Tax Credits (Working Families)

Part of Opposition Day — [5th Allotted Day] – in the House of Commons at 5:55 pm on 7th July 2015.

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Photo of Chris Philp Chris Philp Conservative, Croydon South 5:55 pm, 7th July 2015

It is right that wages are now rising, that people on low incomes have been helped with tax cuts and that the Government are directing assistance to people on low incomes. That is what is right. Over time, as the cost of living issues that have been mentioned are eroded by rising wages combined with zero inflation, the problem that the hon. Gentleman has referred to will without a doubt be alleviated.

There are other issues with tax credits. Employers who abuse tax credits by underpaying their staff have no incentive to invest in education, training and technology and, unfortunately, that contributes to our productivity problems. I believe that tax credits, introduced by the previous Labour Government, are a symptom of failure. They encourage companies to underpay their staff and place the burden of that underpayment on the general taxpayer. Any move in tomorrow’s Budget to reduce the burden of tax credits on the Exchequer while improving the earnings power of people on low pay will be very welcome. I join many colleagues on the Government and Opposition Benches in supporting moves towards a higher minimum wage. I have publicly called for that in London and I think that it would be a good move for the country as a whole.

We have heard about another cost of living issue: housing. There will be a housing Bill in the autumn that will promote house building and therefore affordability, but I point out to Opposition Members that the number of housing starts last year was about 50% higher than the number of starts in 2009-10. The Government have already made fantastic progress.

The foundations of prosperity and the way out of poverty lie in work, not benefits, and I endorse the Government’s approach.