Women and the Cost of Living

Sheila Gilmore Excerpts

Tuesday 19th November 2013 Commons Chamber

[Nicky Morgan]

I am going to carry on for now.

As I said, we are now recovering from the most damaging financial crisis in a generation. I am afraid that the hon. Member for Ashfield (Gloria De Piero) did not mention that financial crisis at all, but it was overseen by the Labour party—although I appreciate that she was not a Member of this House at that time. It was overseen by the last Government, who built a decade of growth on unsustainable debt. When our country is trying to overturn the largest deficit since the second world war at the same time as our largest trading partner, the EU, has been in recession, it is unfortunately highly likely that women and men will feel the pinch.

[Sheila Gilmore (Edinburgh East) (Lab)]

Does the Minister agree that in her view of the world the last Labour Government must have had tremendous power as they apparently brought about a financial crash not just in Britain but across the world? The situation would not have been any different whichever party was in government—and we must remember that the current Government do not want to regulate anything any more and said we regulated too much.

[Nicky Morgan]

That intervention shows the extent of the collective amnesia on the Opposition Benches. First, on the banking crisis the point is that the necessary reserves to deal with the unforeseen consequences were not set aside. Secondly, the last Government systematically over many years spent more than they were raising in taxes, so there were not the reserves to deal with this.

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[Tessa Munt (Wells) (LD)]

The Liberal Democrats are doing what they can to build a stronger economy and a fairer society. We recognise that households are under pressure, which is why we have taken action to try to support women with the cost of living.

The Lib Dems want to help women on low and medium incomes by letting them keep more of the salaries they earn. By April 2014, 1.5 million women—60% of the overall figure of 2.7 million people—will have been taken out of paying tax altogether by the rise in the tax threshold to £10,000. We are also giving a tax cut of more than £700 a year to more than 20 million lower and middle earners, the majority of whom are women. The Deputy Prime Minister is planning to put a further £100 back into people’s pockets through the workers’ bonus, which could increase the tax allowance to £10,500 by the next election.

[Sheila Gilmore]

The problem with the hon. Lady’s presentation of the issue is that it is very one-sided, because in order to pay for that tax cut there have been cuts to tax credits and other benefits, so on balance the lowest earners have lost, not gained.

[Tessa Munt]

I could not disagree more. The most important thing is that we raise the tax threshold so that those women who are working get the benefit of keeping the money they earn.

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[Sheila Gilmore (Edinburgh East) (Lab)]

The Government’s response to all questions about falling living standards and rising costs is to talk about the raising of the income tax threshold. At least one part of the coalition is promising even more of the same and saying that that is how we help the lowest earners, many of whom are women. However, if the main aim is to assist the lowest earners, it is an extremely poorly targeted policy. It is an expensive tax cut. Three quarters of the billions of pounds that have been spent on raising the tax threshold have gone to the top half of earners in our country.

[Harriett Baldwin]

Is the hon. Lady arguing that the income tax threshold ought to be brought back to £6,475, as it was under her Government?

[Sheila Gilmore]

I will continue with what I was saying, because it is important to realise the cost of this policy to many women.

This generous gesture, which has advantaged more people on upper earnings, has been balanced by taxes and cuts elsewhere, such as the raising of VAT. Many of the cuts have affected women in particular. The cuts in tax credits have more than cancelled out the rise in the tax threshold for the lower-paid. People who have been affected by that will not be saying, “It was great that the tax threshold was raised.” They would probably rather have stayed in exactly the same position as they were in before.

[Mr Donohoe]

Surely a consequence of that is that fewer women are able to put their children in day care and get back to work.

[Sheila Gilmore]

Indeed; the work incentives that were provided by tax thresholds, particularly to single parents, cannot be underestimated.

The hon. Member for Wells (Tessa Munt) brushed aside my intervention in which I said that the gains from raising the tax threshold had been more than cancelled out for the lowest-paid, but they have been. The argument is made that raising the tax threshold allows people to keep more of their earnings, instead of tax being taken away with one hand and paid back with the other. The problem is that the policy has not been even-handed. Some people have ended up worse off as a result of it. Those who used to benefit and have lost out are predominantly women.

[Tessa Munt]

Is the hon. Lady saying that she would return the tax situation to the way it was before or is she saying that this policy has no effect whatsoever?

[Sheila Gilmore]

The hon. Lady has told the House that the path onwards involves more raising of tax thresholds, regardless of who will or will not benefit from that. A further rise in tax thresholds, however, will do absolutely nothing for many who already earn below that level, particularly women who are part-time workers. How will that further generosity—which, as I have said, benefits more those whose earnings are in the upper brackets—be paid for? On the basis of the past three and a half years, presumably it will be paid for by yet more cuts to benefits and services that help a lot of women.

