Welfare Reform and Work Bill

Karen Buck Excerpts

Tuesday 27th October 2015 Commons Chamber

[Owen Smith]

That is a brilliant point, and extremely well made. There are myriad examples of waste and incompetence in the handling of our DWP budget under this Government, not least the enormous increase in housing benefit.

[Ms Karen Buck (Westminster North) (Lab)]

Does the Conservative party not fail to understand what tax credits are all about? The tax credit policy was successful in that it moved people into work, and, in particular, underpinned the major progress that was made when single parents were allowed to move into work. When we talk about saving money, should we not see that in the context of the tax credit policy’s success in moving people from worklessness into sustainable employment?

[Owen Smith]

My hon. Friend speaks with enormous experience and expertise, and she is completely right. As I said earlier, tax credits are a policy success. In 1997, 43% of single parents in Britain went out to work; today, the figure is 65%. There has been a 50% increase in the number of single parents who are in work, and that is a measure of the success of tax credits.

--- Later in debate ---

[Ms Buck]

The right hon. Gentleman makes a good point about the importance of allowing people to keep more of their money when they work longer hours. How does he square that commitment with the fact that the changes coming in next April will increase the tapers on higher earnings so that people will be subject to 80p in the pound withdrawal rates when they do work extra hours?

[John Redwood]

The problem with welfare reform, as all who have wrestled with it well know, is that we either have a large number of people facing a moderate rate of withdrawal or we have a more limited number of people facing a high rate of withdrawal. All the time that we have means-tested benefits—our system is still riddled with them—means that we will have to make that difficult choice about whether there is a fast move off benefit when people’s income goes up or a slower move. That will mean we either have fewer or more people affected by the taper. Labour never solved the problem of the taper. The Labour Government had lots of difficult tapers and high marginal rates of tax and benefit withdrawal.

That brings me to the second fundamental pillar of the Government’s strategy, which I support, after the promotion of work and better-paid work: taxing people less, particularly those on lower incomes. Both the coalition and this Government have worked away at that, by trying to get more people out of paying income tax. As my right hon. Friend the Chancellor thinks about his pre-Budget judgment and his autumn statement judgment later this year—he is rightly in listening mode—I trust he will think about the tax element in his policy mix, because the more he can do to take people out of tax or to lower the tax rate upon them, the more he will succeed in promoting prosperity and the more he will offset the impact of benefit changes.