Living Standards

Debate between Rachel Reeves and Louise Ellman

Monday 5th March 2012 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

I beg to move,

That this House believes that next month’s Budget should include a real plan for jobs and growth in order to boost the stalled economy, help hard-pressed families, pensioners and small businesses, bring down unemployment, and so ensure that the deficit is brought down and done so in a fair way; notes that while the banks are receiving a tax cut this year, the Institute for Fiscal Studies analysis shows that families with children will lose an average of £580 per year from tax and benefit changes coming into effect in 2012-13; further notes that up to 200,000 couples with children who work part-time face losing all their working tax credit of up to £3,870 per year from April 2012 if they cannot increase their working hours to 24 hours per week, further squeezing family living standards; further recognises that, in addition to ending the principle of universal child benefit, the Government’s unfair and ill-thought-through changes to child benefit will mean that a family with two earners each earning £40,000 would keep all its child benefit, but a single-earner family on £43,000 would lose it all, at a cost of £2,450 per year for a family with three children; and calls on the Chancellor to use extra revenue from tackling tax avoidance to cancel his changes to eligibility rules for working tax credits and announce in the Budget an immediate and urgent review of his changes to child benefit, to report before they come into effect in January 2013.

The Opposition have called this debate to draw attention to the injustice of ill-considered changes to benefits and tax credits, which are about to hit hard-pressed hard-working families across the country. We urge the Government to take this chance to review and rectify the pressure they are piling on families who are already under huge strain.

The debate takes place against the backdrop of the biggest squeeze in living standards in a generation, which is made all the more painful because of the Government’s failure to generate jobs and growth, and to deal with the deficit fairly. This year, they have chosen to take more from women and families with children than they are taking from the banks—they are refusing to repeat the tax on bank bonuses that the previous Labour Government introduced, with banks benefiting instead from a cut in corporation tax. At the same time, the average family with children faces a £580 cut in their annual income next month, according to the Institute for Fiscal Studies. Those families will get a Budget bombshell from the Chancellor this year.

Today the Opposition are calling attention to two ways in which the Government are clobbering families with children. The Government’s lack of competence or care when it comes to fairness for families includes a crude cut to child benefit planned for 2013, meaning that while two-earner families with incomes up to £84,000 will keep all their child benefit, a single-earner family with an income of more than £43,000 will lose all theirs. Families will be asking: “Is that fair?” We are also about to see a punitive withdrawal of working tax credits for couples with children, meaning that unless a family on £17,000 can increase their working hours from 16 to 24 by 1 April, they will see their income fall by almost £4,000. Families will be asking the Government: “Is that fair?” I look forward to the Minister’s answers.

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

Does my hon. Friend agree that it is appalling that in Liverpool, Riverside alone, more than 520 children from families who are working, but in low-paid jobs, will suffer as a direct result of that measure?