Pensions and Social Security
Liam Byrne Excerpts(11 years, 10 months ago)
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Steve Webb
No, I want to make some progress.
The right hon. Member for East Ham referred to the triple lock and the increase of 2.5% over inflation, compared with 2.2%, as derisory. I remind him that the extra 0.3% cost the taxpayer £150 million. I remember the funny-money days of Labour when £150 million was considered a mere rounding error. He dismisses it as derisory. When his party was in office, it was borrowing £150 billion a year, so I appreciate that for him £150 million is small change, but I still have the naive feeling that that amount is a lot of money. He and others derided our triple lock as though it were a trifle and of no consequence, but had Labour implemented the triple lock between 1997 and now, we would be spending an additional £3 billion on the state pension. So if Labour had applied the triple lock that he derides as inconsequential throughout their term in office, we would be spending £3 billion a year more on pensions. But perhaps he thinks that that sum is derisory, and a frippery, as well.
We have also been hearing about strivers. This is the classic dog-whistle politics of the Opposition. They accuse us of trying to divide people, yet they suddenly divide people—[Interruption.] It is not our side that has used that language.
Steve Webb
The Opposition have tried to divide people into “strivers” and “somebody else”. I am not sure who the “somebody else” is—a non-striver, perhaps. The right hon. Member for Birmingham, Hodge Hill (Mr Byrne) is shouting out, but he is the man who said in his conference speech that Labour was on the side of the strivers, not the shirkers. We know who uses that language.
Why is it necessary to have the fiscal consolidation? It is because of the Labour party’s debts. There was £150 billion of borrowing in the final year of the last Labour Government. Labour takes no responsibility for that but, had the previous Chancellor’s plans been put into operation, it would have had to implement substantial spending cuts on public sector pay—which it has finally now agreed—and on benefits. Have we heard a single suggestion from the Opposition today on how they would make savings? They simply oppose every cut, pretend to be on the side of the poor, and never accept responsibility for how we got into this mess in the first place.
Oral Answers to Questions
Liam Byrne Excerpts(11 years, 10 months ago)
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The Minister of State, Department for Work and Pensions (Mr Mark Hoban)
My hon. Friend makes an important point: poor literacy and numeracy are big barriers to employment. For that reason, personal advisers in jobcentres are trained to identify signs and to signpost people to appropriate course providers. Fareham college in the constituency adjacent to hers is one such provider, but I am sure there are other local providers.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
The Minister will have read about the cases of Becky Bell raised by my hon. Friend the Member for Hartlepool (Mr Wright) and of Angel Hooper, the disabled child whose parents have been told that they will lose £20 a week because her specially adapted room will not be shared with another family member. They are two of the 660,000 families being told they will have to fork out extra or move under the bedroom tax. Will he confirm how many one-bedroom properties will be needed for people to downsize to as the bedroom tax kicks in?
Steve Webb
You will be aware, Mr Speaker, that discretionary housing payments are being made available with a specific focus on the needs of severely disabled people—for example, where a house has been adjusted to reflect the needs of a disabled person. We have allocated money to local authorities precisely to cater for those whom it would be inappropriate to expect to move.
Mr Byrne
The Minister knows that 600,000 people will now need a one-bedroom flat, yet the Department’s own assessment states that there are insufficient properties to enable tenants to move to accommodation of an appropriate size, even if they want to move. From the beginning of April, therefore, people in social housing will face a £14 a week extra bill, when those on £1 million a year face a £2,000 a week tax cut. How can the Minister justify this to hon. Members such as the hon. Member for Harlow (Robert Halfon), who said that benefit cuts at a time of tax cuts of this order would send the clearest signal that
“Conservatives were looking after vested interests: not so much a dog whistle—more a full blown trumpet.”?
Steve Webb
Given that the right hon. Gentleman mentions taxation, I will risk straying on to it, but quite why today’s millionaires would rather have our 45p rate than his 40p rate, or our 28% capital gains tax, rather than his 18% rate is beyond me.
On the right hon. Gentleman’s specific point, households will respond in a range of ways to the measure on under-occupation: moving is simply one of them; taking in a lodger or boarder, sub-letting, working or working more hours are others, and there are discretionary payments for those in most need.
Welfare Benefits Up-rating Bill
Liam Byrne Excerpts(11 years, 10 months ago)
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Richard Graham
On that note, I am happy to give way to my great friend, who was unable to recommend his proposals on tax credits to the Communist party of China last week.
Mr Byrne
I am grateful to the hon. Gentleman, who is giving way with characteristic generosity. He will accept that hitherto in this country, and for many years, the proposal to uprate benefits has been presented annually and much closer to the time at which uprating should take place, so that the Chancellor can take account of the latest economic circumstances and the latest level of inflation. It is only now that the House of Commons is being invited to set in stone a strategy that will stretch ahead for many years to come. That is the unusual situation.
Richard Graham
My friend—for he is my friend— the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) would make a valid point if it was not for the fact that this provision is set for only three years and it is set in the context of what he and his colleagues achieved during the extraordinary runaway period between 2003 and 2010, when they unleashed £170 billion of tax credits and raised welfare spending by 60%, so that, as we know, it is now a third of all Government expenditure. That is the bill that all our constituents are having to pay today.
It is not surprising that the Government are having to take the risk—I accept that there is an element of risk—of pre-setting the uprating of these benefits without knowing what the level of inflation will be. That is why my right hon. Friend the Member for Wokingham (Mr Redwood) was right. Hon. Members on both sides of the Committee gave him credit for flagging up the two crucial ingredients—control of inflation and energy—so that some of the less well-off in our constituencies do not suffer from the effective freeze over the next three years.
Mr Byrne
The hon. Gentleman is incredibly generous in giving way. Does he think the Bill is unconnected to the OBR’s decision to uprate the claimant count by a third of a million over the next few years, lifting its forecast for spending on unemployment and other out-of-work benefits by £6 billion? The Bill is needed to pay the price of economic failure. Surely that is the arithmetic.
Richard Graham
The right hon. Gentleman, with his great experience of these matters, asks a technical question which I am fully confident the Minister will answer in detail in due course.
I promised I would be brief, Mr Amess, so let me come to the point. In effect, tonight we have debated in practical terms the benefits of tax credits against the benefits of tax allowances. I argue that tax credits, the chosen policy of the previous Government, were flawed by their cynicism, having been increased by 58% just before the 2005 election and by 20% just before the 2010 election. I am sorry to say that those were giant electoral bribes that led directly to the greatest bust of all times. The hon. Member for Glasgow North East spoke about moral divisions, and to hear that from a Member whose Government created pension credits, which divided pensioner from pensioner, discouraged saving, enabled arguments between—
Steve Webb
This has been a wide-ranging debate of nearly four hours. Although it has technically been about amendments to clause 1, the generosity of the Chair has meant that we have essentially covered the whole Bill and the issues raised by it.
First, I want to respond to the point about the language in which the debate is constructed. My right hon. Friend the Member for Ross, Skye and Lochaber (Mr Kennedy) and a number of other Members said that we should avoid divisive language, and I entirely agree. I seem to recall that it was the Labour party that used the phrase “strivers’ tax” about this debate—indeed, a year or so ago, the shadow Secretary of State used his party conference speech to create the very divisions that his hon. Friends are criticising. He said:
“Let’s face the tough truth—that many people on the doorstep at the last election felt that too often we were for shirkers not workers.”
The right hon. Gentleman has form on this issue. In 2012, he was at it again. During a speech at the London School of Economics, to what I imagine was a packed house, he said:
“Labour is the party of hard workers not free-riders. The clue is in the name. We are the Labour party. The party that said that idleness is an evil. The party of workers, not shirkers.”
Mr Byrne
The Minister will remember that it was Sir William Beveridge who used the phrase about idleness being an evil.
There is a difference between reporting a conversation on a doorstep in one’s constituency and using a line as the basis of a political strategy that seeks to punish those on low incomes while handing out a £3 billion tax cut to Britain’s richest citizens. I am simply not sure how the Minister, as a Liberal Democrat, can support that policy.
Steve Webb
It is good to hear from the true heir of Beveridge. The quotes describing the Labour party that I just read out were in party conference speeches and at a conference at the LSE—
“The party that said that idleness is an evil. The party of workers, not shirkers.”
Mr Duncan Smith
No, I am going to make a little progress now, although I will give way later. I recognise that some who did not get a chance to speak earlier may wish to say a few words, and I want to give them a little time to do so.
The previous Government appeared to have no care or concern for the fact that more than £10 billion was wasted and lost eventually through fraud, error and overpayments, nor that the rest of the money altogether failed to meet its aim. There was already a problem with fraud and error on tax credits, but, worse still, the previous Government did not even record overpayments, so we have no idea to what degree that system was damaged. However, we do know—
Mr Duncan Smith
I said that I would make a little progress and then give way. I wish to make one point, which is that £4 billion has had to be written off as a direct result of this inability to get the money back, with a further £4 billion likely to be written off directly as a result of Labour’s massive failure to control that budget.
The second part of our approach is important and it relates to the issue of fairness, which my hon. Friend the Minister of State addressed. We do not do these things lightly, but we do want to make sure that those paying the tax bill for those receiving it in welfare recognise that their taxes are well spent; we want to ensure that those in work paying their taxes do not see the rises for those on welfare outstripping their own. We have already discussed the increases, so this is fundamentally an issue of fairness.
Mr Duncan Smith
I said I would give way, so I will give way to the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) now.
Mr Byrne
Over the past month or two, as the Secretary of State has warmed up the debate for tonight’s Bill, he has launched attack after attack on tax credits. Will he just accept the principle that tax credits are important in helping to make sure that people are better off in work and, indeed, that that is why he is not abolishing tax credits but incorporating them into the new system of universal credit? Will he just set that point straight for the House?
Mr Duncan Smith
I have said all along that I do not doubt that at the beginning the intention was to try to improve the lot of those working on low incomes; I have never attacked that as a principle. The point I am making tonight is that there seemed to be a loss of control. In 2005, the then Government stuck a 58% increase into tax credits just before an election—almost 70% of all the money in tax credits goes on child tax credits—and they were, in a way, bribing an electorate in the hope that these people would vote for them because they felt that there would be some reason why they would not get the money afterwards.
I wish to make one important point to the right hon. Gentleman on tax credits, because he has asked me about them. The reality was that the previous Government ended up, through tax credits and child tax credits, attempting to chase a target that, as the economy improved, ran away from them. This became spending for an arbitrary target, and the taxpayer was chasing a target that the previous Government never achieved.
Mr Duncan Smith
I will not give way. Progress on tackling child poverty stalled, and the previous Government missed their 2010 target by some 600,000 children.
Mr Duncan Smith
I shall give way in a second, but I want to make a little more progress.
Let me deal with the point about deficit reduction, which is really important. The Opposition did not answer a key question during our debates in Committee. They have voted against every single measure to reform and reduce the overall spending on welfare so that we can get the deficit under control. Let me quote somebody whom they might remember. The quote is this:
“from 2005 onwards Labour was insufficiently vigorous in limiting or eliminating the potential structural deficit.”
That was their former Prime Minister, Tony Blair. I agree with him. In 2005 the previous Government raised spending dramatically as a device for electoral success, as we said earlier. Time and again Labour has voted against our reforms.
Mr Duncan Smith
Before I give way, let me give some examples. The Opposition opposed the Welfare Reform Bill, and that would have cost £2.1 billion in extra spending. They rejected the benefit cap—a further £500,000. Reversing tax credit savings would cost £5.5 billion. Reversing the child benefit savings would cost £1.7 billion. Voting against this Bill would cost another £1.9 billion. That money would need to come from somewhere.
If I give way to the right hon. Gentleman now, I would like to hear him tell us how exactly he would reduce the overall spending. Please, nothing on the bankers bonus tax, which has been spent at least 10 times already. If he tells us that he would get long-term unemployed people back to work, he should remember that under his Government the long-term unemployed figures doubled.
Mr Byrne
I am grateful to the Secretary of State for giving way. We have said that contributory employment and support allowance should be limited to two years. We have said that there should be an independent gateway for disability living allowance. We have said that we should switch the way we uprate benefits from RPI to CPI. We have said that there should be a benefit cap which, yes, is different in London from the rest of the country, but a benefit cap none the less. We have said that disregards in tax credits should be reduced. Crucially, we have said that there should be a two-year limit on jobseeker’s allowance. That is a far bigger list than the current Chancellor of the Exchequer ever set out when he was in opposition. We think welfare spending should come down. We think getting people back into work is the way to do it. That is why we think the Secretary of State should have brought forward plans to sort out the Work programme, which is failing, and to fix universal credit, which is in disarray.
Mr Duncan Smith
I wonder why I bothered to give way to the right hon. Gentleman. Every one of those statements was a spending commitment. They were not reductions. Every one of them would still leave a Labour Government with a vast bill to pay. I remind the Opposition that what they have opposed remains the reality. They are stacking up spending commitments without one single observation about how they would make the savings necessary to cut the deficit that they left us—one of the worst deficits, as I said before. Their proposed raid on pensions, which they wanted to talk about, would not cover it. They have already spent several times over all their little gimmicks. Voting against the Bill is another spending commitment.
Mr Byrne
I rise to oppose Third Reading. I have not been in the House for as long as the Secretary of State, but never in my years here have I seen so much taken from so many so fast. It is a disgrace that the Government should have rammed the Bill through the House in just two weeks. I hope that the other place will have listened hard to our debates today and seen how little time has been granted to us in the Commons to debate measures that will hurt thousands and thousands of our constituents.
In the fortnight since the Bill was introduced, claim after claim made by the Government has simply fallen apart. Originally, we were told that the Bill would not hurt working people, that the Government would protect disabled people, and that they cared about “family-raisers”, to use the Prime Minister’s term, yet in vote after vote tonight the Government have refused to stand by their word. They have refused to protect working people or to offer safeguards for disabled people, and we have heard nothing remotely credible from them about how child poverty will be tackled. After tonight’s debate, no one will believe that there is such a thing as compassionate conservatism. To be frank, it was always a wild claim and, lo and behold, so it has turned out.
When the Bill was first presented to us, we were invited to believe that it was squarely aimed at those of our neighbours who were “sleeping off a life on benefits”, in supposed contrast with a Budget that allegedly helped working people and gave effect to the Prime Minister’s determination, expressed to the party faithful—their number is dwindling—at his party’s conference. He said:
“They call us the party of the better-off”.
That is true; we do. He continued:
“no: we are the party of the want to be better-off, those who strive to make a better life for themselves and their families.”
