Universal Credit Work Allowance

Owen Smith Excerpts

Wednesday 6th January 2016 Commons Chamber

[Owen Smith (Pontypridd) (Lab)]

I beg to move,

That this House calls on the Government to reverse its decision to cut the universal credit work allowance, which is due to come into effect in April 2016.

I start by wishing you a happy new year, Mr Speaker. I wish the same to Ministers, Members on both sides and all in this House, and especially to the Secretary of State for Work and Pensions, who has just joined us. I am disappointed that it will not be the Secretary of State who responds to the Opposition day debate in the name of my right hon. Friend the Leader of the Opposition. This is the second time that the Secretary of State has failed to address the House when questions have been asked of his Department. I am not sure what his excuse is today, but it is a shame that he is shirking his duty to speak to the House today.

Perhaps we ought to take a lesson out of the playbook of the right hon. Gentleman’s Department and think about sanctioning the Secretary of State if he continues to shirk work in this way. Some 600,000 people in the UK were sanctioned by him last year, some for failing to turn up to a job interview, some because they were selling poppies, some because they were attending their father’s funeral, and one because they had had a heart attack. Someone suggested to me that an appropriate punishment for the Secretary of State—a sanction—might be to ban him from the House of Commons canteens for a month or so, thereby forcing him to go and visit a food bank at last.

It is extraordinary that the Secretary of State cannot be bothered to defend his pet project, universal credit, today. Perhaps it is because he thinks he is above answering questions from Members in the House of Commons, or perhaps he now agrees that universal credit is indefensible. The changes that we are debating today are among the most radical ever undertaken to social security; they are changes that should have done what the Secretary of State originally intended and made work pay for working people on benefit—on in-work support—and should have made millions of people in this country better off, but after the recent cuts I fear they are set to make millions of people worse off.

[Angela Rayner (Ashton-under-Lyne) (Lab)]

My constituency was one of the first places in Britain to pilot universal credit. Analysis by the House of Commons Library shows a single mother of two working full-time in my constituency on the minimum wage and on UC will have a net income loss of £2,981 next year. My constituents will be the first of millions of people in the country to be hit by these cuts, because they were the first in the country to be put on UC. Does my hon. Friend agree that this is just not fair and another example of Tory broken promises?

[Owen Smith]

I agree wholeheartedly. In fact I believe that in my hon. Friend’s constituency 12,000 people will by 2020 be subject to far lower incomes as a result of the cuts to UC. That is 12,000 people—less the northern powerhouse than a northern workhouse.

Let me be clear about what we are talking about, because this is complicated; UC is a bit of a black box and I think many people out in the country—and many on the Tory Benches—do not quite yet appreciate what is going on and have believed the smoke and mirrors from this Government. The changes that were snuck out—mentioned in passing in last summer’s Budget and then leaked out piecemeal in a statutory instrument subject to negative resolution that we had to pray against in order to get it even debated in this House—will halve the value of the work allowance under UC, which is the piece of UC that is essential to making work pay.

Let me illustrate exactly the nature of those changes to the work allowance by giving a few examples. For a single mother with one or more children, the work allowance will be halved from April of this year from £8,808 to £4,764, a reduction of £4,044. In cash terms, that working mother will lose £2,628 next year. That is the nature of the loss to a single mother. For a joint couple living and working together, one or both with limited capacity to work as they are disabled, their budget —the work allowance—will be cut from £7,700 to £4,700, a loss of £3,000 in their income. A single individual in receipt of UC will lose everything—a £1,332 reduction; a net loss to their income of £865.

[Alison McGovern (Wirral South) (Lab)]

I am so glad my hon. Friend has mentioned single parents and how they are going to be hit. The last Labour Government did us all proud with the new deal for lone parents. Does my hon. Friend agree that the fate that now befalls single parents in this country is an absolute reversal of what past Governments did to help them work?

[Owen Smith]

Let me be very clear: under the Tory Governments in the 1980s I remember the right hon. Member for Wokingham (John Redwood) being dragged through the newspapers in this country for damaging the reputation of working mothers almost irreparably after comments he made about the St Mellons estate in Cardiff, and the Tories are back on the same track. In their sights are single mothers. They are the biggest single group of losers from all these changes to tax credits and UC, and it is an absolute disgrace that the Tories are undoing all the good work the last Labour Government did.

[Oliver Dowden (Hertsmere) (Con)]

The hon. Gentleman talks about examples; can he confirm that without these reforms a family with a net household income of £57,513 would be in receipt of benefits? Does he think that is in any way sustainable?

