Pensions

Kwasi Kwarteng Excerpts

Wednesday 19th July 2017 Commons Chamber

[Mr Gauke]

The number of sanctions is down by about half in the last year. We have a welfare system that has at its heart the principle of conditionality for many benefits, and to enforce conditions it is necessary to have a sanctions regime. However, the vast majority—something like 98%—of benefit claimants are not sanctioned.

[Kwasi Kwarteng (Spelthorne) (Con)]

With respect to the statement, my right hon. Friend will be aware that 300 people reached the age of 100 in 1952, when Her Majesty the Queen came to the throne; last year, it was over 13,000. Is he surprised, as I am, at the irresponsibility and recklessness of the Labour party in resisting some of these measures?

[Mr Gauke]

I do not know whether I am surprised any more by anything that the Labour party does, but it is disappointing. The reality is that we have an ageing population, just as every similar country does. We all have to respond to the facts, and the facts are that, as the population ages, and as life expectancy—and indeed healthy life expectancy—improves, it is necessary for the state pension age to reflect that. To deny that is just to deny common sense.

Housing Benefit (Abolition of Social Sector Size Criteria)

Kwasi Kwarteng Excerpts

Wednesday 17th December 2014 Commons Chamber

[Kwasi Kwarteng (Spelthorne) (Con)]

I am pleased to follow the Chair of the Work and Pensions Committee. However, one cannot on the one hand say that people are being driven from the social sector to the private sector, and on the other argue the opposite case by saying that the number of people moving to the private sector is falling because rental prices are going up. Those are contradictory points. Members have to choose one line of attack.

[Dame Anne Begg]

The only choice that a person has is to stay where they are and pay the bedroom tax. That is the problem.

[Kwasi Kwarteng]

I am glad that that has completely cleared up how Members can argue two entirely different things.

Let us put the matter in context. There is a lot of scaremongering, wild words and passion from Opposition Members, but very little attention to the facts. The Government removed the spare room subsidy simply to equalise the situation with what was going on in the private sector. I find it absolutely extraordinary that Labour Members are saying that it is all very well to have a discrepancy between social housing and private rented housing. Let us look at some more facts. Currently, 1.4 million households are on social housing waiting lists in England alone, and nearly 250,000 families are living in overcrowded accommodation. On what planet does it make sense not to have some degree of equity or fairness between people who rent in the private sector and those in social housing?

[Mr Slaughter]

I am so sick and tired of listening to Tories crying crocodile tears about this. Some 822 people pay the bedroom tax in Hammersmith, and the last Conservative council sold off or demolished 500 council houses. How does the hon. Gentleman think that that possibly helped with overcrowding?

[Kwasi Kwarteng]

I am not aware of the details of the hon. Gentleman’s borough council, but Members across the House have widely acknowledged that there is a problem with housing supply. However, I am confused when the Labour party says that those in private rented accommodation should pay an extra amount, but that social housing should be exempt from that—and all in the context of people living in overcrowded accommodation and not having enough rooms. People come to our surgeries who are living in cramped conditions, and Labour thinks it is all very well to carry on as before.

The wider point is that even if we were running a balanced budget, this would be a legitimate subject for debate. When we add in the context of a country that is borrowing £100 billion a year—largely thanks to the efforts of the Labour party when it was in government—and when both sides of the House are trying to reduce Government expenditure, it is the financial management of the mad house not to look at welfare expenditure and try to reduce it. Again, there are facts to back this up. Without reform, the overall housing benefit bill would have risen to more than £25 billion in 2014-15, and as the Minister established, we have saved £2 billion.

[Several hon. Members]

rose—

[Kwasi Kwarteng]

Forgive me. Each and every one of those reforms and attempts to reduce expenditure have been opposed by the Labour party. It is well and truly said that Labour is the party of welfare: by my estimate, it has opposed £83 billion of welfare spending savings this Parliament. Under the previous Government it was notorious and a scandal that the maximum housing benefit award was £104,000 a year—[Interruption.] These are well-established facts; for exactly that reason, when the Government introduced the £26,000 welfare cap, it was the most popular Government policy since the second world war and since polling began. There is wide acknowledgement among the public that those reforms, although difficult, are crucial in trying to reduce the deficit and get the country back to some form of sanity in the conduct of its economy.

[Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)]

I have listened with great attention to the hon. Gentleman’s compelling rhetoric. He spoke about the management of the mad house. Is it the management of the mad house to try to force families in houses that allegedly have too many bedrooms out of that accommodation in a borough such as Hackney, where there simply are not enough one or two-bedroom flats for them to move in to?

[Kwasi Kwarteng]

We have established that there is a supply problem, but what we must agree on—and the general public agree—is that reform in this crucial area was needed. Neither of the interventions that I have taken addressed the fact that there is massive overcrowding, and that a quarter of a million families are living in accommodation that is physically too small for them.

In such a situation, surely it is common sense to try to equalise and rationalise the supply. [Interruption.] It is all very well for Labour Members to shake their heads and deny there is a problem, but at least the Government have had the courage to try to address the issue. They are doing so not by applying radical new ideas, but by doing what Labour did in government when they introduced a change to private sector rental agreements. It is time for the Labour party to wise up and get real—

[Madam Deputy Speaker (Dame Dawn Primarolo)]

Order. This afternoon’s debate is following a sort of pattern where the Opposition shout at the Government, the Government shout at the Opposition, and then both sides complain that there has not been a proper debate. I hope that Members who continue to shout across the Chamber will resist the urge to do so and listen to the debate.

Oral Answers to Questions

Kwasi Kwarteng Excerpts

Monday 8th December 2014 Commons Chamber

[Mr Duncan Smith]

I do not know whether the hon. Gentleman was listening to what I said earlier. The reality for us is that our youth unemployment is falling faster than anywhere else. Only a few countries in Europe actually have lower youth unemployment. I am determined to drive it down to the levels that other countries have. Our rate of youth unemployment is a success, and I honestly do not think that bogus schemes—they cost a lot of money, but do not get anybody into work—will do anything but instil a certain amount of apathy among young people.

[Kwasi Kwarteng (Spelthorne) (Con)]

Does my right hon. Friend believe that the Government’s success on youth unemployment shows that our long-term economic plan is working?

[Mr Duncan Smith]

It is true. Here is the long-term economic plan—a record employment level of 30.8 million, up 1.75 million since 2010; over three quarters of the rise in employment since 2010 in full-time work, and two thirds of the rise in employment in managerial, professional jobs; and the number of British people in work up by over 1 million in the past four years, two thirds of the total rise in employment.

DWP: Performance

Kwasi Kwarteng Excerpts

Monday 30th June 2014 Commons Chamber

[Kwasi Kwarteng (Spelthorne) (Con)]

I have been very interested to hear some of the contributions from Labour Members as well as those from my hon. Friends. It is interesting that the terms of the motion address the so-called chaos in the administration of the Department. To me, that is an admission by the Opposition that they are not challenging the need for reform. As a consequence of the fact that Labour Members cannot engage in a debate about whether the reforms are necessary, they have sought to propose this secondary motion, as it were, based on looking at the administration of the Department.

Everyone here knows that we faced a significant budgetary problem when this Government came to power in 2010. It will be remembered that the last Labour Chief Secretary said there was “no money left”, which clearly was the case. There was a deficit of £160 billion, and a large component of that overspend was a consequence of overspending in the welfare department. In 1997, the amount spent on welfare and social security was £93 billion. Within about 10 years, that had gone up by about 60% in real terms. Today we have a bill of well over £200 billion. Anyone can see that that was not sustainable. Anyone can see—the public do see—that it was not a viable proposition to keep adding to this welfare bill. What this Government have done very effectively has been to focus on this problem, to try to address it and to bring about reforms to make our welfare spending sustainable in the future.

It is quite irresponsible for Labour Members to say that we Conservative Members do not care and that it is the same old evil Tories. The hon. Member for Hampstead and Kilburn (Glenda Jackson) made a passionate speech, giving full vent to all her theatrical skills in denouncing my right hon. Friend the Secretary of State. Everyone knows that his attention to detail and his commitment in this area have been second to none. Over 10 or 15 years, he has devoted himself to trying to understand the system and the causes of long-term poverty and long-term unemployment. In fact, after four years, he and my right hon. Friend the Chancellor of the Exchequer between them have turned around this floundering ship.

If we look at the employment figures and see how much employment is being created by a prospering private sector, and if we look at the numbers of people entering employment, we will see a marked success in this area. It is no good Labour Members wailing about the changes being made. We all know that the country faced a significant budgetary problem and we all know that a big part of the overspend related to this precise area of welfare spending, welfare dependency and so forth, and it is quite right for the Government to tackle it.

