Lindsay Hoyle
Main Page: Lindsay Hoyle (Speaker - Chorley)Department Debates - View all Lindsay Hoyle's debates with the HM Treasury
(9 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Rebecca Long Bailey (Salford and Eccles) (Lab)
The problem with the Government’s suggestion that cutting tax credits will lead to higher pay is that the labour market is weighted in favour of the employer, rather than the worker. The only way to restore wage growth across the board, especially in the private sector, is through the expansion of collective bargaining. We simply cannot have wage growth in a country where the erosion of trade union rights is right at the top of the Tory agenda. The Government are doing the exact opposite of what they intend, which is to get people back to work and on decent pay—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Order! Honestly, we must have short interventions. I want everybody to get to speak. Interventions are not meant to be speeches. We have to help each other today because a lot of people wish to speak. The shorter the interventions, the more people we will get through.
Ian Blackford
I agree with the gist of what the hon. Lady said. We need to ensure that there is proper protection for trade union rights throughout the UK.
The Resolution Foundation, which has been much commented on, has assessed the proposed plans. It found that more than two thirds of the families affected—2.7 million of them—would be in work. Working families with two children would lose up to £1,690 a year. Almost two thirds of the cut would be borne by the poorest 30% of households; almost none of the cut would fall on the richest 40% of households.
A poll by YouGov and The Sunday Times the other week found that there was opposition across the UK to cuts in tax credits, and that the opposition was highest in Scotland: 56% of Scots are opposed to the cuts and only 37% are in favour. Clearly, there is public opposition to any attempt to target tax credits, and that opposition is strongest in Scotland.
The Tory assault on the welfare system is already pushing more and more people, particularly thousands of children, into poverty. There are worrying links between welfare reform and food bank use. The Trussell Trust has reported that 117,689 people picked up a three-day supply of groceries from Scottish food banks in 2014-15, including 36,114 children. That is eight times the number of people who were helped just two years ago. Given the social harm that is already being done by Tory welfare cuts, the future damage that could be caused by gutting tax credits is unthinkable. The Tories’ plans, and the high degree of uncertainty about the future of that lifeline support, demonstrate the need for full powers over Scotland’s welfare system to be in Scottish hands, not those of the Chancellor and the Secretary of State for Work and Pensions.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Before the hon. Gentleman continues, he has spoken for quite a while now, so I am sure that he is right at the end of his speech and wants to let others in.
Julian Knight
Thank you, Mr Deputy Speaker.
My answer to the hon. Member for Bootle (Peter Dowd) is that we will find out a lot more about the future direction of tax credits and other welfare measures from the Chancellor’s Budget statement tomorrow, so we should wait on that announcement.
I am running out of time, so let me say that I completely understand why tax credits were invented. They have done a lot of good in our society. There have, however, been unintended consequences. Worst of all, they are making millions of healthy, working-age adults reliant on cash from the state. We must preserve elements of the system for those trying to get into work, but we should augment it by active programmes of raising personal allowances and enhancing childcare provision.
Kate Hollern (Blackburn) (Lab)
Let me begin, Mr Deputy Speaker, by thanking you and the House for the honour you do me by listening to my maiden speech today.
As MP for Blackburn, I follow in the footsteps of illustrious predecessors. After the war, a formidable woman, Barbara Castle, represented my constituency until 1979. When Barbara Castle made her maiden speech 70 years ago, she made a promise that in her career in this House she would be the “pineapple of politeness”, an aspiration I will seek to emulate—but with no guarantees.
Barbara was known as a fighter. She fought for fairness and equality, and she was unquestionably the most successful female politician of her generation. Barbara was somebody with immense personal and political courage. She was able to inspire others and is still remembered very fondly in Blackburn today. She campaigned tirelessly to secure pensions and benefits, particularly child benefits. She would rightly be appalled and angry at this Government’s welfare reforms. She would be outraged at the glib statements Ministers make when speaking about poverty and deprivation.
My immediate predecessor, Jack Straw, will be familiar to this House, where his parliamentary career included holding, with distinction, a number of high offices, including Home Secretary, Foreign Secretary, Lord Chancellor and Leader of the House. But in Blackburn we remember a very different Jack; we remember an extremely hard-working Member of Parliament who served our town for over 36 years. Whether it was when on his soapbox—again, I cannot guarantee to copy that; stiletto heels will go through the box—or in his walk-in surgeries, he always made time for his constituents.
I am therefore really pleased that, despite standing down as MP, Jack’s connections with Blackburn are due to continue. He is to become chair of the fantastic Youth Zone, an initiative that was led by local business. It is a great example of collaboration between the private, voluntary and public sectors. It gives young people tremendous facilities to develop as individuals and engage in positive activities right next to the new Cathedral Quarter. Jack will also continue to be a governor at Blackburn’s University Centre, another facility that is testament to his energy and commitment to bring the best to Blackburn. I am under no illusion that Jack will be a hard act to follow.
To represent Blackburn, you need to know, understand and love the town. I moved there in 1977 from the west coast of Scotland, working in a shoe factory, where, I am proud to say, I worked full-time and received family tax credits. I am also proud to say that my two daughters have always worked and, fortunately, have never been in a position where they have had to claim tax credits. In Blackburn, I learned from the best; the people were warm, welcoming and hard-working, and their passion for the place is infectious. We have a rich and diverse community who are only too pleased to play their part in improving the town, as was vividly demonstrated when thousands of volunteers came out to spring-clean the town to honour Her Majesty the Queen’s visit on Maundy Thursday last year.
