Autumn Statement Distributional Analysis, Universal Credit and ESA

Helen Goodman Excerpts

Wednesday 16th November 2016 Commons Chamber

[Helen Goodman (Bishop Auckland) (Lab)]

I am pleased to take part in this debate, and to follow the hon. Member for South Suffolk (James Cartlidge). He made the very fair point that benefits that go to pensioners in the higher tax brackets could be an area that is targeted for reductions. If we made those reductions, we would not be putting people with long-term chronic health conditions and disabilities into the position that the Government are choosing to put them in by making these ESA cuts.

I want to take part in this debate because in my constituency 6,138 people are either on universal credit—or on jobseeker’s allowance and will be moved on to universal credit—or on ESA. That is a lot of people and the cuts will have a significant impact on some of them. When we look at the wider economic impact, we must also take account of the fact that more than £1 million will be taken out of the local economy—another £1 million that will not be spent in the local high street and that does not help the local economy. The measure does not make sense for individuals—it is unkind and cruel—and does not make sense for the local economy either.

I want in particular to focus on what the Chancellor publishes regarding the distributional implications of his measures. I note that the Government’s amendment refers to the Chancellor’s remarks to the Treasury Committee last month. He simply said:

“I will look carefully at the best format for doing so, including the issues you have raised around the baseline.”

That is pretty gnomic. As well as being able to stop the ESA cuts, I hope that we may also persuade the Chancellor to revert to the practice that we saw between 2010 and 2015 of providing proper distributional analysis, showing how each decile will be affected in the first year and for the rest of the Parliament by changes in the tax and benefits system. That is the detail we want. That is the detail we used to have.

It is incredible that the Government have not published the detail. I do not believe that they do not know what the distributional impacts are. It is possible that they do not care, but they are foolish if they think that they can hide the impacts. Every year, three days after the Budget, the IFS does the analysis anyway, so the impacts are revealed to the nation in the newspapers. It would be much better for the Chancellor to do what was done between 2010 and 2015 and be up front about the impacts and put them in the back of the Red Book.

The Treasury Committee has been on this case for a long time and initially asked the previous Chancellor to make the changes. However, we have returned to pressing the new Chancellor. The Committee’s Chairman, the right hon. Member for Chichester (Mr Tyrie), first pointed out that the quintile analysis

“cannot be used to determine the effect of government policies on household incomes.”

Secondly, he said that it is

“not possible to determine the impact of the policies of the present Government on the distribution of tax and spending.”

Thirdly, he stated that the “assumptions underpinning the analysis” keep changing, meaning that we cannot compare one Budget with another. Fourthly, he said that the attempt to apportion

“public spending on items such as health, police, justice, defence”

by quintile is extremely flaky. We do not really know how much of these other public services are consumed by people in the different quintiles. If the Government want to do the quintile analysis, that is fine and they can publish it, but they should also do the decile analysis.

I want to remind the House about the impact of the last Budget. The truth is that it provided losses in annual net income for all families except two-earner couples without children. The bottom half of the income distribution gained £20. The top half, however, gained £170. Looking in detail at the deciles, the second poorest decile lose £1,500 between 2015 and 2019, but those next to the top gain £170. Looking at working-age families with children, the second poorest decile is set to lose £2,800, but those next to the top will gain £500. The number of children in absolute poverty between 2009-10 and 2013-14 rose by half a million. The proportion of children in absolute low income rose in that period from 11% to 17%. Ministers must not be seduced by their own rhetoric. We need to come back to a fact-based approach to policy making.

The new Chancellor has an opportunity to break free from the tight framework set by his predecessor. He can fulfil the promise made by the Prime Minister to help those who are just managing. If he publishes the information and makes some sensible change, we will all know that he has done that.