Welfare Benefits Up-rating Bill

Toby Perkins Excerpts

Monday 21st January 2013 Commons Chamber

[Charlie Elphicke]

The hon. Gentleman makes the case better than I could about the extent of the mess left by the previous Government, which was such that recovery has been choppy. As the whole Committee knows, a recovery from a debt crisis is always much tougher, particularly when we also have the eurozone plunging into crisis because of its years of mismanagement. Unless we have sound money and ensure restraint in the public finances and growth in the private sector, we will not be able to turn the corner and get the economy growing and the nation’s finances in place. The economy is now starting to heal, but part of that involves building in an extra incentive to ensure that work pays—universal credit is part of that—and ensuring an extra incentive for those who are out of work and on benefits to go into work. We do that by not continuing with the over-generous benefits or over-uprating of benefits, as compared with what people in work have received, that we have seen in recent years.

[Toby Perkins (Chesterfield) (Lab)]

The hon. Gentleman is making the point strongly that it is important that we make work pay. On that basis, is he concerned that 60% of those affected by the clauses we are discussing today are in work, and that this Bill is making precisely those hard-working people on low and middle incomes worse off by being in work?

[Charlie Elphicke]

The hon. Gentleman well knows that this Government have taken many people on low incomes out of tax altogether. That is not something that his party did. Labour froze the personal allowance and, over time, had more people in the tax system relatively speaking. We have taken people out of tax, because we do not see the point in taking money off people in taxes and then handing their own money back to them. It is better not to take it off them in the first place.

The key point is that the Opposition are proposing to impose a cost of £3.5 billion. I ask them: where are they going to find the money? How will they pay for their spending pledge? If they want to pay for it through more borrowing—which always seems to be their policy—all they will do is raise interest rates for hard-pressed mortgage holders, small businesses and borrowers.

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[Ian Mearns]

I have no doubt that that is the case. It applies to the north-east of England where the capacity of local authorities to help out local communities has been dramatically undermined—disproportionately, by comparison with other parts of the country.

This Bill provides yet another example of the Government demonising the most vulnerable in our society, making the poorest live in relative poverty. The Government’s decision to cap uprating on certain benefits and tax credits will, as confirmed only last week by the Minister with responsibility for disabilities, result in around 200,000 more children living in poverty. Let us bear in mind the fact that this is not the only policy forcing those on the lowest incomes into poverty. We need look only at the sprouting of food banks everywhere truly to understand the impact of this Government’s welfare agenda.

According to the Child Poverty Action Group report entitled “The Double Lockout: How local income families will be locked out of fair living standards”, this Bill

“is poverty-producing and means that both absolute and relative child poverty will increase”.

How exactly? First, delinking the uprating of benefits from increases in the price of commodities such as fuel and food will obviously result in a fall in standards of living for anyone dependent on state assistance. Given that two thirds of the households affected by the Bill have children in them, it is not hard to understand why child poverty will increase. Furthermore, given that proportionately poorer households spend more on basics such as fuel, food, water and other households necessities, their rate of inflation is higher when the prices of those basic goods increase faster—a trend we have seen over recent years.

In the last few months we have seen utility companies hiking up their prices—the highest change we have seen is about 10.8 or 11%. How on earth are the low paid and those out of work supposed to heat their homes if their benefits are not increased in line with inflation? We are going to see families—we are already seeing them—having to make the difficult choice between eating or heating.

The Children’s Society estimates that the following professions are also affected: 300,000 nurses and midwives in the NHS; 150,000 staff in primary and nursery schools; 1.14 million admin workers, secretaries and secretarial assistants; 44,000 electricians and electrical fitters; 510,000 sales assistants and cashiers; and 42,000 armed forces personnel.

[Toby Perkins]

Does not that list of people in those professions that are going to be badly hit fundamentally undermine the idea that the Bill is really about incentivising lazy people to go and get a job, which will happen only if the incentive system is made a little bit nastier?

[Ian Mearns]

I think it is the ultimate insult to ordinary people’s intelligence to say that in order to incentivise those at the top end of the economy we have to pay them more, while incentivising people at the bottom end by paying them less. “We are all in this together”—I don’t think.

