Finance (No. 2) Bill — House of Commons, 2015-03-25
Topic: Social Welfare
Sheila Gilmore (Labour, Centre-left): I thank my hon. Friend for her intervention. Of course the position she sets out is exactly what we saw in the early part of this Parliament when VAT was increased and a number of other measures were put in place. At that point, inflation hit about 5.5%, which then allowed the Government to say, "Aren’t we wonderful? We have just put pensions up by the biggest ever amount." But that increase would have come even under the old system—even under a system that was simply tracking pensions to inflation—because of the inflation rate. Pensioners were not getting some amazing extra increase that year; there was a simple tracking of what had happened, largely because of the VAT issue Not only have many of those low-paid people not got any further gain to get if the tax threshold keeps increasing, but they have actually lost out at the same time, because one thing that has helped to pay for all this has been the reductions in things such as tax credits. Many low-paid people lost more in tax credits than they gained in the rise in the tax threshold. The Government keep endlessly repeating that low-paid people are the ones who have benefited, but that has not been the case in practice for many of these people, particularly those with families and children—they have particularly suffered. For them, the Budget is a bit of non-event and it will continue to be so That is why the £12 billion of welfare cuts that have been pencilled in for some two years now in various statements by the Treasury, and by the Chancellor in particular, are very important. Part of that approach might be to cut away further the support given to people in work, perhaps through the tax credits system, at some future point. Tax credit is to be replaced by universal credit, but the issue remains much the same in terms of how it tapers off and where the losses might come We already know that in many respects universal credit will be less beneficial for a lot of people in work, as they increase the hours of work they do. So how much of this £12 billion will come from that source? Again, people may be given a little bit with one hand, through the increase in the tax threshold, but find that they lose as a result of what the other hand is taking. We just do not know because we have been given no detail; it has been deliberately withheld, although one suspects that someone, somewhere has a plan. It would be strange if they did not have a plan. If, under welfare cuts, we are taking away things such as support for people who are in work, it is extremely important The other area is housing benefit, because, again, that is increasingly being claimed by people who are in work, not just by people who are out of work. Those people who are in work will be hurt again if there are further attempts to reduce the housing benefit bill, by eroding the amounts that individuals get. Again, we have this lack of clarity and detail. It is understandable why some of us are extremely suspicious about the alacrity with which the Prime Minister wished to distance himself from a VAT increase. For all the talk about a long-term economic plan, we have a lack of any clear policy and detail about what the Conservatives will do if they are re-elected. I hope that they will not be in government, so perhaps they do not need to give any detail, but the people who will be voting in a few weeks’ time deserve to know such things. We should not be in the position that we were in before the 2010 election when we were promised things, such as that there would be no VAT increase, that were undone very, very quickly. I do not think that people were told about the scale of the reductions that would be made.