I must inform the House that I have selected the amendment standing in the name of the acting Leader of the Opposition.
I beg to move, That the Bill be now read a Second time.
I am conscious of the fact that many Members wish to speak today and that we have compressed time as a result of the statements. I will take interventions, but I recognise that we need to make some progress so that everybody has a chance to speak. In moving the motion, I wish to make it very clear that Conservative Members are united in support of the Government’s aim to move from a high tax, high welfare and low wage society to a low tax, lower welfare and higher wage society. This Bill lays the ground for that commitment and helps us to continue the job of reversing the Labour’s Government’s failure that led us into the difficulties we inherited.
Let me remind the House quickly, before we get into the details, of what we inherited when we came into office in 2010: nearly one in five households had no one working—this is what Labour left us; the number of households where no one had ever worked had nearly doubled; 1.4 million people had been on benefits for most of the previous decade; and close to half of all households in the social rented sector had no one at all in work. Since then, even through the coalition, we have proceeded to get to 2 million more jobs being created; there are now 2 million more apprenticeships; the number of workless households has reached a record low—it is down more than 670,000 since 2010; and the workless household rate in the social rented sector is now the lowest on record. The recent Budget debate, in which we had a pretty full discussion of many of the characteristics of this Bill, made it clear that we want to go further, delivering 3 million more apprenticeships and moving towards full employment. These are measures that this Government will drive forward and that this Bill requires us to report on each year.
We will also continue to bear down on the deficit and debt, achieving a surplus by the end of the Parliament. We are spending £3 billion on debt interest payments alone every month—the figure is £33 billion a year, which is £1,236 per household. Every pound we spend on paying off the debt is a pound we are paying to others such as overseas investment funds, rather than on the necessary public services such as schools and hospitals or on being able to reduce taxation further. Eliminating the deficit and paying off our debts is the moral and most effective things for a responsible Government to do for people on low incomes, who rely more than anybody on those services.
It is worth pointing out that we also need to drive productivity improvements. The Budget contains some important measures to make that a reality, and our long-term productivity plan sets out how it will boost productivity over the next 10 years. As my right hon. Friend the Business Secretary made vividly clear in launching that plan, if we could, for example, match US levels of productivity, we would increase GDP by 31%—that is £23,000 a year for every household. A key driver to getting us there is the national living wage. That historic reform will give more than 2.7 million people currently on the minimum wage a pay rise of more than £5,000 a year. With the increase in the personal allowance to £12,500 by the end of the Parliament, the national living wage will make work pay and improve people’s living standards. It will also help productivity. The Governor of the Bank of England confirmed last week that the living wage will help increase the productivity of workers and of the country—
I want to quote what the Governor has said and then I will give way to the hon. Gentleman. The Governor said:
“There should be some improvement in productivity as a consequence of adjustment in the national living wage”.
I thank the Secretary of State for giving way so early on in his speech. Obviously, all of us are supportive of a productive, growing economy—that benefits everybody. But when he drew up proposals for this Bill, did he look at the levels of child poverty in Britain? Did he look at the levels of homelessness, destitution and rough sleeping in Britain? How does he think this Bill is going to improve that situation? Alternatively, will it make the holes in the welfare state safety net rather bigger, with more people falling through it as a result?
I am grateful to the hon. Gentleman for his intervention. I wish him well in his campaign. [Laughter.] I was being genuine and not politically expedient. I must say that being Leader of the Opposition is not all that it is cracked up to be. I have some personal experience of that. He should be careful what he wishes for. None of us wishes him ill.
On the hon. Gentleman’s legitimate question, I say yes to the first part. The measures in the Bill relating to life chances will do more to help us target the kind of work that we should be doing to turn lives around in families and households to ensure that people are able to get into work and to sustain themselves in work. As for the third part of his question, it is also correct that this Bill, with all the other welfare reforms and the things that we are bringing in, will ultimately improve the life chances of people and the numbers in work. We know that the best way out of poverty is through full-time work.
Several hon. Members
I will give way to my hon. Friend the Member for North West Leicestershire (Andrew Bridgen), but then I will make some progress. I will give way again a bit later.
Does my right hon. Friend agree that, by putting welfare spending on a sustainable footing, these measures are the best way to secure the future of the poor and the vulnerable in our society?
I do agree with my hon. Friend, which is why I want to get to the Bill. This backdrop of rising employment, falling deficit, increased productivity and higher wages brings me to the Bill before the House today. This is a Bill for working Britain, and it is underpinned by three key principles: first, work is the best route out of poverty, and being in work should always pay more than being on benefits; secondly, spending on welfare should be sustainable and fair to the taxpayer while protecting the most vulnerable; and, thirdly, people on benefit should face the same choices as those in work and those not on benefits. I wish to talk about each of those principles in turn.
My focus in government—and the focus of the Government —has been to ensure that it pays more to work than to be on benefits. This Bill builds on that principle. First, it extends the important principles of the benefit cap. The £26,000 cap we introduced in 2013 has been a huge success—
One moment, please. The cap has been a huge success in getting people back to work and reintroducing fairness to the welfare system. Capped households are more than 40% more likely to go into work after a year than similar uncapped households. It is right to keep the level of the cap under review to ensure that it continues to be fair and that it provides the right incentives for people to move into work.
No, I will give way to the hon. Member for Swansea East (Carolyn Harris) in a second, but I wish to make a bit of progress.
We know that around four in 10 households outside London earn less than £20,000, and the same proportion of households in London earn less than £23,000. To ensure that the cap better reflects the circumstances of hard-working families, the Bill lowers the current cap to £20,000 for households outside Greater London, and the Greater London cap will be set at £23,000. The exemptions will continue to apply to the most vulnerable, which includes people on disability living allowance and personal independence payment, those in an employment and support allowance support group and those moving into work who are entitled to working tax credits.
What assessment has been made of the effect of his welfare reforms on children?
I am sorry, but I did not quite hear the hon. Lady. Will she repeat what she said?
The right hon. Gentleman must listen carefully. What assessment has he made of the effect of his welfare reforms on the children of this country?
The impact assessments are in the Library and the Vote Office. Full assessments have been made.
I am grateful to the Secretary of State for giving way. Earlier, he said he would protect the vulnerable. May I remind him that there are 1.4 million people in this country with a learning disability? Has he considered an exemption for the specialist disability housing providers, such as Mencap, from the 1% reduction, so that people with a learning disability have more opportunities to live in the community, especially after Winterbourne and all those terrible scandals?
I am happy to meet the hon. Gentleman to discuss that and to look at the issue he raises. I know that we have looked at it, but I am happy to look at it again with him.
Several hon. Members
I will make some progress, and then I will give way, but many Members wish to speak and make their own points.
We are committed to helping people who have health difficulties and who are capable of taking steps into work to do so, which is why we are putting greater support into jobcentres. For new claims, the Bill will end the disparity between what people receive on the work-related activity component of ESA and on jobseeker’s allowance. We know that the majority of people receiving work-related activity ESA payments want to work, but the current system discourages claimants from making the transition into work. People on ESA receive £30 a week more than those with a health condition on JSA, but they receive far less support in finding work: people on JSA can expect about 11 hours of work coach time per year, whereas those on ESA typically receive only about two hours per year. The Bill will help people to achieve their ambitions. Current claimants will not be affected, and new funding will be provided for additional support to help claimants to move into work.
I was interested to hear the Secretary of State talk about the benefits cap and fairness. Is he aware that his right hon. Friend the Member for Epsom and Ewell (Chris Grayling) also talked about fairness and the benefits cap, saying that it was only fair that people’s benefits were capped at the level of the average that someone would expect to earn by working? At that point, the cap was £26,000; now, it seems that average earnings are £23,000 and £20,000. What is the reason for the difference?
I just explained, I think, that there are differences between gross and net figures. Now, we are looking at lowering the cap from the original £26,000, as the hon. Lady will know if she uses her intelligence—
Will the Secretary of State give way?
Will the right hon. Gentleman give way?
I am not going to give way to the hon. Lady again, because I thought it was pretty simple maths. However, I will give way to the right hon. Gentleman.
Given what the right hon. Gentleman was just saying about ESA, what is his response to Parkinson's UK and Macmillan Cancer Support? They point out that, in the case of Parkinson’s, there are some 8,000 people in the work-related activity group with Parkinson’s and other progressive diseases who are not going to get better but who, under his proposals, will lose £30 a week. How can he defend that?
As originally designed by the Labour Government, the work-related activity group was to be a transitional stage on the way to work. It included people who had conditions that were perceived to be likely to improve, thus enabling them to move into work, and people who could, even while they were in the work-related activity group, do some work, and that had to be assessed. If a person’s condition is such that they are unable to do any work at all, under the existing rules of the work capability assessment, they should be assessed and moved into the support group. That is exactly the point.
The objective of the work-related activity group—its design was, I think, rather faulty, but we have what we have—is to encourage people to go into work. As the right hon. Gentleman knows, there are no sanctions to make them take work. There are sanctions if they are unwilling to make an effort, but if they cannot take the work they are not sanctioned.
The Secretary of State will readily acknowledge that people with Parkinson’s or multiple sclerosis who are in the work-related activity group are not going to get better. Surely he should not be taking £30 a week away from them.
As I said—the right hon. Gentleman should remember this—the purpose of the work-related activity group is that the people in that group are deemed to be capable of some work, or at least to be capable of doing some work very soon. That is the point of the group. My point is that when someone becomes too ill to do any work, at that point they are assessed and they should go into the support group. I am happy to discuss the matter further with him elsewhere, but those are the rules as they stand.
Several hon. Members
I want to make some progress. I will give way again later, but I am conscious of the fact that over 35 Members are waiting to speak—
Forty Members, so it is in colleagues’ interest to let me make some progress.
I also want to support parents claiming universal credit to get into and stay in work after having a child. We found just last week that the number of children living in households claiming out-of-work benefits is at a record low, down by 450,000 since 2010. That is very good progress, but we want to build on it. The Government are introducing a far-reaching childcare offer: with universal credit, people will get up to 85% of their childcare costs paid from April 2016—up from 70% under the previous system. All three and four-year-olds already receive 15 hours of free childcare a week, as do 40% of the most disadvantaged two-year-olds. On top of that, there will be an additional 15 hours of free childcare available for working parents of three or four-year-olds. Overall, we anticipate that this provision will be worth about £5,000 per child per year. In line with that, we believe it is fair to ask parents claiming universal credit to look for work when their youngest child turns three, and to prepare for work when the youngest child turns two, and the Bill makes provision for that as well.
I want to bring the Secretary of State back to the cap. Lowering the cap is one thing, and it is something that we could probably agree on, but having different levels of the cap across the United Kingdom breaks parity and sets an unwanted precedent for other benefits, and we strongly disagree with that. Will he reconsider and have the cap at the same level across the whole United Kingdom?
The problem with the cap when we set it previously was that it disproportionately affected London without having a great effect on the rest of the country. This process means that of the 92,000 extra people who are likely to be affected, 16,000 will be in London and 77,000 will be outside London, which I think resets the balance. By the way, many people tell me that the cap is set far too high.
I have already given way to the hon. Gentleman, so I will make some progress. He is more than welcome to try to intervene later, but I want to move on to the next aspect of the Bill. I stand by the fact that the cap will now be more likely to be equal. It will not be absolutely equal because there are variable incomes, as he knows.
Will the Secretary of State give way?
I will give way to the hon. Lady, because I have not yet done so.
On the level of the cap, the cost of living for my constituents is very similar to that in London, yet they will have to make do with a much lower cap. Moreover, the Bill will allow the Secretary of State to reduce the cap over time without having to come back to Parliament to seek any kind of agreement. Why is he essentially playing politics with poverty?
The hon. Lady’s question is rather mixed; I thought that she was asking me to impose an even stricter cap on her constituency, with a lower level. The reality is that none of this is absolutely perfect, but we believe that it will reset the balance, which is better than just leaving a single figure at a lower level and making London suffer more than the rest.
As the Chancellor set out in the Budget, the benefits system has to be put on a more sustainable footing, but in a way that protects the most vulnerable. That brings me to the second principle of the Bill, which is sustainability. In 1980 working-age welfare accounted for 8% of all public spending, but by 2010 it had risen to nearly 13%, which is over £200 billion, or almost £8,000 for every household. Nine in 10 families with children were eligible for tax credits when we came into government. It is clear from what we heard last week that many Opposition Members have still not learnt anything from some of the mistakes made during Labour’s 13 years in government. They have not weaned themselves off the addiction to paying for more and more debt with somebody else’s money. They are still not credible when it comes to managing the public finances.
As a result of our reforms, five in 10 families with children will be eligible for tax credits, bringing greater balance to the welfare budget. However, it is also clear in the Bill that we have been careful to ensure that the changes are fair. We are protecting the most vulnerable in society, including the elderly and disabled. Where possible, we are introducing changes only for new claimants so that those who have planned on the basis of what is currently available are not affected.
On that point about protecting the vulnerable, particularly the disabled, our manifesto commitment to halve the disability employment gap is very welcome. Will the Bill’s reporting obligations on full employment include the Government publishing data each year showing to what extent they are meeting that target?
All the data that we have committed to publishing will be open and available to everybody, so everybody will be able to see exactly how much progress we have made. Through the life chances measures, people will be able to figure out whether we are making progress, and therefore what we should be doing about it. I am glad that my hon. Friend welcomes some of the changes, particularly the living wage, which I know he has campaigned on for some time.
We are making provision to tackle social rents, which have increased by 20% since 2010. The Bill will reduce rents in social housing in England by 1% a year for four years from April 2016, protecting taxpayers from the rising cost of subsidising rents through housing benefit, and protecting tenants from rising housing costs. This will reduce average rents for households in the social housing sector by around 12% by 2020, compared with current forecasts. It will also mean that those people not on housing benefit and not subject to “pay to stay” will be better off by around £12 a week by 2019-20.
Several hon. Members
I have given way quite a lot and I am conscious that 40 Members wish to make speeches. [Interruption.] I do not think that I can be accused of having not given way, because I clearly have.
Finally, we are reforming the way support for mortgage interest payments will be paid in future. Instead of a benefit, it will be made in the form of a loan. I think that will be welcomed by most Members on both sides of the House, although it is difficult to tell with the Opposition.
Let me turn to the third principle of the Bill. We are ensuring that people on benefits face the same choices as those in work and those not on benefits. Families in work have to make careful choices about what lifestyle the money they earn can support and what their income can provide for. In that context, it is right that people who receive child tax credit should make the same financial choices about having children as those who are supporting themselves through work. Therefore, from April 2017 the Bill will limit the child element of child tax credit to the first two children. The two-child limit will also apply on universal credit in relation to a third child or subsequent new children in the household and to completely new claims. Again, we are ensuring that this charge is fair. It will not affect existing claimants at the point of change. That is the key point.
The Secretary of State knows that the number of those earning over £25,000 now is 800,000 fewer than it was in 2010. The real crisis in Britain today is not the number of people not in work, but in-work poverty. Given that child and family tax credits basically subsidise and incentivise work, will he look at this again and accept that the real crisis is not the number of people without jobs, which is what he has been talking about, but the fact that people in work do not earn enough to put food on the table, and they are getting more and more poor?
I do not agree. If the hon. Gentleman looks at our record over the past five years, he will see that we have increased the number of jobs and that wages are now rising much faster than inflation. The last set of jobs statistics showed that every single one of those jobs was full time. All this nonsense about them being low-earning, part-time jobs is just complete and utter fabricated idiocy.
On a point of order, Mr Deputy Speaker. The impact assessment for the Bill has only just arrived in the Vote Office; it was not here for the beginning of the debate. Surely we ought to be given the statistics in order to have an informed debate, rather than having to rely on what comes out of the Secretary of State’s mouth.
We will investigate the matter. I would have thought that the hon. Lady would give me a little more warning of her point of order, but there we are.
We released them earlier and they have been available since before the debate began, so I will simply move on.
I would like to turn to how we tackle the root causes of poverty. I believe that the past approach focused on dealing with the symptoms of poverty while completely failing to target the root causes. The Bill will provide a statutory basis for much-needed reform to improve children’s life chances. I have long argued that there are five key pathways to poverty that affect children’s life chances: worklessness, educational attainment, drug and alcohol addiction, family breakdown and problem debt. The Bill will remove the existing measures and targets in the Child Poverty Act 2010 and introduce a new duty to report on worklessness and educational attainment. Alongside the statutory measures, we will develop indicators to measure progress against either of those root causes of poverty.
Our new approach will drive real action, which will make the biggest difference to the most disadvantaged children now and in future. The key point is that this will enable us to measure what Government policy actually does, rather than just how much money we put into it. It is worth reminding the House that we will continue to publish the HBAI—households below average income—statistics so that those who wish to look at them can still do so.
Child Poverty Action Group figures indicate that 21% of the children in my constituency grow up in poverty. As a result of the benefit freeze, a couple with two children earning £400 per week will be £34.20 worse off each week. Does the Secretary of State agree that the Bill punishes families on low pay?
No. The hon. Lady should realise that the main way out of poverty is to get into work and then to progress through work. The vast majority of people progress through work. [Interruption.] The records in Scotland are remarkably good. Employment in Scotland—[Interruption.]
Several hon. Members
Order. The Secretary of State has given way quite a lot. We cannot have three people at once shouting, “Will the Secretary of State give way?” The Secretary of State will give way when he feels it is correct to do so, but we cannot have three people hanging loose.
Let me give the hon. Member for Lanark and Hamilton East (Angela Crawley) some figures for Scotland, which are worth looking at. Employment in Scotland is up 40,000 on the year and 179,000 since 2010. The employment rate is 74.3%, up 4.5% since 2010. Private sector employment is up 58,000 on the year and 244,000 since 2010. Just 5.2% of workers in Scotland are on temporary contracts and over 80% of those who work part time do so because they say it suits them. Although there is still much more to do, our reforms to lower corporation tax, get people back to work and create more jobs are exactly the route for her constituents to improve their life chances.
Will the Secretary of State give way?
I do not want to intrude on internal fear and loathing among Opposition Members. They will have time for their private argument among themselves about what they should do. I am trying to give a little more time for them to do that, to be fair to the Opposition.
This Bill is an important legislative step in moving Britain from a high welfare, high tax, low pay society to a lower welfare, lower tax and higher pay society. It will ensure that the right support and incentives are in place so that people are always better off in work rather than trapped on welfare. Yes, there are difficult decisions, but it would be wrong to turn a blind eye, as the Opposition did for so many years, and not face up to these difficulties. The Bill puts work first and puts welfare spending on a more sustainable footing for the future, while protecting the vulnerable and those most in need. I commend the Bill to the House.
I beg to move,
That this House, whilst affirming its belief that there should be controls on and reforms to the overall costs of social security, that reporting obligations on full employment, apprenticeships and troubled families are welcome, and that a benefits cap and loans for mortgage interest support are necessary changes to the welfare system, declines to give a Second Reading to the Welfare Reform and Work Bill because the Bill will prevent the Government from continuing to pursue an ambition to reduce child poverty in both absolute and relative terms, it effectively repeals the Child Poverty Act 2010 which provides important measures and accountability of government policy in relation to child poverty, and it includes a proposal for the work-related activity component of employment and support allowance which is an unfair approach to people who are sick and disabled.
In government we addressed all the challenges set out by the Secretary of State. We stand for the right to work and the responsibility to work. We believe the Government have a responsibility to ensure full and fulfilling employment. We believe in making work pay so that people are always better off in work, and that work is the best route out of poverty. The deficit has to be eliminated. We believe in controlling the costs of social security so that it is fair on the working people who pay for it and so that it is there for people who need it because they cannot work or earn enough to live.
We support a number of measures in the Bill. We welcome the reporting obligations on full employment, apprenticeships and troubled families. We are committed to a cap on household benefits to help make families better off in work. We support reforms to mortgage interest support that will strengthen work incentives and deliver savings. But this Bill does some very bad things as well. It abolishes the duty of Government to tackle or even to report on child poverty, it breaks promises that the Conservative party made before the election to protect sick and disabled people, and it comes alongside a ruthless reduction in the support to working families through tax credits that will reduce work incentives and undermine the goals of universal credit—
Several hon. Members
I will give way in a moment. Universal credit is a reform which, even though it is running four years late, we still want to succeed.
Was my right hon. Friend as shocked as I was at the response of the Secretary of State to his intervention in respect of disabled people, especially those who have terminal illnesses as well—cancer and Parkinson’s disease were two of the examples that he used? The Secretary of State does not seem to understand the implications of the changes to the employment and support allowance for these very vulnerable people at a very worrying time in their lives.
My hon. Friend raises an important point, which I wanted to return to. The implication of what the Secretary of State said is that, for example, people with Parkinson’s disease or multiple sclerosis should be in the support group, not in the work-related activity group. The Secretary of State needs to follow that through.
Because we support some measures in the Bill, oppose others and want to change yet others to make them workable, we ask the House to support the reasoned amendment in my name and those of my right hon. and hon. Friends.
There seems to be an omission from the list of measures that the right hon. Gentleman supports. Will he clarify whether the Labour party will support the measures to limit child tax credits to two children, and whether that will still be the party’s position in October?
I look forward to coming to that part of my speech. The Bill, as I understand it, says that the limit does not apply in the case of tax credits for children born before 6 April 2017. The limit does apply in the case of universal credit for children born before 6 April. That seems to me a pretty clear unfairness and we will oppose that unfairness, and we will table amendments to deal with that and other unfairnesses in the Bill.