By no stretch of the imagination should these hard-working people—all those I have just listed—be regarded as shirkers. The Joseph Rowntree Foundation estimates the cost of child poverty to the taxpayer as £25 billion, despite the fact that 57% of children living in poverty have one parent working. Surely increasing the number of children suffering from child poverty, which is what the Bill will do, will take more out of the Treasury’s coffers in the long term than would be saved from capping the uprating.

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[Mr Redwood]

I think it would be a good idea for us to start by working out what we agree about, because during debates such as this the House sometimes becomes very tribal. It seems to me that we agree that we hate poverty, and that that is true not just of the Opposition but of the two governing parties. We see poverty as a scourge. We come here to promote and support policies that will make people better off and improve their living standards—of course we do—and today’s debate is about how we can achieve that in very straitened and difficult circumstances.

I should have thought it was common ground that we need to ensure that it is more worth while to work. In order to ascertain whether that is common ground, I intervened on the right hon. Member for East Ham (Stephen Timms)—who was very eloquent—and he said that that was indeed Labour policy as well as Conservative and Liberal Democrat policy. So we agree that we want to get rid of poverty and that we need to make work more worth while. That is where our Ministers are faced with a difficult dilemma. Last year’s benefits uprating occurred at about the peak of the spike in inflation and so benefit recipients got the 5.2% increase whereas low-paid people working alongside them in their local communities got perhaps 1.7%, if they were lucky—that was about the average. Suddenly, in one fell swoop, people were 3.5% worse off in work than out of work because of the normal uprating.

[Toby Perkins]

What the right hon. Gentleman has just said is fundamentally untrue. Just because the percentage rise for someone on £71 a week is more than that for someone on £35,000 a year does not mean that they are better off. Will he correct the record on that point?

[Mr Redwood]

No, I am talking about people in very similar circumstances—those either in low-income employment or out of work—where the two numbers are much closer together. They are closer together than any of us would like, because we want it to be that much more worth while for people to work. The hon. Gentleman has to accept that, at the lowest income levels, there was a problem because the benefits went up by much more than the wages. What would the best answer be? It would be for all wages to go up more. The second best answer would be for the prices not to go up so much. But we are where we are and we have to work to try to come up with a fair settlement for the future.

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[Andrew George]

But when does the crisis end? The figures produced by the Office for Budget Responsibility estimate that in three years’ time, wages will exceed CPI. One has to examine the matter over a much longer period. The Conservatives paid for some posters a couple of weeks ago to make the point that it was unacceptable for benefits to rise faster than wages, and the amendment would deal with that issue.

I said earlier that one big weakness of the Government’s proposal, and the reason why I opposed it, was the inflexibility of the 1% uprating. It takes no account of what may happen to food prices, for example, by 2015-16. It is all very well having a Bill that takes a clairvoyant view that a 1% increase will not press large numbers of working families, as well as out-of-work families, into severe and extreme hardship. However, we have experienced this year in the UK the impact of significant volatility in our climate. There has been significant climate change, which is having an impact on the food baskets of the world, including those in many developing countries and here. We therefore need to ask ourselves whether we can confidently say that there will not be food price spikes such as we saw only a few years ago. I suggest that we may see such spikes again. There is also tremendous concern about the potential volatility of energy prices. The 1% uprating figure is inflexible and somewhat arbitrary, and we cannot say with confidence that we will not need to introduce further primary legislation to revise that figure in 2016.

We must also consider the impact of the 1% uprating on housing. In their emergency Budget, the Government proposed to cut housing benefit from the 50th percentile of rents to the 30th percentile. Whether or not we like the fact that only 30% of the private rental market might be available to people in receipt of housing benefit, rather than half of it, it is essential that the rate is linked to the variation in private sector rents. The 1% uprating will break the link with what is available in the market and instead peg housing benefit back. In my area, and I know in many others, the Government’s attempt to peg it back by cutting the rate to the 30th per- centile of rents has failed to constrain private sector rents, so it has not had the desired impact. Maybe it has in some areas, but certainly not in mine or many others.

The measures that the Government have brought forward in the Bill have been ill thought through, and I fear that we will have to reconsider the figure set out in it next year or the year after. On that basis, we will listen to what the Minister says in response to the debate before we have the opportunity to divide the Committee on the amendment.

[Toby Perkins]

It is a great pleasure to follow the thoughtful and useful contribution of the hon. Member for St Ives (Andrew George) and the contributions of other hon. Members.