[Stephen Metcalfe]

Will the hon. Lady give way?

[Sheila Gilmore]

I will not give way again.

In future—assuming, of course, that universal credit ever materialises, which is far from certain at the moment—low-paid people will benefit even less as the tax threshold increases. Universal credit will be calculated on net, rather than gross earnings. Therefore, if a taxpayer who claims universal credit receives a tax cut of £100, they will automatically lose £65 of benefits. The lowest paid taxpayers are going to suffer more, and a solution would be to commit to increase the amount someone can earn before universal credit payments are reduced every time tax thresholds go up. Those who advocate the solution for low-paid workers have told us time and again that the reason for raising tax thresholds is not to benefit everyone but to benefit low-paid workers. However, it will not benefit those workers to anything like that extent—indeed, for many of them probably not at all.

We are constantly being told that we have to make tough choices—the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe), who wanted to intervene, has constantly risen to speak about the need to deal with the deficit. Choices are being made in the way the Government are proceeding, including the choice to give those generous tax cuts and wanting to continue to do so, but that does not sound like a terribly tough choice for some people to make.

There are other uses for the money if it is available. We could give a tax break to businesses that agree to pay the living wage, which would benefit women in particular. We could increase help with child care costs now. Child care tax credits were cut from 80% to 70% by the coalition. I know the Government say that they will restore that for recipients of universal credit when—if—it comes in, and the new child care tax relief starts in 2015. Why not now, however, especially with universal credit receding somewhere over the horizon? Further to that, the Social Mobility and Child Poverty Commission suggests that the Government should reallocate the 2013 Budget funding for child care tax relief from higher rate tax payers to those on universal credit. That would be over and above existing plans—this is a recent report from the commission—to help those who want to work and need help with child care.

Gingerbread, which will obviously advocate on behalf of families with one parent, 90% of whom are women, has made proposals for improving universal credit that would make work pay and encourage the progression through employment that is desired by us all. The old 16-hour rule that Government parties tend to dismiss was to ensure that going back to work really improved people’s situation, rather than the mini-jobs that, frankly, leave people poor.

Gingerbread has suggested that we increase the amount a claimant can earn before universal credit starts to be withdrawn, and reduce the rate at which benefits are reduced—the taper rate. Those proposals cost money, but if money is available—clearly it is for those who advocate another increase in the basic tax threshold—I urge the Government to consider measures such as those advocated by Gingerbread genuinely to help the lowest earners improve their position.

One point I completely refute is the suggestion that if we say that life under this Government is hard for many women, we are calling women victims. Far from being victims, women are struggling to bring up their children despite the difficulties that they face. It is completely wrong to suggest that we are therefore painting them as victims—far from it.

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[Harriett Baldwin]

The previous Government, as we heard from the hon. Member for Edinburgh East, thought it was appropriate to tax people earning only £6,500 per year, and to give them their own money back in the form of tax credits. I believe it is more important that we do not take that money in the first place.

I want to demolish what the hon. Member for Ashfield (Gloria De Piero) said on disposable incomes. Since the start of the economic downturn, the average equivalised household income has fallen by about £1,200 since 2007-08. The Opposition talked about the average fall, but the richest fifth of households have seen largest fall. In contrast, after accounting for inflation and household composition, the average income for the poorest fifth of households has grown in the same period by 6.9%—a statistic from the Office for National Statistics. I refute the argument inherent in the motion that we have had a particularly serious impact on the cost of living for women.

I would also like to demolish the claim in the motion that the Chancellor has made

“women pay three times more than men to bring down the deficit”.

I have taken the trouble to look at the Full Fact website, which I recommend to Opposition Members. It makes a line-by-line demolition of their claims. For example, women such as me, who earn more than £60,000, no longer receive child benefit. That is counted as a negative, but I would argue that that is a sensible way to reallocate scarce resources. The Opposition count it as a negative that the income tax cut does not help women as much as men, whereas I think it is a good thing that women are given a tax break.

The third point I would like to demolish is that it is a problem for more women than ever before to be in work. I welcome it. One reason this has been a successful area of welfare reform is that the number of lone parents out of work—I accept that the number of lone parents out of work declined under the previous Government—has declined sharply since 2010, falling by 26% to just under 500,000. I agree that that is still too high and we have more to do, but we are doing an enormous amount—providing free child care and helping lone parents into work—to help them to lift their own families out of poverty. There are other positive aspects of welfare reform for women in the workplace. Although well intentioned, a terrible consequence of Labour’s approach to welfare is that it trapped many women in 16-hour-a-week jobs. I have met many women in my constituency who have said, “I have been offered more hours, but it does not make economic sense for me to take them.”

[Sheila Gilmore]

Will the hon. Lady give way?

[Harriett Baldwin]

I do not have enough time, I am afraid.