For the sake of clarity for Opposition Members if not for Government Members, will the right hon. Gentleman tell us, as this is missing from his reasoned amendment, whether he supports in principle that reduction of payments for two children for families on child tax credits?
As I told the House, we will table amendments to deal with unfairness in those measures and in others in the Bill, and we will vote on those in Committee in the autumn.
I want to be very clear about this. Is it now the official Opposition’s position that they support the limiting of payments of child tax credit for two children from the date specified in the Bill?
We support removing unfairness from the Bill that the Secretary of State published. For that reason we will tonight table a raft of amendments to that part of the Bill and others where we think there is unfairness.
I will give way one more time.
The right hon. Gentleman is very generous in giving way. I want to establish clarity for those on the Government Benches as well as those on the Opposition Benches. Putting aside the fact that in Committee he may want to table amendments to make changes, do the official Opposition support the principle that those with more than two children should not receive further child tax credits? Is that the principled position they support? That is missing from the right hon. Gentleman’s reasoned amendment.
The Secretary of State does not need to wait until the Committee because we will table a raft of amendments tonight: if our reasoned amendment fails and the Bill receives a Second Reading, we will table our amendments. He will see in that list of amendments a series of amendments to deal with the unfairness in that part of the Bill. Those amendments will give him the answer that he seeks. They will appear on the Order Paper tomorrow so that the House can consider them over the weeks ahead.
My right hon. Friend is right to talk about removing unfairnesses. There are a number of unfairnesses in the Bill that affect carers. The Conservatives seem blind to the impact of their measures on carers. Can my right hon. Friend say whether we will table an amendment to exempt carers from the benefit cap? Carers should not be affected by the benefit cap and they should never have been affected by the bedroom tax, but the Government would not listen about that either.
My hon. Friend is absolutely right. That will indeed be the subject of one of our amendments, because at the moment carers who do not live with the person they are caring for are caught by the cap, and they should not be.
I want to turn to the impact of the Budget changes on tax credits and on universal credit, some of which are in the Bill and some not. Of course the increase in the minimum wage is welcome, but it does not make up for the measures in the Budget, though mostly not in the Bill, that cut tax credits for working families. The claim that they do make up for it—the Secretary of State repeated it in his speech—is, according to the Institute for Fiscal Studies, “arithmetically impossible”. The problem will be especially bad in the next couple of years. The increase in the national minimum wage is phased in over five years, but big tax credit cuts hit immediately next year. Over 3 million working families will lose over £1,000 a year on average, and work incentives will be cut. That is the reason we voted against the Budget. When the Government bring forward the statutory instruments to implement those huge cuts to the incomes of working families, we will vigorously and fiercely oppose them.
Do Labour Members not understand the fundamental idea that being in work should always make people better off than being out of work? If so, will the right hon. Gentleman lead his party through the Lobby in support of the proposals in this Bill that make people better off for being in work?
I fear that the hon. Gentleman did not understand the Budget. According to the Institute for Fiscal Studies, the Budget reduced the income of 3 million working families by over £1,000 a year on average, and in many cases it lessens the incentive for the first person in a household to go into work. He need only read the very clear analysis of that point by the IFS.
My right hon. Friend goes right to the heart of one of the difficulties involved. I support the idea of getting away from taxpayer-funded poverty pay to a situation where people are paid a genuine living wage. The IFS analysis shows clearly that the people most affected by this change are working families in the second lowest decile. If it goes through, together with the other changes, I will have to go back to my constituents and explain why I have made them poorer in work.
My hon. Friend is absolutely right to highlight this, because the IFS is absolutely clear that the cuts in tax credits target working families. Those people will lose out from the changes not in this Bill but in the Budget—that is why we voted against them. This is not about making work pay; it is about making working families pay. As the party of working families, we will be fighting those changes tooth and nail in the period ahead.
Returning to my right hon. Friend’s commitment to amend unfairnesses in the Bill, will he confirm that one of his amendments might tackle the obscenity of a woman who has been raped having to prove to the Department for Work and Pensions that she has been raped in order to be able to claim tax credits in future?
We will have to hear from the Government how they envisage that part of their proposal working, but I can well understand the concern that my hon. Friend raises.
Let me turn to the individual measures in the Bill, starting with the benefit cap. We support the principle that work should always pay and that people should be better off in work than on benefits. That is why our manifesto supported a household benefit cap and the idea that it should be lower in areas where there are lower housing costs.
Does my right hon. Friend accept that Conservative Members do not seem to understand that two out of three children growing up in poverty are in working households?
My hon. Friend is absolutely right. For the first time, the majority of children below the poverty line—quite a significant majority, as she says—are in working families. That is a reflection of how things have gone over the past few years.
To avoid hardship and unfairness with the reduction of the benefit cap, we will press for some people to be protected from the cap. My hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) referred to the position of carers. Under the current cap, carers who live with the person for whom they are caring are exempt, yet 8% of those affected by the cap are carers. That is because carers who do not live with the person they are caring for are included in the cap. We want that to change. We think that those with the very youngest children should not be affected by the cap. We also want protection for those affected by domestic violence. As it stands, those who have been affected by domestic violence can be exempted from job-seeking requirements at the jobcentre, but if they are living in supported accommodation a cap will apply. The amendments that we will publish tonight would exempt them along the same lines as the current exemption in jobcentres.
It is absolutely vital to keep the implementation and the impact of the benefit cap policy under scrutiny. There must be jobs for people to move into and childcare available to help them. We need to be vigilant against increases in homelessness and child poverty. We also need to make sure that the policy does not have knock-on consequences for councils and others which mean that it ends up costing more than it saves. If the Bill goes ahead, we will seek to add a requirement for the Secretary of State to report to Parliament within a year on the impact of the policy.
Will the shadow Secretary of State join me in recognising the unpardonable folly of these proposals and their impact on the entire islands of the United Kingdom of Great Britain and Northern Ireland? Does he agree that that is felt not only on the front line by children and women but by the staff of the DWP, who in Glasgow and Bolton are considering strike action because of the effects of these proposals and the stress that they are under?
There do need to be some safeguards in place, as I have been spelling out. Indeed, the Government themselves have recognised the need for a fund to protect people in exceptional circumstances. We welcome the extra £150 million for the fund for discretionary housing payments to help mitigate the worst impacts, but it will not be enough. Many local authorities have already exhausted their funds, which are vital in preventing those affected from becoming homeless. With the cap now lower, there will be more demand for discretionary help. We will therefore want to amend the Bill to require the Social Security Advisory Committee to review the funding for discretionary housing payments each year to make sure that sufficient resources are available.
The right hon. Gentleman has talked a lot about child poverty. The benefit cap, according to the Government’s own figures, will push a further 40,000 extra children into poverty, yet he is talking about some amendments around the edges. Will he explain how much extra child poverty is acceptable to Labour Front Benchers?
As the hon. Lady well knows, the big impact on child poverty will come from the huge cuts in working tax credits and other changes not in this Bill but elsewhere. I hope that she will join us in fighting very strongly against those changes when the House has the chance to do so.
The shadow Secretary of State is making a brave effort to defend whatever his party’s policy is on this, but he has very little credibility because the country knows that under the previous Labour Government the number of workless households doubled, so Labour policies not only trap people in welfare but trap people in poverty.
Child poverty fell dramatically under the previous Government; now it has plateaued. I fear that because of measures announced in the Budget, it is going to rocket, and we are determined to stop that happening if we can.
Another reform in the Bill that we support in principle is the provision to turn support for mortgage interest into a repayable loan. That is a sensible step, in principle, given that the benefit enables homeowners to retain an asset and potentially gain substantially from rising house prices. However, it must not make affordability problems worse for people struggling to stay in their homes. Repayments must not tip people into repossession and homelessness. The Secretary of State did not tell us what arrangements are proposed for repaying these loans. We will argue that those who access that support should be able to defer repayment until they sell the property without pressure from the Government to do so. The Budget announced an increase in the waiting period for support for mortgage interest from 13 weeks to 39 weeks. That is too long. As it is a loan scheme, why make people wait, particularly as that could force them into the hands of loan sharks? With support for mortgage interest becoming, in effect, a form of low-risk consumer credit, it should be readily available without nine months of delay to those struggling to make repayments.
We welcome the plans to reduce social rents, which will save 1.2 million households £700 a year, but we have grave concerns about the impact on housing associations and local authorities. They will face a huge reduction in rent revenue, drastically undermining their capacity to borrow and to build. The Office for Budget Responsibility says that many fewer homes will be built; the National Housing Federation puts the figure at 27,000. We will table amendments to address that.
Is my right hon. Friend aware that up to billions of pounds will go missing from local authorities? If we lifted the cap, they could build more homes and thereby help address the terrible housing crisis, particularly in London and the south-east?
My hon. Friend is absolutely right. Affordable home building is already at a historic low, and the Government need to stop making things worse. We will table an amendment requiring the Secretary of State to produce a plan to make up the shortfall in house building funds that will result from this change.
I give way to my hon. Friend, whose popularity among Conservative Members I have noted.
Obviously, a reduction in local authority rents is good for tenants—I fully understand that—but does my right hon. Friend know whether the Government have given any consideration to the effect that a consistent drop in rental income over five years will have on the housing revenue account; on housing maintenance, including of the common areas of estates; and, of course, on any future building programme that could have been funded by the housing revenue account?
My hon. Friend is absolutely right. The proposal will affect not only new house building funds, but funds for maintaining existing stock. The Secretary of State needs to explain how that shortfall will be met.
We support the aim to provide 3 million apprenticeships, but the Government need to do more than just publish a target in a Bill. We want quality apprenticeships. There is deep concern among businesses and others that the quality of apprenticeships is being watered down in order to increase their numbers, so we will table an amendment to require that the UK Commission for Employment and Skills should provide an independent assessment of whether quality is being delivered.
Does my right hon. Friend agree that the concern about the impact of the changes to housing rental income relates not just to the immediate shortfall in funding, but to the uncertainty they will create among registered providers, whose business plans are drawn up five, 10 or 15 years in advance?
My hon. Friend is absolutely right. Attention has been drawn to that issue, not least by the Financial Times, which has reported that housing associations’ business plans and their loan covenants and agreements with lenders could be at risk, and that even some big associations could go bust. The implications are very serious.
The right hon. Gentleman is a reasonable man, so I am surprised that he cannot see the advantages of the housing policy in, first, reducing rents for large numbers of tenants who are among the poorest people in the land; secondly, obliging housing associations to make a 1% productivity saving each year, which is very small compared with other parts of the public sector; and, thirdly, reducing the welfare spend and therefore the budget deficit. Surely they are all advantages.
I think the hon. Gentleman was momentarily distracted, because I have welcomed both his first and third points. We welcome the fact that rents are being reduced, but he needs to recognise the impact that the changes will have. As I am sure he will be aware, housing associations do not share his rather sanguine view of what the changes will mean, particularly for new house building at a time when we all recognise the need for substantial new socially rented housing, which is not being delivered at the moment.
The Bill does not provide a definition of “full employment”. In line with recent research and the previous Labour Government’s definition, our amendment will set the full employment target at 80% of the working-age population. To pick up on a point rightly made in an intervention by the hon. Member for Enfield, Southgate (Mr Burrowes), in our view the annual report on progress to full employment must also set out progress on the target to halve the disability employment gap.
We will support policies that make work pay and increase opportunity, but where the Government are wrong we will not hesitate to say so. The Conservative party promised in its manifesto that it would
“work to eliminate child poverty”.
It is now absolutely clear that it did not mean it: the Bill abandons any pretence that it did. Instead of eliminating the scandal of child poverty, the Bill attempts to eliminate the term. Labour in government was committed to reducing the appalling levels of child poverty left behind by the Thatcher and Major Governments, and we did so. We introduced the Child Poverty Act 2010, with cross-party support, including from the Secretary of State when he was in opposition and the Conservative party. It contained clear targets to reduce absolute and relative poverty, persistent poverty and material deprivation.
We have known for some time about the debate in the Conservative party about the validity of the relative poverty measure, but now it is not just changing the definition. It is interested not in stopping child poverty, only in stopping people talking about it. It is exactly the same with food banks: the Tories want to stop people discussing them. Clause 6(9) tells us that we should not refer any more to the Child Poverty Act and that instead it is to be known as the life chances Act, but there are fewer life chances for a child growing up in poverty, and poverty needs to be reduced.
Getting rid of the targets and measures leaves the Government with no commitment to tackle child poverty at all, just a requirement to publish a mix of loosely connected statistics. Instead of removing child poverty, the Bill seeks simply to remove it from the lexicon.
My right hon. Friend is, like me, a London MP. The driver of child poverty in my constituency is a combination of low pay and high private rents. When the cap was introduced, the Prime Minister advocated—there was an element of logic in this—the idea that it would reduce rents in the private rented sector. That has failed in my area and right across London; rents have increased significantly. Have the Government produced any evidence to prove that the cap reduced rents in the private sector at all?
I certainly have not seen such evidence. We have just seen the impact assessment, and the figures are in there, so we will have to see what information they provide. I am worried about the proposal—it was made in the Budget, but it is not in the Bill—of a cash freeze in local housing allowance for the next four years, irrespective of what is happening to rents in London and elsewhere.
The child poverty changes are a shameful attempt to brush under the carpet what should be right at the forefront of Ministers’ minds as they make policy and manage the economy. It is, I am afraid, the final nail in the coffin for compassionate conservatism.
It is always a mystery to me why more Labour Members do not agree with the right hon. Member for Birkenhead (Frank Field) and, indeed, Alan Milburn, who think that the Government’s proposal to measure the root causes of child poverty is an improvement on what went before. Why does not the right hon. Member for East Ham (Stephen Timms) agree with them, or indeed with another 50 of his colleagues? Is not Labour a shambles?
I have no doubt that my right hon. Friend the Member for Birkenhead (Frank Field) will contribute to the debate, but I can tell the hon. Lady that he feels very strongly, as we all do, that this huge hit on 3 million working families—it will take more than £1,000 a year from them, with tax credit changes coming in next year—is a very bad thing to do. It will let down working families, and all Labour Members will fight hard against the iniquitous change being made by the hon. Lady and her colleagues.
Before the election, the Government promised to protect those with disabilities from welfare cuts, but that promise has been broken. As has already been discussed, Parkinson’s UK reckons that there are currently 8,000 people in the work-related activity group with progressive and incurable conditions such as Parkinson’s and multiple sclerosis. Macmillan, in opposing the provision, points out that
“thousands…will experience a significant drop in support at some point during their cancer journey.”
As my hon. Friend the Member for Easington (Grahame M. Morris) said in an intervention, that group includes people with learning disabilities and many with mental health problems.
The Bill reduces the level of support for new claimants by nearly £30 a week, from £101 to £73. That change introduces a new perverse incentive, because it increases the incentive for people with health problems to get into the support group by providing a higher payment, meaning that even more people will not get help to return to work.
The recent marked increase in the ESA case load, at a time when unemployment has come down, has been sharpest in the support group. Anyone in the support group will be seriously deterred from taking the risk of trying employment, for fear that it will result in their receiving a much lower level of support if they are then reallocated to the work-related activity group. I say to the Secretary of State that a particular worry is that young people with mental health problems, who ought to be getting help to return to work, are being abandoned in the support group at the moment. We therefore want the ESA measures removed from the Bill.
These serious issues are arousing passions on both sides of the House. I am slightly concerned that none of the right hon. Gentleman’s colleagues who are candidates for the leadership has decided to put their name either to the amendment tabled by the hon. Member for Bishop Auckland (Helen Goodman) or to the Opposition’s reasoned amendment. Are they not prepared to give us their views?
I am glad to be able to reassure the hon. Gentleman that he will be pleased with what happens when the House divides at 10 o’clock tonight.
The Bill seeks to restrict support provided through tax credits and universal credit to families with more than two children. We will aim to amend the Bill in Committee, for example to protect families with multiple births or those whose claim arises because of exceptional circumstances. We do not support locking in a cash freeze for four years for tax credits and benefits. We recognise that reducing the deficit will require savings on indexation, but those decisions should be made annually so that actual inflation can be taken into account. We do not support the accompanying sharp reductions in income thresholds for tax credits and the corresponding cuts to work allowances announced in the Budget, which will be legislated for outside this Bill. They will be a huge setback to work incentives. The whole point of universal credit was supposed to be to improve work incentives; now it is being hobbled even before it has properly got started.
We want progress towards full employment. We want demanding targets for apprenticeships and help for troubled families. We want a household benefit cap, and to make sure that families are always better off in work. We want support for mortgage interest and reductions in social rents that will deliver savings to the taxpayer. We want better economic opportunities, and we want social security to be fairer and more affordable.
However, children who are growing up in poverty—as we have heard, the growing majority of them are in working households—need a Government committed to improving their position. People who because of illness and disability are found by the Government’s own tests to be not fit to work, as can happen to anybody, need social security to assure them of a decent basic standard of living. Families who are doing the right thing and going out to work, often when they are already struggling with low or stagnant wages and increasing insecurity and uncertainty about their future, need a Government who are on their side, not one who will pull the rug out from under them, as the tax credits announcements in the Budget will do.
These are not just matters of morality and social justice, although they most certainly are; this is also about how we secure our future prosperity and stability, ensuring that everybody in Britain can play their part, make the most of their talents and make the most of the ambitions of all.
On a point of order, Madam Deputy Speaker. I made a point of order earlier about when the impact assessments were published, and I understand that there is an inquiry. When we heard the Secretary of State announce that they had been published, my researcher went to the Vote Office and found that they were not available. A phone call was made to the Vote Office in Members Lobby, which said that they had just arrived. This is not right, and I would like your advice about how we can hold the Government to account when they do not publish impact assessments until after the Secretary of State has got to his feet.
I am grateful to the hon. Lady for her point of order. If a mistake has been made by the Vote Office, I am quite sure that Mr Speaker will be annoyed on behalf of the House.
I can see that the Secretary of State has something to say, and I am delighted to call him further to that point of order.
Further to that point of order, Madam Deputy Speaker. I rise only to say that we sent the impact assessments to the House authorities before 5 o’clock. I gather that there was some technical hitch in the House before they were able to get them to the Vote Office, but that was not a problem of our making. [Interruption.]
Order. The Secretary of State has explained what he and his Department have done. If there has been a mistake in getting the papers between the Secretary of State’s office and the Chamber, that will be investigated. It should not have happened, but there is no point in Members shouting about it from a sedentary position. The Secretary of State has apologised for his part in any mistake, if such a mistake has been made. [Interruption.] No, I will not have any more shouting about this. It is a technical problem, and it is not strictly a matter for the Chair, except in so far as saying that Members ought to be provided with all the information necessary to enable them fully to take part in a debate. If that has not happened, there will be an investigation, but one way or another, there is no point in any further shouting about it.
Further to that point of order, Madam Deputy Speaker. I seek your guidance as to whether Members can be given sufficient information even if papers are provided some 10 minutes before a debate, given the nature of the impact assessments. If we are to read them properly and understand them, surely Members, if at all possible, should be given more than a few minutes’ notice.
I simply observe that the debate started at 5.34 pm and it is now 6.36 pm, so it has been under way for an hour. I appreciate that the Chair insists that Members of Parliament should take part in the debate and concentrate on the speech being made at any particular moment, but I am sure it is not beyond the ingenuity of intelligent Members to be able to participate in the debate while also looking at the papers that are now available to them. It would have been better had the papers been here earlier, but I am quite certain that this debate will go on for another three hours and 23 minutes and, if they now have the papers, Members ought to be able to multitask to the extent of listening to the debate and reading the papers at the same time. That does not mean, if a mistake has happened, that I condone it; if there has been one, it will be thoroughly investigated.
It is a pleasure to speak in support of this very important Bill, which is one of the measures we need to move us to the high pay, low tax, low welfare economy that the Secretary of State wants.
I will start with the measures relating to work. From having served on the Work and Pensions Committee, I know that getting people into work is the area of the Department that gets the least scrutiny. The reporting obligations on full employment and apprenticeships are a really important step forward. We all want the 3 million apprenticeships to be created by the end of the Parliament.
I hope that the power the Government are taking to report on the number of apprenticeships will cover the details on the quality of those apprenticeships. I would like the annual report to include the number of higher apprenticeships, because we want apprenticeships that give people real skills and real future careers, not just to be tick-box training schemes that add little value. As we occasionally see in our constituencies, some employees get sold such schemes, and we ought to look at whether they provide any real advantages. The reports will be extremely useful.
Another important thing to strengthen work is to have a welfare system that encourages rather than disincentivises it. Our measures to increase the minimum wage, which will start later this year, and to increase the amount of childcare, as well as the welfare reforms, are the right package to ensure that all people and all families are very clear that work will always pay and, at least in the medium and longer term, is the best way of securing a better financial situation.
Whoever won the election, we knew from the campaign that the welfare reform measures would be the most contentious issue at the start of this Parliament. We all knew that we had to find several billions.
Will my hon. Friend give way?
I will give way.
He is not my hon. Friend. [Laughter.] I apologise, Madam Deputy Speaker.
How many children in the hon. Gentleman’s constituency will be affected by the cuts in the Bill?
I do not have that number to give the hon. Lady. However, her party is also committed to making large welfare savings. It is very easy to support the theory, but if Labour Members oppose all the large measures that are taken in practice, they are not going anywhere. They have to answer this question. If they are committed to large savings, but they do not support all these measures, which measures would they like to see? That is the challenge. We have to find savings to close the deficit. We have a clear mandate for welfare savings to form a large part of those savings.
