Welfare Reform and Work Bill

Debate between Lindsay Hoyle and Nia Griffith

Monday 20th July 2015 Commons Chamber

[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.

Budget Resolutions and Economic Situation

Debate between Lindsay Hoyle and Nia Griffith

Tuesday 14th July 2015 Commons Chamber

[Nia Griffith (Llanelli) (Lab)]

Thank you, Mr Deputy Speaker. Did you say 10 minutes?

[Mr Deputy Speaker]

I said eight.

[Nia Griffith]

In that case, let me very briefly congratulate those who have made their maiden speeches today, before turning to the subject of the steel industry.

Let me begin by thanking the Minister for Small Business, Industry and Enterprise for being so helpful last week by voting to retain anti-dumping measures for wire rod. The steel industry is being flooded out by a massive increase in imports from China, and it is important for us to work with other EU countries on anti-dumping measures. I hope that the Government will take the same approach to measures in relation to steel reinforcing bar, grain oriented electrical steels, and cold rolled steels.

Let me now say something about the EU compensation package. As we know, the Government set the carbon floor price too high, thus causing considerable difficulties to the steel industry. They have now come up with a compensation package for energy-intensive industries, but it is still a long time until April 2016. Will the Government think again about whether the date could be brought forward, and will they make absolutely certain that the package will not be cut?

As well as the problem of the carbon floor price, the steel industry faces the challenge of the EU emissions trading scheme. I firmly believe in working with the EU to create a level playing field, and I believe in the need to reduce our carbon emissions, but the energy-intensive industries need special consideration. It is important that the Government work with them so we actually achieve those goals, rather than achieving what is called carbon leakage—manufacturers going elsewhere where they are allowed to get away with higher emissions levels. There is a lot of work to be done here.

Business and industry need absolute certainty as they plan ahead and invest, and I am disappointed at the infrastructure projects that have been scrapped. The cancellation and postponement of rail projects and other infrastructure projects is very serious both to our skills base and our manufacturing industry. I am pleased that electrification is still planned for the railway line to Swansea, although I would like to see it come a lot further west, but it has still not started. I urge the Government to make sure that goes ahead with full speed.

I would like the Government to make greater efforts to maximise the UK input into the supply chains for such infrastructure, too. It is possible within EU regulations to include in tendering criteria a recognition of the benefit to the local community. Other EU countries manage that very effectively, and we should do a lot more in this regard.

Roger Evans from Schaeffler in my constituency of Llanelli is working with the Swansea tidal lagoon to maximise the proportion of supplies for the construction of the lagoon that is sourced locally in Wales and the UK. He is to be applauded for his efforts and I hope the Government will take note and do likewise, and that they will also strike the right price for the tidal lagoon to make it economically viable.

Business and industry need absolute certainty. We saw the Government cut the feed-in tariffs unexpectedly sharply without consultation, resulting in manufacturers and installers—many of whom had spent a lot of money training up as solar panel installers—going out of business, and now the Government’s sudden cut to the wind turbine incentive is again threatening manufacturers. When such decisions are made, they should not be knee-jerk, politically motivated decisions; there should be proper consultation with the industry and sensible lead-in times for any changes. There will now be a massive knock-on effect on the manufacturers and installers of wind turbines.

On the financial changes in the Budget, I welcome the national minimum wage going up to £7.20 next April, but it is, after all, a national minimum wage and it is high time it did go up to that amount—and the Chancellor promised ages ago it would go up to £7. I am very concerned, however, that it does not apply to those under 25, and I am extremely concerned about the loss of tax credits. They are an important part of our current taxation system. As has been mentioned, a couple on the current minimum wage with two children gain £1,500 but lose £2,200 in tax credits. We must raise the wages first, before scaling down any tax credits. This hits those on the lowest incomes who are often dealing with problems of insecurity, juggling more than one job to make ends meet, and working antisocial hours.

We still need a crackdown on zero-hours contracts as well. It is not enough to do what the Government did, which was say “You shouldn’t be prevented from taking another job.” They must do a lot more to try to ensure people can have proper contracts. USDAW has done a lot of work in this regard by getting annualised contracts that allow flexibility for employers and employees, but guarantee an agreed number of hours, so offering some security and chance of planning ahead for workers.

The cuts to tax credits will have a massive knock-on effect on local economies. People on low incomes out of necessity use their money immediately, putting it back into the local economy. There are wards in my constituency where Government changes over the past five years have already led to a loss in income of an average of £800 to £1,000 per person per year. Add to that the new cuts to the tax credits and we will see even more money sucked out of local economies. That is bad news for local business and could lead to further job losses.

I was shocked a fortnight ago to hear the Secretary of State for Work and Pensions say that the way for families to get out of poverty is through education and getting higher paid jobs. Of course it is, but in the meantime they need help. They cannot get that education and move into higher paid jobs in two minutes; we are talking about very long-term goals. What we are seeing in this Budget is a cut to what was a grant and has now become a loan for going into higher education for those very families on the lowest incomes.

We are also worried that the Government are removing the cap on the £9,000 fees for what are probably going to be the most sought-after and prestigious universities. Again, they are creating disincentives for people from less well-off homes to achieve the best and go to the very best universities. These are extremely worrying features of the Budget. Obviously, people want their children to do well—