Welfare Reform and Work Bill

Lindsay Hoyle Excerpts

Monday 20th July 2015 Commons Chamber

[Mr Duncan Smith]

I want to make some progress. I will give way again later, but I am conscious of the fact that over 35 Members are waiting to speak—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Forty.

[Mr Duncan Smith]

Forty Members, so it is in colleagues’ interest to let me make some progress.

I also want to support parents claiming universal credit to get into and stay in work after having a child. We found just last week that the number of children living in households claiming out-of-work benefits is at a record low, down by 450,000 since 2010. That is very good progress, but we want to build on it. The Government are introducing a far-reaching childcare offer: with universal credit, people will get up to 85% of their childcare costs paid from April 2016—up from 70% under the previous system. All three and four-year-olds already receive 15 hours of free childcare a week, as do 40% of the most disadvantaged two-year-olds. On top of that, there will be an additional 15 hours of free childcare available for working parents of three or four-year-olds. Overall, we anticipate that this provision will be worth about £5,000 per child per year. In line with that, we believe it is fair to ask parents claiming universal credit to look for work when their youngest child turns three, and to prepare for work when the youngest child turns two, and the Bill makes provision for that as well.

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[Emily Thornberry]

On a point of order, Mr Deputy Speaker. The impact assessment for the Bill has only just arrived in the Vote Office; it was not here for the beginning of the debate. Surely we ought to be given the statistics in order to have an informed debate, rather than having to rely on what comes out of the Secretary of State’s mouth.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

We will investigate the matter. I would have thought that the hon. Lady would give me a little more warning of her point of order, but there we are.

[Mr Duncan Smith]

We released them earlier and they have been available since before the debate began, so I will simply move on.

I would like to turn to how we tackle the root causes of poverty. I believe that the past approach focused on dealing with the symptoms of poverty while completely failing to target the root causes. The Bill will provide a statutory basis for much-needed reform to improve children’s life chances. I have long argued that there are five key pathways to poverty that affect children’s life chances: worklessness, educational attainment, drug and alcohol addiction, family breakdown and problem debt. The Bill will remove the existing measures and targets in the Child Poverty Act 2010 and introduce a new duty to report on worklessness and educational attainment. Alongside the statutory measures, we will develop indicators to measure progress against either of those root causes of poverty.

Our new approach will drive real action, which will make the biggest difference to the most disadvantaged children now and in future. The key point is that this will enable us to measure what Government policy actually does, rather than just how much money we put into it. It is worth reminding the House that we will continue to publish the HBAI—households below average income—statistics so that those who wish to look at them can still do so.

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[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The Secretary of State has given way quite a lot. We cannot have three people at once shouting, “Will the Secretary of State give way?” The Secretary of State will give way when he feels it is correct to do so, but we cannot have three people hanging loose.

[Mr Duncan Smith]

Let me give the hon. Member for Lanark and Hamilton East (Angela Crawley) some figures for Scotland, which are worth looking at. Employment in Scotland is up 40,000 on the year and 179,000 since 2010. The employment rate is 74.3%, up 4.5% since 2010. Private sector employment is up 58,000 on the year and 244,000 since 2010. Just 5.2% of workers in Scotland are on temporary contracts and over 80% of those who work part time do so because they say it suits them. Although there is still much more to do, our reforms to lower corporation tax, get people back to work and create more jobs are exactly the route for her constituents to improve their life chances.

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[Heidi Allen]

We are friends, I believe. I think we are all friends in here—I hope we are.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Absolutely.

[Heidi Allen]

Thank you. I do not have children, so I often tread carefully in these sorts of debates because I do not want people to point the finger and say, “Well, you don’t understand.” But I am certain of one thing: a choice between one, two or three children is a choice. If you cannot afford it, why should the taxpayer subsidise you? Can she answer that? [Interruption.]

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[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I will try to get everyone in, but I now have to reduce the time limit to four minutes. Let us stick with it. Interventions, if we must have them, must be short.

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[Jeremy Quin (Horsham) (Con)]

It is a pleasure to follow the thoughtful and interesting speech of the hon. Member for Ogmore (Huw Irranca-Davies). He showed huge sincerity in his opposition to the Government, but during a couple of sections of his speech, I thought he might be joining us in the Lobby this evening, and I am disappointed that on this occasion he will not. I draw his attention to the words of my hon. Friend the Member for Mid Dorset and North Poole (Michael Tomlinson) and other hon. Friends who have pointed out that this is, in fact, the Welfare Reform and Work Bill. I thought the hon. Gentleman was getting there—surely we all support systems that work; surely we all want annual reports to the House on progress on full employment, troubled families and apprenticeships. There must be much in the Bill that hon. Members on both sides of the House can agree on.

