Universal Credit Work Allowance

Simon Danczuk Excerpts

Wednesday 6th January 2016 Commons Chamber

[Simon Danczuk (Rochdale) (Ind)]

Thank you for calling me, Madam Deputy Speaker. It is an absolute delight to follow the hon. Member for Hertsmere (Oliver Dowden).

I am grateful that this debate is taking place. My constituency was included in the pilot roll-out of the universal scheme and will be feeling the full force of the dreadful cuts that have come along with its implementation. I remain wholly committed to getting as many people out of the benefits system as possible, and I readily accept the need to reduce the burden on the welfare bill and to do all we can to get people into regular, well-paid work, but to do so at such a high price for those least fortunate is not the way to do it. We must be clear that these cuts will affect hard-working people—these are not people who are work shy—who are the very people we should and must be supporting.

The Chancellor was right to do a U-turn on the proposed cuts to tax credits. They were an abhorrent attack on the financial wellbeing of millions of hard-working people in Britain, including more than 7,000 in my constituency. However, here we are, faced with the same work penalty, albeit with a different name. The cuts are the same, and once again it will be hard-working families who will suffer. The only difference is the name: this time it is universal credit rather than tax credits. The 140,000 people on the pilot scheme will be the first to fall victim to the cuts, and, as we have seen too often under this Government and the last, the north will suffer first too—75,000 people in the north-east are part of the roll-out. In my constituency, just over 1,400 people claiming universal credit will see their household budgets cut, will face increasing pressure when they need to pay their rents, will increasingly struggle to put food on the table and will find it harder to support their children.

This is not just about those currently on the pilot scheme, however; in time, the cuts will affect many more. After the initial cuts in 2016 to the 140,000, it will become a postcode lottery as to whom the roll-out will affect. In the longer term, up to 2.6 million working families could be worse off by 2020 to the tune of about £1,600. A single mother of two, working full time and on universal credit in 2016-17, will be worse off to the tune of £2,981, compared with someone on tax credits. These cuts will also see a sharp decline in the reward for people taking on more work.

The House of Commons Library has shown that a single parent earning a living wage and with one child will increase their wage packet by only £40 by working an extra 12 hours, whereas before the cuts this would have amounted to an increase of £92. The Conservatives continue to perpetuate the rhetoric that they reward those who want to get on. This is simply not true, as is proved simply by their proposed cuts to tax credits and the imposed cuts to the work element of universal credit.

Finally, let me say that only this week wage growth under the Conservatives will be the worst for 100 years. From 2010 to 2020, wage growth is expected to be only 6.2%. Faced with cuts to their work element of the universal credit, the lowest paid in society will suffer massively at the hands of this Government. I urge the Conservatives to reverse these cuts to universal credit for current and future claimants to protect these hard-working people.