Welfare Benefits Up-rating Bill

Martin Horwood Excerpts

Monday 21st January 2013 Commons Chamber

[Stephen Timms]

The policies of the previous Government reduced the number of children below the poverty line by 1.1 million. The policies of this Government are set to increase it by 1 million by 2020. That is a shameful record.

What we will have from April is a toxic combination of policies that will cut the highest rate of income tax and real-terms cuts in benefits and tax credits. Some 8,000 people who earn over £1 million a year will get a tax cut in April averaging more than £2,000 a week. Someone receiving the adult rate of jobseeker’s allowance will receive 71p a week. People are getting angry at what the Government are doing.

[Martin Horwood (Cheltenham) (LD)]

The right hon. Gentleman may or may not think that the Bill is a partisan device by the Chancellor—and he may or may not be right—but in refusing to support either the amendment tabled by the hon. Member for Brighton, Pavilion (Caroline Lucas) or the various amendments tabled by Liberal Democrat Members, is not the Labour party being absolutely pathetic? It has the opportunity to do something about this and it is not taking it.

[Stephen Timms]

We will announce uprating policy in the normal way on the normal timetable, not on a date chosen by the Chancellor for his own partisan purposes.

I think the Minister knows that I have been looking back at his speech in the Child Poverty Bill Second Reading debate in July 2009—fewer than four years ago. It was an autobiographical speech, as he said at the time. He explained that his first job was with the Institute for Fiscal Studies, where he had the task in the 1980s of compiling its poverty statistics. He said that

“year after year the level of child poverty would remorselessly grow. A majority of people would do relatively well, enjoying tax cuts, and the people at the top would do exceptionally well, but year after year more and more children would find themselves in poverty.”

He said that he decided to become a politician because he

“was appalled at what was happening in our country to the most vulnerable people”—[Official Report, 20 July 2009; Vol. 496, c. 625.]

Now here he is, three and a half years later, arguing in this Committee for exactly the same combination of policies he condemned at the time: tax cuts for the highest paid and benefit cuts for the most vulnerable. Exactly as in the 1980s, as he knows better than anybody, the result is certain: child poverty rocketing. With the extra rise as a result of the Bill, if current policies are maintained it will go up by 1 million by 2020—right back up to the level he was logging at the IFS in the 1980s.

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[Ian Mearns]

I think it is the ultimate insult to ordinary people’s intelligence to say that in order to incentivise those at the top end of the economy we have to pay them more, while incentivising people at the bottom end by paying them less. “We are all in this together”—I don’t think.

By no stretch of the imagination should these hard-working people—all those I have just listed—be regarded as shirkers. The Joseph Rowntree Foundation estimates the cost of child poverty to the taxpayer as £25 billion, despite the fact that 57% of children living in poverty have one parent working. Surely increasing the number of children suffering from child poverty, which is what the Bill will do, will take more out of the Treasury’s coffers in the long term than would be saved from capping the uprating.

[Martin Horwood]

On the subject of insulting people’s intelligence, will the hon. Gentleman vote for either of the amendments that seek to change the rate of this benefit cut?

[Ian Mearns]

What I will do is listen to the debate and see whether I can be convinced one way or the other.

Given that the majority of the people impacted by the Bill are in work, the Minister should perhaps have listened to my suggestion on Second Reading: why not legislate for a living wage so that low-paid workers are not reliant on the Government to top up their income but are paid an adequate wage?

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[Kwasi Kwarteng]

I have my own ideas about the banking collapse, which I am happy to share with the hon. Lady—although not, perhaps, tonight.

The financial crisis, which we all remember, devastated everyone. Even today, the United Kingdom economy is 3% smaller than it was in 2008. I cannot speak for everyone in the country, but the vast majority of people are much less well-off than they were in those days. What has happened to benefits since then? According to the figures that we have heard, they have increased by 20% while the earnings of people in work have risen by 10%. That is not fair.

Labour Members have talked of fairness. For instance, the hon. Member for Chesterfield argued eloquently that 1% on £70 a week was very different from 1% on £35,000 a year. However, it is not the people on £35,000 a year about whom we are worried; it is the people on very low incomes. People in my constituency who do night shifts at Heathrow come to me and ask “Why did out-of-work benefits rise by 5% last year? I earn £11,000 a year if I am lucky and work 20 hours a week, but I was not given such a big increase.” That is the sort of fairness that we are talking about. This is a really important issue, which Opposition Members have not addressed in any way.

[Martin Horwood]

Is not the answer to the hon. Gentleman’s question—which applies to people on low incomes in my constituency as much as to those in his—that those who have worked hard and have low incomes, but have paid their taxes and done the right thing, can still lose their jobs through no fault of their own and find themselves trying to subsist on 70 quid a week, and that we do not want to make things more difficult for those people? I think that very few of them are scroungers, and most want to get back to work as fast as possible.

[Kwasi Kwarteng]

I accept what the hon. Gentleman says, but I am talking about the position in general. It cannot be right, arithmetically, for benefits to rise, year after year, faster than the wages of the low-paid people to whom he has referred. However, we must look at the overall picture. The 1% increase is not very much. I know that some Government Members proposed a cash freeze, and I am glad to note that the Government have not adopted that severe option; but in the context of the European and the global financial crisis, a cash freeze is not completely off the table. We have seen other countries take extremely tough measures. Why have they done that? They have not done it because they want to limit demand, as the hon. Member for Glasgow North East suggested. They have not done it because they want to hurt people on low incomes. They have done it because they feel that the fiscal future—the future of the state: the future of their countries—requires a tough approach to public spending.