(8 years, 10 months ago)
Commons ChamberAbsolutely—£100 million on the bedroom tax and a further £40 million ensuring that the council tax cuts did not affect low-income households in Scotland in the way they did in England. I hope that, after today, Labour will return to where it was earlier this week when it stood side by side with the SNP in opposing Tory cuts.
The SNP will oppose these ideological, regressive and utterly punitive tax credit cuts with every opportunity open to us—and we do so again today—because we realise the damage caused to family incomes, levels of poverty and child poverty in these isles and to social cohesion in every community in Scotland. The Scottish Government analysis, discussed today at First Minister’s Question Time in the Scottish Parliament, shows that 250,000 households in Scotland will lose, on average, £1,500 from April. Thereafter, when the all the changes are fully implemented, that could rise to an average of £3,000 per household. These changes are fundamentally regressive: they disproportionately target those in low-income households and punish them on account of this Government’s ideological obsession with austerity.
For our part, the SNP stood on a manifesto that was fundamentally anti-austerity and that plotted a more responsible path for bringing down the deficit. We argued for a 0.5% increase in spending per year for this Parliament, which would have released £140 billion in total to invest in capital projects and other measures to narrow income inequalities. Our plan would have brought the budget deficit down to 2% by the end of this Parliament, while protecting public services at the same time—a far more measured and reasonable way to balance the books. Our plan was backed by an IMF report from June this year, which highlighted that reducing income inequality not only leads to reduced poverty, but boosts growth. By extension, the policy of cutting tax credits and thereby increasing income inequality will drive more of our citizens into poverty. It is, in fact, going to harm growth.
I am pushed for time and I know that colleagues want to enter the debate, too.
As well as being socially destructive, this policy is, as an extension of IMF thinking, economically incompetent. No mention was made of these wholescale cuts to tax credits in the Conservative manifesto. There were just two references to tax credits, but neither referred to anything like the proposals in front of us now. I reiterate that the changes were the central plank of this Chancellor’s first Budget since the election. He has based all his sums on the back of these cuts. One would have thought that they would merit at least a passing reference or a hint at what was coming down the line.
The Chancellor’s summer Budget was a prime example of obfuscation, suggesting that these cuts to tax credits would be compensated for by the rise in the minimum wage. That was absolute nonsense. The reality is that the full rise in the minimum wage will not come into effect until 2020—four years after the tax credit cuts start. Even when the full rise comes into effect, it will still not mitigate the tax credit cuts. Why did the Government decide to undermine and sabotage the real living wage campaign by labelling their minimum wage rise as such?
I wish to conclude by addressing some of the language used in previous debates. Many of us have rightly been focusing our time on pointing out that these cuts will impact on working households, and lambasting the fact that many working households will be dragged into poverty by these tax credit cuts. I suppose I have been as guilty as others, as we attempt to show the Government that their rhetoric on making work pay is a complete sham when considered in the light of the tax credit cuts. There should be no distinction between working or non-working households that are in poverty or living on low incomes. We cannot continue to allow ourselves to be dragged into the Tory mantra of the deserving and undeserving poor. Nobody deserves to live in poverty—nobody. So referring to “hard-working families” or “the working poor” is unhelpful. We do not know the circumstances whereby people are unable to work, and we should not judge them in the way some do routinely in terms of “there by the grace of God go I”. None of us knows when we may find ourselves out of work. We should be working to address poverty wherever it is manifested and wherever it is likely to be worsened—as it will be by this Chancellor’s tax credit cuts.
I would indeed welcome that. We have heard nothing from the Opposition to illustrate how they would deal with the £30 billion deficit.
Does my hon. Friend agree that those comments were surprising because Labour has voted against every welfare change made over the past five years?
Absolutely correct. It is ultimately our responsibility to look at all the financial provision that we make as a Government and ensure that that money is distributed to people who are trying to do the right thing.
It is a pleasure to speak in this debate and to follow the hon. Member for Nottingham North (Mr Allen), whose comments about the tone of the debate I echo: it has been far more positive than some of our debates. I also thank the right hon. Member for Birkenhead (Frank Field) for securing it. I knew I could look forward to a measured speech from him, and he duly delivered.
I believe that the tax credits system needs reform. Six out of 10 families receive them, meaning that one in five families in the top half of the income distribution does so. A person can receive them on an income of up to £32,960. The House of Commons Library indicates that some families with an income of more than £40,000 get them. It was interesting to hear the hon. Member for Wolverhampton South West (Rob Marris) agree with us that the bill of £30 billion needed to be reduced. It will be interesting to see what proposals he brings forward.
