Budget Resolutions and Economic Situation

Julian Knight Excerpts

Thursday 9th July 2015 Commons Chamber

[Jack Dromey (Birmingham, Erdington) (Lab)]

Yesterday, the Chancellor trumpeted one nation. If one nation means anything, it is that Britain cannot succeed through London and the south-east alone. Building on Labour’s great devolution legacy in Scotland, Wales and London, we are pleased to see the devolution agenda for England moving forward, but we in the west midlands were surprised that there was but a throwaway reference by the Chancellor yesterday to the midlands powerhouse. Little wonder that the Birmingham chambers of commerce accuse the Chancellor of hot air and say it is time that he backed the midlands engine.

[Julian Knight (Solihull) (Con)]

Does the hon. Gentleman acknowledge that the midlands engine and the devolution we are undertaking in this country are supposed to take a bottom-up approach, rather than a top-down approach? It is up to the authorities in the west midlands to come to the Chancellor with their proposals, rather than for the Chancellor to dictate to them.

[Jack Dromey]

On this issue, we are as one. We are working together in the west midlands to construct the midlands powerhouse and realise the full potential of the midlands. What was surprising yesterday was that the Chancellor waxed lyrical about the remarkable Greater Manchester, mentioned the northern powerhouse in considerable detail and referred to just about every other part of Britain, and at the end of his remarks made a throwaway reference to the midlands powerhouse. That has not gone down well in the midlands.

Crucially, at the next stages what the Chancellor cannot do is empower but impoverish. One of the great problems with this Government is that everything they do is characterised by a fundamental unfairness of approach. Some £700 million has been cut from the budget of Birmingham City Council—£2,000 for every household—yet in the Chancellor’s own constituency there has been an increase in spending power of 2.6%. Likewise, the West Midlands police have been treated unfairly. If they were treated fairly, they would be entitled to £43 million more—enough for 500 police officers back on the beat.

We will never be one nation while the Chancellor and the Government continue to demonise and divide, with their talk of shirkers or strivers, work or benefits. I was born in poverty—my father a navvy, my mother training to be a nurse; they worked hard to get on. I have always believed that those who can work should work, but I object to wicked caricatures of the sort we heard yesterday in relation to the young homeless—“they come out of school, they go on benefits, then they want to get a flat”.

Three years ago, I hosted in the House of Commons the Homeless Young People’s Parliament in Parliament—quintessentially middle England, middle Scotland, middle Wales young people, the best of Britain, who had ended up homeless, overwhelmingly through no fault of their own. Last Friday, I was at Orchard Village, which serves young homeless people in my constituency. It is substantially dependent on housing benefit for its income and now faces closure.

If we are to be one nation, the Chancellor cannot continue to play politics with the United Kingdom, posing one nation against the other. EVEL—if ever there was an accurate acronym, that is it.

As for the Tories being the party of working people, they introduced in the Budget a tax on aspiration, saying to working families in social housing, “If you get on, you have to pay much more or move out.” The party of working people? On Sunday trading, I agree with what was just said. One of Labour’s greatest achievements, the weekend, is now threatened by this Conservative Government, who would compel seven-day working, in reality forcing millions of retail workers, particularly women, to work on Sunday and putting at risk thousands of small stores all over the country.

The party of working people, with the so-called living wage? Yesterday, when the Chancellor spoke about this, he grinned like a Cheshire cat and the Secretary of State for Work and Pensions punched the air, as if England had scored the winning goal in the World cup. The living wage? Twelve years ago, I was a founder member of the drive for the living wage, working through the former Transport and General Workers Union, with the East London Citizens Organisation and London Citizens, to organise, for example, thousands of cleaners in Canary Wharf and the City of London and the first-ever strike in the history of the House of Commons to win the living wage. This is not the living wage or a “new contract” with the British people, as the Chancellor called it this morning; this is a con trick by a cunning Chancellor, who gives with one hand and takes away with the other.

In the west midlands, 56% of families are on tax credits and 300,000 children depend on tax credits. Yet a family with two children and one full-time earner on £20,000-plus now faces losing £2,000: for every £1 they get from a higher living wage, they will lose £2 in tax credits. What is the Government’s answer? They say, “Ah, the £9”. That is £9 in 2020, but they are cutting tax credits in the here and now.

--- Later in debate ---

[Julian Knight (Solihull) (Con)]

I congratulate all those who have made their maiden speeches today. I remember making mine only a few weeks ago. I was glad just to get it over with, to be frank.