How does the Bill help those who are striving to be better off? The Institute for Fiscal Studies could not have been blunter: 7 million working people will be hurt by the Bill. The impact of changes announced in the autumn statement will be, between now and April 2015, to reduce the real income of the one-earner working family by £534 on average, net of any increase in the personal allowance. That is why this is a strivers’ tax, pure and simple, which we will oppose.
Andy Sawford (Corby) (Lab/Co-op)
Does my right hon. Friend agree that it makes much more sense to uprate by inflation in this Parliament and then take stock, with a proper zero-based budgeting look at this in the next Parliament?
Mr Byrne
My hon. Friend is absolutely right that it would make sense to uprate in line with inflation for the rest of this Parliament, but frankly we do not know what kind of mess will be inherited in the next Parliament, which is why my right hon. Friend the shadow Chancellor is right to say that a zero-based review will be needed.
In the seven minutes that remain, I want to make two more points. One is about disabled people, who the Chancellor and Secretary of State said would be protected under the Bill. The Chancellor said that he would “support the vulnerable” and that disability benefits would be
“increased in line with inflation”—[Official Report, 5 December 2012; Vol. 554, c. 879.]
Then we learned the truth: 3.4 million disabled households will be hit by the Bill, admitted the Pensions Minister in a written answer. On average, they will be £156 a year worse off. Hundreds of thousands of people on employment and support allowance—people who the Department says have a disability—will be £87.50 a year worse off.
Mr Byrne
No. Given the hon. Gentleman’s support for a programme motion that has given me six minutes to respond to a Bill that takes hundreds of pounds off thousands of his constituents, he will forgive me for carrying on.
Some 206,000 disabled people will be £62 a year worse off as a result of this Bill. The Government have been caught red-handed trying to keep the truth from this House.
I am glad that today we have had an extensive debate on child poverty, because we were told nothing about how many children and how many working parents would be hurt by this Bill. Only in the past couple of weeks has the truth finally emerged. I want to put on record Labour Members’ gratitude to the Child Poverty Action Group for ruthlessly exposing the impact of the Bill and the cumulative impact of other measures.
The Secretary of State spent some time casting doubt on the strategy for tackling child poverty, which I seem to remember he voted for when he supported the Child Poverty Act 2010. On 24 November 2004, the Prime Minister said:
“I believe that poverty is an economic waste and a moral disgrace. In the past, we used to think of poverty only in absolute terms… That’s not enough. We need to think of poverty in relative terms.”
The Chancellor was even blunter when he said to the News of the World: “We’re all in this together. I’m not going to balance the Budget on the backs of the poor.” That encouraged the Secretary of State to wade in on “Sky News” in June 2010, when he said that “you have” to make savings
“but protect the poorest and that’s my absolute priority.”
How hollow those words ring tonight.
The truth is now before us: 200,000 children will be pushed into poverty as a result of this Bill. According to the Child Poverty Action Group, the measures in this Bill, alongside other measures that have been introduced, mean that 1 million children will be pushed into poverty by this Government. That will be the Secretary of State’s legacy. He spent all those years trying to persuade us that the Conservative party was finally a party that cared about poverty, and now, because the Chancellor needed a new year’s dividing line on welfare, he is accountable for putting 1 million children into poverty. It is well and truly clear that the nasty party is back.
This is about not just children but their mothers. A fortnight ago, my hon. Friend the Member for West Bromwich East (Mr Watson) published a list of 106 battle- ground constituencies. In those seats, there are 150,000 mothers who will be hurt by this Bill, losing £180 a year. In fact, as a result of measures put through by this Government, they are now losing £1,400, and tonight Members on the Treasury Bench voted to allow that to continue. They were given the chance to protect those 150,000 mothers and they chose not to. Over the next few months, we will be getting in touch with mothers in those constituencies and making it very clear that their Member of Parliament had a chance to protect their maternity pay and chose not to. Right now, the price of children’s clothing is rising by 4.5% and food prices are rising by 3.6%. Working mothers going on to statutory maternity pay are losing £180 a year at a time when someone on £1 million a year is getting a £2,000 tax cut. How are Government Members going to justify that to people in their constituencies?
Mr Byrne
No, there is too little time.
It is a disgrace that this Bill is being rammed through the House tonight. The Secretary of State did not want public hearings and Ministers did not want to defend the detail of the Bill in Committee. We hope that the other place will give it the scrutiny that was denied to Members of this House.
The tragedy is that there is another way to bring down welfare spending. Long-term unemployment is now rising towards the 1 million mark, as is youth unemployment. Nothing in this Bill fixes the Work programme, which gets only 2.6 people out of every 100 back into work, or fixes the disarray that is now unfolding in universal credit. What the Government should have been doing tonight is bringing us measures to bring down unemployment, long-term unemployment and youth unemployment, and to save this country the cost of failure. Instead, the debate on this Bill has shown a Government and Secretary of State who are hellbent on making savings and clearing up the cost of the failure of a rising unemployment bill by taking that money from working people—6,000 working people for every Conservative-held marginal constituency.
Welfare Benefits Up-rating Bill
Liam Byrne Excerpts(11 years, 11 months ago)
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The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I beg to move, That the Bill be now read a Second time.
The Bill, which stands in my name and that of my right hon. and hon. Friends, is about the renewal of what I believe is a principled welfare state based on affordability, integrity and fairness. For the convenience of the House, let me explain that I intend briefly to run through the features of the Bill, and I will then open up the debate to take interventions and deal with the amendment.
This Government inherited from the previous Government an unsustainable and costly system, and a welfare state that I believe delivered poor social outcomes, trapping people in dependency, as well as a poor deal for Britain’s taxpayers. My opposite number, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), needs no reminder of that as it was he who, when we arrived in government, told us that there was no money left. That was the result of a recession that was later discovered by the Office for Budget Responsibility to be deeper and sharper than anyone thought. The original estimate—
Mr Duncan Smith
I will give way in a moment. I am in the business of having the right hon. Gentleman justify his own position so I will be happy to give him a chance, but let me finish this point. The previous Government originally claimed that the shrinkage in the economy was 5.8%. In fact, as the OBR later pointed out, at 6.3% the shrinkage was deeper than we had ever seen before—the biggest shrinkage in the economy since world war two.
Mr Duncan Smith
I am glad that the right hon. Gentleman raises that point because a huge part of that is spending on pensions. He will know that we are spending more on pensions and provide a better deal for pensioners than his Government ever did. Until this Bill, the Government continued to raise welfare payments in line with inflation; this is the first time that we propose not to do so. That will take effect through the uprating order that should be laid before Parliament later this month. The Bill provides that discretionary working age benefits and tax credits will be uprated by 1% for a further two years in the tax years 2014-15 and 2015-16, if prices have risen by at least 1%. The schedule to the Bill sets out the benefit payments and tax credits in question, which are listed in full in the explanatory memorandum. By providing for those changes in legislation, we can provide certainty for taxpayers, the markets and claimants.
A number of exceptions to the Bill are not included, and a number of benefits remain outside the scope of the Bill. We are maintaining our commitment to the triple lock so that the basic state pension will rise by 2.5%. In April 2013, pensioners will see an increase of £2.70 on last year—far more than the derisory 75p that Labour gave them in 2000—and I stress again that we introduced the triple lock to guarantee that. Crucially, we are also protecting disabled people and carers. Benefits to cover the added costs faced by these groups will continue to be linked to price inflation.
Mr Byrne
It is significant that the Secretary of State has just admitted for the first time that welfare spending on his watch is rising £14 billion higher than projected. Will he go a step further and confirm his understanding of the OBR figures that show that the claimant count is forecast to rise by a third of a million more than anticipated over the next few years? Will he admit that, yes or no?
Mr Duncan Smith
I should remind the right hon. Gentleman that the claimant count was forecast to rise but has fallen throughout all those forecasts. I know it is inconvenient for the Opposition, who would rather unemployment rose than fell, but unemployment is falling. Many countries in Europe would give their eye teeth for the employment figures in this country.
Mr Duncan Smith
I will give way in a minute. The reality is that the shadow Chancellor and the former Chief Secretary deny that they left a problem. It was a nightmare, and they should apologise and tell us what they would do to put it right.
Mr Byrne
I am grateful to the Secretary of State for giving way again: he is being typically generous. No doubt he, like me, will have looked at the DWP benefit expenditure tables, which show that spending on out-of-work benefits between 1996-97 and 2009-10 did not rise, but fell by £7.5 billion. That is why Lord Freud said that Labour’s record in getting people back to work was “remarkable” and noted that Labour had tackled the long-term dependency on unemployment benefits that it had inherited from the Tories in 1997.
Mr Duncan Smith
I notice that the right hon. Gentleman is very careful to avoid telling the House how much Labour spent on tax credits as well. The important point that Labour Members need to realise is that of the total bill for tax credits, 70% had no involvement with work at all. Child tax credits had no work agreement on them whatever. The reality is that Labour spent 340% more on tax credits, 58% before the 2005 election and 29% before the last election, in the hope of buying votes to get it out of difficulty. The result was that the debt we had to pay off was costing us £30,000 every single minute. That is what we had to pay as a result of that expenditure—
Mr Duncan Smith
I am not giving way to the right hon. Gentleman again. I keep reminding him that he is the man who, when he left office, admitted that there was no more money left. He should apologise for that. Labour has opposed the £80 billion of savings that we have proposed. When he gets up again, he needs to tell the House what Labour would do to reduce the deficit and where it would find the savings. If he answers that question, I will give way to him.
Mr Byrne
My right hon. Friend the shadow Chancellor has set out far more about the difficult decisions that we would make than the Chancellor ever made. We have said that uprating of benefits should be slower; that there should be a two-year cap on contributory ESA; that there should be a reduction in disregards in tax credits; that there should be a benefit cap in different parts of the country; and that no one in this country should be allowed to live a life on welfare and languish for more than two years on JSA. The best way to bring the welfare bill down is to get people into work, not give them a failed Work programme.
Mr Duncan Smith
I remind the right hon. Gentleman again that we are getting people into work. Unemployment is lower than it was when we took office, youth unemployment is lower and we are getting more people into work. He said that he was in favour of the cap. That is very interesting, because he voted against the cap. He says that he is in favour of a number of issues, but he voted against the Welfare Reform Act 2012. He is against universal credit and the housing benefit changes. He has not agreed to any of the changes that we have made.
The overall bill for welfare rose by 60% between 1997 and 2010—
Mr Duncan Smith
It is in its DNA, so I am not sure when it started, to be honest. The tax credit system was out of control, as I said earlier on, because Labour was chasing a figure it could never reach, and as a result its spending was enormous.
In conclusion—
Mr Duncan Smith
No, I want to conclude. The right hon. Gentleman will have plenty of time to speak.
Mr Duncan Smith
Okay, I will give way in a second.
I want to remind the Opposition of what they have done. They have opposed £83 billion-worth of savings this Parliament. That is equivalent to adding another £5,000 of debt for every working family in the country. We hear much about taxing the rich, yet, in this Parliament, the richest will pay more in tax than in any single year of the previous Government—more tax on capital gains, more stamp duty—they will be less able to avoid and evade tax and they will pay more when they take out their pension policies.
We hear much about the bankers’ bonus tax, but Labour would have spent that money 10 times over. This is its great bankers’ bonus tax of £2.3 billion. Let us think about it very carefully. It would have overspent that to the sum of £25 billion—through reversing the VAT increase, more capital spending, reversing tax credit savings and reversing the child benefit savings. We are talking huge sums of money.
Mr Byrne
The Secretary of State has the temerity to criticise proposals we launched on Friday, when he is presiding over a Work programme that is literally worse than doing nothing. He stands before the House justifying the position of his Government, which is that it is possible to spend a life on welfare, but we say that is wrong. The way to bring welfare spending down is to get people into jobs, and when there are no jobs we invest in creating them.
Mr Duncan Smith
Our record on getting people into jobs is better than theirs. The difference is that Labour spent taxpayers’ money like drunks on a Friday night, with no care or concern for how effective it was. The work experience programme achieves what the future jobs fund did, but at a fraction of the cost. The Work programme is getting more people into work than the flexible new deal programme.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
I beg to move,
That this House declines to give a Second Reading to the Welfare Benefits Uprating Bill because it fails to address the reasons why the cost of benefits is exceeding the Government’s plans; notes that the Resolution Foundation has calculated that 68 per cent of households affected by these measures are in work and that figures from the Institute for Fiscal Studies show that all the measures announced in the Autumn Statement, including those in the Bill, will mean a single-earner family with children on average will be £534 worse off by 2015; further notes that the Bill does not include anything to remedy the deficiencies in the Government’s work programme or the slipped timetable for universal credit; believes that a comprehensive plan to reduce the benefits bill must include measures to create economic growth and help the 129,400 adults over the age of 25 out of work for 24 months or more, but that the Bill does not do so; further believes that the Bill should introduce a compulsory jobs guarantee, which would give long-term unemployed adults a job they would have to take up or lose benefits, funded by limiting tax relief on pension contributions for people earning over £150,000 to 20 per cent; and further believes that the proposals in the Bill are unfair when the additional rate of income tax is being reduced, which will result in those earning over a million pounds per year receiving an average tax cut of over £100,000 a year.
It is good to see the Secretary of State fronting the Bill today and to see the Economic Secretary to the Treasury in his place. Where, however, is the Chancellor? It is a disgrace that he is not here in person. Where is he?
Mr Duncan Smith
The Chancellor told me earlier he was in Berlin making a speech—a long-term commitment —but he will be back in plenty of time for the winding-up speeches, and he is looking forward to hearing Labour make as much of a mess of it at the end as at the beginning.
Mr Byrne
I think it is surprising that the Chancellor is talking to people in Germany, rather than to MPs in the House about the disastrous consequences of his policies.
We know that the Chancellor and the Secretary of State do not see eye to eye on much, but they are jointly and severally liable for the mess and the haemorrhaging of the welfare budget that the Bill seeks to staunch. The Chancellor’s disappearance is a hallmark of the contempt that has been shown for the House today. The impact assessment for the Bill was published at noon. It makes radically different assumptions from the policy costings set out by the Chancellor last year. And now the Government propose to ram the Bill through the House in just one day of debate. They are terrified of scrutiny and exposure. It is turning into a hit and run on working families, and frankly we should not stand for it.
The Chancellor should have shown up, because the Bill is about clearing up the consequences of his failure. His reputation as a maker of recessions is now pretty well established. Every time he has come to the House, he has been forced to downgrade growth yet again, and since he took office he has battered the life out of the recovery that Labour left him in 2010. He is the first Chancellor for 35 years to preside over a double-dip recession. History will not judge him well.