[Owen Smith]

We are not talking about families in receipt of £57,000; we are talking about families on low and middle wages. We are not talking about people who are in the highest tax bracket, and it is a complete misrepresentation of the facts and of this debate to try to turn this discussion to high-earning taxpayers. That is not what we are talking about.

[Chris Stephens (Glasgow South West) (SNP)]

I want to come back to the process the shadow Minister outlined at the beginning of his remarks. He said this measure was sneaked through by a statutory instrument. Has he read the many questions Opposition Members, including myself, asked at the statutory instrument Committee about the impact of this change, such as on carers, particularly young carers?

[Owen Smith]

We have repeatedly asked for any sort of impact assessment in respect of these measures, and as usual the Government signally fail to offer one. I believe that in the hon. Gentleman’s constituency 13,000 households will lose out by the end of this Parliament as a result of these cuts, and in the constituency of the hon. Member for Hertsmere (Oliver Dowden) I believe 5,000 people will lose out by an average of £950 by the end of this Parliament; perhaps he ought to reflect on that when he votes on this motion later today.

[Andrew Gwynne (Denton and Reddish) (Lab)]

I commend my hon. Friend on bringing this motion to the House today, because the impact of these changes will be devastating to a very great number of my constituents in Tameside who, because they go through the Ashton-under-Lyne jobcentre, were part of the pilot for UC. Does my hon. Friend agree that there is another con here in that the Secretary of State has indicated that the £69 million support fund will help to bring in transitional arrangements, but that fund is used for myriad other purposes, and we already know the impact of the cuts to working families of UC changes this year alone will be £100 million?

[Owen Smith]

My hon. Friend is absolutely right as usual, and I think 10,000 of his constituents will eventually be affected with lower incomes as a result of these changes. He is also right about the transitional protections and the way in which the Secretary of State has, I think, sought to misrepresent those as covering the losses; I will come to that later in my speech.

[Ms Karen Buck (Westminster North) (Lab)]

rose—

[Owen Smith]

Before I do, however, I will give way to my expert friend.

[Ms Buck]

That is kind—and inaccurate. Like many Opposition colleagues I was besieged by constituents concerned about their tax credit cuts in the run-up to the spending review. They were horrified that a Government who said making work pay was going to be their mantra should do this to working people. Does my hon. Friend think the 600,000 Londoners on tax credits—7,000 in my constituency—will be equally horrified to know the sting is still in the tail and working people are going to lose out dramatically as UC is rolled out?

[Owen Smith]

I think that, more than that, they will be absolutely cheesed off to the back teeth that this Government have tried to pull the wool over their eyes, because the truth is these are precisely the same cuts that were proposed through tax credits—almost exactly the same amount of money will be saved through these cuts to the work allowances as was previously proposed.

[James Cartlidge (South Suffolk) (Con)]

Excellent.

[Owen Smith]

A Member says “Excellent” from a sedentary position. I think—

[James Cartlidge]

Will the hon. Gentleman give way?

[Owen Smith]

I will be delighted to give way.

[James Cartlidge]

I have just a minor detail: every penny paid out in benefits has to be raised in tax out of working people’s taxes. The money paid out in tax credits is not wages; it is means-tested benefits. Does the hon. Gentleman not recognise that the great advantage of UC is that it reduces the harsh impact of means-tested withdrawal of income?

[Owen Smith]

Where do I start? I start by telling the hon. Gentleman that 7,000 of his constituents will be hit by this by the time he next stands before them at the election, and he ought to reflect on that. More importantly, I tell him that it is precisely people in work paying tax—working hard, long hours, many on the minimum wage, working every hour they get—who are getting hit by his Government. That is what these cuts are doing. This is not a different set of people—they are not the scroungers that the Government like to talk about; they are the strivers, and they are being hit by the Government. The truth, as the Institute for Fiscal Studies has said, is that there is no difference between these cuts and the ones to tax credits that the Government proposed, on which they U-turned. According to the IFS, the U-turn makes “no difference”. The Government will end up saving the same £5 billion, at the end of the Parliament as opposed to the beginning, and they will strip £10 billion out of the pockets of working families. They should be ashamed of themselves.

[Maria Caulfield (Lewes) (Con)]

I understand what the hon. Gentleman is saying, but he has previously said in the House that he is committed to making £12 billion of savings to tackle the country’s deficit. How would he make those savings if not through these changes?

[Owen Smith]

What I absolutely would not do is cut the incomes of 5.5 million working families, many of them in the hon. Lady’s constituency, by an average of £950. I would not take £1,600 from 2.6 million working families—[Interruption.]

