Tax Credits

Debate between Suella Braverman and James Cartlidge

Tuesday 15th September 2015 Commons Chamber

[James Cartlidge (South Suffolk) (Con)]

There is no doubt that this measure is controversial and that it will hurt our constituents. It is a tough measure, but I nevertheless support it strongly because of the wider picture. This country must take the journey from being an economy of high welfare spending, high welfare dependency and high borrowing to being a more competitive country with higher productivity and, most importantly, higher real wages at every level of the economy. That, in turn, will put us on the path to more sustainable prosperity and sound public finances.

I have spoken on tax credits before in the House. I said on Second Reading of the Welfare Reform and Work Bill that they were one of the greatest mistakes in the history of the welfare state. When the Beveridge report made its recommendations, which led to the welfare state, the third key principle was that state benefits

“should not stifle incentive, opportunity, responsibility”.

My biggest problem with tax credits is that it is overwhelmingly clear that they stifle incentive and opportunity.

[Suella Fernandes]

I agree with my hon. Friend. Tax credits have distorted the principle of welfare, which was to help the most vulnerable in our society who are unable to work. We now have a distorted system of in-work welfare where the state is subsidising wages. It is unsustainable.

[James Cartlidge]

I strongly agree with my hon. Friend. My point about work incentives is based on my experience as a small business owner. I found the situation with tax credits extraordinary. I had members of staff who declined pay rises because they would lose so much from their tax credits, and most common of all were part-time staff who would not go full time because the tax credits were so generous.