Income Tax (Charge)

Liz Kendall Excerpts

Monday 4th November 2024 Commons Chamber

[The Secretary of State for Work and Pensions (Liz Kendall)]

The first Labour Budget in 14 years—the first ever Budget delivered by a woman Chancellor—shows the difference that this Labour Government are already making. We are fixing the foundations of the public finances to bring the stability that our economy needs, putting more money into people’s pockets after the worst Parliament for living standards on record, beginning to turn the corner on our vital public services, with more appointments in the NHS and more teachers in our schools, and making the long-term investments in infrastructure and skills that our country needs in order to grow our economy and seize the jobs and opportunities of the future.

In the Department for Work and Pensions, the message from this Budget is clear: we will tackle the unacceptable levels of fraud that we have inherited, because every pound of taxpayers’ money must be wisely spent and go to those who need help the most. We will drive up opportunity in every corner of the country with our plan to get Britain working, because this Labour Government believe that work is the key to building a better life and to growing our economy. We have made a start on driving down poverty too, because, unlike Conservative Members, we know that children cannot fulfil their potential without food in their bellies and a roof over their heads, and our country cannot fulfil its potential when the talents of so many bright children and young people are being denied.

Getting a grip on the public finances is the first step in delivering all these changes. Without strong foundations, we cannot deliver a thriving economy, decent public services or sustainable increases in living standards for families and pensioners. We did not choose to inherit the mess that we found in the public finances and our public services, but we have chosen to level with the public about the scale of the challenges and how we intend to deal with them.

Conservative Members have still not faced up to their responsibility for the state in which they left the country. There is a £22 billion black hole in the public finances this year, with billions of pounds overspent on a failing asylum hotel system. New hospitals, roads and train stations were announced, without the money to pay for them. Vital compensation schemes for infected blood and the Horizon scandal were set up, without the funds to deliver them. The country’s reserves were spent three times over.

That is before we even get to the state of our public services. Millions of patients have been left waiting for NHS treatment, often in agony and pain. Victims have been left waiting months or even years for justice in our courts. Our prisons are overflowing, and our schools literally crumbling. As my right hon. Friend the Chancellor of the Duchy of Lancaster has said, this could have been a Budget where we looked at the state of the country but ducked the difficult decisions. We could have tried to kid the voters, paper over the cracks and then hope that something better somehow comes along. But we chose not to do that, because that is precisely the approach that got us into this mess in the first place, and because in politics, as in life, you do not deal with a problem by ignoring it, ducking it or pandering to it; you deal with problems by facing them head on.

We have chosen to get the public finances back on track, to protect the payslips of working people, to start turning the corner on our public services and to invest in the long-term infrastructure our country needs. In order to deliver that, we have made tax changes, which is never easy to do, and asked some businesses and wealthier people to pay some more. Hand in hand with this balanced approach, however, the Chancellor has set out tough new productivity, efficiency and savings targets of 2% this year for every single Department. Under this Labour Government, investment in our public services will always go hand in hand with reform, because we cannot keep spending taxpayers’ money on the same problems without changing the way we tackle them, and because public expectations and developments in AI and new technologies are transforming the way people interact in many aspects of their lives, and the public sector must respond to those changes, too.

The need for reform in our system of employment support and social security is urgent and it is real. I want to spell out clearly and honestly for the House the facts of the previous Government’s legacy of failure. Some £35 billion of taxpayers’ money has been lost to fraud and error since the pandemic—now standing at £10 billion a year. Our employment rate is still not back to pre-pandemic levels, making us unique in the G7 group of wealthy countries, and not in a good way. We have near-record levels of people trapped out of work due to long-term sickness—a staggering 2.8 million people, with rates far higher in some parts of the country such as the midlands and the north—and 420,000 more households are predicted to claim universal credit health benefits over the next five years, increasing from a third to a half of all universal credit claims. That is the legacy of the Conservatives. One in eight of all our young people are not in education, employment or training, with all the terrible long-term consequences we know that brings.

It is not just the economic cost of this failure that is unacceptable, with a predicted £26 billion increase in sickness and disability benefits over the next five years. Above all, there is the human cost to individuals and communities when millions of people are denied the opportunity to work and earn a decent standard of living, to make connections, to get skills and to build chances for a better life, with all the benefits that that brings. We do not accept that as the future for our country or our fellow citizens.

Instead, we choose a different path. It starts with our determination to deliver value for money for every pound of taxpayers’ money, so we will bring forward a new plan to drive down fraud and error in the welfare system. Our new Fraud, Error and Debt Bill will update the Department for Work and Pensions’ powers for the first time in 20 years, so that we can keep up with the new ways that fraudsters, including organised criminal gangs, are using to take public money, and so that our powers are brought into line with other public bodies such as His Majesty’s Revenue and Customs.

We will use technology to alert us to people trying to scam the system, and to prevent errors from happening in the first place. We will recruit 3,000 more staff to crack down on fraudsters, with a focus on serious case reviews, and we will bring in new powers to recover debt, all with independent oversight and a guarantee that a human being will always take the final decision in any fraud case, to give everyone confidence in the system—something that the Conservatives utterly failed to do.