[Mr Speaker]

Order. The hon. Gentleman’s mellifluous eloquence has to be interrupted for a moment for me to make this obvious point. Whatever their dissimilarities, the hon. Members for Elmet and Rothwell (Alec Shelbrooke) and for Birmingham, Yardley (Jess Phillips) have one thing in common: they are extremely excitable. They need to calm down a little bit, not least so that we can hear the flow of the shadow Secretary of State’s eloquence and the eloquence of his flow.

[Owen Smith]

I am extremely grateful, Mr Speaker.

[Simon Hoare (North Dorset) (Con)]

Will the hon. Gentleman give way?

[Owen Smith]

No.

Disabled workers will lose £2,000 a year, and as my hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) reminded the House, the worst affected group will be single mothers. A single mother working full time on the new, shiny national living wage will be £3,000 worse off. How have the Government justified that? They have made a series of attempts to defend it. The first was to refer to their manifesto and say, “We said we were going to deliver £12 billion of cuts from welfare, and here we go.” What they did not say at the election, as I recall, was that they would be stripping the money from working families. I do not recall them talking about nursery nurses, security guards or shop workers on the minimum wage as the sort of wage scroungers they now seek to vilify, yet those are the very people who will be scragged by the change.

[Mrs Madeleine Moon (Bridgend) (Lab)]

My hon. Friend was asked whether he would find alternative ways of raising money instead of taking it from the disabled, single parents, carers and working families. Would it not be more appropriate to collect tax from the many top companies in the UK that are avoiding paying their tax, rather than to steal from low-paid families as the Government propose?

[Owen Smith]

I found it interesting to learn, as part of the massive data dump before Christmas, that some of our largest banks such as J. P. Morgan and Merrill Lynch paid absolutely no corporation tax in the UK last year, in the same week when we learned that there would not be an investigation of the practices of our banks. Others can draw conclusions from that; I will stick to the subject at hand, which is universal credit.

I turn to transitional protection for those affected. As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, the Government keep telling us that there will be transitional protection, and I will go so far as to concede that that is true—sort of—for some of the 350,000 people who will be on universal credit by April.

[The Parliamentary Under-Secretary of State for Disabled People (Justin Tomlinson)]

Two hundred and fifty thousand.

[Owen Smith]

The Minister says it is 250,000, but 350,000 is the latest estimate that I have seen from the Office for Budget Responsibility. Perhaps it is wrong—it could be wrong about other things in future, as well. However, there will not be transitional protection for the 5.8 million people who will eventually be on universal credit. Even for the 350,000 who are currently on it or will be on it by March, there will not really be transitional protection if they undergo anything that constitutes what the Government call a “serious change of circumstances”. In that case, the maintenance of their in-work support at tax credit levels will stop. It will interest the House, especially given the Secretary of State’s interest in marriage as an institution, that getting married will constitute a serious change of circumstances. If someone who is on tax credits and enjoying transitional protection gets married, the Secretary of State for Work and Pensions will take that money away from them.

There will be no protection whatever for any of the millions of new claimants by 2020. The Secretary of State has implied on several occasions that there will be transitional protections. Indeed, when he intervened on me in the debate before Christmas—he was not leading for the Government in that debate—he said explicitly:

“We are transitionally protecting those who are moving on to universal credit.”—[Official Report, 7 December 2015; Vol. 603, c. 696.]

Unfortunately, the Minister for Welfare Reform, Lord Freud, had to correct him in the House of Lords, saying:

“It is not the same as transitional protection…it might be some more work or it might be upskilling”.—[Official Report, House of Lords, 14 December 2015; Vol. 767, c. 1910.]

In truth, the £69 million fund that the Secretary of State has prayed in aid as transitional funding will in no way make up for the £3.2 billion loss over this Parliament.

The truth came out in the infamous data dump of documents snuck out in Christmas week. Responding to criticism by the Government’s own Social Security Advisory Committee, Ministers had to admit that the only way to recoup the losses would be to work an additional three to four hours a week. That is right—the House heard me correctly. The Government are now saying to a single mother who is working full time on the national minimum wage and looking after her children in the evening and who will lose £3,000 that she has to get another job working an extra three or four hours a week—approximately 200 hours a year—to make sure that she is no worse off. Tell me, Mr Speaker—I cannot see it—how that single mother who has a child at home and who is working full time will, even on the new national minimum wage, be able to work an extra three to four hours a week or 200 hours a year. Is she meant to get a job after work in a bar, in a garage or serving coffee? Is she meant to get a job in addition to the full-time job she is doing during the day and in addition to looking after her children—for example, cleaning in the mornings—to earn an extra few quid?

What on earth is the incentive for that mother to undertake that extra work? I ask that because the other massively damaging effect of the cuts is that they fundamentally undermine and destroy the very premise of universal credit—to make work pay.