My hon. Friend the Member for Forest of Dean (Mr Harper) mentioned the benefit cap of £26,000. He was quite right to suggest that this policy is widely appreciated and widely supported by people across the country who cannot understand why any family in any constituency should be in receipt of £26,000 a year in benefits. The results of polls done on individual policies show that the benefit cap is the most popular Government policy of any party since 1945. This is well documented, and there is a reason for it: people understand that the benefit bill had been expanded way beyond anything that was sustainable.

It is quite revealing that in the course of this debate, the Labour party, which should be re-christened the welfare party, has failed to engage with any of the real reasons why reform was needed. Labour Members have relied on what I am calling a subsidiary motion related to the Department’s administration because they know that on the substantive issue of welfare reform and of trying to reduce spending and ensure that welfare goes to the people who most need it, they have been found wanting. Frankly, the British people do not accept any of their arguments.

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[Mrs Anne McGuire (Stirling) (Lab)]

It is a pleasure to follow the hon. Member for Skipton and Ripon (Julian Smith), but I must tell him that I think I speak for all Opposition Members when I say that I rather resent his suggestion that any criticisms of the inefficiencies of the Secretary of State’s Department are laid at the door of hard-working civil servants. Let me also tell him that when he next makes assertions about what people who work in jobcentres actually want, he might wish to prove those assertions rather than simply stating that they are in favour of more reforms and more sanctions.

The DWP touches all our lives at some point. I think that when we talk about welfare, we should bear it in mind that welfare payments—that generic term that we trot out so easily—also include our pension system. The Minister may correct me if I am wrong, but I suspect that about 54% of our welfare payments are pensioner payments. We should never forget that.

Today’s debate results from the fact that a Government Department has failed miserably to achieve its objectives, namely reform of our welfare system, a Work programme that works for people, and the reform of disability payments. I agree with what was said by my hon. Friend the Member for Aberdeen South (Dame Anne Begg), the Chair of the Select Committee—who, on cue, has just entered the Chamber. The hon. Member for Spelthorne (Kwasi Kwarteng) suggested that the Conservatives were the only party that was in favour of welfare reform. Nothing could be further from the truth. What we did object to—

[Kwasi Kwarteng]

rose—

[Mrs McGuire]

Will the hon. Gentleman let me finish my sentence? I had only got as far as a comma.

The hon. Gentleman should realise that, in fact, we had a consensus on welfare reform. Indeed, the hon. Member for Forest of Dean (Mr Harper) mentioned that we had worked together in the last Parliament. We are now debating a reform programme that is not about consensus—it is not about talking to other people. It is the brainchild of the Secretary of State. He went at it with zeal, and he was not prepared to accept that there were any ways in which he ought to finesse its implementation. We cannot simply dismiss the 700,000 people who are waiting for WCA as somehow a blip or a glitch in the system. Those are individuals who, as my right hon. Friend the Member for Birkenhead (Mr Field) said very powerfully, find themselves quite literally without money on many days of the week; people who find themselves in the humiliating position, as they see it, of having to go to get food from friends, family and food banks.

We have PIP now. I think the Minister deserves just a little credit for PIP and I have said that to him before. He has stalled the implementation, however, and I hope that at the end of this debate he will tell us exactly what the waiting times are now, because they have been bandied around but I have not seen any evidence for them.

We cannot just ignore what other organisations are saying. The Public Accounts Committee says the DWP has “yet to achieve” savings and it has an “unacceptable level of service” with

“uncertainty, stress and financial costs for claimants”.

Even the DWP’s own annual report last week said:

“The volume of assessments undertaken by providers on both contracts has fallen consistently below”

the expected demand.

We have called over many months now for a cumulative impact assessment of the impact of the policies on disabled people. What we have here is a cumulative disaster area of a ministerial team, which introduced major change projects without suitable testing. The objective assessments have clearly identified that. Ministers continued to advise this House that everything was, and was going to be, hunky-dory. They have sought to camouflage all the failures of their Department. We now even have a new technical term that we did not know we had: reset. Actually, that is a term for a new project; the Secretary of State ought to admit that.

We have a Secretary of State who has stretched credibility on universal credit when he has said time after time that it is on budget and on time. I hate to disillusion the Secretary of State, but when I asked the chief executive of the Major Projects Authority whether universal credit was on budget and on time, he might have said certain words, but his body language gave a whole different interpretation of what he said, and the Secretary of State should look at that evidence in the PAC record.

This ministerial team is living in a virtual world in Caxton house. It is not the same world most of us—even the Ministers’ own Back Benchers—have said they live in, and, frankly, if the Secretary of State does not get a grip on the chaos within his Department in working with people, one has to ask, “Why is he still in his job?”

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[Heather Wheeler (South Derbyshire) (Con)]

I am probably tail-end Charlie on this occasion, so I will be brief. The Opposition have given us a tour de force on what they think is wrong in their constituencies, but when they look at themselves in the mirror and see the pain and misery going on in their constituencies, I wonder what it must look like to them when they look over to our side and see, for example, my hon. Friend the Member for Tamworth (Christopher Pincher) talking about how unemployment has been cut by at least a half or my hon. Friend the Member for Fareham (Mr Hoban) talking about the changes that have happened in his constituency.

We on the Government Benches like to think that the glass is half full, because we are prepared to roll our sleeves up and provide leadership in our constituencies. We have provided job fairs in our constituencies and worked with food banks and mental health charities, for example. I know that there are some good, honourable people on the Opposition Benches—

[Kwasi Kwarteng]

Who?

[Heather Wheeler]

I would never name them; Mr Speaker would not appreciate that.

I say to those honourable people who earn their money as MPs and are proud to represent their constituencies, “Actually, guys, what is happening in your constituencies? What is going to change in your constituencies? When are you going to get out of the mental state that you seem to have, whereby everything is bad, nothing is ever going to change, nothing is ever going to get better. Well, it is.” Unemployment in South Derbyshire used to be 25%; now it is 1.8%. We used to have 13 mines; we do not have those any more, but we have apprenticeships, we have engineering, and we have tourism. We have numerous really special jobs, and people are working jolly hard. They are rolling their sleeves up because they want better for their families. They are not prepared to live on welfare. They are not prepared to have that as a lifestyle. They want everything for their families in the future.

It is sad that we have spent four years trying to turn the oil tanker around. Welfare used to be “what you did”, but things cannot be like that any more, and I want Members in all parts of the House to realise that they have to change. We must live within our means. We want people to come out of this in the right way. We want to help all our mental health charities, and we want to help all our young kids to get apprenticeships. That is the way forward; welfare is not.

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[Kwasi Kwarteng]

All I was observing in my speech was that it is the single most popular Government policy since the war according to opinion polls.

[Kate Green]

I think the hon. Gentleman has got two policies confused, which shows how on the ball he is. I am talking about the AME cap, not the £26,000 benefit cap—the AME cap that this Government are introducing and which is now, even before it is in place, going to be breached.

Government Members rightly pointed to trends in employment, and it is good to see more people in work, but too often they are working for poverty pay. I have to say to the right hon. Member for Basingstoke (Maria Miller) and others that Labour was never content to abandon people to a life on benefits. That is why we introduced the successful new deals that increased lone-parent employment by 15%. It is why we introduced the future jobs fund which, far from being a failure, was extremely good at getting young people into work and keeping them in work when the programme came to an end. We introduced tax credits that made work pay. Making work pay is not an invention of this Government; it was done under Labour first.

PIP is another tale of disaster—it was not piloted, there were misleading statements on Atos’s bids, and there were long delays in decisions. Like others, I have had constituents waiting for an assessment since last October—in one of those cases, my constituent had it only last week. There are huge backlogs already, which at the current rate of progress will take 42 years to clear. To put it another way, the Minister will need to increase the number of assessments from 7,000 a month to 73,000 a month immediately if he is to get the programme back on track, and this is also wasting taxpayer money. Each decision costs £1,500 for a benefit which for many is only worth £1,120. The NAO has said it does not represent value for money and the £3 billion savings are likely to be wiped out by the costs.

We know the bedroom tax is a disaster. Just 6% of those affected have moved. The Joseph Rowntree Foundation points out that savings are £115 million lower than they should be, and many households, including two thirds with a disabled family member, and more than 60,000 carers face hardship and fear.

Welfare Reform

Kwasi Kwarteng Excerpts

Tuesday 11th February 2014 Westminster Hall

[Charlie Elphicke]

Yes, I would. It is about fairness to hard-working people and their families. They pay their taxes and want to see those taxes used to help people escape poverty, rather than to enchain them within it. They want their taxes to fund doctors, teachers and nurses, rather than those on welfare. It is also about fairness to people on welfare and their having a greater sense of independence, rather than being locked into a cycle of dependence. I hope that the Northern Ireland Executive will think more carefully about the future, and fairness for working people and those not in work.