I support the Chancellor’s aim of creating a high-wage, low-welfare economy. In my constituency over the past five years, we have seen the number of people on unemployment benefits fall, more people getting an opportunity, and investment in things such as the south Devon link road. This is inspiring and creating more jobs, helping people get on in life and making a difference to them and their families. That is what I support, and it is at the core of the reason I came here and why I am proud to be a Conservative MP.
Members might ask why I am supporting the motion, which I will vote for if we end up having a Division. My family was rich in love if not in money when I was growing up. My father worked as a labourer and painter, and my mother was a teaching assistant. It was a family that wanted to get on in life. I disagree with Opposition Members: it is right that we give people the opportunity to own their own home. I am not being hypocritical. I grew up in a house my parents could buy because of a scheme that helped working people buy their own home back in the 1970s—introduced, ironically, by a Labour Government. I am proud that those opportunities will be made available. It is not that long ago that those on the left were arguing that people should be owning their own homes, not paying rent. It is strange how that has changed, and it is right that the Conservatives give that opportunity to a new generation by increasing the housing supply coming on stream.
We need to have some clear ideas of how to mitigate the impact of these reforms. I noticed the usual magic money trees being presented—by the same people whose oil revenue projections were not exactly accurate last year either. I have confidence that the Chancellor will come forward in the autumn statement with proposals to mitigate the impact on the lower-paid. That is why I am happy to support the motion, which asks the Government to reconsider. It is fine to talk about the destination of a high-wage, low-welfare economy.
Will the hon. Gentleman enlighten us on how the Chancellor’s forecast for budget and debt reduction worked out in the last Parliament?
We have an economy moving forward, and we have increased health spending, unlike in Scotland. According to last Thursday’s Daily Record—one of my favourite reads over porridge, obviously—our failing NHS is the SNP’s fault. I am happy to get talking about politics any day of the week.
Returning to the key issue—[Interruption.] It is always lovely to have an accompaniment from these Benches. The key part for me is not the e-mails I have received or the stuff in the media; it is thinking about the thousands of families I now represent in this Chamber who are like the family I came from. Whatever we may think of the destination of this policy area, we should ensure that the journey we travel to get to it does not impact unduly on people who are trying to do their best in life.
I listened with interest to the speech of the right hon. Member for Birkenhead, but it is important to have alternatives that do not make things worse or create the wrong incentives. The hon. Member for Airdrie and Shotts (Neil Gray) made a point about what the Library figures mean for the right hon. Gentleman’s initial proposals. However, if that model were adopted, there would be an effective taxation rate of nearly 100%—higher than virtually anyone at the highest levels of income is paying anywhere in the world, so it would be strange to have such a system applying in this country to those earning just under £20,000. I can appreciate the sentiment of those proposals, but at that sort of level it would provide a clear disincentive to work, just as tax rates of 88% or 98% were back in the 1970s.
I look forward to seeing what the Government will bring forward, and I look forward to continuing engagement with Ministers on the Treasury Bench. I thank my hon. Friend the Member for Kingswood (Chris Skidmore), the Chancellor’s Parliamentary Private Secretary, who I see in his place, for the engagement so far. It is right that we should not oppose without offering up alternatives. I hope that there will be clear engagement with Members and Parliament about what things can be done to mitigate the impact within the envelope of an affordable and deliverable financial settlement that allows us to achieve our overall fiscal goals, which were so strongly endorsed in the UK general election not very long ago.
It has been a pleasure to sit through and speak in this debate, and it will be even more of a pleasure to welcome the Government’s proposals that will come forward in the near future to mitigate the impacts on the lowest paid, as is called for by the motion.
(8 years, 11 months ago)
Commons ChamberOne of the problems with national insurance contributions for employers is that they are a direct tax on employment, making it more expensive to employ someone in both the private and the public sector. It may be worthwhile Opposition Members noting that putting up national insurance contributions for employers would hit local councils severely, giving them an extra bill to pay. The Bill backs business, but it will also help public services by keeping their bills low.
My hon. Friend is right. The Bill’s measures strongly back business and other employers, many of whom will benefit from the employment allowance too.
The Bill legislates our commitment to provide certainty on national insurance rates for the duration of the Parliament. Hon. Members will be aware that our other commitments in the manifesto to lock taxes were that we would not increase the main rates of income tax and value added tax, as well as not increasing national insurance. The Finance Bill will deliver those commitments and this Bill delivers the commitment on national insurance.
