Welfare Benefits Up-rating Bill

Debate between Madeleine Moon and Anne Begg

Tuesday 8th January 2013 Commons Chamber

[Dame Anne Begg (Aberdeen South) (Lab)]

I have sat through a lot of annual debates on benefits uprating, but I have never seen a turnout quite like this. Very often the number of hon. Members in the Chamber is less than double figures. I hope today’s turnout reflects the importance of the debate. The votes tonight will have a profound effect on many of the most vulnerable and poorest people in our society, whether they are in or out of work. Based on the decisions we take tonight, for some families it will not be a case of whether to eat or heat. Towards the end of the two weeks or the month when universal credit is introduced, some families might have a few days when the children get neither food nor heating, unless food banks, which are increasing, come to the rescue. We should not wish that on our society in the 21st century.

[Mrs Moon]

An additional problem is that low-income families—some working, some not—will be faced with a decision when their housing benefit is paid directly to them of whether to pay their landlord or feed their children. Does my hon. Friend accept that we are facing a potential explosion in homelessness?

[Dame Anne Begg]

I thank my hon. Friend, because she sets up my point on how the proposals undermine the Government’s flagship policy of introducing universal credit. Universal credit will create problems—she alludes to the fact that it will be paid monthly, and that housing benefit will be paid directly to individuals, who must make the decisions she describes.

One big claim for universal credit is that it will make work pay in all circumstances, but Government Members somehow cannot understand that making work pay means increasing benefits, because the majority of people who receive the benefits that will be affected by the Bill are in work. The group who are out of work and the group in work are often the same people, as my hon. Friend the Member for Westminster North (Ms Buck) has said—they move in and out of work.

The principle of universal credit is to smooth the move into work. The Government are freezing the benefits that make up universal credit statutorily for the next three years. I do not know why we are not having the normal uprating debate. There is no reason why the measure must be in the form of legislation, which makes me suspect that it is a political decision. The freezing of those benefits will tie the Government’s hands on the introduction of universal credit and could undermine it.

In spite of everything that has been said today, tax credits were a huge success. They increased the income of workers on low wages and made work pay. For the first time in at least two generations, the poverty trap was ended—I thought that it had gone for ever. There was a genuine poverty trap created by the previous Conservative Government and to all intents and purposes tax credits got rid of that. Almost everybody was better off as a result of tax credits unless they lived in a high accommodation cost area such as London or they had a large number of children. Work paid. The incentives did not always work because work did not pay enough. Through the Bill, the Government are repeating the same mistake—the incentives to move into work under universal credit will not be high enough to make work pay in all circumstances.