Welfare Reform and Work Bill — House of Commons, 2015-10-27
Topic: Labor
Owen Smith (Labour, Centre-left): No, I am talking about £4.4 billion-worth of support that is offered to working people in this country, including 3,800 in the hon. Gentleman’s constituency. He has a choice to make on their behalf today. Is he going to stand up for them? Is he going to speak for those almost 4,000 families in his constituency, or is he going to roll over and vote with the Government to cut their wages by 10%? That is the choice he faces, and it is a very real political choice for him. As he is a new Member, he should think very carefully about that Let us deal with what the Government are proposing by way of mitigation. We heard a lot from the Chancellor yesterday evening. He looked a little ratty as he told the cameras that he was going to think again—he was obviously not very keen on having to do it—but there was at least some hint that there would be transitional measures. We have had hints over recent days as to what they might be. Let me run through a few of them and put the Government on notice that we will scrutinise extremely carefully, as we have done today, the net impact of any such measures First, there is the minimum wage. It is welcome that the Government propose to increase it from £6.50 to £7.20 next year and thereafter to get it up to £9.20 by 2020—it is a good measure. Unfortunately, however, even if the Government were to take it to £9.20 on 1 April—the day on which tax credit cuts are introduced—it would not offset the losses for average families, not by a long chalk. Most families on 40 hours a week with one parent earning would, if they were earning around £15,000, still lose £600 a year. The minimum wage increase is clearly not going to offset the losses The second element that has been talked about is childcare allowance. Even if the Government were to move straight away to the proposed 30 hours a week for England—again, a welcome measure, although it looks rather under-resourced to me, given that we were told it would cost us over £1 billion if we were to implement it and the Government are planning to invest around £300,000; we will see what happens with that—that same family, banking the £9 minimum wage, would still be around £500 worse off Let us build in the third element, which is of course the increase in the personal allowance. The Government have made other welcome measures in increasing the personal income tax allowance from £6,500 to £11,000 and they are talking about taking it up to £12,500 at the end of this Parliament. Again, that is a welcome measure, but it misses the target. Those people who earn between £3,500 and £12,500 will all be worse off if the Government start taking away their tax credit entitlement. They are two different tribes. It is completely fallacious to suggest that if we give extra money by increasing the personal allowance or the national minimum wage, we will offset the losses. Only 25% of the losses will be offset by the national minimum wage and only for 25% of the population. It is very straightforwardly a con. As we heard in the excellent evidence session before Thursday’s debate, the Resolution Foundation said very clearly that if we need to deal with the question of tax credits, the answer is, unfortunately, tax credits.