Universal Credit and Working Tax Credit

Sammy Wilson Excerpts

Monday 18th January 2021 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I beg to move,

That this House believes that the Government should stop the planned cut in Universal Credit and Working Tax Credit in April and give certainty today to the six million families for whom it is worth an extra £1,000 a year.

I am not here to claim that Conservative MPs are heartless, lack compassion, or have insufficient regard for the poorest people in this country. I know that after the vote on free school meals, many Conservative MPs, mainly after comments made by other Conservative MPs, received a high degree of personal abuse, and I want to make it clear unequivocally that that is wrong. I am here to put forward a clear and, I believe, compelling case that reducing universal credit and working tax credit this April would be fundamentally the wrong decision. It would be a profound mistake for families, for the economy and for our ability to effectively tackle and recover from the covid pandemic.

Before putting forward that case, I wish to address the Prime Minister’s suggestion that Parliament is somehow not the right place to have this discussion. Opposition days have been a feature of our parliamentary system for many decades. They were used very successfully by the Conservative party when it was in opposition—for example, when the Labour Government were defeated over resettlement rights for Gurkhas in 2009, or over post office closures. All majority Governments, except this one, have accepted that if they cannot win a vote in Parliament on one of their policies, then they have to change that policy. This decision cannot be deferred until a Budget, because the Government cancelled the November Budget and have not brought forward a Finance Bill since March.

I put it to all Members that Parliament is exactly the right place to have a discussion of such consequence to the country. The Government cannot expect to preach parliamentary sovereignty one week, and run away from parliamentary scrutiny the next. Too often, the Prime Minister seems unwilling to abide by basic democratic norms and to accept proper scrutiny and accountability. We have seen in the US where that can end.

Let me also say at the outset that, throughout the pandemic, the Opposition have always sought to be constructive. The official Opposition want the national strategy to succeed. In that spirit, we welcomed the changes that the Government made to universal credit at the beginning of the crisis. The £20-a-week weekly increase, and the suspension of conditionality and the minimum income floor, were necessary steps to support people. Recognition must also go to frontline Department for Work and Pensions staff, who kept our social security system going through the early stages of the crisis, making sure that hundreds of thousands of new claimants received the support they needed. All those staff deserve our praise, from the civil servants working in the Department to the security guards I met recently, who face difficult working conditions keeping Jobcentre Plus offices open.

However, the fact that such urgent changes were required to provide a basic safety net is a telling assessment of where the social security system was when we went into the crisis. If we cannot properly support people in a time of need without emergency surgery to the system, it is not fit for purpose. The fact is that support for people in this country when they lose their job or cannot work is significantly lower than in comparable European countries.

I will address three points: how we got here; the case for reversing this cut to secure our economy; and, finally, the human impact if the Government refuse to change course.

[Sammy Wilson (East Antrim) (DUP)]

Does the hon. Gentleman accept that a pressing reason to have a debate and vote on this issue today is the fact that all the evidence suggests that the restrictions resulting from the measures taken to deal with covid have hit the poorest in society hardest? Poverty is up, and those people who most depend on this kind of support are the ones who are most damaged at the moment.

[Jonathan Reynolds]

I agree. Inequality, and the differential impact on people, has been one of the defining features of this crisis. I do not think anyone can avoid that. It is relevant to make that point in this debate.

We have to be honest about the state of our social security system going into the crisis. Since 2010, poverty has increased significantly in the UK. In addition, people who were in poverty in 2010 are now so much deeper in poverty than they were. This is not an argument about definitions. Conservatives themselves were the driving influences behind bodies such as the Social Metrics Commission, which came up with a new definition of poverty that was actually very similar to the one that has traditionally been used. The Government’s own estimate is that 4.2 million British children live in poverty. That is shameful, wrong and unnecessary.

The UK, along with Ireland, is an outlier compared with the rest of Europe when it comes to inequality. That means that the reality for millions of families is that they went into this crisis already under significant pressure. As the Resolution Foundation said in 2019, the 1.7% increase to universal credit that year was the first working-age benefit increase for five years. Last year, the real value of basic out-of-work support was lower than when John Major was Prime Minister, so anyone claiming that the system is too generous, or who is trying to resurrect the stigmatising rhetoric of George Osborne, simply has no case to make.

--- Later in debate ---

[Will Quince]

My hon. Friend is absolutely right. Maintaining the uplift would cost a huge amount of money—somewhere in the region of £6 billion. But it is not just about that. Throughout this pandemic, we have always looked at how best to support the poorest, most vulnerable and disadvantaged in our society. Because this is an ever-emerging and changing situation—that is the very nature of a pandemic—we have to keep everything under review. That is why the Secretary of the State, the Chancellor of the Exchequer and the Prime Minister do meet regularly to discuss all these issues. I want to make one further point because it was raised by the Chairman of the Select Committee: yes, we will continue the roll-out of universal credit, as we committed in our manifesto, ensuring that those on legacy benefits and working tax credits are moved across by 2022.[Official Report, 1 February 2021, Vol. 688, c. 6MC.]