The Government have produced measures that are a little less severe and fast than many of us feared they would be. The Labour party thought that they would be a lot more severe only a few weeks ago, when we were told that families would be £1,400 worse off overnight unless the minimum wage went up by 25%. What we are seeing is wages going up by more than 25% and some of the cuts being deferred over several years. The Government have attempted to make the cuts as fair as possible.
The hon. Gentleman is being generous in giving way. He made a point about making work pay. I raised a point with my right hon. Friend the Member for East Ham (Stephen Timms) about carers and the benefit cap. Some 5,000 carers will be affected by the benefit cap. The hon. Gentleman is talking about making work pay, but many carers cannot work. Does he agree that carers should therefore be exempt from the changes?
We need to give carers every possible support. They perform an important and difficult role. Having done a bit of caring in my time, I know how hard and stressful it can be. We can look at that, but I cannot stand here tonight and say I would vote for it.
The reduction in the benefits cap is a hugely popular policy. Everybody I spoke to in my constituency said that the benefits cap was a great idea, but £26,000 a year was far too high. It was higher than the average wage in my constituency, so people did not think that it would affect a lot of people. In fact, the number of people who were affected by it in my seat was extremely small.
It is right to bring the cap down and to have different levels in London and the rest of the country. There are different levels of housing benefit around the country and that is one of the biggest costs that trigger the benefits cap, so it is right to have a different level in London. Twenty thousand pounds is the right level for the cap. It is a bit less than the average wage in my constituency. That will show people clearly that anyone who goes out to work will be better off than those who live solely on benefits.
I support the hard decision to have a benefit freeze for four years. When we have to find savings, perhaps one of the least bad ways of doing it is to freeze what people are already getting, rather than taking more people out of the system completely.
The point that the acting shadow Secretary of State raised about the withdrawal rates for tax credits and universal credit showed how fiendishly complicated the tax credits system is. It is difficult to work out exactly who will be hit at what level and by what amount by the new withdrawal rates and the new starting position. That reinforces the case for universal credit. Everyone will be able to see from every pay packet they get that when they work more hours in a month, they are better off than in months when they work fewer hours. We need that system to be in place, rather than the incredibly complex, slow and clunky tax credits system, which applies a year behind or a year ahead. Nobody quite understands how what they get in tax credits bears any relation to the work that they have done in the year.
Even with the changes to universal credit, the taper remains exactly where it was, so every hour in work will mean better pay. That principle still stands.
I was not doubting that for a second. With the tax credit changes, we need to be sure that the people who are still claiming tax credits understand that they will be better off doing more hours and earning more than they would have been otherwise. That is why universal credit needs to be rolled out. Everyone will be able to see that they are better off month by month, rather than having to work out if they might have been better off a year ago if they had worked a bit less in a complex way through online calculators. That cannot be a sensible system.
On the child tax credit limit, it has to be right that people who spend a life on welfare have to take the same decisions as people who are going out to work. It is therefore right to draw the line at two children for where the welfare system stops helping. There will still be a lot of help through child benefit and the Prime Minister confirmed that we would not seek to limit that. I think that we have got the line in the right place. It should be clear to people that from 2017, if they have more than two children, there will not be more tax credits.
We agree that people in work and people not in work should face the same choices, but does the hon. Gentleman not accept that the proposals on limiting access to child tax credit to the first two children will affect working families and those who are out of work?
Yes, but clearly the principle is that people should have to make the same choices if they are claiming benefits in work or are in work and not claiming benefits. It is not entirely clear whether the Labour party supports limiting child tax credit to the first two children. It sounds like it might support it, but that it dare not quite say so tonight.
Finally, the hardest issue in the Bill is the level of welfare for people in the work-related activity group. We have to get work capability assessments right. We have to get people in the right group, and people must believe themselves to be in the right group. I have seen constituents who have been through the assessment and have accepted the WRAG as a compromise on the basis that they will get much the same as they would get in the support group, but will have some requirements put on them. However, they thought that they should be in the support group. People who ought to be in the support group, but have chosen to be in the WRAG need support to put their situation right.
We need people to get the support that they need. Those who can never and will never work again need the right support. It is not in their interests or ours to put them in a different group. Clearly, we have to get the system right so that those who are in the group where they are meant to be able to work at some point in the future have the right incentives to take the support, undergo the training and get into work, rather than trying to stay on benefits claiming the slightly higher rate. We need to see the detail of how we can get that right and make it fair, so that we do not end up with perverse incentives.
Overall, I welcome the Bill. It is an important step forward in sorting out our deficit and making our welfare system fair for those who are claiming from it and those who are paying for it.
Several hon. Members
Order. It is obvious that a great many people wish to speak this evening and that there is a limited amount of time. I am afraid that I will have to impose a time limit of five minutes after the SNP spokesman.
I rise to urge the House not to give the Welfare Reform and Work Bill a Second Reading.
On the day of the Budget announcement, I, like many of my colleagues on the SNP Benches and many in society, watched in horror at Conservative Members jeering and cheering as the Chancellor announced swathes of cuts that will hit the poorest and most vulnerable in our society hardest. When I was elected by the good people of Livingston to this House, I anticipated some aspects of Dickensian tradition, largely framed around the traits and traditions of Westminster, but not for one minute did I expect that we would be taken back to Dickensian times by a Government hellbent on dividing our nation in such a regressive way.
The Conservative Government have claimed that they have
“a long-term economic plan to move the nation back to where we should be. This offers that and will reward hard-working families.”
We are certainly going backwards. The rhetoric that the Conservatives use in this Chamber about hard-working families and aspiration is fast wearing thin for many of us. Apart from anything else, when we delve into the detail, what we find is deeply worrying.
Let us look at exactly what the Government plan to do for our so-called hard-working families. The Conservatives will rename the Child Poverty Act 2010 the life chances Act. I spent a number of years in the marketing industry and recognise that this is rebranding on a grand scale. Perhaps the Chancellor is in the wrong job. I have taken the advice of the hon. Member for Islington South and Finsbury (Emily Thornberry) and looked at the impact assessment that came out very recently. Paragraph 33 says of the life chances Act:
“The proposed changes enhance the life chances of children as they ensure that households make choices based on their circumstances rather than on taxpayer subsidies. This will increase financial resilience and support improved life chances for children in the longer term.”
Let me explain why SNP Members do not believe that to be the case.
The Scottish Trades Union Congress says that the “so-called” living wage is
“simply a cheap gimmick aimed at undermining…a meaningful living wage”
“continuation of the public sector pay gap is…a kick in the teeth for hard-working public sector workers.”
The Scottish Council for Voluntary Organisations said that the Budget was an attack on the poorest and most vulnerable communities by an “economically illiterate” Chancellor who has admitted that this is not about tackling the deficit, as he said that it was part of his push for a low tax, low welfare society. In SCVO’s view, he was
“demonstrating a cruel disregard for the impact this will have on hundreds of thousands of people’s lives.”
Barnardo’s has stated that renaming the Child Poverty Act 2010 the “life chances Act” sends the message that eliminating child poverty is no longer an aim of this Government. It is clear that the Bill will push more children, families and vulnerable people across Scotland and the UK deeper into poverty. Rebranding child poverty plans as “life chances measures”, and completely removing any legal obligation to meet those targets, only proves how badly this Government are failing our society on welfare. As indicated by the House of Commons Library, the Social Mobility and Child Poverty Commission’s “State of the Nation” report from October 2014 stated:
“Modelling for the Commission illustrates the scale of the challenge. It projects that—based on current OBR forecasts for employment and wage growth—relative poverty (before housing costs) will rise to 21 per cent by 2020, 11 percentage points above target, and absolute poverty will rise to 24 per cent, even further behind the target of five per cent. This is likely to be an optimistic view as it ignores the impact of the further cuts to welfare benefit entitlements that are pencilled into current plans for deficit reduction in the next Parliament.”
Those plans are no longer pencilled in; they are in black and white for all of us to see. It is crystal clear to me that the Conservatives cannot meet their targets or fulfil their promises to folk across the UK, so instead they will just rebrand and repackage swathes of cuts to make it sound as if we are getting a better deal. It simply will not wash.
Another genius rebranding exercise by the Tories has been the introduction of the so called “living wage”—which, in reality, is a small increase in the minimum wage, up to £7.20 and to £9 by 2020—and the Chancellor has blatantly stolen the terminology used by the Living Wage Foundation that has set the living wage rate at £7.85 outside London and £9.15 in London. Rhys Moore, director of the Living Wage Foundation said:
“Is this really a living wage?...The Living Wage is calculated according to the cost of living whereas the Low Pay Commission calculates a rate according to what the market can bear. Without a change of remit for the Low Pay Commission this is effectively a higher National Minimum Wage and not a Living Wage.”
He went on to say that, to add insult to injury, the current calculation is based on workers receiving tax credits, which are also being cut.
Let us move on to tax credits and universal credit. The four-year freeze starts in 2016 and will affect around 577,000 families in receipt of child benefit in Scotland, and an overlapping 468,000 in receipt of housing benefit. More than a third of a million households in receipt of tax credits will also lose out. The Conservatives claim to be the workers’ party, but that claim could not be further from the truth as they lower the total amount that a household can receive in benefits to £20,000 outside London, and £23,000 in Greater London. In the words of charity Barnardo’s:
“This will significantly reduce the income of some very poor families.”
Worse still, in the Trade Union Bill—yet to be debated by this House—the Government plan to introduce standards for unions when voting for a strike that not even we as politicians are required to meet.
Let us consider the proposals for lone parents and other “responsible carers” in receipt of universal credit. We know that they are not currently subject to “work preparation” requirements until their youngest child reaches the age of three, and they do not have to be available for and look for work until that youngest child reaches five. The Bill reduces the age thresholds for work preparation to two, and for full work-related requirements to three. Let me be clear: the SNP is abjectly opposed to the capping of benefits such as carer’s allowance, child benefit, child tax credits, severe disablement allowance, and widow’s pension. The people who receive those benefits are some of the poorest and most vulnerable in our society, and it is abundantly clear that there is no level to which this Conservative Government will not stoop as they attack those vulnerable groups.
Instead of considering how we can properly protect and support folk who have already faced significant challenges in their life, we have a Government who cannot see past reducing a deficit, and will do so at all costs. This is an “at all costs” attack on the sick, the poor, the disabled, the elderly, and the many families who are working and trying their best to get to the end of the month without getting into debt. This Government’s cuts will affect the working poor, so that instead of being supported to better themselves, those in work will be further marginalised and have their benefits cut. Barnardo’s has noted that:
“A lone parent working full time on the minimum wage for 37 hours a week with two young children would lose £1,200 a year as a result of changes introduced from April 2016, even after accounting for the increase in the minimum wage.”
The hon. Lady is making an important point. Does she think that all lone parents are able to work 35 hours a week?
I believe we must have benefits that are suited to the situation, and the Conservative proposals will not do that.
Will the hon. Lady give way?
I will not; I will make some progress.
I am one of those children from a single parent family. My own mother worked all the hours in the day to provide for my brother and I, at a time when single parents were demonised by the Thatcher Government.
At the moment, 1 million more children are expected to grow up in poverty by 2020 across the UK. That would mean 5 million children in poverty in one of the world’s richest nations. Does my hon. Friend agree that those children need support, not savage cuts to the security of their families?
I could not agree more.
As I was saying, there was limited support for single parents, and although my mother held a good job in academia, finances were always close to the edge. I recall Lady Thatcher famously saying not long after she left office:
“It is far better to put these children in the hands of a very good religious organisation, and the mother as well, so that they will be brought up with family values.”
She told the audience in the Commonwealth convention centre in Louisville, that the spread of illegitimacy
“devalues our values and our community”.
She said that Governments had made things worse by providing social security benefits for single mothers, and it feels to me as if this Bill and the Conservative proposals are taking us back in time. We have come a long way since the dark days of the Thatcher Government: please do not let us return. All Opposition Members should be uniting against these pernicious Tory cuts—perhaps even a few progressive Government Members will join us to say no to a Second Reading.
Let me turn to the two-child policy. This part of the Bill makes changes to universal credit and tax credits, including a two-child limit for new claims and births after 2017. The Budget documents say that there will be protections in cases of rape and exceptional circumstances such as multiple births, but there are no details in the Bill. The limit will reduce the value of tax credits for future claimants with three or more children. There are currently 50,000 households in Scotland with three or more children receiving tax credits. Many of them are in Livingston and I have heard already from a number of constituents who are deeply worried about the impact that this measure will have on their finances.
To suggest for a moment that a woman who has been raped will have to justify herself to a member of the DWP is as sickening as it is unworkable. I have to hope that this grave error in policy making is a matter that the Conservatives will rethink and completely remove from the Bill. Either it is a deeply insensitive afterthought, or it is a proposal that shows utter disregard for a woman’s privacy and basic human rights.
How on earth can that policy work? What criteria will be applied to women justifying whether or not they have been raped? Will the criteria require a conviction—numbers of which, as we all know, are notoriously low—and what if a woman’s first or second child was the result of a rape? Will she be asked retrospectively to justify herself if she goes on to have a third child? What kind of training will staff have in dealing with women who have been raped? I simply do not want to believe that anyone in this House would want a woman to be subjected to this kind of regime. Asking a woman to relive such an abhorrent crime, simply to get enough money to keep a family going, is surely one of the most ill-conceived policies any Government have ever proposed. We deplore this policy and ask the Government to rethink it as a matter of urgency. As Sandra Horley, the chief executive of domestic violence charity Refuge, said:
“Women experiencing domestic violence are often completely controlled by their partner, including their access to birth control. Some women are also raped and sexually assaulted on a regular basis. Will this tax credit exemption mean vulnerable women who have been raped are forced to re-live their ordeal to prove they deserve support?”
We need detail and a rethink on this policy urgently. Similarly, for people who have had multiple births, the details and parameters of this policy are not clear. Much more clarification is required.
I will turn now to other aspects of the Bill, including the abolition of the employment and support allowance work-related activity component. Under the Bill, employment and support allowance for claimants in the work-related activity group will see their payments reduced to jobseeker’s allowance rates for new claims from April 2017. People affected are therefore set to lose up to £1,500 a year under current rules.
My hon. Friend the Member for Paisley and Renfrewshire South (Mhairi Black) described eloquently the pernicious nature of the changes to housing benefit for young people when she highlighted the fact she was now the only 20-year-old in the country the Chancellor would be helping with her housing bill. We now know that, from April 2017, those out of work aged 18 to 21 making new claims to universal credit will no longer be entitled to the housing element.
Listening to my hon. Friend talk about women having to prove they have been raped and about 18 to 21-year-olds having to move back in with their parents when housing benefit is removed reminds me of when I was a welfare rights officer in the late ’80s and the Tory Government decided that 16 and 17-year-olds were no longer entitled to any benefits unless they had exceptional reasons. I had to advise a frightened 17-year-old girl sitting in front of me that, yes, if she wanted to stay in her own not very nice house, which was at least safe, she would have to tell a stranger that her dad regularly raped her. What does my hon. Friend think of progress under Tory Governments?
I thank my hon. Friend for her intervention. It is very clear from her experiences that these cuts are pernicious and unfounded, and we must, must oppose them.
The Scottish Government are protecting people from Westminster cuts. To be properly supported to live a full and meaningful life, be that in employment or otherwise, we have to look at a different way of doing things. In Scotland, the Scottish National party Government are providing £104 million in 2015-16 to protect as many people as possible from the damaging impact of the welfare reforms imposed so far by Westminster. That includes £35 million to mitigate the bedroom tax and the council tax reduction scheme, which has protected 500,000 Scots.
Does the hon. Lady agree that the changes on conditionality to three and four-year-olds are an interference with Scottish and Welsh Government policy? They impose an obligation to provide some form of childcare for those policies to be in any way humane. That is above and beyond the way in which a UK policy should affect Welsh or Scottish Government policy.
I agree with the hon. Lady wholeheartedly. We will certainly have to look at that. The Joint Ministerial Committee met today. Hopefully, it will have discussed this matter and we will hear further information on it.
The SNP believes that having socially progressive policies is the key to unlocking our society’s potential. That is why our First Minister, Nicola Sturgeon, wrote in yesterday’s Sunday Herald:
“The UN General Assembly in New York will provide the backdrop for national governments to agree the 17 Sustainable Development Goals (SDGs). The Sustainable Development Goals themselves offer a vision of the world that I believe people in Scotland share. From ending poverty to combating inequality, the aims set out by the UN form an agenda for tackling some of the world’s greatest problems.
I am delighted to confirm that Scotland has become one of the very first nations on Earth to publicly sign up to these goals and provide leadership on reducing inequality across the globe.”
Michael Green, from the Social Progress Index, said:
“The term Gross Domestic Product is often talked about as if it were ‘handed down from god on tablets of stone.’ But this concept was invented by an economist in the 1930s.”
He says that we need a more effective measurement tool to match 21st century needs: the social progress index. We absolutely agree that GDP is the internationally recognised benchmark, but we have to take into consideration much wider aspects. Michael Green asserts that economic growth has lifted hundreds of millions out of poverty and improved the lives of many more over the last half century, yet it is increasingly evident that a model of development based on economic progress alone is incomplete. Economic growth is not enough. A society that fails to address basic human needs, to equip citizens to improve quality of life, to protect the environment and provide opportunity for many of its citizens, is not succeeding. We must widen our understanding of the success of societies beyond economic outcomes. Inclusive growth requires achieving both economic and social progress. If we focus solely on GDP and reducing the deficit at all costs, we will store up significant problems for the future.
The SNP was very clear in its manifesto proposals about the aspects of policy that could be introduced to help bring people out of poverty. We want a vote for child tax credits and child benefit to be uprated in line with the consumer prices index and to support an increase in free childcare up to 30 hours a week by 2020. We propose an increase in carer’s allowance to bring it in line with JSA, which would see more than 100,000 unpaid carers in Scotland better off by almost £600 a year. We support increases in the personal tax allowance, but will back an increase in the work allowance—the amount people are allowed to earn before their benefit is cut at 20%.
The Bill is an attack on civil society. It is an attack on our poorest families. It is a regressive Bill that takes us back in time with cuts that will hit women and children the hardest. It will stigmatise and marginalise women who have been raped, and put conditions on the most needy in our society. At a time when we should be looking outward and forward, when we should be progressive and look to give our people a bright future and something to hope for, this Government are instead looking inward to attack their own people and turn them against each other in a way that even Thatcher’s Government would not have dared. The people of Scotland will not stand for this and neither will its democratically elected politicians. If the Bill and the Budget succeed, going our own way in Scotland and building a society that is progressive and for everyone, not just the rich, will be increasingly attractive. I urge the House to reject the Second Reading of the Bill.
As a member of the workers’ and one nation party, I am very proud to support the Welfare Reform and Work Bill.
No, we have heard enough from the SNP for now.
Unlike the previous speaker, I am going to talk about the Bill. It shows the Conservative party and the Government full of head and heart. We care passionately about mobility and aspiration. We also care about security and solidarity, helping the vulnerable and the disabled. Our head says that we have to live within our means. Finally, we are grasping the nettle and recognising that we have to live within our means. The welfare budget has to be sustainable. What the Chancellor has said has to be said again: we have 1% of the world’s population, 4% of the world’s GDP and 7% of the world’s welfare spend. We have to deal with that to make sure we can help the most vulnerable and ensure they have a sustainable future.
This is the Welfare Reform and Work Bill, but as the Secretary of State said, it could also be described as the “Catch you when you fall” Bill or the “Lift you when you can rise” Bill. That is what it is all about. We are spending more than £33 billion on welfare for the sick and the disabled. That will continue. What does that mean? Compared with the previous Labour Government, we have spent £7 billion more on disability benefits. We will continue to spend just shy of £7 billion more than the previous Labour Government on disability and sickness benefits. That matters.
The hon. Member for Livingston (Hannah Bardell) prayed in aid Margaret Thatcher. In 1979, Margaret Thatcher said:
“Our aim is to provide a coherent system of cash benefits to meet the costs of disability, so that more disabled people can support themselves and live normal lives.”
The hon. Lady was right when she said the Government are following in the tracks of Margaret Thatcher, because disability payments increased under her Government by 21%. This Government are continuing to increase disability benefits, despite the £12 billion in welfare cuts. The difficult cuts to the work-related activity group payments represent one twenty-fourth of the welfare cuts that are being made. We are protecting the disabled. We heard all the scaremongering, particularly from Labour during the election, about our plans to cut carers’ allowances savagely and to means-test and tax disability benefits, but the Bill shows that that is not happening.
Does my hon. Friend agree that, while the most vulnerable must be protected, welfare must be a safety net rather than a lifestyle choice?
I agree that it is a generous safety net, and that will continue under this Government. Despite the challenging decisions that have to be made, it is clear that we will have a generous safety net.
However, we need to act with great care. Clause 13 deals with payments for those in the work-related activity group—the WRAG. The proposed reduction of £30 will be significant for those who are assessed as not yet fit for work, and we need to deal with that issue with care. Disabled people and those who are sick have additional costs. Macmillan Cancer Support says that 83% of people living with cancer are £570 a month worse off. One in five in the WRAG have a mental health condition, and 50% of those with one of a number of characteristics will have a mental health characteristic. We have to deal with those people with care.
