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AUTUMN STATEMENT DISTRIBUTIONAL ANALYSIS, UNIVERSAL CREDIT AND ESA
16 November 2016
Lead MP
John Martin McDonnell
Debate Type
General Debate
Tags
TaxationEmploymentBenefits & WelfareChildren & Families
Other Contributors: 52
At a Glance
John Martin McDonnell raised concerns about autumn statement distributional analysis, universal credit and esa in the House of Commons. A government minister responded. Other MPs also contributed.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Lead Contributor
Opened the debate
Moves the motion, expressing concern over £3.4 billion reductions to the work allowance element of universal credit and £1.4 billion reductions to employment and support allowance; calls on the Government to reverse these cuts; and reintroduce detailed distributional analysis for the Autumn Statement.
Hayes and Harlington
Pays tribute to Debbie Jolly, a disability campaigner who passed away last week. Explains that this debate is an attempt to influence the Chancellor to reconsider his predecessor's budget plans which are harmful for low earners and vulnerable people.
Jeremy Quin
13:44:00
Defends the fiscal framework imposed by the former Chancellor, stating it led to a significant reduction in the annual deficit. Claims that Labour Members have not provided alternatives that would achieve similar results.
Hayes and Harlington
Reiterates that they introduced a fiscal credibility target with flexibility, criticises the unrealistic constraints imposed by the former Chancellor on Departments. Points out failures in reducing deficit and debt, increasing national debt to £1.7 trillion.
Stephen Timms
Lab
East Ham
Questions McDonnell about the abandonment of the goal to halve the disability employment gap by 2020 due to cuts in ESA.
Hayes and Harlington
Responds to Timms, criticising the reduction in benefits without providing adequate support for disabled people into work. Calls on the new Chancellor to reassess the burden placed on welfare budgets.
Seema Malhotra
Lab Co-op
Feltham and Heston
Supports McDonnell's argument, emphasising the moral and economic rationale for focusing on disability employment due to a 30% employment gap. Criticises the Government's strategy characterized by ESA cuts and lack of fairness.
Rob Flello
13:44:00
Flello pointed out that there is a double impact on those being punished by the system, as they are less likely to access mental health services due to cuts and winding down of NHS services.
Hayes and Harlington
McDonnell responded to Flello's comments about the impact on people and expressed hope for a reversal of cuts, particularly to mental health walk-in services. He also agreed with Kevin Foster's statement that ESA support is inadequate.
Kevin Foster
13:44:00
Foster mentioned past promises made by the Labour party and raised concerns about the inadequacy of current support for those in the Employment Support Allowance work-related activity group, suggesting a need for reform.
Damian Hinds
Con
East Hampshire
Hinds moved an amendment noting the role of universal credit and welcoming additional employment support. He highlighted progress made since 2010 in reducing the deficit while providing support to those who need it, citing examples such as £60 million for employment support for disabled people and health conditions.
Rob Flello
14:04:00
Flello challenged Hinds' recollections about previous promises to cut the deficit, referencing Labour's plan to halve it by 2015 and Conservatives advocating for more spending before 2008.
Damian Hinds
Con
East Hampshire
Hinds responded to Flello's challenge, stating that the Government has worked on getting finances back in order despite opposition. He also noted that increased funding for NHS is possible due to financial stability.
James Cartlidge
Con
South Suffolk
Asked whether a distributional analysis can capture the dynamic impact of tax cuts on entrepreneurship and economic growth.
Damian Hinds
Con
East Hampshire
Reaffirmed that the Government's deficit reduction programme is fair, with the wealthiest paying more in taxes. He also highlighted improvements in employment rates for disabled individuals and discussed reforms like the national living wage and universal credit to incentivise work.
Hayes and Harlington
Cited the Institute for Fiscal Studies to argue that lower-income households would face disproportionately larger percentage losses from government tax and benefit changes compared to higher-income households.
Diana R. Johnson
Lab
Kingston upon Hull North and Cottingham
Questioned the Minister on how the “pay to stay” policy would help incentivise people to get into work.
Stephen Timms
Lab
East Ham
Asked why the commitment to halve the disability employment gap by 2020 had been abandoned, citing former Conservative ministers and the then Prime Minister's promise.
Ian Blackford
SNP
Ross, Skye and Lochaber
Calls on UK Government to protect disadvantaged people from budget cuts post-Brexit. Criticises the impact of Brexit on economy, citing IFS analysis showing negative impacts on growth and inflation which disproportionately affects the poor.
James Cartlidge
Con
South Suffolk
Questions Ian Blackford about Scottish Government's decision to defer welfare powers until 2020. Argues that this shows concern for disadvantaged in Scotland is misplaced.
Ian Blackford
SNP
Ross, Skye and Lochaber
Defends the Scottish government’s approach to handling welfare powers, asserting they will do better than UK Government and not punish pensioners or those with health conditions as the current regime does.
Hannah Bardell
SNP
Livingston
Agrees with Ian Blackford that Scottish government can manage welfare properly once given powers. Criticises UK government for failing to protect people and for focusing on closing a £36 billion tax gap rather than protecting the vulnerable.