One thing that has come across in the speeches of Members on both sides of the Chamber is the economic illiteracy of the Government’s policy as part of a strategy for reducing the deficit. As other Members have said, one of the great things about welfare payments is that when people are living on the bread line, the money that they receive is spent in the local economy, often within their own community or on their own estate. They spend it at their local convenience store. They tend to spend it the minute they get it, rather than put it in trust funds, because they are attempting to sustain their life on the bread line.

When money is taken from the poorest in our society and at the same time given to the very wealthiest in our society, as was mentioned earlier, we are taking money away from people who will spend it in the real economy and giving it to people who are much more likely to take it out of the real economy and not spend it. It makes no economic sense, even on the basis that the Government are introducing this measure to reduce the deficit.

[Kwasi Kwarteng]

I still have not heard what exactly the Opposition would propose to reduce the deficit. Surely the hon. Gentleman will admit that there must be some reduction in public spending.

[Toby Perkins]

As Members on the Government Benches are fond of reminding us, at one point they thought that the original plans of my right hon. Friend the Member for Edinburgh South West (Mr Darling) were not paying off the deficit fast enough. We now see, however, that under those plans we were actually paying off the deficit faster than this Government are doing. The fact that the Labour party was going to make tough decisions is reflected in a whole number of ways, and we supported—with tremendous reluctance—the very small uplift in public sector pay. We heard from the hon. Member for Brighton, Pavilion (Caroline Lucas) a shopping list of things we should be asking for and ways in which she felt we did not go far enough.

The Labour party recognises that tough choices need to be made, and it agreed to a whole raft of things in all the discussions on welfare. When I go back to my local party, the members ask, “Why are we agreeing with these things?” I say, “Look, it is very difficult. We would always like to make certain different decisions but”—

[Andrew Bridgen]

rose—

[Toby Perkins]

Let me just answer the point raised by the hon. Member for Spelthorne (Kwasi Kwarteng). We would always like to make different decisions, but we are not always in a position to do so. There is a raft of things with which we have agreed that we would not have wanted. We have seen, however, from the policies that the hon. Gentleman has so loyally supported time after time, that when we pursue austerity to the extent that he has been happy to support, demand comes out of the economy. Various retail businesses have gone bust and people are losing their jobs. A huge number of people in the public sector who were consumers are now not spending money, and the level of borrowing that the Government predict is higher than the Labour party proposed under its policies.

[Mark Reckless (Rochester and Strood) (Con)]

Is the hon. Gentleman seriously blaming firms such as Jessops and HMV for going into administration on the Government’s austerity programme?

[Toby Perkins]

On the specific issue of whether HMV has gone bust purely as a result of the economic circumstances, no, that is not the case I am making. However, when a raft of retail organisations go into administration, and when we see in many town centres—happily, not in Chesterfield because of the progressive policies of the Labour council—a huge number of empty shop units, it is perhaps time to start considering whether the economic policies pursued by the Government may have some sort of link to the economic success of our businesses.

[Julie Hilling (Bolton West) (Lab)]

I am following what my hon. Friend says and I absolutely agree that cuts have to be economically competent. The International Monetary Fund has already warned the Government that the annual cut of £24 billion to benefits and tax credits will reduce economic output by up to £40 billion.

[Toby Perkins]

That very important point underlines much of what I am saying. When hon. Members talk about benefits rising faster than earnings, we have to understand that each one of us needs basic things to stay alive. We need to have enough food to eat and put in front of our children for them to survive; we need clothing so that we can go out in the street; and we must be able to afford transport to get to job interviews.

[Several hon. Members]

rose—

[Toby Perkins]

I would like to finish my point. I am glad that my comments have elicited so much excitement and that lots of people want to intervene. There are basic things that we need in order to sustain life, and if someone is on poverty money—the hon. Member for Dover (Charlie Elphicke) said there are 600,000 people in severe poverty—their 1% increase cannot be compared with a school teacher, for example.

[Mr David Anderson (Blaydon) (Lab)]

Or an MP.

[Toby Perkins]

Such increases cannot be compared with how a Member of Parliament is able to sustain small increases. There is no comparison between what someone in severe poverty is able to cut and the situation faced by public sector workers, despite their currently being hard pressed, as many will testify.

