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Income Tax (Charge)

Part of the debate – in the House of Commons at 2:40 pm on 12th March 2020.

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Photo of Stephen Timms Stephen Timms Chair, Work and Pensions Committee, Chair, Work and Pensions Committee 2:40 pm, 12th March 2020

It is a privilege to follow Andy Carter and to congratulate him on a warm and confident maiden speech. I welcome his generous tribute to Faisal Rashid, not only for his brief period in the House but his work as mayor and local councillor before that. The hon. Gentleman is right to highlight the potential of Daresbury science park in particular. The House will look forward to hearing much more from him in the years ahead.

The Financial Times pointed out this morning that yesterday marked the end of the Tory promise to eliminate the deficit. For a large part of the past decade, ending the deficit appeared to be the Tories’ raison d’être, but we cannot blame the current Chancellor for concluding yesterday that his Tory predecessors’ policies on the deficit had comprehensively failed and that the result has been, to quote the Chancellor yesterday,

“a decade-long slowdown in productivity.”—[Official Report, 11 March 2020;
Vol. 673, c. 282.]

In what was a remarkable phrase, the Chancellor told us yesterday that his was a plan to “fund…our future prosperity.” I have never heard any Chancellor previously claim that we could spend our way to prosperity, but that is precisely what many Members on the Conservative Benches used to accuse Members on the Labour Benches of believing. It is now apparently official Tory policy. Repudiating past Tory policy is no bad thing, though, and I wish to welcome a number of the measures in the policy area of the Work and Pensions Committee, which I chair.

I warmly welcome the wider availability of statutory sick pay; the faster access to employment and support allowance; and the £500 million hardship fund for disbursement by local authorities, which recognises, as I suggested in my intervention earlier during the excellent speech of my right hon. Friend John McDonnell, the need for central Government funding to replicate what the old social fund used to do until it was abolished by the coalition.

I welcome the changes on universal credit. The suspension of the minimum income floor means that self-employed people whose income takes a hit will get at least some extra help from universal credit. The truth is, though, that the minimum income floor should not be there, and there is a strong case for making its suspension permanent.

I also welcome the reduction in the maximum rate of repayment of advances, and the longer period of repayment, although those measure will take effect only from October next year.

As my hon. Friend Steve Reed said, the Budget did not address the fundamental problems with universal credit. Research by the Trussell Trust has found that people on universal credit are two and a half times more likely to need help from a food bank than people in otherwise similar circumstances who are still on the legacy benefits. That is a remarkable statistic that underlines the scale of the problems that universal credit is causing.

Even more startling is the article this month in The Lancet. I do hope that Ministers will weigh very carefully the dry academic prose in that article, which concludes that up to the end of 2018:

“An additional 63,674 unemployed people will have experienced levels of psychological distress that are clinically significant due to the introduction of Universal Credit”.

It goes on to suggest that over one third of them

“might reach the diagnostic threshold for depression.”

About one quarter of those ultimately expected to be on universal credit are on it at the moment. The Government say that the rest will be on it by the end of 2024. The Office for Budget Responsibility yesterday expressed its traditional and well-founded scepticism about that timetable, and suggested it is likely to take two years longer than the Department for Work and Pensions says. Given that the harm being caused by universal credit is so well documented, I do not think it is viable for the Government simply to press on.

What is it about universal credit that is causing such hardship? I think it is the delay—never before a feature of the social security system—of five weeks between applying for benefit and being entitled to payment. That is why the Select Committee has made it the subject of our first major inquiry. We want to work closely and constructively with Ministers and the Department to identify workable and affordable solutions to what is, incontrovertibly, a very serious problem.

I want to make one final point. One of yesterday’s Budget’s few revenue-raising measures was the increase in the immigration health surcharge. One might think that this is about increasing the charge to tourists coming to the UK to take advantage of the NHS, but it is not. It is a major burden being imposed on a large number of modestly paid working families, a large number of them in my constituency, and I cannot see how it can be justified. These are families who are settled in the UK, often with children who have been born in the UK, and who are on the 10-year pathway to indefinite leave. They are given leave to remain for two and a half years at a time. They are paying their taxes, like everybody else who uses public services, but every two and a half years they have to pay thousands, on top of their taxes, in visa charges, and now they will have to pay even more through this immigration health surcharge. They have already paid tax and national insurance. How can these swingeing additional charges be justified?