The Bill must be a reforming measure. Much has been made of the need to cut costs, with cuts of £450 million rising to £620 million by 2020, but it needs to be a reforming measure. The problem is that far too few disabled people are getting into work—only 1% per month. That is a scandal. We must ask ourselves whether the WRAG is really fit for purpose. Rather than just looking at the spend, let us look at the outcomes. We want more people to get into work. We have a system with nine-month delays in assessing people, and we agree that the system has to be improved. It is also not good enough that 58% of people are still in the WRAG after two years. Those people are getting an average of only 130 minutes’ coaching a year to help them to get work, compared with 710 minutes for those on jobseeker’s allowance. That disparity will not be bridged by this reforming measure.
We must ensure that the fit-for-work services and the access-to-work mental health services come on stream now. I welcome the fact that there will continue to be support for that group of people, but when we consider the £60 million of investment in 2017-18, going up to £100 million, we must ask whether there will be a gap now.
Does the hon. Gentleman agree that, when dealing with the work plan and Jobcentre Plus, the most difficult-to-place people with disabilities are unlikely to have time spent on them, because the payment is designed for those who are easy to return to work? We need to re-orientate the support and the finance to get them into work, but the jobs just are not there in most parts of the country.
The hon. Lady makes a valid point. This is about outcomes and about giving tailored support. We must recognise the concerns about the loss of payment, but those who are not yet fit for work but who are on that journey should be encouraged to cut that journey short. One per cent. per month is not good enough. We need to provide tailored support through Jobcentre Plus, but we also need to consider the many other organisations, particularly small businesses, that do not use Jobcentre Plus.
We all need to be involved in Disability Confident events and to take up this cause in our constituencies to ensure that tailored support can be provided to those hard-to-reach groups that are finding it difficult to get work, whether through the WRAG or in other ways. We need to provide tailored packages of support to ensure that this reforming—and cost-cutting—measure really works for that particular group.
I look forward to hearing the Minister and others say that we are very much on the side of those people, and that we are pretty much keeping up the overall spend on disability. However, we need to get more people back into work. That matters to all of us. I look forward to hearing the Minister say that she is deeply committed to investing in tailored support for those people, to show that this is a one nation Bill encompassing two traditions: that of Margaret Thatcher but also that of Winston Churchill. We often pray in aid Winston Churchill in our speeches, and he said that we must have an ambition to have the best social ambulance in the world when it comes to welfare support for people with disabilities. The Bill meets that ambition for us to have the best social ambulance in the world.
Madam Deputy Speaker, if I leave the Chamber shortly after my speech, I shall come back immediately afterwards to listen to the rest of the debate. I know that there is a huge amount of interest in the Bill.
We now have a more political Chancellor than any I can remember in the whole of my time in the House of Commons, and he has laid traps for us in the Bill. I make a plea to my very hon. Friends not to fall into them. The Government have, however, exposed their soft underbelly in one respect, and we should attack them in that spot. There is a huge difference between giving notice that the terms of a contract will be changed at some point in the future and changing the terms for people who have already bought into it. In the long build-up to the election, as well as during and after it, we heard that the one group of people about whom the Conservatives, as a party and as a Government, cared most were the strivers, yet it is the strivers who will feel the worst effects of the Bill.
In tonight’s debate, I want us to unite and launch an offensive against part of the Bill that the Government will not be able to carry in the country. By doing so, we can change the debate on welfare, on work, on productivity and on all the other parts of the Government’s programme. There are more than 3 million people in this country who are in work but whose income is being supplemented by tax credits. They are among the strivers in our society who are going to be walloped by the Bill. Many of them will be a minimum of £1,000 a year worse off. Some will be much worse off than that. We should not be at sixes and sevens in voting for the various amendments tonight. The one message we need to hammer home is that the Government use one language outside the House and a different one to enact legislation inside it. They talk about strivers outside, but the Bill will affect 3 million in-work strivers and make them worse off.
Worse still, it is going to be difficult for us to vote against that particular measure in the Bill, because the Government could well try to enact it by means of a statutory instrument upstairs. If they dare to take the cuts against 3 million strivers outside this main Chamber, I hope we will all learn from the new contingent from Scotland, who do not accept the conventions of this House, and that we will crowd into that Committee Room and make it very difficult for them to get the measure through. We must send a message to the rest of the country that we are united in our opposition to this unbelievably vicious move against people who have responded to the Government’s plea to become strivers, who are in work and who will find themselves much worse off as a result of the Budget.
My plea to my very hon. Friends is this: please do not have what Aneurin Bevan might have called an “emotional spasm” and try to feel better by simply voting against this, that or the other. The one message tonight is that we must get behind the reasoned amendment tabled by the Leader of the Opposition. Later, we can discuss all the other disadvantages that the Government have put into the Bill, and we can vote against them if we wish to do so. The one message that must go out from the Chamber tonight is that the Government talk loudly about supporting strivers but, when it comes to it, they are proposing to make that group worse off without a second thought. It will be difficult for us to oppose what I see as by far the worst measure in the Bill, but I hope that we can send a united message and not be at sixes and sevens voting to our hearts’ content on all different aspects of the Bill. That is my plea. I shall return to the Chamber as soon as I can to listen to how others develop their own themes on the way in which the Government are making strivers worse off.
It is always a pleasure to follow the right hon. Member for Birkenhead (Frank Field), who, despite many of his remarks being concerned with his own team, as it were, made an important point.
I wish to refer to six measures in the Bill that I welcome because they are about work. First, I welcome the proposal for an apprenticeship levy. We are setting out the right ambition to create 3 million more apprenticeships in this country, and it is right to take a look at quality as well as quantity as we do that. Although the details are yet to be fleshed out, I welcome measures to encourage higher quality apprenticeships. I look forward to discussing with businesses in my constituency—I am sure Ministers will be doing the same up and down the land—ways to achieve that goal and the goals set out by others, such as the noble Baroness Wolf of Dulwich in the other place.
Secondly, I wholeheartedly welcome the provision on full employment. The task of selecting the measure to be used will follow later, but none the less I welcome that, because it marks out the kind of ambition that we should all have and that my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) rightly mentioned.
My hon. Friend is the chairman of the all-party group on youth employment, the name of which was recently changed from “youth unemployment”. Does she, like me, welcome the title of the Bill, with its emphasis on work?
I do, and I thank my hon. Friend for that point. It is important to reflect on what we can do to help people be in work rather than rely on welfare.
Thirdly, I turn to the measures in the Bill about work and disability and a point that my hon. Friend the Member for Enfield, Southgate made. Let this not be a taboo topic that we find too difficult to deal with. There is a case for making the best of everybody’s talents in this country. My right hon. and hon. Friends on the Front Bench are right that we all ought to be disability-confident, and we should all encourage businesses in our constituencies up and down the land to be disability-confident. Why should we do that? According to Mind, the mental health charity, the Royal College of Psychiatrists and many other reputable sources, work can be extremely beneficial to a person’s health—in the case of those two organisations, mental health. The measures in the Bill range from mental health to other aspects of health, but let us understand that we can and must offer chances to everybody in the country. We can all look at ways to do that in our constituencies.
I am afraid I will not give way. Out of fairness to other Members, I must finish and then allow others to speak. I have already taken one intervention.
As my hon. Friend the Member for Enfield, Southgate said, we need to ensure that the support provided in jobcentres is proportionate to the distance claimants have to go to find work, and to the height of the barriers in their way. That is the right thing to do.
Fourthly, I turn to the measures on child poverty. I referred earlier to the comments of the right hon. Member for Birkenhead—I think in his absence, I am afraid to say. He noted that the definition of poverty, and everything that is needed for someone not to be regarded as poor as defined by academics and politicians, can be utterly bewildering. I agree with that, and we are right to attempt to improve on a measure that the Institute for Fiscal Studies, the Social Mobility and Child Poverty Commission and others readily say is unattainable. It makes no sense to press on with something that is unattainable when we have the opportunity to improve the situation and do better for children by referring to educational attainment and being in work.
Fifthly, a measure connected to the Bill is the national living wage, which is a crucial part of serving the strivers in this country. No doubt the right hon. Member for Birkenhead knows far more than I do about the difficulties of encouraging high pay at the same time as the Government are effectively subsidising pay with a high welfare net. Nevertheless, I support the measures in the Bill and the Budget for turning Britain into a higher wage economy and a lower tax society, and for creating a more reasonable approach to welfare.
Finally, my constituents in Norwich, where the gross median income is £23,000, will welcome the measure in the Bill to reduce the welfare cap one step further to £20,000 outside London. That is the right thing to do and will support work over welfare.
We are very clear: we cannot and will not support the Bill. If it did what it said on the tin, there might be much to commend it, but it does not. The Government pledge a living wage that even they know is not one, they want a welfare state that is anything but good for our country’s welfare, and they use the guise of economic necessity to cover up ideologically driven cuts. Tonight, we will vote against the Bill because we know that the depth and character of the proposals are unfair, unwise and inhuman, and anything but economically necessary.
In truth, the Government do not have to take £12 billion from the poorest families in the country, mostly working families, but are choosing to do so. No amount of political spin will protect the individuals who have to live with the reality, not the words. Calling something a living wage when it is not does not make it a living wage, calling housing affordable when it is not affordable does not make it affordable, and labelling the Bill as progressive does not make it progressive. In the end, the consequences of these actions for Britain will speak louder than the Chancellor’s attempts to change the definition of his words.
The proposals on employment and support allowance—support designed to help people who, through no fault of their own, face more barriers to work than most—will not help into work people with depression, fluctuating conditions, schizophrenia or physical conditions that make more difficult the ordinary tasks that many of us take for granted. In fact, they will act as a ridiculous disincentive. Almost 500,000 people will see their vital support cut by one third once they apply to the new system, meaning that if they are on the existing support, they will lose it as soon as they get a job, even on a short-term contract. It is a disincentive to work and will trap people on welfare, not liberate them.
The Chancellor has chosen to implement a counterproductive policy that demonises people with disabilities and mental health conditions. I am disappointed by Labour’s confusion over the Bill. To give in to the narrative that the answer to our country’s needs is to pit the working poor against the temporarily-not-working poor is shameful. Cutting tax credits, tightening the benefit cap and ramping up the right to buy is not just morally wrong but economically wrong; widening inequality is not just against British decency but economically stupid.
Of course, we accepted some of the changes to welfare in the last Parliament, but this goes too far. Does my hon. Friend share my concern about the effect on young people who, through no fault of their own, find themselves in need of housing benefit? Why should they be excluded from the same rights that any other citizen in this country has if they have need of the safety net?
My hon. Friend makes an excellent point. In many ways, young people are the biggest victims of the Bill. I think of young people being supported by housing benefit—for example, in the location of a Foyer, such as the wonderful Foyer in Kendal—and who thereby have access to work, training and further development opportunities. Taking housing benefit away from young people is not just morally wrong but utterly counterproductive, because it will prevent them from accessing work and other life opportunities.
We will stand for the thousands of people in work and yet in poverty, and for the millions of people who might not be personally affected but who do not want to see inequality grow in Britain. Instead, we want a direction for the country that combines economic credibility with truly socially progressive policies, which is why we will continue to make the case for using capital investment to build houses and strengthen our economy for the long term, and for a welfare system that understands the needs of people with mental health conditions and helps them back into work, rather than putting them under the kind of pressure that simply makes them worse.
The reduction in the incomes of poor families in work comes at the same time as the Government are giving inheritance tax cuts to millionaires, cutting corporation tax for the richest firms and refusing to raise a single extra penny in tax from the wealthiest people—for example, through a high-value property levy. We will continue to speak for the millions of people who are young, who suffer from mental health problems, whose parents have no spare rooms or spare income, who do not have parents at all, or who have more than two children. The Liberal Democrats will stand up for families, whether they are hard working or just desperate to be hard working. We will not let the Conservatives through choice, or the Labour party through its silence, unpick our welfare system.
Let me take this opportunity to welcome the vision of welfare reform that has been set out by the Government, and by my right hon. Friend the Secretary of State in particular. I think we all agree—certainly those on this side of the House—that we have a problem with the amount of money spent on welfare. When Gordon Brown first became Chancellor and introduced tax credits, he promised they would cost £2 billion. They now cost £30 billion, which is a fifteen-fold increase. We have been in a ludicrous position: people have been in work, on the minimum wage, and paying tax, only for those tax payments to be recycled through the welfare system and returned to them in the form of welfare payments.
According to the Government’s rhetoric, work is the best route out of poverty, but is this not the reality of their proposals: it does not matter how hard those who live in poverty work; their poverty will remain stubbornly present in their lives owing to cuts in child tax credit and low pay? Is this not about ideology rather than necessity? Is it not about rolling back the frontiers of the state?
No, it is not about rolling back the frontiers of the state. The points that the hon. Lady has raised are addressed by our introduction of universal credit, which gives people who are in work a progressive route out of poverty by helping them, as they earn more, not to have all their benefits removed. Moreover, by introducing a national living wage, we are ensuring that everyone who is in work and has a low income will be given a pay rise.
Faced with the current problem, a Government might be tempted simply to salami slice benefits across the board. However, this Government have set out a coherent vision of welfare, which has a number of elements. First, if we are to move from a low wage, high tax, high welfare economy to a higher wage, lower tax, low welfare economy, we must deal with the tax problem. The last Government, with their coalition partners, set about massively increasing the amount of money people could earn without paying tax. We are continuing that agenda, so that as people earn more they keep more
Secondly, we have grasped the problem of people who are in work but do not earn a sufficiently large wage, which is why, for the first time, we are able to increase the minimum wage significantly. Our increase is far greater than any increases that were made by the Labour party when it was in power.
I am grateful to the hon. Gentleman for his honesty. Having claimed, as his colleagues have claimed, that this is a living wage, he himself has now used the phrase “national minimum wage”. Is it not the case that all the Government are doing is increasing the minimum wage without making it enough for full-time workers to live on?
I do not accept that. I hope that Members will forgive my slip of the tongue. The increase in the current minimum wage, which is less than £7 an hour, to a minimum wage of well over £9 an hour by the end of this Parliament is huge. It is not in line with the standard increase in the minimum wage. This is a step change that reflects the introduction of a national—
Will the hon. Gentleman give way?
I will give way once more, but I am subject to the time limit.
I assume the hon. Gentleman knows that the Institute for Fiscal Studies has noted that it is “arithmetically impossible” for the increase in the minimum wage to
“provide full compensation for the majority of losses experienced by tax credit”
—and universal credit—
Is it the members of the IFS who need to go back to school, or is it the hon. Gentleman?
I invite the hon. Lady to note the analysis showing that the income of a typical renting household receiving tax credits, consisting of two people working full time with two children, will increase by 12%. That is exactly what we are seeking to achieve.
The third element comes into play once we have ensured that wages are higher—and I should point out that we are able to do that only because our welfare reform programme has been so successful that it has brought about a massive cut in unemployment. Because 1 million fewer people are receiving unemployment benefit and 2 million more people are employed, the labour market can withstand a significant increase in wages. Had it not been for those developments, the whole package would have fallen apart. Our measures reflect a more coherent vision.
Once those first two elements are in place, it is only right for us to consider reducing welfare benefits. There is a clear principle behind this. People in my constituency, and in many other constituencies, face tough choices, and those choices should also be faced by those people who are receiving welfare benefits. For example, one of my constituents will have to decide whether he or she can afford to have another child; we are saying that, similarly, child tax credits should, in due course, reflect what is appropriate for a family with two children.
Will the hon. Gentleman give way?
I am afraid that I cannot, because I am subject to the time limit.
We concluded that it should not be possible to earn more on welfare than a person who had gone out and worked every single day could earn after tax. We also concluded that it should not be possible to leave school and immediately start claiming benefits. I think that those are fair principles, and I think that principles are better than mere salami slicing.
All this has given rise to a need to change the measure of child poverty. It was absurd when Gordon Brown spent huge amounts of time and money showing people one side or the other of an arbitrary line. We are looking at more fundamental principles and measures of what drives poverty. Living in a workless household is one of the biggest drivers of poverty, and I think it right to take account of the massive reduction in workless households that has taken place under our Government. Lack of educational attainment is another huge driver of poverty. I know that such opportunity-based measures are dismissed by Opposition Members—including, as was clear from his speech,. the right hon. Member for East Ham (Stephen Timms)—but I think that they are vital if we are to establish whether we are merely putting a sticking plaster over poverty, or addressing the fundamental causes.
Will the hon. Gentleman give way?
I have some time left, so I will.
That is very gracious of the hon. Gentleman.
In my constituency, 3,900 working families will have lower incomes as a result of the Government’s changes, and 7,100 children will be pushed into poverty. Can the hon. Gentleman tell me how that encourages people to think that working is a good idea?
First and foremost, we are introducing a national living wage, which will deal with the current problem and give people a massive pay rise. Ultimately, however, there is a wider point to be made. Opposition Members are decrying every single measure in the Bill, but if they oppose our welfare reform measures, they must be able to tell the House and their constituents what measures they themselves plan to introduce. Which other welfare costs do they intend to cut, and which other taxes do they intend to increase—or do they intend to continue to borrow, thus forcing our level of national debt ever higher?
That is the contrast between Labour and the Conservatives, who are willing to make difficult decisions. None of us enjoys making those decisions, but we make them in a principled fashion that sets the economy and the country on the right track.
I listened with great interest to the Secretary of State’s attempt to reinvent himself as the workers’ friend. In fact, the Bill contains hugely regressive measures that will make many working families much poorer. It is no wonder that they include measures that will effectively repeal the Child Poverty Act 2010. From now on, there will be no income-based measure of child poverty; instead, the Secretary of State will have to report on worklessness and educational attainment, although two thirds of the children who are in poverty come from families who are in work. The problems to which the Secretary of State has referred, such as family breakdown and addiction, are indicators of poverty, but they are not a measure of it. Those problems can occur across the whole income spectrum.
As for educational attainment, the Secretary of State knows, or ought to know, that the biggest predictor of failure in education is poverty. It is not family breakdown, addiction or anything else; it is pure, material poverty. He should not confuse indicators and measurements.
Secondly, this Bill will make many working families much poorer. We have already heard that the increased minimum wage that the Chancellor is introducing is not a living wage, and many people will be excluded even from that increased wage: 21 to 25-year-olds. These people are adults and may have families, but under this Government they will pay a penalty for being poor and working. Where is the incentive to work in that?
As a result of this Bill’s measures, 13 million families will lose £260 a year or £5 a week. That might not sound much to those on the Government Benches, but for families on the margins it is the difference between getting through to the end of the week and not getting through.
The measures to restrict child tax credits and the child element of universal credit to two children are based on the assumption that people are always on tax credits or on benefit, whereas in fact there is a revolving door.
Will the hon. Lady give way?
No, I am afraid I do not have the time.
Life does not proceed in a straight line. Let us take the example of a family with three children. They are doing all right; they can afford it. Then one partner falls ill or dies. The other partner might have to work, and take a part-time or low-wage job. Under this Government’s proposals that third child becomes superfluous—one that they should not have had. Not every child matters under this Government.
Let us say a family improve their prospects and get more hours or get a better job. If that job lasts for more than six months and they have to make another claim, that is treated as a fresh claim and they lose the credits for their third child. Where on earth is the incentive to work in that?
We have also heard about what might happen in cases of rape, and I hope the Minister will be able to answer that point when she sums up. Many women do not report rape for reasons that we understand. When they do report it, the prosecution rate is very low and the conviction rate is even lower. What will be taken as proof—reporting, prosecution or conviction? How will a DWP official, not trained in investigation or used to dealing with rape cases, decide on that? Not since Mao Tse Tung has there been a proposal to limit families that is more degrading to women.
This Bill is a purely regressive Bill. It will make millions of families in this country worse off. That is why I will not support it in the Lobby tonight.
There are many measures in this Bill, but I shall discuss just one or two aspects of it.
I am the vice-chairman of the all-party group on youth employment and I am delighted that under the chairmanship of the hon. Member for Norwich North (Chloe Smith) its name has been changed from “youth unemployment” to “youth employment”, showing a more positive outlook. Likewise, this Bill is called the Welfare Reform and Work Bill, which also shows a welcome direction of travel.
Clause 1 has the welcome ambition of reaching full employment and a reporting obligation to ensure that we here in Parliament are regularly updated on progress. Over the past two and a half years I have had the pleasure to run a jobs club in my constituency, from the Pilot pub in Canford Heath, and I pay tribute to its landlady, Lisa Ballet, for being so community spirited and permitting that jobs club to exist.
The claimant count in Mid Dorset and North Poole is down to 312. Of course I do not claim credit for that entirely, but I do welcome the ambition to lower the claimant count in my constituency. Although I would ordinarily guard against targets and a target culture, if this is simply an ambition, then I welcome it, and I look forward to the numbers in work in my constituency increasing over the coming Parliament.
Does my Dorset constituency neighbour agree that we have to view alongside the tax allowances measures the increase in the minimum wage with the aspiration of going to the living wage? For areas such as those in Dorset that we represent where median or average wages are quite low, those are real incentives to get back into work.
I agree with my hon. Friend and constituency neighbour.
Clause 3 sets out the reporting obligations for the troubled families programme and I pay tribute to that programme in Dorset, which is aimed at the hardest-to-reach families. There are potential long-term cost benefits because these are the families that cost the country the most, but more importantly these are the families that are most likely to benefit from this measure, and I welcome it.
Opposition Members have from the outset expressed concerns about scrapping the current child poverty measure, and they have done so again this evening. However, scrapping that measure is not the same as scrapping the route out of poverty; it is quite the opposite in fact, as that child poverty measure was flawed and did not provide a proper test of whether children’s lives were improving. For example, in the aftermath of the recent recession the number of children in poverty went down significantly under the old measure; in one year it fell by 300,000. Does that mean that those children’s lives were really altered in such a way as a result of the recession? Of course not; a shrinking economy is not the way to raise children out of poverty.