[John Howell (Henley) (Con)]

Has the hon. Gentleman taken into account in his figures the impact of universal credit, which will lift 900,000-plus people out of poverty?

[Toby Perkins]

We have heard a lot of talk about universal credit but we still lack a lot of the detail. Given the record of the Secretary of State for Work and Pensions and the most catastrophic Work programme in history, if I were the hon. Gentleman I would not have much confidence in the success of the policies pursued by the Secretary of State until he has seen what the Government deliver.

[Dr Hywel Francis (Aberavon) (Lab)]

My hon. Friend is making a series of interesting points. Does he agree that the insufficient time allowed by the Government to scrutinise these changes—eight days between Second Reading and the remaining stages of the Bill—does not allow us to scrutinise and ask the Government questions about why, for example, they are treating categories of disabled people differently and why they do not recognise that they may be breaching United Nations conventions relating to the rights of children and disabled people?

[Toby Perkins]

That is an incredibly powerful point. My hon. Friend probably thinks—as I do—that we are being given so little time to scrutinise those issues because this is an entirely political Bill. It is not an economic Bill or something put together and discussed on the Floor of the House because the law needs to be changed. It is being done for entirely political reasons, and the minute that the Opposition said—to their tremendous credit—that they were going to oppose it, the posters were already up and ready because they had been designed in advance. This was an entirely political manoeuvre that had nothing to do with comments that might be made by the United Nations or any of the details of it.

I want to return to the issue of benefits rising faster than earnings.

[Richard Graham]

rose—

[Toby Perkins]

I am pleased to see the hon. Gentleman in his place. The past two times that he has been billed to appear he has not actually been present, so now that that he is here I will definitely allow him to intervene. However—perhaps he will reflect on this—the central point of the whole debate seems to be that benefits claimed by someone on £71 a week can be compared with the earnings of a school teacher or a doctor in a hospital, and that a 1% rise is the same to someone on jobseeker’s allowance as to someone working in the public sector. Will the hon. Gentleman at least accept that they are not the same thing?

[Richard Graham]

I am very grateful to the hon. Gentleman for letting me intervene and I will come straight to his specific point. It would be interesting if he came to meet some of my constituents who work in the public sector in Gloucester. We have over 20,000 people working in the public sector—as I used to—and most of them are seeing no increase in their salary whatsoever, with a cap at a maximum of 1%. The hon. Gentleman appears to be supporting an increase of 2.2%—more than double what those in work will be getting—for those who are out of work. I would like him to respond to a constituent of mine who wrote to me. She is a retired nurse—

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[The Temporary Chair]

Order. Will the hon. Gentleman sit down?

[Toby Perkins]

It is almost as though the last two minutes of my speech did not exist. I had answered the hon. Gentleman’s point before he made it and I have no idea why he felt the need to intervene when I had specifically dealt with that issue—[Interruption.] I have already dealt with that point. We just cannot compare what 1% means to someone on £70 a week with what it means to a doctor. People on poverty money and in severe poverty have not got lots of options as to what they can cut back. They cannot decide, “Well, I’m only going to have one holiday this year”, as those whose jobs are more lucrative might be able to do. Interruption.] I have reflected on that point and I think I have answered it at some length.

There is a particular irony in the Chancellor, who was a millionaire the day he was born, railing against the extravagance of those on £71 a week. The debate needs to be put in proper context.

[Kwasi Kwarteng]

Will the hon. Gentleman give way?

[Toby Perkins]

I will take further interventions, but I would like to crack on a bit now.

The 1% increase comes on top of a raft of difficult choices on benefits, including housing benefit cuts, tax credits cuts and council tax benefit cuts, at a time when there is increasing poverty, including severe poverty and child poverty. Specifically, there is an increase in poverty among those in work. That is the context in which this debate is held, and the reason why the Labour party has taken the stance it has. No one should be in any doubt that, in taking that stance, the Labour party recognises that there is tremendous contention about benefits, and that many feel just like the hon. Member for Gloucester (Richard Graham) and his constituent. I recognise that many people in many communities feel that way, and therefore how difficult it was for my right hon. Friend the Member for East Ham (Stephen Timms) to take that principled stance.