We have a number of initiatives that bring people together: the Your Call campaign, where residents take responsibility for their own area; the 100 Voices initiative, which brings together people from right across the town to discuss issues; and Just Good Friends, which gets older people out to reminisce, have a dance and help tackle social isolation. The diverse communities of Blackburn are strong, and I am immensely proud they have chosen me to represent them in this place. In Blackburn, there is a strong partnership between residents, the council and local businesses. For example, the local college and the council have just, in partnership, built a new state-of-the-art leisure centre. The private sector has committed to having apprentices from more disadvantaged groups and to fund the youth facilities.
I served as a councillor for 20 years, many of which as leader of the council, and I have seen Blackburn go through good and bad times. In every case, the people of Blackburn pulled together. To know Blackburn and to understand where it is going, we have to understand its history. Blackburn was one of the key mill towns that were the driving force behind the industrial revolution. By the end of the 1840s, there were 75 cotton mills. By 1860, that number had more than doubled.
One hundred years earlier, the cotton industry was revolutionised by the invention of the spinning jenny. James Hargreaves patented his invention—[Interruption.] Blackburn led the northern powerhouse more than 100 years ago, and I am sure that it will continue to do so.
Mr Deputy Speaker
As much as I would love to let you carry on—you are my neighbour—I dare not. Chris Philp.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The hon. Lady has just come into the Chamber and we know that Members cannot just come into the Chamber and intervene. It is better for all of us if they do not, and we certainly want to get to the next maiden speech, which will be from an SNP Member.
Chris Philp
I look forward to hearing the point after the debate, perhaps.
Let me turn now to the topic before us. When Gordon Brown introduced these measures in the early 2000s, he told us that tax credits would cost perhaps a couple of billion pounds a year. The truth is that today they cost £30 billion a year, an astronomic burden on the Exchequer.
Let us think for a moment about what tax credits mean. They are a subsidy paid to top up wages because employers are not paying their staff properly. I deplore the fact that some employers are not paying their staff properly and are effectively abusing the generosity of the Government by underpaying their staff. Any reforms in tomorrow’s Budget that end that abuse will be extremely welcome.
Tax credits provide disincentives to work, as some of my colleagues have pointed out already. They are withdrawn at the same time as income tax and national insurance kick in. Effectively we have marginal tax rates at around the 75% to 80% mark, so it is no surprise that employees in the companies run by my hon. Friend the Member for South Suffolk (James Cartlidge) were reluctant to take pay rises when marginal tax rates were so high. One Member mentioned the 16-hour-a-week limit, now raised to 24 hours a week. I know people who have employed part-time staff who refused, understandably given the system, to work extra hours for fear of losing those extra tax credits. That is all wrong. The fundamental fact is that people are helped out of poverty not through Government handouts but through hard work and earning more money.
Several hon. Members
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. To try to help everybody, I will drop the time limit to five minutes. Every time someone intervenes, we allow the speaker an extra minute, which is killing us for time.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Thank you, Mr Deputy Speaker. In the light of that, I shall not take any interventions.
I congratulate all the Members who made their maiden speeches this afternoon. They have been fantastic and it is a privilege to follow them.
As lovely a place as Oldham is—the place where I live and which I represent—it has a very low-wage economy. One in three of the people who work in Oldham earn less than the living wage. That is significantly above the north-west average and the UK average. Associated with that there are high rates of deprivation and child poverty— 27% overall, and in some wards it is nearer one in two. We have talked about food bank use: we used not to have a food bank in Oldham, but we have one now. I undertook a fairness commission report to look at the core issues underpinning that and to set out how we could address them. It was not unique; other boroughs and cities have done a similar analysis. One of the key truths, unfortunately, is that the UK is one of the most unequal countries in the world. In its recent report, the International Monetary Fund, which the Minister did not seem to know anything about, says:
“Widening income inequality is the defining challenge of our time”.
Forty years ago, 5% of income in the UK went to the highest 1% of earners. Today it is 15%. We should spare a thought for our cousins across the water, where the figure is even higher.
This is the IMF’s second report. In the light of the work of Joseph Stiglitz and others, it found that inequalities are a drag on growth and can make growth volatile. This supports work by the OECD, which rejected the trickle-down economics so popular with Thatcherites. That idea supposed that increasing wealth at the top would trickle down to the rest of the food chain, and that policies aimed at reducing inequality would remove incentives and slow growth. Now the evidence is clear: inequalities have slowed growth, not increased it. According to this analysis, raising the income share of the poorest 20% of the population increases growth by as much as 0.38% over five years. By contrast, increasing the income share of the richest 20% by 1% decreases it.
We have a weak, stagnant economy, and the measures proposed will only make it worse. As colleagues have mentioned, over the past five years Institute for Fiscal Studies analysis has shown that the bottom 20%—the people on the lowest income—have been disproportionately affected by both tax and benefit changes. This is compounded by the cuts to public services, skewing resources away from areas of high need, and by the impact of the disastrous housing policy on housing costs. The Government justify this by saying—we can hear the mood music—“We are far too generous with benefits.” A comparative analysis of benefits spending as a proportion of GDP shows that we are 17th among EU countries. We spent 15% of our GDP on social security. That does not support the claim that we are incredibly generous.
One of the other myths that the Government are spreading is that everyone will be fine if they are in work. Again, the evidence does not support that. We have one of the highest under-employment rates in the EU, and about 80% of the increase in employment comes from self-employment. The average income drawn by people who are self-employed is less than £10,000 a year. In Oldham 20,000 working families with nearly 30,000 children are claiming tax credits. That is two in three families and three in four children. For them, tax credits mean the difference between just about keeping their heads above water or not. The Oldham fairness commission that I run has produced strong evidence of the impact of parental income on cognitive development, behaviour and health outcomes, which will have a negative effect on those children’s life chances—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I want to call everybody. If Members aim for three minutes, everybody will get the same amount of time.