Universal Credit and Working Tax Credits

Will Quince Excerpts

Wednesday 15th September 2021 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (Will Quince)]

Let me begin by thanking all hon. Members who have taken part in this important debate, and I will endeavour to respond to the points raised in the short time left available to me.

This debate has been wide ranging, and there is no question but that the last 18 months have brought unprecedented challenges. We have all had to change the way we have lived and worked, but in the face of adversity this Government provided an unprecedented response and delivered support to families across the country in response to this crisis.

We have heard how the £20 per week uplift to UC has made a difference to households facing economic shock and financial disruption as a result of the pandemic, and we have heard calls for the uplift to be made permanent and extended to those on legacy benefits. But I have to remind the House that the Chancellor has always been clear that the UC temporary uplift was a pandemic response, and he ensured that the support was in place well beyond the end of restrictions and reopening of our economy.

Not one Member of this House wants to see anyone in our constituencies in poverty. It is incumbent on all of us to work together to tackle the root causes and drivers of poverty. No one Member of this House has a monopoly on ideas and solutions to tackling poverty, and I have no doubt that everyone taking part in today’s debate wants to achieve the same outcome, but via differing means.

As we have heard in the debate, there have been significant positive developments in the public health situation since the extension to the uplift was announced: the vaccine roll-out is progressing well; restrictions have been eased; and our economy is opening up. As my right hon. Friend the Secretary of State said in her opening speech, job vacancies are currently above pre-pandemic rates. They are sitting just below a record high since the series began in 2018. There are more than 1 million active vacancies in our labour market and hundreds of thousands are moving into employment every week. That is a very promising sign that our economy is recovering, and quickly.

Universal credit provides a safety net, but it is not designed to trap people on welfare. Fundamentally, we recognise that work is the best route to prosperity and it is therefore right that the Government should now shift their focus to supporting people back into work and to progress in work. We have a comprehensive plan for jobs to help us achieve that objective.

Several Members called for the uplift to be made permanent. I want to tackle head-on the suggestion that this is a cut. I have to say that this is what turns people off politics and politicians. The removal of a clear, time-limited measure for a specific purpose is clearly not a cut and to describe it as such is disingenuous. There is no saving; in fact, it is quite the opposite: a further £6 billion would need to be raised through taxation just to maintain the uplift, let alone to extend it to legacy benefits. To my knowledge, not one Opposition party called for an uplift to the standard allowance of universal credit 18 months ago. In fact, when the Labour party was last in Government, it did not increase the rate of unemployment benefit above inflation because it was concerned about work incentives.

Several Members raised the annual cost of the uplift, which I can confirm would be £6 billion. The Chancellor has been absolutely clear that new day-to-day spending must be funded through savings or taxation, as part of a return to living within our means. This all has to be paid for. As hard as these decisions are—and they are hard—we have a duty to be fiscally responsible and to ensure that we have a welfare safety net that is there to support those who need it, that incentivises work, that is fair to taxpayers and that is sustainable for the future.

It was precisely because of our fiscal prudence since 2010 that this Government were in a position to put in place an unprecedented support package during the worst stages of the pandemic, to protect people, jobs and livelihoods. For context, it may assist the House to know that to raise £6 billion in taxation would require the equivalent of adding 1p on the basic rate of income tax in addition to a 3p increase in fuel duty. That would be a significant tax increase for hard-working families next year.

Several Members expressed concerns about poverty, which of course concerns me too. As I have said, universal credit provides a safety net, but it is not designed to trap people in welfare. All the evidence suggests that work, particularly full-time work, is the best route out of poverty and to prosperity. In 2019-20, there was only a 3% chance of children being in absolute poverty if both parents worked full time, compared with a 42% chance for two-parent families with only part-time work. Whether it is kickstart, restart, JETS or the 13,500 additional work coaches, this Government have a comprehensive plan for jobs to help us to achieve our objective.

In 2021-22, we will spend more than £111 billion on benefits for working-age people. On our support for those who are struggling, there will be £670 million in funding for local authorities, to help with council tax support; nearly £2 billion to increase the local housing allowance and maintain it in cash terms; £140 million in discretionary housing payments; and £220 million to extend the holiday activities and food programme. We have increased Healthy Start voucher payments from £3.10 to £4.25, and we have increased the national living wage by 2.2% to £8.91 an hour and extended it to all those aged 23 or over.

In conclusion, as we have demonstrated during the pandemic, the Government are committed to supporting the poorest, the lowest-paid and the most vulnerable in our society and to ensuring that people have the support that they need. Now is the time to be positive and ambitious and to look to the future. The expected rise in unemployment during 2021 has not materialised. The unemployment rate is now around half a percentage point lower than it was at the start of 2021. Vacancies are up to record numbers and now stand at more than 1 million, which is more than double the number this time last year. The number of furloughed workers is falling each week and the number of payrolled workers is up by nearly 1 million since the start of the year. Everything is moving in the right the direction, so our focus is rightly on continuing the implementation of our multibillion-pound plan for jobs. After all, a working Britain is a Britain that works. That is a pillar of our agenda as we build back better and fairer for our whole United Kingdom.

Question put.