But the Chancellor has a partner in crime: the Secretary of State, the man who has become the Comical Ali of the Government, the only man in the DWP who thinks that everything is fine and hunky-dory—a man who would put Dr Pangloss to shame. Every time he comes to the House, he comes with words of reassurance: everything on his watch is going according to plan. He blithely assures us that the Work programme is fine. We are told that universal credit is completely and utterly on track—not a hiccup to be heard—and that the benefit cap will definitely start in May. The only problem is that he is living in a fantasy land of his own, because everything is not okay, everything is not on time and everything is certainly not on budget. We were promised a Work programme bigger than any yet known to man. So big it could be seen from space. This is a programme that is so effective it is literally worse than doing nothing. It works so well that just three out of 100 people who passed through it passed into sustained jobs. It is a disaster.
Then, of course, we have universal credit—a policy that is now proceeding so smoothly that, it is fair to say, it has earned widespread support and praise from right the way across Government. Members of the Cabinet—perhaps even those sharing a building with the Economic Secretary—are now so impressed that they are telling anyone who will listen at the Daily Mail and elsewhere that it is a “disaster waiting to happen” and that the IT is “nowhere near ready.” The Secretary of State has so much grip on this project that the Prime Minister himself invited him to pack his bags and clear on out of the Department—a vote of confidence that I know rang around Caxton house, because senior officials are now leaving the Department as fast as they can.
Now, of course, we have the news that the benefit cap—which Lord Freud told the other place would absolutely, definitely, without question be introduced nationwide in April—will be introduced in just four London boroughs. This is a record of chaos, delay and impending disaster, and today the Government are inviting millions of working families in this country to pay to clean it up.
Jake Berry
I thank the right hon. Gentleman for giving way. I am sorry to drag him back to the Bill, but what would he say to the police officer in my constituency—the right hon. Gentleman heard my earlier intervention—who said, “Is it fair that people out of work have seen their benefits go up by 5.2% when my salary’s been frozen and I risk my life every day to keep people safe in this country?”? That is what this Bill is about; will the right hon. Gentleman please answer that question?
Mr Byrne
I want incomes to rise faster than benefits. That is why I think it was wrong that the hon. Gentleman voted for a three-year freeze in tax credits, which has hit 7,700 of his constituents. He must answer to them after today’s debate. Why is he supporting a huge tax cut for millionaires when 7,500 people in his constituency are seeing a freeze on their tax credits and a squeeze on them in the years to come?
Grahame M. Morris (Easington) (Lab)
To respond to the issues raised by Government Members, I point out that a lady on £72 a week in jobseeker’s allowance came to my surgery on Friday. She is being expected to pay £9.60 because of a loss of housing benefit because of the imposition of the bedroom tax. What do Government Members have to say to her?
Mr Byrne
Once upon a time—back in 2004 and 2005—when the Secretary of State was making speeches about poverty, he said that the way to judge the Conservative party was on how its policies worked for the poorest communities in the country. What many people will be asking after today’s debate is: what happened to that man?
Jane Ellison (Battersea) (Con)
The right hon. Gentleman is perhaps not willing to address the issues put to him by Government Members, but I wonder whether he will address the question raised by a former Cabinet colleague of his, Jacqui Smith, who said earlier this week that Labour canvassers
“who’ve knocked on doors recently”
have
“been told the problem for Labour is…they think we caused the deficit and they’re not…convinced we know how we’ll solve it.”
How would he respond to her?
Mr Byrne
I spoke to the former right honourable Member for Redditch yesterday and I set out—[Interruption.] Absolutely. I set out the substance of today’s debate and said that we have a choice between the Tory way and the Labour way to bring down welfare spending. The Tory way is to hit working families; the Labour way is to help people work.
Andy Sawford (Corby) (Lab/Co-op)
I share the concern about the Bill’s impact on public service workers. Has my right hon. Friend seen—I am sure he has—the research published over the weekend by the Children’s Society? It shows that 40,000 soldiers will see their household incomes cut if the Bill goes through, along with 300,000 nurses, 150,000 primary school teachers and 9,300 of my constituents, which is why I will be voting against it today.
Mr Byrne
My hon. Friend is already speaking very eloquently in the House. Some 40,000 soldiers, 300,000 nurses and 150,000 primary and nursery school teachers will be hit by this Bill. I suggest to the House that they are making a much bigger contribution to the health and well-being of this country than the Chancellor of the Exchequer, who is accusing them of being the people whose blinds are closed in the morning.
Alex Cunningham (Stockton North) (Lab)
We have seen the failure of the Work programme. In my constituency, unemployment is now 10% higher than a year ago. One person in the area telephoned BBC Tees this morning and said that he had £130 a week for himself, his wife and three children. He cannot get a job and all he has to look forward to is an increase of £1.30—enough to buy a loaf of bread. Does my right hon. Friend agree that we need to show compassion to such families, rather than giving millionaire earners a tax break of £2,000 a week?
Mrs Madeleine Moon (Bridgend) (Lab)
We were told that this Bill was about fairness. How can it be a fair when a young mother in my constituency on jobseeker’s allowance is expected to live on £56.24 a week? She will lose £12 a week through the empty room tax and £9 a week in council tax. That leaves her with £35 a week to pay for heating, water and food. How is she going to survive? How can that be fair?
John Healey (Wentworth and Dearne) (Lab)
On inflation uprating, which is at the heart of this Bill, there is a widespread belief that housing benefit for private rented accommodation will rise in April by CPI. The Department has done little to dispel that understanding, but in Rotherham, as my right hon. Friend might be aware, the rate for a three-bedroom home is set to be cut by 3% in cash terms. Is not this, like the Bill, another harsh, half-hidden cut to the help that those in work and those out of work need to meet the cost of household bills?
Mr Byrne
My right hon. Friend is absolutely right. He is also right that the Department’s incompetence in proceeding with some of these reforms means that many of the changes risk costing more than they save. That is why Ministers have been forced to delay implementation of the benefit cap, about which they made such a fuss last year. Now we see that it will be implemented in just four London boroughs, because the Government do not know how it will work in practice.
Charlie Elphicke
Does the right hon. Gentleman think it right and fair that benefits should have gone up by 20% at the same time that average earnings have gone up just by 10%?
Mr Byrne
I repeat: there are 6,800 people in the hon. Gentleman’s constituency on tax credits—we have rehearsed these figures before, because he is an assiduous attender of social security debates. I want incomes to go up faster than benefits. That is why it is so important that tax credits are protected. He has to accept that he has voted for a freeze in tax credits for the 6,800 of his constituents who enjoy them. Today he is proposing to vote for a further squeeze, at a time when millionaires are being given a tax cut. I just do not understand how he will justify that to the good residents of Dover.
Nick de Bois (Enfield North) (Con)
The right hon. Gentleman refers to 6,700 people in the constituency of my hon. Friend the Member for Dover (Charlie Elphicke). While he is bandying statistics around, he might be interested to know that there are 38,000 people in work who have benefited from the increase in the tax threshold. The way to raise incomes is not to have inflation of state support but to get people back into work where they can keep more of their own income.
Mr Byrne
The hon. Gentleman knows as well as I do—he is a numerate man and he understands the figures involved in this debate—that the personal allowance does not compensate for the whack that has been delivered to most working families in this country. The House of Commons Library says they will be £280 a year poorer by next year and the Institute for Fiscal Studies says they will be £534 poorer by 2015-16. He has to get real about the impact of his Government’s policies, because they are hurting 7,000 of his constituents.
Nick de Bois
I am grateful to the right hon. Gentleman for giving way again. However difficult these decisions are, if we look more closely at the numbers, we see that he is not highlighting the fact that people earning £50,000 or £60,000—which most people would consider a good income—are included in his figures for tax credits. That is disingenuous and merely a reflection of the trap and the legacy of the shadow Chancellor’s former friend, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown).
Mr Byrne
That is complete nonsense. This Government are taking £14 billion out of tax credits and the Bill proposes to take another £4 billion. That will hurt 7,000 of the hon. Gentleman’s constituents, at a time when millionaires are being given a tax cut. I simply do not understand how he can justify that, either in this House or on the streets of Enfield.
Ian Lucas (Wrexham) (Lab)
I am grateful to my right hon. Friend. What Government Members do not seem to understand is that the whole rationale for this Bill is the need to address their failure to deliver on the economic promises they made when they first came into government. The Bill is necessary only because the Government have failed economically.
Mr Byrne
My hon. Friend is absolutely right. When the Chancellor came to the House back in December, he was forced to admit that somehow, for some reason, growth had eluded him once again—it had got away. He brought forward a package of measures that was so focused on generating jobs that the Office for Budget Responsibility looked at it and revised the claimant count for the forecast period, not down but up by 300,000. The OBR also spelled out how much this was going to cost us: it is an eye-watering figure. The heroic efforts of the Chancellor and the Secretary of State to get the claimant count down over the next few years is costing us £6 billion in higher welfare bills, and today’s Bill shows us exactly who is going to pick up the tab.
Mr Byrne
I shall give way to people who were here at the start of the debate, rather than to those who have wandered in late. This is an important debate. The point that I want to make, before I give way to the hon. Member for Stourbridge (Margot James), is that we are learning today who is being asked to pick up the bill for this catastrophic economic failure. It is not Britain’s richest citizens, who are now so hard pressed and under the cosh that they are being given a tax cut. From next year, millionaires will have £107,000 more to help them to heat their swimming pools. It is not Britain’s millionaires who are picking up the tab; it is Britain’s working families. The measures in the Bill are a strivers’ tax, pure and simple.
Margot James
Is the right hon. Gentleman going to acknowledge the 1 million extra jobs that have been created since 2010? Will he also acknowledge that the number of people claiming tax credits escalated to an unsustainable level under his Government? The country cannot afford to have 50% of the population either claiming tax credits or in receipt of benefits. That is unsustainable.
Mr Byrne
I look forward to coming to Stourbridge and helping to explain to the 6,500 people there who are on tax credits that their Member of Parliament thinks that the money they are getting is unsustainable. I happen to think that those 6,500 people, whom the hon. Lady has just dismissed, need every pound of the tax credits that Labour delivered when we were in office.
The Minister of State, Department for Work and Pensions (Steve Webb)
I should like to bring the right hon. Gentleman back to the Bill, and to tell him that when he votes against it tonight, £1.9 billion a year will go missing. Will he compare that £1.9 billion a year with the £3 billion a week that Labour was borrowing during its last year in office?
Mr Byrne
I would contrast that money with the £3 billion a year that the Chancellor is giving away to Britain’s richest citizens, in a tax cut that will kick in next year, at a time when the Government are cutting tax credits and when Britain’s working families are under pressure. How can the hon. Gentleman possibly justify that, either here or to his constituents?
Mr Duncan Smith
I would be grateful if the right hon. Gentleman will now acknowledge that all the OBR’s latest figures show that, under this Government, the wealthiest are paying more in tax than in any single year under his Government.
Mr Byrne
Like me, the Secretary of State will no doubt have seen table 2.1 of the Budget, published in March 2012, which clearly shows that in 2014-15, the cost of the tax giveaway will be £3.4 billion. How can he possibly justify that at a time when he is hitting Britain’s working families? Will he justify it now?
Mr Duncan Smith
I asked the right hon. Gentleman a simple question—[Interruption.] Actually, the shadow Chancellor should leave the right hon. Gentleman alone for a second; I think he has a brain in his head. Don’t listen to him; his advice to the last Prime Minister was hopeless. I want to ask the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) a simple question. Here are the figures: the wealthiest in Britain are paying more in tax under this Government than in any single year under the last Government. Does he agree with that?
Mr Byrne
We put the top rate of tax up. It is this Government who are cutting it, at a cost of £3.4 billion a year. How can the Secretary of State possibly justify the choices made by his right hon. Friend the Chancellor, a man who has supported him hilt and sword? How can the Secretary of State justify giving away £3.4 billion to Britain’s richest citizens in a tax giveaway when he is hurting Britain’s working families? Justify it now!
Mr Duncan Smith
Does the right hon. Gentleman agree or disagree that the OBR figures show that, under this Government, we are raising more in tax from wealthy people than in any single year under the last Government? Will he now admit that?
Mr Byrne
I will give way to the hon. Gentleman, even though he could not be bothered to get here for the beginning of the debate, but let me first ask him how he can justify giving away £3.4 billion to Britain’s richest citizens while taking money away from Britain’s working families. Justify that now!
Nadhim Zahawi
My question to the right hon. Gentleman is about the honesty with which he delivered his message in 2010, in which he told us that there was no money left and wished us good luck. Will he show the same honesty now and acknowledge that we are taking more from the wealthiest in this country in every year of this Parliament than was taken in the 13 years of the Labour Government? That is the honesty we require from him. Yes or no, please?
Dr Wollaston
I certainly feel that the tone of this debate is important, and that we should not be talking about shirkers. I do not believe that people on welfare benefits are shirkers. Having made that clear statement, I would like to ask the right hon. Gentleman this question: for how many days did the Labour Government apply the top rate of tax when they were in office?
Mr Byrne
I know that the hon. Lady is new to the House—[Interruption.] I will seek to answer her question as soon as those on her own Front Bench calm down a little. I think that she would acknowledge that the economics and the politics of this Parliament are very different from those in the last three Parliaments. There was an important principle at the heart of the debate—namely, that those with the broadest shoulders should bear the biggest load. That is why, when Labour was in power, we put up the top rate of tax. We knew that, as part of the plan to bring the deficit down, those with the broadest shoulders should bear the biggest load. That is why we put up the top rate of tax, and that is why we object to the Chancellor of the Exchequer cutting it and giving £3.4 billion to Britain’s richest citizens when he is taking money from Britain’s working families.
Simon Hughes (Bermondsey and Old Southwark) (LD)
The hon. Member for Totnes (Dr Wollaston) was right yesterday, and she is right today. This debate should not polarise people in work against people who are out of work. However, the right hon. Gentleman must realise that those of us who lived through the last Labour Government saw the rich doing better, the bonuses getting higher, the bankers exploiting people more and the pensioners not getting the link with earnings that Labour promised but never delivered. This is a difficult decision, but the Government have got the balance right in these difficult times. I hope that, by the end of this Parliament, they will be vindicated through many more people being in work and many fewer being on benefits.
Simon Hughes
No, I do not think that it is the right priority, but it was part of a package deal that will leave the richest paying more than they did under Labour, that will bring the top rate down to 45% when it was only 40% in 12.5 years of the Labour Government, and that will bring in a rise in the tax threshold to £9,440 for ordinary people in my constituency and the right hon. Gentleman’s this year. In this place, we make balanced choices. This is a reasonable balanced choice to get the economy out of the mess that he and his colleagues have clearly admitted they left us in.
