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Benefit Reforms

Volume 603: debated on Monday 7 December 2015

6. What estimate he has made of the proportion of working families likely to be affected by the Government’s reforms to benefits. (902564)

We are fundamentally reforming the welfare system to ensure that the benefits of work are always clear for all. As part of that, we are supporting working families who are on benefits to progress in work, increase their earnings and move away from welfare dependency.

The Government’s humiliating U-turn on tax credits is to be welcomed, but the Chancellor has confirmed that another £12 billion of welfare cuts will take place. Is it not a fact that those cuts will affect the poorest, the most vulnerable and those who are struggling to survive in society, like families?

With respect to the hon. Gentleman, it was made clear at the Budget by the Chancellor that the total package of changes includes changes to the welfare budget of £12 billion, but that other Departments are also involved in the process of getting rid of the deficit. I thought that the Labour party had said it was in favour of getting rid of the deficit, so the question is what it plans to do. I remind him that a huge amount of the savings are being made because more people are going back to work and fewer people are therefore claiming benefits.

Following on from what the Secretary of State has just said, if the British people vote to come out of the EU, we will not be giving £350 million a week or more than £1 billion every three weeks to the EU. Would he welcome some of that money for his Department?

My hon. Friend must not dare tempt me in that direction. What is really important is that we run our economy here in the UK for the benefit of citizens of the UK. We have made our position clear: we want to ensure that those who have not been here for a certain period of time and have not contributed are not able to draw upon our benefits system.

On the whole, because the hon. Member for Wellingborough (Mr Bone) is dextrous, he was just about within order, but I counsel colleagues that they should take great care, as a general principle, not to shoehorn their personal preoccupations into questions to which they do not obviously relate.

The Government’s forced U-turn on tax credits is very welcome to the families in my constituency who were set to be affected by the cut, but many people are being moved on to the universal credit system and will be similarly impacted. Young people will not qualify for the Government’s so-called national living wage. How do the Government reconcile that with the aim of making work pay?

The key thing is that, as the Institute for Fiscal Studies has said, there is nothing new in the spending review when compared with the Budget. It said that

“the long term generosity of the welfare system will be cut just as much as was ever intended”.

In other words, the £12 billion of savings is pretty much exactly as was announced in the Budget. I say to the hon. Gentleman that universal credit has a huge effect. We published figures this week to show that universal credit means that more people go into work faster, stay in work longer and are likely to earn more money. That is a huge change and it will affect young people dramatically, as much as it will anybody else.

The reforms to benefits, whereby work should always pay more than welfare, are welcome in Louth and Horncastle. As we roll out universal credit across my constituency, will the Secretary of State join me in my constituency to see the changes for himself, including the 40 new jobs just created in Louth at the supermarket Aldi?

I know how hard my hon. Friend campaigns to get employment up in her constituency. I am more than happy to come and support her to show that more people are getting jobs as a result of our welfare changes. Unlike the previous Government who spent money and changed very few lives, we are spending less money but changing more lives for the better.

The Secretary of State said yesterday that “nobody will lose a penny” under his changes to universal credit, which was a surprise to me. On Friday, the Office for Budget Responsibility published a report showing that the Government intend to cut £100 million from the universal credit work allowance next year, £1.2 billion the year after that, and then £2.2 billion, £2.9 billion and £3.2 billion by 2020. By my count, that is a trillion pennies. Will the Secretary of State clarify his remarks and tell us precisely which workers are going to lose them?

I just wish the hon. Gentleman would actually go and visit a universal credit site to see the huge difference it is making. In answer to his question, as the IFS said

“no family will take an immediate…hit”

from being moved on to universal credit. [Interruption.] Hold on a second. I remember that it was the Labour party that got rid of the 10p tax starting rate and did not cash protect anybody at all. We are transitionally protecting those who are moving on to universal credit. Maybe the hon. Gentleman is against that. If so, would he like to say why?

Again, the Secretary of State says this Budget made no changes. He is right, because the changes had already been passed in the summer Budget and in the statutory instrument. The truth is that the Chancellor bailed himself out of the hole he dug on tax credits by raiding the universal credit system, creating a deeply unfair two-tier system. A working mother on universal credit will next year be £3,000 worse off than her equivalent on tax credits. In all, 2.6 million families will be £1,600 on average worse off. It is the new IDS postcode lottery: it is arbitrary, it is unfair, and if you are a low-wage working mother, it could be you.

The hon. Gentleman’s party, which opposed universal credit from the outset, can hardly say that it is the slightest bit interested in how it works. The reality is that all those calculations for lone parents do not take into consideration—[Interruption.] No, they don’t. The childcare package that comes with universal credit is dramatic. Unlike tax credit—[Interruption.] Perhaps he would like to just keep quiet and listen for once to somebody who knows what they are talking about. I say to him very simply that the childcare package for universal credit gives parents with children childcare support every single hour while they are in work. Under tax credit, they got next to nothing.