Steve Webb
Main Page: Steve Webb (Liberal Democrat - Thornbury and Yate)Department Debates - View all Steve Webb's debates with the Department for Work and Pensions
(12 years, 11 months ago)
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Mr Byrne
No, because what comes with that is the biggest raid ever on the benefits of children and families. Let us consider the bill that will be paid by families under yesterday’s announcements. An average family on the minimum wage with two kids will lose £320 a year as a result of the changes made yesterday. They would only ever gain £120 a year through the increases in tax thresholds to which the hon. Gentleman referred. Overwhelmingly, poorer families and children in this country are now getting poorer as a result of his Government’s Budget.
No wonder Save the Children said yesterday:
“For many families the scrapped £110 increase in Child Tax Credit could mean the difference between putting food on the table for their children or having them go hungry.”
The Child Poverty Action Group said:
“Britain’s poorest families have been abandoned today and left to face the worst…the government has actively decided to let child poverty rise.”
Those on the Treasury Bench should be ashamed of themselves; they should be ashamed of what they have done to children in this country. Labour will be the party that stands up for a fair deal for working parents.
The scale of the cuts to children’s benefits is not the only story. There is more. Let us consider the cuts to working tax credits for working families. Working families are already in line for seven big cuts to their tax credits next year. That was going to lose them more than £1.7 billion, but that was not enough for the Chancellor, so yesterday they got an eighth cut to their working tax credits. They will now lose almost £2 billion next year. That is almost double the cuts they received last year.
Some 2 million families in our country now face a double hit, with the cuts to child tax credits and the freezing of the working tax credit. There is therefore a great deal of extra squeeze that will hit working families, but I want to flag up one cut in particular. It is the subject of a Westminster Hall debate secured by my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), and I want the Secretary of State to reflect on it further, as I think it will have consequences that he would not intend. One of the changes he will make next year is to increase the number of hours a working couple must work in order to get tax credits. At present, they can qualify for tax credits if they work 16 hours a week. From next April, they will need to work 24 hours a week. At present, however, companies are not handing out extra shifts. Many families that will be affected work in the retail sector. If anything, big retailers are cutting back on their employees’ hours, not increasing them. A family that is on the minimum wage for 16 hours a week might bring in just over £5,000. Working tax credits and child tax credit might increase their take-home pay to about £11,000. If they cannot get an extra shift, all of that working tax credit will be gone. Those families may well find themselves better off on jobseeker’s allowance.
We must not create a situation in which cuts to tax credits mean families are better off on benefits than in work. I am sure that is not the Secretary of State’s intention, and I urge him to look at this matter in more detail before those cuts bite in April next year.
The Minister of State, Department for Work and Pensions (Steve Webb)
I am trying to follow the right hon. Gentleman’s reasoning. I think he has argued so far that people out of work should not face cuts and that people in work should not face cuts, so who should?
Stephen Williams
I recommend that the hon. Gentleman looks at the High Pay Commission report, which is an excellent document containing many recommendations for controlling executive pay. I urge the Government seriously to consider many of those recommendations, including on the revolving door of non-executives on boards of companies effectively determining each other’s pay, where some of the most serious breaches occur.
On hard-working families, to which the motion refers, the Liberal Democrats’ No. 1 policy commitment at the last general election was that, in order to make work pay, we would raise out of income tax those on low earnings and those working part time by increasing the income tax threshold to £10,000 over the lifetime of the Parliament. Progress towards giving effect to that aspiration is being made throughout this Parliament. Let us contrast that with the last Budget of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) in 2007, when, just before becoming Prime Minister, he financed an income tax cut through a tax rise for the poorest in society. I remember watching Labour Members waving their Order Papers and cheering that income tax cut—
Stephen Williams
As my hon. Friend the Pensions Minister says, they did not understand that their own Chancellor was financing election populism on the backs of the poorest workers in society. Let us have fewer lectures from Labour Members on how to treat people on low pay in work.
Robert Flello (Stoke-on-Trent South) (Lab)
The hon. Member for Poole (Mr Syms) almost had me agreeing with some of his speech, certainly in its early moments, but I am afraid that he blew it at the end when he talked about the Chancellor being sensible and then praised the Liberal Democrats—neither of the main parties in this House should stoop to such a level.
