– in the Scottish Parliament on 4th November 2015.
The next item of business is a debate on motion S4M-14688, in the name of Jackie Baillie, on supporting Scotland’s children.
Today is a historic day for the Scottish Parliament and a defining day for devolution. The members of this Parliament are going to look ahead to the future and lay out their plans to transform the lives of people in this country using the new powers that are coming to the Parliament. I have to say that, if the Scottish National Party does not support our motion today, that will confirm once and for all that the politics of grievance is more important to the SNP than helping working families in Scotland.
We have the power to make change; we have the money to pay for that change. The question is, does the SNP have the political will? Scottish politics is about to get real and it is not before time. At the Scottish Labour conference in Perth last weekend, Kezia Dugdale outlined Labour’s plans to protect working families. Scottish Labour will restore in full the money for tax credits.
Scottish Labour will make different choices on tax from the SNP Government in Edinburgh and different choices from the Tory Government in London. We would not implement the Tory tax cut for higher-rate earners; we would not implement the SNP’s tax cut for airlines. Tax cuts actually cost money. The SNP spends money to cut a tax, but we would spend that money differently. We would use that revenue to restore the money lost from tax credits for families in Scotland, using the new powers that are coming to the Scottish Parliament through the Scotland Bill.
Will Jackie Baillie spell out how much money will be raised by the tax changes that she proposes?
In 2013, Ms Baillie said:
“I’m not saying that, y’know, we can’t develop our own welfare system; I’m saying we shouldn’t develop our own welfare system.”
What has changed her mind and why does she not want all the welfare powers to be devolved to this Parliament?
It is typical of SNP members to hark back to the past. Fifty-five is greater than 45—they did not win the referendum. The people of Scotland’s settled will is to have a partnership with the UK Government.
Let me talk about tax credits. [Interruption.]
Clause 21 of the Scotland Bill gives us to the power to do that. I quote the Scotland Office:
“Holyrood will be able to top up payments to people in Scotland who are entitled to a reserved benefit. These payments will be in addition to the reserved benefits and will allow the Scottish Government to provide extra money to people on reserved benefits where they consider it necessary.”
The independent experts at the Scottish Parliament information centre agree that there is the power to top up tax credits, as do the independent experts at the House of Commons library. [Interruption.]
Is Ms Baillie not aware that the top-up of reserved benefits can happen only in cases of severe hardship and that if someone has had their benefit taken off them, the benefit can no longer be topped up? [Interruption.]
Thank you, Presiding Officer.
What is fascinating is that the member clearly does not understand the detail that is there. [Interruption.]
How many times does she need to be told? The UK Government, SPICe and the independent experts at the House of Commons library all say that we can top up reserved benefits.
Let us talk about independence for a minute, because I know that SNP members are keen to do that. It was just over a year ago that the SNP tried to claim that an independent Scotland could share the administration of welfare with the rest of the UK. Now it is trying to claim that a devolved Scotland with powers over tax and welfare cannot restore the money for tax credits. How absurd is that? A party of Government that claimed that after independence it would be able to run a different welfare system using the UK system now pretends that it is impossible to run a different system inside the UK, even when the UK Government is offering to allow it to do just that. Alex Neil should be embarrassed to be peddling such nonsense. He should be especially embarrassed, given that he is doing it to avoid protecting working families.
Politics is about priorities and values. Joe Biden said:
“Don’t tell me what you value. Show me your budget and I’ll tell you what you value.”
Instead of hiding behind the constitution and peddling the familiar politics of grudge and grievance, the SNP should try something new. Maybe it should show us the money. Alex Neil should just tell us what is more important to him, his party and his Government—the incomes of working-class families or the price of a business-class flight.
The SNP has the power and the money, but does it have the political will?
That the Parliament believes that the UK Government’s proposed changes to tax credits would leave working families worse off and calls on the Scottish Government to restore tax credits to families using the new powers being devolved.
Last night, Jackie Baillie voted with the Tories to spend £167 billion on replacing Trident and building a new generation of weapons of mass destruction. I find it incredible that, less than 24 hours later, she is still leading for Labour as a spokesperson on public services. How can Labour have any credibility on public services when its cheerleader in this debate voted to spend £167 billion on warfare instead of on welfare?
To be fair to Jackie Baillie—I am always fair to Jackie Baillie—her colleagues in London also failed to oppose the Tories’ Welfare Reform and Work Bill. Indeed, the then acting leader of the Labour Party, Harriet Harman, wanted to vote for it. At the end of the day, Labour eventually agreed merely to abstain, but at no point did I hear Jackie Baillie criticise Harriet Harman for wanting to vote for that Tory bill.
Jackie Baillie made it clear during the referendum that she is opposed to social security powers coming to this Parliament. Had Jackie Baillie had her way, with the result that no powers would be coming to this Parliament, we would not now be getting the power to reverse the Tory tax credits cuts—
Would you sit down please, cabinet secretary? Rhoda Grant has a point of order.
I would like to ask for your guidance, Presiding Officer. I thought that members had to speak to the motion for debate and that it is not in order to speak to the motion for the previous day’s debate.
Thank you, Ms Grant. The cabinet secretary is opening with debating points. He is speaking about welfare, and it is entirely up to me whether I stop him.
Cabinet secretary—continue to speak to the motion.
Right, Presiding Officer. Labour members do not like the truth.
If we had listened to Jackie Baillie and this Parliament was therefore to be denied social security powers, we would not be in the position that we are in now, whereby we will be able to undo the dirty work of the Tories on some tax credits. [Interruption.]
It is no wonder that the Scottish Labour Party has no credibility when it comes to fighting the Tory cuts. Unlike the Labour Party, the SNP has fought the welfare cuts tooth and nail at every opportunity while Labour has tried to get into bed with the Tories.
Cabinet secretary, could you address your remarks through the chair, please?
I am doing so.
Unlike the Labour Party, we will not run up the white flag while there is still a realistic chance of forcing the Tory Chancellor of the Exchequer to amend drastically his proposals for tax credits cuts when he makes the autumn statement. Those cuts will do enormous damage to the living standards of some of the poorest working people in Britain. We estimate that in Scotland the impact of the proposed changes will be that 250,000 working households will lose an average of £1,500 a year in tax credits.
That impact is just from the changes that are to be brought in next April. In the longer term, if the full set of cuts were to be implemented, low-income households with children could lose an average of £3,000 a year. That is against a backdrop of a cumulative total of £6 billion having been lost to the Scottish social security budget through previous cuts.
This year alone, there will be cuts of just under £2.5 billion in Scotland. Unlike Labour, the SNP will continue to demand further amendments to the Scotland Bill to give the Scottish Parliament power over all tax credits policy. I hope that Labour members will not listen to Jackie Baillie again but will agree that it is too dangerous to leave tax credits under the control of the Tories at Westminster.
Labour has to give a clear commitment to support the SNP’s amendments to the Scotland Bill to ensure that the Scottish Parliament gets the power to do what Labour says it wants to do. If Labour does not support those amendments, it will have no credibility in relation to tax credits policy.
That said, I also welcome the new amendments that the UK Government has tabled today, which go much closer to what we had asked for in terms of the powers that are required. As the Scottish Parliament information centre has confirmed, until the new amendments, which Jackie Baillie clearly did not know about—[Interruption.]
Until the new amendments were placed on the order paper in the House of Commons, the reality was that we would not have had the power to do all that Labour wants.
Order, Ms Baillie. The cabinet secretary is not taking an intervention.
I will not be drawn down by them, Presiding Officer.
Three weeks from today—
I will give way in a minute.
Three weeks from today, we will find out whether George Osborne will revise or refine his tax credits proposals when he makes his spending review statement in the House of Commons. The SNP will continue to demand total reversal of the tax credits cuts in the autumn statement, but if the Tories continue to force through changes that are to the detriment of hard-pressed working families in Scotland, the Scottish Government will not stand by idly and watch the living standards of our poorest families fall off a cliff. Once we know the facts, the shape and the content of the chancellor’s final tax credits proposals, we will consider carefully what action needs to be taken to protect the living standards of our most vulnerable children and families. [Interruption.]
We will give urgent serious consideration to the consequences for the people of Scotland that will arise from the chancellor’s statement on 25 November. We will consider what corrective action needs to be taken on tax credits, when it needs to be taken and how it should be funded and administered. [Interruption.]
I am very grateful to the cabinet secretary for giving way. In relation to the point that he made just a moment ago, can he confirm his understanding that the new amendments to the Scotland Bill that he has mentioned will, if agreed to, give this Parliament the power, if it chooses, to replace in full any reduction in tax credits?
The amendments that were tabled today should give the Scottish Parliament that power. However, none of the amendments that were tabled before today would have done that. [Interruption.]
That has been confirmed by various people, including the great John McTernan from the Labour Party.
We will properly address the needs of people who will be affected by cuts in tax credits. We will look at new claimants, which Labour has not done, and we will look at the time gap between the implementation of tax credits changes and the date from which the Scottish Parliament will have the power to fill the gaps, which Labour has not done. For example, the policy levers that Labour has referred to will not be devolved to us until next year, the power to set the higher rate threshold for income tax will come to the Scottish Parliament from April 2017 at the earliest, and responsibility for air passenger duty will not be devolved until 2018.
Labour has not done its homework. It has tried to work things out on the back of a postage stamp. As a serious Government, we will do the job properly. We will establish the most effective way to administer top-ups to tax credits, we will properly cost our proposals before we bring them before the Parliament, and we will identify where any additional funding will come from. Unlike Labour, we will not draw up our proposals on a whim without proper research and consideration. We will ensure that we get it right for the people of Scotland. [Interruption.]
Unlike many people in the Labour Party, we will continue to fight against the Tory tax credits cuts and other unfair cuts in social security benefits. Unlike Labour, we will deliver for the people of the Scotland.
I move amendment S4M-14688.3, to leave out from “and calls on” to end and insert:
“welcomes the action that the Scottish Government has already taken to offset UK Government welfare cuts, including mitigation of the so-called bedroom tax and the establishment of the Scottish Welfare Fund; notes that there is currently no proposed power in the Scotland Bill that would enable the Scottish Government to restore all tax credits; calls on all parties in the House of Commons to vote for an amendment that would devolve full responsibility for child and working tax credits to the Scottish Parliament at the report stage of the Bill; further notes that Labour’s sums simply do not add up and that it plans to pay for its policy using money that it has previously earmarked for education, and agrees that the Scottish Government will set out credible, costed proposals to further mitigate these Conservative welfare cuts following the comprehensive spending review”.
I will give way in a second.
The changes that are being introduced by the current Conservative Government, coupled with the introduction of the national living wage and record increases in the income tax personal allowance, mean that eight out of 10 working households will be better off in 2017-18 by an average of £130.
I do not accept Murdo Fraser’s premise in relation to tax credits. However, can he explain to me why, in this period of transition to a high-wage, low-welfare economy, the poorest families in our communities have to suffer right now?
I will respond directly to that point, which is the same challenge that Jackie Baillie made.
We accept that there is an issue with the transition as the national living wage kicks in. That is exactly the point that Ruth Davidson raised some weeks ago; she has raised it in public and in political cabinet on a number of occasions. It has also been raised by other people in the Conservative Party, among them the leader of the Welsh Conservative Party, the Mayor of London and a number of Conservative back benchers, to whom Jackie Baillie referred. We look forward to the autumn statement and to hearing from the chancellor how he will address those concerns, many of which we share.
Today, however, we see Labour’s solution.
No. I need to make some progress.