What we heard in this place yesterday was one of the great set-piece Budgets—a resetting Budget—along the lines of Lord Howe’s in 1981, Lord Lawson’s in 1986 and, in a less positive way, Gordon Brown’s Budgets of the early 2000s, when he decided to do away with the careful fiscal management he inherited from my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) in favour of a massive expansion of the welfare state and the hyping up of supposed golden rules, which seemed to change according to his whim or to disguise unsupportable Government expenditure.

The Budget contained many measures that will be welcome in my constituency, in particular the extra money for the national health service. Solihull has an ageing population with particular health challenges, so that money will go a long way there. The higher personal allowance, which I will return to in detail, is a fantastic move for the population of Solihull, as it is a hard-working town. I am delighted to report that its unemployment rate is 1.6%. That is because it is the hard-working engine of the west midlands.

The Chancellor has effectively reset how the state interacts with the economy and the individual, subtly, cautiously and over time. In the Opposition debate on tax credits, I acknowledged the important role that tax credits play in many of my constituents’ finances. They help them to get over humps in the road in their lives and can be very helpful. I am pleased that the Chancellor recognised that, as I knew he would, and that the overwhelming majority of people who receive help through the tax credits system will continue to do so.

In the same debate, many of my hon. Friends made the point that tax credits were propping up low pay and effectively trapping many people in welfare dependency, and that many people on salaries far higher than the national average were receiving state help when, frankly, they should not be. Over the past decade or so, many of our fellow citizens have moved into a relationship with the state that, over the long term, is unhealthy for their career ambitions, business more widely and the nation’s finances.

The Chancellor has pressed the reset button on that situation. We will see a freeze in working-age benefits and a narrowing of the people who can claim tax credits. To ease the transition away from tax credits for some people, there is a raising of the personal allowances, which cuts out the middle man by letting people keep more of their own cash, rather than having to go through a complex tax credits system. There is an expansion of childcare provision; the introduction of the living wage, which will rise to £9 by 2020; and support for business, as part of this transfer, through lower corporation tax—something that was opposed by the Labour party in its manifesto—and the ongoing reduction in national insurance contributions for new employees.

The Government are moving from being a nanny who keeps individuals wedded and chained to a fiendishly complex system prone to substantial fraud and endemic overpayment to being a facilitator. Good Governments should be there to create the correct environment for individuals and businesses to flourish. If that is brought to fruition, it will mark the end of Brown economics, and not before time.

That is all big-picture stuff from the Chancellor, as we would expect, but I should like to say something about the smaller bits of the Budget, and the good news that we have received. I was delighted that he accepted Budget submissions from me and from my hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile). We asked him to raise the rent-a-room scheme allowance, which had been languishing at just £4,250 a year since 1996. By raising it to £7,500, he has made up for nearly 20 years of inflation, and will help thousands of home owners who want to let a room to make ends meet, or even just to have some extra company at home. The measure should also increase the availability of rooms to rent in the private sector, which will be particularly helpful to young people who want to strike out on their own in the world.

Another welcome step was the decision to up the compensation for Equitable Life members by an estimated £80 million. There are many former members of Equitable Life in my constituency. It is a black mark on the Labour Government that they first allowed the development of a regulatory regime which effectively allowed the world’s oldest mutual to collapse, and then, when its administration was found wanting by the parliamentary ombudsman, wriggled like mad to avoid paying what was due to people who had seen their life savings largely disappear. When the country had the money with which to compensate the members of Equitable Life, the Labour party chose not to use it.

I believe that it is great credit to the Chancellor and to my hon. Friend the Economic Secretary to the Treasury that they have not forgotten about those wronged individuals, but—despite the global recession, and despite having inherited the worst public finances since the war—have sought to help. The compensation is not perfect by any stretch of the imagination, but the Government, like the coalition before them, are doing their best within the confines of the current fiscal position.

There are many other highlights in the Budget. The apprenticeship levy, for instance, will help to secure fairness in the apprenticeship system, and the best employers will be rewarded. Like my hon. Friend the Member for Torbay (Kevin Foster), I am no fan of trading on the Sabbath, but I welcome the Chancellor’s indication that it should be up to local mayors to set Sunday trading hours. Should we have an elected mayor in the “midlands engine”, I shall welcome the opportunity to lobby for a sensitive approach, along with my friends in local church groups. That is real devolution.

Finally, there will be a great deal of cheer over the freezing of fuel duty, which means that it is 18p lower than it would have been if Labour’s anti-motorist plans had been implemented.