A second example, which was mentioned by my hon. Friend the Member for Hertsmere (Oliver Dowden), is the arbitrary line introduced by the last Labour Government. Does tipping a family that falls just below an arbitrary line up above it really mean poverty has been alleviated? Of course not.
I encourage Opposition Members to support this Bill, as it is aimed at the real causes of poverty. It addresses family breakdown, school attendance and attainment and levels of work within the family. It focuses on ways to make a real improvement to children’s lives rather than offering illusory measures.
As I have said, the most vulnerable must be protected. There must be a safety net but, by removing disincentives to work, introducing a living wage and reducing the benefits cap, this Bill will encourage more people away from a life on benefits and towards the real benefits of getting into work—better health, greater wellbeing and the self-esteem that comes from being in work. Work really is the best way out of poverty.
We support many of the measures in the Bill, which will be important in the debates we will have on it, but my role today is to highlight the things that cause us concern.
This Bill probably spells the end of the Northern Ireland Assembly, because the current welfare reform measures have not been introduced, which has left a £600 million hole in the budget. I say to the Members from Scotland who are keen to have welfare reform devolved, that there is a cost in that because every measure that is not introduced means money is taken off the block grant. People should be aware of that. It is significant that Sinn Féin, who are not here, will probably claim that they will block these measures.
Does the hon. Gentleman not understand that the very firm view in Scotland is that those additional costs are a price well worth paying if they give us the fair and just society each and every one of us was elected to deliver?
My point was that there is a cost. How people decide to distribute it is another matter. The one thing I do know—
Will the hon. Gentleman give way?
No, I will not give way.
The one thing I do know is that the people who will complain most about this measure in Northern Ireland—Sinn Féin—are not even here to defend the vulnerable, whom they will claim they wish to protect.
Government Members have talked about the measurement and recording of child poverty. I would have thought—indeed, the DWP review indicated—that the most important source of short-term child poverty, and of the length of time people are in such poverty, is the level of income. It stands to reason: you don’t have to be a genius to know that if you don’t have money, you’re poor. If you want to lift people out of poverty, what do you do? You ensure that they get more money. If we remove that as a measure, we ignore the most fundamental aspect of what causes poverty and what puts children in poverty. Yes, in the longer run, as the review says, educational qualifications, family stability and so on are important, but in the long run, as Keynes said, we are all dead. If we want to deal with the problem now, we cannot ignore the level of income.
Members from all parts of the House should be concerned about the way in which the Bill divides the cap into two. But that is not the end of the matter, because the Bill makes it clear that the Secretary of State can review the caps at any time. All he or she has to consider is “the national economic situation” and
“any other matters that the Secretary of State considers relevant”.
Then the Government can introduce changes by regulation.
I am very grateful to my hon. Friend for his point about the difference in the cap on welfare and benefits between London and the rest of the country. That measure is very clearly the thin end of the wedge, and, if we are not careful, what will eventually happen with benefits and public sector pay will be the introduction of regionalisation.
Indeed. The Policy Exchange think tank, which prepared the welfare manifesto for the Government, talked about the introduction of a two-tier cap, stating:
“The first stage in creating a regionalised system would be to create two levels of Benefit Cap, one for London and the South East where average incomes within the UK are highest, and one for the whole of the rest of the UK.”
The measure before us is the first step towards regionalisation, and we ought to be aware that in this Bill is contained the embryo of further cuts to the poorest regions of the United Kingdom, because that is where we are likely to find the pressure to try to reduce the welfare bill further.
On tax credits, I support the Government’s desire and objective to get people into work—to make work pay, to give people an incentive. That is why the proposals on apprenticeships, full employment reporting and so on are all good. But the change in universal credit, the freezing of benefits and the change in tax credits are, as the right hon. Member for Birkenhead (Frank Field) pointed out, an attack on aspiration. It is an attack on people who are in work.
Will the hon. Gentleman give way?
I am running out of time. I would be happy to give way if I could get an extra minute out of it.
As has been pointed out, many people will not even be subject to the safeguard of the higher national living wage. Many of those who are in work will still find that the reduction in their benefits and tax credits is not compensated for by the increase in the national living wage, so the Government will not achieve what they are seeking to achieve. We are talking about people who are already on low wages and who are not in the best employment.
My final point is on the changes in employment support allowance and the work-related activity group. There are many people who do require support, but if the Secretary of State is right, he is not going to create an incentive for those people to get back into work. In response to the shadow spokesman, the right hon. Member for East Ham (Stephen Timms), the Secretary of State said, “We’ll put those with Parkinson’s and MS into the support group.” The idea may be to get people into the work-related activity group and to give them the support they need to get into work, but, if the Secretary of State says, “No, we’re going to move them to the support group”, they will not get the support they need to get into work, and he is defeating his own objective.
There are contradictions in the Bill which need to be teased out. While there may be things in it that we can support, there are many aspects which I believe will be detrimental to our constituents, which will have a disproportionate impact on regions of the United Kingdom and which, therefore, should be voted against.
Thank you for calling me to speak in this important debate, Madam Deputy Speaker. I shall start by focusing on one or two comments that Members made earlier and then return to a central issue—getting those with disabilities back into work.
The right hon. Member for Birkenhead (Frank Field) said that 3 million strivers will be hammered. I am a great fan of his—he is the Chairman of the Select Committee of which I am a member, and I am sorry he is not in the Chamber to hear this—but his gloom tonight was focused on two things. The first is the big problem of unity and what approach to take to welfare and work within his own party. The second is an underlying belief that the only way to help the poor is ultimately to increase benefits from taxpayers, and that the only way out of poverty is to grow a tax credits bill that is already, at £30 billion a year, far greater than in the similar populations of France or Germany, and is, in the words of the former Chancellor, previously the right hon. Member for Edinburgh South West,
“subsidising lower wages in a way that was never intended”
when it was first introduced by the Government of the right hon. Member for Birkenhead.
The reason the right hon. Gentleman and his party are discombobulated on the issue is that they rightly feared a reduction in benefits before an increase in wages and did not expect that my party, the party of compassionate conservatism, would implement precisely that: a national living wage considerably above that mooted by their former leader, plus an expansion of the tax-free allowance that will take the amount one can earn without paying income tax to almost double by 2020 the £6,500 allowance of 2010. They know that higher wages, lower tax and less welfare is the right way forward, because there was no social justice in spending over £170 billion more than we received in tax revenues, leaving the interest on Labour’s debts alone—the interest alone—costing us more than the entire education budget. There is no social justice in spending more on benefits—on the interest on all that debt—than on helping our children with education and giving them the chance to attain and to go on to good jobs.
Some of Labour’s leadership candidates have realised that point and seen that there are no more sweeties in the sweet bag and no credible alternative to this overall philosophy of higher wages, lower tax and less welfare— unless one believes that living within one’s means is always for someone else and not for us, and one wishes to follow an anti-austerity programme that has led a country like Greece to the brink of disaster. That is a political option, but it is not one that the city of Gloucester would ever want this country to follow.
I turn briefly to the second part of my speech. The Chancellor promised in his Budget speech that we would always support the elderly, the vulnerable and the disabled.
Our hon. Friend the Member for Enfield, Southgate (Mr Burrowes) said that £30 billion a year is being spent on disability living allowance and on similar allowances. Does my hon. Friend agree all Government Members welcome that?
My hon. Friend is absolutely right to point out that the current welfare bill is unsustainable, but he is also right—I have heard him say this in Select Committee meetings—to say it is vital that we support the elderly, the vulnerable and the disabled. It is true that the Work programme has been far more successful for those on JSA than for those on ESA. The question therefore is: how do we help those people with disabilities who are currently not getting a job and not benefiting from the Work programme in the same way as those on JSA?
Some 61% of those in the ESA work-related action group say that they want to work, and the evidence is that they do. I have heard from charities and from people with disabilities in my constituency how passionately they want to have the same working opportunities as the rest of us, so what can we do to help them? The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for North Swindon (Justin Tomlinson), in his role as the Minister for disabled people, has the ambitious task of halving the number of people with disabilities who are out of work. He will need some innovative thinking to help him, so let me make a couple of suggestions.
Should the hon. Gentleman not recognise that if these people want to work, it is the lack of support and the lack of jobs that is preventing them from getting into work. Why punish them by taking money away? It is like removing the crutches from someone who has just lost a leg before we give them the new limb. Let us get them into work—then they will not need the support.
The hon. Lady raises a perfectly valid point. There is a philosophical difference here: do we take the difference between what they currently get on ESA and JSA and use that money to help give them the greater support that should get them into jobs, or do we just carry on as we are, knowing that the current programme is not that successful? We have to do something different. We have to do more in the Work programme to make it more likely that people with disabilities will get jobs. The jobs are there; all the statistics tell us that more jobs are available than there are people looking for them, but those with disabilities are not getting them at the moment. They need more help with resilience and confidence—the things that make a difference when people go to an interview. They need employers who understand, so the Disability Confident programme is important. They need—we need—providers to understand that they must do more to help, and in return we probably need to give more cash up front, rather than depending solely on payment by returns for those in the ESA category. We MPs need to do our bit. When we hold job fairs, how many of us focus on those on ESA? It is time to tilt our jobs fairs away from those on JSA and towards those with disabilities and on ESA. We can do that, with the help of the Department for Work and Pensions.
There is much to be done, and I believe Ministers are aware that when they review the Work programme they will have to innovate to make sure that those with disabilities and on ESA stand a better chance of winning jobs in a competitive marketplace. We need to do more to help employers realise the importance of this. All of us need to do more as Members to inspire our residents and our businesses to apply for those jobs and to help them win them. That will be vital in reducing the working age welfare cost from 13% of all public spending at the moment to a more reasonable figure.
Will the hon. Gentleman give way?
I regret that there is no more time.
Above all, we need to inspire those with disabilities into a job. The Leonard Cheshire Disability charity said:
“We believe that disabled people should have the freedom…to contribute economically and to participate fully in society.”
I believe that all of us agree with that. Now we must do our bit to make sure it happens.
It is a pleasure to follow the hon. Member for Gloucester (Richard Graham). Unfortunately, the £640 million that is being saved on ESA is not going to go to work-related activities; it is going to go to the Chancellor of the Exchequer.
In the last Parliament, I had the privilege, along with my right hon. Friend the Member for East Ham (Stephen Timms), who made a characteristically excellent speech, to take the Child Poverty Act 2010 through, and we had all-party support at that time. It is therefore very disappointing that this Government are abandoning that Act and even the aspiration to end child poverty. Furthermore, it is ridiculous of them to attempt to airbrush the whole concept from the statute book.
I do not believe this Government have a mandate for the changes they are making in this Bill. Throughout the election campaign the Tories refused to say how they were going to save £12 billion from the welfare bill, because they knew that the measures would be unpopular and it would hit them in the ballot box. Indeed, the Prime Minister went on national television to say that he would not be cutting tax credits. In any case, the truth of the matter is that 9 million people did not vote Tory on 7 May. The most obnoxious part of the Bill is the proposal to cut tax credit support for families with more than two children. When we were in government, Labour had a principle that Every Child Matters, and I believe that was the right principle.
Will my hon. Friend give way?
I will. [Interruption.]
We are friends, I believe. I think we are all friends in here—I hope we are.
Thank you. I do not have children, so I often tread carefully in these sorts of debates because I do not want people to point the finger and say, “Well, you don’t understand.” But I am certain of one thing: a choice between one, two or three children is a choice. If you cannot afford it, why should the taxpayer subsidise you? Can she answer that? [Interruption.]
As my hon. Friend the Member for Warrington North (Helen Jones) described, people’s circumstances can change. People do not have a complete and perfect forecast of how their life is going to pan out, which is why we need a safety net. The problem is that a child living in a family with more than two children is 50% more likely to be living in poverty than the average. Some 35% of the children in this country who live in poverty live in those families, so these measures are precisely targeted at those children. The measures will increase the number of children affected and deepen the poverty they face.
Does the hon. Lady recognise The Children’s Society’s comments? It said it supports plans to add additional reporting requirements on parental employment and educational attainment as these are important in contributing to children’s welfare. I know she would say that these were additional, not a substitute, but does she recognise that they are important measures to study?
I used to work for The Children’s Society and it does some excellent work. What I am concerned about tonight is that rather like a child who has broken a toy and hides it under the bed, the Chancellor tried to hide the impact of this Budget by not presenting the distribution tables in the normal and proper way after the Budget. Fortunately, the IFS told us the truth, which is that people at the top are losing 0.2% of their income and people at the bottom are losing 7% of theirs. This is a phenomenally regressive Bill and a very regressive Budget. It will take £10 million out of the local economy every single year in my constituency. As hon. Members have said, one of the worst things about the tax credit cuts is that they affect in-work families, who are struggling in low-paid jobs to do their very best for their children. They are being given what my hon. Friend the Member for Nottingham East (Chris Leslie) has called a “work penalty”. The Bill worsens work incentives. A top-rate taxpayer who earns an extra pound can take home 55p whereas a lone parent on tax credits can take home only 25p.
The Chancellor believes that his rabbit—a rise in the national minimum wage—solves the problem. Of course we all welcome that increase, but it does not solve the problem. It does not compensate by the right amount, it does not compensate enough people and it does not compensate at the right time. Overall, 13 million people are losing from these measures. Some 3 million are losing £1,000 and 2.7 million people will gain from the national minimum wage. The mismatch is shown by chart B3 on page 208 of the report by the independent Office for Budget Responsibility. It says something that surprised me and is very pertinent:
“around half the cash gains”—
from the increase in the minimum wage—
“may accrue to the top half of the household income distribution”.
It shows that people at the bottom gain less than £600 and those at the top gain more than £1,000. Furthermore, in evidence to the Treasury Committee last week, it told us that only 14% of people in the bottom decile receive the national minimum wage.
I have concentrated on the issue of children and tax credits, but I have also had many messages from carers, sick and disabled people, and lone parents who are worried that the 30-hour condition is coming in before the extra childcare provision is in place. There are so many serious issues here, and it is a shame that we do not have time to address them.
Recently, Professor Amartya Sen said:
“Democracy should be about preventing mistakes through participatory deliberations, rather than about making heads roll after mistakes have been made.”
He is right. I have been in this House for 10 years, and I have never voted against my party’s Whip. I think that my right hon. Friend the Member for East Ham made a good case for the Front-Bench amendment. I shall vote for the amendment, but there are so many issues in this Bill that are deeply worrying that I cannot avoid going into the No Lobby against it tonight.
Several hon. Members
I will try to get everyone in, but I now have to reduce the time limit to four minutes. Let us stick with it. Interventions, if we must have them, must be short.
I am grateful for the opportunity to speak in this important debate. I wish to pick up on a few points relating to employment and apprenticeships.
First, I was pleased to see that in June we had another fall in unemployment in my constituency. As I mentioned in last week’s Budget debate, it is clear that the measures we have taken and continue to take, such as the benefits cap, the national living wage and the changes to the personal allowance, are encouraging people back into work and making work pay.
Apprenticeships play a key role in ensuring that our young people get into work and, importantly, acquire the skills they need to progress in life. In the previous Parliament, 2 million apprenticeships were created, 5,000 of which were in my constituency. In the past year alone, 11,000 apprenticeships have been created across Staffordshire. I am very much looking forward to attending the first apprenticeship graduation ceremony this Wednesday. I welcome the target of 3 million apprenticeships, as promised in our manifesto, which is now set out in clause 2 of the Bill.
There are three key points that I wish to make. First, we need to promote apprenticeships. As I said last week, I welcome the local campaign Ladder for Staffordshire. On its first day alone, it created 50 new apprenticeships. From my own experience, I know that we need to be better at connecting businesses, training providers and apprentices to ensure that all their needs are met and to mitigate any risks of an apprenticeship not working. Sometimes when such a partnership works, it happens by default rather than by design, with businesses stumbling across the right training providers and apprentices rather than using co-ordinated services, so there is more that we can do in this area.
I also feel that we need to do more in schools to direct young people to apprenticeships. It is important that vocational qualifications are seen to be as valuable as academic ones. We need to ensure that young people are directed to the right qualification for them. I note that the 3 million apprenticeships target is for England only. I would be interested to know what the targets are in Scotland, Wales and Northern Ireland, how they are faring and what we in England can learn from their experiences.
I welcome the annual reporting periods proposed in clause 2(3), and I hope that figures will be provided at a national, regional and constituency level, as they were previously. Although I appreciate that the reporting mechanisms in the Bill are intended to support the apprenticeship target, I feel that it would be valuable for them to continue beyond the end of this Parliament. After all, creating high-quality apprenticeships should be an aspiration for the long term and not just for the next five years.
I welcome the move to create more apprenticeships, as set out in the Bill. I will continue to meet businesses, training providers, schools and young people to understand their needs and ensure that they are represented. In the autumn, I will be looking to launch my own campaign to promote apprenticeships. I will be doing my bit to help us reach the 3 million target in this Parliament.
Welfare reform is needed, but if it is badly thought through it will hurt people, including low-paid workers. The Bill cannot be supported without major changes, so I say to the Government, think again. If the benefits and social security regime is not subject to sensible and proportionate reform, popular support for it across society will fracture, and the case for giving assistance to those in need will be undermined. That in turn will give those who are politically or ideologically opposed to providing assistance to the vulnerable, the temporarily jobless, the low-paid in expensive private sector housing, those with life-changing disabilities, carers and others the opportunity to destroy a social contract that has been steadily constructed and refined over decades.
The support regime must of course be refreshed and renewed for each new generation, and to fit prevailing social and economic conditions. Those who argue against any change are doing real harm to the durability of that social contract. But those changes must be carefully considered and evidenced, proportionate and progressive.
The Government are opening themselves up to accusations that their intentions may not be entirely pure and may not be focused on good and appropriate reforms. We can look at the rush, and at the dismissal of critical analysis of the consequences of tax and benefit changes. There is a seemingly cavalier and careless attitude to negative impacts on low-paid working families, carers, some people with disabilities, and absolute and relative child poverty. All those things suggest that the honourable and high ambitions of some Government Members—to reform the regime to help people out of poverty—risk being bound together with a lower and less honourable ideological fixation with urging the poor to sort themselves out.
I have long been in favour of sensible, progressive and radical welfare reform. Most people, including Labour party members and supporters, want those reforms focused on conditionality, which is not limited only to funds, to help people back to work. They want support for those who genuinely cannot work, and help for carers that gives them dignity, not a begging bowl. They also want a continuing commitment and specific policies to target and remove poverty. Those are all marks of a decent society and decent government. Yet I cannot and will not vote for the Bill today, despite the need for reform, because it risks making life more miserable, desperate and unforgiving for some of the most financially exposed and vulnerable people in our society. The full-throated proponents of the Bill do not seem to see that, or perhaps they do not want to see it.
The core mission of government surely has to be to help make the lives of people better, or, at the very least not to make them worse. That is why I urge all Government Members, including well-meaning supporters of the Bill, to think long and hard before swallowing it whole. The digestion of the contents by their constituents back home will be long and bitter, compared with the short-lived, sugary-sweet taste of a brief political moment in Westminster. I say to them: do not punish low-paid workers, when the IFS shows clearly that the combined impact of the tax and benefit reforms will do exactly that; do not further impoverish children, when groups such as 4Children, which are not against reform, call for changes to be made sensitively and intelligently; do not shoot the messenger by dismissing authoritative organisations and individuals who point out the flaws in the Government’s proposals.
The Bill as it stands will not have my support today, and unless it is changed to take into account the valid concerns that have been raised, it will not have my support in future. In the light of all the dangers contained in it, I call on the Government to think again.
It is a pleasure to follow the thoughtful and interesting speech of the hon. Member for Ogmore (Huw Irranca-Davies). He showed huge sincerity in his opposition to the Government, but during a couple of sections of his speech, I thought he might be joining us in the Lobby this evening, and I am disappointed that on this occasion he will not. I draw his attention to the words of my hon. Friend the Member for Mid Dorset and North Poole (Michael Tomlinson) and other hon. Friends who have pointed out that this is, in fact, the Welfare Reform and Work Bill. I thought the hon. Gentleman was getting there—surely we all support systems that work; surely we all want annual reports to the House on progress on full employment, troubled families and apprenticeships. There must be much in the Bill that hon. Members on both sides of the House can agree on.
The last Labour Government spent £170 billion in tax credits between 2004 and 2010. It is not unreasonable to ask whether that £170 billion, or at least some of it, could not have been better spent on measures that would change recipients’ life chances. That is particularly true since we know we have to live within our means, as my hon. Friend the Member for Gloucester (Richard Graham) stated so eloquently—far more eloquently than I put it in my intervention on him. Between 2010 and 2015, the welfare reform that we achieved made savings of £60 billion, helping to halve the deficit and restore confidence in our public finances. In the same period, employment increased by no less than 2 million. In my constituency, the number of people who are unemployed has fallen by a third, and I am sure that similar statistics could be quoted by hon. Members throughout the Chamber if they chose to reel them off.
The best way to tackle poverty and reform welfare is to ensure that everyone who can work has that opportunity. That is the best way to tackle poverty both in this generation and in the next. Under this Government, 387,000 fewer children are being brought up in workless households. That is hugely positive in enhancing the life chances of all our people. I am delighted that the Government are not only targeting full employment but ensuring, through the introduction of the national living wage and the targeted reduction of tax, that those working in lower-paid jobs get a fairer reward.