In the absence of any positive ideas from the Labour party, I hope the Government will consider new reforms like the one I am suggesting. It would promote the role of women in the workplace, increase simplicity and security, treat employed and self-employed alike, and ensure that maternity and parental leave is paid fairly and that the system is funded by the workplaces of the nation on a long-term sustainable basis.

[Kwasi Kwarteng (Spelthorne) (Con)]

rose—

[Jim Sheridan (in the Chair)]

Order. Mr Kwarteng, I notice that you have not registered to speak in today’s debate. Protocol suggests that, with the agreement of the hon. Gentleman who introduced the debate and the Minister, you can speak. Do you have permission?

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[Kwasi Kwarteng (Spelthorne) (Con)]

I am very grateful for being allowed to speak in the debate. I am also pleased to speak after my hon. Friend the Member for Dover (Charlie Elphicke), who is an innovative and creative thinker on these subjects. I want to say a few words on welfare reform, which is probably the single most important thing that the coalition Government are embarking upon, because the principal reason why the coalition came into being was to reduce the deficit. Everyone here knows that welfare spending, including pensions, is 28% of the entire budget. Surely it makes sense, if we are to reduce the deficit, to look at the biggest part of expenditure.

My hon. Friend is right when he says that there was a huge problem under the previous Government with welfare spending. Between 1997 and 2010, it rose by more than 60% in real terms. Even if pensions are excluded, the welfare bill went up by 55% in real terms. It is right for everyone in the House to realise that that is a real problem. I am grateful to my hon. Friend for bringing the matter up in such a timely fashion and for allowing others to contribute to this important debate. I do not have much time to speak, but I want to say that it is disappointing that so few Labour Members are present, given that they have said nothing constructive about welfare reform over the past four years. They have opposed all the coalition Government’s messages. [Interruption.] The hon. Member for Rhondda (Chris Bryant) looks at me quizzically, but it is true.

[Chris Bryant (Rhondda) (Lab)]

The convention for half-hour debates is that only two people—the Member who secured the debate and the Minister—speak. It is perfectly customary for there not to be anybody else, including the shadow Minister, present.

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[Kwasi Kwarteng]

I am grateful for the hon. Gentleman’s contribution, but it is extraordinary to say that Members cannot contribute to debates simply because of convention. This is an important matter and I wanted to put something on the record. That is all I have to say.

[Chris Bryant]

rose—

Housing Benefit

Kwasi Kwarteng Excerpts

Tuesday 12th November 2013 Commons Chamber

[Kwasi Kwarteng (Spelthorne) (Con)]

I apologise for not having sat through the whole debate; I was in the Gambling (Licensing and Advertising) Bill Committee. However, I have to say of those speeches that I have heard from the Labour Benches: I have heard it all before. Initially, Labour Members dubbed the measure the “bedroom tax”—

[Chris Ruane]

Initially? It still is.

[Kwasi Kwarteng]

They still persist in calling it that. We have to remember why the legislation was brought in, and the serious nature of the economic position in which we found ourselves. One of the great things that this Government have achieved is a measure of welfare reform. Labour Members vigorously opposed the housing benefit cap, but it has proved to be an incredibly popular and well-regarded policy. There were prophecies of ethnic cleansing in London and absolute devastation, but the policy has largely worked and welfare reform is on course.

It is a misrepresentation to talk about the spare room subsidy as a tax. It is not a tax, by any definition. There is also a serious problem of overcrowding. About 1.8 million people are living in overcrowded conditions, yet there are literally millions of spare rooms. What are we, as a country, going to do about that? Are we going to continue to subsidise people living in larger accommodation that they do not necessarily need, or are we going to try to achieve a fairer distribution of accommodation?

[Barbara Keeley]

The hon. Gentleman has mentioned millions of extra rooms and the benefit cap. To many disabled people and their carers, those are not spare rooms. They are needed by people who need to sleep apart, or who have hospital beds or medical equipment. Five thousand carers are being hit by the benefit cap, and a large number will also be hit by this measure. The hon. Gentleman needs to reflect on that fact, if he thinks the measure is working.

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[Kwasi Kwarteng]

If that were indeed true, why is there a discrepancy between privately rented accommodation and social housing in this context? I hope that the Opposition will enlighten me on this. The last Labour Government might have wrecked the economy, but they at least had some sense of responsibility—unlike the current Opposition. Why did that Labour Government believe that there was a perfectly good reason to equalise the treatment of the private and social sectors?

[Sheila Gilmore]

Will the hon. Gentleman give way?

[Kwasi Kwarteng]

I will not; I have only a short time in which to speak.

Labour Members talk about fairness, but is it fair that someone on a low income who is in privately rented accommodation should pay taxes in order to subsidise someone else’s spare room? Is it fair to raise taxation from low-paid workers to subsidise other people’s accommodation?

[Ian Mearns]

The hon. Gentleman has not recognised that people with disabilities often get priority when it comes to public housing. That is why there is a predominance of people with disabilities and greater levels of ill health in publicly provided housing.

[Kwasi Kwarteng]

It is an issue of principle—equality between socially provided housing and private sector rents. At the moment, there is a discrepancy that the Government—perfectly fairly and perfectly wisely—are trying to equalise.

It is, I think, very irresponsible of Labour to persist in peddling these half-truths about the nature of what the Government are trying to do, and many people in this country think so, too. It is apparent that this Government measure enjoys a wide body of support. It is exactly on this issue where the Labour party is on the wrong side of public opinion. On welfare, the public are consistently behind the coalition parties in the polls—and this debate shows why.

Labour Members who are sitting rather lemming-like in their places have absolutely no idea about fiscal responsibility and no idea about trying to reform a system that cannot be sustained. The notion that Labour would be tough on welfare has been shown to be untrue. It is not the case that Labour is tough on welfare. On the basis of the bits of the debate that I have had the pleasure—or, rather, misfortune—to listen to, I felt I was back in 1974. We have gone back to an early-70s, socialist-style model, in which there is no sense of responsibility, no sense of any fiscal constraints under which Governments have to operate and not even any sense of fairness when, as I mentioned, the taxes of people on lower income are being used to subsidise the spare room.

What is particularly frustrating for Government Members is to have to listen to the same old debates, the same old primary-school name calling of “the bedroom tax” and all the rest of it, which are completely lacking any grounding in reality. We have said that we want fairness. Councils are able to use discretionary payments, and we hear anecdotally that councils are refraining from using them. These are the anecdotes that we hear. It is now time for the Labour party to wise up and get realistic about the nature of the challenges we face and the overcrowded nature of much of this country’s social housing.

Disabled People

Kwasi Kwarteng Excerpts

Wednesday 10th July 2013 Commons Chamber

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

I have great respect for the hon. Member for Blackpool North and Cleveleys (Paul Maynard), and although I do not agree with everything he said, like my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex), he brought some reality to a debate that so far—I am referring to contributions from the Government Benches—does not seem to relate to the world in which I live, the people I meet, or the families I represent.

The Minister read out what seemed to be a civil service briefing, but disabled people watching that are too accustomed to being asked to fill in large forms and all sorts of bureaucracy to be impressed by such an approach. We did not hear from Government Members of organisations such as Save the Children, Mencap, Radar, Enable and so on, which have proof of the cuts the Government are making, and particularly the disproportionate impact of those cuts on disabled people.

Let us return—it is right to do so, Madam Deputy Speaker—to the bedroom tax. The Minister of State, Department for Work and Pensions, the hon. Member for Fareham (Mr Hoban), who has now left the Chamber, basically defended what the Government are proposing, as did the Prime Minister right from the beginning. The Minister did not say, however, that the Government have since done two U-turns.

[Kwasi Kwarteng (Spelthorne) (Con)]

What is the policy of the Labour Front Benchers? Their position regarding the bedroom tax seems to be all over the place. We have heard that the Leader of the Opposition has said that Labour would not repeal it, yet in this debate the Labour Front Benchers have suggested that they would.

[Mr Clarke]

There was a time when I was on the Front Bench and I might have been happy to respond to that point. I am satisfied that the Labour party will present to the British people at the election a manifesto that they will endorse. I will fight and fight again, whatever Government are in power, to ensure that this monstrosity of legislation does not remain on the statute book.

Let us examine what the bedroom tax means to ordinary people in our constituencies. As my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) said, two thirds of those affected by the bedroom tax have a disability. That is absolutely outrageous. How can the Government have seriously considered putting in place such a proposal? According to an estimate by the National Housing Federation, 2,128 households will be affected in my constituency, and according to the Government’s own estimates 1,419 of them—along with 83,000 in Scotland and more than 400,000 throughout the country—are occupied by someone with a disability.