We have heard the phrase, “We’re all in this together”, many times over the past 18 months. I wonder how the 11,600 families in my constituency who will see their tax credits cut by an average of £680 per annum—on top of the three-year child benefit freeze and all the other cuts that they have seen—will feel about our all being in this together. I think they will be sitting there thinking that we are certainly not all in it together. Around the country, 100,000 more children will be in poverty as a result of this Government’s plans, proposals and policies. Will they think that we are all in it together? I somehow do not think they will. The number of young people in my constituency who are aged between 18 and 24 and have been claiming jobseeker’s allowance for six months or more has increased by 154%. That is a huge increase in the number of young people who find themselves in the position of not having any work. They will not think that we are all in this together, and rightly so, because we are not.
The Minister sneered a few times when the issue of bankers came up. The Government are keen, with their coalition pals, to talk about how hard they have been on the bankers with their levy. They always seem to forget that they offset the hit of the levy with the corporation tax cut and other giveaways to the bankers. The bankers are not sitting there saying “We’ve been really hard hit by this; we’re all in this together”—of course they are not. They are quite happy because on the face of it, they have had this big levy, but the reality is that that is diminished by the corporation tax changes and other benefits.
The pay of FTSE 100 directors has risen by 49% but my constituents can only dream of a 4.9% increase in income. Are we all in this together? I do not think that we are. A pattern is developing. The wealthiest, the bankers and the FTSE 100 all seem to do nicely as against the children and the poorest. The three poorest deciles are being hit three times as hard as the top decile.
Robert Flello
The Minister shakes his head, but I am afraid that the figures do not support his position.
The Opposition are wrong to say that the Government’s policies are hurting, not working, because they are not hurting but murdering our communities. They are so punitive that they are destroying our communities. We are not all in this together by any stretch of the imagination. We heard earlier about a list of areas that were among the most vulnerable to the impact of the cuts. Stoke-on-Trent was high up on that list but the Government’s policies actively take money away from places like Stoke-on-Trent to help all-in-it-together places like Kensington and Chelsea or Westminster, which obviously need the money far more than do the people of Stoke-on-Trent.
Then there is this nonsense, this con––let us get it out on the table––of the freeze on council tax. I am sorry but this 2.5% increase in council tax, which is what this nonsense would amount to––
The Minister of State, Department for Work and Pensions (Steve Webb)
I agree with the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) on one thing: this has been a worthwhile and important debate. We have had 31 contributions from across the House on the important issue of living standards. However, there is an omission in the motion. It refers to the impact of policies on living standards and to hard-working families, women and parents, but it does not mention pensioners at all. I wonder why. It is probably because the Labour party assumed that we were not going to keep our promise, but we did. We uprated the basic state pension by 5.2%—the biggest increase ever, at £5.30—and passed that money through to the poorest pensioners. We have done the right thing by pensioners; it is not surprising that Labour Members do not want to talk about it.
What are the key things that matter to our constituents about living standards? The first and most important is their mortgages. One in three households has a mortgage. We have the lowest mortgage rates on record and we have kept them that way.
The right hon. Member for South Shields (David Miliband) made a thoughtful contribution in which he reminded us why most of his colleagues wanted him as party leader and not his brother. He explained that he did not think the Government’s stance on the fiscal position had anything to do with interest rates, but does he accept that Britain’s credit rating has improved, almost uniquely, because we are taken seriously on tackling the debt? That is the crucial difference between this side and the Opposition.
The hon. Member for York Central (Hugh Bayley), if I can distract him from his BlackBerry, referred to the national debt and to Labour’s golden economic legacy. He forgot to point out, however, that the national debt—£750 billion in total the year before the election—was slated under his plans to double to £1.5 trillion. I may be old-fashioned, but with a trillion here and a trillion there, we are soon talking about serious money. That was the burden.
We have talked about our children, with some almost dismissing the idea that we as a society have lived beyond our means. For every £3 we raised in tax, we were spending £4. That simply could not go on.
Steve Webb
I am not giving way.
