Tax Credits

Debate between Maria Caulfield and Roger Mullin

Tuesday 15th September 2015 Commons Chamber

[Maria Caulfield (Lewes) (Con)]

I am grateful for the opportunity to speak in this debate. I support the proposed changes to tax credits, but I acknowledge that it is a difficult and sensitive issue. I wish to make a few points to explain my reasons for supporting the measure.

While I acknowledge that tax credits were introduced to support low wage workers, it cannot be right in this day and age that people who work long hours, often doing difficult work, are reliant on benefits to supplement their wages because they do not earn enough to live on. The perpetuation of the tax credit system of topping up wages lets employers off the hook when it comes to paying a decent wage. As we have heard, even Alistair Darling, the former Chancellor, has said that tax credits are

“subsidising lower wages in a way that was never intended.”

The proposed changes to tax credits deal not only with the economic issues of reducing public spending, but aim to address the inequalities faced by those who find themselves on welfare despite being in work. Life on benefits can have a huge negative impact on life outcomes, even affecting length of life. Living on welfare can have negative outcomes on physical health, on mental health and on educational attainment, to say nothing of the dignity of living on benefits.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Will the hon. Lady give way?

[Maria Caulfield]

I will not, I am afraid.

It is very important that we make work pay. I have met many constituents who are on tax credits because they are paid so poorly. We are subsidising employers unwilling to pay a decent wage, but relying on the taxpayer to subsidise low wages. Currently, taxpayers, many of whom are earning just above the tax credit limit, are subsidising employers to pay low wages. This must end.

Change to the tax credit system is more than an economic argument to reduce public spending, but reduce it we must. I have heard nothing from Opposition Members on how they would do that if there are no changes to the tax credit system. To facilitate the changes to tax credits, the Government have not just introduced the national living wage but are providing free childcare for 30 hours a week, freezing fuel duty, freezing VAT, national insurance and income tax for five years, and increasing the tax threshold to £11,000 as a step towards raising it to £12,500, thereby keeping more money that people earn in their own pockets.

Changes to tax credits are needed to reduce public spending, as we are accountable to the British taxpayer who is currently subsidising low pay. What message is that to low-paid workers? If people get up early, go out to work, work long hours and come home late, they deserve a decent wage, not a life on benefits. We should, in this place, be pushing the agenda for better wages, instead of accepting that a life on benefits is inevitable. I will be going through the Aye Lobby tonight.