Tax Credits

Richard Arkless Excerpts

Thursday 29th October 2015 Commons Chamber

[Bob Blackman]

That is not quite what I said. I mentioned the welfare system and said that we had a series of different welfare benefits. Whatever the problem was, the Labour Government set up a new benefit, whether a tax credit or another arrangement. During a period of relatively high employment they failed to deal with the fundamental issue, which, as the hon. Gentleman rightly points out, is low wages.

This debate was billed as the last chance to review what the Government are proposing before it became fact, but events in the other place mean that we are now in a position to make alternative proposals. Contributions this afternoon will therefore be helpful to the Chancellor in deciding what to bring forward in his autumn statement. Clearly, we have to strike a balance. The Conservative party manifesto laid out that we were going to save £12 billion in welfare. The challenge is therefore to come forward with alternative proposals on how welfare savings of £12 billion will be found. Some £4 billion of savings are envisaged from this change.

I start with sympathy for the people affected. When we reduce people’s benefits, they will always complain. When we increase the tax threshold so that they pay less tax, they will be quite happy and will not complain. When their wages are increased, they will not complain. But if we take benefits away, they will squeal. We clearly must look at the effect on individuals in the round. We must have the utmost sympathy for those people who are working full time and have no alternative but to receive tax credits to top up their wages. What can they do? They suffer a loss of income, and that will have an impact on their families. Therefore, the first thing I would like the Chancellor to do is examine the measures so that people in full-time work suffer no impact whatsoever, because this is grossly unfair on them.

Equally, we face a challenge in both the public and private sectors. Over time the Government have quite rightly reduced business taxation to encourage businesses to grow and to locate within the United Kingdom. That has got to be good news, because it has created jobs. However, they have also kept wages artificially low, and that has to change. Therefore, I greatly support the principle of a living wage, but clearly it is far too low at the moment. We need to see it increase dramatically so that work pays, instead of relying on the taxpayer to subsidise work in private industry, which cannot be right. I hope that the Government will look at that, in particular, so that we can encourage businesses to pay their staff more for the work they do. That has to be the right way to demonstrate that work should always pay.

We hear constant criticism from the Labour party about the creation of large numbers of part-time jobs in this country. One of the reasons for that is the fact that a large number of people know that if they take on a part-time job, perhaps working 16 hours a week, they will still have access to a large range of benefits. That is a lifestyle choice.

[Richard Arkless (Dumfries and Galloway) (SNP)]

Will the hon. Gentleman give way?

[Bob Blackman]

I will not give way again.

That is a lifestyle choice that people make. What we can see is that Government proposals and Government restrictions on taxation and benefits change people’s habits, so what we have to do is enable people—

--- Later in debate ---

[Richard Arkless (Dumfries and Galloway) (SNP)]

I welcome the Chancellor’s announcement that he made on Tuesday to bring measures forward to mitigate the changes to tax credits. I suppose the question on all our lips is how far his inclination to mitigate will stretch—will he mitigate for some or all? My message to the Chancellor is very clear: changes must be offset in full; tax credits should be tapered so that people do not lose out; the changes should be phased in; and the so-called package of changes must increase incomes at the same rate as tax credits are tapered off.

It is easy to admit that I have some sympathy with the principle. I think every sensible Member would agree that work should pay—of course it should. I would much prefer it if the cost of subsidising poor wages were borne by business. In an ideal world, the Government would not need to prop up wages, but we do not live in that ideal world at the present moment. The economy is not in that position. The Government had intended to put the cart firmly before the horse.

As a cynic, I do not believe that the Chancellor’s statement had compassion at its heart. For me, it was driven by fear—fear of losing power in the phoney constitutional war now started with the other place.

[Brendan O'Hara]

I agree with my hon. Friend that the second Chamber has forced the Chancellor’s hand, but does he agree with me that its intervention does not legitimise the constitutional absurdity of an unelected, unaccountable and ever-growing legislature at the end of the corridor?