The Government claim that they are putting the housing market in a more appealing position. However, when we look at statistics—indeed, before we even do so—we know that there are simply not enough houses with the right facilities to which to remove disabled people if they have an extra bedroom. I have thought during the debate about several disabled people in my constituency and others I have met throughout the country. Two or three years ago, a young woman in my constituency was dying of variant CJD. She needed her bedroom, and she also needed another bedroom to accommodate the equipment that she desperately needed, including her supply of oxygen. How can we allow the Government to remove disabled people to smaller houses, when we know that those houses are simply not there?

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[Kwasi Kwarteng (Spelthorne) (Con)]

I am grateful to be called in this debate.

I can assure the House that the Whips have not told me anything about what to say; they have not given me any guidance. What I am going to say comes from my experience as a constituency MP of having to deal with a number of cases that relate to Government policy.

On the so-called bedroom tax—the spare room subsidy—the Government are doing absolutely the right thing. If we consider that about a third of social housing tenants have spare rooms, and that about 1.8 million households remain on the social housing waiting list, we see that there is an imbalance. I saw this last year in a constituency surgery—a 58-year-old lady lived in a house with four bedrooms. She objected, as was her right, to the bedroom subsidy, yet at the same time—I am not divulging any confidences—her daughter and her daughter’s partner and their baby were living in a bedsit in the borough in my constituency. Clearly, there was a mis-match. It did not make sense for the lady to be living in a four-bedroom house at the taxpayers’ expense, while her daughter and granddaughter were living in a bedsit.

[Fiona O'Donnell]

I remind the hon. Gentleman that we are talking about disabled people. Approximately one in four disabled people in Scotland in social housing will be liable to pay the bedroom tax, but need that spare room as a direct result of their disability. Does he think that is fair?

[Kwasi Kwarteng]

I was mindful that we were talking about disability, but I wanted, at the beginning of my speech, to say that the Government were doing the right thing with the spare room subsidy.

When the disability living allowance was introduced in 1992, the number of recipients was one third of what it is today; the number of people has tripled in 20 years. That does not reflect the changing work environment in Great Britain.

[Mrs Anne McGuire (Stirling) (Lab)]

Does the hon. Gentleman appreciate that since 1992 the lives of disabled people have been transformed? In 1992, the expectation was that most disabled people would live in residential care as they got older, but now people are living in the community. Furthermore, the working-age increase has not been as dramatic as Ministers would like us to believe.

[Kwasi Kwarteng]

I accept that society has changed since 1992, but there has been a marked increase in costs. We cannot pretend, like Labour, that there is not an issue. As the shadow Secretary of State said, we need to have reform; the problem is that too many Opposition Members do not understand what that reform entails. To me, reform means directing funds to the people who are most vulnerable and who most need it.

[Nigel Adams (Selby and Ainsty) (Con)]

Has my hon. Friend had an opportunity to look at the projected figures and assess what is likely to be spent under the new system in 2015-16 compared with the amount spent in 2009-10?

[Kwasi Kwarteng]

I am happy to have taken that intervention. The projected figure of £13 billion is more in real terms than the figure in 2009-10 provided by the previous Government. That means not just more money, as my hon. Friend suggests, but more money directed at the people who need it the most. We are trying to reform the system, and we will succeed in doing so. We are taking an adult and mature view of the public finances and trying to direct scarce resources to people who most need them.

It is all very well for Opposition Members to howl, holler and cry about cuts—that is what one expects them to do; they are doing their job—but Government Members have to take a mature and responsible approach to the public finances and introduce meaningful reform that we can afford and which can best help the most vulnerable.

[Barbara Keeley]

Will the hon. Gentleman explain the economics of the situation to the 10,000 carers who expect to lose their carer’s allowance and who have probably already given up work to care? If they stop caring, there will be no saving in moving from DLA to PIPs and in all those people losing their DLA, because if their carers stop caring for them, they will end up in much more expensive state care homes.

[Kwasi Kwarteng]

I am happy to have taken that intervention, but I must say that Opposition Members have totally ignored this issue of reform. We cannot continue on the basis that nothing has happened, that there are limitless resources and that we can simply give more money to more people; that is completely unacceptable. It is clear from any engagement with the electorate or any look at the polls or surveys of public opinion that the public have had enough. That is one of the problems with Labour’s political strategy. On welfare reform, it is completely incredible.

[Fiona O'Donnell]

The hon. Gentleman is confusing me slightly. Is it his understanding that the change from DLA to PIP will result in any savings to the Government, or does he think it will keep the budget at the same level?

[Kwasi Kwarteng]

I fear that that will be the last intervention that I take. In the first instance, it is not about trying to cut how much money people get; its purpose is to direct the funds, recognising the expenditure constraints. The Opposition, in their robotic insistence on very simple, clear messages that are completely false and not based on any sense of reality, have forgotten about that. Considering that the DLA budget has gone up £10 billion in real terms—that is more than the Home Office budget or what we receive from capital gains tax and inheritance tax—it is vital that we are more sensible and intelligent in how we apply those funds.

It is perfectly clear to me that the PIP reform will be much more intelligently applied than the DLA, the costs of which spiralled, as I have suggested. We had a self-regulatory system, whereby people could essentially say that they were eligible for the benefit.

[Sheila Gilmore]

rose—

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[Kwasi Kwarteng]

I am not taking any more interventions. I have been perfectly generous enough and time is short.

I am afraid this is not something that Labour Members are taking seriously. They are not taking reform seriously and are wilfully in denial about the scale of the fiscal mess that they made. It is disappointing that any constructive attempt by those of us on the Conservative Benches to reform our welfare system and introduce a measure of added fairness and greater efficiency—in terms of targeting people who need the money—is met by the same old stale cries and hollering from the Opposition. This is not a constructive debate. My hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) suggested, in a powerful and compelling speech, that the whole tone of the debate was demeaning to people who are vulnerable. The language is very much that of people who are victims and of trying to apply more money or thinking that money is the solution to everything, but there is a much wider range of criteria against which the issue can be discussed.

Lastly, I want to say something about the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), who represents Labour on this issue. He was the man who wrote that there was no money. It is important that the House is reminded of that. That is the general context in which this debate has to take place. A Government who are trying to reform are doing the right thing.

--- Later in debate ---

[Fiona O’Donnell]

As ever, my hon. Friend makes a valuable contribution to the debate.

I freely admit that I want this Government gone; that is my agenda. It is not a narrow political agenda that has brought all those organisations and disabled people to the House today to make their views heard. They are saying that, as the Government press on with the changes, they need the relevant information. Councils, medical services, social workers and disability organisations also need that information so that they can respond and support people adequately through this process.

[Kwasi Kwarteng]

rose—

[Fiona O’Donnell]

I will give way for the last time. I apologise to the hon. Member for Strangford (Jim Shannon) that I shall not have time to give way to him.

[Kwasi Kwarteng]

The hon. Lady has talked about the Government’s position but, for the benefit of the House, will she clarify the position of the Opposition, particularly on the bedroom tax?

[Fiona O’Donnell]

Our position on that has been stated time and again. If we were in government today, we would axe the bedroom tax. Of course our manifesto has not been written at this time, but I can tell the hon. Gentleman and the people who have e-mailed me that I will be pressing the Labour party to make a commitment to axe the bedroom tax. I want to see such a commitment in our manifesto, because it is a grossly unfair tax on people who are often very vulnerable.

Welfare Benefits Up-rating Bill

Kwasi Kwarteng Excerpts

Monday 21st January 2013 Commons Chamber

[Andrew George]

Amendment 10 stands in my name and in those of my right hon. Friend the Member for Ross, Skye and Lochaber (Mr Kennedy) and my hon. Friends the Members for Argyll and Bute (Mr Reid), for Manchester, Withington (Mr Leech), for North Cornwall (Dan Rogerson) and for Ceredigion (Mr Williams). Its purpose is to address the oft-repeated key concern of the Secretary of State and the Government—it has been repeated today by the hon. Member for Gloucester (Richard Graham) and others—that in certain circumstances and, admittedly, over selected periods, benefits have risen at a rate higher than wages, and that in straitened times such as these, a principle should be established whereby that should not happen and that average wages should be the marker against which future benefit rises are set.

A further weakness in the Government’s proposals, to repeat an earlier intervention of mine on the right hon. Member for Wokingham (Mr Redwood), relates to their intention to enshrine in future policy the blunt and inflexible instrument of a 1% rise beyond the next general election—up until 2016—and whether we can foretell with confidence what is likely to happen during that time.

[Kwasi Kwarteng (Spelthorne) (Con)]

Is it not the case that the 1% uprating is for two years? It is not designed to be extended after the next election.

