Universal Credit Work Allowance — House of Commons, 2016-01-06
Topic: Social Welfare
Eilidh Whiteford (Scottish National Party, Centre-left): No—I have moved on, so I am going to keep making progress It is important that we understand that new claimants for universal credit will be significantly disadvantaged compared with those still claiming under the old tax credits regime. We have been told that there will be transitional protections for those being migrated from the old system to the new, but my understanding is that the transitional protections for existing claimants will evaporate if there is a significant change to their circumstances such as a new job, having a baby, or the breakdown of a relationship. The difference will be enormous. In the coming financial year, a one-earner couple with two children will take home nearly £800 a year more on the old tax credit system than they will if they have been moved on to universal credit. That is a huge disincentive to change one’s circumstances. People who are already on very tight budgets will be very reluctant to increase their hours or take a promotion if it might leave them worse off. Once again, this undermines work incentives, and it will make people reluctant to take promotion, change their hours, or move to a different employer. To come back to the point raised earlier, it will erode the dynamism of the system by which the Government have set such store today I think these disparities are going to cause real ill feeling in our communities. Co-workers who are doing the same job alongside each other, earning the same salary and living in similar family circumstances, could be receiving wildly differing levels of support. I do not know how the Government plan to sell that to people in low-paid work. I certainly would not want to have to try to justify it to my constituents; it is manifestly unfair. What is also deeply problematic is that some parts of the UK have been transitioning to universal credit before others, so there will inevitably be regional disparities in the areas where a higher proportion of claimants have been migrated. Why should people living in Hammersmith, Rugby, Inverness, Harrogate, Bath and Shotton—the areas where universal credit has been rolled out first—receive less support, on average, than those in the towns and cities that are last in the queue? The Government admit that at least 700,000 people will still be on the old system by the end of next year. That is a recipe for discontent among those who have served as the guinea pigs Cutting work allowances will not achieve the outcomes the Government claim. The way to reduce social security spending is to fix the economy—to create jobs and boost productivity. That reduces the need for spending on social security and raises tax receipts. We need to name the cuts to the work allowance as what they are—an assault on people in low-paid work as part of a failed, needless, ideologically driven austerity programme that has held back economic recovery and stifled productivity. The Government have made the wrong choice. They have a chance today to rethink these cuts, which will reduce work incentives and trap low-paid families in poverty. There is an alternative to austerity. Their short-sighted, counter-productive cutting of work allowances will hurt working people. I hope that the Conservative Members who expressed reservations about the tax credit proposals will understand that this cut will hit many of the same people in much the same way as they move on to universal credit, and that they will join us in the Lobby this afternoon.