Labour’s solution is to propose a hike in taxes solely for people in Scotland, which will put us at a competitive disadvantage in relation to the rest of the United Kingdom. We see Labour planning to reintroduce a 50 per cent top rate of tax—but in Scotland only. How much money would that raise? Not even Kezia Dugdale seems to know the answer to that question. In that august publication, Holyrood magazine, she told its editor, Mandy Rhodes, that it would raise
“up to £100 million. But bluntly, Mandy, it could also raise zero.”
Yes. Maybe Jackie Baillie can tell us the answer to the question, because her leader does not seem to know.
She does know, actually. We were encouraged—as I hope Murdo Fraser will be—by HM Revenue and Customs’s comments about pursuing high earners who might, through behavioural change, seek to pay their taxes elsewhere. The estimated haul from that rise would be £80 million to £100 million. I hope that the member will accept that. However, might I ask him whether he agrees with the Institute of Fiscal Studies’s comments about the national minimum wage?
—full compensation for the majority of losses that will be experienced by tax credits recipients. That is just arithmetically impossible. Does Mr Fraser agree?
Thank you, Deputy Presiding Officer.
I suggest to Jackie Baillie that she read the article in Holyrood magazine to which I referred, in which her leader said that she does not know how much money would be raised. That just makes clear the level of Labour’s economic literacy: by the Labour leader’s admission, Labour is proposing, in order to pay for its spending commitments, a measure that might well raise nothing. [Interruption.]
There are only some 14,000 higher-rate taxpayers in Scotland, many of whom operate businesses on a cross-border basis. The impact of an additional 5 per cent hike in their tax would be enough to send a large proportion of them south of the border, which would potentially leave us—as Kezia Dugdale is prepared to admit—with zero. However, it could actually be worse than that, because we could end up raising less money by losing all the revenue from those high earners if they were to relocated elsewhere. Once again, Labour is—true to form—completely clueless when it comes to understanding taxation and how the issues should be approached.
However, to give Labour credit, at least it is setting out its stall. Labour realises that this Parliament is at last getting new powers over tax and welfare. Labour is setting out how, as an old-style socialist party, it will use those powers to hike taxes in order to increase public spending. I think that Labour is fundamentally wrong in aiming to do that. I believe that Labour would put Scotland at a serious competitive disadvantage. However, at least Labour is making a case.
We now need to hear from the SNP what it is going to do. Will the SNP stand with the Labour Party in hiking taxes in Scotland in the knowledge that that will reduce the tax-take and leave public services in Scotland short-changed, or will the SNP stand with us in resisting further tax rises and seek to create a more competitive Scotland that welcomes entrepreneurs and aims to grow businesses and personal wealth?
I listened carefully to what the cabinet secretary had to say on the issue, and he used the words “will consider carefully” and “urgent serious consideration” about it. He cannot hide for much longer. Sooner or later we will know the answers, and on which side the SNP stands.
I have pleasure in moving the amendment in my name.
I move amendment S4M-14688.1, to leave out from “believes” to end and insert:
“considers that, under the last Labour UK administration, nine out of 10 working families with children became eligible for tax credits while spending spiralled out of control; believes that this growth went far beyond what was envisaged when the current system of tax credits was introduced and has contributed to the subsidising of low wages; welcomes proposals to reduce expenditure while seeking to build a high wage, lower tax and lower welfare society; anticipates announcements in the Autumn Statement on what more can be done to ensure that changes are applied in the fairest way possible; considers that Scotland’s children would be best supported by growing up in a thriving economy with high levels of employment, good-quality education and appropriate provision for childcare, and calls on the Scottish Government to reject proposals that would increase the burden of taxation in Scotland and put the country at a competitive disadvantage relative to other parts of the UK”.
On a point of order, Presiding Officer. I seek your guidance on the competence of the SNP amendment, specifically the statement
“there is currently no proposed power in the Scotland Bill that would enable the Scottish Government to restore all tax credits”.
Given that during his speech Mr Neil acknowledged that the bill would have the power to restore tax credits, I ask you whether the amendment is still competent to be considered at decision time tonight.
Thank you, Mr Kelly. I will check that point and come back to the chamber.
I will do so in the course of my speech.
I wonder whether I can get Mr Fraser to reflect on the words of Tory member of Parliament David Davis, who said:
“The Government needs to look at this again. For three million families losing £1,000 doesn’t mean cancelling your holiday, it means an empty pantry. I hope this doesn’t turn out to be our Poll Tax.”
When Murdo Fraser opens the debate for the Conservatives, will he say whether he agrees with David Davis?
Labour will use the new powers that are coming to this Parliament to fulfil its historic mission to stand up for working people. I promise members that no one will pay more tax than they are paying now under Labour’s plans to restore the money that is lost from tax credits—not one penny more.
We would use the air passenger duty of £250 million to help working families, rather than give a tax cut to airlines, as the SNP proposes to do. We would not increase tax thresholds for those earning more than £42,000, as the Tories propose to do. That will give funding of £440 million, to answer Murdo Fraser’s question. There is more than enough from both those sources to fully fund the policy and even a bit more.
The SNP really does need to keep up. The claim that our funding has already been committed for education is absolute nonsense. Unlike the SNP, we do not spend the same amount of money over and over again. As Kezia Dugdale said at the weekend, we will use the powers that are coming to Scotland to set a 50p top rate of tax on those who are earning more than £150,000 a year, to invest in education. Specifically, we will create a fair start fund for our poorest pupils—an idea that was praised this week by the commission on school reform, which criticised the SNP’s lack of urgency in closing the attainment gap between the richest and the rest in our classrooms.
The Government’s amendment is factually wrong, but I do not imagine that that will bother Alex Neil much. Why let the facts stand in the way of his spinning yarns? I fully expect from him a pantomime dame performance to distract us from the paucity of the SNP’s position. The SNP’s amendment says that we do not have the power. What rubbish! John Swinney says that we do not have the money, but I have just demonstrated that we do. This is about political will. Alex Neil has over 5,000 families in his constituency who are in receipt of tax credits; today, he has turned his back on them, offering them a pitiful excuse rather than real action. He is putting grudge and grievance with the United Kingdom before action that will help working families, and he is using the constitution simply as a distraction and an excuse.
Like the SNP Government, Alex Neil is very good at talking but not so good at doing. Just last Sunday, Alex Neil—who knows that I hang on his every word—said:
“Tax credits can be a lifeline for families on low incomes that rely on them to get through daily life, put food on the table, heat their home and pay their bills.”
I agree. He said:
“Removing this vital support from thousands of families will widen the gap in inequalities and push even more people into poverty.”
I agree with that, too. He also said:
“The UK Government’s plans are a clear attack on low income working families and those families must be protected as a matter of urgency.”
Alex Neil can claim the match ball, because that is a hat trick of things that I agree with him about. Both Alex Neil and I oppose Tory austerity; the difference between us is that I am willing to do something about it instead of simply wringing my hands and telling everybody how bad it is.
Let us take action, see the possibilities of devolution and use the power to do good. I am willing to unlock the potential of devolution and use the powers of this Parliament for the purpose of standing up for working-class families.
Tax credits work. They boost people’s earnings in a targeted way to really tackle inequality. They lift hundreds of thousands of children out of poverty and allow families to aspire to more than just making it to the end of the month or the end of the week. David Cameron has broken his promise not to cut tax credits, and working families are paying the price. In Scotland, nearly 350,000 families rely on the money from tax credits, with the average family being more than £100 a month worse off as a result of the cuts that are planned by the Tories. It is a rise in tax on the working poor, and 70 per cent of the money saved by this rise in tax on working people will come from the pockets of working mothers. In a few weeks, just before Christmas, families are due to receive letters on their doormats telling them how much they will lose. What a cruel way to break a promise.
I never thought that I would say this, but thank God for the House of Lords. Labour, working alongside cross benchers, led the defeat of the chancellor’s plans in the House of Lords, and he has been forced to think again. We must keep the pressure on the Tories to cancel their plans to cut tax credits but, if they ultimately refuse, we will stand up for Scottish families come what may. It was not just the Tories who made a promise to the people of Scotland. Both Labour and the SNP promised working families a break from Tory austerity. That is why we should use the new powers that are coming to the Scottish Parliament to restore the money lost from tax credits for working families.
Few members in this chamber could have been as vocal about this Parliament taking on more financial responsibility as the leader of the Scottish Conservatives. I have no doubt in my mind that, next year, the Tories will run on a ticket of tax cuts. However, they cannot claim, as they appear to want to, to be caring or compassionate Conservatives if they let George Osborne cut tax credits for working families. If Ruth Davidson does not intervene to stop that, she and her party will stand accused of introducing a measure that is even worse than the poll tax in Scotland. Anything short of that and the mask slips, and we will know that compassionate Conservatism is simply a sham.
We have been here before: the Tories make a cruel decision at Westminster, the Scottish Tories look awkwardly at their shoes, and the SNP does anything at all to avoid taking responsibility. That past decision was, of course, the bedroom tax, which is mentioned in the SNP’s amendment. For months, the SNP said that protecting vulnerable Scots from the bedroom tax just could not be done, despite Scottish Labour saying repeatedly that it could. We had the money and the power then, but the SNP did not have the political will to do anything about it. Vulnerable people had to wait a year for action by the SNP.
John Swinney—where has he gone?—has elected not to speak in a debate this afternoon about the tax choices that this Government faces. He eventually admitted that he could mitigate the impact of the bedroom tax, but he did not want to do that because it would let Westminster off the hook. What a shameful thing to say when he claims to be anti-austerity.
The reality is that the SNP set up constitutional excuses to avoid blocking the bedroom tax for as long as it possibly could. It had to be dragged kicking and screaming into this chamber to a decision by Scottish Labour. It is shameful that the SNP is attempting to play the same red herring yet again, but it should be careful: people saw through that the first time, and they will see through the SNP again.
The SNP Government is trying to claim that we cannot restore tax credits and protect working families, but we can. It is trying to claim that the new powers that are coming to Scotland will not allow us to make fairer choices on tax credits, but they will.
I warmly welcome Jackie Baillie’s return to the Labour front bench. As she knows, I am very fond of her, so I was more than a little concerned yesterday about her future career prospects, given her unaccustomed role in being banished to the back benches. I feared that she had gone from her normal position of loyal front-bench stalwart to that of rebel back bencher. Fortunately, the true Scottish Labour leader—Mr Findlay—has hauled her back into line and we now see her restored to her rightful place. Long may she reign on the Labour front bench and have the good sense to continue to vote with the Conservatives.
It was Hallowe’en on Saturday. As I took my children guising around the streets of Perth, they were terrified by the endless procession of hideous misshapen creatures from the underworld—the procession of ghastly ghouls and the undead stalking the streets. I am sure that it was only a coincidence that the Scottish Labour Party conference was being held in our city at just that time. What we saw at the weekend was the zombie figure of 1970s-style socialism, which we all thought had long since been consigned to its grave, hauling itself back from the earth and coming back to strike fear and alarm into the people’s hearts.
Today, we see the first fruits of the decisions that were taken at that conference at the weekend and of the announcements that have been made under the new Corbynite Labour Party. We see the Scottish Labour Party taking a step back in history to a time of tax-and-spend economics and of higher taxes clobbering working families.
Let me deal with the tax credits issue and try to respond to some of the points that Jackie Baillie made. We in the Conservative Party have been very clear that we want to move Britain from being a high-welfare, high-tax and low-wage economy to being a lower-welfare, lower-tax and higher-wage economy. The reality is that, under Labour, the tax credits bill was allowed to spiral out of control. The cost trebled in real terms in 10 years: from a system that cost £4 billion in its first full year to one that cost £30 billion in 2015. Under Labour, nine out of 10 working families with children were eligible for tax credits, including those of a number of members of Parliament, who by no definition could be described as poor.