[Andrew George]

The hon. Gentleman is right that it is for two years—it is from 2014 to 2016, which is beyond the next general election.

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[Andrew George]

There has been a lot of selective quotation of statistics, with selective beginnings and ends of the time period within which those comparators are applied. I understood that the purpose of the Bill was as the Secretary of State articulated it when he introduced it—to ensure that benefits would never rise faster than average wages. Our amendment would deal with that.

[Kwasi Kwarteng]

My hon. Friend has suggested that people are referring to arbitrary time frames, but they are not. By looking at the past five years we can determine when the financial crisis began, so that is an entirely natural time frame to examine.

[Andrew George]

One can look at it in a variety of ways. If we examined a much wider time period, say the past 20 or 30 years, we would certainly not come to the conclusion that benefits have risen significantly faster than wages, because that is clearly not the case.

[Kwasi Kwarteng]

Will my hon. Friend acknowledge that the fiscal problem that the Government face began as a result of the financial crisis? It is therefore entirely logical to consider the matter over the period between the financial crisis beginning in 2008 and the present day.

[Andrew George]

But when does the crisis end? The figures produced by the Office for Budget Responsibility estimate that in three years’ time, wages will exceed CPI. One has to examine the matter over a much longer period. The Conservatives paid for some posters a couple of weeks ago to make the point that it was unacceptable for benefits to rise faster than wages, and the amendment would deal with that issue.

I said earlier that one big weakness of the Government’s proposal, and the reason why I opposed it, was the inflexibility of the 1% uprating. It takes no account of what may happen to food prices, for example, by 2015-16. It is all very well having a Bill that takes a clairvoyant view that a 1% increase will not press large numbers of working families, as well as out-of-work families, into severe and extreme hardship. However, we have experienced this year in the UK the impact of significant volatility in our climate. There has been significant climate change, which is having an impact on the food baskets of the world, including those in many developing countries and here. We therefore need to ask ourselves whether we can confidently say that there will not be food price spikes such as we saw only a few years ago. I suggest that we may see such spikes again. There is also tremendous concern about the potential volatility of energy prices. The 1% uprating figure is inflexible and somewhat arbitrary, and we cannot say with confidence that we will not need to introduce further primary legislation to revise that figure in 2016.

We must also consider the impact of the 1% uprating on housing. In their emergency Budget, the Government proposed to cut housing benefit from the 50th percentile of rents to the 30th percentile. Whether or not we like the fact that only 30% of the private rental market might be available to people in receipt of housing benefit, rather than half of it, it is essential that the rate is linked to the variation in private sector rents. The 1% uprating will break the link with what is available in the market and instead peg housing benefit back. In my area, and I know in many others, the Government’s attempt to peg it back by cutting the rate to the 30th per- centile of rents has failed to constrain private sector rents, so it has not had the desired impact. Maybe it has in some areas, but certainly not in mine or many others.

The measures that the Government have brought forward in the Bill have been ill thought through, and I fear that we will have to reconsider the figure set out in it next year or the year after. On that basis, we will listen to what the Minister says in response to the debate before we have the opportunity to divide the Committee on the amendment.

[Toby Perkins]

It is a great pleasure to follow the thoughtful and useful contribution of the hon. Member for St Ives (Andrew George) and the contributions of other hon. Members.

One thing that has come across in the speeches of Members on both sides of the Chamber is the economic illiteracy of the Government’s policy as part of a strategy for reducing the deficit. As other Members have said, one of the great things about welfare payments is that when people are living on the bread line, the money that they receive is spent in the local economy, often within their own community or on their own estate. They spend it at their local convenience store. They tend to spend it the minute they get it, rather than put it in trust funds, because they are attempting to sustain their life on the bread line.

When money is taken from the poorest in our society and at the same time given to the very wealthiest in our society, as was mentioned earlier, we are taking money away from people who will spend it in the real economy and giving it to people who are much more likely to take it out of the real economy and not spend it. It makes no economic sense, even on the basis that the Government are introducing this measure to reduce the deficit.

[Kwasi Kwarteng]

I still have not heard what exactly the Opposition would propose to reduce the deficit. Surely the hon. Gentleman will admit that there must be some reduction in public spending.

--- Later in debate ---

[Toby Perkins]

It is almost as though the last two minutes of my speech did not exist. I had answered the hon. Gentleman’s point before he made it and I have no idea why he felt the need to intervene when I had specifically dealt with that issue—[Interruption.] I have already dealt with that point. We just cannot compare what 1% means to someone on £70 a week with what it means to a doctor. People on poverty money and in severe poverty have not got lots of options as to what they can cut back. They cannot decide, “Well, I’m only going to have one holiday this year”, as those whose jobs are more lucrative might be able to do. Interruption.] I have reflected on that point and I think I have answered it at some length.

There is a particular irony in the Chancellor, who was a millionaire the day he was born, railing against the extravagance of those on £71 a week. The debate needs to be put in proper context.

[Kwasi Kwarteng]

Will the hon. Gentleman give way?

[Toby Perkins]

I will take further interventions, but I would like to crack on a bit now.

The 1% increase comes on top of a raft of difficult choices on benefits, including housing benefit cuts, tax credits cuts and council tax benefit cuts, at a time when there is increasing poverty, including severe poverty and child poverty. Specifically, there is an increase in poverty among those in work. That is the context in which this debate is held, and the reason why the Labour party has taken the stance it has. No one should be in any doubt that, in taking that stance, the Labour party recognises that there is tremendous contention about benefits, and that many feel just like the hon. Member for Gloucester (Richard Graham) and his constituent. I recognise that many people in many communities feel that way, and therefore how difficult it was for my right hon. Friend the Member for East Ham (Stephen Timms) to take that principled stance.

--- Later in debate ---

[Toby Perkins]

One point I have laboured is that hon. Members cannot compare in percentage terms the difference the Bill will make for someone on £70 a week and someone on £35,000 a year. The hon. Gentleman seems to be attempting to make such a comparison, but as my right hon. Friend the Member for Birkenhead (Mr Field) related previously—

[Kwasi Kwarteng]

Will the hon. Gentleman give way?

[Toby Perkins]

I will answer the ill-advised point made by the hon. Member for Dover (Charlie Elphicke) before I take another intervention.

As my right hon. Friend the Member for Birkenhead has said, in cash terms—we should bear in mind that we buy food and clothing for our children with cash— people on benefits have had an increase of £12 a week; at the same time, working people have had an increase of £49 a week. It is impossible to make the comparison in simple percentage terms. That is one of the central points of my speech, but I have dwelt on it rather too much. I keep returning to it because hon. Members who intervene seem not to hear it.

--- Later in debate ---

[Mr Bain]

That is absolutely right. We also had lower levels of long-term unemployment than we have now. As I and other Members have pointed out, high levels of long-term unemployment decrease the earnings potential of the people afflicted by that social evil.

Only today, the Joseph Rowntree Foundation published a survey of poverty in Scotland which revealed that a baby boy born in the richest 10% of Scottish neighbourhoods has a life expectancy 14 years higher than that of a baby boy born in the poorest 10% of such neighbourhoods. Having a 4% real-terms cut in unemployment and other out-of-work benefits of the sort contained in clause 1 is going to make those figures in Scotland even worse. I urge the Government to think again, to accept amendment 12 and to reduce the terrible social damage that will be caused if this measure becomes law.

I hope that, at this eleventh hour, the Government will decide to make policy on the basis of evidence, rather than reintroduce some Victorian distinction between the deserving and the undeserving poor. I urge them to think again about the impact that clause 1 will have, ensuring that 90% of those in out-of-work benefits will, according to the Institute for Fiscal Studies, be an average of £215 a year worse off. They should consider the effect that will have not just on high streets in our towns, villages and cities but on the local shop. They should think about the amount of economic demand that will be taken out of local communities, the jobs that will go as a result of the passing of this measure in this form tonight.

The Government ignore the inconvenient truth that out-of-work benefits constitute just 3% of the welfare budget, and that outside of pensions, most welfare spending ensures that work pays for many of our citizens. Nearly three in 10 of my constituents earn less than the living wage of £7.45 an hour. Although introducing a living wage in those parts of the economy where it will work would save money in lower tax credit costs, we, like many other countries, need a strong tax credit system to reduce imbalances within the labour market that would otherwise cause unacceptable levels of inequality. The simple truth is that most poverty in Britain today is among the working poor. It is mainly the working poor who are losing out as a result of these measures. They will be the biggest victims if this iniquitous Bill were to become law, with a real-terms 4% cut in their living standards.