Clive Efford (Eltham) (Lab)
The argument coming from the Government Benches is wholly founded on misinformation, particularly in respect of the claim that the Government have created 1 million jobs in the private sector. Is my right hon. Friend aware that, according to the Office for National Statistics, 196,000 of those jobs are due solely to the reclassification of sixth-form colleges and further education colleges?
Mr Byrne
I will give way later, but I want to move the debate on a little. It is time that we debated who is going to be hurt by the Bill. Yesterday, the Institute for Fiscal Studies did us a great favour in setting out for the first time that a total of 7 million working families will be hit by the Bill—half the working families in Britain. As we heard from the hon. Member for Enfield North (Nick de Bois), some on the Treasury Bench like to cry, “Don’t worry, don’t panic; working people are going to be compensated by the rises in the personal allowance.” That is simply not true. The IFS is very clear about that: the real income of a one-earner working family is going to be £534 a year less by 2015-16.
The Children’s Society, as one of my hon. Friends mentioned earlier, has spelt out clearly what this means for many of Britain’s working families. A second lieutenant will lose £552 a year, and there are 40,000 soldiers in the same position; and a lone parent nurse will lose £424 a year, as will a primary school teacher. These are not people who have their blinds closed in the morning, yet these are the people who will be hurt by the Bill.
I know the Chancellor thought he was being clever. I know that he was, as the hon. Member for Brent Central (Sarah Teather) said, playing the politics of the playground and looking for a dividing line. We are right to ask what that means for the average Conservative constituency. It means that an average of 6,000 families in Tory-held constituencies will be worse off—a number that I noticed was bigger than the Tory majority in 107 seats. I just mention that in passing. Why should a second lieutenant, a nurse or a primary school teacher, or 6,000 residents of an average Tory constituency, be asked to pay for this Government’s failure to get people back to work? This is a strivers’ tax pure and simple: it does nothing to create new jobs or remedy the deficiencies of the Work programme; it does nothing to sort out the chaos in universal credit; it does nothing but punish working families that are now losing £9 billion of support under this Government.
Chris Bryant
Is there not another real problem? In many constituencies where there is profound deprivation and low-income families have even less money coming in to spend every week, we will see further depression in the local economy, more shops closed and fewer people in jobs, so that we will never be able to refloat the economy. Is not the greatest scandal of all the fact that working people in our constituencies—people in jobs—are using food banks to feed their children?
Mr Byrne
My hon. Friend speaks eloquently, and his remarks cut to the quick of the values now on show in this Government. Once upon a time—the Secretary of State will well remember this—he said:
“Conservative policies have to work for Britain’s poorest communities and every policy must be measured by that standard.”
That is what the right hon. Gentleman said on 28 June 2004, so let us weigh up the impact of this Bill on Britain’s communities. It will mean child benefit rising by 20p a week, maternity allowance by £1.37 and jobseeker’s allowance by 72p, while the income of a millionaire will go up as a result of the tax cut by £2,058 a week. How can he possibly justify that? He cannot. He knows that the Chancellor was in search of a dividing line on welfare and that he has obliged the Secretary of State to kiss goodbye to 10 years of campaigning to turn the Tory party into one that gave a monkey’s about poverty.
Rushanara Ali (Bethnal Green and Bow) (Lab)
Does my right hon. Friend agree that child poverty in London remains stubbornly high, and that this Bill will make matters worse? My constituency has the highest level of child poverty, and this Bill will lead to more poverty across cities such as London and around the country.
Andrew George
Of course we welcome the Labour party’s last-minute pre-election conversion to increasing tax for wealthy people. The right hon. Gentleman will have heard in my intervention on my right hon. Friend the Secretary of State my sincere misgivings and my wish to encourage him to review this rather arbitrary 1% cap and perhaps to find ways of relating it to average wages. Bearing in mind that the welfare budget is—
Madam Deputy Speaker (Dawn Primarolo)
Order. It was only a few moments ago, I remind the hon. Gentleman, when I said interventions on a speech needed to be brief and should not become a speech in their own right.
Mr Byrne
I am grateful for the intervention because I think the hon. Gentleman, like us, is concerned that in our country today a food bank is opening every three days, and that 5 million people may resort to payday loans this year in order to balance the books for the end of the month. The Sun on Sunday this weekend, in an article carried next to the one by the Secretary of State, said that a quarter of mums are now turning off heating so that they have enough money to feed the kids. Is that the kind of country that we are becoming, because the Saint of Easterhouse has now become the punch bag of the Treasury? Once he talked about broken Britain; now he is presiding over breadline Britain because he keeps losing his battles with the Treasury.
Andrew George
In view of that and given that the welfare budget is £220 billion, does the right hon. Gentleman believe that it is something that needs a long hard look at? Particularly in a time of austerity, where does he believe the savings can be made within that budget?
Mr Byrne
Let me deal first with the hon. Gentleman’s intervention. I think it is wrong that millionaires will get an extra £2,058 a week next year, in 2013-14, when child benefit is going up by 20p a week. I simply cannot see how that can be justified and I do not think that tax cut should go through.
Richard Fuller (Bedford) (Con)
The right hon. Gentleman is right to say that the public do not want false distinctions between strivers and shirkers and he is equally right, I think, to believe that people will see through those who pretend to care when they do not have the money to show that they care. In his more lucid moment, he explained that the Government had no more money left, so would he accept that one answer might be to push forward with ideas such as the living wage, and will he advise us, on the basis of his own research on a living wage, what impact it would have on the long-term benefits needs in the country?
Mr Byrne
I suspect the hon. Gentleman feels that very keenly, as 7,500 people in his constituency are on tax credits. I think that the best way to bring the welfare bill down is by getting people into work. The tragedy with the Bill is that it fails the Ronseal test set out by the Prime Minister yesterday. It does not do what it says on the tin. We are told that this Bill is all about reducing welfare spending. Actually, if we put tax credits to one side, the welfare bill for the period covered by this Bill will not rise by 1%; it is going to go up by 4%. It will go up by £8 billion because the Secretary of State is doing so little to get people back to work.
The reality of the debate is that there is a Labour way to bring down welfare spending and there is a Tory way. The Tory way, aided and abetted by the Liberal Democrats, is to attack tax credits. The Labour way is to bring down welfare spending by getting people into jobs—jobs in which they will pay tax rather than sitting on the dole taking benefits. That is why we tabled our amendment. We think that it is right to introduce a bank bonus tax to get 100,000 young people back to work, and to reform pension tax relief to create a two-year limit on jobseeker’s allowance. We think that it is right to send the clear signal that anyone who can work must not, and will not, be allowed to languish or to live a life on welfare. That is the kind of tough-minded but fair policy that we now need.
Ms Karen Buck (Westminster North) (Lab)
We have heard many interventions from Government Members about the unsustainability of tax credits and top-up benefits for working families. According to the Government’s own impact assessment,
“households towards the bottom of the income distribution are more likely to be affected and have a slightly higher average change because they are more likely to receive the affected benefits.”
What does my right hon. Friend think is the reason for that statement?
Mr Byrne
I note that the impact assessment is based on assumptions very different from those that formed the basis of the Treasury costings in December last year. However, the Government cannot change the simple truth: this is a strivers’ tax pure and simple, and it will hit people on tax credits.
We oppose this strivers’ tax. We believe that welfare to work will not work without jobs, and the Bill does not create a single job. It creates a heck of a mess, and asks Britain’s working families to clear it up. I urge the House to oppose the Bill’s Second Reading, to strike a blow for Britain’s strivers, to send the Government back to the drawing board, and to demand from them a proper plan to get our country back to work.
Sajid Javid
The hon. Gentleman should ask that question of the shadow Secretary of State. There is no money left! Let me put it simply: welfare spending costs the UK—
Sajid Javid
We are dealing with the economic mismanagement of the Government of whom he was part and the deficit is already down by 25% since we came to office.
We are spending more than £200 billion a year on welfare. That is almost £1 in every £3 raised in taxes—more than the budgets for health, education and defence combined. After 13 years of economic mismanagement and overspending, the British people want a country that lives within its means once again. We need to find savings across the Government, and the uprating measures announced in the autumn statement are forecast to save £2.5 billion by 2015-16. It is interesting that not one Opposition Member addressed how they would fill that funding gap by opposing the Bill. That proves they have no answers for the problems the Government face.
Oral Answers to Questions
Liam Byrne Excerpts(12 years ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey)
I would like to meet my hon. Friend to discuss this case, as I do not know the full facts.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
Will the Secretary of State set out for the House the projected rise in the dole bill as a result of the Budget?
Mr Duncan Smith
I do not believe that there will be a dole rise. The reality is that, under this Government, in the last year we have seen more people back into work; more private sector jobs than were ever created by the previous Government; and more women in work. Unemployment levels have fallen and youth unemployment levels have fallen. Perhaps the right hon. Gentleman would like to apologise for the total mess his Government left us.
Mr Byrne
The Secretary of State clearly does not know, so let me help him. The Office for Budget Responsibility says that the dole bill will rise by £6 billion as a result of his failure to get Britain back to work. To pay that price, he is proposing an uprating Bill which, I am afraid to say, sounds all wrong to me. It is wrong to take £4 billion from tax credits, it is wrong to take £300 million from maternity pay, and it is wrong that this strivers tax is going to hit 4,500 working families in his constituency. He should be fixing welfare reform, not flogging working families. Perhaps he would like to tell the House this afternoon just what share of the savings from this uprating Bill is going to come from working families.
Mr Duncan Smith
I must tell the right hon. Gentleman that our unemployment figures are better than those originally forecast by the OBR. I remind him—as if he needed reminding—that he left this Government with a 6% fall in GDP, an economy that was on the rack, and debt that was higher than that of any other country in northern Europe and rising every year, with £120 million a day being spent on the interest. Let me remind him of one other thing: he has voted against every single change and every cut we have made to deal with that debt. The Opposition are irresponsible and not fit for government.
Remploy
Liam Byrne Excerpts(12 years ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
(Urgent Question): To ask the Minister if she will make a statement about the end of Remploy.
The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey)
I am grateful for the opportunity to provide the House with an update on Remploy. On Thursday, I laid a written statement in the House about stage 2 of Remploy factories—a continuation of a process announced by my predecessor, now Secretary of State for Culture, Media and Sport, on 7 March. She then gave a further statement to the House on 10 July. In it, the Remploy board announced the outcome of its analysis of the remaining stage 2 businesses. Remploy will now start a commercial process to mitigate potential job losses. At this stage, no final decisions have been made about factory closures or redundancies. Our priority throughout the process is to safeguard jobs, which is why we are offering a wage subsidy of £6,400 for each disabled employee to encourage interested parties to come forward.
We want substantially to improve employment opportunities for all disabled people. We engaged with disability experts and organisations to undertake a review of our specialist disability employment support. The Sayce review findings and the responses we received to the public consultation strongly supported the idea of moving away from the Remploy model for disabled people.
The first point that I want to make is that a sixth of the money for the sustained employment of disabled people is currently spent on supporting the Remploy factories, which means that a sixth of the budget went to 2,200 out of 6.9 million disabled people of working age. I remind the House that, before the last Government closed 29 factories, the right hon. Member for Neath (Mr Hain) said:
“The reality is that without modernisation Remploy deficits would obliterate our other programmes to help disabled people into mainstream work.”—[Official Report, 29 November 2007; Vol. 468, c. 448.]
The current Government are committed to protecting the budget of £320 million for specialist disability employment support, but we know that we must use that money much more effectively to help far more disabled people to fulfil their ambitions and move into mainstream work. In these economically difficult times, it is more important than ever for the Government’s disability employment programmes to represent value for money and to deliver the most effective possible support to help disabled people to find and keep employment.
Remploy has faced an uncertain future for many years, and in 2008, under the last Government, 29 factories closed. A modernisation plan failed, having set excessively ambitious targets which were never achieved. The right hon. Member for Birmingham, Hodge Hill (Mr Byrne) knows that only too well. As a result, the factories have become increasingly loss-making, and their future has become more precarious. That has left all staff in a vulnerable position. The answer must be to find them work and help them into mainstream employment, and the changes that are being made are focused on ensuring that they all obtain long-term, sustainable jobs.
I do, of course, understand how unsettling it is for Remploy employees to find that they are faced with the threat of losing their jobs. I know that a large number of them have given many years of service, and that they now face the prospect of looking for alternative work. That is why we set up the people help and support package especially for them. All disabled Remploy staff affected by the changes who give their consent will be guaranteed access to £8 million of tailored support to help them to find alternative employment. Despite a slow start, we are making a number of improvements to the package. Over the past three months, 148 of the 960 or so disabled people who have come forward to work with us and our personal case workers have found employment. We have every expectation that the number of job outcomes, which is already increasing daily, will increase further. We are monitoring and tracking these people and helping them to obtain work, which is something that the last Government never did when they closed their factories.
Jobcentre Plus reached agreements today with five major national employers—some of the biggest high street retailers and restaurant chains—to help ex-Remploy staff into work, and they will also have access to support from Remploy Employment Services. Since 2010, despite the tough economic climate, it has found 50,000 jobs for disabled and disadvantaged people, many of whose disabilities are similar to those of staff in Remploy factories.
Let me give a few instances of former Remploy staff who have begun work in a vast array of jobs. Four former employees from Aberdeen have started a co-operative business in their old factory. Red Rock Data Processing Services in Wigan is reopening its factory and employing former Remploy staff. Ex-employees have found work at Dekko Windows in Oldham, Camborne college in Penzance and Hayman Construction in Plymouth, and at Asda. All those people are moving into mainstream work, and I expect that, as the support continues, we shall see an increasing number of such good outcomes.
I have met many Members on both sides of the House to discuss this matter, and I shall continue to do so. We seek the best possible outcomes and opportunities for all Remploy staff.
Mr Speaker
I am grateful to the Minister. She did somewhat exceed her allotted time, which simply means that I must allow some modest latitude to the right hon. Member for Birmingham, Hodge Hill (Mr Byrne).
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
May I start, Mr Speaker, by saying how grateful we are to you for allowing this urgent question this afternoon? I say to the Minister that, frankly, it is shameful that her Department tried to sneak out through a written ministerial statement last week news that it was shutting a further 10 Remploy factories and putting five more at risk. It was a mark of contempt for Remploy workers that the Minister sought to duck a debate in the House.
