Welfare Cap

Simon Hoare Excerpts

Wednesday 16th December 2015 Commons Chamber

[Owen Smith]

I would have been mortified had I been the Chancellor responsible for such a terrible U-turn and such an extraordinary, humiliating, screeching U-turn.

[Simon Hoare (North Dorset) (Con)]

Again, in this great spirit of festive tidings, let me say that if that is really the best that the Opposition Front-Bench spokesman can do on such an important issue, he and his party really have not got a cat in hell’s chance of ever being back in government.

[Owen Smith]

I thought I was doing rather better than that. I thought the House might enjoy a bit of Christmas spirit.

The real crime that Macavity is hiding from today is not the breach of the welfare cap, however embarrassing that may be. The real larder that has been looted is universal credit. Opening the debate, the Minister said several times that the Government would meet the welfare cap in 2019-20 and he is right that the OBR confirms that, but he signally failed to tell the House how they would do it. I suspect that that is because of the other reason that the Secretary of State did not wish to address the House today. We know precisely how he will meet the cap: through the £10 billion cut to the work allowance that we will see by 2020; a cut of £3 billion a year, nearly making up for the £3 billion that was to be taken away in tax credits, butchering the work incentives that are supposed to make universal credit worth while.

Who are the victims of this crime? The Secretary of State is for one, because he has had his budget raided once more—the seventh time, I believe. However, the true victims are the millions of constituents in Labour and Tory seats who will still lose thousands of pounds as a result of the Chancellor’s cut to universal credit. Some 500,000 people will be on UC by next April, and according to the independent Institute for Fiscal Studies, 2.6 million households will lose £1,600 by 2020. They are the victims of this crime, the people who are paying for the Chancellor’s hubris with £3 billion of their own money in 2020 and every year thereafter. They are the people being fleeced by the postcode lottery that is being created in support for low-wage workers, whereby those lucky enough to stay on tax credits will be massively better off than their neighbours on universal credit.

A single mother working full-time on the new national minimum wage with two children will be £2,981 worse off than another mother, perhaps living next door in precisely the same circumstances but still on tax credits. [Interruption.] The Secretary of State says from a sedentary position, “What about child care?” Yes, if that mother has children who are three or four, she may be better off, but if her children are one, five, seven or 12, they will not be. That is the reality and we should not be misleading the House, from a sedentary position or otherwise.

That disparity cannot be fair and cannot be right. It may not even be legal. We are seeking advice as to the legality of that move. I suspect that is not what the Chancellor told the hon. Member for South Cambridgeshire (Heidi Allen) or other Tory Back Benchers when he reassured them that he was making good the tax credit cut, even if it meant breaching the welfare cap.