The proposal to reduce the welfare cap is right for two reasons. It will support a culture in which people know that work will always pay, and that it is the best way to maximise income and support a family. It is also right to redirect our support to enhancing life chances. The funds saved will go towards increasing the number of quality apprenticeships—I take the point made by the shadow Secretary of State that they must be quality apprenticeships, and I am sure that is what we will get. I know that enabling young people to achieve their ambitions is close to the hearts of all of us, on both sides of the House. I agree with my hon. Friend the Member for Cannock Chase (Amanda Milling) that that is an exciting feature of the Bill, which we should all support. The Government have overseen the creation of 2 million apprenticeships, delivering more apprenticeships in two years than Labour delivered in five. The Bill will take the aspiration further, with a target of 3 million apprenticeships.
I acknowledge much of what the hon. Member for Ogmore said, but there are great differences across the House in how we achieve our aims. We believe—
I speak on behalf of Plaid Cymru.
So, we have another round of cuts to social protection and a Government unrestrained by the alleged compromises of coalition. I note that the new leader of the Liberal Democrats has already left us. The Government are unrestrained in slashing the social safety net, shrinking the state and allegedly balancing the books, and doing this, they say, to put the public finances in order—indeed, claiming that it is in the interest of working people. They no longer talk about “hard-working families”; it is just “working families”. The election is over; the election is won; now it is the Government’s turn to be hard.
Government supporters say, “Aha! We have introduced the national living wage.” We saw the jubilation of the Secretary of State for Work and Pensions when that was announced—his ugly triumphalism at having got one over on the poor old Labour party—except it is not a living wage at all, and when combined with cuts to tax credits and a host of freezes and other cuts, people will be worse off overall, as respected bodies such as the IFS and the Resolution Foundation have made clear. I welcome any rise in the minimum wage, but a genuine living wage would provide a decent living and bring down the in-work benefits bill. What we are getting is the rebranding of the higher minimum wage, while a large chunk of tax credits is cut out—giving with one hand and taking much, much more with the other.
Look at the Government’s appropriation of the term “living wage”. They steal the language of social justice and talk about full employment, but there is a crisis of under-employment, low wages, insecure employment and precarious self-employment. Without proper measures to tackle those problems and boost the UK’s woeful productivity, the foundation is not firm and a dip in the global economy could swiftly push up unemployment again here and especially in Wales. Outside the headline figures, large areas of the UK still suffer from persistently high unemployment and levels of economic inactivity—areas on the so-called periphery. I live in Caernarfon, which is in no way peripheral to the people who live there, so what does peripheral refer to? It is areas out of the sight and out of the mind of the economic and governing elites. In my constituency of Arfon, the economic inactivity rate is 23.5%—almost a quarter of all people of working age are economically inactive.
The restriction of child tax credits to only two children seems to answer the question so often posed by Government Members: why should parents get support for more than two children when others cannot afford to have more children? However, it fails to answer a more fundamental question: why should any child be denied support through no fault of its own? It is a perverse logic that ignores a child’s inability to control their parents’ reproductive abilities, then punishes them none the less.
Will the hon. Gentleman give way?
I will not. The hon. Lady should have been here from the start.
That is the reasoning of the tyrant, from one-child China to Ceausescu’s Romania. Most grim of all are the tortuous complexities involved in demonstrating that the third child is the result of rape.
We sorely need a system that pays a fair wage for a fair day’s work, and a top-up when the Government’s minimum wage policy fails to provide an adequate living for families with children.
The Bill marks a true revolution in how the Government administer welfare, with the roles and responsibilities of the state, business and individual citizens clearly defined for the first time. Those who pioneered the welfare state at the turn of the last century intended it to be a short-term safety net for those in society who, for whatever reason, found themselves thrown on hard times. We Conservatives have long believed in the one nation principle of a hand up, not a handout when it comes to welfare, so through this reform Bill we seek to return Britain to a country that, once again, lives within its means and encourages aspiration among working people to get on and do well in life.
I am pleased to say that in Erewash we have bucked the national trend, with unemployment falling again this month to just 2.4%. Youth unemployment also continues to fall, and is now a third of what it was in May 2010. We have some fantastic employers in Erewash, such as FC Laser, which I recently visited. It is now investing in apprentices, helping our young people to earn while learning new skills on the job. That type of training is vital if we are to achieve a healthy, balanced economy, as it ensures a skilled workforce with a strong work ethic, making it less likely that they will need to rely on benefits or be out of work for an extended period.
Turning to social mobility, in Erewash we have a proud history of hard graft, whether in the manufacturing of Nottingham lace, Stanton Ironworks castings or railway wagons. Today, many of my constituents are still employed in a broad spectrum of industries that supply the country, and indeed the rest of the world, with top-quality goods and services. Put simply, they are hard-working people who do an honest day’s work.
Constituents often ask me why someone on benefits can get the same amount of money for doing nothing, and in some cases more, as they do for going to work day in, day out. I consider that to be unfair, and so do the Government, who have introduced a welfare cap to make the whole system fairer. Social mobility and a low welfare bill can be achieved only if going to work is an attractive option. We need to break the cycle of those who believe that it is okay to exist on benefits. We need to strengthen the links between businesses and schools to ensure that the example we set our children is that work is the right path for getting on and succeeding in life.
When I rose to deliver my maiden speech a week ago, I said that we needed to be bold in our vision for this country and that I would stick my head above the parapet for the good of my constituents, even if at times those decisions might be unpopular with some. I believe that the Government have a duty to support the most vulnerable in our society, but that we should also give working-age people the means and incentive to stand on their own two feet, independent of the state. By introducing measures such as the new national living wage and increasing the number of apprentice opportunities, we are doing just that. That is why I will support the Bill in the Division Lobby this evening.
Unlike the hon. Member for Erewash (Maggie Throup), I will not support the Bill tonight, because it is an ideological attack on in-work parents, children, disabled people, carers and, generally, society. Lest the Government forget, people do not choose to be on benefits; they are in receipt of benefits because they might not have the necessary access to work. That is the case for many people in Northern Ireland. As a former Minister with responsibility in this area, I can well recall that for many people achieving employment was impossible, even though it was what they most desired. It was what would have given them self-esteem, a position in society and a status.
Notwithstanding that, the Bill is clearly an assault on ordinary working people. It will deprive them of their necessary benefits. It will attack families with more than two children, and there are many such families in Northern Ireland. It is attacking the fundamental basis of civic society. For that reason, along with everything else, I cannot support it.
I want to look at one aspect of the Bill, the impact on child poverty. Due to parity in Northern Ireland, this legislation will eventually be ushered in there. Children’s charities have warned that the cuts will push more young people into poverty. Recent figures show that one in four children in Northern Ireland are living in poverty, while the UK average is one in six. In fact, the Northern Ireland Commissioner for Children and Young People wrote to the United Nations in June, along with the other UK Children’s Commissioners, to warn of the impact of cuts on young people if the Government insist on the proposals set out in the Budget and in this Bill. The commissioner said that levels of poverty are higher in Northern Ireland and that cutting in-work benefits would have a detrimental impact on the lives of young people, as 61% of children growing up in poverty across the UK live in families where at least one parent is working. The Bill is an assault on in-work parents.
It is imperative that the Government abandon the Bill and ensure that tax credits are maintained at the current levels to continue to provide assistance to working families who are largely dependent on them for their financial stability. The Government must also spell out the impact that a reduction in funds for tax credits and the refusal to provide for third and subsequent children will have on child poverty and on the wider economy, because there is no doubt that the implications of an attack on in-work benefits will be counterproductive for our economy, sucking money out and undermining it. For those reasons, I and my party will oppose the Bill tonight.
I am sure that all of us in this House believe in social justice, but I support this Bill because it recognises that the most effective tool to achieve social justice is encouraging work for all. It is work that provides dignity, security and life chances. It is work that improves general wellbeing and sets an example to the next generation. Work is at the centre of the Bill. It is a Bill that pivots our society from high tax to low tax, from low private sector wages to high wages.
It is worth noting that there are 2 million more people in employment now than in 2010. That means that, as has been said before but bears emphasis, there are now 370,000 more families with positive role models. Previously, one in five households had no one working. There is no social justice in that, as there is no social justice in unemployment. We should go further and I am glad this Bill agrees. Nothing less than achieving full employment should be our goal. That is why the imposition of a duty to report on progress to full employment is right.
So it is with apprenticeships. The coalition Government generated 2 million apprenticeships in the last Parliament. Our ambition now is to generate 3 million more. That is bold, but I am pleased that the Bill imposes a duty to report on progress so that this issue gets the attention it deserves. That should go hand in hand with ensuring that opportunities are made available to people, and children in particular, from all backgrounds—hence, the duty to report to Parliament on obligations to address life chances.
On welfare, it is correct to say that tough decisions have had to be made, but it is worth considering the context. Between 1997 and 2010 welfare spending rose by 60%. Tax credits, a measure originally expected to cost £600 million, which was the only reason Gordon Brown was able to sneak it under the nose of Tony Blair, now cost £30 billion. To place that in context, the defence budget is only about £35 billion. It is not right that this measure should effectively subsidise low wages in the private sector. It is unaffordable. But there is a question of resilience as well. Just before the 2007 financial crash Greece had a debt to GDP ratio of 100%. It meant that the cupboard was bare when the storm hit. Now in the UK we have a debt to GDP ratio of 80%. It means that we are spending £33 billion a year in debt interest.
It is also right to recognise that the bottom 3 million taxpayers have been taken out of tax altogether, and a further 26 million people have benefited from tax cuts. That is part of the context as well. The richest 1% now contribute 30% of the tax take. That is quite right. The richest 20% contribute 80% of the bill. That is right and it is progressive.
Finally, this is not just about social justice; it is about generational justice too. We owe it to our children and grandchildren to bequeath to them a country that can pay its way. Just as important, we must leave a country that can care for the next generation of vulnerable people. Thirty years from now, a young man or woman yet to be born will approach the state seeking help, having fallen on hard times. Our generation owes it to him or her not to leave the cupboard bare.
Ours is a disabling society. Some are born impaired, some acquire impairments. Some of those are visible, some invisible. All of us will, in time, feel the invisible agency of a society that is organised for the convenience of able bodies, a society which for too long has approached the mental wellbeing of its people with silence, embarrassment and denial. It is society that disables. It inscribes its exclusionary assumptions everywhere—on pavements, on buildings, in interview panels, in bleak ATOS assessment rooms.
The Government propose to abolish the employment and support allowance work-related activity component, which was originally envisaged as a way of supporting people with limited capability for work as a result of sickness or disability. It sought to recognise the barriers that people with disabilities face in seeking work, the disabling attitudes, the disabling environments, and the additional costs that disabled people bear, day to day, leading their lives. Employment and support allowance extended a small measure of recognition of the inequality that our society generates, and now even that small gesture is to be torn away. Paul Farmer, the chief executive of Mind, is reported as saying:
“People being supported by ESA receive a higher rate than those on JSA because they face additional barriers as a result of their illness or disability, and typically take longer to move into work. Almost 60 per cent of people on JSA move off the benefit within 6 months, while almost 60 per cent of people in the WRAG need this support for at least two years.”
Someone close to me who has bipolar disorder used to use her employment and support allowance to pay for things when she found it impossible to face the world. She would employ somebody to take her child to school and someone to provide talking therapies and things that improved her mental health. Does my hon. Friend agree that sometimes mental disabilities can be just as financially costly as physical ones?
I thank my hon. Friend for that very well-made point.
According to the House of Commons Library, in November last year 492,000 claimants fell within the employment and support allowance work-related activity group—people assessed as being capable of undertaking some work—almost 250,000 of whom are classified by the Government as suffering from mental and behavioural disorders. Under the Bill, these people will see their payments slashed, at a saving to the Exchequer of £640 million a year by 2020. Affected claimants will receive up to £1,500 a year less than under current rules. A recent study by Scope found that disabled people spend an average of £550 more in disability-related expenses than non-disabled members of the population. These are not extravagances, they are not luxuries, and they are certainly not lifestyle choices.
Child tax credits will be paid only to families with up to two children, even if the third is disabled. Does my hon. Friend agree that if there is a disabled child in a family, they should be exempt from this cap?
I absolutely and fundamentally agree.
While £30 a week may seem like small change to the Secretary of State, for whom it is a breakfast, for too many disabled people it is the difference between hunger and malnutrition—between turning on their fire or sitting shivering in the dark, or between booking a cab to take them for their one day out a week or sitting at home alone, excluded from society. We will not tolerate that. Disabled people are not passive victims. This Government see the poverty they inflict on disabled people, on their loved ones and on their children as someone else’s problem. They talk a good game on getting disabled people into work, but dismantle the best tools we have for doing so. They have used traditional tools: cynical innuendo about disabled people, with baseless assertions that they are workshy, idle, and disincentivised by employment and support allowance from seeking work. Knowing the price of everything and the value of nothing, they assume that everyone organises their lives according to their cynical standards. This is a Government determined to ignore the social barriers they are even now erecting.
Tonight the conscience of this Chamber will be tested. Hubert Humphrey, in his last speech, said:
“The moral test of government is how it treats those who are in the dawn of life, the children; those who are in the twilight of life, the aged; and those in the shadows of life, the sick, the needy and”
those with disabilities. The Minister’s hand signed the paper, but this Government, who would rather parrot empty slogans than address the real needs of our people, have no tears to flow. Yet the tears flow of my constituents, and yours and yours. If you vote for this Bill or abstain, go home to your constituencies and prepare your explanations.
We hear that there is something of a quandary among Labour Members about how to vote, perhaps characterised as a decision on whether they go for political pragmatism or principles of social justice. Let me assure them that they need not worry. If they vote with us, they will be voting for social justice, because, as my hon. Friend the Member for Cheltenham (Alex Chalk) said, this Bill is based fundamentally on social justice.
I want to highlight the three key principles that show that this Bill is about social justice. The first and most important relates to the dependency culture. There is an idea among Labour Members that if benefits are reduced, that will be it: people will be static and will never be able to go out into the workplace and improve their situation. We have to accept, however, that those benefits are far too generous—£30 billion a year is huge—particularly the individual awards to workers.
I have run a small business and have seen what it is like. People earn £13,000 from work and a similar amount from tax credits. In that situation, benefits are permanent. How can someone in that position ever reduce their benefit take when the amount they need to earn from work in order to overcome it is so big? That represents a massive extension of the dependency culture, and taking the tough decisions to row it back is a socially just agenda, which I support.
The second key principle relates to fairness to taxpayers. After all, the working population have to pay for these benefits. I strongly support the benefits cap. There is a great social injustice when people in work earn less than those on benefits. That may not happen in a large number of cases, but we should never accept it. It should be a key principle of our welfare system always to seek to reduce the benefits bill and increase in-work wages. That is our agenda, which will come through in the national living wage.
The third principle is the move towards full employment. I want to focus on a point that the right hon. Member for East Ham (Stephen Timms) made several times in his speech. He said that the measures attack work incentives, but I am afraid that that simply does not stack up in the real world. I am talking not just about my experience; every other employer to whom I have spoken who, like me, has had staff on tax credits, finds it difficult. That is particularly the case with part-time staff who are on tax credits: they do not want to work any more hours and often do not even want to take pay rises, because of the dependency system. That is what we are up against.
I wonder whether the hon. Gentleman has reflected on the fact that in 1997 the employment rate among lone parents was less than 45%, whereas today it is getting on for 65%. Those who have looked at the matter have confirmed that that dramatic improvement is largely thanks to the additional incentive from tax credits.
The employment statistics are very much on the side of the agenda we have been pursuing: employment is now at a record high. The fact is that this Bill is socially just because it will enable people to stand on their own two feet and to support themselves through their wages, not rely on the state. That is a sound Conservative principle.
I want to reiterate two of the points my hon. Friend has made. First, I am also an employer and have lost count of the number of times part-time workers have turned down wage increases or further hours—when I know that their households are short of money—purely because of tax credits. On the flipside, just this Friday I was visited in one of my constituency surgeries by a young married lady with three autistic children—it is a very sad case—who was scared to accept payment for the precious hours she worked as a volunteer teacher, for fear of having her benefits taken away.
My hon. Friend corroborates my point. I repeat that this is not a fantasy: every employer to whom I have spoken is wrestling with this situation. Tax credits can work as disincentives. I accept the point made by the right hon. Member for East Ham about lone parent employment, but to be completely honest I do not have that statistic to hand. The general statistics on employment are extremely strong.
Our agenda is one whereby we will reduce benefits but raise wages. Real wages are now increasing sharply. Obviously, after the credit crunch there was a period when wages were static. It was very difficult to follow that financial shock with a strong recovery, but we have achieved economic stability. The next stage is to share our prosperity more widely and the key to that is not the benefits system or dependency, but higher wages and people supporting themselves. That is a sound Conservative agenda, but it is also socially just.
The Bill’s title is one of the finest examples of doublespeak I have seen outside of Orwell’s own texts. The Bill is not about welfare reform; it is about welfare cuts. As for being about work, I repeat what I said last week in my maiden speech: this Government must realise that they cannot threaten, demonise or sanction people into work.
It is absolutely clear that the best route out of poverty is work, but we must keep open the safety net of the social security system for those who cannot work permanently or temporarily. The Bill cuts away many of the links in that safety net and will leave people to fall through into poverty. For example, removing the work-related activity component of ESA just punishes those who are sick or temporarily unable to work through no fault of their own.
ESA is supposed to be available for people identified as having a “limited capability for work” as a result of sickness or disability. According to the House of Commons Library briefing, there were just short of 500,000 ESA claimants in that group in November 2014. Of those, 250,000 suffer from mental ill health or behavioural disorders. Under this cut, claimants will receive £1,500 less than they do now, which is an absolute scandal.
The chief executive of Mind, Paul Farmer, has said:
“People being supported by ESA receive a higher rate than those on JSA because they face additional barriers as a result of their illness or disability, and typically take longer to move into work. Almost 60 per cent of people on JSA move off the benefit within 6 months, while almost 60 per cent of people in the WRAG need this support for at least two years. It is unrealistic to expect people to survive on £73 a week for this length of time.”
I could not agree more. This cut does nothing to encourage people into work. It just forces them into poverty, and will ultimately push people with mental health issues and illnesses, which have held them back from work, further to the margins of society.
Yet again, we have heard welfare described in this debate as a lifestyle choice, which is utterly shameful. I say to the hon. Member for Mid Dorset and North Poole (Michael Tomlinson) and his colleagues, “There by the grace of God go I”. We never know when mental illness will affect us, our friends, colleagues or family members. It does not happen by choice; yet this Government have chosen to cut the support available to help them to return to work. It is disgraceful.
My hon. Friend mentioned sanctions. As reported in today’s Paisley Daily Express, my constituent Colleen Duncan has had her benefits stopped erroneously not just once, but twice. The first time was for not attending a meeting that she actually attended. The second sanction was for missing a back-to-work interview when she was actually securing a job by attending a job interview. Does he agree that we cannot trust the Government to implement fuller welfare reform when they cannot run the current system properly?
My hon. Friend makes a point that any SNP Member could have made, and he makes his point well on his constituent’s behalf. I hope that the Minister for Employment was listening.
The four-year benefits and tax credits freeze will reduce the real terms value of benefits received by most working-age recipients. The IFS has estimated that 13 million families across these isles will lose an average of £5 per week as a result of the freeze. That includes 7.4 million families in work, whose incomes will drop on average by £280 per year. That £5 may be a cheap lunch for some Conservative Members, but £5 a week could be the difference between heating or eating, new school shoes for the kids or getting transport to their work. Taking money from those in low-income jobs does not make work pay; it just pushes them closer to the breadline.
SNP Members came into politics to pursue progressive policies and social justice and if we are to stay true to that—I am looking at Labour Members—we cannot do anything other than oppose the Bill. As the IFS has pointed out, when the measures are taken in the round with other Budget measures, we can see the real winners and losers. The poorest four income deciles will see their annual net income cut by between 3% and 8%, or a drop of between £600 and £1,300. The higher up the income deciles, the smaller the income decline until the ninth decile, the second richest in society, who are to receive a net income rise.
What happened to the social solidarity Scotland was promised last year? What happened to the pooling and sharing of resources? What happened to the promises that our social security system would be safe with a no vote? They are all nailed to the wall, with this Bill and the Budget, as being utter fabrications, myths and untruths. The Bill, along with the Budget, is part of this Tory Government’s ideological, social-engineering agenda. They are punishing the poor, the disadvantaged, the sick and low-income working families for economic failings that are not of their doing. Hon. Members should see that this Bill will take our society backwards and vote against it.
The Welfare Reform and Work Bill has to be seen in the context of the announcements on the living wage and the increases in tax allowances. The overall theme of increased pay, full employment, lower tax and reduced reliance on the state is one that I support. I particularly welcome the commitment to apprenticeships and the support for troubled families. At the same time, it is vital that support is maintained for those who cannot work or who need help to get into work. It is therefore right that the DLA and PIP are excluded from the welfare cap and the freeze on benefits, and that, contrary to some pre-Budget reports, they will not be taxed.
