Universal Credit Work Allowance

Debate between Owen Smith and Angela Rayner

Wednesday 6th January 2016 Commons Chamber

[Owen Smith (Pontypridd) (Lab)]

I beg to move,

That this House calls on the Government to reverse its decision to cut the universal credit work allowance, which is due to come into effect in April 2016.

I start by wishing you a happy new year, Mr Speaker. I wish the same to Ministers, Members on both sides and all in this House, and especially to the Secretary of State for Work and Pensions, who has just joined us. I am disappointed that it will not be the Secretary of State who responds to the Opposition day debate in the name of my right hon. Friend the Leader of the Opposition. This is the second time that the Secretary of State has failed to address the House when questions have been asked of his Department. I am not sure what his excuse is today, but it is a shame that he is shirking his duty to speak to the House today.

Perhaps we ought to take a lesson out of the playbook of the right hon. Gentleman’s Department and think about sanctioning the Secretary of State if he continues to shirk work in this way. Some 600,000 people in the UK were sanctioned by him last year, some for failing to turn up to a job interview, some because they were selling poppies, some because they were attending their father’s funeral, and one because they had had a heart attack. Someone suggested to me that an appropriate punishment for the Secretary of State—a sanction—might be to ban him from the House of Commons canteens for a month or so, thereby forcing him to go and visit a food bank at last.

It is extraordinary that the Secretary of State cannot be bothered to defend his pet project, universal credit, today. Perhaps it is because he thinks he is above answering questions from Members in the House of Commons, or perhaps he now agrees that universal credit is indefensible. The changes that we are debating today are among the most radical ever undertaken to social security; they are changes that should have done what the Secretary of State originally intended and made work pay for working people on benefit—on in-work support—and should have made millions of people in this country better off, but after the recent cuts I fear they are set to make millions of people worse off.

[Angela Rayner (Ashton-under-Lyne) (Lab)]

My constituency was one of the first places in Britain to pilot universal credit. Analysis by the House of Commons Library shows a single mother of two working full-time in my constituency on the minimum wage and on UC will have a net income loss of £2,981 next year. My constituents will be the first of millions of people in the country to be hit by these cuts, because they were the first in the country to be put on UC. Does my hon. Friend agree that this is just not fair and another example of Tory broken promises?

[Owen Smith]

I agree wholeheartedly. In fact I believe that in my hon. Friend’s constituency 12,000 people will by 2020 be subject to far lower incomes as a result of the cuts to UC. That is 12,000 people—less the northern powerhouse than a northern workhouse.

Let me be clear about what we are talking about, because this is complicated; UC is a bit of a black box and I think many people out in the country—and many on the Tory Benches—do not quite yet appreciate what is going on and have believed the smoke and mirrors from this Government. The changes that were snuck out—mentioned in passing in last summer’s Budget and then leaked out piecemeal in a statutory instrument subject to negative resolution that we had to pray against in order to get it even debated in this House—will halve the value of the work allowance under UC, which is the piece of UC that is essential to making work pay.

Let me illustrate exactly the nature of those changes to the work allowance by giving a few examples. For a single mother with one or more children, the work allowance will be halved from April of this year from £8,808 to £4,764, a reduction of £4,044. In cash terms, that working mother will lose £2,628 next year. That is the nature of the loss to a single mother. For a joint couple living and working together, one or both with limited capacity to work as they are disabled, their budget —the work allowance—will be cut from £7,700 to £4,700, a loss of £3,000 in their income. A single individual in receipt of UC will lose everything—a £1,332 reduction; a net loss to their income of £865.