The whole thing has become an absurd extension of the welfare system. Members should not take my word for that, because even a former Labour chancellor, Alistair Darling, said that tax credits were
“subsidising lower wages in a way that was never intended.”
The Labour Party is to be congratulated on taking the initiative in having a real debate about powers that the Parliament will have. That is a refreshing change, which I welcome. I would have thought that the SNP would also welcome it.
What is disappointing is the SNP’s response—a groundhog day debate about powers. Faced with a choice between taking action to help low-paid workers and continuing with its constitutional obsession, the SNP simply cannot help itself. So much for accepting the result of the referendum.
I am not in the slightest bit surprised that the SNP is not going to back Labour up today; I am just surprised that Labour is surprised. The SNP has a track record on this. If we look back to the independence white paper, we will remember that John Swinney’s plans for the welfare budget in the first year of independence were to match exactly the spending by Iain Duncan Smith—there would not have been one penny more.
The SNP spent years arguing with, debating with and condemning the Westminster Government for its £2.5 billion cut in welfare spending but, when the opportunity came, no SNP members condemned John Swinney for not including extra finance in the white paper. The SNP has a track record. It often complains but, when it comes to moving away from the rhetoric and taking action, it refuses to act.
I felt sorry for Alex Neil today.
I know. Having a Liberal Democrat feel sorry for him must be painful for Alex Neil. He has been sent out to deliver stirring rhetoric, to lambast the Opposition and to pump up the ever-loyal back benchers. However, the most confused and contradictory speech that I have ever heard from him is the speech that I heard today.
Alex Neil started by saying that the SNP Government does not have the powers and by demanding that this Parliament should have the powers so that we can make the decisions. By the end of his speech, he had conceded that we have the powers after all and that he might actually take action. That was the most confused and contradictory contribution from a man whom I hold in high regard.
We should not forget that we are here today because of my former coalition colleagues in the Conservative Party. These ideologically driven cuts will directly affect 250,000 Scottish families and 300,000 children. Alex Neil is right about the financial impact that the cuts will have on those families. Someone who has an MSP’s salary could probably cope with a £1,000-plus cut, but for a family who are living on the breadline and finding it really difficult to make ends meet, £1,000 could be a lifeline. I deeply regret that the Conservatives continue to argue for such a cut.
Despite the warm words from the leader of the Scottish Conservatives, the words of the Conservative amendment wed the party completely to the tax credit cuts. Murdo Fraser finished his speech by refusing even to consider making up the difference on the tax credits when we have the powers over them here.
We know where the Conservatives stand. They sent Annabel Goldie down to the House of Lords to vote for the tax credit cuts. David Mundell, who is a member of the Cabinet, voted for the cuts in the House of Commons. Today, the Conservative MSPs will vote for tax credit cuts; we just heard it from Murdo Fraser.
The Liberal Democrats spent many years in the coalition Government cutting taxes for those on low and middle incomes. The aim was to make work pay so that people would be incentivised into work. We did not do all that work over five years just for the Conservatives to undo it all in one year with a £1,000-plus cut to people on low incomes. We did not want that to happen, and many people will condemn them for that.
I want to move towards a low taxation and high wages regime, with—in the meantime—a tax credit regime to support families who are in need. Despite the rhetoric, we know exactly where the Conservatives stand today.
Who would have believed that the House of Lords—that age-old, unelected institution that I want to get rid of—would be more representative of the British people than the newly elected Government and would speak up for working people? The new champions of working people are in the House of Lords, not the Conservative Party. That shows us what a topsy-turvy world we now live in.
We will vote against the SNP amendment. That is easy, because we have the powers and, if we choose to do so, we should be able to act on the choice to help working people. However, I urge the Conservatives in the Scottish Parliament, if they have any influence over the Conservative Cabinet—to date they have shown that they have none—to send the message out from today that the tax credit cuts should be reversed. That is the priority and that is the message. That is what we need to change.
I move amendment S4M-14688.2, to leave out from “and calls on” to end and insert:
“; notes that these cuts are being proposed by the UK Conservative administration despite them not being in its manifesto and the Prime Minister explicitly ruling out tax credit cuts if the Conservatives won the general election; believes that economic reasoning is now being used as a pretext to mask ideologically-driven welfare cuts, many of which were blocked by the Liberal Democrats in the previous UK administration; is deeply concerned that 250,000 families in Scotland and 300,000 children would be affected by the proposed cuts; believes that the priority should be blocking any proposals that leave these people, among three million on low incomes across the UK that would be affected, more than £1,000 worse off, pushing more families into poverty; urges the UK Government to listen to the House of Lords and to come back with plans to balance the books that do not attack working families already struggling to get by; welcomes that, if all else fails, Scotland will be able to use its welfare powers to assist people affected by the cuts, but believes that this course of action remains an inferior solution compared with stopping the tax credit cuts wholesale across the UK”.
We come to the open debate. Some time has been lost through points of order and other issues, so I will allow speeches of six minutes—members must keep to that time limit.
We must distinguish between principle and practicality. The principle of supporting and assisting the most vulnerable in our society is not in question, and we have seen the Scottish Government take steps in that direction. The question has always been about practicality and effect.
The amendment that has been tabled at Westminster today—I do not think that anyone had seen it before today, although perhaps certain people had—would perhaps give the Scottish Government the ability to do what the Labour Party suggests. However, the SPICe paper that Jackie Baillie quoted contains two important caveats. The first is that it talks about a situation in which tax credits are accepted as a benefit. At the moment, tax credits are administered through HMRC, not the Department for Work and Pensions, so there would need to be a discussion about whether they were classified as a benefit under the devolution settlement. However, if the Westminster amendment that has been tabled today allows that to happen, we can take that as read.
The second important caveat in the SPICe paper is that top-up of benefit is possible only when benefits are being received. In the changes that the Chancellor of the Exchequer is proposing, a significant number of people will lose all entitlement to tax credit—they will not receive any tax credit whatsoever. The question in that case is whether a top-up power could be used. Obviously, we cannot top up a non-existent benefit. The question is therefore how we administer a system that enables those who, because of a change in 2016, will not receive tax credits to subsequently receive them. Given that the powers that are being proposed in the Scotland Bill will come into play in 2017 or 2018—or possibly later; that depends on the technicalities of disaggregating some of the functions in areas of shared competence—there will be a significant gap for the families and individuals who will lose out.
The cabinet secretary is entirely correct when he says that the important thing is to consider the detail and then consider the possibilities that arise as a result. We do not yet know the final picture or what the Chancellor of the Exchequer is going to propose, having been given a bloody nose by the House of Lords. I am no fan of the House of Lords, but I welcome the decision that it took. I still think that the place should be abolished, because it is a democratic and constitutional anachronism, but a stopped clock is right twice a day, so there is no reason why the House of Lords cannot occasionally get a decision right, too.
The Chancellor of the Exchequer has been sent home to think again, so the question is: what comes back? I want to ensure, and we as a party are trying to ensure, that all guns are blazing so that the chancellor reverses the decision and we convince enough rebels to back the Opposition. I hope that the Labour Party will oppose the decision 100 per cent in Westminster alongside the SNP and that rebels will be attracted to ensure that we do not have to consider the matter further.
I take it from what Mark McDonald says that this is now an issue of timing. Of course Labour Party members want to do everything that they can to stop the cuts going through, but is it not reasonable to ask the Scottish Government, with all the power and support that it has, to interrogate every option that is open to it to protect people? Instead, it has spent the past few days explaining to everybody how it cannot do anything to support the affected families.
The cabinet secretary stated clearly that considering the options is exactly what the Government is doing and will do. It will consider how it can deliver support for the most vulnerable.
The vehicle for delivery is important. To offset the bedroom tax, we were able to use discretionary housing payments. The cap required to be lifted for that to be done, which required negotiation with Westminster. On council tax benefit, we had to create a mechanism to replace the 10 per cent reduction and ensure that we could fully fund council tax reductions with the moneys that we were given. Again, some creative thinking had to be applied to enable that to happen.
Last week, the Finance Committee took evidence from HMRC on the Scottish rate of income tax. HMRC said that, if the Scottish rate of income tax were set differently from the UK level, that would more than double the administration costs that HMRC incurred. If we are to consider establishing a different approach in Scotland, the fact that there is a cost per transaction for tax credits—as opposed to a global administrative sum, as there is for the Scottish rate of income tax—begs the question of where the administrative costs for those transactions will fall and whether they are factored into the calculations that Jackie Baillie laid out.
There is no member who does not recognise the impact on the vulnerable in society, but our record—whether on the establishment of the welfare fund, council tax reduction or discretionary housing payments—shows that, where we can, we take action to support the most vulnerable in society. However, devolution is supposed to be about our priorities and setting our own policy agenda; it should not be about continually being handed a pig’s ear by Westminster and being expected on limited resources to fashion it into a silk purse.
I will spend the first part of my speech dispelling Tory myths about tax credits and the second part exposing SNP myths about why nothing can be done.
Tax credits were one of the great achievements of the previous Labour Government. The IFS said in 2003 that they were
“a substantial reform” whose
“distributional impact is fully in keeping with that of past Labour reforms, with the largest gains going to the poorest families”.
The tragic fact of the matter is that the families who are having the highest losses as a proportion of income now are precisely those poorest families, as the threshold for reductions is plunging from £6,420 to £3,850 and the taper is increasing from 41 to 48 per cent. The threshold and the taper apply to child tax credits as well, which is completely against what David Cameron promised during the general election campaign.
We should all reflect on the fact that 43 per cent of in-work recipients of tax credits are in households that earn less than £10,000 a year. On average, they will lose more than £1,000 in appallingly regressive cuts. The raising of the income tax threshold that Murdo Fraser mentioned is irrelevant to those families, because they are nowhere near it.
We should reflect also on the national living wage, which the Conservatives and others always invoke in this context. To quote the IFS again,
“even under the ‘better case’ scenario”, that would result in £140 extra a year. Crucially, the IFS says that that would offset 11 per cent of the tax credit losses.
Does the member agree with Alistair Darling, who has said that the Labour policy on tax credits expanded to such an extent that it put intense pressure on public spending and therefore had a detrimental effect on economic growth?
The fact of the matter is that there are fewer people on tax credits now than there were under the Labour Government. I accept that, but Murdo Fraser should have acknowledged that, at this moment—before the cuts—less than 50 per cent of working families are on tax credits. In a way, we have already moved on from Alistair Darling’s comment from a few years ago. Torsten Bell of the Resolution Foundation summed that up perfectly when he said:
“Tax cuts and the living wage cannot compensate for these tax credit changes. That is not an option ... The answer to tax credits is tax credits.”
We also have the massive work disincentive in the changes: the withdrawal rate of 80p in the pound for any extra money earned, and 93p in the pound if people are on housing benefit.
What are we to do if there is no change from the UK Government? At a recent Devolution (Further Powers) Committee meeting, Judith Paterson of the Child Poverty Action Group Scotland said:
“the question to be asked is what will happen if Scotland does not use the powers to top up tax credits ... It has been forecast that, if it does not do that, many more children and families will fall into poverty over the next few years, which would have associated impacts on children’s health, education and prospects.”—[Official Report, Devolution (Further Powers) Committee, 8 October 2015; c 7.]
As we all know, although some of us forget—not me personally—politics is about choices. Today, Labour is making it clear that we are making a different choice from the SNP—certainly in relation to APD—and a different choice from the Conservatives in relation to the higher-rate tax threshold. That might be a different choice from the SNP; it has not told us about that.
I recognise Malcolm Chisholm’s sincerity and I acknowledge what he says about choices. However, in coming to that decision, did Labour take into account the administration costs that the DWP will charge? As he will know, because he is a member of the Devolution (Further Powers) Committee, the DWP is entitled to do that under the legislation. If Labour took those costs into account, what did it estimate them to be?