[Alison McGovern]

I thank my hon. Friend for being so generous and giving way again. I remind him that when the Chancellor announced his so-called living wage, he assumed a rising personal allowance in his calculations in the Budget book that suggested that work would pay. Given the Government’s broken promises left, right and centre, why should any single parent believe what they say?

[Owen Smith]

My advice to single parents is absolutely clear: do not believe a single word that the Government say in response to today’s debate, or what they are telling the country about making work pay and about universal credit. Each and every promise is being broken.

[Oliver Dowden]

Will the hon. Gentleman give way?

[Owen Smith]

No, I have given way to the hon. Gentleman once.

The Secretary of State used to say that universal credit was a watershed benefit. Indeed, he used to say that it would

“ensure that work pays, and more work pays, for everyone”.

The cuts to the universal credit work allowance have holed that argument below the waterline. The House of Commons Library briefing, which was produced yesterday evening and circulated to every Member, makes it clear that a single mother will have to work an extra 12 hours each week to earn an extra forty quid, at £3.30 an hour, after these changes. Before the changes, she would have got £92 for those extra 12 hours at £7.66 an hour. How on earth is this meant to increase her incentives to go out and work harder and work longer? It is absolute nonsense.

[Heidi Allen (South Cambridgeshire) (Con)]

I wonder whether there is something in the integrity of the people the hon. Gentleman speaks about, and whether they will raise their heads high enough to say, “Okay. It’s not great and it’s not the end result, but I am lifting myself and my children off a life of welfare dependency.” In that is a pride. I would like us to talk a little more in those terms and that language.

[Owen Smith]

I have a great deal of respect for the way in which the hon. Lady stood up for her constituents and spoke out against her party and Government Front Benchers on the tax credits changes because many thousands of people would be affected in her constituency. I point her to the document commissioned and chaired by the Secretary of State when he first conceived of universal credit: in his introduction, he demolished the argument she has just made. He effectively said that we could not expect people to work harder simply out of responsibility and moral obligation, and that we needed to introduce incentives. That was the underpinning rationale of universal credit. Unfortunately, these changes—the cuts to the taper rate, the cuts to the work allowance and the cuts to the childcare provision—are fundamentally undermining the initial premise. They are destroying universal credit. In 2020, 5,000 of the hon. Lady’s constituents will suffer lower incomes as a result of the changes to universal credit.

[Jess Phillips (Birmingham, Yardley) (Lab)]

I lived on in-work benefits. The delightful feeling of being lifted out of welfare benefits never fed my children. Does my hon. Friend agree?

[Owen Smith]

I completely agree, and my hon. Friend’s personal experience ought to be listened to by the Secretary of State and Members on both sides of the House. She will know that 17,000 of her constituents will be hit by the changes in 2020—an extraordinary number of families will have lower incomes as a result of the changes.

The truth is that the changes cannot increase work incentives and will not increase outcomes. They cannot. That is why successive independent experts have come out and told the Government to think again, as they did on tax credits. The Social Security Advisory Committee—the Government’s own advisory committee—tells them to reverse their plans. The Resolution Foundation, chaired by a former Tory Minister, tells them the same. Most recently, and most importantly of all, on 17 December the Government’s social mobility commission, deputy-chaired by a Tory peer, Baroness Shephard, said with great clarity to the Secretary of State in its “State of the Nation 2015: Social Mobility and Child Poverty” report:

“The immediate priority must be taking action to ensure that the introduction of Universal Credit does not make families with children who ‘do the right thing’ (in terms of working as much as society expects them to) worse off than they would be under the current system. That means reversing the cuts to Universal Credit work allowances enacted through the Universal Credit (Work Allowance) Amendment Regulations”.

The commission is right and the Opposition agree, just as we agreed when the hon. Member for South Cambridgeshire (Heidi Allen) and her colleagues urged the Government to go into reverse last time.

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

In a deft but somewhat selective speech, is the hon. Gentleman not missing the point that universal credit, with a single rate of taper, will make it invariably clear to people that if they work more, they will earn more? Under the current system, taper rates go up to 90%. It is incredibly confusing and many people do not risk taking on extra work because they will have to re-apply for benefits and may be worse off. Universal credit has a beautiful simplicity and will encourage people to work.