The last Labour Government spent £170 billion in tax credits between 2004 and 2010. It is not unreasonable to ask whether that £170 billion, or at least some of it, could not have been better spent on measures that would change recipients’ life chances. That is particularly true since we know we have to live within our means, as my hon. Friend the Member for Gloucester (Richard Graham) stated so eloquently—far more eloquently than I put it in my intervention on him. Between 2010 and 2015, the welfare reform that we achieved made savings of £60 billion, helping to halve the deficit and restore confidence in our public finances. In the same period, employment increased by no less than 2 million. In my constituency, the number of people who are unemployed has fallen by a third, and I am sure that similar statistics could be quoted by hon. Members throughout the Chamber if they chose to reel them off.

The best way to tackle poverty and reform welfare is to ensure that everyone who can work has that opportunity. That is the best way to tackle poverty both in this generation and in the next. Under this Government, 387,000 fewer children are being brought up in workless households. That is hugely positive in enhancing the life chances of all our people. I am delighted that the Government are not only targeting full employment but ensuring, through the introduction of the national living wage and the targeted reduction of tax, that those working in lower-paid jobs get a fairer reward.

The proposal to reduce the welfare cap is right for two reasons. It will support a culture in which people know that work will always pay, and that it is the best way to maximise income and support a family. It is also right to redirect our support to enhancing life chances. The funds saved will go towards increasing the number of quality apprenticeships—I take the point made by the shadow Secretary of State that they must be quality apprenticeships, and I am sure that is what we will get. I know that enabling young people to achieve their ambitions is close to the hearts of all of us, on both sides of the House. I agree with my hon. Friend the Member for Cannock Chase (Amanda Milling) that that is an exciting feature of the Bill, which we should all support. The Government have overseen the creation of 2 million apprenticeships, delivering more apprenticeships in two years than Labour delivered in five. The Bill will take the aspiration further, with a target of 3 million apprenticeships.

I acknowledge much of what the hon. Member for Ogmore said, but there are great differences across the House in how we achieve our aims. We believe—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order.

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[Nia Griffith (Llanelli) (Lab)]

In order to keep to the time limit, I will turn immediately to the Government’s intention to increase the tax credits withdrawal rate—the taper—from 41% to 48%, and to the cut in the tax credits income threshold from £6,420 to £3,850 a year. Those are two of the most damaging and far-reaching changes, and the Government are determined to press ahead with them, but in fact they are not in the Bill. They will be dealt with in secondary legislation, yet they will have an enormous impact on family incomes, and the Bill needs to be considered in the context of those changes.

Increasing the taper from 41% to 48% will make it less attractive to seek more hours of work and will produce a marginal rate of tax higher than that paid by those on the 45% additional tax rate—those earning more than £150,000. Combine that with the cut in the tax credits income threshold—the point at which the withdrawal of tax credits begins—from £6,420 to £3,850, and people working on low incomes will be hard-hit. Furthermore, those earning just above £7.20 an hour, the new minimum wage from next spring for over-25s, will gain nothing. Figures from Citizens Advice show that a couple with one child, one working 37 hours a week and the other working 18.5 hours a week, both on £8 an hour, will lose £646 per annum; a similar couple with two children will lose £2,400; and a single parent with two children, who works full time, will lose £1,862. That is no way to treat those working hard on low incomes and with little prospect of getting better-paid work.

I am absolutely opposed to limiting child tax credits to two children. What if a family’s income suddenly drops? If one earner loses a reasonably paid job and can find only a replacement job on much lower pay, the family might become eligible for tax credits, but they will not be eligible for the family element or anything for the third child. What about cases of family break-up, in which one parent—usually the mother—is left with sole responsibility for three or more children? The whole point of providing tax credits for children is that a child needs support, no matter how the family income has fallen in hard times.

The Secretary of State has talked about education and about better-paid jobs being ways out of poverty, but first a child needs food to develop healthily and clothes to wear at school. Only one in seven families in the UK have three or more children, and nine out of 10 families with three or more children have one adult in work. We should make sure that every child has food and clothing and provide support where family incomes are low.

The Secretary of State justifies the extension of conditionality to single parents of three and four-year-olds by saying that the Government will roll out additional childcare, but we already know that their manifesto promises on childcare are being postponed. The provision of childcare is devolved to the Welsh Government, so the change presupposes, or assumes, that the Welsh Government will provide exactly the same support, but that Government have extended the Flying Start scheme while the Tory Government have slashed Sure Start centres in England. They should not be introducing measures contingent on spending on specific provision by the Welsh Government without discussion with Welsh Ministers and the appropriate Barnett consequential funding.

I am also concerned about the freeze on payments such as tax credits and jobseeker’s allowance that the Bill will enshrine in legislation. That comes on top of previous freezes implemented since 2010. Never before this Secretary of State came to office was the link between benefits and inflation broken; there was always uprating to reflect inflation, even in the time of Margaret Thatcher. The way to reduce benefits bills—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order.