Tax Credits (Working Families)

Roger Mullin Excerpts

Tuesday 7th July 2015 Commons Chamber

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

Thank you, Madam Deputy Speaker.

I congratulate the Labour party on bringing this most important debate to the House. Having listened to the Minister over the past 25 minutes, I think that we on the SNP Benches must live in a different world from the one that he lives in. When we revisit what has been happening over the past couple of weeks, with the scandal of the Secretary of State for Work and Pensions coming to this Chamber and wanting to redefine how we measure child poverty, we can see that that indicates the scale of the problem we face. But the cat is now well and truly out of the bag. We listened to the Minister taunting the Labour party and accusing it of being the party of welfare. On these Benches, we see the importance of what we call social security in Scotland. We believe that society is as strong as its weakest link. The battle that we are facing in this Parliament is an ideological one with a Government who want to demonise the poor of this country.

Let this House take the opportunity to say to the Chancellor of the Exchequer, before he rises to deliver his emergency Budget tomorrow, that he should not use the failure of the Government to fix the deficit as an opportunity to attack the poor and the disadvantaged in our society. In particular, the Government should pause and reflect on the importance of tax credits to those who rely on the contribution that they make to the household budgets of many of our citizens. Tax credits have a significant impact in raising the income of low-income households, particularly those with children. The tax credits system was designed as a key mechanism for tackling poverty and inequality, and the SNP firmly opposes any moves to gut it, as the Tories have hinted at doing.

Tax credits require a significant amount of expenditure, which largely goes to supporting children in lower income families. In 2013-14, tax credit expenditure in Scotland was £2 billion, supporting thousands of people on low incomes. The SNP recognises the vital role that tax credits play in providing such support, and that is why our manifesto proposed to protect their value by increasing tax credits annually in line with inflation.

We need to go much further, however, and do more to raise wages, including raising the minimum wage, promoting the living wage and increasing the work allowance in universal credit. It is the delivery of real wage growth that will lead to a natural reduction in tax credits. These benefits cannot be removed at a time when many are on low pay.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

My hon. Friend is right to talk about the moral case and the position in which the poorest in our society are being put. The Conservative party also talks about productivity. Does my hon. Friend agree that cutting tax credits will harm the possibility of raising productivity in the economy?

[Ian Blackford]

My hon. Friend is absolutely right. We hear much in this Chamber about productivity, but the reality is that over the past seven years productivity has fallen by 0.7%. Rather than attacking the poor, which is what the Government are doing, their Budget tomorrow should introduce a programme for investment in this country that will lead to a rise in real wages, improve productivity and negate the need for tax credits. Removing tax credits will not fix the problems this country is suffering.

The failure to drive sustainable economic growth means that many people who are in work are in poverty. As a result, many of them rely on tax credits in order to put food on the table to give thousands of young people a decent start in life. There has to be dignity in work, and much has to be done to drive investment in our economy, enhance productivity and see a sustained rise in real wages.

Tax credits are an investment in our people and, as a consequence, the future prosperity of our country. Tax credits have made an important contribution to tackling poverty and inequality. In 2013-14, 90% of tax credit expenditure went to families with an income of less than £20,000. Families with children received an average of £6,900, and families without children an average of £2,200, from tax credits. That represents a very clear contribution to boosting incomes and tackling poverty and inequality. Tax credits help tackle in-work poverty and child poverty.

It is worth noting that about 70% of tax credits go to families where somebody is in work, predominantly supporting low-income working families. Given that a majority of people in poverty are already in work, tax credits are thus a crucial tool to support working people.

The Child Poverty Action Group estimates that the UK Government’s welfare cuts will push an additional 100,000 children in Scotland into poverty by 2020—and that does not take into account the additional £12 billion-worth of cuts that this Government want to push through. Given that 500,000 children benefit from the tax credit system in Scotland, cuts to tax credits would certainly have a further detrimental impact on the wellbeing of children in Scotland and on child poverty figures.

Figures due to be published tomorrow by the Scottish Government show that if the Chancellor cuts child tax credit back to 2003 levels in real terms, as has been reported, the poorest 20% of Scottish families with children will lose an average of nearly 8% of their income. That will have the impact of taking a total of £425 million out of the Scottish economy. How are we to deliver sustainable growth when we take £425 million out of the pockets of the poorest in our society? It beggars belief. We want a caring, compassionate society; that is not what we are getting from this Government.

Scotland Bill

Roger Mullin Excerpts

Monday 29th June 2015 Commons Chamber

[David Mundell]

I would like to make a little progress.

Since the Committee last met, I have had the opportunity to appear before the Devolution (Further Powers) Committee—to give it its full title—and to listen to its views and explain the Government’s stance. I can assure the hon. Member for Dundee East (Stewart Hosie) that that Committee will continue to play a full part in my consideration of the Bill as it progresses through the House, and I have assured the convener of that.