Our costings are in excess of what is required to restore tax credits. We have made a choice and we will always make choices that lead to improvements for working families and a more equal society. We should remember that the choice involves no extra tax increases; it just means a different choice from other parties about tax reduction.
The amendment from the SNP Government says that this cannot be done—wrong. The amendment from the SNP Government says that the money has already been “earmarked for education”—wrong. The SNP amendment is all over the place. It says that more powers are required; the SNP is hiding behind the constitution as usual. The changes can be made with the powers that we are going to get. If Alex Neil did not know yesterday when he lodged the amendment that those powers are coming to Scotland, he should have done, because we certainly knew.
The SNP is thrashing about, looking for excuses not to do what is self-evidently just, fair, achievable and necessary. It is trying to be all things to all people, which is its way.
As things stand, the tax credit cuts will take effect next April but we will not get the income tax powers until at least the following year and we will not get the APD powers until the year after that. What is the start date for implementing the Labour proposals?
It is interesting that the Government is thinking up new arguments that it obviously had not thought about for its amendment.
My last word is that the SNP may think that being all things to all people is a good strategy for building support for a referendum, but it is a useless strategy for creating a fairer and more equal society and, for some of us, that is the purpose of politics.
Earlier in the debate, Murdo Fraser spoke about zombie figures. I am afraid that we are discussing this issue today purely because of the outdated dinosaur politics of the Tory party and a discredited zombie ideology that fails to learn the lessons of the global financial crisis and continues to wage war on the poor and increase inequality, thereby damaging the economy that the Tories claim to care so much about.
Mr Fraser does not need to take my word for it—he can take the word of Standard & Poor’s, which warned in 2014 that growing income inequality in the United States was slowing growth in the world’s biggest economy. It stated:
“Aside from the extreme economic swings, such income imbalances tend to dampen social mobility and produce a less-educated workforce that can’t compete in a ... global economy.”
It went on to say:
“This diminishes future income prospects and potential long-term growth, becoming entrenched as political repercussions extend the problems.”
When we make families in our society more unequal, we increase borrowing, which takes us back to the very problems that caused the global financial downturn in the first place. When incomes keep falling and borrowing is kept at the same rates, households eventually run into brick walls. That is where the Conservative Party is taking the poorest people in our society.
In lowering incomes and attacking low-income families, the Conservatives are putting more people in poverty, thereby damaging the future of this country.
No, sorry—I think that we are pressed for time.
Unequal societies are less functionally capable, less socially cohesive and less economically sound, and they perform worse than more equal countries. Growing inequality is probably the most pressing global economic crisis that we face, yet the Tory party fails to realise what its policies are doing in that area.
More than half a million children in this country rely on tax credits to make ends meet, and 350,000 of them will feel the impact of the Tory cuts that will strip away much-needed tax credits from more than 200,000 low-income working families. The figures from SPICe show that 197,200 families in Scotland, with a total of 346,000 children, have been hit by those changes from the Tory party.
We have to do something about that. I wonder what people who are scared of what is going to happen to their futures will think when they watch the debate this afternoon. There should be more that joins us than divides us on this issue, and we should not be arguing about semantics or principles, because we are on the same page on this matter. [Interruption.]
The difference is that this Government, unlike Labour, will not write a blank cheque but will look for a costed and practical way to tackle the policies of the Tory Government.
No, I am not taking an intervention—I am sorry.
The decision on who to trust on the issue will lie with the voters. It will come down to who they trust to deliver a commitment to do as much as possible to stop the Tory ideology and to create a new system in Scotland. Labour seems to have been content to grab a headline on the issue rather than produce a reasonable and costed manifesto that can make progress for the people of Scotland. I say to Labour members that they should think very hard about that, because people do not have short memories. They do not forget that, in the past, Labour promised things in its manifesto and then, within weeks, changed its stance on policies, as it did when it said that the decision on the council tax freeze was wrong.
Let us not forget that many of those families have already been affected by the abolition of the 10p tax rate, which hit part-time low-income workers. They will not forget that that is Labour’s record on delivery, unlike the record of this Government, which has committed £90 million since the introduction of the bedroom tax to fully mitigate the impact and help more than 70,000 people in Scotland.
With the councils, the Government has committed more than £40 million to help more than half a million people in Scotland to receive council tax benefit, protecting them from the UK Government’s cuts. It has provided more than £1 million to combat food poverty in Scotland through the emergency food action plan, and an extra £9.2 million of the Scottish welfare fund, giving a total of £33 million for each of the three years from 2013 to 2016.
It is a matter of trust, and the people of Scotland will trust this Government, which has a track record of standing up for the poor and vulnerable and for delivering on policies that, unlike the Tories’ policies, seek to level our country and reduce inequality. As I have said, inequality is the most pressing issue of our times and I am glad to stand behind a costed and well-put-together plan by the Government to do everything that it can to reduce inequality in future.
Before I start, I want to refer to Malcolm Chisholm’s comments of a few moments ago. He referred to the powers that we are going to get to deal with the situation, but I am sure that Jackie Baillie, in her opening remarks, spoke about the powers that we already have. That highlights the fact that, once again, Labour is all over the place.
Education represents an investment not just in our children but in our culture, society and economy. Quality education helps young people to be successful learners and to grow into confident individuals, responsible citizens and effective contributors to society. A highly skilled population leads to higher wages, better jobs and economic growth, and benefits the health and wellbeing of each of us, but a child in poverty is a child who has yet one more barrier to learning. A child whose home life is chaotic, or who is hungry, cannot do their best, and a child who worries about the future of their family is a child who is distracted from fulfilling their potential.
If Mr McMillan is concerned for the wellbeing of that child, why would he prioritise a cut of £250 million in air passenger duty? Does he think that that was the right choice, and how much interrogation of the possibilities of that tax did the Scottish Government do before it made that decision, as it cannot make one on tax credits?
I reiterate a point that I made in the chamber yesterday. I have heard Labour members speak in this Parliament about cutting APD not because it is a bad thing but because it threatens the airports in the north of England. That is more of an issue for the Labour Party to address than it is for anybody on this side of the house.
The main tools for tackling poverty and for tackling the attainment gap lie in the tax and benefits system and in the employment services. All need to play their part in a coherent system that delivers for children, allows parents to work and boosts family income. Currently, unfortunately, those tax and benefits powers are under the control of Westminster. Under the Scotland Bill as it stands, the Scottish Parliament cannot restore all tax credits and does not have the power to reimburse all those who will be affected.
The UK Government is using those tools not to tackle poverty or to promote work in Scotland but to cut welfare. The Tory tax credit cuts will lead immediately to £1,500 being taken from the pockets of 250,000 Scottish working households next April. Across Scotland, the number of children affected will be almost 350,000. In Inverclyde, where I stay, 5,500 children will be affected. Those figures should help anyone who has not yet grasped the scale of the cuts to understand just how many families in Scotland are being hit and how many children are being affected.
It is time for those powers to be transferred to Scotland, allowing us to take real action to tackle poverty, support working families and give our children all the support they need rather than continuing on the UK Government’s course, which will push even more children into poverty.
The SNP has today tabled amendments at Westminster to devolve working tax credits and child tax credits in full to the Scottish Parliament. The amendment to the Scotland Bill that the cabinet secretary highlighted in his opening speech will enable the Scottish Parliament to set its own tax credit system, including eligibility, thresholds and tapers, allowing the Scottish Government to determine the level of tax credits in Scotland and to protect households from Tory tax credit cuts.
Holyrood should send a united message to George Osborne that the cuts are completely unacceptable. Unlike Labour, the SNP has voted against the proposals at every possible opportunity, and we will continue to do so. Willie Rennie has now left the chamber, but he mentioned the House of Lords. Unfortunately, on the fatal motion that was before the House of Lords, Labour peers sat on their hands.
The SNP Government has mitigated some of the worst aspects of the UK Government’s welfare cuts, and we are already spending £296 million over three years to mitigate the damaging effects of those cuts. The Scottish Government will set out clear, credible and costed plans to support low-income households following the comprehensive spending review and the outcome of the amendments that have been tabled to the Scotland Bill. Who knows what is going to happen with those amendments? However, one thing that is clear is that the Scottish Government is the one that is credible and competent—something that the Labour Party clearly knows very little about.
The SNP is standing up for Scotland in government here in the Scottish Parliament, and we are the only ones who are providing an effective Opposition to the Tories at Westminster. We will continue to fight austerity and to oppose Trident, and we aim to ensure that George Osborne’s tax credit cuts are stopped in their tracks.
For as long as powers over working-age benefits remain in the hands of the likes of Iain Duncan Smith, Scottish families and Scottish children will bear the brunt. We will continue to fight the cuts and to demand that the Tories protect the poorest from the worst impacts.
The principal aim of providing support for families is to give children the best start in life and the greatest chance to succeed as they grow and develop into adulthood. It is essential to maintain the highest quality of provision in order to support child wellbeing and development, alongside providing significant support to families and sustainable employment opportunities. That is why I back the amendment in the name of the cabinet secretary.
Murdo Fraser took some delight in trying to point out differences of opinion within other parties on a range of issues. On this particular topic—tax credits and the impact that they will have on working families—it appears that there is quite a significant difference within Murdo Fraser’s party. I do not know whether Ruth Davidson represents the caring weekend face of conservatism when she says that she is concerned about the impact that tax credits will have, whereas Murdo Fraser perhaps represents the real face of the Conservative Party as cheerleader for tax credit cuts and the impact that they will have on families right across the country.
There are a number of different issues at stake. The first issue is the tax credit cuts and what they will do. There can be no doubt that there are hundreds of thousands of families throughout the United Kingdom, including in Scotland, who are profoundly worried about what is going to happen to them.
I recently had the pleasure of meeting Mark Payne from Port Glasgow, who is a member of the Union of Shop, Distributive and Allied Workers. USDAW is a trade union that is at the forefront of campaigning about the impact of tax credits on its members and on ordinary families. Mark and his partner, Agnes, live in Port Glasgow and have three children. They are a family who believe in the ethos of hard work, and both Mark and Agnes work. They are also a family who stand to lose £2,100 per year because of the changes to tax credit. Mark works full time as a supermarket delivery driver, and Agnes works part time in the retail trade, too. Mark told me that he and Agnes work two jobs for more than 60 hours per week. They have no time with the kids, and they have no food in the fridge by the end of the week. He and Agnes have to skip meals to ensure that the kids eat.
When I raised Mark’s case with Priti Patel, who came here to meet members of the Welfare Reform Committee, she agreed to meet Mark. I hope that she will listen and reflect on what Mark has to say. I accept that there are members of the Conservative Party at Westminster who have begun to realise the inhumane impact that the tax credit cuts will have.
Unfortunately and tragically, Mark is not alone. There are hundreds of thousands of people like Mark, and it is not just hard-working families who are affected. Amanda Batten, the chief executive of the charity Contact a Family, said:
“These cuts will affect a staggering 150,000 hardworking families with disabled children whose finances are already at breaking point.”
That is the reality of what we are confronting.
I will take help and support from anybody who will help to stop the cuts taking place. That is why I welcomed the decision in the House of Lords, which is a body that has to be reformed—Labour is on record as saying that we will reform it from top to bottom. What struck me was not just the decision in the House of Lords but the quality of the debate there, which would put this chamber and the House of Commons to shame. We heard some fantastic contributions from people who were reflecting on what is happening in ordinary families across the country. To their credit, they forced the Westminster Government to stop and think again, which I hope it will do.
