Tax Credits (Working Families)

Eilidh Whiteford Excerpts

Tuesday 7th July 2015 Commons Chamber

[James Cartlidge]

I am delighted that the hon. Lady has searing ambition, and I am sure that when she achieves her full ambition she will want to reform welfare and ensure that people make the most of themselves. Tax credits are a massive barrier—that is a fact even if no Labour Member will recognise it—and we are spending £30 billion a year to put a ceiling on the aspiration and ambition of British working families. My hon. Friends and I believe in a safety net, but I do not believe in a ceiling. We should not put ceilings on ambition and hold people back from making the most of their natural talents and abilities. We should empower them to make the most of their skills.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

The hon. Gentleman thinks people are getting a king’s ransom in tax credits. The reality is that the Government are taking people on low pay that simply will not keep a person and their family and bringing them just to the breadline. They are not exactly incentivising them to stay in poverty. That is the crucial flaw in his argument.

[James Cartlidge]

Of course it is not a king’s ransom. That is the point. We are trapping people on benefits.

At the end of the day, the money has to come from somewhere. Someone else has to earn the wages to pay for the tax credits of the people who receive them. If we reduce them, people will have to be more productive, will have to work harder and will take alternative employment to make that up. That is what happens in the real world. I am proud to be in a party that is ready to take the tough decisions to deal with the fundamental problems we face.

We must look at a solution to the problem the hon. Lady describes. Clearly, we cannot just cut the whole system overnight, but it is worth reflecting that, according to the House of Commons Library, if we spent the £30 billion we spend on tax credits on education, we would have the best-funded education system in the European Union and the fifth best-funded system in the entire world.

There are choices—to govern is to choose—and there is an opportunity cost to spending. My view is that we should reduce tax credits, increase the minimum wage over a long period towards the living wage and reduce employer’s national insurance with the savings we make so that employers can cope with the increase. That is a one nation policy. It is radical and tough. I say to my hon. Friends on the Front Bench: be brave, be bold and reform tax credits, because they will be helping working people who are being held back by that massive dependency culture.