I will now turn to the specific issue of the UC uplift. The Labour party is quite simply wrong in its use of emotive language, saying that the Government plan to cut universal credit. The £20 per week uplift to universal credit and working tax credit was announced by the Chancellor as a temporary measure in March 2020. This additional support increased the universal credit and working tax credit standard allowances by up to £1,040 for a year. We took this approach in order to give those people facing the most financial disruption the financial boost they needed as quickly as possible. The agility and flexibility of the universal credit system allowed us to implement this vital increase rapidly, and was hugely successful in giving claimants—many of whom, incidentally, had not interacted with the DWP before—a foundation by which to navigate the uncertainty of the beginning of this pandemic, and in many ways lessen the drop in earnings.

The Chancellor has always been clear that this measure remains in place until the end of the financial year. I hear the calls from Labour and, indeed, from the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), for a decision now on whether the uplift to universal credit will continue post April, and I have sympathy with the argument that it would give claimants certainty. However, one of the evident features of a pandemic is uncertainty: if the hon. Gentleman is certain about what the economic and social picture will look like in April, then to be frank, he must have a crystal ball. The reality is that we simply do not know what the landscape will look like, which is why it is right that we wait for more clarity on the national economic and social picture before assessing the best way to support low-income families moving forward.

Why is that important? One word: agility. The poorest and most disadvantaged in our society are best served by a Government that have the agility to respond to emerging situations and the facts at the time. None of us in this House can say with any certainty what the economic landscape will be like in April, which is why we continue to work with Her Majesty’s Treasury on the best way to support those in receipt of benefits.

I will add one more thing, which is that I know my right hon. Friend the Chancellor well, and I put it to right hon. and hon. Members that, throughout this pandemic, he has consistently stepped up to support individuals’ jobs and livelihoods. This is the Chancellor who created the furlough scheme and the self-employment income support scheme; uprated universal credit by £1,040 this year; lifted the local housing allowance by £1 billion; protected renters from eviction; protected homeowners; gave grants to businesses; supported rough sleepers to get off our streets; funded the local welfare assistance scheme to the tune of £63 million; and set up the £170 million covid winter grant scheme. This represents one of the largest and most comprehensive support packages in the world.

[Sammy Wilson]

I think everyone in this House must acknowledge the work that the Government have done to try to help people through the economic difficulties caused by the response to the pandemic. However, will the Minister accept that, even with the best will in the world, he cannot say that after April, everything is going to be rosy? We know there is going to be a long tail of businesses that have been damaged during this pandemic—damaged by the lockdowns—and people, especially those at the low-paid end of the market, are going to find themselves still in need of support. Therefore, it is wrong to say that somehow or other, things are going to be rosy from 1 April, and that the level of support required by the lowest paid in society will no longer be needed.

[Will Quince]

I thank the right hon. Gentleman for his intervention, but I do not think anybody is saying that. We are saying that the situation remains unclear, so the Chancellor of the Exchequer in particular needs the agility to be able to act on the information at the time.

My right hon. Friend the Chancellor has an unenviable task, but I repeat the point that I made just a moment ago: he has a proven track record of stepping up to support the poorest and the most vulnerable and disadvantaged throughout this pandemic, and I have absolutely no doubt that he will continue to do so. Throughout this pandemic, the Chancellor has consistently acted with the necessary agility to support and wrap our arms around those who need it. The Chancellor has always said that, sadly, we cannot save every job or every business. That is why getting Britain back to work is the relentless focus of the Secretary of State, myself and the entire ministerial team at the Department for Work and Pensions. That is key to our national recovery and is why we are investing billions of pounds to secure the economic recovery. Through our plan for jobs we are injecting billions of pounds-worth of support and have launched a range of employment schemes and programmes.

To conclude, we have demonstrated during the pandemic that this Government are committed to supporting the most vulnerable in our society and to ensuring that people have the right level of support. Through universal credit and our plan for jobs, we are supporting people of all ages to gain the right skills and experience to support them back to work. We know how quickly things can change with this virus—the new variant has led to increased challenges—but there is now also real hope from the rapid vaccine roll-out, which promises to have a hugely positive impact on the way ahead and the effort to get back to normal and to get our economy growing again. As the Government have done throughout this crisis, we will continue to look carefully at the changing impact of the virus on public health and on our economy, to help to inform how we can continue to support people and give them the tools that they need to move into the workplace so that the country can build back better after the pandemic.