Tax Credits

Stephen Timms Excerpts

Tuesday 20th October 2015 Commons Chamber

[Maggie Throup (Erewash) (Con)]

I am delighted to speak in this debate as it gives me the opportunity to speak up for the hard-working families I meet on the doorsteps of Erewash. My constituents tell me that they want a fair welfare system, one that is there for the most vulnerable in our society and provides a safety net when things do not work out. They tell me that when they pay their taxes, they want the money to be spent on the NHS, education and social care, not on subsidising employers who think they can get away with paying just the bare minimum wage. They also tell me they want to be paid a fair wage for the work they do and do not want to be dependent on state handouts. The people of Erewash are a proud people and I am proud of them.

That reflects the way in which I was brought up. My parents did not expect handouts from the state, but looked for ways to boost the household income. My dad worked hard during the day and took on a second job in the evening. Even when my mum was entitled to attendance allowance in her later years, she did not want to claim it because she thought that someone else would need it more.

The tax credit system is so complex that it is not fit for purpose. I am sure that my casework is no different from that of other hon. Members. Time and again, residents who receive tax credits get a pay rise and inform HMRC, but then find that they rack up huge debts with HMRC. Those people tell me that they would much rather earn more money than have to claim tax credits. That is exactly the environment that the Government’s changes are bringing about. We are introducing a national living wage between now and 2020, and are continuing to increase the income tax threshold.

[Stephen Timms (East Ham) (Lab)]

Will the hon. Lady give way?

[Maggie Throup]

We are short of time, so I will move on.

When we include the extra childcare that is being provided by Government, virtually zero inflation and mortgage rates at an all-time low, it can easily be seen that we are putting families at the heart of our welfare changes. I also believe that we are putting women at the heart of our changes. The extra free childcare will allow more women to get back into work, and those who are already in work will be able to do more hours. That will definitely boost family incomes. Wrongly in my opinion, women tend to be in lower-paid jobs, partly owing to the sacrifices that they make to bring up their families. The introduction of the national living wage and the increases in the income tax threshold will disproportionately benefit working women.

I am not saying that everything is perfect. We need to continue to narrow the skills gap between men and women. That is why I am backing a project spearheaded by the Erewash Partnership in my constituency, which aims to help women to set up their own business and realise their dreams. Some may question why we need women-only support. It is well recognised that some women lack self-confidence when it comes to going it alone in business and having the self-belief that they can do it. The support is tailored to meet those specific needs and it is working.

I want to finish by reminding people of the principle that was set out by John Bird, who founded The Big Issue: it is far more effective to offer a hand up than a handout. The culture of tax credits has become too much of a handout, rather than a hand up. I am confident that the proposed changes will create the hand up that Erewash residents want and deserve.

--- Later in debate ---

[Mr Alan Mak (Havant) (Con)]

This is a Government on the side of hard-working people, elected with a mandate and a majority to transform our country from a high-welfare, high-tax, low-wage economy to a low-welfare, low-tax, high-wage economy. The reforms brought in and passed through this House must be viewed in the wider context of the summer Budget and the broader package of help for working people. Conservative Members believe the best route for working people is to let them keep more of the money they earn. All Members should welcome our new national living wage—a pay rise for 2.5 million people—while income tax, national insurance and VAT have been frozen.

[Stephen Timms]

The national living wage is being phased in over five years. Surely the tax credit cuts should be phased in over the same period, rather than taking huge ill effect next April.

[Mr Mak]

This is a national minimum wage that gives 2.5 million hard-working people a salary rise, which is the right approach. We have also increased the tax-free personal allowance and doubled free childcare for working people, while the fuel duty has been cut and council tax has been frozen as well. These reforms are all linked: they go hand in hand; they should not be seen or analysed in isolation. As many hon. Members have said, these are all part of a coherent, long-term economic plan, and it is simply not acceptable to deliver higher wages through the national living wage while at the same time leaving tax credits unreformed when they are such an important part of our reform package.