This statement marks the destruction of a tradition that stretches back to the foundation of the welfare state. If there is an ideal that Labour Members cherish, it is that the welfare state should be strong on the ethic to work and strong on the ethic to care. Remploy epitomises both those ideals, yet over the past year all we have heard from the Government is one plan after another to close Remploy down, without any regard for how its workers are connected to a future—to jobs and prosperity in the years to come.
Months ago, a Minister from this Department promised the House that the Government would move hell and high water to ensure sacked Remploy workers got into jobs, yet today about 90% of those workers sacked this year are still out of work. That is not good enough. The Work programme is not delivering for disabled people. Fewer than 1% of people on employment and support allowance have been found sustained jobs. When we undertook the modernisation of Remploy, we set aside £500 million to help support the process. I am afraid that is in sharp contrast to what we heard from the Minister this afternoon.
It is now apparent that this closure programme must stop until we are clear about what has gone wrong in getting sacked Remploy workers back into jobs. We need to learn far more from the example set by the Welsh Government, who have already provided 97 opportunities for 250 workers who have lost their jobs. The Minister will have heard, as I have, just how important this is, because she will know, as I do, that for Remploy workers their job is far more than simply an income; it is their connection to a social network and to a world outside. It is often everything to them.
Let me ask the Minister this: will she apologise to the House for trying to sneak this announcement out through a written ministerial statement? Especially after the Secretary of State dismissed Remploy workers as doing nothing more than sitting around drinking coffee, I think that that would be an appropriate gesture. Will the Minister stop this closure programme until we have a report on the table from her Department about what has gone wrong in getting the workers sacked earlier this year back into jobs? Specifically in respect of Wales, will she take up the proposal of Leighton Andrews that two factories in Wales be transferred to the Welsh Government, because although she does not feel they have a future, the Government of Wales certainly do?
Esther McVey
I am quite taken aback by your bluster and, I have to say, false words. Your words would have far more emphasis—[Interruption.] The right hon. Gentleman’s words would have far more worth were it not for the fact that he put these plans into place in the first instance. Indeed, he closed 29 factories in 2008 and rightly put in a lot of money, but it was put into a failed modernisation plan with targets that could never be reached. A target of 130% was expected of public sector contracts; that never happened. Worse still, he has the temerity to talk to us about what we have put in place for individual workers when he did absolutely nothing; he did not track them, and he did not put in place any personalised casework or any support. That is really rather shocking.
The right hon. Gentleman might be making cheap jibes and cheap statements on the back of these workers, but frankly I find that rather disingenuous and beneath him. He has a failed modernisation plan behind him, and also failed support, and he was also the chap who said that no money was left in the bank. I will not apologise, therefore, because, frankly, I am picking up his pieces.
Benefits Uprating (2013-14)
Liam Byrne Excerpts(12 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
I thank the Minister for advance sight of his statement, although from yesterday we had a pretty good idea what he was going to say. Today brings welcome news for Britain’s pensioners. When Labour was in office we lifted 1 million pensioners out of poverty and increased pensioner incomes by 40%. Today the Minister has confirmed that pensions are set to rise, which we welcome, and we look forward to his pensions White Paper, which is now acquiring mythical status—we hope he will soon be able to prove it is a reality and not a myth.
Although the news for pensioners is welcome, news for working people is a disaster. Buried in the small print of yesterday’s Budget is the brutal truth that it was a Budget for unemployment. We already knew that the Chancellor had throttled the recovery, that the Secretary of State for Communities and Local Government had cut hardest those councils where jobs were fewest, and that the Work programme was worse than doing nothing, but yesterday we saw what that means for the nation’s finances.
The Office for Budget Responsibility has revised up the claimant count by 340,000 by 2016. This Budget puts up unemployment, and the bill for that failure is enormous. The dole bill in 2015-16 will now be nearly £1 billion higher—£1.6 billion more over the next three years. The bill for failure is not going down but up, and yesterday we learned that working people will pay the price.
This country already has more than 6 million working people in poverty. The Resolution Foundation stated yesterday that 60% of the welfare uprating bill will be paid by working people. It is a strivers’ tax. Her Majesty’s Treasury policy costings state that the 1% squeeze will save £6.7 billion. Provisional analysis this morning by the Library shows that just 23% of that will come from JSA, ESA and income support. The rest of the balance will come from tax credits, maternity allowance, maternity pay, sick pay and housing benefits, which are all claimed by working people. The strivers and battlers whom the Prime Minister promised to defend at his party conference will pay the price for the Government’s failure.
I hope we will not have any nonsense from the Minister about how all that will be offset by the rise in the personal allowance. Already, £14 billion has been taken out of tax credits, and yesterday’s Budget steals another £5 billion from tax credits by 2016-17. The universal credit we have heard so much about—if it ever happens—has been hacked into before it has even started. The price will be paid by 6,000 families in the Minister’s constituency—no doubt they are delighted with him.
In the welfare uprating Bill, what is the value of the squeeze on working people’s maternity allowance, statutory sick pay, maternity pay, paternity pay, statutory adoption pay, working tax credit and child tax credit? During Second Reading of the Child Poverty Bill, the Minister said that he had given up being an even-handed academic, because he was
“appalled at what was happening in our country to the most vulnerable people”—[Official Report, 20 July 2009; Vol. 496, c. 625.]
Indeed, he attacked his hon. Friends for standing “idly by” and watching child poverty reach record levels.
Before the autumn statement, the Institute for Fiscal Studies said that 400,000 children will be plunged back into poverty by 2015 because of measures already taken. How many more children will fall into poverty as a result of this strivers’ tax? Will the Minister please justify to the House how the Chancellor can press ahead with a £3 billion tax cut for the better-off—a tax cut of £107,000 for the 8,000 people earning over £1 million—when 6,000 families in his own constituency will see their tax credits frozen or cut? This Budget has increased the claimant count, put up the cost of failure and now working people will pay the price.
Steve Webb
It is not often that Shakespeare springs to mind when I respond to these statements, but the phrase
“full of sound and fury, signifying nothing”
springs to mind—I missed out the earlier bit of the quote about a tale told by an idiot, out of respect for the right hon. Gentleman. We get a lot of fury and sound, but when it comes to the crunch, he abstains. He described the measures as a disaster, but it was not clear whether that means he will vote against them—answer came there none. If the measures are a disaster, surely he can say he will vote against them, but of course he does not. He sounds sympathetic and angry, but when it comes to the crunch and there is a vote, he disappears and is not to be seen.
The right hon. Gentleman asked about the crucial issue of employment, but he does not seem to realise that the number of people in work is at a record level and will rise every year of this Parliament. That is the record of the coalition. He asked about strivers and somehow wanted to waft away the large increase in personal tax allowances. I am afraid, however, that I will not let him waft away a large commitment to Britain’s strivers. This April, the personal tax alliance will rise by a record amount—£1,300. That is worth £5 a week to the hard-working families he claims to support—far more than any indexation impact.
The right hon. Gentleman referred to universal credit and used the phrase “if it happens”. He may not have noticed that yesterday we published the rates of disregard for universal credit, and on Monday my right hon. Friend the Work and Pensions Secretary will publish further details. This bold welfare reform is on track, on time and under budget, and it will be delivered as we have promised.
The right hon. Gentleman asked about three specific areas. When the welfare uprating Bill is published it will be accompanied by a full impact assessment that will deal with the figures he has requested. On child poverty, the Government remain committed to our statutory obligations, and when taken as a whole, our policies will deliver real reductions in child poverty. He will have seen the chart published yesterday on the impact of universal credit, which shows overwhelmingly that those in the poorest deciles benefit most. Universal credit will help us to eat into child poverty. He did not mention the Chancellor’s announcement yesterday of a multi-billion pound tax relief for investment by British business which will create jobs and reduce child poverty.
Finally, the right hon. Gentleman mentioned taxes on the highest paid. I seem to remember that he was a Treasury Minister. In 13 years of the Labour Government —if I remember rightly—the top rate of income tax was never above 40%. He seems to be objecting to the fact that we have a 45% top rate of income tax. If 45% is too low, why was he satisfied with 40% for 13 years?
Jobs and Social Security
Liam Byrne Excerpts(12 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
I beg to move,
That this House notes that only just over two in every hundred people referred to the Work Programme in its first year have gone into work; further notes that it has delivered a worse outcome than no programme at all; recognises that long term unemployment is soaring and that the welfare bill is projected to be £20 billion higher than planned; notes with concern that the Government is cutting £14 billion from tax credits and is taking £6.7 billion from disability benefits to pay for this cost of failures; and calls on the Government to implement a bank bonus tax to fund a Real Jobs Guarantee for young people and commission a cumulative impact assessment of disability benefit changes.
Our debate takes place in the shadow of the Chancellor’s winter statement next week. It is clear that a winter of misery lies ahead. The Chancellor has already had to revise up the cost of welfare spending for this Parliament by an eye-watering £20 billion, and now, after yesterday’s brutal exposure of the Work programme, we know a great deal more about who is to blame.
We already knew that the Chancellor had done his level best to throttle the recovery. He has cut so far and so fast that we have now been landed with the longest double-dip recession since the war; and our economy is so fragile that the Governor of the Bank of England has warned that we might lapse into another recession this year; but what we did not know until yesterday was just how badly let down the Chancellor, the Cabinet and our constituents have been by the complete inability of the Department for Work and Pensions to get our country back to work. No wonder the Chancellor is tearing strips off the Secretary of State for Work and Pensions in Cabinet.
All over Britain, businesses and families are busting a gut to do anything and everything to find work. Some 60% of jobs created since the election have either been part-time or self-employed, and, amidst all that strain and effort, we might have expected a little more support and a little more of a helping hand from the DWP. Yesterday, however, we discovered that it has done worse than nothing. Ministers swept into office promising the biggest-ever scheme to help people back to work, but yesterday we heard, not the hype, but the reality. It has been trying to hide these figures for more than a year, and yesterday we found out why: the Work programme has proved precisely as useful as doing absolutely nothing—in fact, worse than nothing.
When the DWP went out to market to ask contractors to come forward and help with the task, it said, in its documents, that it could expect about 5% of people on long-term benefits to make it into work under their own steam each year. That is why it set itself a target of outperforming doing nothing by 10%—not a high bar—but somehow it managed to set a target as low as possible and miss it. It is right, therefore, that the House highlights, not just this failure, but the soaring cost of failure, which our constituents will now have to help pay down.
Mr John Redwood (Wokingham) (Con)
Will the right hon. Gentleman give us some positive ideas on what improvements could be made? I am sure that all people of good will in the House want more people to get back to work and will recognise that this large welfare spending needs to be used in a way that encourages them.
Mr Byrne
The right hon. Gentleman will be as concerned as I am about this question, because only 2.6% of people in his constituency on the Work programme got a sustainable job outcome. I will come directly to that very question, but I want to dwell first on the cost of failure.
Since the Work programme has been in place, the number of people out of work full-time for more than a year has risen by an extraordinary 210,000. This spiralling cost of long-term unemployment is now costing us, in the jobseeker’s allowance bill alone, £750 million. That is an enormous cost of failure. It is the cost, in fact, of 18,000 nurses, 16,000 teachers and 14,000 police officers.
Bill Esterson (Sefton Central) (Lab)
My right hon. Friend talks about the cost of the failure of this programme. Will he also mention the impact on our constituents? The message from mine is clear: when they go on Work programme activities, they are not given the sort of training or opportunities they are promised, by and large, and so there is little prospect, even from the start, of their getting a job, even if the jobs are there at the end. Does he agree that that is a common experience across the country?
Mr Byrne
I know this is of great concern to my hon. Friend. There are more than six people chasing every job in his constituency. What his constituents need is a back-to-work programme that actually works, pulling out all the stops to get people into jobs, but I am afraid the story he has told from his constituency has become all too common across the country.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I am sure the right hon. Gentleman wants to get the record straight. Will he now tell the House that in the last two years of his complacent Government, long-term unemployment rose by some 400,000?
Mr Byrne
I would be happy to trade arguments about our record with the Secretary of State, because while Labour was in office, the amount of money that we spent on out-of-work benefits fell by £7.5 billion. That is why his noble Friend Lord Freud described Labour’s record in getting people back to work as remarkable. It is a shame that he could not arrive at the same judgment about this Government’s programme, which is now in place.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I am sure that my constituents want a reflective debate today, not the sort of intervention they have just heard from the Secretary of State. As I remember, Lord Freud—or Mr Freud or Dr Freud, before he was ennobled—did a thorough piece of work for the former Prime Minister, Tony Blair. What went wrong? Was his analysis wrong or was the way the Conservative Government interpreted it wrong? Was Freud wrong and his analysis abused, or was he right and something has gone wrong with the Government?
Andrew Bridgen (North West Leicestershire) (Con)
Will the right hon. Gentleman give way?
Mr Byrne
In a moment.
The Government spent something like £63 million closing down the flexible new deal—a programme that was actually getting more people into sustainable jobs than the Work programme and was costing only something like 9.5% more per job outcome. The Government have, in effect, shut down a system that was working, spent an awful long time getting something back up and then overseen a programme that has dramatically failed to hit the target set for it in the first years. It is a catalogue of failure.
Jessica Morden (Newport East) (Lab)
Does my right hon. Friend agree that yesterday’s figures for young long-term unemployed people were especially tragic? Would he be interested to know that Jobs Growth Wales, which was introduced by the Labour Government in the Welsh Assembly in April, has proved to be seven times as effective in getting young people back into work and was based precisely on the future jobs fund?
Mr Byrne
My hon. Friend is absolutely right. The Work programme has been an abject failure in her constituency. Only 1.4% of people in her constituency who went into the programme were attached to any kind of sustainable job outcome. We know from Department for Work and Pensions research last week that the future jobs fund was a roaring success, delivering more than £7,500 of wider benefit to society. It was such a tragedy that the Government closed it down. Thank heavens that Labour is in power up and down the country, including in Wales, where we are building on the lessons of the future jobs fund, making it better and stronger, and now making a difference for young people across her constituency and beyond in Wales.
Nick de Bois (Enfield North) (Con)
Before we get too engrossed in bandying statistics around, is it not worth remembering that a job outcome is measured over a six-month period? The Work programme has been in place for a year; therefore, the early statistics will inevitably not reflect its success accurately. Indeed, we could actually discount almost half the 800,000, simply because getting a six-month job outcome is almost impossible.