[Owen Smith]

I congratulate the hon. Gentleman on his equally deft selectivity. Dare I say that my point is that universal credit might have done all those things? If we had, as was originally envisaged, a 55% taper rate, or even if we had the current 65% taper rate, and if we had work allowances that were double what are now proposed, as was originally intended, universal credit would have made work pay and it would have been an incentive for people to work those extra hours. I have made that plain in my speech. However, with the cuts—the seven successive cuts that have been made since 2012—it will not deliver what was promised. The hon. Gentleman and the country are being sold a pup by the Secretary of State. It was not what was written on the tin when he first brandished it. Conservative Members need to understand that, because thousands of families in their respective constituencies will be affected by those cuts. Many of them will lose as much or more than they would have lost under the tax credit cuts. I say to all Tory Members: join us or tell me how these cuts are different from those they stood against last time around, other than that Tory Members might not quite have the time to realise that these cuts are being made before they next stand in an election. So far as I can see, that is the only plausible reason for their failure to follow their consciences this time and rail against the cuts.

[Justin Tomlinson]

I want to be clear on one point. The taper at the conception of the policy was 65%. There has been no cut and no change to that. It is important that the shadow Secretary of State does not make a mistake on that.

[Owen Smith]

I did not make a mistake in any way, shape or form.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

You said it was cut.

[Owen Smith]

No I did not. I referred to the original document commissioned and chaired by the Secretary of State, in which it was recommended that there be a 55% taper rate. I might also refer to the social mobility commission, which is telling him to go into reverse. It argues that he needs to get back to a 55% taper rate.

[Mr Duncan Smith]

You said it was a cut.

--- Later in debate ---

[Owen Smith]

The Secretary of State can chunter all he wants, but if he really wants to make an argument in favour of his pet project, he ought to get off his rear end and speak from the Dispatch Box. I would be more than grateful any time he wants to intervene and talk to me about it. As I have said before to our effectively absent Secretary of State—he was very bold to brief the press before the Budget that he would resign if his pet project was touched by the Chancellor—now is the time to go. The Secretary of State’s plans have been shredded by No. 11 since 2012. He said universal credit would be more generous than the benefits it replaced, but it will be £5.7 billion less generous than he promised. It will be £4 billion less supportive of working families than the current system, thanks to the Chancellor’s raids on the Secretary of State’s budget. He said it would make work pay, but as I have shown today, after the cuts the policy is tantamount to asking single mothers to pay to work.

[Jessica Morden (Newport East) (Lab)]

My hon. Friend mentioned the disabled. It is worth underlining how the policy hits disabled people in work particularly hard. Liverpool Economics assesses that they could lose up to £2,000 as a result of the changes.

[Owen Smith]

As ever, my hon. Friend is completely right. Nine thousand of her constituents will be worse off. Those among them who are disabled or who are part of a couple in which one or more of them are disabled will lose £2,000 under the cuts. That is a disgrace.

Under this Government, people are working in a period of wage restraint and austerity that we have not seen since the 1920s. This Tory decade promises the lowest 10-year period of wage growth in a century, with gains to workers half those they had under the Labour Government—6% wage growth versus 12%. That includes all the fancy promises about a national living wage.

The living wage will make up just 22% of the losses that working people will incur under the changes. It is misleading to the country and the House to suggest otherwise. Under this Secretary of State, we have a bedroom tax that leaves people without money to pay for food or heating. We have a sanctions regime that has driven some to suicide. Now we have universal credit, which will reduce security and rewards for people doing the right thing and working hard for their families and our society. The Secretary of State should have addressed those questions today and spoken to the House. He should consider his position.

--- Later in debate ---

[Justin Tomlinson]

I thank my hon. Friend, who I know has worked incredibly hard in his constituency to help more people get into work. Across the country, more than 2 million more people are in work—record numbers—with record low numbers of people out of work.

Welfare spending overall went up by almost 60% in real terms, costing every household an extra £3,000 a year in 2010. What was the result of all that spending? The number of working people in poverty actually went up by around 20% and nearly one in five households had no one working. That was too often the norm.

[Owen Smith]

Will the Minister confirm that under his Government welfare spending has gone up more than it has under any Government, breaching £1 trillion under the previous Government, and £130 billion more than under the previous Labour Government?

[Justin Tomlinson]

In percentage terms, it is now back to 2008-09 levels. These reforms are key to that. Having an open blank chequebook is simply not an approach that we or hard-working taxpayers would take.

--- Later in debate ---

[Justin Tomlinson]

My hon. Friend highlights the importance of that personalised support, which people find absolutely vital. We have seen this in our casework, in our experience of life and through friends who have navigated through the system. My hon. Friend has taken the time to visit her jobcentres, and I would gently encourage the shadow Secretary of State to go and visit one of the universal credit sites and to see it at first hand.