I agree with Alex Neil that the solution is for Westminster to come to its senses and accept that what is being proposed is, frankly, unacceptable and also cruel in the extreme. I also think that we have a responsibility to say that, if we cannot win the argument there, we will look at our power and our budgets in order to do something.
Before this afternoon, it was all about whether the Labour motion would have been competent and could have been put into effect. Alex Neil now tells us that an amendment has been tabled today in the House of Commons; I do not know whether he is talking about the SNP amendment or the Government amendment, but he seems to indicate that it is that. Well, Presiding Officer, we have a problem. If that amendment was tabled before the debate today, we will be asked to vote on an amendment here this afternoon that is outdated, no longer competent and, frankly, misleading.
In a minute. We have been asked to vote on something that says that we have no power, when in fact the minister has indicated that we will have the power.
You are in your last 20 seconds, Mr Henry, although there appears to be a point of order from Mr Neil.
What has been lodged in the House of Commons today is a proposed amendment. As things stand, the bill does not give us the powers that would be required to carry out the Labour proposal. If the amendment tabled today is carried, it will do. Therefore, we are not out of order.
Many thanks for that. I will treat it as a point of information. Mr Henry, would you please close in the next 20 seconds.
“there is currently no proposed power in the Scotland Bill”, but there clearly is.
I think that we should work together. I think that the cabinet secretary should reflect on where the SNP is. To be honest, this should not be about point scoring—about who is right and who is wrong. If that power is there, I think that we should grab it with both hands. We should reflect. We will look absurd, Presiding Officer, if we vote on something that is now outdated. What we need is something that will protect hard-working families.
I welcome the cabinet secretary’s assurances that we will, when the time comes, take measures to help the families who are affected by these cruel tax credit cuts. I have great confidence that the cabinet secretary will do that, because I judge the Scottish Government on its record.
The Scottish Government has already spent £300 million to mitigate the damaging effects of UK Government welfare reforms. We do not have to go by the Scottish Government’s figures on that. In March this year, evidence was presented to the Parliament’s Welfare Reform Committee from research that it had commissioned from Sheffield Hallam University on the cumulative impact of welfare reforms to that date. The evidence did not cover the budget shock announcement about tax credits, but it did cover the £350 million of previous tax credit cuts that were brought in by the Tories and their coalition partners.
The Sheffield Hallam research showed that the cumulative effect on Scotland of all the welfare changes announced to March was £1.5 billion. It broke that down into an average of £440 per head for every adult of working age in Scotland, whether or not they claimed benefits. That is an important point. Professor Steve Fothergill who conducted the research pointed out that the per capita cost to Scotland of those welfare cuts was just below the GB average of £450, but was much less than in other areas, including even London, which loses £490 per head, the north-west of England, which loses £530, and Wales, which loses £520.
The explanation of that in the research is worth quoting. It said:
“It should not escape note, however, that the impact in Scotland would have been around £35 a year per head higher for every adult of working age if the Scottish Government had not struck a deal with local authorities to avoid passing on the cut in Council Tax Benefit or put in place arrangements to defray the impact of the ‘Bedroom Tax’.”
“The financial burden of these welfare reforms is being borne by public sector budgets in Scotland rather than by benefit claimants.”
That is a very clear acknowledgement from an independent source that the Scottish Government’s measures to mitigate cuts are working. However, it is also an acknowledgement that those measures come at a cost to other public sector budgets in Scotland—budgets for health and education, and general local authority budgets. Every week, Labour members come to the chamber demanding that more be spent on those budgets, even though revenue budgets have been cut by 10 per cent by the Tory Government and capital budgets have been cut by 25 per cent.
Although I have confidence that the Scottish Government will continue to do the right thing by the poorest in society, as it has done in the past, we must recognise that that comes at a cost to existing public sector budgets—and it will continue to do so. The cabinet secretary has pointed out Labour’s black hole. The tax powers will not kick in until one and two years after tax credits have been cut, and not a single Labour speaker who has been challenged has been able to answer that question about the black hole.
The Scotland Bill gives us limited powers over tax and welfare. Seventy per cent of tax and 85 per cent of welfare will remain with Westminster, so the vast part of Scotland’s budget will continue to be determined by a UK Government that we did not vote for and which has very different priorities from the Scottish Government. We have a UK Government that is cutting welfare by £12 billion while cheerily committing to an additional £167 billion for weapons of mass destruction—a policy that was backed cheerfully by Labour front bencher, Jackie Baillie, only yesterday.
Let us never forget that the cuts are coming from that Tory Government. It is vital that we do not let the Tory Government off the hook. It is vital that we speak with one voice on tax credits, as we spoke with one voice yesterday on Trident renewal. George Osborne has been on the ropes over tax credits, so I urge members not to let him bounce back, whether by blaming tax credit cuts on the SNP or by saying that the policy is okay and not a big deal, because Scotland can somehow find the money to sort it all out. Tax credit cuts are a very big deal for the families who are affected and we must not let George Osborne off the hook. We need to call time on his cruel tax credit cuts, and that needs to happen in London.
I began by talking about the Scottish Government’s track record in clearing up Westminster’s mess. Measures in that regard require not just resources but expertise at devising solutions that work in our increasingly complex devolved settlement. Mitigation of benefit cuts is difficult, as we have seen, and requires us to have a careful look at what we can do with the powers that are devolved to us.
The issue will become increasingly complicated, given the piecemeal devolution of some benefits and not others. If I had more time, I would quote some of the expert evidence to the Welfare Reform Committee on the difficulties that piecemeal devolution will bring and the hardship that it will cause, particularly in the context of the failure to devolve universal credit. Devolution of universal credit would make it much easier to mitigate the tax credit cuts. I cannot understand why anyone on the Opposition benches who has heard some of the evidence on welfare reform would vote against devolution of universal credit in its entirety.
That is why I take with a pinch of salt some of the pronouncements from the other benches. I say to members that it is not too late. Amendments to the Scotland Bill will be tabled and we can still devolve universal credit and power over sanctions, which is another issue that is harming the poorest people in our society.
The Tories’ austerity agenda is penalising the poor and vulnerable, and it is having a devastating effect in communities throughout Scotland. Over the past five years, we have seen benefits and tax credits changed and cut, which has hit working families and the poor hard, while, at the same time, we have seen taxes cut for the rich and a blind eye turned to tax evasion by both individuals and companies.
Now, despite promising during the general election to protect tax credits, the Tories are at it again. In their election manifesto, the Tories promised to improve the lives of
“the millions who work hard, raise their families, care for those who need help, who do the right thing”.
The changes that the Tories want to make to our tax credits system fly in the face of those aspirations. I guess that the lesson to learn is never to trust a Tory.
The Tories’ plans to cut tax credits will leave around 4,600 families in my constituency an average of £1,300 a year—more than £100 a month—worse off. Across Scotland, more than 250,000 working families will be affected, and the figure reaches 3 million across the UK. That is 3 million working families, the vast majority with children, who are already struggling to get by from week to week and who will have less money in their pockets than they have now. The Child Poverty Action Group has cited some examples of those who will be affected: the nursery nurse who will lose £1,788 a year; the hospital porter who will lose £2,011 a year; and the care worker who will be £1,906 a year worse off.
While those low-paid families are being made to pay the price of austerity, the Tory Government has made its priorities clear, pledging £2.6 billion to help the rich by cutting inheritance tax, handing £7.25 billion to big business by cutting corporation tax, and increasing the take-home earnings of those who are already comfortable by raising the threshold of the top tax rate, which will benefit the rich most. Last week at Westminster, the Labour lords won a vote to stop the Tory plans going ahead unless protections are introduced for the most vulnerable. However, although the UK Government suffered a setback, the Tories are still refusing to say that they will change their plans.
We have heard many statistics, but I will talk about the actual impacts on families. The Union of Shop, Distributive and Allied Workers has been contacting its members to find out how they will be affected by the tax credit cuts. Many on household incomes of between £7,000 and £27,000 a year are already worse off because of previous cuts to tax credits. Those families are struggling with rising housing costs, heating bills and food prices. In the retail sector, where evening and weekend work is the norm, mums and dads who are already struggling to spend enough quality time with their children and are now facing further cuts are asking whether it is worth their staying in work at all.
Imagine the outrage that there would be if the Government proposed a 97p tax rate for millionaires, yet the increase in the clawback that is proposed by the Tories means that families who are in receipt of housing benefit will lose 97p of every £1 that they earn, making it impossible for them to make up for the cuts or work their way out of poverty as some Tories suggest. Only a Tory would think that the solution is to work more hours. For many families, working more hours means more childcare costs, not more income. For USDAW members who work in retail, the reality is that there is little opportunity for them to increase their hours; in fact, many feel that there is a real risk of employers’ cutting their hours to make up for the increase in the minimum wage, and many worry about being replaced by younger workers who will cost their employers less.
What impact will the cut in tax credits have? Hugh Henry cited one example and I will cite others. An USDAW member called David could lose £2,000 a year. David says that the changes to tax credits will “massively affect” his family, who are already worrying about how to pay their bills and keep their car running. He says:
“The government is disgusting for taking these tax credits away from people like myself who work hard and have never been unemployed since they left school. We are the people who keep the economy going”.
Yvonne from Airdrie will lose £1,870 a year. She says:
“We struggle financially most months, even without these cuts being introduced. Food shopping is obviously a big part of our monthly budget. Anything over and above is non existent. This will just make things worse”.
Tax credits are an absolute lifeline for those families—they are the difference between families keeping their heads above water or going under.
Those are just two examples that highlight how the Tory tax cuts could hit hard almost a quarter of a million hard-working families right across Scotland unless we act.
I am sorry, but I have no time.
Scottish Labour will fight the Tory cuts to tax credits every step of the way. We want to protect every family in the UK from these vicious cuts. However, should the Tories get their way, we must have a plan B. Scottish Labour has pledged to protect Scottish families from Tory austerity, and that is what we will do. If the Tories go ahead and implement the cuts, it is only right that we should use the powers of the Scottish Parliament to protect hard-pressed families in Scotland.
We can choose to let more children grow up in poverty, or we can choose to do things differently. We will always put those on middle and lower incomes first. We will never put millionaires before ordinary working families and expect working families to pay the price.
Our plans will ensure that working families are protected and that no one in Scotland will pay more tax than they do today as a result of our commitment.
Jackie Baillie said that today is a defining moment for Holyrood. She is right: today is the time to get our priorities right. When children in my constituency are going to school hungry and when families I represent are struggling to afford a food shop, I know what my priority is: protecting the incomes of working families, not reducing the cost of business-class flights.
With the new powers that have been agreed for Holyrood, we have the opportunity to act to ensure that every Scot has a decent standard of living, that income and wealth are distributed fairly, and that the cycle of poverty that destroys people’s life chances is ended. The new powers have been confirmed. It is time for the SNP to stop the whinging and to start standing up for working people.
Scottish Labour will use the new powers to support working families. The question is: will the SNP and Tories do the same? The 4,600 families in my constituency who will be affected by the tax credit cuts deserve to know whether the SNP is on their side.
I am only too pleased to take part in the debate, as it is on an issue than will affect many of my constituents. As always, I will try to represent them to the best of my abilities.
How we deal with the on-going attacks from the Westminster Tory Government will continue to be one of the major debates in the chamber. I am not exaggerating when I say that the savage Tory cuts on tax credits will affect many families in Renfrewshire. A recent briefing from children’s charity Barnardo’s calculated that 10,500 families in Renfrewshire will have to deal with that situation. Half of all families in Renfrewshire with dependants use that money to buy food, clothes and other essentials. That means that more than 17,000 children in Renfrewshire will be affected by the callous cuts. All that is taking place on the back of the so-called Tory Westminster reforms, with more and more of our constituents—our friends and members of our communities—continuing to suffer on the Tories’ watch.