That is what this Budget is all about. We are on the side of normal people who want to get their kids into work, keep more of their cash, and interact with the state in the right way. It is about a hand up, not a handout. The Budget sends a loud and clear message: we are the workers’ party now.

Scotland Bill

Julian Knight Excerpts

Tuesday 30th June 2015 Commons Chamber

[Dr Whiteford]

I entirely agree. The democratic will of the Scottish people over the past few years from the 2011 elections and again more recently—just look around this Chamber—is very clear. They want an alternative to austerity and a fairer social security system.

I am keen to highlight new clause 31, which I hope we will have an opportunity to vote on later. If Labour do not press it to the vote, we will. It gives explicit power to create new benefits in devolved areas, giving effect to that Smith agreement recommendation, and it could be used to improve the support offered to carers. I am pleased that there is a great deal of consensus on the Opposition Benches about the need to move that forward.

Inclusion Scotland, one of the leading networks of disabled people’s organisations in Scotland, has expressed support for amendment 48, and Carers UK and Carers Scotland have said that they welcome

“the flexibility for the Scottish Government to define the terms of the new ‘Carers benefit’ as it provides the Scottish Government with an opportunity to improve carers’ benefits in Scotland.”

That is why there is that degree of consensus on the Opposition Benches. Carers are understandably concerned about the speculation on where the Chancellor’s £12 billion of social security cuts will fall. We know that carers and the disabled people they support are likely to see further squeezes on their already squeezed incomes. These amendments offer an opportunity to consider alternatives.

In Scotland we realised some years ago that carers are integral to meeting the long-term challenges we face in delivering health and community care. Unpaid and family carers are the backbone of the community care system and they are irreplaceable; they are part of the solution to meeting our social care challenges. Since the advent of devolution the Scottish Parliament has pioneered policies that have improved support for carers and those receiving care in the community, but when carers fail to get the support that they need to continue to care, the pressures on our public services become far less manageable.

It is worth pointing out that the positive policies for carers pursued in Scotland under existing devolved powers contrast sharply with what we have seen from Westminster over recent years. Particularly over the past few years, I have met carers under increasing strain because of the failures of the work capability assessment and the implementation problems that have accompanied the personal independence payment regime. One of the consequences of someone losing benefit because of inadequate assessment procedures is often a big knock-on financial impact on carers, who find themselves having to support their relative financially, as well as providing practical care. Also, in the absence of other support, the intensity of the care they have to provide often increases.

[Julian Knight (Solihull) (Con)]

I find the hon. Lady’s speech very illuminating, particularly on carers, an issue close to my heart and that of my constituents. However, a thought occurs to me: is not the real agenda to turn back the clock on benefit reform, effectively ending accountability for those claiming benefits and allowing a return to rampant welfarism, which destroys communities and keeps people trapped in dependency?

[Dr Whiteford]

The hon. Gentleman’s intervention demonstrates that he has completely failed to understand my point—that carers are holding up our social care system. They are providers of care, not benefit recipients. They stop the state having to look after people who would otherwise require considerably more support from the NHS and from community care services. Let us not pretend that carers are a drain on our resources. They are a resource on which we are hugely dependent. Let us face it. The support that we give to carers in no way compensates for the care that they provide for free. [Interruption.]

When carers stop being able to care—often because their own health has been severely compromised—our local authorities and the NHS find themselves having to make—[Interruption.]

Welfare Reform (People with Disabilities)

Julian Knight Excerpts

Tuesday 30th June 2015 Westminster Hall

[Mr David Burrowes (Enfield, Southgate) (Con)]

It is a pleasure to take part in this debate, which is timely as we look forward to the Budget. It allows us to consider welfare reform and people with disability without being drowned out by the common refrain and focus on how much money needs to be saved from the welfare budget. We can look seriously at what we mean by disability and how we can stand up properly for those who are vulnerable.

I want to make three points. First, we need to support and uphold the positive value of a generous safety net. We should be able to do that, be proud of it and stand up for it. We have to find a better way to discuss welfare. We should focus particularly on disability, so that we can properly protect vulnerable people. We need a positive approach.

I recognise that there need to be cuts in the overall welfare spend, not least because, as the Chancellor said, we have 1% of the world’s population, 4% of its GDP, and 7% of global welfare spend, so reform is needed. Although we are considering the subject through the prism of cuts, protection for people with disabilities should not be regarded as being at the end of the queue, after protection for pensioners and child benefits. Disability campaigners are concerned about what is happening. Disability should not be at the end of the public spending queue after the NHS, international development, which is protected, defence, which some of us think should be protected more, and education. Somewhat mischievously, I asked what percentage of GDP should be given to disability, but we should consider the real spending requirements before considering what is needed in terms of reform.