[Owen Smith]

I spoke to one of the people piloting universal credit just two weeks ago. Is the Minister seriously telling the single mother I mentioned earlier, who is working full time on the new national minimum wage, that she should not worry about the £3,000 drop in her income that will result from these cuts? Is he saying that she should not worry because she will have a personal work coach who will encourage her and give her greater confidence to get another job, maybe in management? Is he seriously saying that to the country?

[Justin Tomlinson]

I will extend my invitation further: I will join the hon. Gentleman if he wishes to come and see this work in action. If he is worried about going on his own, I will in effect be his work coach. We have talked about examples. Let us talk about a working lone parent with two children who is doing 35 hours on the national living wage. They will be £330 better off. We could continue to trade examples, but that would be to assume that this is a static analysis. I will address that point later.

The evidence is clear: universal credit is working. Independently reviewed statistics published at the end of last year show that under universal credit people spend 50% more time looking for work, are 8 percentage points more likely to have been in work, and when in work, they earn more and seek more hours. So, universal credit is supporting people whether they move into or out of work, and focusing on getting people not just into work but into sustainable employment where earnings increase and the number of hours they work rises.

--- Later in debate ---

[Owen Smith]

This will be the last time I intervene on the Minister, I promise. Is he seriously telling the House that the £69 million flexible support fund that he has just prayed in aid once again will in any way make up for the £3.2 billion loss to working families?

[Justin Tomlinson]

The shadow Secretary of State is mis-matching the two parts. The people who are going across will continue to have their cash protected. The £69 million fund will provide ongoing support to help people to navigate through the process.

[Justin Tomlinson]

This is actually delivered through the jobcentres and the universal service, so I think we will have to discuss that a bit further.

Figures have been bandied about, and I want to make it clear that they were wildly inaccurate. They were based on a fundamental misunderstanding of universal credit, which is why I am so keen to arrange a visit for the hon. Member for Pontypridd (Owen Smith). The vast majority of those on the universal credit caseload will not lose out as a result of the changes. That is because the measure affects only those people who are in work, most of whom would have received nothing under tax credits. I have not seen the Opposition campaigning on this issue before. Unlike tax credits, universal credit is a dynamic benefit.

[Owen Smith]

rose—

[Stephen Timms]

rose—

--- Later in debate ---

[Dr Whiteford]

I have made that point already. We are talking about a change that is due to come in in April that will undercut work incentives. It will take the work incentive out of universal credit. The work allowance helps universal credit make work pay. It is the cornerstone of the system. If we take out that allowance, all we will have is another benefit trap like the one that it is trying to replace.

I wish to pick up on an issue raised by the hon. Member for Pontypridd (Owen Smith) earlier in the debate. In the Government’s response to the Social Security Advisory Committee’s “Occasional Paper 15” on universal credit, they said that they expect claimants to respond to cuts in the work allowance by “actively seeking more work.” From what we have already heard about the disincentives caused by high marginal rates of taxation, that is simply wishful thinking. The Secretary of State and Members on the Government Benches seem to be labouring under the misapprehension that people in low-paid jobs do not work as hard as people in highly paid jobs, and that somehow it is easy to pick up extra work—whether that is in the form of another wee job, or of more hours—but the reality is that low-paid jobs are often the most physically demanding, the most insecure, and the most exhausting.

Early yesterday morning, at the crack of dawn, when I was leaving Aberdeenshire, I passed roadworks where men were already trauchlin in the cold and the dark and the pouring rain—it has been raining incessantly—setting up their temporary traffic lights. Although they will not be on the minimum wage, they are certainly not high earners, and, doubtlessly, some of them will be part of families receiving tax credits or universal credit. I could not help but think how lucky I was to be able to work indoors at this time of year. Those manual workers are exactly the sort of folk who will be asked to find an additional job, or work extra hours after a long day outside.

[Owen Smith]

The hon. Lady is making an excellent speech. Does she agree that it is fundamentally offensive to those workers, and to all workers on a low wage, for the Secretary of State and his Ministers constantly to refer to the “dynamic” effects that will be introduced by this new system? Are these people who are working full time in the pouring rain undynamic?

[Dr Whiteford]

They were certainly showing a fair bit of dynamism yesterday morning. I was really glad that I did not have to work with them. I partly agree with the hon. Gentleman. The insecurity of the modern labour market means that people move in and out of part-time work more often that they did in the past. It is important that we create a system that responds to that. My problem is that the Government are undermining their own process with their transitional arrangements, but I will say more about that in a second or two.