The Scottish Government has mitigated, and will continue to mitigate, the on-going Tory Government attacks, but that is not simple as the Labour Party says that it is. The debate is not just about tax credits but about welfare reform in general; it is about the on-going attack on the vulnerable in our society. The Scottish Government is looking holistically at how we deal with the issues.
It may be easy for the Labour Party to carp from the sidelines—it does not have to deliver for the people of Scotland. However, the Scottish Government has a record of delivering for our people, and it will continue to deliver.
I have no doubt that in their heart of hearts many Labour members want to make a difference for their constituents, but it appears that they have lost touch with what is happening in the real world. Labour is debating in the parliamentary bubble, when we need to get out there and deal with the issues that affect our constituents. Who will the public believe? Will they believe a Scottish Government that has delivered for our people and which continues to deliver for them, or a discredited Labour Party?
Even Labour Party members of high standing doubt the party’s policy positions. Tom Harris recently said:
“Labour still expect to be taken seriously as a potential government? Really?”
He also said:
“Labour has jumped the shark ... And I give up. That’s it for me. Giving. Up. Goodbye.”
Presiding Officer, you are probably wondering, “What exactly does ‘jumping the shark’ mean?”, which is what I asked at the time. It is a theatrical term for a television or movie series that has gone on for too long, has lost any creative input and has no further to go—a storyline that is so over the top and unbelievable that it can no longer be taken seriously. That sounds very similar to the Labour Party’s situation.
No, I must carry on.
The situation that the phrase relates to is when in “Happy Days” Arthur Fonzarelli water-skied over a shark. I know that the Labour Party believes that it can do many things, but I do not believe that it can keep any credibility.
Labour is trying desperately to be relevant to the debate. Yesterday, some Labour members were evangelical about scrapping Trident, but others were not. Today, Labour is making a cynical attempt to talk about tax credits. We are talking about real people’s lives and real people’s issues. Labour should join me in looking towards Scotland’s future instead of looking towards tomorrow’s newspaper headlines.
Talking of newspaper headlines, I give way to Jenny Marra.
If I can be allowed to bring the member back to the point of the debate, is he in favour of our proposals to reinstate the tax credits for working people in his constituency?
I am in favour of making sure that we have a policy that ensures that the people of Scotland have the ability to live their lives to the full. That is what is important to me: doing the job that the Scottish Government is doing, as opposed to pontificating and making noise.
That is why Labour has absolutely no credibility. Labour has already said that it would spend the proposed cut in APD on education. No matter how many times Jackie Baillie says that it has not, Labour has already said that it would do that. That is its right—it is a fair point for it to make. Education and bridging the gap in attainment are ways of bringing people out of poverty. The Labour Party said that, but now it has changed its mind.
Scotland is to get extra powers in 2017, but it will not get control of APD until 2018, so what will happen to the 250,000 families in Scotland who are being affected in the here and now? How will they get by on Labour’s kind words? We need to deal with the real-world issues that are in front of us instead of playing a political game.
The on-going Westminster attacks are attacks on the weakest in our society—not just families who receive tax credits but others on benefits. I am talking about personal independence payments, disability benefits and payments for those with long-term conditions. In Christina McKelvie’s members’ business debate on welfare reform last week, I spoke about the people who are struggling to get by.
For me, the issue is who people trust. Do they trust the Scottish Government, which has a record of continuing to support the people of Scotland, or do they trust a bunch of chancers from the Labour Party?
Jackie Baillie talked about value, but she would rather spend £160 billion on bombs than on bairns. That is her way of supporting Scotland’s children—the topic of today’s debate.
Scotland gets back only about 70 per cent of the extra money that we send to London. The other 30 per cent is kept by Westminster and is usually spent on things that we did not ask for and did not want, including nuclear bombs. The Barnett formula grants Scotland about £30 billion, which is worth about £28.8 billion when inflation is taken into account. We have no idea what cut the Chancellor of the Exchequer will hit us with at the end of the month.
Increasingly, the costs of the UK Government’s commitment to austerity are being borne by the most vulnerable people. The cuts to welfare benefits have so far cost our economy at least £4.5 billion, and last year the situation got worse. With the Tories’ majority came another phalange of cuts totalling £30 billion in all, which were heartily backed by Labour MPs. Those same Labour MPs are now telling us that we must mitigate their decision.
We have little idea what David Mundell’s latest amendment might do, but we know what our amendments would do. We cannot ignore the reality that Scotland is not getting any extra money. In fact, under Smith it was a condition that neither side would gain or lose funds, so all we can do is recalculate the budget headings. We did that in order to mitigate the effects of the bedroom tax, but we cannot keep mitigating Westminster policy decisions on welfare without having the balancing financial and revenue-raising powers.
Ultimately, only with full power and full decision-making powers will the Scottish Government be able to access all of Scotland’s resources in order to deliver a more prosperous and fairer Scotland—including a social security system that works for our people. I just hope that Labour will not revert to type and let the Tories off the hook at Westminster for an “SNP bad” story today.
With the reality now straight in everyone’s minds, we need, I believe, to see what we can do to mitigate the tax credits cuts. Kezia Dugdale says that Labour will use the new welfare powers in the Scotland Bill, but we are not yet altogether sure what those powers will be; indeed, the UK Government has just tabled another 20 or so amendments, the latest of them having been tabled at lunch time today. Malcolm Chisholm has said that he knew about the amendments last night. Is that part of the pooling and sharing of resources and information that we heard about from the better together campaign? If Mr Chisholm heard about it last night, that shows straightforward disrespect for the Scottish Government.
The Labour Party cites clause 21, but discretionary payments would give us only the competence to introduce discretionary top-up payments to people in Scotland who are already entitled to a reserved benefit. We have heard from SPICe that what has been proposed simply cannot happen and that that clause will not let us restore the benefits that will be lost to some 80,000 families, or support people who have been sanctioned. The SNP has now tabled amendments at Westminster, which would, if they are agreed to, mean full devolution of working tax and child tax credits. Can Labour tell me today whether its MSPs will back those amendments? If it will not back them, that will show that its rhetoric is empty.
Colleagues here have made clear their support for the move, and the cabinet secretary has reiterated the disastrous losses that will hit low-income households. On that point, I have to congratulate Cara Hilton, who I see is not in the chamber at the moment. I wanted to intervene on her to do so, because I thought that her speech was fantastic and I agreed with everything that she had to say—at least, until the last 30 seconds, when she reverted to the “SNP bad” theme.
The cabinet secretary has highlighted how we have realised the promises that we have made, but all we have heard from Labour today is an empty promise and dereliction of its duty to people who need support. If it is to follow through on the promise that it has made today, it will troop through the lobbies with our MPs next Monday in support of the amendments that we have tabled.
Never mind. Let us push on. Kezia Dugdale will have seen the collection of media reports describing her admirable desire to make things better for the most vulnerable people as a wish to “restore”, “cancel” or “reverse” Tory tax credits cuts. Her spin doctors have been spinning away all afternoon in an attempt to change the words to “top up”, because they realise that they cannot restore, cancel or reverse anything. At the risk of stating the obvious, I believe that Ms Dugdale seems to have avoided one small issue: tax credits are not devolved. They are not even counted as a benefit. They are counted as a tax, and we do not know what they will be or whether they will be defined as a benefit. The devil is always in the detail—something that the Labour Party never takes cognisance of.
Where is Ms Dugdale going to find the money? Is she going to cut the national health service? Is she going to cut education? Is she going to cut local government? Perhaps Jackie Baillie will decide to cut the £167 billion that she would rather spend on bombs. Once again—we are familiar with this by now—Labour is making promises that it can never fulfil. Labour Party members in Scotland will have seen just how true that is when, after 70 per cent of them voted not to renew Trident, the London party said, “Ye’ll dae whit yer telt.”
Let us give the people of Scotland a bit of hope and do something for them. We need to support full devolution of tax credits, not some wishy-washy “top-up”—
Labour needs to support the inclusion in the Scotland Bill of full devolution of tax credits, then we can work together to make life better for the people whom we all care about.
Neil Bibby will be followed by Fiona McLeod. You have up to five minutes.
I welcome the opportunity and am proud to speak in favour of Scottish Labour’s motion on tax credits, which have, since they were introduced by the last Labour Government, helped millions of families up and down the country. They were instrumental in lifting more than a million children out of poverty during the period of the last Labour Government by putting money into the pockets of working people, and today they support nearly 50,000 families in West Scotland, 350,000 families across the whole of Scotland and more than 3 million families up and down the UK. I have spoken to hundreds of people, including some of my own family, who rely on that vital support. Tax credits are very important to many people, which is why it is scandalous that the Tories want to take that support away from working families.
It is even more scandalous that David Cameron and the Tories broke their promise to the Scottish public and the UK public earlier this year. During the general election campaign, David Cameron told millions of working people live on national television that he would not cut tax credits; now he is planning to cut them. We saw Jeremy Corbyn ask the Prime Minister six times at last week’s Prime Minister’s question time whether any working families would be worse off as a result of the changes in April next year, and six times David Cameron did not give a straight answer.
We are asking whether the SNP Government and others will join Kezia Dugdale’s and Scottish Labour’s call to give a clear commitment to help working families in Scotland and to agree that, if necessary, we will restore the money that is lost through tax credits cuts to working families.
We know what Nicola Sturgeon has said about the tax credits cuts. On 25 June, she said:
“Cuts of that magnitude will have a significant impact on families and poverty levels in this country, and they will push more people into relying on services such as food banks.”—[Official Report, 25 June 2015; c 20.]
As usual, we have nice, warm words from Nicola Sturgeon and from Alex Neil today, but working families need more than that. They do not need excuse after excuse from SNP members who appear keen to find problems and to highlight reasons not to act.
I do not know whether Neil Bibby was in the chamber to hear my speech, but I gave a very clear commitment on behalf of the Government. Once we know what the further changes are—the chancellor has said that he will announce them on 25 November—we will look at what gaps need to be filled and take whatever action is necessary. That is the sensible thing to do.
Quite frankly, the details of Labour’s proposals have not been properly thought out.
We need to think out the detail and do the thing properly at the right time.
If Alex Neil wants to give a clear commitment to working families in Scotland, he will withdraw his amendment and support Labour’s motion.
We all know that the Government has the power to act. We, the Scotland Office and SPICe have said that, and even Alex Neil appears to be saying that. We heard the SNP say that it cannot act on the bedroom tax: it said that, legally, it could not take action to mitigate the bedroom tax. That was until Labour-run Renfrewshire Council showed how that could be done and Labour lodged a budget amendment. The bedroom tax is cited in the SNP’s amendment. Let us not tell families across Scotland that we cannot take action. Where there is a will, there is a way. The question is not whether there is a way for the SNP; it is whether there is the political will.
As Jackie Baillie said, this is a defining day for the Scottish Parliament. Will we decide to exploit the political argument, or do the right thing and give a clear commitment to those who need it? We and the SNP know that it has the power and the resources. Labour has said that we would not abolish air passenger duty, which would cost £250 million. Helping families and stopping children falling into poverty has to be a bigger priority than cutting airline taxes. If SNP members think the opposite, they have their priorities all wrong.
We can also achieve the resources that are needed by making different decisions from George Osborne’s decisions on tax rates without anyone having to pay any more tax than they currently do. We can make that socially just policy work, if we have the political will to do so.
A number of key questions are left. If the SNP wants to mitigate the cuts and has a well put together and costed plan, as Clare Adamson said, what and where is that plan? Given Alex Neil’s comments on having the powers, and given the questions over the competence of the SNP amendment, will the SNP withdraw it? Will it vote against Labour’s motion, which calls for firm action to restore the money that is lost through cuts in tax credits?