[Susan Elan Jones (Clwyd South) (Lab)]

I am not sure whether my hon. Friend could hear the hon. Member for Gloucester (Richard Graham) say a second ago from a sedentary position, “What’s your solution?” Surely the Opposition’s solution is to help families such as the 8,600 families in his constituency who receive in-work tax credits. The hon. Member for Gloucester seems silent now.

[Toby Perkins]

My hon. Friend makes a valuable point. Perhaps Government Members’ strategy is to follow Mitt Romney, who said that anyone who receives any welfare should be written off because they will never vote for the right-wing party. It did not work particularly well for Mitt Romney, but perhaps that is the electoral strategy of the hon. Member for Gloucester.

[Richard Graham]

rose—

[Toby Perkins]

The hon. Gentleman is about to tell us what he will do for the 8,600 people in his constituency who will be worse off as a result of the vote he will cast tonight.

[Richard Graham]

I thank the hon. Gentleman for his generosity in allowing me to intervene a second time, but the answer to him and the hon. Member for Clwyd South (Susan Elan Jones) is that, on the question we are debating, I have not heard their proposal. Does he agree with the hon. Member for Brighton, Pavilion (Caroline Lucas) that the solution is to peg those benefits for ever to the retail prices index, so that people who are out of work can continue to have annual rises three times higher than those who are in work? While the hon. Gentleman is advocating that my public sector workers should continue to lose out relative to people who are on benefits, I am proud that the Conservative party has left 35,000 people with lower tax bills.

[Toby Perkins]

The hon. Gentleman was silent on the 8,600 people in his constituency who will be worse off as a result of the vote he will cast tonight, but the Opposition’s proposals are clear in the amendment. I will touch on this in more detail, but one interesting thing is the extent to which the Chancellor, for reasons best known to himself, has chosen to handcuff himself to a level of benefit increase for year after year when he has no idea what the level of inflation will be—the hon. Member for St Ives made that point.

[Several hon. Members]

rose—

[Toby Perkins]

Let me make more progress before I let hon. Members intervene again.

One issue I have raised previously in the context of the Bill is housing benefit changes. Last week, I met Chesterfield borough council officials to discuss the impact of the bedroom tax, which will hit people across Chesterfield in April. The council knows it faces a time bomb as people who cannot afford to pay their rents are told that there is a shortage of smaller properties for them to move to. Many of those people are at the back end of their working careers, and are either not working or in part-time employment. The council is budgeting for a situation in which around a third of them will fall into arrears—their housing-related benefits will be reduced and they will no longer have enough to pay their rents—and the Government are increasing the discretionary payment to allow councils to meet the costs of some who fall into that situation, which is a totally illogical policy. People who have been council house tenants for many years will fall behind, and the Government will give money to councils to bail them out. At the same time, the Government will hit them on housing and council tax benefit, and on tax credits. They are saying, “Those payments have already been cut, but they will now be increased by less than the rate of inflation.”

[Mr Marcus Jones]

A thread running through the hon. Gentleman’s speech is how we help the lowest paid. Does he agree that the coalition Government are helping the lowest paid in his constituency, because in April 3,880 of his constituents will be lifted out of income tax altogether, like 3,168 people in my constituency?

[Toby Perkins]

I welcome any measure that makes people better off, but the hon. Gentleman is entirely wrong if he thinks those being lifted out of tax are the lowest paid—they are not. Many who are earning less than them will get no benefit from the increase in the tax threshold. The people being lifted out of tax are not the lowest paid, although I recognise that they are on modest incomes.

[Charlie Elphicke]

More than 30,000 people in the hon. Gentleman’s constituency have seen their pay go up in recent years by just 10%. They are in work and striving to get by. How can he justify asking them to pay more taxes and provide more money for people on benefits when the latter have had a 20% increase in the same period? Is that not unfair on working people?

[Toby Perkins]

One point I have laboured is that hon. Members cannot compare in percentage terms the difference the Bill will make for someone on £70 a week and someone on £35,000 a year. The hon. Gentleman seems to be attempting to make such a comparison, but as my right hon. Friend the Member for Birkenhead (Mr Field) related previously—

[Kwasi Kwarteng]

Will the hon. Gentleman give way?

[Toby Perkins]

I will answer the ill-advised point made by the hon. Member for Dover (Charlie Elphicke) before I take another intervention.