That could not go on, and it meant that our children will have to pick up the tab. Similarly, several hon. Members, including the hon. Member for Erith and Thamesmead (Teresa Pearce), have referred to public sector pensions. This is a classic case of asking our children to pick up the tab. For example, the right hon. Member for Holborn and St Pancras (Frank Dobson) asked why we did not value the teachers’ pension scheme, as we might find that it was in credit. I have news for him: there is no scheme; there is no money. Today’s teachers pay for today’s retired teachers. There could not be a credit, because there is no fund. That is one of the problems with this whole debate. [Interruption.] There is no fund and no money; there is nothing invested. [Interruption.] If the right hon. Member for Holborn and St Pancras wants to intervene, I am happy for him to put on record what he is saying from a sedentary position. As a former Secretary of State for a major spending Department, if he does not understand that there is no cash in the teachers’ pension fund, I will be very pleased to take an intervention from him.
Frank Dobson
The Minister and the Secretary of State refer to creating jobs in the private sector to compensate for the ones that have been lost in the public sector. Can he confirm that neither his Department nor any other is checking on how many of the so-called new jobs in the private sector are simply ones transferred from the public sector?
Steve Webb
I can understand why the right hon. Gentleman did not want to deal with the issue that I raised. I can point out to him, however, that the total number of people in employment will rise from 29 million last year to 30 million in 2016 under the projections. There will be more people in employment, and a rebalancing towards a vibrant private sector, which we want to see.
As well as mortgages, Members on the Government side have talked about the council tax. Labour Members did not seem to want to talk about the council tax, as though it did not matter. The council tax is one of the most regressive taxes that we have. This Government froze it and will freeze it again. That is real help for hard-working families.
A number of hon. Members talked about fuel prices and petrol. It is this Government who cancelled the 3p rise in January. It is Labour that had the escalator, year after year, with above-inflation increases in petrol prices. Under our plans for duty, petrol prices will be 10p a litre less than under Labour’s plans.
Steve Webb
I am grateful to the right hon. Gentleman for intervening, because I asked him the question when he was speaking, and he said that he opposed cuts for people who are out of work and that he opposed cuts for people who are in work. When I asked him whom that left, he said nothing—he never answers the question—and his Back Benchers said, “The bankers”. He was in the Treasury when, before the general election, the Labour Government introduced a “temporary” bankers’ bonus tax. If Labour thought they were going to win the election, why did they not make the bankers’ bonus tax permanent? It was a one-off, pre-election gimmick, whereas this Government have introduced a banking levy that, every year, will raise more than his temporary banking tax raised in any year.
Steve Webb
I have four minutes to respond to more than 30 speeches. Out of deference to Labour Members, I will do so.
The shadow Home Secretary talked about the position of women, and it is important that we deal with that point. The difference between this Government and the Labour Government is that we are taking 1 million people out of tax, the majority of whom are women, whereas her Government abolished the 10p tax rate, from which the majority of the losers were women.
There has been much discussion of the gainers and losers from the Government’s policies. I refer the House to the chart on page 4 of the Treasury document, “Distributional analysis to accompany the Autumn Statement 2011”, which ranks households by expenditure and shows the smallest cash losses at the bottom and the biggest cash losses at the top—progressive changes in difficult times.
Steve Webb
My hon. Friend the Member for Bristol West (Stephen Williams) made a characteristically thoughtful contribution pointing out the contrast between the two parties’ records—the 75p pension rise and the abolition of the 10p tax rate under the previous Government, and the personal tax allowance increases that this party is bringing in.
Mr Speaker
Order. The House must come to order. It seems clear on observation that the Minister is not giving way.
Steve Webb
I am grateful, Mr Speaker.
The hon. Member for Dover (Charlie Elphicke) spoke about how low interest rates benefit growth, which is crucial to the economy. The hon. Member for Broxtowe (Anna Soubry) raised the crucial issue of us having to pay our own way.
In opposition, one must do two things: yes, one must oppose the things that one is against, but one must also propose the things that one is in favour of. The Labour party failed to tell us where the £46 billion of spending cuts identified by the shadow Secretary of State for Work and Pensions would come from. We heard speech after speech from Labour Members who were opposed to every single cut, but I heard no Labour Member say what they would cut. We heard that there should not be cuts for people out of work, or for people in work, that there should not be cuts to the public sector, or to the private sector. Where does all the money come from? Answer came there none.
Ms Rosie Winterton (Doncaster Central) (Lab)
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Main Question put accordingly.