Scottish Labour has lodged a motion that can begin the process of supporting working families in Scotland. I urge all members in the other parties to vote for the Labour motion, if they are serious about doing that.
The debate has been characterised by a lot of heat and noise, especially from one part of the chamber. Perhaps we have to look at facts; we need to look at facts in a variety of ways.
First, let us test the Tories’ actions against the Scottish Government’s response. The Tories cut, and the Scottish Government mitigates. We do not have the money, but we find it and we do that. That is the first fact. We have mitigated the heinous Tory welfare cuts.
However, we then have to test the Labour Party’s proposals against the legislative, financial and political facts. The legislation is absolutely clear: the Scotland Bill will provide limited devolution of benefits from the United Kingdom to the Scottish Parliament. The benefits system works only if it is done holistically, but we are getting only limited devolution of benefits. Next, we can look at legislative amendments down in Westminster that we can either support or oppose. The SNP lodged an amendment to the Scotland Bill to ensure, as Christina McKelvie and Stuart McMillan said, that tax credits are devolved to the Scottish Parliament in their totality.
The fact is that we will get devolution of air passenger duty. Would Fiona McLeod spend money on cutting ticket prices for businessmen flying to London, or would she prefer to put that money in the pockets of working people?
It is interesting that Mr Findlay talks about devolution of air passenger duty. If I remember rightly, it is something that the Labour Party did not want.
The Labour Party said that it was better for APD to remain with the Westminster Government.
Talking holistically, I want all benefits to be devolved to the Scottish Parliament, but I also want the economic levers that would allow us to make our economy prosperous so that we can reinvest in the welfare of a socially just Scottish society.
I say to Mr Findlay that it is about facts and not his airy-fairy “Let’s have a go at the SNP” approach.
As Stuart McMillan and Christina McKelvie did, I will put a question to the Labour Party. Will it vote next week for the SNP amendment to the Scotland Bill to devolve everything to the Scottish Parliament? If it does, that will be unlike the times when the Labour Party did not vote for SNP amendments just because they were from the SNP; and unlike when in July this year 184 out of 232 Labour MPs did not oppose Tory welfare proposals. Those are the legislative facts.
On the UK Government amendment to the Scotland Bill that was lodged today, I pose this question: will any new Scottish benefits that we produce in the Scottish Parliament be immune from UK clawback through other benefit changes and tax changes? The example that comes to mind is what happened when we introduced free personal and nursing care, which this Parliament is incredibly proud of: the UK Government took away attendance allowance from our old folk in Scotland. We should ensure that the UK Government amendment to the Scotland Bill gives us the power to ensure that Westminster cannot interfere with what we do.
I am rapidly running out of time, but I can say that Labour’s financial approach to the tax credits issue is all over the place, and that, politically, what the Tories are doing is beyond words. However, Labour’s words have to be checked against the Scottish Government’s actions, and many of my colleagues have already gone through what we have done on mitigation. In total, £296 million out of a diminished Scottish Government budget will have been spent from 2013 to 2016 to mitigate Tory welfare cuts.
However, the reality is that, politically and financially, we cannot keep on mitigating, and we should not have to. It is wrong, cruel and deceitful to say that the Scottish Parliament can continue to mitigate the cuts coming from Westminster. It is wrong, cruel and deceitful for the Opposition to say that they want to do something about the cuts coming from Westminster but to say at the same time that they do not want to have the powers in the Scottish Parliament that would benefit our economy so that we can reinvest in a socially just Scotland.
Before we turn to closing speeches, I want to refer to the point of order that was made by James Kelly during the debate, on the competence of the amendment in the name of Alex Neil.
The veracity of points that are made in amendments is a matter for the member who lodges the amendment, not the Presiding Officer. Veracity is not an admissibility criterion for an amendment. Therefore, in terms of the standing orders, the amendment in the name of Alex Neil is competent.
In his contribution, Hugh Henry spoke about what we are all really talking about. He spoke about Mark and Agnes. They have two jobs and are working 60 hours a week but are struggling to put food on the table and spend time with their kids. Any extra hours spent working are less time to spend with their kids. This debate is about that couple, although we might sometimes find it difficult to believe that. Hugh Henry hit the nail on the head and we must do everything that we can to exert the influence that we have to make the changes that are necessary, whether it is done here or at Westminster. We must do everything that we can to help Mark and Agnes, because that couple is what it is all about.
We should be trying to make work pay in this country and incentivise people into work. Despite their claims of being for working people and being in favour of work, the Conservatives are making benefits pay. If the tax credit changes go through, some people will be better off on benefits than in work. Just like our tax cuts for those who are on low and middle incomes, the whole system was created in the first place to incentivise people into work.
I cannot understand why we are trying to reverse that action. Before we have driven up wages to the real living wage level that we all want to see, cuts are being implemented. If the Scottish Parliament really wants to make an impact, we should focus on what we can do to make the difference. We need to send the message to the Conservatives at Westminster just like the House of Lords did.
We need to have a proper programme of change. By all means, we should try to put an end to the Government subsidising companies that pay their employees low wages, but we should not do it on the backs of working people who are struggling to make ends meet. To do it in that way while presenting it in terms of trying to balance the budget is unfair.
Malcolm Chisholm was right when he talked about the Conservatives’ record. The tax credit cuts were not in the Conservative manifesto; it talked about £12 billion of welfare cuts, but tax credit cuts were not mentioned. Conservative members did not argue for making those cuts in any of the debates that I heard during the election campaign. In fact, the Prime Minister explicitly ruled that out as an option. On three fronts, the Conservatives have a record on this issue. If they believed what they said during the election campaign, they should make meaningful change in the autumn statement.
SNP speakers find it difficult to put the referendum behind them.
Even when the minister admits that the power is coming to the Scottish Parliament, the back benchers are stuck singing an old song and arguing for more powers when we need to focus on how to use the powers that are coming. Christina McKelvie, Joan McAlpine, Stuart McMillan and Fiona McLeod all made the case for more powers rather than focusing on what Alex Neil says he is now focusing on.
See, they all get very excited when I start talking about the referendum. Who says that it is only us who talk about the referendum? SNP members are interested only in more powers, rather than in making this Parliament work for working people.
We know that the SNP is in trouble when it appeals for unity. It always appeals for unity on its own terms and never on anyone else’s. Clare Adamson was brilliant—I have to commend her. Without one scintilla of embarrassment, she called for that unity and then, in the next breath, condemned the Labour Party. How does she seek unity if she is condemning the people with whom she is trying to seek consensus? I cannot understand that. I was impressed by her speaking skills, because I did not think that it was possible to do such a thing.
George Adam continued that attack, as did Christina McKelvie. However, someone is absent today: that Presbyterian accountant, the Deputy First Minister. He said quite clearly, just a few weeks ago—
Not just now.
Mr Swinney said quite clearly just a few weeks ago that it was “highly unlikely” that he would reverse the Conservatives’ planned benefit cuts. Earlier, we heard about his record, as evident in the independence white paper. The SNP bellyached about the £2.5 billion cuts but did nothing about them in the white paper, which pledged to spend not one penny more than Iain Duncan Smith was planning to spend. The SNP will be judged on its record.
Today was the most humiliating day for Alex Neil, who started his speech arguing that he did not have the power to take action and then concluded by saying that he had the power after all. We all know that the SNP likes to say different things to different people, telling them whatever they want to hear. However, it usually exhibits a degree of sophistication when deploying that tool by getting different people to say different things to different people. Alex Neil is obviously so confident about his abilities that he thinks that he can say different things to different people in the one speech, which is exactly what he did today.
I commend Alex Neil’s speaking ability, as I did Clare Adamson’s.
We need to get back to what Hugh Henry was talking about earlier on.
How are we going to help Mark and Agnes? That is what it is all about, and that is how this Parliament will be judged.
This has been a highly charged debate, with a contest between Alex Neil and Jackie Baillie for the highest decibel levels, particularly when they were discussing whether the amendment was admissible—a point that you have cleared up, Presiding Officer.
Welfare is a contentious and emotive issue, so it is not surprising that passions have been running high. Hugh Henry made an interesting point when he said that he felt that the standard of debate in the House of Lords was better than it was in this place or the House of Commons. However, I hope that that has been partially addressed today because, as Willie Rennie said, this has been a good debate.
The Labour motion is blunt in its criticism, but I remind Labour members again that the context in which the debate takes place is one in which a senior Westminster colleague of theirs, Alistair Darling, said:
“one of the unintended consequences is that we are now subsidising lower wages in a way that was never intended”.
That is not an argument for scrapping tax credits but an argument for adjusting the system so that wages are driven up. That is good advice and is a clear pointer to the fact that the current high level of tax credits creates long-term pressures on the economy and difficulties for public spending. Labour cannot get away from the fact that nine out of 10 working families with children became eligible for tax credits. That is not a sustainable situation.
That point notwithstanding, the recent differences in opinion between the House of Commons and House of Lords reflect the fact that there are real concerns about this issue. The Scottish Conservatives have been clear that we have concerns, particularly about the timing. That will be an important issue at the time of the autumn statement.
I am confused. If the Conservatives were quite clear, in the way that Liz Smith describes, why did they send Annabel Goldie down to the House of Lords to back up the Conservative Government?
For the simple reason that, as Annabel Goldie put on record on television the other day, it was a point of principle about the nature of that bill.
That said, those who want to reinstate tax credits to a similar level to the present level have to explain two things: first, how they would pay for that and balance the books; and, secondly, how Britain and Scotland could, in those circumstances, move to a high-wage, low-tax economy that promotes stronger growth and will not burden future generations with unmanageable levels of debt. The Labour Party needs to consider that carefully.
As Willie Rennie said in his closing speech, the national living wage policy, lower taxes and reformed tax credits come as a macroeconomic package; the elements cannot be seen in isolation.
It is our contention on this side of the chamber that, given the new powers that are coming to this place, we must reject policies that seek to introduce taxation policies that place Scotland at a competitive disadvantage, for exactly the reasons that Murdo Fraser set out.
Mark McDonald said something interesting about the debate being about principle and practical issues. There is some truth in that, but it is also about choices, and the different political parties in the Parliament will clearly come to different decisions about the different choices.
I will not at the moment, if Mr McDonald does not mind.
Aileen Campbell made an announcement today about the reason why childcare and educational changes are important. I was interested to hear her announce that measure, because she was trying to drive at some of the issues to do with better provision in that area. I was slightly surprised that the SNP members did not raise some of that, because the Conservatives are clear that it has to be part of the equation of looking after Scotland’s children.
I was interested to hear from the Labour Party conference at the weekend that that party will introduce a £78 million fair start fund to provide extra teaching and extra facilities for the most deprived pupils, as I understand it. That is a laudable aim in principle, even if I do not necessarily agree with the way in which the Labour Party will pay for it.
The really interesting point about that announcement is that the Labour Party says that the money will follow the child, bypass local authorities and go straight to headteachers. Which party criticised the Tories for doing exactly that? I can point to amendments in the name of Neil Bibby and speeches by Malcolm Chisholm and Cara Hilton that criticised the Conservative Party for saying exactly that. If that is a Damascene conversion for the Labour Party, I welcome it, because it is an important part of the package that goes with ensuring that our children have the best start in life.
We find ourselves at an interesting time in Scottish and British politics. Difficult choices will have to be made. The Conservative Party is prepared to make those difficult choices and to accept a lot of the criticism that has been levelled in our direction about the timescale for the changes and the need to mitigate the impact on the poorest. That is an important thing to think about as we go on with the knockabout politics that are familiar to the chamber. There are real issues and real choices to be made.
Naturally, I support the amendment in the name of Murdo Fraser.