[Richard Arkless]

Members will not be surprised to learn that I agree completely with my hon. Friend’s statement. The fact that the other place has seen sense on one particular issue does not legitimise the mess, in my view, that the other place represents. The Chancellor’s statement the other day was predicated as much on the fact that the other place was an unelected Chamber that had stuck its nose into financial matters as on anything else. If anything, that corroborates our view that the other place should go.

Our urge to change these proposals comes from compassion: from putting ourselves back in the shoes in which many of us walked not so long ago; from figuring out what ordinary people in our constituencies would lose; and from finding that completely and utterly unacceptable. We were elected to this place to protect vulnerable people, not to punish them.

I was going to use this time to talk about some of my constituents in detail, and to explain precisely how the tax credit changes could destroy their lives. I was going to tell the House about Katy and her son Olly, and I will tell the House a little bit about them. They will lose more than £100 a month from a budget that is already impossibly tight. That could mean that Katy and Olly may no longer be able to go on mountain bike trips at weekends. Katy tells me that she will move from fresh to frozen food. Katy has no support network for Olly. She has no choice but to work part time. Her sister Nikki recently passed away, and when Olly is not at school, she must be available to be with him. She already works all the hours that are available to her. She has absolutely nowhere to go with this.

I was going to tell the House about Jenny, who is a self-employed child minder. Her partner is also self-employed. They will lose about £130 a month. Jenny worries that her customers who are receiving tax credits will no longer be able to use her service. She told me that she literally lies awake at night wondering what this place is going to do to destroy her life.

I was going to tell the House more about Jenny and Katy, and about some others, but then I realised that those stories would only have an impact if they were listened to by Conservative Members who displayed some compassion. It is true that most of the speeches that we have heard today have moved into the realms of compassion, and I welcome that, but it is the compassion of the 300 Conservative Members who are not present that really concerns me.

Instead of considering how the cuts will affect Katy and Jenny, perhaps Conservative Members should consider how the cuts will affect them, as Members of Parliament. What have they to fear? One of the first changes that they may notice—and all us of may notice them in our constituencies—is that our high streets start to struggle even more than they are now. High streets are already struggling in my constituency, and the removal of £4.4 billion from people’s pockets—these are not internet bargain hunters; they are people who shop in our high streets—will compound an already precarious situation. If we remove the disposable income from the very people who shop in our high streets, the failure of small businesses will inevitably follow. We must prepare for more charity shops.

Members may begin to notice that the police in their local areas are busier than they used to be, and they may wonder why the number of instances of crime has increased. It will be because desperate people—young people with no hope; people who have been disfranchised from their communities and the Government—often turn to crime. If we can mitigate these changes in full, it may well be cost-effective.

Over the course of the next Parliament, Members may notice that the performance of their local schools is beginning to drop. They may see those schools falling down the league tables, and they may wonder why that is happening. It will be happening because hungry children do not learn well. Katy is beginning to worry about Olly’s education because of the proposed cuts.

Inevitably, the food budget will be the first thing that struggling families will cut, and that will have an immediate impact on the educational achievements of children in all our constituencies. How many Conservative Members—how many absent Conservative Members—enjoy dining out? Quite a few, I suspect. It is nice to have a range of different restaurants to choose from. Well, they should enjoy those restaurants while they can, because they, too, will be under threat.

The hospitality industry, in which I was brought up—in a rural area—depends entirely on a thriving local economy to sustain it. Many of the people whom we welcome to Dumfries and Galloway when they go there on holiday are people from the rest of the United Kingdom who cannot afford to go abroad: people who are receiving tax credits. The holiday will be one of the first culls from the annual budget.

Do I need to continue? Make no mistake: these tax credit cuts will have an impact on the absent Tory MPs as well. If the Government cannot mitigate the cuts in full, they will be responsible for the demise of all our communities. Those in Tory constituencies will not thank them, and I doubt that they will re-elect them. I look forward to hearing how the Government will mitigate, in full, the wide and far-reaching effects of these unnecessary and wholly ideological cuts.