In Scotland, as a result of these measures, some 261,000 working families, nearly one in five, would lose an average of £259 a year by 2015—the antithesis of work paying for those 261,000. About 70% of the tax credit cuts will affect working families in Scotland. The median wage in my constituency is less than £17,600 a year, and many thousands of people will be savagely hurt by clause 1, as Citizens Advice outlined in its submission. A couple on just £13,000 with two children will lose nearly 5% of their income as a result of this Bill, completely overwhelming any benefit from increasing personal tax allowances, which is worth just 13p a week to them.

This debate is not just about the measure before us; it is a debate about the values of this Government and the priorities of our society. This Bill impoverishes the poor, without reducing the deficit; it makes inequality worse, adding 200,000 to the child poverty figures, leaving 1 million more children in poverty by 2020. This clause is a provision that will cause enormous hardship to some of the poorest people in society, and it will devastate economic demand in constituencies such as mine. I urge the Committee to endorse amendment 12 and to vote against clause 1.

[Kwasi Kwarteng]

I am grateful to be called to contribute to this Committee debate. Many of tonight’s speeches have made me feel that I live in a different world from the one in which my constituents and a large number of people in this country live. I propose to Labour Members that the world in which they live is one far removed from reality.

When this Government came to office in 2010, the coalition confronted the worst peacetime deficit in Britain’s history. That fact cannot be repeated often enough. This is the architecture and the framework through which every single decision has been made since the formation of that Government. It is particularly nauseating to see Labour Members berate the Government for trying to make very tough choices and trying to make savings when they were the architects responsible for the chronic and devastating mismanagement of our public finances; and it is particularly nauseating to see those Members berate and accuse the Government of being purely political in respect of this very difficult measure.

--- Later in debate ---

[Sheila Gilmore]

Does the hon. Gentleman not appreciate the reason why this particular Bill and its measures have been called political? It was clear in the autumn statement that the Chancellor intended these measures to be some sort of political trap. In making choices, any Government would not be looking only at the contents of this Bill. I would be happy to talk about a much wider range of choices, so why can we not have a wider Bill?

[Kwasi Kwarteng]

In my opening remarks, I made a wider point about the eurozone. This is exactly what goes to the heart of the issue. What those countries have done to deal with their fiscal crisis—I am not saying we should follow it, but we have to remember that their deficits are better than ours at the moment—is to make swingeing cuts to public spending in the form of benefits. We have not done that. We have spared our people that measure of severity, but we have to recognise that a large portion of spending goes in this direction and that the savings we are making are in the region of £3.7 billion a year.

Our coalition colleagues, the Liberal Democrats have said that the time frame is arbitrary. Some people have talked about 1912—more than 100 years ago—and some have talked about the last 30 years. I am not interested in the last 30 years. I am interested in what has happened since the financial crisis. I am interested in what has happened since Labour got us into the mess we are in. I accept that it is an international mess and that there is a world crisis, but the fact remains that, at £170 billion, this was a much larger deficit than that of any of our competitor or partner countries in the OECD. In that context, something had to give. We had to make some very tough choices about spending.

Let me consider some of the provisions. There is clearly a measure of disagreement over how we should approach this aspect of welfare spending. I have yet to hear from Opposition Members by how much they think benefits should rise. We have heard one suggestion, although admittedly it came from the only member of the Green party in the House. The hon. Member for Brighton, Pavilion (Caroline Lucas) seemed to be saying that she would have raised the rate in line with the retail prices index. When asked how much that would cost, she blithely replied “£7.4 billion”—I am sorry, it was £7.6 billion—as if that were a snip. It is to her credit that she at least had the honesty to spell out what are, in my view, the disastrous fiscal implications of her policy. Labour members have given no such undertakings. They have made no such statements about what their policies would actually cost. They have simply wailed and moaned about the harshness of the Government, without in any way recognising the severity of the crisis that we face.

[Charlie Elphicke]

Does my hon. Friend agree that it is a question not just of welfare policies, but of employment or, in the case of the Labour party, unemployment policies? In my constituency youth unemployment rose by 52% under the last Labour Government, and rose by 36% in the constituency of the hon. Member for Glasgow North East (Mr Bain). Under the present Government, it has fallen by 11% in Glasgow North East. Does that not show that our war on unemployment is beginning to work, and the economy is beginning to heal?

[Kwasi Kwarteng]

I could not have put it better myself. My hon. Friend has made an important point about employment, which touches on a wider point about the division between Government and Opposition. The Labour attempt to create a socialist state by means of Government spending led to absolute disaster, as it always does. We will not be able to create jobs simply by expanding the public sector ad infinitum; logic tells us that that is not going to work.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

I am pleased to note that my hon. Friend ascribes efficiency and a real plan to the Labour Government, but that great plan of theirs to create a socialist state ended in the payment of tax credits to people earning more than £70,000 a year. Who were they helping in that regard?

[Kwasi Kwarteng]

This is anecdotal evidence, but I was reliably informed that a couple of Liberal Democrat Members of Parliament were claiming tax credits on the basis that they were entitled to them. That is the sort of barmy universe that was constructed under the last Administration, and it is something that we have had to redress. When we consider matters such as those that we are considering today, we must always bear in mind that, given a budget deficit of £170 billion—more than 12% of GDP—it is very difficult to curb public spending sufficiently to enable the country to pay its way on a sustainable basis.

[Christopher Pincher]

I am obliged to my hon. Friend for reminding the House that it is the historic mission of the Conservative party to clear up the mess left behind by successive Labour Governments. Does he agree that it is unfair for people earning more than £70,000 a year to be paid tax credits, but very fair that people earning just £10,000 a year—who paid £1,160 in tax and national insurance in 2010—will now pay only £670, and even fairer that next year they will pay only £360? Is that not an example of Conservative fairness?

[Kwasi Kwarteng]

It is not only fair, but common sense. The Labour cash merry-go-round, when Labour was taxing people with very low earnings and then handing back the money in the form of benefits, did not provide a sustainable model. The measures that we have introduced have been far more effective in reducing—[Interruption.] I wish I could share the joke, but I have more important matters with which to deal.

[Helen Goodman]

The hon. Gentleman can share the joke. I was just wondering whether he was going to tell the House that the banking collapse had been caused by working tax credit.

[Kwasi Kwarteng]

I have my own ideas about the banking collapse, which I am happy to share with the hon. Lady—although not, perhaps, tonight.

The financial crisis, which we all remember, devastated everyone. Even today, the United Kingdom economy is 3% smaller than it was in 2008. I cannot speak for everyone in the country, but the vast majority of people are much less well-off than they were in those days. What has happened to benefits since then? According to the figures that we have heard, they have increased by 20% while the earnings of people in work have risen by 10%. That is not fair.

Labour Members have talked of fairness. For instance, the hon. Member for Chesterfield argued eloquently that 1% on £70 a week was very different from 1% on £35,000 a year. However, it is not the people on £35,000 a year about whom we are worried; it is the people on very low incomes. People in my constituency who do night shifts at Heathrow come to me and ask “Why did out-of-work benefits rise by 5% last year? I earn £11,000 a year if I am lucky and work 20 hours a week, but I was not given such a big increase.” That is the sort of fairness that we are talking about. This is a really important issue, which Opposition Members have not addressed in any way.

[Martin Horwood]

Is not the answer to the hon. Gentleman’s question—which applies to people on low incomes in my constituency as much as to those in his—that those who have worked hard and have low incomes, but have paid their taxes and done the right thing, can still lose their jobs through no fault of their own and find themselves trying to subsist on 70 quid a week, and that we do not want to make things more difficult for those people? I think that very few of them are scroungers, and most want to get back to work as fast as possible.

[Kwasi Kwarteng]

I accept what the hon. Gentleman says, but I am talking about the position in general. It cannot be right, arithmetically, for benefits to rise, year after year, faster than the wages of the low-paid people to whom he has referred. However, we must look at the overall picture. The 1% increase is not very much. I know that some Government Members proposed a cash freeze, and I am glad to note that the Government have not adopted that severe option; but in the context of the European and the global financial crisis, a cash freeze is not completely off the table. We have seen other countries take extremely tough measures. Why have they done that? They have not done it because they want to limit demand, as the hon. Member for Glasgow North East suggested. They have not done it because they want to hurt people on low incomes. They have done it because they feel that the fiscal future—the future of the state: the future of their countries—requires a tough approach to public spending.

[Mr Bain]

Would the hon. Gentleman care to comment on the fact that the International Monetary Fund has called for the free and unimpeded operation of the automatic fiscal stabilisers, including unemployment benefits, when people, sadly, lose their jobs? Does he agree with Jonathan Portes, who used to work for the Government and now works for the National Institute of Economic and Social Research, and who says that the Bill makes little or no sense macro-economically? Is Jonathan Portes not right?