Mr Byrne
I am afraid that prompts the question why the DWP set the target in the first place. Indeed, yesterday on the television news that I watched, the Secretary of State made great play of the fact that the Work programme was only in its first year. However, the fact that the targets were set by the DWP was somehow missing from what he said yesterday. Indeed, they were targets for the first year. The challenge only gets greater in the second year. If the hon. Gentleman looks at the tender documents that the DWP put out, he will see that in the second year the Work programme has to get 27.5% of those on jobseeker’s allowance into sustainable job outcomes. That is about 10 times what the Government have managed to deliver in the first year. So I am afraid the argument that the Work programme is just warming up simply will not do.
Nick de Bois
I think that the right hon. Gentleman would accept, on reflection, that in achieving the goal of helping people to secure full-time employment, it is inevitable in these difficult times that some of them will need to take jobs that might not last six months in order to help them to get back into the Work programme cycle. The inevitable consequence of that is that we will do far better in the next year. So be it: let us celebrate that.
Mr Byrne
There is an element of me that feels sorry for the Secretary of State. He is operating in an economy whose recovery has been throttled by the Chancellor, while another Cabinet colleague, the Secretary of State for Communities and Local Government, is implementing the biggest cuts to those local councils where there are the fewest jobs. So yes, the Secretary of State for Work and Pensions faces a difficult challenge, but it was his Department that set out the bald statistic—[Interruption.] I am sorry that the hon. Member for Enfield North (Nick de Bois) cannot hear me because of the chatter from those on his Front Bench. It was the Secretary of State’s Department that said that if the Government did nothing, 5% of people on long-term benefits could flow into work. The Work programme has delivered less than that, and the benchmarks will get stiffer next year.
Mr William Bain (Glasgow North East) (Lab)
My right hon. Friend has seen a successful job creation plan for the long-term unemployed in my city of Glasgow, run by the Labour administration on Glasgow city council. There are 1,320 long-term unemployed people in my constituency, but under the Work programme only 2.5% of them have found a lasting job. Does not that illustrate the difference between a Labour administration who know how to help to create jobs, and a Conservative-led coalition that is making an absolute hash of it?
Mr Byrne
My hon. Friend is absolutely right. Glasgow city council has lessons to teach all of us about what it takes to get young people back into work. Despite all the difficult decisions that the council has had to take, it has made it a priority to get young people back into work. The way in which it has built on the future jobs fund is a real lesson for everybody.
Andrew Bridgen
The right hon. Gentleman talks about the Labour Government’s record of getting people into work. Can he explain why the number of households in which no one had ever worked doubled to 350,000 during the 13 years of his Government?
Mr Byrne
The hon. Gentleman should check his facts. The number of people on out-of-work benefits came down by 1 million under Labour, and the out-of-work benefit bill came down by £7.5 billion. That is in sharp contrast to this Government, who have put up welfare spending by £20 billion more than they projected. To pay down that bill, they are now having to cut tax credits from constituents such as those of the hon. Gentleman.
Andrew Bridgen
The right hon. Gentleman did not answer the question. I asked why the number of households in which no one had ever worked doubled to 350,000 under the last Labour Government.
Mr Byrne
I am afraid the hon. Gentleman has to check his facts. The truth is that Labour delivered 1 million fewer people on out-of-work benefits and a £7.5 billion reduction in the out-of-work benefits bill. That is why his noble Friend Lord Freud described our record of getting people back to work as remarkable.
If this Government had built on those lessons rather than ignoring them, they would not be presiding over the sorry state of affairs that was announced yesterday, when the Secretary of State and the Minister for unemployment—the Minister of State, Department for Work and Pensions, the hon. Member for Fareham (Mr Hoban)—were forced to come out and tell us that the only virtue they could find in yesterday’s figures was that the Work programme was cheaper than the flexible new deal. The truth is that a payment-by-results system will always be cheaper if there are no results. It is the lack of results that is now costing this country a fortune. That is what is driving up the welfare bill by £20 billion more than was projected at the beginning of this Parliament.
We have to ask who is going to pick up the tab. We know that it will not be Britain’s richest citizens. They have been handed a tax cut of some £3 billion. They will not be asked to pay for this failure. Instead, it will be Britain’s strivers and battlers—those whom the Prime Minister promised to defend. Well, some defence! This Government are now taking £14 billion off tax credits over the course of this Parliament. I think I am right in saying that tax credits are the only benefit that is currently frozen.
The tragedy is that the cuts are so unfocused and so unwise that Britain’s part-time workers will now be better off on benefits than they will be in work. How on earth can that be right? A couple with two children and some child care costs on £40,000 a year are set to lose £1,900—5% of their income—in benefits over the course of this Parliament, while 8,000 millionaires will gain an average of £100,000 a year from the Government’s tax rate cut in April. If that is the Prime Minister’s defence of Britain’s battlers and strivers, I would hate to see what happens when he starts attacking them.
Gavin Shuker (Luton South) (Lab/Co-op)
Is not the reality even worse than my right hon. Friend paints it? [Interruption.] He says that he has not finished yet! Many of the battlers and strivers are young people, and in my constituency, long-term youth unemployment is up by 1,150%. The other options available to them are going on to university or staying in education, yet tuition fees have trebled and the education maintenance allowance has been taken away.
Mr Byrne
My hon. Friend is absolutely right: there is a bleak future for many young people in his constituency, where the Work programme has delivered something like 1.3% of people into sustainable jobs, so it is one of the worst figures in the country. When young people in my hon. Friend’s constituency face tuition fees that have trebled, the cancellation of EMA and the shutdown of the future jobs programme, he is right to call in this place for a very different course of action.
Even more worrying for the future, the signs are that when universal credit is introduced, it will not get better for Britain’s strivers and battlers; it will actually get worse. We know that new rules for universal credit will mean taking in-work benefits away from anyone who has managed to squirrel away £16,000, and we know that it locks in cuts to tax credits. Now, in this morning’s Sun, we read that a couple working full time—over a million of them will be in the system—will lose something like £1,200 a year. That is, of course, if it ever happens.
Andrew Bridgen
I thank the right hon. Gentleman for giving way again. I would like to tackle him on the last Government’s record on what he claims was getting people into work. If that were the case, will he explain why the working age welfare budget increased by 40% in real terms during the 13 years of the last Labour Government?
Mr Byrne
Let me give the hon. Gentleman some statistics. If he looked at the amount spent on benefits in 1996-97, he would find that it came to about £51 billion, excluding pensions. By the time we reach 2009-10, that had fallen to £44 billion, so I am afraid that no matter how he looks at it, the truth is that the amount spent on out-of-work benefits over the course of Labour’s period in office fell by £7.5 billion. The hon. Gentleman is a member of a party that has presided over an increase in the projected welfare spend by £20 billion, and there are something like 8,000 families in his constituency that are now seeing their tax credits either frozen or cut to pay for that cost of failure. I wonder how he is going to explain that to his constituents as we get closer to the next election.
It is not simply people in work who are paying the bill. We now know that about 6 million families are working, yet are still in poverty. There is another group of our constituents that we must worry about, too—those constituents who are disabled yet are set to lose something like £6.7 billion of help over the course of this Parliament to help pay for the failure to get Britain back to work. These benefits are being taken away, without any cumulative assessment of their combined impact, and these cuts total more than the Government are taking away from banks. That, I am afraid, is a sorry indictment of this Government’s values.
Geraint Davies (Swansea West) (Lab/Co-op)
My right hon. Friend will know that growth is at a standstill because of the collapse in consumer demand. Given that poor people spend all their money while rich people can afford to save or hide it away, does he accept that focusing the cuts on the poorest—cutting disablement benefits, the working families tax credit and the like—is completely counter-productive for job growth as it deflates the whole economy?
Mr Byrne
My hon. Friend is right. The Work programme has delivered only about 1% of his constituents into sustainable work. What we will publish this afternoon is an analysis showing that the per capita cuts in councils across the country are biggest where jobs are fewest. Where there is something like £200 a head in cuts, it means two or three times the national average of people chasing every single job. It is not surprising that the Work programme, flawed as it is, is finding it hard work because the Chancellor has throttled the economy and the Secretary of State for Communities and Local Government is cutting back where jobs are fewest.
Joan Walley (Stoke-on-Trent North) (Lab)
Does my right hon. Friend agree that the Government should be redoubling their efforts to invest in the areas that need investment most—the areas that have been hit hardest by the welfare reform cuts? The Prime Minister implied that Stoke-on-Trent would have a local enterprise zone, but that never happened. We need to benefit from the regional growth fund, and we need a Government emphasis on what needs to happen.
Mr Byrne
My hon. Friend has been a consistent champion of Stoke, and has consistently drawn attention to the need for greater economic development there. The Work programme is not helping, the cuts in council funds are not helping, and the Chancellor’s wider economic strategy is not helping. My hon. Friend is right: we must redouble our efforts, particularly in those poorer parts of the country, to get people back into work. There is very little sign that that is happening at present.
Once upon a time we were promised a welfare revolution, and I think that we are right to ask this afternoon what on earth has happened to it. Universal credit is descending into universal chaos, punishing the strivers and battlers whom it was supposed to help. A climate of fear is being created for disabled people, and the Work programme quite simply is not working. The Chancellor knows that it is going wrong, and No. 10 knows that it is going wrong. Only the Secretary of State thinks that it is all okay. There he was yesterday, running from studio to studio, saying to anyone and everyone who would listen that it was all fine—that it would be all right on the night—although, quite obviously, it is all wrong. I am now sure that the Secretary of State is competing for Channel 4’s Comical Ali award for those who ignore all the evidence around them. It is not delusions of grandeur from which he suffers; it is delusions of adequacy, and the tragedy is that there is an alternative.
Andrew Gwynne (Denton and Reddish) (Lab)
Does my right hon. Friend agree that, although it would be bad enough if just one of the elements that he has mentioned affected any of his constituents, many of our constituents will be clobbered by a combination of them all? They will be hit by the bedroom tax, they will be hit by the changes in tax credits, they will be hit by the housing benefit changes, and they will be hit by the localisation of council tax relief.
Mr Byrne
My hon. Friend is exactly right. Many of our communities throughout Britain are being hit from all sides, and the Government simply do not seem to understand the combined impact of what is happening. We can only hope that next week’s autumn statement will contain a proper plan to get us back to growth and to get our country back to work.
Mr Andy Slaughter (Hammersmith) (Lab)
No group is being hit harder than the homeless, or the most recently homeless. I do not know whether my right hon. Friend has had a chance to read “The Programme’s Not Working”, a report published yesterday by Homeless Link, St Mungo’s and Crisis about the experience of homeless people on the Work programme. It states that 58% of them were not even asked whether homelessness contributed to their difficulty in obtaining a job, and that the same number said they were not treated with dignity or respect. People who are losing their benefits are also being victimised by this dreadful scheme.
Mr Byrne
I am grateful to my hon. Friend for bringing that report to the House’s attention. I have not seen it, but yesterday’s announcement made clear that for the groups who need extra help, the Work programme is failing particularly badly. I was extremely disappointed to learn, for example, that those receiving employment and support allowance were getting the toughest deal. Fewer than 1% of them were being helped into sustainable jobs. That is not a record of which any Member in the House can be proud.
Hywel Williams (Arfon) (PC)
I am grateful to the right hon. Gentleman for giving way. He is being very generous. To complete the picture, does he agree that the poorest areas often contain the largest public sectors? Would it not be a tragedy if regional pay in the public sector were introduced in those areas, including my own, and would not regional benefits compound the difficulty?
Mr Byrne
The hon. Gentleman is right. That is just one more element of the wider picture that we are presenting this afternoon. At a time when there is a huge combined impact on communities throughout the country, we do not have a plan to get Britain back to work. What we have is a welfare bill that is rising, and when it comes to paying that down, it is Britain’s working people—those in receipt of tax credits—who are bearing the brunt. The Government are taking £14 billion out of tax credits over the course of the present Parliament.
We are arguing for a different approach, and we hope that we will see it next week. We believe that that different approach starts with getting our young people back into work. They currently constitute some 40% of those who are out of work. That is one of the highest levels in any western country, and it is a badge of shame. Now, all over the country Labour councils are leading the charge to get young people back into jobs. In Leeds, Sheffield, Liverpool, Wales, Cardiff, Glasgow and Birmingham, it is now Labour councils that are rolling up their sleeves and leading the drive to get young people into jobs. We should help them, so let us put in place a bank bonus tax to create a fund that would help us get young people back into work.
This Saturday is the 70th anniversary of the Beveridge report. That report offered the blueprint for post-war social security. The truth is that 70 years later, working people in this country need new things from the welfare state. They need retraining when they lose their job. They need child care. They need better social care. They need help when they are disabled. Millions today pay in and get nothing back. They are short-changed Britain, when what we want is something-for-something Britain.
Those of us who want to modernise the system know we need to remember the most important lesson Beveridge taught us: social security is built on full employment. So let us get on with getting Britain back to work, and we should start with the young people, whom we will ask to pay for all of our futures—our young people who are hungry for work, yet are being let down by this shambolic Government.
I commend the motion to the House.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The Labour motion is one of the stupidest motions I have ever had to deal with. It says very little and nothing at all about what the Opposition would do if they were in office. It also lays yet more spending commitments on an Opposition whose programme is littered with huge cost increases.
I will take no lectures from the right hon. Member for Birmingham, Hodge Hill (Mr Byrne). I remind everyone again that he is the man who thought it was a joke to write a letter to the incoming Government saying there was no money left. [Interruption.] Opposition Members moan, but the reality is that the last Government bust this country, and we are having to pick up the mess. Furthermore, the right hon. Gentleman was hugely responsible for that mess, yet we have just got a lecture from him on the economy and on unemployment. The reality, however, is that unemployment is now lower than it was when he left office. We have higher employment. We have more women in work than ever before. We also have 1 million new private sector jobs. The reality is that he and his party left us with an utter mess, and we are having to take tough decisions to get ourselves out of it.
Mr Duncan Smith
I will take some interventions from the right hon. Gentleman after I have dealt with a few of the points that he made.
The right hon. Gentleman’s motion says that just
“two in every hundred people referred to the Work Programme in its first year have gone into work”.
That is complete nonsense. The Opposition have added, and then divided, the numbers in a very partial way, to come up with the worst possible figure, which is precisely what they wanted. They have added up all the total attachments, but taken into account only a small proportion of those for whom six-month job placements were found.
Mr Duncan Smith
As I have said, I will take some interventions after I have made a few rebuttal points.
If the Opposition had worked the figures out correctly, they would have noticed what my hon. Friend the Member for Enfield North (Nick de Bois) has pointed out: some 315,000 of the 837,000 people who were attached were not in a position to have a six-month outcome because they had not been on the programme for six months. The Opposition do not want to incorporate that fact into their figures, however. Those people will come through into the next set of figures that we produce.
