Social Security

Debate between Meg Hillier and Alicia Kearns

Tuesday 10th September 2024 Commons Chamber

[Dame Meg Hillier]

I give credit to the hon. Gentleman for his chutzpah in coming to the House today to say that it is this Government who have denuded pensioners of income. As my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) highlighted, the previous Government have a track record in that area, and there are 880,000 pensioners who, on the hon. Gentleman’s watch, deserved pension credit but did not get it. Those pensioners have lost out on £3,900 a year, in some cases for many years, because the last Government fell down on the job. They protected some pensioners, but not all. Where was the urgency then? These are crocodile tears when those people were suffering, but it is right that pensioners should get what they are entitled to, and pension credit is not being abolished by this Government. Rather, it is being promoted to make sure that the very poorest pensioners get that income.

One of the things that is absolutely apparent is that we cannot take this issue in isolation. We have a Budget coming on 30 October, and knowing what I knew a few months ago as Chair of the Public Accounts Committee and what I know today, I am not going to change my tune about the dire state of public finances. However, we face a second challenge: at the same time that our public finances are in that dire state, many of our citizens face the same challenges in their personal finances. This Labour Government are rightly committed to growth, but that will require an approach to taxation that helps ensure growth. We will therefore hear many arguments about the need for a taxation system that will underpin growth.

[Alicia Kearns (Rutland and Stamford) (Con)]

I thank my honourable friend for giving way. I call her “friend” because we have worked together very closely over the past few years, and I welcome her election—I would have supported her for that role.

The difficulty is that the public are not buying it. The Government cannot claim that they need to take this money from vulnerable pensioners—over 20,000 in my constituency will lose the support they are currently getting—and then reward train drivers who work four days a week on 70 grand a year. That is the difficulty, so how is my hon. Friend explaining that to her constituents? I have not been able to give an answer.

[Dame Meg Hillier]

I could speak forever about the challenges that the last Government left. I have spoken about the NHS, but let us take the dire state of our train services. The previous Government refused to engage and stop the strikes, which meant that anybody travelling had no certainty about whether they could get to everything from work to a family funeral. Lives were put in havoc, so it is absolutely right that we begin to set right the chaos that the last Government left. Yes, there is a cost to that, so the challenge for my right hon. Friend the Member for Leeds West and Pudsey and this Government is how we address that, making decisions that will build up the future of Britain in the way that we all want to see.

We also need to address the issue of taxation. The biggest challenge in our taxation system is that those who face the greatest financial challenges often face the biggest challenges of all, because the greatest cliff edges in our taxation and benefits system affect not those who are starting to earn and accumulate wealth, but those who are most financially challenged. For those at the margin, we keep coming across examples—this is not the only one—where the marginal costs of a slight improvement in income can drastically outweigh that improvement, whether that is tax thresholds being frozen or the issues we have seen with child benefit. There are many more examples, and the debate we are having today is one of those. The solution is not to duck or defer the need for tough choices, so, for the record, I will be voting with the Government. Equally for the record, though, I want this Government to commit to tackling those cliff edges, because that is what progressive policy—including taxation policy—looks like.

Like many Members of this House, I know from bitter experience that rushed laws tend to be bad laws, so I do not expect some Houdini-like solution to be announced from the Front Bench by my right hon. Friend the Member for Leicester West (Liz Kendall) in her closing speech. Instead, I expect and trust that she will consider removing those chains of poverty as a key mission for this Government in a thoughtful, carefully planned way; one that is tied up with the next Budget but goes way beyond it.

I also know, as will many Members, that there are technical challenges in making changes. Look at what has happened with child benefit: the limits on income are dragging many people into tax returns, where households of the same income did or did not receive child benefit depending on who was earning the money. That is a lesson in why changes need to be made in a sustainable way and according to a plan. My right hon. Friend on the Front Bench and her colleagues have a plan, but the winter fuel allowance, which we are discussing now, is a prime example of the problems that those cliff edges create. Addressing those problems in isolation, however, will leave in place all the other cliff edges; we need to look at challenging poverty in the round.

I was honoured to be chosen yesterday to be Chair of the Treasury Committee. I do not yet have Committee members—they are yet to be elected, as is the Chair of the Work and Pensions Committee—so I cannot speak for a Committee that does not yet exist on a cross-party basis, but I will be urging the Committee to consider this wider challenge of cliff edges as a matter of urgency. I look forward to working with Ministers to find some practical steps forward.

We have to make tough choices as a Government in-year, because one of the challenges is that the hole in the public finances is not just about the hole today. In previous Budgets, decisions were made to defer spending to later years, so the real challenge is now. Too often I have seen calls for efficiency savings and cuts in-year that end up being deferred. If we look at what happened to the defence equipment plan under the Conservative Government in 2010, we see that there was a desire to balance the books. In doing so, the Ministry of Defence deferred spending—moved it to the right—which left us with aircraft carriers without aircraft and a raft of other problems. Deferring decisions and spending does not solve things, and this Government and this Cabinet are making the tough choices to make those difficult decisions in-year, because that is financially literate and the right thing to do.