Universal Credit Work Allowance

Debate between Nick Thomas-Symonds and Oliver Dowden

Wednesday 6th January 2016 Commons Chamber

[Oliver Dowden]

I would ask the hon. Lady to consider the facts. I believe that the OBR is projecting a decline in the proportion of our national income spent on welfare over this Parliament, so the plan is actually working. If Labour Members do not wish to reduce welfare spending, there are only three alternatives. First, they could choose to cut spending on public services, but I have heard nobody suggest that, instead of making this reform, we should cut spending on the NHS or education. Alternatively, they could advocate an increase in personal or any other form of taxation, but I happen to think that in this country we already have unsustainably high levels of taxation. The third alternative is that Labour Members—

[Nick Thomas-Symonds (Torfaen) (Lab)]

Will the hon. Gentleman give way?

[Oliver Dowden]

Yes, of course.

--- Later in debate ---

[Nick Thomas-Symonds]

What would the hon. Gentleman say to the 7,000 people in Hertsmere on universal credit who will be worse off by 2020 about the nearly £1 billion that his party is spending on cutting inheritance tax for houses worth between £600,000 and £1 million? How will he excuse that?

[Oliver Dowden]

I do not recognise the hon. Gentleman’s figures, but I do recognise the following figures: in my constituency, 5,000 people have been lifted out of tax altogether, unemployment is down by 11%, and, as a result of tax cuts introduced by this Government, 47,624 people have seen a reduction in the tax they pay. This is the Government’s plan in action. We are moving from a low wage, high welfare, high tax economy to a higher wage, lower welfare, lower tax economy, and the net result is that unemployment continues to fall at a record pace. Since we came to power, an additional 2.2 million people have acquired the stability and security of a regular pay packet and a job to provide for themselves and their families. That is a record of which we on the Conservative Benches can all be proud.

If Labour does not have an alternative plan on spending, does it have one on welfare reform? Once again, we have a clear plan. First, we will introduce universal credit to remove the perverse incentives, discussed extensively during this debate, whereby employees are refusing a pay rise because they fear that the reduction in their benefits will be greater than the benefit they receive from the additional pay. Secondly, we are increasing the personal allowance. Under this Government, by the end of the Parliament the tax-free personal allowance will be £12,500, which will lift those working 35 hours a week on the minimum wage out of tax altogether. This will end the absurd situation in which people on the minimum wage pay tax and then have it recycled back to them through the welfare system. Thirdly and most importantly, we are introducing a national living wage, made possible only because we have been so successful in reducing unemployment, meaning that employers can bear the burden of that higher national living wage. As a result, we will cease to subsidise low-paid jobs, such as in supermarkets and the cleaning industry, with welfare payments.

This is a sensible plan that, when combined with help for childcare and other Government measures, offers a route to the higher pay, lower welfare, lower tax economy we desire. The House has a choice. Do we stick with a plan that has given 2.2 million more people the stability and security of a job and that will eliminate the deficit in this Parliament, meaning we finally run a surplus and start spending less than we earn—so that when the next crisis inevitably hits, we are cushioned against it—and do we start reforming the welfare system through the excellent measures introduced by my right hon. Friend the Secretary of State for Work and Pensions and his Ministers? Or do we take the approach advocated in Labour’s motion and bury our heads in the sand, pretend the problem does not exist and carry on borrowing forever, thereby burdening our children and our grandchildren with what the Labour party, when led by the likes of Mr Blair and Mr Brown, described as the bills of social failure? We are finally tackling those bills of social failure, and I am proud of the approach taken by the Conservative party.