There are people all over my constituency—and in everybody’s constituency—who work extremely hard already in low-paid, tiring and not exactly pleasant jobs that are neither interesting nor glamorous. They are often doing that while they are juggling family responsibilities, looking after children or, increasingly, elderly and infirm relatives. For many of them, taking on extra hours depends on that work not just being available, but being available at a time when they have access to childcare. Let us face it, young children cannot get themselves out to school in the morning. They may not be able to walk there safely on their own. They cannot just be left unattended at home for several hours after school or get their own tea. Many working parents have to juggle work and family commitments. Indeed, one reason why so many women are trapped in low-paid, low-skilled jobs, even when they have high-level skills and qualifications, is that they are the primary carer in their household and they are trying to fit work around their family responsibilities. The Catch-22, of course, is that it is a lot easier to do that juggling if they are in a well-paid job.

I have a very serious question for the Government that echoes the question posed by my hon. Friend the Member for Glasgow South West. Many of those who work in low-paid jobs in Government Departments, including in the DWP, receive tax credits or universal credit. Will their employer offer them a few wee extra hours to compensate them for the loss of their work allowance? Will the DWP specifically—I hope that Ministers can answer this one—offer extra hours to its own staff who are set to lose out, or will it impose in-work conditionality on them instead? If the Government cannot or will not commit today to supporting their own staff, they have no business putting the onus on other employers to miraculously conjure up extra work for people.

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[Owen Smith]

Does the hon. Gentleman not understand that what we have argued here today is that after the cuts, which we are urging the Government to reverse, 6,000 people in his constituency will be worse off in 2020 than they would have been? It is very simple.

[Craig Williams]

I do not accept that. The shadow Secretary of State would have a lot more credibility if he came here with an idea of how to change the system and practical approaches rather than just opposing everything that this Government try to do. The previous Labour Government failed this country and failed constituents in Cardiff North. We are creating the opportunities. We need only look at the Labour Welsh Government to see their track record at creating opportunities. I stand by this Government and these changes.

[Owen Smith]

What about employment in Wales?

[Craig Williams]

Thanks to the UK Conservative Government—I thank the hon. Gentleman.

Not only does the universal credit system encourage people into work, it supports them through the process, staying with them and working with organisations such as Reed in Partnership, to which I pay tribute. Just before Christmas, it produced a survey of young people about the barriers to getting into work. The main things they said were about the importance of consistent career advice and the effects of receiving poor advice. These work coaches will really change things round for youth opportunities because someone will be dedicated to looking after people throughout the whole journey. I really welcome that. The Opposition should not be quite as jovial about this concept, which is a game changer.

The new system gives claimants the confidence to start a job without having to go through the bureaucracy of changing their benefit claim. We need to appreciate the transformational element of universal credit. Ninety per cent. of people who have already signed on did so online. This is a massive change in the way that we operate our welfare system, and it is extremely welcome. As I said, it is being rolled out in a very careful, safe and controlled manner. The Minister touched on that, but it is worth dwelling on. The findings from the December 2015 “Universal Credit at Work” report show us that, as we have heard, 71% of universal credit claimants moved into work in the first nine months of their claim. That compares with 63% of jobseeker’s allowance claimants. Universal credit claimants work on average 12 days more than comparable jobseeker’s allowance claimants. We need to recognise that and work on it, and provide proper support to ensure that people can achieve their ambitions and do not remain trapped in an unfair system, which is what the previous system was.

As part of that, we have put in place further measures that are directly related to the changes to the work allowance. The transitional arrangements are in place and they ensure that the benefit entitlements of claimants who are migrated on to universal credit by the Department for Work and Pensions—it is worth emphasising this again—do not fall in cash terms.

As I have hinted at, I want to dwell on the tapered relief for universal credit, which remains at 65%. I want to say that over and over again, because the shadow Secretary of State gave us smoke and mirrors. Unlike the planned tax credit changes, which would have resulted in an increased taper, the savings are achieved without increasing the effective marginal loss of benefit for every pound earned as a claimant moves into work or takes more hours. That means that work incentives are not adversely affected.

I am aware that you want to get everyone in, Madam Deputy Speaker, so I will conclude on that point. This really is a massive transition from the system that the last Labour Government presided over, which is not fit for purpose, sustainable or affordable for this country. I welcome the changes and the universal credit roll-out. As a member of the Work and Pensions Committee, I will pay particular interest to the issue and be a critical friend, but I welcome the roll-out so far.

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[Richard Graham (Gloucester) (Con)]

We seem to have had endless debates on universal credit over the past five and a half to six years, and I am sure that we will have many more.

This Opposition day debate was opened with a call from the shadow Secretary of State to reverse the work allowance changes in universal credit. I sensed that he really wanted to reverse every welfare cut that has been made by this Government and their predecessor. After all, he and his colleagues opposed every penny of savings put forward by the coalition Government. However, he cannot do that, partly because he stood on a manifesto that would have reversed only the smallest welfare savings, such as the spare bedroom subsidy, and partly because he signed up to £12 billion of welfare savings. He did not tell us today that his party would reverse all the changes if it were elected into government, nor how he would find the £12 billion of savings.