I shall address some of the details of the Bill, but before doing so I want to highlight one part of the interplay between pay, tax and benefits that must be addressed, and that is savings. One of the great advances of the 20th century was the growth of various kinds of social insurance to guard against or smooth out the risks of everyday life. In the UK, the NHS is our health insurance, and our free primary and secondary education system is our insurance against the school fees that most parents in the world have to pay. The question is how to insure against the other basic costs of life, such as food, housing, energy and transport. The benefits system is designed to do that, but it is increasingly at the level of a safety net, as many Members have said. Benefits provide a minimum and are expected to be a stopgap until someone is able to return to work.
That being the case, we need to support people to make additional provision for the times when they are out of work, for whatever reason. That is why I believe that we should look closely at lifetime savings accounts that provide substantial incentives for people to save and that can be drawn down in times of need to supplement benefits.
I shall now look at points in the Bill or relevant to it that constituents have raised with me. There are many, but I shall focus on five. First, I would like to see clear action on making the use of sanctions fair and consistent. Benefits are, as I have said, a safety net and if that safety net is withdrawn, albeit temporarily, the situation becomes unsafe. Sanctions must therefore be used only where there is a deliberate and repeated failure to comply with conditions.
Secondly, we need to know more about the conditions surrounding the removal of housing benefit from the under-21s. Although that proposal is not covered in the Bill, the rules may be brought forward in the near future. I know that the Department is working closely with young people’s housing providers to ensure that vulnerable young adults are protected. My major concern is over reaching a fair and workable definition of “estrangement” for situations where young people can no longer live with their parents because the relationship has broken down. We must ensure that proper provision is made for their housing in such circumstances.
Thirdly, we need to examine carefully the proposed removal of the work-related activity component of ESA and the equivalent in universal credit. It was my understanding —others have said the same—that the component was designed to meet the additional costs that someone who has a health condition may need to pay. I do not understand what has changed.
Fourthly, the replacement of the child poverty measures with the life chances indicators means that there is no clear assessment of the position of families who are in work but on low incomes. I welcome the additional measures on worklessness and educational attainment, but we also need a realistic income-based indicator for those who are in work.
Finally, we have to appreciate the impact that the reduction in rents will have on the building of additional social housing. Perhaps we need further capital investment by the Government to offset that.
A combination of higher wages, lower taxes, incentives to save and a lower dependence on welfare, with proper support, is the right way to go, but, as always, the details are essential, as is the phasing of the measures.
I make this clear: I would swim through vomit to vote against the Bill, and listening to some of the nauseating speeches tonight, I think we might have to.
Poverty in my constituency is not a lifestyle choice; it is imposed on people. We hear lots about how high the welfare bill is, but let us understand why that is the case. The housing benefit bill is so high because for generations we have failed to build council houses, we have failed to control rents and we have done nothing about the 300,000 properties that stand empty in this country. Tax credits are so high because pay is so low. The reason pay is so low is that employers have exploited workers and we have removed the trade union rights that enabled people to be protected at work. Fewer than a third of our workers are now covered by collective bargaining agreements. Unemployment is so high because we have failed to invest in our economy, and we have allowed the deindustrialisation of the north, Scotland and elsewhere. That is why the welfare bill is so high, and the Bill does as all other welfare reform Bills in recent years have done and blames the poor for their own poverty, not the system.
On Friday I brought together at a poverty seminar welfare advice agencies, local churches and religious groups to talk about why people in my constituency are poor. They are poor because rents are so high. People struggle to keep a roof over their heads. The welfare cap in the Bill will remove £63 a week from those families who are simply trying to keep a decent home over their children’s heads.
The second reason people are poor is low pay. People in my constituency depend on tax credits to live. Parents choose whether they or their children eat, and the Bill will take £6 a week from every one of those families. The other reason for poverty in my constituency is that people have disabilities—they struggle to work but cannot do it. The Bill will take £30 a week from people with disabilities who are in the work support group and desperately trying to get work. Those are the reasons for poverty in my constituency, and I find it appalling that we sit here—in, to be frank, relative wealth—and are willing to vote for increased poverty for people back in our constituencies.
Some of the benefit cuts will be appalling. One measure not in the Bill but being sneaked through by the Government is a 30% cut in support allowances for asylum-seeker children. We are about to ensure that we push some of the poorest children in our society into further poverty.
We need an honest discussion about the reasons for that poverty and how we can invest to ensure that we lift people out of poverty. It is about some of the things that have been mentioned tonight, such as lifting wages. To come along and describe a derisory increase in the minimum wage as a living wage—we know that a living wage in this country is at least £10 an hour—is a disgrace to English rhetoric if nothing else. It is also rubbing it into the faces of the poor.
Tonight we have seen yet another way in which we blame the individual for the failings of our society. We need a proper debate about how we go forward investing in housing, lifting wages, restoring trade union rights and ensuring that we get people back to work and do not have high pockets of deprivation in areas such as mine and around the country.
Tonight the debate has not served the House of Commons well, but I say to Labour Members that people out there do not understand reasoned amendments; they want to know whether we voted for or against the Bill. Tonight I will vote against it.
In 2003 the former Member for Kirkcaldy and Cowdenbeath was spending 0.9% of GDP on tax credits. Under his stewardship that rose to 1.9% of GDP in 2010. By 2020, this Government will have brought that down again to 1.2%, which will still be one third more than the highest levels of spending on tax credits under Labour from 1997 to 2003.
I support the Government’s desire to focus our welfare spending on those who are particularly vulnerable, and to make the system encourage work and people doing better at work. Welfare should be a safety net, not a net that ensnares those it is meant to help. People understand that welfare must be reformed, and even some Labour Members know that the system needs to change and that Gordon Brown’s attempt to create a client state was wrong. His use of tax credits to flatter his relative poverty measure was disingenuous.
People in Britain find abuse of welfare distasteful. A week ago a constituent who has been diagnosed with a terminal illness came to me. He may have a more difficult time under these measures, but he said, “I’m so glad that you are tackling this because the level of welfare is completely unfair on people who work.”
The Bill is full of positive steps such as measuring the root causes of poverty and rightly emphasising the positive intent in calling the measurement process “life chances”.
Does the hon. Gentleman accept that the measures in the Bill do not recognise the fact that two-thirds of children in poverty are from families in work, and that the number of poor children in families in work, as a proportion of all children in poverty, has been increasing? It increased under his Government from 54% to 63% and he is not even going to measure that.
We need to enable more people to get better work, and that is what my Government are focused on doing.
There are other very good measures in this package, such as keeping financial support for people in difficulty with their mortgages, and ensuring that people who claim benefits now face the same choices as people in work. We need to ensure that a job always pays better than welfare and turns life chances around.
It is telling that the Opposition are so divided on these issues, tabling conflicting amendments and saying they will come up with more later. Who knows what they will support in the end? What we do know is that the Liberal Democrats have for now, by their blanket opposition, moved further to the left than the Labour party and into the same basket as the SNP. No longer do they seem to have any intention of balancing the budget and rebuilding our finances.
I commend the Bill to the House.
The Bill as it stands will hurt some of the most vulnerable people in our society. I cannot support a Bill that abolishes the target for the Government to reduce and eradicate child poverty.
Lifting children out of poverty should be one of the primary duties of any Government. I am proud that the previous Labour Government made this issue a priority, introducing the Child Poverty Act 2010, and helping 1 million children out of relative poverty and 2 million children out of absolute poverty. We must be able to measure and monitor levels of child poverty. Progress has stalled in the past five years and it is outrageous that the Government want to scrap the child poverty targets just to save themselves the embarrassment of missing them.
During the previous Parliament, we saw support cut for families on low incomes, many of whom are in work. Cuts to tax credits hit households with children the hardest, with families losing thousands of pounds. Figures from The Children’s Society show that 15,000 children in Grimsby were adversely affected by below-inflation rises in child benefit and by reductions in tax credits. Now, more than one third of children in my constituency are in poverty. In the East Marsh ward, the figure is close to one in two. Constituents, teachers and social workers in the town have reported to me increased numbers of children arriving at school hungry and without school equipment, and whose school dinner is the only expected meal of the day.
It is not acceptable to balance the books off the backs of the poor; nor is it acceptable to backtrack on the work done in the past two decades to reduce deprivation while 2.3 million children are still living in poverty. I cannot support the removal of child tax credits from families with more than two children, and I cannot support a Bill that will remove protection from the most vulnerable young people. When I was 17, I needed assistance from the state because I did not have anywhere to live. The Bill will take away the very assistance from young people—very vulnerable young people—that I benefited from. Protections are not in place, and if Ministers had been in the position I was in, I doubt they would be proposing these changes.
Again, Labour has a record to be proud of on this issue. The previous Labour Government more than halved homelessness during our time in office. Since 2010, however, homelessness has gone up by 25%. I fear that removing housing benefit from under-21s could drive young people who have nowhere else to go on to the streets.
There is a driving narrative among Ministers and those on the Conservative Back Benches that people on benefits are making a lifestyle choice, and that when 18-year-olds leave school they make a choice between going to university, getting a job or going on benefits. The reality is that many young people find themselves in incredibly difficult circumstances, and they need to be supported. Whether they have fallen out of education, had to leave home because of a breakdown in a family relationship or been let down by the care system, we should not turn our backs on them. A Government who remove support from anyone in those circumstances are not, by any stretch of the imagination, a one nation Government. I urge them to think again about the effects the Bill will have on some of the most vulnerable people in our country, and to accept that the Bill needs to change.
The United Kingdom represents 1% of the world’s population; it also has 4% of the world’s wealth and accounts for 7% of the world’s welfare. That is clearly not sustainable. During the last Parliament, I had the honour of sitting on the Work and Pensions Committee. We conducted several investigations and produced reports on Jobcentre Plus, the Work programme, universal credit, benefit sanctions and pensions reform. The Bill improves on the work done in the last Parliament.
Everyone with the ability to work should be given the support and opportunity to do so. The previous system wrote off too many people and left too many trapped in a cycle of welfare dependency. Over the past five years, the number of people in Weaver Vale claiming jobseeker’s allowance and universal credit while not in employment fell by more than 1,000—a 51% drop. This Government’s long-term economic plan is clearly working for Weaver Vale by getting people off a life on benefits and back into work.
Welfare reform is not just about saving money; it is about transforming lives. Employment has been this Government’s real success, with 2 million more jobs, and with 1,000 jobs created each and every day during the last Parliament. We understand that the route out of poverty is not through welfare; poverty can be left behind only through work. The Office for Budget Responsibility has predicted that a further 1 million jobs will be created over the next five years, but we are the party of ambition and we want to go further. The Bill is working to a target of full employment.
I have held four annual jobs and apprenticeship fairs in Weaver Vale, and I have plans for more. The fairs involve bringing together local and national employers to showcase the job and apprenticeship opportunities they have available. Hundreds of jobseekers attend the events and benefit from seeing what is on offer and hearing first-hand accounts of how others have managed to get off welfare and into work.
The Jobcentre Plus and employment support schemes that were introduced in the last Parliament, which are being expanded in the Bill, underpin our success in getting people off benefits. With the jobcentre’s help and guidance, most people move off jobseeker’s allowance quickly, with more than 75% of people ending their claim within six months. The minority of people who have been on jobseeker’s allowance for a longer time finish the Work programme and move on to the help to work scheme, in which they have to take up one of three different types of intensive support depending on what is preventing them from finding work. That could involve a daily meeting with their jobcentre adviser or taking up a new activity to improve their skills base. Previously, a claimant needed to attend only once or twice a week. Claimants whose lack of work experience is felt to be holding them back from finding a job might be asked to undertake a placement in their local community.
For jobseekers with multiple or complex barriers to work, the Jobcentre Plus advisers spend more time with the claimant looking at how to tailor back to work support. The help to work scheme is rightly mandatory, and those who fail to participate face financial sanctions. Conditionality remains a necessary part of the benefits system and is still one of the most effective tools for encouraging engagement with the employment support programmes at Jobcentre Plus.
The Bill continues the work of my right hon. Friend the Secretary of State in the last Parliament on restoring to the core of Britain’s welfare system the ethos that it always pays to work. The reforms are transforming the lives of some of the poorest families in our communities and giving people the skills and opportunities to get on in life and stand on their own two feet.
In order to keep to the time limit, I will turn immediately to the Government’s intention to increase the tax credits withdrawal rate—the taper—from 41% to 48%, and to the cut in the tax credits income threshold from £6,420 to £3,850 a year. Those are two of the most damaging and far-reaching changes, and the Government are determined to press ahead with them, but in fact they are not in the Bill. They will be dealt with in secondary legislation, yet they will have an enormous impact on family incomes, and the Bill needs to be considered in the context of those changes.
Increasing the taper from 41% to 48% will make it less attractive to seek more hours of work and will produce a marginal rate of tax higher than that paid by those on the 45% additional tax rate—those earning more than £150,000. Combine that with the cut in the tax credits income threshold—the point at which the withdrawal of tax credits begins—from £6,420 to £3,850, and people working on low incomes will be hard-hit. Furthermore, those earning just above £7.20 an hour, the new minimum wage from next spring for over-25s, will gain nothing. Figures from Citizens Advice show that a couple with one child, one working 37 hours a week and the other working 18.5 hours a week, both on £8 an hour, will lose £646 per annum; a similar couple with two children will lose £2,400; and a single parent with two children, who works full time, will lose £1,862. That is no way to treat those working hard on low incomes and with little prospect of getting better-paid work.
I am absolutely opposed to limiting child tax credits to two children. What if a family’s income suddenly drops? If one earner loses a reasonably paid job and can find only a replacement job on much lower pay, the family might become eligible for tax credits, but they will not be eligible for the family element or anything for the third child. What about cases of family break-up, in which one parent—usually the mother—is left with sole responsibility for three or more children? The whole point of providing tax credits for children is that a child needs support, no matter how the family income has fallen in hard times.
The Secretary of State has talked about education and about better-paid jobs being ways out of poverty, but first a child needs food to develop healthily and clothes to wear at school. Only one in seven families in the UK have three or more children, and nine out of 10 families with three or more children have one adult in work. We should make sure that every child has food and clothing and provide support where family incomes are low.
The Secretary of State justifies the extension of conditionality to single parents of three and four-year-olds by saying that the Government will roll out additional childcare, but we already know that their manifesto promises on childcare are being postponed. The provision of childcare is devolved to the Welsh Government, so the change presupposes, or assumes, that the Welsh Government will provide exactly the same support, but that Government have extended the Flying Start scheme while the Tory Government have slashed Sure Start centres in England. They should not be introducing measures contingent on spending on specific provision by the Welsh Government without discussion with Welsh Ministers and the appropriate Barnett consequential funding.
I am also concerned about the freeze on payments such as tax credits and jobseeker’s allowance that the Bill will enshrine in legislation. That comes on top of previous freezes implemented since 2010. Never before this Secretary of State came to office was the link between benefits and inflation broken; there was always uprating to reflect inflation, even in the time of Margaret Thatcher. The way to reduce benefits bills—
When viewed alongside the recent Budget, this important Bill shows a clear determination among Conservative Members and the Government to recalibrate Britain and our society in a way that is to be welcomed for the reasons that many of my right hon. and hon. Friends have given.
I support the Bill wholeheartedly, but many Members will be looking for further detail and clarity as it progresses. In particular, I draw Ministers’ attention to carers and the need to ensure that local authorities have enough money to deliver the troubled families programme, which I welcome. Additional thinking also needs to be given to the condition regarding a woman having to prove rape. That is an enormously sensitive issue on which further work and clarity are needed.
Government Members have sat and listened to this debate in amazement. In the speeches of Opposition Members, Ministers have resembled the four horsemen of the apocalypse, riding through the town, with the firstborn having to be sold and vital organs having to be cut out to pay the bills. It has been a debate riven by ideology; not the ideology of the Government, who have approached the Bill as a pragmatic and one nation Government, but the ideology of the left—both the separatists and the Labour party—which believes that welfare is and should be a lifestyle choice. I do not know which planet some Opposition Members are living on if they do not believe that certain people in society have made a choice. Under the system that has been allowed to emerge under Governments of both colours, welfare has ceased to be a safety net and has become a way of life. Let us return to the welfare system that Beveridge envisaged: a helping hand up, and a safety net below which no fellow citizen should fall.
Some may want to wade through vomit, like the hon. Member for Hayes and Harlington (John McDonnell), but I suggest that the hon. Gentleman is wading through the primeval swamp, for the Labour party is clearly in disarray. No Labour leadership contender was prepared to put his or her name to either the Opposition or the rebel reasoned amendment.
I listened with great attention to the Scottish nationalists this afternoon, because, according to the press, they can no longer say their Rs. Well, they could certainly say their Rs today, but I am afraid that, when it comes to welfare reform and economic management, they do not know their Rs from their elbow.
The Bill will reward work, incentivise our fellow citizens, and, most importantly, deliver fairness to hard-working families and the taxpayers who have to pay the bill. My right hon. Friend the Secretary of State has worked hard on this Bill, and it deserves the full support of the House.
It is hard to see how the changes contained in the Bill will not result in hardship for the most vulnerable families. We know that the cuts in tax credits will have a serious impact on working families earning low wages, and that neither the increased minimum wage nor the higher personal allowance will plug the gap. We also know that there will be less support for families with more than two children, which will push even more larger families into poverty.
As usual, however, the devil is in the detail. Behind the headline reduction in the household benefit cap to £20,000 outside London is something else that the Government are doing. Proposed new subsection (4) in clause 8 will allow the Secretary of State to change the cap at any time, without consulting Parliament. It grants the Secretary of State significant powers, and provides for no scrutiny whatever. In effect, it means that the Government could continue to lower the cap time and again, rendering more and more families unable to make ends meet, and forcing more and more children into poverty. I urge the Government to reconsider their decision, and—as was suggested by my right hon. Friend the Member for East Ham (Stephen Timms)—to amend the Bill so that Parliament will be able to play a role in scrutinising, debating and voting on any further changes to the cap.
Given that the Bill will make many more families significantly worse off, it is not surprising that the Government no longer want to measure how many children are living in income poverty. The headline measure in the Child Poverty Act 2010, which was passed with cross-party support, is 60% of median income. That measure is internationally recognised and allows for monitoring and transparency. However, the Government want to scrap it and replace it with a measure of workless households and educational attainment. Given that 65% of children in poverty live in a household where at least one adult works, I believe that changing the definition of child poverty is an attempt to avoid scrutiny of in-work poverty. Let us be clear about what that means. Clause 4 will repeal the Child Poverty Act in all but name, but deleting the term “child poverty” from the statute book will not make the problem go away. Changing the definition does not mean that parents working on zero-hours contracts and receiving the minimum wage will not have to rely on food banks to feed their children.
The Bill sends the message that child poverty does not matter, and that as long as parents are in work, we need not worry about whether they can afford to feed and clothe their children. For that reason alone, I will vote against the Bill.
This Bill, in combination with the summer Budget, asks us to make three choices. It asks us to think about what sort of society we want to live in, the place of welfare in that society and whether welfare should be a way of life. It asks us to think about the relationship between the state, employers and labour. It also asks us about our tolerance for people being better off on welfare than in work. I know where I stand on those three issues, but I have heard that some on the Opposition Benches are wavering.
On the first of those questions—what sort of society we want to live in and the place of welfare in that society —I am pretty sure we have a consensus that welfare should be a safety net and should be a hand up rather than just a handout, but that means that a benefit such as child tax credits, which nine out of 10 families are receiving, simply cannot be right. Either a benefit should be universal, as with the NHS, or it should help those in trouble, but this one is at present stuck somewhere in between. It is absolutely right that we should move towards tax credits being for far fewer families—five out of 10 families in due course—but arguably we should go further, because in future people’s incomes should cover their cost of living. That is the direction we are going in with the living wage going up towards £9 an hour in 2020.
On the second question—the relationship between the state, business and labour—right now we have a high employment society, but we have a problem of low pay topped up by the state combined with low productivity. We need to move to a situation in which people have a decent wage and businesses keep more of their earnings through there being lower tax, with those earnings being reinvested in the workforce. We will then have a workforce that receive higher pay and that are worth more to their employers, who invest more in their workforce. That is a much better economy to have, with people being better paid and more productive.
The third question—our tolerance of people being better off on welfare than in work—was, I am sure, a real sticking point for all of us on the doorsteps. We got a very clear message from the voters at the election that it is not right for people to be better off on welfare than in work. It is a huge source of resentment when people see they are paying taxes that support somebody in a lifestyle they cannot afford. A couple might stop at having one or two children when they would like to have more but they realise they cannot afford it.
Will the hon. Lady give way?
I am sorry but we are short of time, so I will keep going.
It is right that those out of work or receiving benefits should face the same tough choices as those in work and living off their income. Three wards in my constituency are among the most deprived 20% in the country, and since becoming an MP I have prioritised spending time with my citizens advice bureau and local food bank. In the past I have worked as an outreach worker for the homeless, so I do really care about this subject—it is not just something I feel I should say.
It is critical to recognise the three principles of the Bill: that the best way out of poverty is work; that we have a better economy when we have people on higher pay with lower taxes and there is higher productivity as well as high employment; and people should be better off in work than on welfare. That is not just to do with incentives; it is about being one nation, with everyone having a shared stake in the nation’s prosperity.
We in the Democratic Unionist party have been outspoken in our opposition to welfare reform and I rise to continue that. The reforms outlined today are too stringent to work, and we fear that the most vulnerable and the needy will suffer. Those who need the help will struggle and, whether the Government want to admit this or not, I see people in my advice centres who will be worse off. I see people who are on disability allowances for a very good reason—who need to pay for carers and who cater for the day-to-day needs of their family. This is a matter of their being ill and needing help.
