Tax Credits

Debate between Luke Hall and Graham P Jones

Tuesday 20th October 2015 Commons Chamber

[Luke Hall (Thornbury and Yate) (Con)]

Thank you, Mr Speaker, for giving me the opportunity to speak in this debate. I will keep my remarks brief, because I know that a number of colleagues wish to speak.

Specific reforms announced in the Budget should be discussed in the context of the new deal announced by the Chancellor. The problem is that some Members of the House want to pick and choose the elements of that new deal, welcoming the extra spending but never endorsing any of the difficult decisions that the Government have had to take. The current situation is this: Britain is home to 1% of the world’s population, generates 4% of the world’s income, but pays out 7% of the world’s welfare spending. We are currently spending more on family benefits than Germany, France or Sweden.

This Government were elected six months ago with a mandate—an instruction—to balance our books and to reform welfare, as stated in our manifesto. I have listened to Opposition Members, but we have to seek to avoid the mistakes of the past. Spending on tax credits more than trebled under Labour in 10 years, while in-work poverty rose by 20%. In 2010, 90% of families were eligible for tax credits—a disproportionate amount. After these budgetary changes, that will be reduced to five in 10, a much more sustainable number. Ultimately, these changes will return tax credit spending to pre-crisis levels—the level under the Labour Government in 2007-08—and deliver £4.4 billion of savings in 2016. That money can be invested in our national health service.

[Graham Jones]

rose—

[Luke Hall]

I will not give way because time is short.

Where do we go from here? We can either run a high welfare, high tax, low pay economy or continue with the job of reforming our economy to have high pay, low tax and lower welfare. Controlling welfare spending is part of this Government’s wider offer to working people. We are raising the personal allowance so that by the end of this Parliament people will not have to pay anything on the first £12,500 they earn. We are introducing 30 hours of free childcare for working parents—tax-free childcare worth another £2,000 a year. We are freezing fuel duty and introducing the new national living wage. These reforms cannot be viewed in isolation. They form part of this Government’s new wider deal with the British people, supporting people into work and ensuring that we deal with our debts now rather than burdening our children, grandchildren and great-grandchildren with more debt than they can ever hope to repay. That is why I will support the Government this evening.