It is worth making some international comparisons. We should be proud that we spend £33.5 billion each year on benefits for the disabled, excluding social care. It is a small amount when shared among the many vulnerable people. We all have individual experiences, as I do in my surgeries, of people who are challenged by living on those benefits and dealing with some of the reforms. Nevertheless, as a proportion of GDP, the UK spend on benefits for the disabled is double that of the US, a fifth more than the European average and six times that of Japan. We can be proud of that record while realising that there are ways that we can do better within that budget.

We should uphold the principle of dignity—the dignity for disabled people of being independent, for those who can be live independently, and the dignity of working for those who are able to work, although not everyone can. It is also about dignity in terms of showing compassion, standing alongside them and being able to support them in the ups and downs. Some need that safety net temporarily, and some need it permanently.

My second point is on the importance of de-weaponising welfare. On the one hand, campaign groups say that the cuts will fall on the most vulnerable and the poor, and as much as I congratulate the hon. Member for Oldham East and Saddleworth on securing the debate, we did hear that from her. On the other hand, the tabloids—do not just put this at the door of Ministers—say that it is all about the workshy and condemn them for exploiting the system. Everyone is in the mix. We need to get beyond that argument and look at what needs to be achieved for us to have an honest debate.

The facts are important and they need to be heard. The Institute for Fiscal Studies has said that between 2011 and 2014, spending on disability living allowance increased by £1.8 billion, spending on attendance allowance increased by £200 million, and spending on carer’s allowance increased by £400 million. The number of unemployed disabled people has fallen by more than 15% over the past year. That matters; it means that 230,000 more disabled people are in work, so it is not all scaremongering and doom and gloom.

There are challenges—the independent living fund was mentioned. It was scrapped, but the funds were not scrapped. Let us be honest about the situation: the £300 million was reduced to £262 million and the funds were devolved to local councils, where efficiency savings can be made by having everything under one roof. We have to see how those efficiencies are made, but the funds are there to help the same people as the ILF helped, and for the same reasons. We have to have an honest debate. We have to recognise that we need to be on the side of the vulnerable and the poor. Not all disabled people are poor—in fact, two thirds are not in low-income brackets. We need to recognise that, while understanding that they all might be vulnerable in the long term.

[Julian Knight (Solihull) (Con)]

I am very much interested by what my hon. Friend has said and how he has tried to take the middle ground in the debate. We have heard a lot about the apparent failures of the Access to Work programme, yet disability employment is now at 3.1 million. The employment rate for disabled people rose by 2.5% in the year to September 2014. I hope my hon. Friend agrees that those are encouraging figures, but that more needs to be done.

[Mr Burrowes]

That is right. There are some excellent Disability Confident events in our cities that help those figures, and we must support them.

I am calling for an honest debate. The IFS said that the number of DLA claimants is twice what it was in 1992. We cannot say that that increase is simply because of an increase in the number of disabled people; we have to look at why the number of claimants has doubled and seek to make reforms.

We should look at a new way of dealing with the whole welfare debate, and in particular at disability and the spend needed in that area. We should look not only at benefits, but at social care, which poses serious challenges for local authorities dealing with disabled people. We need integration. We are looking at personalised budgets, so we should look at their impact on social care, the cuts and challenges, as well as on the issue of disability benefits. Let us bring that together for all our constituents and work hard to give them the best deal.

As we approach the Budget, I want to be able to look disabled people square in the face and say, “Whatever is happening around the economy, we are wholly committed to being on your side and giving those disabled people who need it that independence for living and work.” We need to show compassion and that we are on their side all the way along.

Oral Answers to Questions

Julian Knight Excerpts

Monday 22nd June 2015 Commons Chamber

The Secretary of State was asked—

[Julian Knight (Solihull) (Con)]

1. What assessment he has made of the effects of automatic enrolment on private sector pension saving.

[The Parliamentary Under-Secretary of State for Work and Pensions (Justin Tomlinson)]

More than 5.2 million workers have been automatically enrolled in a workplace pension by their employer to date. Since the start of automatic enrolment, workplace pension membership in the private sector has risen from 32% in 2012 to 49% in 2014, a very positive start.

[Julian Knight]

With 135,000 firms set to auto-enrol their employees from January, does my hon. Friend agree that the work of non-governmental groups such as the Solihull-based Chartered Institute of Payroll Professionals is key to the successful delivery of auto-enrolment and to meeting the savings challenge of 11 million Britons who are currently failing to put enough away for their retirement?