Welfare Cap

Mark Durkan Excerpts

Wednesday 16th December 2015 Commons Chamber

[Mark Durkan (Foyle) (SDLP)]

As someone who voted against the welfare cap when it was introduced and whenever it was reset, I am happy that the Government are trying to relax the original level of that cap. During the Budget statement in July, the Chancellor revised the welfare cap figures that he announced in the spring. He reduced that cap over four financial years by £46 billion, to include changes to tax credits and some of the other changes to universal credit that have been mentioned, and for that reason we would have opposed the measure.

As we have heard, the welfare cap is a fairly political argument. It has its origin in the opposition of Labour Members to the benefit cap in the Welfare Reform Act 2012, and they came under some pressure for that. At one point, the then Leader of the Opposition, the right hon. Member for Doncaster North (Edward Miliband), announced that he would do better than a benefits cap and introduce a welfare cap on the overall budget. We could see the lights go on for the Chancellor of the Exchequer, who decided, “That will do nicely. We’ll go for a welfare cap as well.” He proceeded to set up his working group to consider that, on the basis, he said, that annually managed expenditure is not managed but needs to be in future. That is how the welfare cap was introduced, and that is why the then Opposition were trapped into voting for it, whereas some of the smaller parties—and some Labour Back Benchers—felt free to vote against it.

When the welfare cap was introduced it was bubble-wrapped as a neutral budgetary tool, but many of us recognised that it would end up being brandished as a weapon for cuts, and that is exactly how the Chancellor used it this year in the July Budget. Of course, he was forced to revise his propositions on tax credits by a combination of opposition from right hon. and hon. Members right across the House. In fairness, some Government Members did not just vote against the measures but spoke against them too, making valid and pointed arguments about just some of the difficulties caused by the Chancellor’s plans. It is good that, with the range of consideration and argument outside and inside this House and in the other place, that the Chancellor had to revise his position. That is now reflected in the adjusted proposals for the welfare cap.

The Chancellor, in his autumn statement, made it clear that he will still get to the quantum of cuts he wants to achieve. The issue is how far the welfare cap will, in itself, be used as an instrument for forcing some of those cuts. We have also yet to hear from Ministers exactly how they are going to get to that quantum. Will they need to table amendments to the Welfare Reform and Work Bill currently going through Parliament to deliver the cuts within the time the Chancellor has projected, or do they feel that they will be able to arrive at the same cuts using existing legislation? There are powers of regulation under the 2012 Act and provisions in the Bill, not least the sweeping provisions in clauses 13 and 14 that could see significant benefits—universal credit, employment and support allowance, and the work-related activity group—disappear or be very heavily eroded. If the Government still intend to arrive at the quantum of £12 billion of cuts in terms of the welfare cap, how do they propose to deliver it?

That matters in the context of Northern Ireland. If the cuts are to be delivered under existing legislation or the Bill, the fact that direct rule powers are in the hands of Department for Work and Pensions and Northern Ireland Office Ministers means that the cuts will be put through under the sunset clause which will be exercised here up until the end of the next calendar year. We have the right to ask: what future cuts will go through under existing legislation and the Bill, and what would require further reductions in future?

We did not get clarification on welfare measures during the passage of the Scotland Bill, or on other occasions when we have asked Ministers about this more informally. Will the Minister clarify whether the welfare spending that can be undertaken by the Scottish Government of £2.7 billion—the last figure I heard—will count as part of the UK welfare cap, or is that absolutely outside the UK welfare cap? Is that a precedent for other factors? Ministers have been unable to address that point.

In welcoming the Government’s position today, I take no comfort from it. Their original intent to use the welfare cap as a cuts weapon is still there. I want clarification on their plans for the Bill. Will they table amendments to achieve further cuts, or do they believe that they can achieve the full £12 billion as the clauses currently stand?