Welfare Reform and Work Bill

Oliver Dowden Excerpts

Tuesday 27th October 2015 Commons Chamber

[Owen Smith]

Let me be clear: tax credits are a success. They have kept people in work in this country, and we have seen a shift in the volume of single parents in work.

[Oliver Dowden (Hertsmere) (Con)]

Will the hon. Gentleman give way?

[Owen Smith]

I will in a moment.

In 1997 about 43% of single parents were in work in this country, and today it is 65%. The reason for that is tax credits. Tax credits have made it possible for thousands of constituents in my patch—and in the constituencies of all Members—to stay in work despite the decline in wages.

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[Owen Smith]

I fear that may be correct, and Government’s lack of forethought, analysis and scrutiny on these measures, and the way they have tried to bowl them through both Houses in double quick time, is a measure of their fear that such analysis will reveal the fundamentally misconceived economics behind these cuts, which are unfortunately designed to make an ideological political point.

[Oliver Dowden]

The hon. Gentleman talks endlessly about the success of tax credits. Will he explain why spending on tax credits under the previous Labour Government rose from £6 billion to £30 billion, while at the same time in-work poverty rose by 20%? Why does he think that happened, if tax credits have been such a great success?

[Owen Smith]

The hon. Gentleman should start by explaining to the 3,700 constituents in his constituency who will lose out as a result of the measures for which he will no doubt vote and speak today—[Interruption.] I will answer the specific question he asks. The truth is that under the previous Labour Government, when this iteration of tax credits was introduced, the steady state amount of money we spent on tax credits was £23 billion per annum. In 2009-10, after the crisis, that went up to £30 billion. The bankers’ recession saw a spike in the necessary spending on tax credits, and it has stayed at £30 billion under his Government—another measure of this Government’s rotten economic record.

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[Owen Smith]

Of course they should. If they had any guts they would do precisely that. There has been an abject failure on housing benefit. The bill has gone up and up and up. If the Bill is passed—I sincerely hope it does not pass after yesterday evening’s decision—housing benefit spending will go up some more. We know the Government have failed on that and they will continue to fail in the future.

Let us look, for a moment—

[Oliver Dowden]

Will the hon. Gentleman give way?

[Owen Smith]

I have given way once. I will move on and give way again in a moment.

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[Owen Smith]

I will not—I have already given way a lot—but I will quote to Conservative Members some of their own people, who have recognised how mistaken this policy is. Let us take Lord Lawson, for example—hardly a bleeding-heart liberal, and someone I remember standing next to Mrs Thatcher during those dog days for my part of the world when the pits closed in south Wales. Lord Lawson referred in the other place yesterday to

“the great harm, or a great deal of the harm”,

being done “at the lowest end”. He continued:

“That is what needs to be looked at again; that is what concerns me.”

He said that the Chancellor would, of course,

“listen to this debate, but it is not just listening that is required. Change is required.”—[Official Report, House of Lords, 26 October 2015; Vol. 765, c. 1005.]

Let me also cite the hon. Member for South Cambridgeshire (Heidi Allen), who I thought spoke brilliantly, eloquently and forcefully last week. I shall quote just one part of her speech. She said:

“To pull ourselves out of debt, we should not be forcing those working families into it.”—[Official Report, 20 October 2015; Vol. 600, c. 876.]

We should not be forcing working families into debt to deal with the debt that the country has been left by the bankers’ recession and the failure of the Tory Government to fix it.

[Oliver Dowden]

The hon. Gentleman has still not answered a very simple question. If this measure saves more than £4 billion, how will the Labour party find that money? Will it cut spending on other measures such as health and education, will it increase taxes, or will it increase borrowing? There are only three options. Which one will the hon. Gentleman choose?

[Owen Smith]

I repeat that the hon. Gentleman should really answer the question asked by the 3,700 people in his constituency who will lose out if he votes with the Government today.

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[Madam Deputy Speaker]

You see! Why can’t people just stand up? It is not difficult. Schoolchildren do it. Just stand up when you want to speak! I can now see a significant number of people wishing to speak. I cannot impose a time limit at this stage in the proceedings, but we have less than half an hour left in this debate, so I appeal for brevity: perhaps three or four minutes.

[Oliver Dowden]

I shall speak briefly against new clause 1. We as a nation need to be clear about the scale of the challenge that we face. The budget deficit has been halved, but it is still enormous and we are spending far more than we earn. Against that backdrop, the increase in welfare spending is an important element that must be addressed. The amount of spending on tax credits has risen from £6 billion when Gordon Brown first introduced them to £30 billion now. That money is being borrowed in order to pay for welfare. I do not think that borrowing money to pay for welfare expenditure is a sensible idea.

[Catherine West (Hornsey and Wood Green) (Lab)]

Let us look at the totality of welfare spending as though it were a cake. Is it not the case that the failure of the Government over the past five years to address the high cost of housing or to bring down the housing benefit bill is the key to solving your problem?

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. It is not my problem. It is somebody else’s problem.

[Oliver Dowden]

We need to be clear about the problems with tax credits. Let me offer the House three facts. The first is that, under the last Labour Government, 1.4 million people remained on out-of-work benefits for almost the entire period. Secondly, the number of workless households doubled, and thirdly, the level of in-work poverty rose by 20%. So there has been a massive increase in expenditure on welfare and on tax credits, but it is not delivering the reduction in poverty that we all desire.

[Neil Coyle]

Does the hon. Gentleman not agree that tax credits have played a role in tackling in-work poverty?

[Oliver Dowden]

This is precisely the point that I would like to get on to. Despite the increased expenditure on tax credits, we continue to see these dreadful statistics on poverty, and that is because this is a flawed model that is based on taxing people on the minimum wage who can barely afford to pay tax, recycling that revenue through the welfare system and using it to top up low pay. That is not a sensible way to proceed.

[Ian Blackford]

rose—

[Oliver Dowden]

I will give way once more, but I am aware of Madam Deputy Speaker’s injunction.

[Ian Blackford]

We understand, from survey after survey, that millions of people in this country are going to be worse off as a result of these measures. What is the hon. Gentleman going to say to his constituents who come to him after next April having lost on average £1,300 of their income?

[Oliver Dowden]

I would say to those people that this Government have a clear and coherent plan for helping people on the lowest incomes that consists of three elements. The first is to increase the amount of money people can earn without paying any tax; by the end of this Parliament that will be increased to £12,500. That is lifting people working 35 hours a week on the minimum wage out of tax entirely. Secondly, we are introducing a national living wage which by the end of this Parliament will increase wages to £9 an hour. Thirdly, we are introducing a number of other measures such as free childcare which will help those in most need of it. That is a far better model—to move from a low-wage economy with high tax and high welfare to a higher wage, lower welfare and lower tax model.