Universal Credit Work Allowance

Debate between Owen Smith and Jess Phillips

Wednesday 6th January 2016 Commons Chamber

[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.