[Kwasi Kwarteng]

Jonathan Portes is not right. I do not think that anything he has ever written—I read his blog—makes any sense whatsoever, and I am happy for Hansard to record that. On the point about the automatic stabilisers, I refer the hon. Gentleman to the answer that my right hon. Friend the Member for Wokingham (Mr Redwood) gave him. The automatic stabilisers are working; in cash terms, a lot of our spending in these elements is higher than it was. That is a clear sign that the automatic stabilisers are working.

--- Later in debate ---

[Andrew Bridgen]

Does my hon. Friend agree with my argument that what we have heard in this evening’s debate confirms that the parts of the country with the highest levels of unemployment often also have the lowest average wages and so it is important, if we want to make work pay—I believe all right hon. and hon. Members in the Chamber would agree that work must always pay—that we keep that disparity in respect of work and keep the incentive for people to get into jobs?

[Kwasi Kwarteng]

That is absolutely right.

I shall try to keep my closing remarks brief. The 1% rise in the uprating is surely a temporary measure; I would not want to see this in perpetuity. My right hon. Friend the Member for Wokingham talked about the need to combat inflation. Clearly if inflation is sustained at 3% or 4% over years, that would be very punitive and would make the proposed measures even more difficult for people to bear. So the Government need to keep a firm handle and an eagle eye on the inflation rate. I am absolutely in favour of that, but on the general approach I would not want to see any amendments to this Bill. It is a difficult proposal that we are trying to push through, but many people up and down the country are supporting the Government on it because they feel that the measures we are introducing are encouraging people to get out to work. People also realise—I will close where I started my speech—the appalling fiscal legacy given to us, the incredibly difficult financial circumstances in which the Government found themselves, and the tough and courageous measures we are taking to get us out of the mess.

[Mr Frank Field (Birkenhead) (Lab)]

I rise to support the amendment because it is very clear: it seeks to tear the heart out of this Bill, and it should tear the heart out of the Bill, because it is a terrible Bill. By taking this stance, I am not saying that we should not, with all urgency, think about welfare reform, because that is a mega task which will face a succession of Governments. I am not saying that we do not recognise that there is a real problem in this country with incentives to work, because there is. I am not saying that there are not all sorts of other issues that we need to deal with and consider in relation to this measure. We have to consider what this measure is actually about.

I agree totally with the Government Members who said how serious the fiscal deficit is. I do not doubt that when Labour breaks the trend and has to clear up a mess—we have been hearing this afternoon about Tories clearing up our mess—we might well have to look at the size of the welfare bill. However, I do not believe that any Labour Government would get cuts through without presenting them in a context in which the cuts were thought to be fair. That goes to the heart of the current Government’s strategy. Despite the rhetoric in which they have tried to clothe themselves in respect of the changes they have been making, the country will have to make a judgment in the election on whether the Government have fulfilled the assurance they gave at the beginning of this journey that who had most would pay most and those who had least would be protected. It is no accident that we link the amendments being debated tonight with the tax cuts in the Budget for those who have most.

We will not have to face this issue tonight because, sadly, we know how the vote is likely to go, despite the presence of some brave Liberals—I hope that my saying that encourages even more to vote, knowing that it is safe to register their protest. In the end, it is those outside this House who will judge whether this measure is fair. Is it fair that, at time when we can find moneys to make tax cuts for the very richest, we cut living standards for the very poorest?

[Kwasi Kwarteng]

Will the right hon. Gentleman give way?

[Mr Field]

No, I am going to make a short speech. I am grateful for the hon. Gentleman’s interest and the way he is following my speech, but I do not want to extend it.

The country will make a judgment about how fair the collection of measures is. I think the Government must be extremely confident, given that we are seeing a record number of people who are hungry and are turning up at food banks operating in our constituencies. Thank God for food banks. I do not hold the view that food banks are terrible; it is great that we have them, because people are hungry. I think it is terrible that we live in society where people are hungry. That is where we should direct the anger; it should not be aimed at the people providing the food banks. We are thinking about cutting benefits at a time when we also know that people who probably have greater abilities than I do in managing on a low income—thank God, I have never had to do so—find that they fail. The Bill will crush some decent people, who find it impossible to live on the levels of income that we lay down.

That we should do this at a time when we can find the money for the richest to take more passes all my understanding. Perhaps the Opposition will lose the vote tonight, but I am not so sure that, on this argument, an indelible mark will not now be made against the coalition Government, who found money to cut taxes for the very rich while making life more and more difficult for the poor, some of whom do not have enough to eat. Should more people join that terrible queue of our fellow citizens? Lots of other arguments have been marvellously put, but for me it comes down, as I guess it will for the electorate, to whether this is fair. I think that they will say no.

Welfare Benefits Up-rating Bill

Kwasi Kwarteng Excerpts

Tuesday 8th January 2013 Commons Chamber

[David Miliband]

Just a minute.

The measures before us raise £3.7 billion from poor and lower-middle-income people in 2015-16. The Chancellor cut tax relief for pension contributions by wealthier people, but by how much? It was by £200 million in 2013-14 and £600 million in 2015-16. The cumulative saving from the richest between now and 2015-16 is £1.1 billion; the cumulative saving from those on lower-middle incomes on benefits and tax credits is £5.6 billion. Taking five times as much from poor and middle-income Britain as from the richest in Britain—

[Kwasi Kwarteng (Spelthorne) (Con)]

rose—

[David Miliband]

I will come to the hon. Gentleman in a minute.

Taking five times as much from lower and middle-income Britain as from the richest in Britain is not equality of sacrifice. The Chancellor reminds me of the man at the top of a ladder in a 1929 election poster. The man at the bottom of the ladder has got water up to his neck, and the man at the top shouts, “Equality of sacrifice—let’s all go down one rung!” It is not equality of sacrifice when you are up to your neck in water.

[Kwasi Kwarteng]

rose—

[David Miliband]

I will come to the hon. Gentleman in a moment.

The Government have made a great deal of the point that no one should receive more on benefits than the average wage of £26,000 a year, but they offer tax relief of £40,000 for those with £40,000 spare. Just to be clear, that tax relief costs £33 billion a year, while we are talking about a total bill of £42 billion for out-of-work benefits. If tax relief on pension contributions were limited to £26,000 a year, we would not need this Bill. That is the point about priorities and choices that need to be made.

[Kwasi Kwarteng]

The right hon. Gentleman gives a very powerful speech in which he mentions lots of facts and statistics, but there is a very fundamental question that he has not answered. Is it right that people on out-of-work benefits should be receiving faster and greater increases in their income than people on very low wages? Is that fair?

[David Miliband]

Forty thousand soldiers are not on out-of-work benefits but they are being hit by this Bill. Eighty per cent. of the savings—

[Kwasi Kwarteng]

Answer the question.

[David Miliband]

I will address it directly; I am very happy to do so. If a couple on £5,500 a year or someone on £3,700 a year gets a 1% increase, that is different from someone who is on £15,000, £20,000, £25,000, £30,000 or £35,000 getting the same increase, because although the people on £15,000, £25,000 or £30,000 are making tough choices, those on £5,000 or £3,700 are making a choice between feeding their kids and heating their home.

Amendment of the Law

Kwasi Kwarteng Excerpts

Tuesday 29th March 2011 Commons Chamber

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I know that the Secretary of State learned some time ago that attack is the best form of defence, but I expected him to do a better job of defending the Budget that we heard last week. The Budget debate started with no acknowledgement that growth was coming down—and the same is true of its conclusion. The right hon. Gentleman refused to admit that this so-called Budget for growth has knocked 0.5% off the rate of growth this year and next, put unemployment up by 200,000, and is putting the benefits bill up through the roof—and he seems to think that we are the ones in denial.

A fortnight ago, the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling), who has responsibility for work, was rolled through the television studios and asked to give his progress report on how well the Chancellor had done in his first year. He was asked to report on how good a job the Chancellor was doing of getting the country back to work. Fifteen months after the end of the recession, the House could be forgiven for expecting unemployment to be falling rather than rising. However, at the very point when unemployment should be falling, the Minister was forced to report that it was actually rising. He decided to choose his words very carefully. He said that the jobs market was “stabilising”.

Last week it was left to the Chancellor to tell us that the jobs market was doing nothing of the sort. He did not dare spell it out, but in the fine print of the Budget we learned the truth: this is not even the beginning of the end. His first year has gone so well that unemployment, which should be falling, is set to rise until the summer. In fact, it is not expected to fall below 2.5 million until way through next year. Now we face the prospect that unemployment is not going to fall below 2 million for the rest of this Parliament.

[Kwasi Kwarteng (Spelthorne) (Con)]

Will the right hon. Gentleman give way?

[Mr Byrne]

Perhaps the hon. Gentleman can tell us what he thinks of that.