I believe passionately that we have a responsibility to help those who are less well off. I support the international fund that helps developing countries, and I advocated and voted for its retention. How can I do that and then stand here tonight and not advocate on behalf of those in need in my constituency? I am aware of those who take advantage and play the system, but I am aware also of those who do not, and it is for those people that I stand here tonight and make these comments.
Tonight Sinn Féin Members, who do not attend this Chamber, will be sitting at home talking about austerity but they will not be here to vote against it. They will be sitting watching this on TV, not here on these green Benches to register their opposition. I understand why people at home may be upset. Their quality of life may well be affected. It is up to us in this place to ensure that it does not dip below a certain standard, although I fear the standard may well be too low at this moment in time. I believe in compassion and in the need to understand other people.
In Northern Ireland we have a legacy from the troubles of mental health issues, underlined by the latest report from the University of Ulster on behalf of the commission for victims and survivors. It states that 30% of the population have mental health issues as a result of the troubles; that 7% indicated they had been injured during them; and that a further 36% said a close relative or friend had either been injured or killed. Putting all those figures together, it implies that in the early years of this decade about 500,000 people had been affected by the conflict in some way. Those figures are enormous and, under these welfare reforms, those people in Northern Ireland will be directly affected.
The bedroom tax has been an issue, and the supplementary payment fund will definitely hit hardest the people who can least afford it. One of my main concerns is the predicament that families and, especially, children will find themselves in. I shall read the words of the chief executive of Barnardo’s, which need repeating in this Chamber:
“Beyond the well-publicised cuts to tax credits, which will leave many families on low wages struggling to buy basics, the government also plans to cap benefits. For the moment this will be £20,000 (£23,000 in Greater London), but a clause in the bill allows the government to change the amount in future too—without consulting parliament. This paves the way for the threshold to sink ever lower, consigning children from larger families to the breadline without scrutiny. The most worrying element is the decision to ditch the government’s duty to end child poverty by 2020. Instead this bill would redefine ‘poverty’, scrapping income as the way we measure being poor and replacing it with worklessness. Given that two-thirds of our poorest children already live in ‘working’ families, this is a completely unacceptable way to measure hardship.”
That is a concern for me; it should be a concern for everybody in this Chamber; we wonder whether it is a concern for the Government.
I stand again with my colleagues and say I cannot support the Bill. I cannot support a Government who persist with this agenda, no matter what the consequences. We in the DUP will say “no” tonight. This Bill will affect the disabled; it will affect children; it will affect those in society whom we are bound to protect. The Government are targeting those who can least afford it. This is too much, too far and is totally unacceptable.
This is a wicked Bill. It punishes the sick, the disabled and the poor. Not content in the last Parliament with cutting £23.8 billion from 3.7 million disabled people as part of the Welfare Reform Act 2012, the Government are going for even more. Clause 13 cuts the amount of employment and support allowance that disabled people who are in the work-related activity group, and who have been assessed as not currently fit for work, can get. They will have their income cut from £102.15 a week to £73.10 a week.
The implication is that these measures will incentivise people with disabilities to find, stay and progress in work. There are currently 7 million working-age disabled people, 4 million of whom are working, but although 1.3 million are able to work and want to work they are currently unemployed. The Government say they want to halve that disability employment gap, but how will they do it? With currently only one disability employment adviser for every 600 disabled people, what additional support will be given to help disabled people to get an interview? How are the Government going to address the attitudes that often prevent people with disabilities from even getting a job interview? Given that 90% of disabled people used to work, what will the Government do to support newly disabled people leaving the labour market prematurely?
The chaos and inadequacy of the specialist employment service, Access to Work, which last year supported just 35,000 disabled people into and at work, just does not cut it. The Select Committee undertook an inquiry in this area of work last year and is still awaiting the Government’s response to its report. When will that be published? How can the Government really be taken seriously? Why has the money from the Remploy factory closures, which was meant to be invested in Access to Work, not been used to provide vital support for disabled people?
The cuts in support to disabled people fail to recognise the additional costs disabled people face as a result of their disability. The Extra Costs Commission analysed the additional support and found that on average disabled people spend an extra £550 per month on things associated with their disability. It comes as no surprise that people with disabilities are twice as likely to be living in persistent poverty as non-disabled people, and 80% of disability-related poverty is caused by these extra costs. Last year, the number of disabled people living in poverty increased by 2%, which equates to more than 300,000 people. This has implications not just for disabled people themselves, but for their families. A third of all families living in poverty include one disabled family member. In addition to these cuts, we have seen a four-year freeze in other benefits that many disabled people receive, including housing benefit, local housing allowance, universal credit and JSA. How does that fit with the Tory pledge to protect disabled people’s benefits?
The Bill removes the duty for the Government to meet targets to reduce child poverty, saying, in effect, that ending child poverty is no longer an important goal. The Bill replaces the use of “relative child poverty” with a confused definition of child poverty determinants. The worsening inequalities that are facing this generation are becoming intergenerational. With that in mind, and recognising the Government’s legal obligation under the Equality Act 2010, when will they produce a cumulative impact assessment? That has been piloted already and needs to happen.
As my hon. Friend the Member for South Down (Ms Ritchie) indicated, we will vote against this Bill. I also have to say that I cannot accept all the reasoning in the amendment, so we will not support the reasoned amendment either.
Many people in this debate have made a number of points about this Bill. It removes even the term “child poverty” from the Child Poverty Act 2010. The Government’s answer to eradicating child poverty seems to be to delete all statutory references to child poverty. That is their policy on ending child poverty. Of course, that has an impact not only on policies here—where there is accountability to this House—but on devolved policies. Did any consultation take place with the relevant devolved authorities, whose positions are changed by virtue of this Bill, if it passes into law?
More importantly, I am here because, like many Government Members, I want to see that work always pays, but unlike them I am conscious of the fact that I will have thousands of constituents for whom work will pay less as a result of this Bill. People who are on working tax credits will see their position worsen. We see that by the changes to the income threshold and to the taper, which will mean a difference of more than £100 a month to many people, straight off, just from those changes alone. Other people will be affected by the freeze on other benefits. They include people who are not in work, but it also affects people who are in work. It is as though the Government looked at all the speculation a number of weeks ago about what they would do and whether they would go for freezes, for cuts or for caps, or whether they would change the thresholds. The answer is that all of the above are in this Bill. The bottom line is billions of pounds of welfare cuts, which will affect not just the Budget in overall terms in the way the Government want, but family budgets in crucial and biting ways.
In addition, the Bill introduces the two-child policy. We know that Conservative Members will say, “Well, at least it is not quite Vulgarian and you don’t have to hide your first two children. Therefore it’s all right.” But the fact is that the Conservative party was not saying there should be a two-child limit when it came to the child tax allowances that it put through in legislation in the last Parliament. There, £2,000 of childcare payments a year can be paid for every single child; there are no limits on the number of children for that, and of course we know that 80% of the beneficiaries of those childcare payments will be in the top 40% of the income bracket. No, it is two children only here, and people have to think about their choice when they are not in that income bracket. That is why this Bill is fundamentally unjust.
Basically, this Bill proposes a poverty tax. In the previous Parliament, many Government Members valiantly rebelled when it came to Budget measures on things such as the “caravan” tax and the “pasty” tax. There is no sign of any of them rebelling on the poverty tax that will hit hard-working families in their constituencies. There is no sign of any of them rebelling over the dishonest way in which this Bill treats disabled people. Yes, disability premiums might be protected, but not the wider benefits that people are on, so disabled people will see their benefits go down as a result of these measures. They will be told, “Oh no, but we protected your disability premium.” That will be a fat lot of comfort when their overall income goes down as a result of these measures. There is no point in pretending to them at that stage that the tyre is only flat at the bottom; and that the comfort is in the fact that their disability premium is protected. There has been no follow through on the promises that were made to carers. Any of the promises that are still being made to carers are not reflected in this Bill.
This evening, we have seen the Conservatives breaking their promises to protect the poorest, to reward hard work, to protect disability benefits, and to address relative poverty. Parents, disabled people and millions of children will bear the brunt of the Government’s policies. Working families will be worse off as a result of measures in this Bill and in the summer Budget. As my right hon. Friend the Member for Birkenhead (Frank Field) has said, they will be worse off by as much as £1,000 per year. As numerous Opposition Members have said, including my hon. Friends the Members for Llanelli (Nia Griffith) and for Swansea East (Carolyn Harris), the new increase in the minimum wage does not compensate sufficiently for the loss of tax credits. The Budget makes a mockery of the Tories’ claim to be the party of working people.
However, there are some measures in the Bill that the Labour party welcomes. We support the ambition for full employment and we welcome the provisions to report on that and the apprenticeships reporting obligation. We will insist on an ambitious full employment target, set at a rate of 80% of the working age population. We will require the Commission for Employment and Skills to report on the quality as well as the quantity of apprenticeships, which was acknowledged by a number of Members, including the hon. Members for Norwich North (Chloe Smith) and for Enfield, Southgate (Mr Burrowes).
Although we recognise the Government’s worthy ambition to halve the disability employment gap, the reporting mechanisms must also set out progress in ensuring that disabled people gain employment and have access to apprenticeships. We also support the reporting obligations in relation to troubled families, although we will seek to ensure that they, too, are strengthened.
I turn to the household benefit cap, which Labour has supported to ensure that people are better off in work. It was Labour that first called for a regional dimension to the benefit cap to recognise high-cost areas. But the cap must operate in a way that protects the most vulnerable, including carers, those looking after young children and victims of domestic violence. The decoupling of the level of the cap from earnings means that the Secretary of State will have an alarmingly wide discretion to set the level, with little scrutiny by Parliament.
As my right hon. Friend the Member for East Ham (Stephen Timms) has said, we will be tabling amendments to address those concerns. As Parliament has both a right and a duty to scrutinise the policy, we will require the level of the cap to be reviewed every year, based on an annual report on its impact, especially on child poverty.
We also agree that those who can work have a responsibility to do so, but the changes in work requirements for parents whose youngest child is aged three or over must come with guarantees of childcare and protections for lone parents. Although we support the provisions in relation to loans for mortgage interest, we will want to examine them closely. We also want to examine the provisions on social housing rents for their impact on housing supply, including, as my hon. Friend the Member for Easington (Grahame M. Morris) said, on specialist housing provision. We will require the Government to produce a plan to ensure the supply of affordable homes and the maintenance of existing housing stock.
Those are measures we can accept and build on, but as my right hon. Friend the Member for East Ham said, other elements of the Bill present significant problems. Of course we accept the need to make savings, but we do not support a four-year freeze on benefits, which will cost 13 million families £260 a year on average, of which 7.4 million are working families losing £280 a year. Uprating should take place annually to take inflation into account.
Labour Members deplore the provisions to airbrush child poverty from the statute book and to repeal the provisions of the Child Poverty Act 2010 relating to poverty targets. The abolition of the child poverty targets is a disgraceful betrayal of millions of children by a Conservative party that previously said it was signed up both to the legislation and to the relative poverty goal, but perhaps we should not be surprised. Under Tory Governments between 1979 and 1997, child poverty doubled. Between 1999 and 2010, under Labour, the number fell by more than 1 million children. There was a further fall in the first year of the coalition Government, thanks to the continuation of measures put in place by Alistair Darling, but thereafter relative poverty has flatlined—there has been no progress whatsoever—while absolute poverty, disgracefully, has risen.
Although I can accept that there is an important set of measures relating to life chances to be looked at, it is simply wrong to overlook the importance of income poverty. Indeed, the Child Poverty Act encompasses both, with four complementary measures of income poverty and specific recognition of the need for strategies on parental employment, housing, health, education, advice, childcare and support for parenting. We will not stand by and allow the Government to turn their back on Britain’s 2.5 million poor children, two thirds of whom—shamefully—live in working families, as my hon. Friend the Member for Warrington North (Helen Jones) pointed out.
I come to the changes to child tax credit and payments for children in universal credit. My right hon. Friend demonstrated myriad unfairnesses in the provisions, including the differential treatment of children in families in receipt of universal credit and tax credits, the effect on disabled children, and the complete failure of Conservative Members to realise that child tax credit is paid to families both in and out of work. We understand that people have choices to make and are responsible for the children they bring into the world, but it cannot be right that children are penalised for circumstances over which they have no control. Furthermore, family circumstances change: few people set out to have children they cannot care for; few lone parents set out to bring up their children alone; unplanned pregnancies happen, as do multiple births or the birth of a disabled child; jobs are lost, people get sick, incomes fall, parents die or become unable to care for their children, and others step in to foster, to adopt or to offer kinship care. Child tax credit helps families in those circumstances. It is the duty of this House to ensure that children are protected, whatever their circumstances, and Labour will table amendments to ensure that that happens.
I turn to the provisions on disabled people and the work-related activity group, which were raised by the hon. Members for Stafford (Jeremy Lefroy), for Airdrie and Shotts (Neil Gray), for East Antrim (Sammy Wilson), for Enfield, Southgate, for Gloucester (Richard Graham), for Amber Valley (Nigel Mills) and for Glasgow East (Natalie McGarry), as well as my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) and many others. Let us be clear: those provisions apply to people who have undergone the work capability assessment and been found to be not fit for work—people with degenerative conditions such as cystic fibrosis, multiple sclerosis and Parkinson’s disease, people with serious mental health problems and people who are suffering from cancer. They are not well enough to work, so, rightly, they are not required to look for work. They are signed off sick by their doctor, and employers do not even want them in the workplace. The idea that such seriously sick people should be “incentivised” to work is not just offensive but misconceived. The incentive will, if anything, be truly perverse, encouraging more people to be placed in the support group.
If the Government believe that something is wrong with the work capability assessment, they should sort out the assessment process. If they believe that we should offer more support to disabled people to get back to work, we can only agree. But slashing their benefit by £30 a week is not going to help those with serious, long-term health barriers to working. It will not make them well or get them jobs; it will just make them poorer.
In conclusion, this Budget and this Bill will increase poverty, hurt disabled people and seriously damage work incentives. We ask the House to support our reasoned amendment so that we have the chance to make this a Bill that protects the vulnerable, especially children, while ensuring that work always pays. I commend our amendment to the House.
It is a pleasure to conclude this extensive debate on the Welfare Reform and Work Bill, and I thank all hon. Members who have contributed. Two weeks ago the Chancellor’s Budget was a key moment in the Government’s plan for a one nation Government. It was a Budget underpinned by the Government’s approach to rewarding work and supporting aspiration. It was a Budget that supported working people through the introduction of the new national living wage, providing greater financial security to working families, whom the Labour party has not supported, just as it failed to support our reform measures last time around.
The Bill, alongside other measures, will ensure that the welfare system is fair to taxpayers while supporting the most vulnerable, and, as all hon. Members on the Government Benches have said, ensuring that work always pays more than a life on benefits. It will ensure that the economy is based on higher pay, lower taxes and lower welfare.
The Bill will continue to tackle the unsustainable and unfair system we inherited from Labour. When Labour was in government, welfare spending went up by 60% and the benefits system cost every household £3,000 a year. Under Labour, a life on benefits paid more than having a job. That is the system that this Conservative Government are now reforming.
After opposing every welfare reform in the previous Parliament, and voting against the benefit cap, Labour’s acting leader appeared at some stage to acknowledge where her party failed in its approach when she said that it would no longer pursue blanket opposition but would instead respond to what the public were saying. The Opposition have since retreated and gone back to a belief in an unaffordable welfare state that is far removed from the original principles outlined by Beveridge.
That is in stark contrast to our reforms. Our policies and our approach have led to the creation of record numbers of jobs, and the number of children being brought up in workless families is now at a record low. From Birkenhead to Amber Valley, and from Islington South to Weaver Vale, we have seen the claimant count fall from the record highs under Labour, with reductions ranging from 36% to 62% since 2010. Those jobs are the result of policies that support working people, create financial security and bring fairness back into the system.
Let me address the points raised in the debate. My hon. Friends the Members for Enfield, Southgate (Mr Burrowes) and for Weaver Vale (Graham Evans) spoke about encouraging and rewarding work being a guiding principle of the Bill, and they were quite right. The Bill focuses on achieving full employment. My hon. Friends the Members for Erewash (Maggie Throup), for Cannock Chase (Amanda Milling) and for Horsham (Jeremy Quin), along with many others, spoke about the value of apprenticeships.
Colleagues also spoke about reforming employment and support allowance and how we will continue to halve the disability gap and transform people’s lives by empowering them to make choices in the same way as those in work do, which failed to happen under the previous Labour Government.
We know that 61% of those in the work-related activity group want to work, but only 1% of people in that group actually leave the benefit each month. The system has failed them, with financial disincentives leaving them trapped on welfare. We will ensure that that changes. We will provide new financial support to get them into employment, increasing that to £100 million by 2020-21.
Many Members spoke about child poverty. I thank my hon. Friends the Members for Hertsmere (Oliver Dowden), for Norwich North (Chloe Smith), for Mid Dorset and North Poole (Michael Tomlinson) and for Cheltenham (Alex Chalk) for their thoughtful contributions. It is right that we identify and tackle the root causes of poverty, rather than focusing on the symptoms. The Bill will amend the Child Poverty Act 2010 and focus on the root causes and, importantly, life chances, which will drive action and changes in the lives of children.
As colleagues on the Opposition Benches have failed to acknowledge, work is the best route out of poverty. Some 74% of poor workless families who have found work have escaped poverty. Of course income is important, but we know that tackling the symptoms and the causes is crucial. Rather than the arbitrary targets that everyone on the Opposition Benches seems to want to produce, we will continue to publish the households below average income statistics alongside the new statutory measures for a wider suite of life chances measures, including family breakdown, debt and addiction, as outlined earlier by the Secretary of State. Together, this will present fuller data on poverty and life chances, which can be used to hold the Government to account as we address the root causes of poverty, rather than the symptoms.
On the changes to tax credits, it is right that families on benefits should have to make the same financial decisions as families supporting themselves solely through work. I emphasise that child benefit will continue to provide additional support for the first child. There are no cash losers, contrary to what Opposition Members have been saying.
We have been bringing welfare spending under control to a sustainable level. That is at the heart of the Bill. It will correct the disproportionate, unfair and unaffordable rises in benefits compared with earnings by freezing working age benefits. The Bill will rightly protect taxpayers—the very taxpayers whom the Labour party chose to ignore during the general election campaign and towards whom Opposition Members have shown contempt—from the costs of subsidising rising social housing rents through housing benefit.
The Bill will restore fairness to the system and fairness to working families, as outlined by my hon. Friends the Members for South Suffolk (James Cartlidge) and for Faversham and Mid Kent (Helen Whately). It is not fair for someone on benefits to be receiving—[Interruption.]
Order. There are far too many noisy conversations taking place in the Chamber. The hon. Member for Ealing North (Stephen Pound) should get a grip of himself.
It is not fair that someone on benefits receives more than many people in work. The benefit cap reintroduces fairness. We are turning support for mortgage interest into a loan. The welfare system is not about supporting lifestyles and rents that working families cannot choose. This is why we are limiting support through child tax credits and universal credit. We are also, as the Bill clearly states, continuing to ensure that the welfare system will support the elderly, the vulnerable and the disabled by protecting pensioners and benefits relating to the additional costs of disability from the freeze on working age benefits. We are making the most vulnerable disabled people exempt from the household benefit cap, a point that seems to have been lost on the Opposition. While we are reforming the ESA WRAG so that the right incentives and the right support are in place for those who are capable of taking steps back to work, we will continue to protect the most vulnerable.
If nothing else, today’s debate has shown that the Labour party has not changed. Labour Members continue to make the same mistakes as they did in the last Parliament, when they refused to support every aspect of welfare reforms that we proposed. Today we heard them make the same speeches as they made back in 2010, 2011 and 2012. They speak against reform.
Unlike the views of the Opposition, our proposals resonate with the British public. When three in four people—and the majority of Labour voters—think that Britain spends too much on welfare, the right approach must be one that enshrines the fundamental principle that it is better to earn a higher income from work than receive a higher income from welfare. This Bill will help people do just that. It will establish the principle of economic security, so that those who work hard and do the right thing are able to get on in life. It will ensure that the welfare system is fair to taxpayers and it will build an economy based on higher pay, lower taxes and lower welfare. I commend this Bill to the House.
Question put, That the amendment be made.
20 July 2015
The House divided:
Question accordingly negatived.View Details
Question put forthwith (Standing Order No. 62(2)), That the Bill be now read a Second time.
20 July 2015
The House divided:
Question accordingly agreed to.View Details
Bill read a Second time.
On a point of order, Mr Speaker. As the neutral arbiter of this House, is there any way in which you could help and advise me on how we can achieve this? Can we rearrange the furniture of this House so that the SNP becomes the official Opposition while the Labour party abstains on the Back Benches?
Notwithstanding the earnest expression on the face of the hon. Gentleman, his point of order was cheeky and tendentious, as he well knows.
Welfare Reform and Work Bill: Programme
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Welfare Reform and Work Bill:
(1) The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 15 October.
(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Consideration and Third Reading
(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.
(7) Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—( Guy Opperman.)
Question agreed to.
Welfare Reform And Work Bill: Money
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Welfare Reform and Work Bill, it is expedient to authorise—
(1) the payment out of money provided by Parliament of:
(a) any expenditure incurred under or by virtue of the Act by the Secretary of State; and
(b) any increase attributable to the Act in the sums payable under any other Act out of money so provided; and
(2) the payment of sums into the Consolidated Fund.—(Guy Opperman.)
Question agreed to.