Mr Duncan Smith
I will give way to the right hon. Gentleman after I have made this point. In fact, the total number in sustained job outcomes falls well within the target area that we were trying to achieve during the first year’s figures. If people want to gerrymander the figures, they should make sure that they gerrymander them all.
Mr Byrne
May I draw the Secretary of State’s attention back to the invitation to tender, which presumably he signed off? Under the heading of “Key Performance Measure”, which is in bold type and is the thing that we are interested in and debating, it says:
“Performance will be measured by comparing job outcomes…in the previous 12 months to referrals in the same period.”
The target for performance in the previous 12 months was 5%, and the Work programme statistics delivered yesterday showed that that target had been missed comprehensively.
Mr Duncan Smith
Yet again, the right hon. Gentleman has defeated the first point that he made. In other words, the figures that he has produced in the motion are wrong and he has just proved it. [Interruption.] If he wants to listen, he might learn something. No wonder he ended up as the man who told us there was no money left—with his kind of arithmetic, I am surprised that there was anything left at all. The reality is that in a year—if we want six-month referrals—a number of people will not have been in the programme for six months. So 315,000 people—[Interruption.] I am simply saying to him that the reality exists. This programme is on track; it is the best programme; and it will be putting some of the most difficult people back into work. Let me just deal with another point, which is the one about unemployment.
Mr Duncan Smith
No, the figures we stand by are those we published yesterday. The point that I was making today to the right hon. Member for Birmingham, Hodge Hill—[Interruption.] No, actually the figure would be more than 5%, but I am not claiming that. What I am saying is that we stand by the figures that we published yesterday, and I believe we are on track. The point I was making, legitimately, is that the right hon. Gentleman spent his time deducting some numbers from one bit and adding them into another to create some bogus figure that two in every 100 people were found sustainable jobs. That is complete nonsense.
Mr Duncan Smith
I stand by the figures that we published yesterday—3.5% is exactly correct. The reality is that what I have said today is what we said yesterday. The point that I want to make is that the thing that has gone missing in all this is that, without the Work programme, some 207,000 people who had been long-term unemployed would not be in work today—they are. Now, we work with those 207,000 people, many of whom have serious problems and difficulties, to make them longer-term employed, which is the key. The Work programme is all about resolving that.
Mr Byrne
I am grateful to the Secretary of State, who is being characteristically generous in giving way. Broadly speaking, about 800,000 people were referred to the Work programme in the 14 months to which he extended the reporting period to flatter the figures, and 5% of 800,000 is 40,000. According to his figures, only just over 30,000 got into sustained jobs, so 10,000 more people would have got into jobs if the Government had done nothing. That cannot be a record of which he is proud; surely, he can admit that to the House.
Mr Duncan Smith
That is simply not true. I do not want to spend any longer on this, but the point that I made earlier about the right hon. Gentleman’s figures was that, when he concocted the figure of 200,000, he stripped out of his achievement figures the numbers for those who had been on employment and support allowance and so on and divided the total that was left, but those figures were in the other total. The Opposition have made a mistake and need to reckon that their adding up is wrong. The truth is that we have a programme that is helping people who are long-term unemployed.
Mr Duncan Smith
Of course it was a different world—it was a world in which the previous Government thought that every problem could be solved by chucking shed-loads of taxpayers’ money at it without caring what the outcomes were. That is exactly the point I am making. We have had to clear that mess up.
Mr Duncan Smith
I will give way, but I ought to deal with the other programme first, as the right hon. Gentleman might want to ask some questions about that, too. The other programme that the Opposition cited was the flexible new deal. If that was such a brilliant programme, surely it would have been rolled out nationally; it never was. When Labour left office, it was only just up to running across half of the UK.
Over an equivalent period and claimant cohort, the Work programme has got more people into work for six months or more—19,000—compared with 15,000 under FND, and it delivers better value for money. The £14,000 per outcome figure thrown around by Labour ignores the start-up costs of the Work programme, which covers five to seven years. An independent cost comparison by the Employment Related Services Association shows a figure of £2,000 per job under the Work programme, compared with £7,500 under FND which, just like other programmes, ultimately cost money and did not succeed in helping to get people into work.
Mr Byrne
This is an important point for us to debate. I do not know whether the Secretary of State has seen the analysis that was published yesterday by Inclusion, but it is pretty clear on this question. The proportion of people flowing into sustained jobs from the flexible new deal was 5%, which is much higher than the figures for the Work programme. The flexible new deal was more expensive. Inclusion calculates that the cost per job outcome under the Work programme is £14,000. The flexible new deal was 9.5% more expensive, but the Secretary of State is failing to be level with the House about the fact that doing nothing costs his Department less, but it costs the country more, because the welfare bill goes up. A payment-by-results programme is cheaper if there are no results. That is the problem that we have to fix, and that is why the Chancellor is so cross.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Many Members wish to speak in the debate, so we must have shorter interventions and replies.
Nigel Mills
I am not sure that I am the best person to answer that question. However, when we have a programme that is running for seven years, with people being put on to it for two years, we cannot draw many conclusions from the data in the first few months of its operation. A decent period will have to elapse before we get some reliable data that will have some meaning and can be used to look at trends. I see why we have official data to the end of July this year, but data since then would have more relevance if we also had data from the first three months of the programme.
No Member of this House seriously disputes the need to provide those with most barriers in their way with the additional support that they need to get back to work. Many such people have been out of work for a long time and will need help with serious issues in order to build up confidence and have any chance of getting back to work. To be fair, the scheme of the previous Government towards the end of their time in office was not radically different from that introduced by the current Government. This Government have accelerated the change, introduced a more consistent programme over the whole country and brought the strands of different schemes into one programme, but the direction of travel is not entirely different. In fact, many providers involved with the previous scheme are also involved in the current one. It is not sensible to say that the Work programme is doing the wrong thing and is a terrible idea, and that its support is completely wrong. Where does that leave us? Surely it is not the Opposition’s policy to have no support at all for the long-term unemployed.
Mr Byrne
The hon. Gentleman is generous in giving way. Our point is that there is not enough fuel in the tank. I am sure he is as worried as I am that on current performance, the Work programme may not hit its second-year target to get 27.5% of those on the programme into a long-term job. The Opposition motion says that we should start putting more fuel in the tank by providing extra resources for young people.
Nigel Mills
One problem of the Work programme is that the year we are looking at contained the second part of the double-dip recession. We all accept that it is hard for anyone to find work in a recession, let alone those who have been out of work for a long time and have the most barriers to overcome. We hope that as the economy gathers strength in the coming year, that will give the Work programme even more chance of success in meeting its second-year targets.
Oral Answers to Questions
Liam Byrne Excerpts(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey)
To correct my hon. Friend, what the contract said was, “Should we win the contract, the sort of people we would look to negotiate with would be Disability Cornwall”—[Interruption.] The right hon. Member for Stirling (Mrs McGuire) is passing comments from a sedentary position; she may be thinking of a different matter altogether. In regard to Disability Cornwall, Atos’s position was that should it win the contract, it would look to negotiate with Disability Cornwall.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
May I first associate everyone on the Opposition Benches with the words of commemoration for our much treasured colleague, Malcolm Wicks, who is sorely missed?
Will the Secretary of State confirm that the introduction of universal credit is proceeding according to its original timetable?
Mr Duncan Smith
I can indeed. As we have said, we will start the process nationwide in October, although we have introduced an earlier start for a pilot programme, as the right hon. Gentleman is aware, because he came into the office to talk to me about it. He knows very well that, as I explained then, the four-year process will be completed exactly as we have intended, on time and on budget.
Mr Byrne
That is curious, because last year the Secretary of State told us that every new claim for out-of-work support would be treated as a claim for universal credit from next October, but the Minister of State, the hon. Member for Fareham (Mr Hoban), told Parliament on 26 October that the rules for universal credit from 2013 onward are still “under development.” What on earth is going on? On Atos, on caps on pension charges and now on universal credit, it does not appear that the Secretary of State has got a grip.
Mr Duncan Smith
If the right hon. Gentleman does not mind, I must say that that is a rather pathetic question. The reality, as he knows very well—he came into my office to discuss these matters and we showed him exactly what we are doing—is that there is no change. The reality is that over the four years we will bring universal credit completely online—it will be completed by 2017. I wish he would spend more time working on his brief, rather than writing books on China.
Universal Credit and Welfare Reform
Liam Byrne Excerpts(12 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
I beg to move,
That this House notes that the Universal Credit is late and over budget; recognises that there is widespread unease surrounding the implementation of the £2 billion scheme’s IT system; further notes that the project is so badly designed that it is set to reduce work incentives for over two million people and hurt small businesses and the self-employed; believes that Ministers have failed to properly account for numerous basic details of how the scheme will work, such as its interaction with free school meals or what is to be done with 20,000 Housing Benefit staff; further believes that the project is poorly thought through and is now at risk of descending into chaos; and calls on the Government to publish the business case, so that the House can see a detailed plan of implementation, and urgently to set out a plan to address these deep flaws before it is too late.
At the heart of the debate is a very simple principle, which is that anyone in this country should be better off in work than they are on benefits. That is a principle in which we in the Opposition passionately believe. We are a party that was founded by and for working people and that is why we want universal credit to succeed. It is now, however, an open secret in Whitehall that universal credit is a flagship that is sinking fast. The Treasury, says Mr Nick Robinson of the BBC,
“have long had deep anxieties that”
the Secretary of State
“might not be able to control spending”
on universal credit. Last week, the Minister for the Cabinet Office and Paymaster General, who is an old friend of the Secretary of State, was asked how universal credit was going. He said:
“Are we there yet? Am I absolutely confident we are there yet?”
His answer? “No.” This morning, an unnamed Minister weighed in to support the Secretary of State in his own way with a ringing endorsement, saying that universal credit
“is another car crash waiting to happen”.
The Secretary of State is no stranger to friendly fire. Indeed, back in 2002, he described himself as the “quiet man” who was about to “turn up the volume”. Today, we are not asking the Secretary of State to turn up the volume. We are asking him to dial down the chaos and dial up the competence in his Department.
The Secretary of State and I share a faith. He, like me, believes that confession is good for the soul, and today is confession time. We need answers to a host of questions about universal credit and we cannot help to get this vital project back on track unless he comes clean about exactly what is going on.
Jacob Rees-Mogg (North East Somerset) (Con)
While we are on a religious theme, I wonder whether the right hon. Gentleman might think about motes and beams, as there is rather a large beam in the eye of those on the Opposition Benches.
Mr Byrne
It is unclear how I might respond to that. I hope I will be able to set out for the hon. Gentleman this afternoon what I think will be a shared set of concerns about how to get this vital project back on track. I hope we have a degree of clarity, honesty and openness from those on the Treasury Bench.
Mr Denis MacShane (Rotherham) (Lab)
My right hon. Friend is starting at a macro level, but last Friday I had meetings with the people who have to apply the universal credit scheme in Rotherham. I also met the voluntary groups that deal with the people who rely on it and there are genuine fears. People want reform and they are not necessarily anti the Government for political reasons, but they do not think that the scheme will work as it is devised. The computer crashes for which our Governments are so famous—both those of whom he was a member and this Government—are a legend in the computer industry.
Mr Byrne
Let me start with precisely that risk. We were told when universal credit was first proposed that the IT costs would be in the order of £2 billion. Some £200 million was taken off for subsidies for another problem with child care created by the Secretary of State’s friend, the Chancellor. The former Minister responsible for unemployment, the right hon. Member for Epsom and Ewell (Chris Grayling), before he departed for the Ministry of Justice, said that the cost had spiralled to £2.1 billion. Already, two years in, the project is £100 million over budget and we learned yesterday that universal credit, when it is introduced and fully rolled out in 2017, will demand an extra £3.1 billion in welfare payments each year. That was the figure that the Department for Work and Pensions gave to the Office for Budget Responsibility in July last year.
Yesterday, however, the Secretary of State told the House that he had agreed to a Treasury target of £2.5 billion, wiping £600 million off tax credits by so-called policy designs. Where on earth is that money going to come from? It is, I am afraid, a mystery. It is a mystery shrouded in further questions about whether people will be better off in work when universal credit is introduced. What on earth is going to happen to free school meals, which are worth £410 million a year to families in many of our constituencies and are a vital lifeline every week? The Children’s Society says that if universal credit integrates free school meals in the wrong way, that will wipe out incentives to work for 120,000 families. What is going to happen to that budget?
Then there is the question of council tax benefit, which is worth £5 billion for 6 million households in Britain. As it turns out, we are going to get not a national scheme but a local scheme, because the Secretary of State lost his battle with the Secretary of State for Communities and Local Government. He was sat on by the right hon. Member for Brentwood and Ongar (Mr Pickles), which is a fate we would not wish on anyone. The result is that whether someone is better off in work or on benefits will depend on where they live. The Institute for Fiscal Studies says that universal credit “severely undermines” the simplification.
Then there is the question of how universal credit will interact with increases in personal allowances, which were introduced with such a great fanfare over the past year or two. Last week, Gingerbread said that because universal credit is calculated on post-tax income, the lowest paid would see most of the increase in personal allowances wiped out. In fact, when universal credit is introduced, the low paid will lose two thirds of the increase in personal allowances. Somehow the Chancellor of the Exchequer forgot to tell us that when he unveiled the proposal in his last Budget.
Then there is the question of how universal credit will lock in the cuts to tax credits that hit so many of our constituents this April. Those cuts now mean, according to answers given to my hon. Friend the Member for Stockport (Ann Coffey), that a couple with kids working part time—and goodness me, there are more people working part time these days—will now be more than £700 better off on benefits than in work. How on earth can that send the right signal?
Mr Redwood
Will the right hon. Gentleman give the House some of his ideas on how we could make it more worth while for people to work, given that all parties in the House think that that is the right aim and that it is not worth while enough at the moment?
Mr Byrne
That is very much the point of bringing the debate here today. We need from the Government transparency about the business case, which is being kept secret. Until we get to the heart of how the policy will be rolled out, until we get some answers to these basic questions, it is difficult for us to offer some constructive advice—advice we would offer for free.
John Healey (Wentworth and Dearne) (Lab)
Will my right hon. Friend take a look at the Rotherham citizens advice bureau survey, which I have sent to the Secretary of State today? The bureau questioned more than 100 people who had been through employment and support allowance assessments last year; more than half said that the assessment was rushed, nearly two thirds said that the assessor did not listen to them and only a quarter felt that the assessor was fully qualified to assess their medical condition. Does he agree that a fair benefits system and a fair universal credit depend on a fair and accurate system of assessment?