[Jim Shannon (Strangford) (DUP)]

Many of us understand the need to have a more focused fraud law, and that is very important, but every other week people I represent come along to me and say that they have been overpaid for their employment and support allowance, their personal independence payments or their disability living allowance. They find themselves in an incredibly difficult position, not because they are trying to defraud or take money away from anyone; it is just a simple issue of their getting it wrong. What will be done to protect those people? This is really important. We are going to have a new fraud law, but let us make sure that we protect the innocent people who make a mistake.

[Liz Kendall]

I absolutely agree with the hon. Gentleman. The technology we will put in place will be precisely so that we drive down not only fraud but errors in the system. He will know, for example, that we are trialling a new system for carers in which we text them if they are about to go over their allowance, so that we do not have the scandalous overpayments that caused such a problem under the previous Government.

The second major reform that we will bring in is our plan to get Britain working again. Our White Paper, which will be published in the coming weeks, will bring forward the biggest reforms to employment support in a generation, backed by an additional £240 million of investment. This will help us meet our ambition to achieve an 80% employment rate and to turn what is in reality a Department for welfare into a genuine Department for work. First, we will create a new jobs and careers service, overhauling our jobcentres so that they no longer focus predominantly on monitoring and assessing benefits but are a genuine employment service working with employers, colleges, public services and local leaders to help people to get work and get on in work.

Secondly, we will devolve powers to Mayors and local areas to join up the fragmented patchwork system of employment, skills and, crucially, health support to drive down economic inactivity and drive up employment, boosting jobs and growth in every corner of the country—because the man, or even woman, in Whitehall does not know what is best in Leicester, Liverpool or Leeds. Last, but by no means least, we will bring forward our new youth guarantee, so that every young person is earning or learning—no ifs, no buts—because we do not accept having a generation of young people without the skills or jobs they need to succeed, and we will never write off young people before they have even begun.

Our determination to help people get work and keep work does not stop there. I know only too well from my constituents and my friends how often women in their 50s and beyond are now caring for elderly and disabled relatives but wanting to work at the same time. I am proud that we are giving family carers the biggest ever boost to the amounts they can earn while still receiving carer’s allowance. That will allow them to increase their hours to the equivalent of 16 hours at the national living wage, so that they can balance work and family life. This comes on top of the independent review into the scandalous overpayment of carer’s allowance that I have already announced, led by the former chief executive of Disability Rights UK, Liz Sayce, to ensure that we learn the lessons from what happened so that it never happens again. As a lifelong champion of family carers, I am proud that we have made that announcement. Our plan to get Britain working is crucial to driving up opportunity and driving down poverty—a key priority of this Labour Government.

The fact that over 4 million children are now growing up poor, with more than 800,000 living in households forced to rely on food banks, is a stain on our society. My right hon. Friend the Education Secretary and I have already set out the framework for our bold, ambitious, cross-Government strategy to tackle child poverty. We will publish the results in the spring, but we will not wait to act, particularly for those facing the deepest poverty.

We have extended the household support fund and discretionary housing payments, with an additional £1 billion this year, so that local authorities can help families and pensioners who face the greatest hardship. Furthermore, we have introduced our new fair repayment rate to cap the level of debt repayments that can be taken from universal credit, putting an average of £420 a year into the pockets of 1.2 million of the poorest households, which will lift thousands of children and families out of poverty. When I was chair of Feeding Leicester, food banks told me that debt driven by universal credit deductions was one of the biggest reasons why people had to use food banks, which is why I know this is such an important change.

We are also substantially increasing the income of pensioners who have worked hard all their lives and who deserve security in retirement. Our commitment to the pension triple lock throughout this Parliament means that spending on the state pension is forecast to rise by over £31 billion. This includes a more than £470 rise in the new state pension from next April.

Unlike the previous Government, who left over 800,000 pensioners missing out on the pension credit to which they are entitled, we are delivering the biggest-ever drive to increase uptake. For the first time, we are contacting 120,000 people on housing benefit who may be eligible for pension credit and, to guarantee even greater uptake, we will merge pension credit and housing benefit for new claimants from 2026. The Conservatives first promised this in 2011, but they never delivered. That is the difference a Labour Government make.

There is still much more to do, but this Budget starts to turn the corner: fixing the foundations of our economy and public services, driving up opportunity and driving down poverty in every corner of the land. We are honest about the challenges we face and optimistic about the opportunities ahead. This is a real plan for real change. I commend this Budget to the House.

[Madam Deputy Speaker (Judith Cummins)]

I call the Opposition spokesperson.

--- Later in debate ---

[Mel Stride]

The number of children in poverty fell by 100,000 in total. I will come to the record of this Government in a moment, but first I give way to the Secretary of State.

[Liz Kendall]

Figures from the Department that the right hon. Gentleman used to be responsible for show clearly that 700,000 more children now live in relative poverty after housing costs. Does he accept that? Yes or no?

[Mel Stride]

As the right hon. Lady knows full well, it is accepted that the key measure is absolute poverty after housing costs. She cannot flit between one measure and another when it suits her. The reality is that it is projected that 100,00 more children and 300,000 more adults will be in poverty as a consequence of the Budget.