[Kwasi Kwarteng]

Will the right hon. Gentleman remind the House which member of the previous Cabinet wrote a note saying, “There’s no money”?

[Mr Byrne]

I would rather have written a bad joke in public than a bad Budget in public.

Now we know—and now the Secretary of State has been forced to admit—that unemployment is not going to fall below 2 million. He will remember, just as we remember, the last time that happened. For those with long memories, what has happened is all too familiar. The last time the Tory party was in office, it took a couple of years to get unemployment above 2 million, but after that it did not fall below 2 million for 18 years, until the Labour party was elected in 1997. Now the Government have decided that that record of the 1980s is worth a rerun, or something of a repeat, because there is one thing that has not changed: the Conservative party still believes that unemployment is a price worth paying.

--- Later in debate ---

[Stephen Barclay]

The hon. Gentleman mentioned productivity, but I urge him to read what the independent National Audit Office says about the health service. Spending doubled, so of course waiting lists went down—we would expect that—but the NAO found that health productivity fell dramatically. The spending fell to many of the best-paid staff such as consultants, so productivity did not match funding.

On procurement waste, the NAO says that Firebuy, an arm’s length body set up by Labour, cost twice as much to set up and run as the savings that it made. On NHS procurement, the NAO found that

“NHS…trusts pay widely varying prices for the same items.”

One NHS trust bought 177 types of surgical gloves.

The huge waste in the opaque spending in local budgets needs to be addressed. For example, Cambridge fire service spends £1.77 million, an increase of £600,000, on what it defines as “other services and supplies”. It cannot explain what that spending is. Cambridgeshire police define £7 million of spending as “other”.

[Kwasi Kwarteng]

What was the cause of all that waste in the first place?

[Stephen Barclay]

I would attribute it to a number of factors. Let me give an example. I have mentioned local spending in Cambridgeshire, but a national organisation, Ofcom, is an arm’s length body run by a former adviser to Gordon Brown and Tony Blair. He was paid £1.5 million over the last four years, and he reduced his head-count but managed to increase his staff budget. Last year he spent £9.8 million on 180 different consultancy providers. Ofcom even managed to spend £200,000 on newspapers and magazines, but it has only 800 employees, which works out as more than one free newspaper a day for every member of staff. Seven Ofcom staff managed to claim in expenses more than the average wage, with one racking up £5,500 on taxis. I do not know whether they took taxis to the protest on Saturday, but that is the waste that we hear about.

My local police bought six Land Rover Freelander cars for senior officers at £28,000. Bobbies on the beat are far cheaper than the management tier, and I suspect that they make more arrests. We should look to protect front-line services, not to make cuts in them when there are other significant costs.

My final point is on the disconnect in terms of the information that the House has when it sets Budgets. I do not believe that we are effectively scrutinising what happens. In 2009-10 we spent £1.5 billion on consultants and £700 million on arm’s length bodies, without any central data being collected. So we know there is waste. Gershon, Green and many others have looked at the matter, and I welcome the steps taken by the Front-Bench team in setting up the Major Projects Association, even if at the moment it only has 38 members of staff. In 13 years in office, however, the Labour party did not even define what a major project was, which is why we have such wide variations in Government.

Despite all the differences in the headline figures and some of the scaremongering we have heard, I hope that we do not lose sight of how money is spent. We cannot cut waste too fast or too deeply. It is clear that there is waste in our system, and unless we have good-quality data with which to benchmark, standardise and give visibility to the problem, our debates will end up returning to the soundbites that we have heard too frequently over recent days.

--- Later in debate ---

[Kwasi Kwarteng (Spelthorne) (Con)]

I am glad to have been called—a happy outcome for me.

It seems to me that Labour Members are ostrich-like inasmuch as they are not aware of what is going on or of what led us to the position we are in. There is always a context, and we appreciate that savings had to be made in Government spending. Everyone knows that. When we ask ourselves why we are in the position we are in, we get conflicting answers. As Government Members have said, Labour Members suggest that it was the fault of American bankers, of evil people in the City of London who were making too much money and of international business. I think my right hon. Friend the Secretary of State for Work and pensions even suggested that at some point they would blame Dr Evil. None of those reasons, however, is remotely relevant to the deficit or the fiscal situation we are in.

The simple fact is that we had a much larger deficit than any other country in the G7. These facts are known to the world. Labour Members have to accept that when they came into office in 1997, there were balanced Budgets. For four years, the then Chancellor of Exchequer essentially balanced the Budgets and it was a matter of deliberate policy in 2001 when the Labour Government turned the taps on and presided over a massive engorgement of the public sector.

It was that decision in 2001-02 that led to the position we are in now. The cause was simple: the last Prime Minister, when he was Chancellor, believed in his hubris that he had abolished boom and bust. He thought that the economy would keep on growing and that he could then use tax and other income to fund his bigger national projects and his huge public spending. What happened, of course, was that the economy stalled. The income receipts to the Exchequer stopped coming in, so we were left with this massive deficit of £160 billion—the largest in peacetime. The coalition Government came in with the principal purpose of dealing with the deficit. That has always been this Government’s purpose. It was almost a Government of national unity, with two historic parties with different views and different traditions coming together to sort out the mess that the Labour party had left behind.

It is a very simple narrative, but because of all the obfuscation and the deliberately misleading comments of Labour Members, all that has been forgotten. My constituents are all too well aware of the mess that Labour made. In fact, one man said to me, “Well, we have seen it all before; exactly the same thing happened in the 1970s. Labour comes in and makes all sorts of spending commitments, and we run out of money.” It was that simple—and exactly the same thing has happened in Labour’s last two years in power. Blaming the global crisis for what was essentially decisions taken by the Labour party in government is entirely wrong.

[Emma Reynolds]

Does the hon. Gentleman blame Labour Members for the recession in Germany, for the recession in France, for the recession in the United States and for the recession in other parts of the world? How can he stand up and say it was all our fault? It was a global financial crisis.

[Kwasi Kwarteng]

Let me point out to the hon. Lady that in Germany the deficit to GDP ratio was 3.3%; our deficit to GDP ratio was 12.8%. That differential had nothing to do with the global crisis; it had everything to do with spending commitments made on the Treasury Bench when the hon. Lady’s party were in government. It is a deliberate obfuscation to try to blame the sub-prime crisis in America and all the rest of it for decisions taken by her party in government. It is like a magician’s trick: one always tries not to let the audience focus on what is actually being done. That is what magicians do, and it is exactly the sort of tactics that Labour is employing. As I say, it is trying to obfuscate and shift the blame for decisions that it made.

I think it is a scandal and an insult to the intelligence of Members generally that Labour Members are still in denial about the mess they created and the errors they made, which were based on hubristic assumptions about the economy growing for ever and ever. We all remember the former Prime Minister himself saying that there was an end to boom and bust. What does that mean? Anyone who says “an end to boom and bust” genuinely believes that there will be no downturn and so makes spending assumptions on the basis that money from income receipts will keep coming in. That is absolutely crazy.

[Emma Reynolds]

I ask the question for the third time in this debate, as I have yet to receive an answer from Conservative Members. Why on earth did the Conservative party back our spending plans right up to the start of the global financial crisis? This is revisionism by the hon. Gentleman’s side; it is his side that is being ostrich-like, not ours.

[Kwasi Kwarteng]

With respect to the hon. Lady, that is entirely irrelevant. Her party was in office; her party had the ultimate responsibility for the government of this country—not only in 2007, but for the 13 years before the last election. It is a strange paradox that when Labour Members got into power in 1997, they did the right thing. They balanced the books; for four years, we were not running deficits, as they stuck to our spending plans. The Chancellor was prudent; “prudence” was his favourite word. Then, all of that was deliberately swept away, and they went on a mad spending spree, which directly caused the deficit and the savings that have to made now.

[George Freeman (Mid Norfolk) (Con)]

Does my hon. Friend agree that the honest answer to the question put thrice by the hon. Member for Wolverhampton North East (Emma Reynolds) is that if we were guilty of anything, it was to fall for the same lie that the British public fell for—to believe that new Labour had become the party of economic competence and that in government it could be trusted with the public finances?

[Kwasi Kwarteng]

My hon. Friend is exactly right. I think there was an element of delusion in the country inasmuch as people believed that Labour could be trusted with the economy. That was clearly not the case. Older voters I speak to in my party association and more widely in Spelthorne remember the appalling legacy of the 1970s, when exactly the same thing happened. None of this is new; we have seen it all before. Exactly the same thing has happened 30 years later: Labour came into power, made all sorts of spending commitments with the best intentions, but found that we had run out of money. It was that simple. On that note, I urge the House to vote in favour of the Budget motions.