(9 years, 1 month ago)
Commons ChamberMy hon. Friend is absolutely right. The situation illustrates why you need a credible economic plan, why you need to make sure that your country is protected from shocks happening around the world and, in short, why you should fix the roof when the sun is shining.
The situation in Greece demonstrates that one cannot mix a single currency with numerous and in some cases reckless fiscal policies. We discussed that point during the Scottish referendum last year. Will my right hon. Friend reassure my constituents that the necessary steps are being taken to protect UK interests whatever the outcome of the forthcoming referendum?
I can assure my hon. Friend that we are taking such steps, and we are working closely with the Governor of the Bank of England. My hon. Friend’s broader observation about credible fiscal policy, whether in the United Kingdom or in the broader European economy, is well made.
(9 years, 2 months ago)
Commons ChamberI give the assurance that the Government will always defend our rebate. Perhaps it might be helpful to the Committee if I make the point that I made on Second Reading about the scale and significance of the partial surrender of our rebate by the Labour Government. According to the European Commission, the disapplication of the UK rebate cost the UK about €9 billion over the seven-year period of the previous multi-annual financial framework. Thereafter, with the abatement disapplication fully phased in, the cost to the UK is about £2 billion a year. That is a significant sum, particularly given the fiscal circumstances that we continue to face.
Frankly, the question of what was achieved in return for the surrender of that partial rebate might be asked. Perhaps we will hear an answer to that later this afternoon, but I have not heard a convincing answer yet.
The Minister has outlined how the European Union is currently funded through contributions from member states. Some in the European Parliament argue that that system should be replaced by direct taxes levied by the European Union. Will the Minister confirm that the British Government would resist any such move?
Yes, we would resist such a move. It would be a fundamental change to the nature of our relationship with the European Union, and one that would go in entirely the wrong direction for the United Kingdom. There were calls in the negotiations for such a step to be taken. There were calls, for example, for a financial transaction tax to be introduced to finance EU spending. We resisted that. The Prime Minister was very clear in ruling it out from any deal.
I thank the Minister for generously giving way to me a second time. Does he agree that the European Commission did not propose a single euro of savings when the negotiations started, so it would be strange to ask it to conduct the review to secure better value for money, as the new clause demands? In essence we would be asking the poacher to review how the poaching is getting on.
I take my hon. Friend’s point. We are, I hope, moving in the right direction. The new Commission has been in place for the past few months or so, and the early signs are—I shall return to the point—that it appears to be more focused on the task. I think there is a link: there was a reduction in the EU budget, which has somewhat focused the mind.
I have been listening with interest to the right hon. Gentleman’s points about funding for Scotland. How does he think this support would be getting on without the benefit of the UK’s rebate?
One of the reasons we do so incredibly badly in many European programmes as regards funding is that the Treasury’s interest, when looking at additionality, as it calls it, is always to minimise EU expenditure. Although it is perfectly acceptable for the Government to defend the rebate, it is less acceptable to look at every European programme and try to minimise expenditure on it, because in doing so, we lose some of the alternative opportunities that the hon. Member for Worsley and Eccles South talked about. If the Treasury looks at every European programme and says, “How do we minimise spending?”, what follows as a natural consequence is that our share of that spending is also diminished. In the case of the common agricultural policy, it is possible to make a direct connection with the negotiating stance of the right hon. Member for North Shropshire, who was trying to abolish farm payments altogether and got the miserable, unfair and inequitable distribution of support that has been the end result of the CAP negotiations.
The Minister—I am not sure if it was a dead bat, a glorious drive through covers, or a catch at slips—rather evaded the direct question of what is the Prime Minister’s negotiating stance on the budget. The Minister said, after being passed a note, that the Prime Minister’s stance was to cut the whole budget and to protect the UK rebate. Let me point out that that has been the Government’s stance and policy since they took office in 2010; it is not a particular stance for these renegotiations. What the Minister is being asked—we really would like an answer—is whether the Prime Minister has a specific target in mind in renegotiations for changes in the EU budget or the UK contribution to it, and if so, what it is. Failure to answer that question throughout the debate adds to the no doubt unworthy, but considerable, suspicion shared across this Chamber that the Prime Minister is adopting this nebulous approach to what are his negotiating aims so that whatever he comes back with can be announced as a fundamental achievement. That does not stand scrutiny in this Committee, but even more importantly, it is a particularly poor campaigning argument in favour of the European cause.
I hope that the Minister—the last man in—will rise to the occasion by confirming that he is in favour of more equitable distribution of land ownership in Scotland and by giving us an insight into the Prime Minister’s true negotiating hand in the coming arguments and discussions in the European Union.