[Owen Smith]

rose—

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[Mr Vara]

It is important that the right hon. Gentleman and others take into account the need to consider the broader perspective: the raising of personal allowances; the introduction of the new living wage; the doubling of free childcare to 30 hours; tax-free childcare from early 2017; and, let us not forget, the fact that every time we fill up our tank with petrol there is a saving of £10 because of the freezing of the fuel duty. It is important to consider everything in a broader perspective, not the narrow perspective that we have heard from so many Opposition Members.

A number of speeches have been made today and, unfortunately, time simply does not allow me to address them all. I shall simply say that the right hon. Gentleman made a passionate contribution. I have huge respect for him and I am sorry that he is no longer on his party’s Front Bench. May I also pay tribute to my hon. Friend the Member for Hertsmere (Oliver Dowden), who made a learned contribution, clearly setting out the reasons why Labour’s proposals are simply not sustainable? My hon. Friend the Member for Lewes (Maria Caulfield) made a powerful contribution, telling us of her experiences growing up, which had the whole House in agreement with her.

This is an important subject and we need to recognise that the IFS has pointed out that no one on existing benefits or tax credits whose circumstances remain the same will lose out in cash terms as a direct result of being moved on to universal credit. These claimants will get transitional protection to avoid cash loss at the point of change. It is important to note that the only people who will be directly affected by the change to work allowances in April will be those already in work, the majority of whom will be single claimants without dependants. [Interruption.] The shadow Work and Pensions Secretary chunters away, but we have checked the Hansard record and found that he was wrong and we were right. Conservative Members await a withdrawal of his earlier comments, which we debated. We have checked Hansard and he should do likewise. For those people who are affected, we have been careful to put measures in place to ensure that they are fully supported. As well as the additional work coach support that these claimants will receive, we have increased the amount available through the flexible support fund to help people progress in work and increase their earnings.

Universal credit is a major reform of welfare that is designed to make sure that work always pays. Through the removal of the requirement to work 16 hours per week that exists in the tax credits system, people will see a financial benefit from every extra hour they work. The universal credit taper means that financial support is withdrawn at a consistent and predictable rate, helping claimants to understand clearly the advantages of work. The IFS has said that anyone being moved on to universal credit from tax credits will be protected—they will not be cash losers. Opposition Members need to take that on board—that comes from the IFS.

[Owen Smith]

rose—

[Mr Vara]

I will not give way.

It is also worth noting that universal credit is working: for every 100 jobseeker’s allowance claimants who find work, there are 113 universal credit claimants who do so. It is important to look at the bigger picture. This Government are moving Britain to a higher wage, lower tax and lower welfare society. Universal credit is fundamentally different to the legacy systems it replaces, and it must be recognised that there is no meaningful way of comparing an unreformed tax credit system with universal credit.

As my hon. Friend the Under-Secretary of State for Disabled People highlighted at the start of the debate, Labour’s spending on in-work benefits went up by £22 billion, but the number of working people in poverty actually rose. The system we inherited from Labour was one where, for millions of people, being on welfare was a more attractive option than working or taking on more work.

Under Labour, there was a complete abdication of responsibility for managing working taxpayers’ money. Labour’s shambolic welfare policies led to a colossal welfare budget that was simply out of control, and the party has not changed. Page 47 of the 2015 Labour party manifesto said:

“To guarantee a decent social security system for the next generation, we need to keep costs under control.”

Yet when the shadow Work and Pensions Secretary was on the “Daily Politics” programme in December he said:

“We are campaigning for a…full reversal of universal credit...we will put that money back in if we were in power…I’m crystal clear about that.”

The presenter Jo Coburn challenged him—she had to challenge him three times. She said:

“Where will you get the money? The bill would go up under your proposal.”

The shadow Secretary’s reply was:

“Had I been Chancellor…I would have taken the extra £27 billion tax receipts.”

There we have it: the party that wants to continue taxing. That is why it is the party of welfare—it is the welfare party, not the labour party.

Welfare is much more than simply giving money to people and writing blank cheques; it is about removing the barriers that prevent people from finding work and progressing in work. It is about giving people the support they need to stand on their own two feet and live independently of the state. It is about creating the right incentives for people so that they can make the right choices for themselves and their families. That is what universal credit does, and it is working. It is incentivising work, renewing personal responsibility, and rewarding positive choices. Under this Government—this one nation Government—we will continue to deliver for all our citizens.

Question put.