In fact, we were paying a lot of women to maintain 16-hour-a-week jobs. That may be ideal for some people’s family situation, but it sends a poor message, through the welfare system, that we need to tackle. We need to allow women to progress up the income scale in the same way as men so that—I do not often argue for higher taxes—men and women pay the same amount of income tax. At the moment, women pay approximately 60% less income tax and I would like to see progress on that.

The motion is full of holes. I urge right hon. and hon. Members to vote against it.

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[Jo Swinson]

The hon. Lady will be aware that we have the fastest growing economy in the developed world. I hope that she will not be as churlish as some of those on the Opposition Front Bench—although not those on the Front Bench today—and welcome that news rather than feel glum at the idea that the Government’s economic policies might actually be working.

Employment and work are the best way to drive up living standards. We have 446,000 more women in employment since the general election. We had some interesting exchanges about the numbers of women in employment and employment rates. Different individuals bring forward different figures to support their arguments. I argue that both the numbers and the rate are important. We have more women in work than ever before—fewer women are economically inactive—but the employment rate is also increasing. It has gone up 1.2% for women to 66.8% since May 2010, which is very close to its highest rate ever.

[Sheila Gilmore]

The Minister stated that work is the best way for people to progress and improve their position, but, as she will see if she reads the work of the Social Mobility and Child Poverty Commission, the problem is that the rate of poverty among children in working households is going up and three quarters of people in such households are in full-time work.

[Jo Swinson]

We absolutely need to help more people into work. When people want to work extra hours, we need to make that easier and we have a raft of measures aimed at assisting people into work. Yes, we also want to ensure that when people are in work their jobs are of a higher quality and that they can have higher pay, but we need to do that in a way that does not threaten to increase unemployment figures.

The pay gap has been mentioned, and rightly so. The Government have given employment tribunals the powers to force equal pay audits on rogue employers who have been breaking the law on equal pay. Our Think, Act, Report initiative now covers nearly 2 million employees across 130 major companies to drive forward standards in gender equality in the workplace. The recommendations of and the Government’s actions in response to the Women’s Business Council report, the extension of the right to request flexible working and the introduction of shared parental leave are all important factors that will also support women in work.

Various Members raised the issue of pregnancy discrimination. I do not know whether I need to declare an interest in order to say that I think that is an appalling and horrendous practice. I have met Maternity Action on these issues and we have commissioned research through the Equality and Human Rights Commission to ensure that we have up-to-date figures on which to take the issue forward.

I want to reply to the point made by some hon. Members about the £1,200 fee for employment tribunals. It is simply misleading to suggest that that is what any woman will have to pay in order to take up a claim. That is not what they have to pay to lodge a claim—that figure is £200. There is a remissions regime for people who cannot afford to pay that amount and only in cases that go to a full hearing—a tiny percentage of the number of cases overall, and only about 300 each year—will the full amount be paid. Even in those cases, if people win it is likely that costs will be awarded and they will not have to pay. Although I accept that the Opposition should make legitimate points, it is important to be clear about the facts.

My hon. Friend the Member for Stevenage (Stephen McPartland) talked about women in sectors in which they are not usually well represented, such as engineering. We recently had Tomorrow’s Engineers week where that was a major theme. The Government also launched the Perkins review, which outlined how important it is to get more women and girls interested in engineering.

The hon. Member for Rotherham (Sarah Champion) mentioned role models and they are important throughout the STEM industries. Of course, there is the Inspiring the Future initiative, which I encourage hon. Members and those watching the debate to sign up to so that they can go into schools and act as a role model by talking about their careers and what they do. That will inspire the next generation so that they know that there is no glass ceiling and that they can do whatever they want.

We are providing significant support for child care, increasing early education for free for three and four-year-olds to 15 hours a week and extending it to four in 10 two-year-olds from the most hard-pressed households, as well as providing the £1,200 per child per year tax rebate on child care costs. The rising cost of child care is an issue and it was not addressed under the previous Government. We are addressing it by extending the support for new child care businesses and increasing the number of childminders by making childminder agencies possible.

I want to mention Labour’s plans a little. Some sound very good, but one wonders where the costing comes from. Things will be paid for by the bank levy, but Labour’s bank levy has now been spent more than 10 times over. Here are the things that will be paid for by Labour’s bank levy: the youth jobs guarantee, reversing the VAT increase, more capital spending, reversing the child benefit savings, reversing tax credit savings, more regional growth funding, cutting the deficit, turning empty shops into community centres, spending on public services, more housing and child care. The same money cannot be spent twice, let along 10 times. The numbers do not add up.

We have improved the situation for older women, particularly pensioners, who suffered previously. Those who have taken time out of work to look after children faced significant injustice under the previous system. Our triple lock, which is raising the state pension—