Universal Credit and Working Tax Credits — House of Commons, 2021-09-15
Topic: Macroeconomics
James Roger Cartlidge (Conservative, Centre-right): That was quite an odd moment because, as the hon. Gentleman will have noticed, I intervened on the shadow Secretary of State and, slightly cheekily, he then intervened on me, in a completely novel form of Commons procedure. No, I do not know that figure off the top of my head. I represent those households in this House and I know some of them, and we all know that this change will cause issues. This is not an easy decision, and, as I said at the beginning of my speech, it is not taken lightly, but I have faith in our economy. There are 1.2 million vacancies and the owners of small and medium-sized enterprises—such as me—and the owners of big businesses are crying out for labour. They are desperate for staff On 5 August, the Governor of the Bank of England, Andrew Bailey, said something incredibly important: "The challenge of avoiding a steep rise in unemployment has been replaced by that of ensuring a flow of labour into jobs." What a position to be in. At the start of the pandemic, we were all fearful that we would see a huge rise in unemployment—probably one of the biggest in generations. The peak was predicted to be 2 million higher; that is an entire recession’s worth of unemployment. I am proud of what we have achieved in keeping unemployment far lower than that, because it is so damaging On the impact on individuals, therefore, we must look to the economy and the extent to which people can work the extra hours to make up the lost income, which I am confident people can. The second key point is the impact on the public finances. It would be extraordinary for us, who are charged with being in Parliament to hold the Executive to account for the moneys they raise, not to consider that impact. The hon. Member for Stalybridge and Hyde said from the Labour Front Bench that we could use the headroom to fund the £6 billion, which basically means borrowing the money. But this commitment will be permanent. The hon. Gentleman wants to use what is potentially a short-term position in the public finances to fund a permanent increase in the welfare state Here is the context. Labour has said that, one way or the other, it will keep the triple lock—perhaps not the exact scheme, but it would cost several billion pounds more than the cost of the decision we have made. Labour has also said that it would keep the overseas development spend at 0.7%. Those commitments amount to more than £10 billion, and possibly to £15 billion. It is not good enough simply to say, "Use the headroom." We know what happened when we had a Labour Government who were irresponsible with public money: we had the great recession and all that that meant for people’s livelihoods and for the poorest in society in particular The third key point is the impact on the wider economy. As the Governor of the Bank of England said in the quote that I read out, the issue that we now have is not mass unemployment, as we all feared, but a lack of workers. In many ways, that brings its own headaches. Going back to the point made by my hon. Friend the Member for Carlisle, the upside is that we could be moving into a new era in which those on lower wages see much higher real-terms pay growth than they would otherwise have had. That is an incredibly important development. The focus of Government policy should be to improve real wages, bring unemployment down even further, manage the public finances responsibly and drive the economic recovery forward. That is the correct thing to do.