Welfare Reform and Work Bill — House of Lords, 2016-01-27
Topic: Social Welfare
David Freud (Conservative, Centre-right): Before I start, I acknowledge my appreciation for what Peers are saying. This is not an attack on universal credit. They are some of its greatest fans and it is in that context that they speak. I absolutely get that and I appreciate it. It has reminded me that I owe regular updates about progress of universal credit and has jogged me to get going on that as soon as this Bill is over The amendment in the name of the noble Baroness, Lady Manzoor, seeks to repeal the work allowance regulations. I am going to sound like the noble Baroness, Lady Sherlock. This measure has been debated and voted on twice in the other place, and both times these regulations have been retained. Therefore, this House should think carefully about using a Bill such as this to introduce opposition to a financial measure that has seen that kind of support in another place On the amendment, let me remind noble Lords of the context of those changes. The previous welfare system was not working. Spending went up from £6 billion in 1998 to £28 billion in 2010, when we reached the stage where nine in 10 families with children were eligible for tax credits. Some families could earn £60,000 a year and still receive benefits. Yet, at the same time, the number of people in in-work poverty increased by about 20%. It also did not do enough to support people to get into work, stay in work, and progress in work. People were left with unfulfilled potential and did not have an incentive to progress. Even if we forget the money, it undermined opportunity and aspiration due to the distortions and complexities of the system The Government have stated their intention to move from a low-wage, high-tax, high-welfare society to a high-wage, low-tax, low-welfare economy and have set out a package of measures. Let me remind noble Lords that the national living wage is set to reach over £9 an hour by 2020 and the personal tax allowance is set to rise to £11,000 in 2016-17, taking 570,000 more people out of income tax. I remember some debates about increasing support for childcare, and we have moved it up to a rate of 85% of eligible costs. We have doubled the early years’ provision, which is free for the working parents of three to four year-olds. When one looks at the whole of childcare, we now spend £5 billion in total across all the schemes, including UC, tax credits and the early years’ provisions, which is more than any previous Administration. Since 2010, there has been an increase of £1 billion To respond to the noble Baroness, Lady Manzoor, the measure is different from the tax credit cuts. Universal credit provides an incentive to making work pay and helps to move people off a life on benefits. They get personalised support through a dedicated work coach which helps them through the barriers. It is a different structure. It is not the same thing as the reduction in tax credits. Clearly, we have two elements; namely, the work allowance and the taper rate. We have already got evidence that it works and gets people into work much more effectively than jobseeker’s allowance. Apart from the savings we will achieve on taxpayers’ money, it will generate—partly by focusing the money more efficiently on the people who need it most—gross economic benefits of £7 billion every year once it is fully in.