Tax Credits

Oral Answers to Questions — Scotland – in the House of Commons at 11:30 am on 15th July 2015.

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Photo of Debbie Abrahams Debbie Abrahams Labour, Oldham East and Saddleworth 11:30 am, 15th July 2015

What discussions he has had with the Chancellor of the Exchequer on the effect on claimants in Scotland of changes in entitlement to working tax credits and child tax credits.

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

The Chancellor has regular discussions with Treasury colleagues, as well as with the rest of the Cabinet, on a wide range of topics. The changes to tax credits are at the centre of the Government’s intention to move to a higher wage, lower tax and lower welfare society.

Photo of Debbie Abrahams Debbie Abrahams Labour, Oldham East and Saddleworth

The independent Institute for Fiscal Studies has shown that the poorest 20% of the population will lose proportionately more than any other income group as a result of the benefit and tax changes. Given that International Monetary Fund analysis has shown that an increase in income to the poorest 20% stimulates growth, what is the Minister’s assessment not just of the increase in poverty in Scotland but of the stifling of growth?

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

The point I would make to the hon. Lady is that if we want to have a strong economy, we have to move to a higher wage, lower tax and lower benefits system. That is what the Government have been elected to do; that is what we are delivering.

Photo of Bob Blackman Bob Blackman Conservative, Harrow East

Does my hon. Friend agree that part and parcel of changing the system is to encourage the Scottish people to live on the wages they earn from the jobs that will be created under the long-term economic plan?

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

The key to prosperity is to ensure that we have a dynamic economy. That is why we are cutting business taxes so we have higher wages and higher productivity; that is why we are improving our skills and investment in the United Kingdom; and that is the way we can ensure we have higher living standards for the people of Scotland and all parts of the United Kingdom.

Photo of Angus Robertson Angus Robertson Shadow SNP Westminster Group Leader

The UK Government are planning to restrict child benefit to two children for new parents. The Department for Work and Pensions and Her Majesty’s Revenue and Customs have in the Budget been asked to

“develop protections for women who have a third child as a result of rape, or other exceptional circumstances.”

Can the Minister explain how that will work?

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

The point I would make to the hon. Gentleman is that we think it is right that all families face the same situation, having to make choices bearing in mind the financial consequences of the number of children they have. It is right that a regime is put in place for exceptional circumstances. If the hon. Gentleman does not want to restrict tax credits to two children per family in future, he will be able to bring in top-ups paid for by the Scottish taxpayer under the powers provided in the Scotland Bill.

Photo of Angus Robertson Angus Robertson Shadow SNP Westminster Group Leader

Rape is one of the most serious crimes and has one of the poorest clear-up rates. It is thought that 85% of women who are raped do not confirm that they have been raped. May I urge the Secretary of State and his colleagues to look very, very closely at this issue? I have already asked the Minister the question once and he did not give an answer as to how the Government are going to manage this very, very sensitive issue. May I ask him again how the Government plan to make this work?

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

We will set out the details in due course, but it is perfectly reasonable to limit in future—this is prospective; this is for future births—the support that is provided to families to two children under the tax credits system, so that all households face the same consequences of decisions about how many children they have. That is what most families have to live with.