As my right hon. Friend the Member for Birkenhead has said, in cash terms—we should bear in mind that we buy food and clothing for our children with cash— people on benefits have had an increase of £12 a week; at the same time, working people have had an increase of £49 a week. It is impossible to make the comparison in simple percentage terms. That is one of the central points of my speech, but I have dwelt on it rather too much. I keep returning to it because hon. Members who intervene seem not to hear it.

[Several hon. Members]

rose—

[Toby Perkins]

I will crack on, because I have not taken a useful intervention from Government Members yet, and other hon. Members want to speak.

Many of the people I meet who face this financial calamity on the horizon have worked most of their lives. The people I meet who have worked for 30 years and then gone on to benefits are overwhelmed not by the generosity of benefits, but by the difficulty of getting by. They believe there must be an alternative benefits system that is incredibly generous—that is the one they read about in the papers—because it is tough to get by on the benefits that they receive.

When we talk about the benefit bill, the most fundamental question we must confront is where the money goes. Most of it goes not into the pockets of benefit recipients, but into the pockets of landlords. The Thatcher Government introduced the right to buy. That was a good thing, but they did not have a corresponding scheme to replace the social housing that was lost, and there was chronic under-investment in the remaining stock.

The Blair Government rightly prioritised the refurbishment of social housing up to the decent homes standard over building new homes, but many Labour Members believe they took too long to take the housing shortage seriously. Although much of that was hidden during the good times, the welcome steps introduced by the Brown Government were too late and too slow to stop the housing crisis from escalating. Whomever we blame for the huge inflation in private rents, the people who claim housing benefit, whether they are working or not, are not to blame.

[Dr Huppert]

Will the hon. Gentleman give way?

[Toby Perkins]

I will try to plough on if I may, because many hon. Members want to speak, and I sense the Opposition deputy Chief Whip—my hon. Friend the Member for Tynemouth (Mr Campbell)—glaring at me with intent.

In a raft of ways, tax credits cuts will hit people on low to middle incomes. By anyone’s definition, they are the thrifty, hard-working strivers that people across the political divide recognise are key to the country’s future prosperity, but they will be badly hit by the Bill.

Once again, women and children will be hit worst of all. The Government’s strivers tax will hit women particularly hard—4.6 million women who receive child tax credit will be hit by the strivers tax, including 2.5 million working women. All those will come together as the perfect storm. The 1% uplift is nothing but a blunt political instrument designed to create a political trap that has nothing to do with a nuanced benefits system, with all its complexities.

The Child Poverty Action Group has said that the 200,000 increase set out in the written answer from the Under-Secretary of State for Work and Pensions, the hon. Member for Wirral West (Esther McVey) should be added to the increase of 800,000 in children in relative income poverty by 2020 that the Institute for Fiscal Studies found in its analysis of the coalition’s welfare cuts. Let us remind ourselves of what the Prime Minister used to say about relative poverty. In 2006, he said:

“I believe that poverty is an economic waste and a moral disgrace. In the past, we used to think of poverty only in absolute terms—meaning straightforward material deprivation. That’s not enough. We need to think of poverty in relative terms, the fact that some people lack those things which others in society take for granted. So I want this message to go out loud and clear: the Conservative party recognises, will measure and will act on relative poverty.”

That is the manifesto on which Conservative Members were elected, and that was what they used to believe, but that is what they will vote against tonight when they support the Bill and reject the very reasonable amendment moved by my right hon. Friend the right hon. Member for East Ham (Stephen Timms).

[Mr Charles Kennedy (Ross, Skye and Lochaber) (LD)]

I shall be brief as we are all conscious that we are increasingly up against the clock. I followed the progress of the argument and analysis by the hon. Member for Chesterfield (Toby Perkins) with some interest. Had his predecessor in that seat been here tonight, he would most certainly have voted for the Liberal Democrat amendment, so I hope that the hon. Gentleman will maintain that proud Chesterfield tradition and join us in the Lobby later this evening.