It has been a highly charged debate in some ways because the issue is critical. As a number of members highlighted, we are talking about low-paid people in communities throughout Scotland. We will always seek to protect them.
I will be absolutely clear and reiterate what Alex Neil said at the start. We will address the issues by considering what happens to new claimants and how we fill the gap between the implementation of tax credit changes and the date when the Parliament has power to fill the gaps. We will consider the matter in a measured way once the chancellor has announced what he intends to do with tax credits on 25 November. Members should be reassured that the Scottish Government will not stand by and let low-paid people in our communities suffer.
I hear what the minister says about considering the practical implications, but I want to establish a principle. Is it the SNP Government’s principle to restore in full tax credits that have been cut by the Tories?
The SNP Government’s principle is to ensure that low-paid working families in Scotland do not suffer through the Tory cuts. [Interruption.] If Jackie Baillie lets me get through a bit more of my speech, she will understand what I am saying. She did not listen to what the cabinet secretary said, so I hope that she will listen to some of what I say.
If the Labour Party does not want the cuts in tax credits, it should back the SNP amendment to the Scotland Bill that would ensure that tax credits were under the control of this Parliament, instead of backing a chancellor who seeks to cut £1,500 from 250,000 working families in just six months. As Joan McAlpine outlined, there was no Labour backing for an SNP amendment that would have devolved all working-age benefits to the Scottish Parliament in the last report stage of the Scotland Bill. Labour seems now to have had an about-face in realising that tax credits should be in the hands of the Scottish Parliament and I hope that it can support our amendment today and also our amendment that would devolve employment rights and the minimum wage to the Scottish Parliament.
I want to make some progress and then I will take an intervention.
Those are powers that we can use to lift people’s wages and lifestyle and tackle inequalities in our society. I point out to Murdo Fraser and his Tory colleagues that their party did not go into the last general election with a manifesto commitment on those cuts—and no wonder. They knew the results that those punitive measures would have had. Would Ruth Davidson have spoken publicly then to voice her concerns, as Mr Fraser says she has done, or was she kept in the dark like the rest of the voting public?
Only a matter of weeks ago, the cabinet secretary, Alex Neil, wrote again to the UK Government asking it to think again on tax credits. I very much hope that the chancellor and the UK Government will listen to the views of people in Scotland and beyond.
I was a bit confused by some of the discussion earlier on, when the cabinet secretary said that a UK Government amendment was tabled today in the House of Commons and that that is what he was predicating his argument on. Can the minister confirm that?
No. What I can say is that late on today, we were told that a UK Government amendment was tabled that supports what the Scottish Government has been asking for for some considerable time—to give the Scottish Government power to create its own benefits. As the Scotland Bill currently stands, we do not have that power.
An amendment was tabled with other amendments—it has not been agreed. However, Jackie Baillie did not seem to know about that. Jackie Baillie was talking about section 21, which would have allowed the Scottish Government, when we got the powers, to top up benefits to people who had an existing entitlement. That would not have covered people falling off the tax credits cliff in April 2016 because they would no longer have an entitlement that we could top up. We may have made some progress on that.
I will go back to that if the member wants to debate the semantics of it but—[Interruption.]
What I want to talk about is what we are trying to do with tax credits. We are trying to protect the people who are losing tax credits across Scotland. We will also continue to fight the UK Government on that, because the UK Government is creating that situation for the people of Scotland. We pay into a social security system that we want in Scotland. We want the tax credits to be paid. We did not want the bedroom tax. We did not elect a Tory Government; it is imposing these changes on us and it is right that we try to make it see the error of its ways and not spend its money on nuclear weapons but spend it on social security, helping the low paid in this country.
I will not take an intervention just now.
The cuts to tax credits that the Tories are proposing will not be replaced by any rise in the UK Government’s new national minimum wage—it is not a living wage as the Tories would have us believe—nor will it be replaced by any other measures announced in the budget. It is clear that working families will lose out—I think that Labour and the SNP can absolutely agree on that—as a result of the chancellor’s proposed changes.
We have been in such a position before with the introduction of the bedroom tax. We heard what Jackie Baillie said on the bedroom tax. We did what we think was the right thing—we opposed the bedroom tax from day 1. We constantly opposed it and we tried to get the UK Government to change its mind about it. We knew that we had a problem that we had to deal with and we were willing to do that, but we had to find a mechanism that was right—one that was administratively workable and which we could cost. We did that—the people of Scotland appreciate that we did that—and we will do it again. We will always stand up for the vulnerable in our society.
We have a record of meaningful action—a record of credibility and competence. I say to some Labour opponents that it is easy to stand up and say in a conference speech to their members that they are going to do something, but when they do not have the means or ideas on how to deliver it and are relying on funds—
For the record, I correct the minister: the Government kept people waiting for a full year before it mitigated the bedroom tax.
On a point of clarification, Presiding Officer, Alex Neil said earlier that an amendment was tabled by the UK Government. He did not say that it would be tabled at the end of the day—he said that it was tabled. Can he clarify his comments?
That intervention has just taken up some of my time. I will go back to the bedroom tax. We took meaningful action and helped 72,000 households, 80 per cent of which contain a disabled adult, and approximately 11,000 of which contain one or more children, with the bedroom tax. The reality is that we deliver.
I make it clear again that, as the cabinet secretary said in his speech and in an intervention, and as I said at the beginning of my speech, this Government will set out clear, credible and costed plans to support low-income households following the comprehensive spending review. That is when we will know how many families are involved and how much they will lose.
I should say, in line with what other members have said, that we should not have to do that, but a Tory Government that Scotland did not elect is making cuts.
I want to make a final point—
You have made your final point, minister. That will do for today. Thank you very much. You must close.
John Swinney is not at the debate because he is with the Fife task force today.
Nothing in politics is inevitable. There was nothing inevitable about women getting the vote; about the creation of the national health service; or about the smoking ban that was passed by this Parliament. Those changes all had to be fought for. People had to campaign for progressive change, and politicians had to be brave enough to make decisions that would upset vested interests.
As we debate the cruel cuts to the tax credits, it is important that we remember that the policy did not just drop out of the sky. Tax credits were not an inevitable change for working families across this country. It took a bold decision by a Labour Government—and a Scottish Chancellor of the Exchequer—to make the changes that have made so much difference to people’s lives. Labour was brave enough to redistribute money to those who needed it most. We believed—and still believe—that children and working families need support in the face of low pay, and we took action to help them. The consequence was a radical overhaul of our tax and welfare system that put fairness at its heart, which is reflected in Jackie Baillie’s motion.
We did that in the face of the same arguments that we hear from the Tories today—we resisted their empty claims and invested in hard-working families that deserved better than they got under previous Tory Governments.
We have heard from members on the SNP side of the chamber that the policy to slash Labour’s tax credits will put thousands of children in poverty. Mark McDonald said that 1,700 families are affected in his constituency; according to Clare Adamson, 18,700 families in Central Scotland are affected; and 18,000 families are affected in Stuart McMillan’s region of West Scotland. George Adam referred to 10,500 families in Renfrewshire, and talked of the 17,000 children who are affected there. The cabinet secretary, Alex Neil, said that 5,000 families in his constituency are affected. The SNP members should think hard before they vote against the Labour motion tonight to support those families and reinstate their tax credits with the power that the Government has.
Let me make a little progress. I cannot imagine why even a Tory Government would find those families and those strivers fair game for its cuts agenda, but it will target them indeed. The UK Government will answer in time for its broken promises, including David Cameron’s broken promise on tax credits, and for its cuts to Labour’s tax credits.
With the changes to the Scotland Bill—perhaps another thing for which we can be thankful to Gordon Brown—the baton will fall to whichever party the people of Scotland trust to form a Government here in Holyrood next May. Scottish Labour and Kezia Dugdale have shown that they are prepared to be bold, with a well-thought-out, fully costed plan to increase the level of tax credits in Scotland to a level that we believe to be fair.
The SNP offers families who are facing deep cuts to their household budgets only excuse after excuse after excuse.
I want to take members through some of the excuses that we have heard today, then I will be happy to take the minister’s intervention. We have heard that there is not enough time, that it is not the right time, that we do not know what the spending review will say, that we need full powers, that we need full economic levers, that we need to redesign the whole benefits system before we do that, that we do not have enough power, we do not have enough power, we do not have enough power.
Jenny Marra missed the point of what I said, although I said it three times. This Scottish Government will lay out what we will do to help people in low-income families who have suffered tax credit losses. I will make that clear and I will say it again. We will do that based on information and we will find who the people are, because, quite frankly, if all benefits and tax credits were devolved here it would be an easier job for any Government to do if it was in charge of all the benefits.
That is another list of waffle and excuses. The key point is the principle. Will the SNP members use the power in their hands—
Will the SNP use the power that it already has to support Labour’s motion tonight to restore tax credits to families who need them?
The principle is absolutely clear. Let us make no mistake. When those powers pass to the Scottish Parliament—
When those powers pass to the Scottish Parliament, they will no longer be Tory cuts. They will be cuts imposed by whichever party holds the balance of power in this chamber and fails to reinstate tax credits. If Nicola Sturgeon is Scotland’s First Minister, they will be the SNP’s cuts and her cuts.
Kezia Dugdale, like Gordon Brown before her, has shown her priorities by pledging to put money in the pockets of hard-working families.
I thank Miss Marra very much for taking my intervention. My only question is whether Labour will support the SNP amendments to the Scotland Bill to fully devolve tax credits on Monday. Will she answer, please?
The only question that the people of Scotland are asking this afternoon is whether the SNP will restore the tax credits—[Interruption.]
Kezia Dugdale, like Gordon Brown before her, has shown her priorities by pledging to put money in the pockets of hard-working families. Nicola Sturgeon, like George Osborne before her, has chosen to leave hard-working families worse off so that she can pursue her own pet projects. For George Osborne, it is inheritance tax breaks. For Nicola Sturgeon, it is tax breaks for the poor airline companies such as Ryanair, which just this week announced record profits.
Of course, this is not the first time that the SNP’s record on welfare support has been found wanting. We heard the same excuses when the Tories brought forward the hated bedroom tax. John Swinney told us that he would not help families because he did not want to let the Tories off the hook. Only when Labour embarrassed the SNP into action did the Government use the powers at its disposal. Here we are again. First we were told that the money was not available to reverse tax credit cuts. When we found the money, we were then told again and again this afternoon that the powers do not exist.
Forgive me if I am wrong, but it sounds suspiciously like the SNP Government is looking for reasons not to take action, rather than using the powers that it has been campaigning for for years to help Scottish families.
There is a clear matter of principle here. It would be very remiss of the First Minister and the SNP not to support the principle of Labour’s motion this evening.
On a point of order, Presiding Officer. I make this point of order in response to your ruling on my previous point of order during the debate.
I contend that the SNP amendment is not competent in relation to its point about the powers—[Interruption.]
Will I be allowed to make my point of order, or will we just descend into a rabble?
The SNP amendment is not competent, on two points. First, we have heard from the minister that amendments have been tabled that give effect to the powers in the Scotland Bill to restore tax credits. In addition, the clear advice from SPICe states:
“tax credits can be assumed to be included in the competence offered by clause 21 allowing the Scottish Parliament the legislative competence to introduce top-up payments to people in Scotland entitled to reserved benefits.”
We can have no credibility as a Parliament if we are voting on an amendment that is not competent. Therefore, I call on you, Presiding Officer, to rule that amendment out of order.
Thank you, Mr Kelly, for raising a further point of order. However, the accuracy of the content of motions is not a matter for the Presiding Officers, so it is not a point of order. It was not a point of order before, nor is it now—but the point has been made nonetheless.