Autumn Statement Distributional Analysis, Universal Credit and ESA — House of Commons, 2016-11-16
Topic: Social Welfare
Ian Blackford (Scottish National Party, Centre-left): As my hon. Friend says, it is shameful. The Child Poverty Action Group estimates that the resulting cut in income will mean that many low-income parents cannot protect the income levels they had before April 2016 House of Commons Library analysis from February 2016 calculates that lone parents without housing costs will experience the largest reduction in their work allowance, from £8,800 in 2015-16 to £4,764 in 2016-17—a loss of over £4,000. Is that what the Government want to defend? A person or couple without housing costs who claim universal credit where one or both are disabled will see their allowance reduced from £7,764 in 2015-16 to £4,764—a loss of £3,000. The U-turn on tax credits in the short term saved families and working people from having their benefits cut, but in the long term the work allowance cut will have a similar impact The House of Commons Library analysis also states that the work allowance reductions announced in the summer Budget "will ultimately have a similar impact to the changes to tax credits which are not now going ahead, though the impact of changes to UC work allowances will not be fully felt until the roll out of Universal Credit is complete." By cutting the work allowance, the Government will impose an eye-watering level of marginal taxation on people in low-paid jobs and make it harder than ever for those in low-income households to break out of the poverty trap That point is well understood by many, including the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), the previous Secretary of State for Work and Pensions, who said: "At present, the 2016 Budget’s plan to reduce Universal Credit work allowances will not be the most effective way of controlling welfare expenditure and, moreover, it goes against the key principles. The planned reduction will affect more than three million people, reducing their income by an average of over £1,000 per year. This will reduce people’s incentive to move into work. Moreover, in November 2015 the previous Chancellor decided to reverse the reduction in working tax credits, increasing the pressure on Universal Credit as it created an artificial disincentive to move to Universal Credit from Tax Credits." I do not say this too often, but I fully agree with him. I would even say that, for the Government, the game is up when even the architect of much of the landscape on this issue can see the fatal flaws in what they are doing. When will they start to listen and begin to act We are having this debate today, and welcome though it is, it is important that we achieve a cross-party consensus on the substantive motion we are debating tomorrow, on the cuts to employment and support allowance. The House will have an opportunity to send a very clear signal to the Chancellor ahead of the autumn statement next week. It is a scandal that proposed cuts to ESA WRAG are still going ahead. The Chancellor must halt these planned cuts until the UK Government can deliver the long-awaited support promised for disabled people in and out of work. Almost 500,000 disabled people in the UK rely on ESA WRAG. This £30 cut will make the cost of living more expensive for many people—even more so in the context of the devalued pound and a possible inflation increase The UK Government said that these changes were introduced to "remove the financial incentives that could otherwise discourage claimants from taking steps back to work" But Mencap’s review of this policy found "no relevant evidence setting out a convincing case that the ESA WRAG payment acts as a financial disincentive to claimants work, or that reducing the payment would incentivise people to seek work" It is a positive step that the new Secretary of State has announced the Green Paper on support for disabled people in and out of work, and we look forward to assessing the detail of the Department’s proposals in due course. However, until the detail in the Green Paper comes to fruition, storming ahead with these cuts is simply putting the cart before the horse. The autumn statement is a key opportunity for the new Cabinet to prove it is true to its rhetoric about delivering for just-managing families. That can be achieved only by abandoning austerity by reversing these cuts and delivering an inclusive Budget fit for the post-referendum economic turmoil A failure to act will drive more people into poverty and the use of food banks. Recent data show that the Tories’ austerity agenda continues to push people into poverty across the UK. A survey for the End Child Poverty coalition suggested that 3.5 million children were living in poverty in the UK, with 220,000 of them in Scotland. A separate study by the Trussell Trust found that in the first half of this year there was an increase in food bank usage that included 500,000 three-day emergency food supplies distributed across the UK, of which 188,500 were for children A recent Resolution Foundation report has highlighted the need for the urgent delivery of support for families who are just managing. It also noted: "Average incomes in the low to middle income group were no higher in 2014-15 than in 2004-05, reflecting not just the turmoil of the post-crisis period but also a sharp pre-crisis slowdown in income growth." It also points out that the projections for unemployment have been revised up since the March Budget following the referendum in June, and real pay growth is now projected to be lower than previously thought In conclusion, with this autumn statement, the Chancellor has the ability to re-prioritise the spending agenda to reflect the very real danger of economic turmoil resulting from the June referendum and ongoing negotiations with the EU. The Chancellor must use the autumn statement to propose measures that reverse benefit cuts and mitigate the impact of economic uncertainty on disadvantaged people.