I had a very useful meeting with the Deputy First Minister to look at how we move forward, particularly in relation to the fiscal framework, and I am going to disappoint the hon. Gentleman, but in a good way, because the criticism that was forthcoming from the Committee to both me and the Deputy First Minister was that we both said the same thing to the Committee, which was that we are not going to give a running commentary on the negotiation of the fiscal framework. What I can say is that the list of issues that the hon. Gentleman referred to in his contribution will be part of the discussion of the fiscal framework. We will of course keep this House updated from a UK Government perspective, but it will be for the Scottish Government to keep the Scottish Parliament updated.

I am pleased to start with the clauses on income tax in today’s debate. These are often overlooked, meriting only a few lines in the comments received on the Bill from both Parliaments and from the Scottish Government, but that is because, as has been said, they command widespread support as delivering the central aspect of the Smith agreement in full.

The changes made by clauses 12, 13 and 14 will give unprecedented flexibilities to the Scottish Parliament on income tax and are a significant milestone in Scotland’s devolution journey within the UK. The Scottish Parliament will be able to set income tax rates and thresholds for earned income. This includes the ability to introduce new bands.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Is the right hon. Gentleman aware of the most recent analysis by the Fraser of Allander Institute, written by Dr Jim Cuthbert? This is not an issue about the individual devolution of income tax; it is about the interaction that will occur between the way in which income tax is proposed and the Barnett formula and the Government’s proposal with the Holtham index, and the conclusion of that analysis is that, when likely shifts in relative population and shifts in relative tax base are taken into account, this will create significant negative dynamic effects. In other words, it will be all over the place and lack consistency, and it will be a source of conflict down the years. Surely, that needs to be avoided by taking a stronger look at making sure the right income tax powers are devolved?

Productivity

Roger Mullin Excerpts

Wednesday 17th June 2015 Commons Chamber

[Michelle Thomson]

I thank the hon. Gentleman for his comment, but I would point out that that we did not make the steel in Scotland and that it was a decision of the Scottish Government, not the Scottish Executive.

I was about to highlight some key areas that the Scottish Government’s economic strategy promotes. They include internationalisation, which helps firms to compete in international markets, to increase exports, to make Scotland a preferred location for inward investment and—most importantly from my business perspective—to promote Scotland as the brand of “We are outward looking, we are ambitious and we are open for business”. The plan also promotes investment in our infrastructure, transport, technology and digital connectivity.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Does my hon. Friend agree that one key component of our productivity strategy has to be building on that essential power of the production of knowledge and that universities throughout the UK, including our world-class universities in Scotland, are key in that regard? It is vital that we protect, and indeed enhance, research funding through the universities.

[Michelle Thomson]

I thank my hon. Friend for his comments. I absolutely agree with them, and I am going to cover that issue further in my remarks.

We must equip our people, who live in and give to Scotland, with the skills— supporting them with free university education—the health, the ambition and the engagement to contribute to making Scotland a great place.

I mentioned manufacturing, and the SNP supports measures to boost the sector, including targeted research and development tax credits and support provided through the Scottish business development bank. However, the lack of access to business funding remains the biggest critical factor affecting small business, which is the lifeblood of our economy. I still await any evidence of that being recognised and acted on by the Government.

The plan promotes innovation, creating a culture of ambition and drive where we reward the risk-taking entrepreneurs—those who drive real change and live by creative and adaptive thinking. Our plan also supports our excellent universities in commercialising the work they do. Finally, it promotes inclusivity, in the form of building a labour market that can contribute equitably, by promoting fair work and sustainable jobs and by taking positive steps to ensure that families can contribute and lead the way in supported childcare. With further devolution of employment law and the minimum wage, the Scottish Parliament could boost pay and standards, and raise employee satisfaction still further. We want to see more sustainable and high-quality employment opportunities, with a partnership approach to employment conditions. We have also proposed a £2 rise in the minimum wage to £8.70 by 2020 and have actively promoted the living wage.

The Scottish Government are doing what they can with the devolved powers they currently have. Given Scotland’s impressive relative performance since 2007, they have been successful. The truth is that the UK operates a failed and outdated business model, one that delivers for the few but not for the many. With its focus on the City of London and its neglect of key manufacturing and other high value added sectors, it has failed to deliver for the people of Scotland, as well as for many across many other parts of the UK.

Oral Answers to Questions

Roger Mullin Excerpts

Tuesday 16th June 2015 Commons Chamber

[Mr Osborne]

I can absolutely give my hon. Friend that assurance. Because of his campaigning, and that of our hon. Friend the Member for Brigg and Goole (Andrew Percy), we have made sure that northern Lincolnshire is part of the northern powerhouse concept and that it is not left behind or neglected, as it was under the Labour Government.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

The last Chancellor to run a budget surplus was Gordon Brown, thanks to a sell-off of gold at a rock-bottom price. Now this Government are pursuing a budget surplus by selling off RBS at a loss. When are we likely to see a banking strategy, rather than a costly political gimmick?