As one who—like so many of my right hon. and hon. Friends—applauds so many of the initiatives that the coalition has been able to take, specifically in the field of social policy, I think that the input from the Liberal Democrats has been significant, not least from my hon. Friend the Minister of State who will have the arduous task of replying to the very wide diaspora of this debate later this evening. That input includes taking low-paid people out of tax altogether to moving in the direction of universal credit—I do not take the jaundiced view of many as to its prospects. I am delighted that the Secretary of State for Work and Pensions is in his place, because if we find, a little further down the track, that a little more constructive pressure needs to be placed on the Treasury to make things work that little bit better, he can certainly count on support from these Benches, because we think that the direction of travel on universal credit is very good. However, my hon. Friend the Member for St Ives (Andrew George) pointed out that the Bill sits at odds, both practically and philosophically, with developments of that type. He used the phrase “a blunt instrument” and I think that is a fair description. Our amendment would maintain a responsible position in relation to the wider issue of the deficit—and deficit reduction policy—in that benefits would not rise at a higher rate than earnings. That is responsible, consistent and a constructive contribution to the debate this evening.

[Toby Perkins]

The right hon. Gentleman just described his amendment as a Liberal Democrat amendment. Can he confirm that all the Liberal Democrats will vote for it?

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[Steve Webb]

It is disgraceful, as my hon. Friend says.

The second question that has arisen is why the Bill is necessary. It has been suggested that the Bill is simply a political device, but that draws a veil over the fact that we are dealing with one of the biggest deficits in peacetime history. To listen to the Labour leadership, one would think that they took such matters seriously. The leader of the Labour party said on “The Andrew Marr Show”, in an interview, I think, with James Landale:

“So when it comes to the next Labour government, if I was saying to you, ‘I can absolutely promise to restore this cut or that cut’, you would say ‘Well, where is the money going to come for that?’...We are absolutely determined that Labour shows we would be fiscally credible in government.”

We have not heard a lot of that today. The shadow Chancellor has said:

“The public want to know that we are going to be ruthless and disciplined in how we go about public spending”.

In fact, we have heard speech after speech calling for the Bill to be scrapped but there has not been a hope of hearing where the money would come from.

The Bill and related measures save £3.6 billion. When I challenged the shadow Minister, the right hon. Member for East Ham (Stephen Timms), about where that money would come from, he said—I paraphrase—“We wouldn’t start from here.” I am afraid that the Opposition have to do rather better than that.

[Toby Perkins]

rose—

[Sheila Gilmore]

rose—

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[Steve Webb]

Not for the moment.

We have a target for 2015-16 of £10 billion of spending reductions. We have not yet found that £10 billion. Even with this Bill, we are on about £6 billion, and without the Bill and related measures we would be down to about £3 billion. The challenge for Opposition Members who have said that taking money away from benefits takes spending power out of the economy is that so do other forms of spending cuts. If the money comes not from benefits but from local government, that will be money out of the local economy; if it comes from infrastructure projects, that will be money out of the local economy. There is not a free way of finding money without any impact.

Let me deal first with amendment 12, tabled by the right hon. Member for East Ham. My hon. Friend the Member for Gloucester (Richard Graham) put it very well when he said of Labour that there is a vacuum where there should be a policy. That is a metaphor for the Labour party. In relation to a Bill that says that benefits and tax credits should go up by 1%, the amendment would take out the figure of 1%, so what would be left? Presumably, “Benefits should go up” but by how much? Perhaps by a fraction of 1%—we do not know. The amendment is incoherent; it would take something out and put nothing in its place. It would remove the heart of the Bill but gives no guidelines on whether the figure should be below inflation or above inflation, below earnings or above earnings.

[Toby Perkins]

As the right hon. Member for Wokingham (Mr Redwood) and the hon. Member for St Ives (Andrew George) said, the Chancellor sets a Budget every single year, and the benefit uprating will have to be relevant to whatever else has happened in the economy by taking into account inflation, wage inflation and so on. There is no need for this Bill now because we have a Budget every single year. Surely that is the central point.

[Steve Webb]

The hon. Gentleman was not listening. The point about establishing a long-term fiscal framework is that it has to be credible; if it could be changed every year, it would not be credible. The whole reason we are able to keep interest rates low—[Interruption.] The hon. Gentleman is saying, “Why not change it every Budget?”, but that would not be credible for the long term.

[Toby Perkins]

rose—

[Steve Webb]

No, sit down. We need credibility for the long term.

[Toby Perkins]

On a point of order, Mr Amess. The Minister is misquoting me, so let me clarify this. I said that if it was all about stability, why do we have a Budget every year instead of setting three-year budgets, which would reflect that fact?

[The Temporary Chairman (Mr David Amess)]

That is not a point of order—it is a point of debate.