Mr Byrne
It absolutely does. Our chief concern is that that open and fair system of assessment will not fall into place for universal credit, with enormous consequences for our constituents.
The final point about the basic principle of whether people will be better off in work or on benefit is the evidence published by the Secretary of State’s own Department in the impact assessment that he signed earlier in the Parliament. The evidence shows that the marginal deduction rates will not go down for many people but will go up—2.1 million people will see their marginal deduction rates go up when universal credit is introduced. The incentive for them to work does not increase with universal credit; it goes into reverse. We have problems with free school meals and with council tax benefit, a short-changed personal allowance, the lock-in of cuts to tax credits and a worse incentive to work. That raises fundamental questions about a system that is about to go live in 150 days. That is why in this debate we want some answers on how these problems will be solved.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I will just give the right hon. Gentleman some answers on the marginal deduction rates. The fact is that 1.2 million people will receive a reduced marginal deduction rate as a result of what we are doing with universal credit. At the moment, 500,000 families see marginal deduction rates of well over 80%. Virtually nobody will see that once universal credit comes in. Some 2.8 million households will gain and 80% of those gains will go to the bottom 40%, improving their life chances dramatically.
Mr Byrne
But the Secretary of State refuses to admit that the marginal deduction rates will get worse for 2.1 million people. Until he answers the question about what will happen to free school meals and to council tax benefit, he cannot give us the assurance that that number of people will be better off in every single part of this country. He has to come clean about a system that is about to go live in 150 days. He is cutting it too fine, which is why No. 10 is worried, why the Treasury is worried and why his old friend the Minister for the Cabinet Office is worried.
Charlie Elphicke (Dover) (Con)
The fact is that 1.4 million people have been on out-of-work benefits for nine of the past 10 years. Rather than fear-mongering, shroud-waving and trying to frighten people, why is the right hon. Gentleman not working with the Government to get the best result and tell those people, “You’re needed in the workplace. We want you to play a part in building up the economy for future generations”?
Mr Byrne
If the hon. Gentleman was serious about wanting to get unemployed people in his constituency back to work—goodness knows there are enough of them—he would support Labour’s proposal for a tax on bankers’ bonuses that would get 110,000 young people back into work over the course of the next year.
Mr John Denham (Southampton, Itchen) (Lab)
Those of us who were here when the Child Support Agency was introduced know the dangers of introducing legislation that everyone agrees with in principle but that is badly carried out. My right hon. Friend is doing the right thing by raising these questions, but does he not agree that it is a little odd that it was the Secretary of State who was in danger of being forced out of his job when so many of the problems with the system lie with the Treasury, the Department for Communities and Local Government and the Department for Education, all the bits of the Government that are refusing to play ball with this vision?
Mr Byrne
My right hon. Friend is precisely right. That is why we are here to help the Secretary of State this afternoon by setting out some of the questions on which, if he was only a little clearer with the House, we would be happy to engage and help. One of the issues in which we share an interest is the way we support the enterprise spirit in this country. The CBI and the Chartered Institute of Taxation have flagged up their worry that universal credit will be a car crash for Britain’s entrepreneurs. The number of self-employed people in this country increased by 280,000 over the past couple of years and many people must now look to their own resources for work, but what is being prepared for self-employed people is frankly chaotic.
Mr Byrne
I will in a moment.
We have heard from the Chartered Institute of Taxation that the system proposed for entrepreneurs will require self-employed claimants to report their transactions each month and that they will have only seven days after the end of the month to file them. They will have to put all that information into a great big IT system and calculate their earnings using a system that is different from the one they use to calculate their tax bill. How on earth does the Secretary of State think Britain’s entrepreneurs, who are busy doing other things day to day, will deal with the new system? I thought that the Government were committed to cutting red tape, not swaddling entrepreneurs with it if they want any chance of help with tax credits. Perhaps the hon. Member for St Albans (Mrs Main) can explain a way through it.
Mrs Main
The right hon. Gentleman should take a little while to consider that not everybody who is self-employed is the entrepreneur he is talking about. The reason that degree of scrutiny is needed is that people who sell The Big Issue for a certain period of time can suddenly declare themselves to be self-employed, so the scrutiny is not something he should want to remove; it is a question of whether it is reasonable. If he wishes to help my right hon. Friend the Secretary of State, he might like to propose a constructive way forward for how we can stop people abusing the system by declaring themselves to be self-employed when all they are doing is a minimal amount.
Mr Byrne
Members on both sides of the House want this to work, but if the hon. Lady looks at the evidence submitted by the CBI and the Chartered Institute for Taxation to the Work and Pensions Committee on Friday, she will see that there is now a real worry that this is going to be a catastrophe for the many entrepreneurs who rely on tax credits for help to balance the books at the end of the month. What I want from the Secretary of State is clarity about how this is going to work in practice.
This is the start of a whole series of risks that have been brought to the attention of hon. Members here and in the Select Committee. Flagged up in the evidence submitted on Friday was the decision to deny people a choice about who receives the money. I hope that the Secretary of State will reform this before implementation of universal credit, because many people who run women’s refuges say that the system is so badly thought through that refuges for women fleeing from domestic violence will have to close. In fact, Refuge tells us—[Interruption.] This is not scaremongering by me; it is evidence submitted to the Select Committee by Refuge, which says that the idea is so badly thought through that unless changes are made, 297 refuges will have to close. This is not scaremongering; it is bringing to the House’s attention information and arguments provided by one of the most important charities in the country.
The Minister of State, Department for Work and Pensions (Steve Webb)
Yesterday in oral questions, at which I think the right hon. Gentleman was present, the Secretary of State gave categorical assurances about refuges, so to repeat the smear after receiving those assurances is scaremongering.
Mr Byrne
If the Minister is accusing Refuge and Women’s Aid of a smear, I am afraid that he has got his facts seriously wrong. This element was not in the original design. Yesterday we finally extracted from the Secretary of State a commitment to change; now we want to know how it, along with a host of other things, will work in practice.
Some of these issues are now bedevilling local authorities. There is a serious risk that direct payments of universal credit, which includes housing benefit going to the individual, will result in local councils’ arrears bills and eviction rates beginning to rise. We are still no clearer about what will happen to the 20,000 housing benefit staff who work for local councils and will no longer have to process housing benefit claims once the DWP takes over the task. Are they going to be sacked or made redundant? Who will pick up the bill? Is it yet another bill that will fall on the shoulders of hard-pressed council tax payers?
Jim Shannon (Strangford) (DUP)
In my constituency, housing benefit applications are up by between 10% and 15% and extra staff have been employed. The waiting list for applications to be processed takes anything from six to eight, or even 10, weeks. Yesterday the manager of the housing benefit office told me that only six months into the scheme he is already cutting back on the moneys that are allocated to try to make them last until next April. Does the right hon. Gentleman think that in the case of housing benefit, chaos is knocking on the door?
Mr Byrne
I am afraid that that is absolutely right. That is the message that is coming back from local authorities all over the country. In fact, the Local Government Association told the Select Committee on Friday that there is
“a real risk that the central Government universal credit IT systems will not be ready on time”.
That was part of an array of evidence submitted about the mounting risks. The CBI said that the
“tight delivery timetable…is a risk to business”.
Citizens Advice said that universal credit
“risks causing difficulties to the 8.5 million people who have never used the internet”.
The Chartered Institute of Taxation said that for many people
“The proposed procedures for self-employed claimants…will be impossible to comply with.”
Shelter has said:
“Social landlords and their lenders have voiced considerable concern at the implications of direct payments for social tenants”.
The Association of Directors of Adult Social Services says that the abolition of severe disability premium is an
“apparent contradiction of the Government’s stated aim to protect the most vulnerable.”
Alison Seabeck (Plymouth, Moor View) (Lab)
On direct payments to landlords, last night I met representatives of south-west housing associations, and to a person they all expressed serious concerns about the implications for them, their lenders and their loan books.
Dame Joan Ruddock (Lewisham, Deptford) (Lab)
I am grateful to my right hon. Friend for reciting the concerns of a whole range of people and organisations. One of the things that has surprised me most is that every employer in the country will have to report to Her Majesty’s Revenue and Customs on the circumstances of every employee on a monthly basis and sometimes, perhaps, even on a weekly basis instead of annually. Is this not going to be an incredible burden on British business, which is already in difficulty?
Mr Byrne
Exactly—as if British businesses were not struggling enough. The point is that the 500 pages of evidence submitted to the Select Committee on Friday present to the Secretary of State a whole range of issues to which we have received no answers, despite the fact that the system will go live in 150 days. The system is already over budget and late, and I am afraid that we now need some urgent answers from the Secretary of State this afternoon.
Kate Green (Stretford and Urmston) (Lab)
Does my right hon. Friend agree that one of the great concerns of the many agencies that he has mentioned—they are worried about how universal credit will affect the client groups that they work with—is that the funding of those advice agencies that could support individuals is being squeezed and that there will simply be no access to support, either to make applications or to sort out problems when things go wrong?
Mr Byrne
That is a real concern. I know from the fact that a number of advice centres in Birmingham have been forced to close that advice is simply not available for many people in some of the most deprived parts of our country. They are being asked to contend with a new benefit system that is complicated and vital to their living standards, so that is a real worry. I hope that the Secretary of State will take that into account in his response.
I am going to draw my remarks to a close, because I know that many hon. and right hon. Members want to contribute to the debate. All I will say to the Secretary of State is that, following the recent attacks on him by the Treasury, the Cabinet Office and No. 10, he could be forgiven for wanting to retreat to the deepest, darkest bunker in Whitehall. The truth is that his Department is already one of the most secretive in Government. He is refusing to publish information about the Work programme and he has refused Labour’s freedom of information request to release the business case for universal credit. I know that he does not always see eye to eye with the Minister for the Cabinet Office, but I hope that he will pay heed to his words:
“Transparency is at the heart of our agenda for government…We are unflinching in our belief that data that can be published should be published.”
Unflinching indeed.
Universal credit is a massive project—it is too big to be allowed to fail. We need to make sure that it is on track and I hope that the House will join us in sending an unequivocal message to that effect this afternoon.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
This debate cannot take place in a vacuum, as the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) would wish. Let me start by saying that he is wrong: we are not over budget on the programme and we are not out of time. Both are proceeding much according to the plans that we laid. He referred to a report or note that mentioned £3.1 billion. That was considered as a possible end position and the Office for Budget Responsibility, which is independent, looked at it well before Members of both Houses had completed their scrutiny of the legislation. It was done in July of last year. Since then we have had a series of discussions with the OBR. It has looked at the modelling in detail, and continues to do so.
Mr Duncan Smith
Wait a minute.
As far as the OBR is concerned, we are progressing in the right direction and the modelling seems to be about right. We are committed to the £2.5 billion a year and the £2 billion of investment in our IT programmes.
Mr Byrne
I am grateful to the Secretary of State for being characteristically generous in giving way so early in his remarks. Will he explain what policy designs resulted in the £3.1 billion estimate, made by his own Department, dropping down to £2.5 billion? Will he also confirm to the House that everybody affected will be on universal credit by 2017, as initially planned?
Mr Duncan Smith
First, I will answer the second question. That is exactly what we intend and we believe that we are on track to do just that. The right hon. Gentleman and the House should realise that this is not, as has been the case with previous IT programmes, a “waterfall” approach whereby everything explodes and is launched on one date, which I think the previous Government used to realise was probably not a good idea. This will be a progression over four years, so that, as we bring in different groups, such as jobseeker’s allowance recipients, and first address the flow, then the stock, and then look at tax credits and how they fit in, we can make sure that we get this absolutely right at every stage. We know that there are important things to consider so that people do not suffer as a result of universal credit. We want to get this right, even as we do it.
We agreed on the £2.5 billion figure. That is our position. As we look at all these things, including the disregards, we see that we can realise better ways of doing them. It is a work in progress. That is how we are able to achieve these things, just as when we looked at them originally.
The right hon. Member for East Ham (Stephen Timms) has peppered us with freedom of information requests, which is exactly what an Opposition Member should do. However, it does him and the shadow Secretary of State ill to lecture us about releasing business cases. When they developed employment and support allowance, a system about as large and complicated as this one—I think that the right hon. Member for East Ham was a Minister in the Department at the time—at no stage, despite the request, did they ever release their business plan to us.
Mr Duncan Smith
The reality about marginal deduction rates, as I have just said, is that the massive majority of the money that we are investing will go to those in the lowest income groups, which has to benefit them. People who would otherwise not enter work because of the margins will now find that it is beneficial to do so. Despite what the hon. Lady and the right hon. Member for Birmingham, Hodge Hill, have said about marginal deduction rates, the median increase will be just about 4%. The truth is that there will be a massive improvement in the marginal deduction rate for vast numbers of households. As I said earlier, half a million people who struggled under the previous Government’s complicated taxes had marginal deduction rates of well over 80%. That will not happen under universal credit, which is a critical point.
Mr Duncan Smith
I am going to make some progress, and I will pick up on some of the points that have been made as I go through my speech. If the right hon. Gentleman will bear with me, I will certainly give way to him later.
I turn to the delivery of universal credit. As I said earlier, its implementation is on time and on budget. Of course, the process is challenging, and I have never said anything else. The right hon. Member for East Ham knows that I have a huge amount of time for him and believe that he was an effective Minister. When we have discussed universal credit I have always told him that all our programmes have challenges and risks to them, but the job of Ministers and our officials is to manage that risk. Life has risks, and we deal with them and manage them. The universal credit programme is challenging, but we are investing £2 billion—I say again to the right hon. Member for Birmingham, Hodge Hill, that the figure is £2 billion—to get the infrastructure and IT systems right.
Mr Byrne
But the Secretary of State must have seen the parliamentary answers that his ministerial colleagues have provided stating that the implementation costs for parts of the programme are now running at £103 million, £391 million, £600 million and £1 billion. By my maths, that adds up to £2.1 billion, which is £100 million more than the budget that he has set out. Is the programme on budget or over budget?
Mr Duncan Smith
I am never keen to rely on the right hon. Gentleman’s maths—that is what ran us into trouble in the first place. Maybe this is a confessional now, and I will take that as a confession from him. All I can say to him is that we are investing £2 billion, but I will drop him a note about any detail that he is concerned about.
As I said earlier, we are making progress. We completed our first testing stages in August and have already held two open sessions with MPs, peers and the media and intend to hold many more. We will demonstrate the IT front-end systems next week and will do so again afterwards for many hon. Members.