[Mr Osborne]

I never thought that I would hear the Member for Kirkcaldy and Cowdenbeath admit that the gold was sold off at the wrong price—I welcome the hon. Gentleman to the House. With the Royal Bank of Scotland we have a serious decision to make: do we continue to believe that at some point we might get back the money that the previous Labour Government put in, or do we take the advice of the independent reports that have been commissioned, and of the Governor of the Bank of England, which is that now is the right time to start selling RBS, and indeed that that might stimulate a higher share price? Above all, it will help to support the British banking system. We have had countless questions in this House about the impact on small businesses of what went wrong at RBS. I think that as soon as we can get that business back into the private sector, the more we can support the general economy, and indeed give a great future for the RBS work force.

Royal Bank of Scotland

Roger Mullin Excerpts

Thursday 11th June 2015 Commons Chamber

[Harriett Baldwin]

I congratulate my right hon. Friend on his unopposed re-election as Chair of the Treasury Committee. That he asks a question about the footnote illustrates his forensic reading of the published materials. As he knows, at the end of 2009 the estimate was that the cost of bank interventions would range between a £20 billion loss and a £50 billion loss. As of last week, the Rothschild report estimates that that situation has completely turned around, and that the overall recovery from the bank interventions is in the order of a £14 billion magnitude. The overall cost of funding on our Treasury issuance is at record lows thanks to the prudent economic management of my right hon. Friend the Chancellor.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

I welcome early sight of the statement.

The Government are fond of talking about long-term economic plans—[Hon. Members: “Hear, hear!”] Absolutely. However, a sell-off is not a strategy, and a strategy for the banking sector is completely missing from the statement. My first question is this: is it not the case that there remains scope for a proper review of the options for the future of RBS, such as the consideration of creating challenger banks out of it? Secondly, yesterday I asked the Secretary of State for Scotland about the branch closures the length and breadth of the country that are being announced by RBS. Is that part of the price that people are expected to pay for this rushed sell-off? Thirdly, the statement mentioned concern about the drag on the economy and the poor performance in supporting small and medium-sized enterprises, so will the Minister explain precisely how the policy will further strengthen the SME sector?

[Harriett Baldwin]

I welcome the new hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin). What a refreshing change it is.

The hon. Gentleman asks about Royal Bank of Scotland in particular. I gently point out that if the Scottish National party had won the independence referendum, there would be no ability to intervene in the banking sector in the way that the UK Government intervened.

The role that Royal Bank of Scotland plays as the most significant lender in the SME sector is critical. It has not been able to play its full part because of public ownership. The Bank of England letter states that a phased return of RBS to private ownership would promote financial stability and lead to a more competitive banking sector, in the interests of the wider economy.

The Economy

Roger Mullin Excerpts

Thursday 4th June 2015 Commons Chamber

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Many congratulations, Madam Deputy Speaker, from the Scottish Benches on your election.

In February 1974, I first stood for this Parliament. It has been a rather long campaign but here I am, representing that wonderful constituency, Kirkcaldy and Cowdenbeath. In the 2010 election former Prime Minster Gordon Brown had a majority of 23,000. I stand here today with a majority of some 10,000, an indication surely of a desire for change not just in my constituency, but mirrored the length and breadth of Scotland.

It is fitting on these occasions to recognise the work of the previous Member of Parliament. Gordon Brown was a giant in Labour party politics and in British politics. He went on to become Chancellor of the Exchequer and then Prime Minister—a very distinguished career to which I pay tribute. There were many issues where we disagreed, but I am sure the whole House will follow me in wishing him the very best for his future. I particularly look forward to the work he intends doing internationally among the poorest countries in the world to bring education to the most disadvantaged.

Kirkcaldy and Cowdenbeath is a constituency of many parts. Some of our communities, including Cowdenbeath, Lochgelly, Kelty, Lochore, Ballingry, Crosshill and the delightful Lumphinnans were hewn out of the very mines of the Scottish coalfields. That mining industry may have gone, but the strength of the community built by those miners is still there, although for the past 30 years or more they have been suffering from political and economic neglect such that I will have to do my best to address it.

In other parts of the constituency, people can meander down the coast from Dysart, through Kirkcaldy, Kinghorn and Aberdour, to the more modern Dalgety Bay, and gaze across the River Forth to Edinburgh. That coastal stretch was a favourite of Adam Smith, that much misquoted father of economics. He would often walk that way and contemplate the great philosophical questions of the day. As he did so, he would look at the impressive European trading ships that sailed up and down the Forth, providing that strong economic and social link to the many great nations of the continent. Standing on the shores of Scotland he saw the importance of international trade and of a European outlook. His perspective then, in the 18th century, challenges us all today to be just as outward looking and imaginative as he was in his time.

Adam Smith knew, too, that there is no centre of internationalism. It is something to be sought in the minds and deeds of people; whether you live in a great city of a great land or in a small seaside town on the northern shores of Scotland, you can be international. He knew, too, of problems, and as I look across at the Government Benches, I see many problems. If I were to point out just one thing where I share the view of Adam Smith, it would be that he could see readily that when looking at people with power and riches, you see that they are no protections against small-mindedness.

Turning to other matters, I was very impressed by the recent OECD report outlining the fact that excessive inequality is bad for growth. To talk of inequality is not to engage in the politics of envy. Rather, it is to engage in a debate about economic failure and missed opportunities. Let me finish with a quote from Adam Smith:

“No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”