Welfare Benefits Up-rating Bill

Sheila Gilmore Excerpts

Tuesday 8th January 2013 Commons Chamber

[Mr Duncan Smith]

The hon. Member for Edinburgh East (Sheila Gilmore) was first.

[Sheila Gilmore (Edinburgh East) (Lab)]

The Secretary of State has stated that benefits have been raised in line with inflation, but he did not say that tax credits— 2,000 people who are affected by the Bill are in work and receiving benefits such as tax credits—have not been increased for the past two years. In fact, they have been frozen.

[Mr Duncan Smith]

It is interesting that the hon. Lady raises that point, because under the Labour Government, tax credits absolutely boomed. In 2005, there were increases of 58%. Overall, there were 340% increases in tax credits, 70% of which goes to child tax credits. The hon. Lady says that tax credits should continue to rise, but she can make that argument in due course.

--- Later in debate ---

[Alun Cairns (Vale of Glamorgan) (Con)]

This is obviously a difficult debate. Any debate that discusses cuts or limits to payments is difficult, and no one should take any pleasure in it. However, two fundamental elements need consideration. The first is the tax credit system as a whole and its purpose, and the second is how benefits in general relate to income. I will briefly take each in turn.

It is hard to believe that until the last general election, anyone earning up to £60,000 a year could still qualify for tax credits. That was nonsensical and crazy. At the time, £60,000 was nearly two and a half times the average salary, but the Government of the day still chose to issue those privileged people with welfare payments.

[Sheila Gilmore]

The Bill is not about restructuring the tax credit system but about placing a limit on an uprate. Much restructuring has already happened: has not £14 billion already been taken out of the tax credit system? The hon. Gentleman should address the issue of uprating.

[Alun Cairns]

I wish that the hon. Lady would at least allow me to create a context and develop an argument, and that she would focus on the real issue and allow me to develop arguments on that. To me, someone who earns £60,000 a year is quite privileged and should not be receiving those payments. Nevertheless, that was the position inherited by the Government.