Jeremy Quin
Con
Minister of State, Ministry of Housing, Communities and Local Government
Challenges Ian Blackford's argument about fiscal reflation being needed despite inflation concerns.
James Cleverly
Con
Braintree
Asks Ian Blackford to explain inconsistency in arguing for Scottish independence while criticising Brexit.
Ian Blackford
SNP
Ross, Skye and Lochaber
Defends previous campaign for Scottish independence, stating it was about securing Scotland's future within the EU. Reiterates that UK government’s handling of Brexit has caused economic instability.
Alison McGovern
Lab
Birkenhead
Argues that breaking unions between countries leads to economic crises, and questions whether Scottish independence would have had similar disastrous effects on the economy.
Ian Blackford
SNP
Ross, Skye and Lochaber
Ian Blackford highlighted the detrimental effects of Brexit on inflation and the falling pound, leading to a decline in living standards for low-income families. He criticised the government's austerity measures, particularly the cuts to universal credit work allowances, which he claimed would push more working people into poverty. According to the IFS, over 3 million working families will lose an average of more than £1,000 a year as a result of these cuts.
Hannah Bardell
SNP
Livingston
She briefly interjected with 'Shameful.'
Chingford and Woodford Green
Iain Duncan Smith welcomed the new Ministers to their roles, highlighting reductions in child poverty by reducing the number of children in workless households. He emphasised the importance of moving disabled people into work, aiming to halve the gap between them and non-disabled workers.
Stephen Timms
Lab
East Ham
Requested a brief intervention from Iain Duncan Smith but no response was provided in the given text.
Jenny Chapman
Lab
Sherwood
Critiques the lack of transparency from the Government regarding their plans for Brexit and welfare reforms. Questions the decision not to publish a full distributional analysis, expressing concern that this might hide the negative impact on low-income households.
Rob Flello
Lab
Stoke-on-Trent North
Echoes Jenny Chapman's concerns, emphasising constituents' worries about upcoming welfare changes and their historical experience of suffering until reforms are improved.
Jenny Chapman
Lab
Sherwood
Highlights the previous government’s commitment to transparency in distributional analysis and calls for a return to publishing detailed information by income deciles. Questions the Government's motives for withholding this data, suggesting it might be due to negative impacts on low-income households.
Jim Cunningham
Lab
Coventry South
Supports Jenny Chapman’s argument that someone will inevitably lose out when the government paints such positive pictures of their proposals without evidence. Emphasises the need for transparency to understand and scrutinise proposed reforms.
David Burrowes
Con
Enfield, Southgate
I am pleased to be able to take part in the debate. The shadow Chancellor talked about econometrics; I want, like the Prime Minister, to focus on human metrics. At the outset of her premiership, she rightly said that this would be a Government who wanted to ‘stand up for the weak’ and reach out to the ‘just managing’. Today’s debate, like the debate that we shall have tomorrow, is about seeking to fulfil those aims. I intend to concentrate on cuts in the universal credit work allowance today and delay most of my comments about the ESA WRAG payments until tomorrow, although I will say now that I approve of the Green Paper’s direction of travel. Its vision of integrated and personalised employment and health support is overdue, but welcome. However, we need to look out for the disabled people—some 500,000, according to a House of Commons Library estimate—who worked in April as new WRAG claimants. They will still be affected. The flexible support fund—about which I look forward to hearing from my hon. Friend the Minister for Disabled People, Health and Work—is crucial. Along with other discretionary relief, it needs to meet the wider costs of job seeking for disabled people by April. We cannot deny that those wider costs exist, and we must ensure that we meet them. My support for the Government’s admirable reform agenda for disability depends on that.
Chingford and Woodford Green
My hon. Friend is rightly dealing with the levels and the amounts, but may I take him back to one point that came out of the dynamic study, which was that if we stayed with the purposes of the original universal credit with that allowance, it would amount to a minimum of an extra 300,000 people in work over and above existing forecasts? That is a positive reason for staying with those allowances.
David Burrowes
Con
Enfield, Southgate
I agree, and it helps to revolutionise things for everyone—those on low incomes and those on median incomes. A one-earner married couple on a median income with two children—those with children are particularly impacted, given the costs—will lose some £2,211.04 per year without the allowances. This Opposition debate is plainly timely as it comes ahead of the autumn statement. Before all the universal credit is rolled out and has its full impact, we want to make sure that that impact fulfils the first line of the amendment: to ensure that work pays. Welfare reform rises and falls on this basis, and that is why I commend my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith) for all the work he has done. That is the basis of our welfare reform. We want this to rise to meet the aspirations of everyone who can work—families who have been put in poverty, and vulnerable disabled people who are the subject of this debate.
Tommy Sheppard
SNP
Edinburgh East
One of the beneficial consequences of the recent change in Government personnel is that we are no longer subjected on a daily basis to the phrase ‘long-term economic plan.’ We know of course from recent press reports that that is because the Government do not really have an economic plan at present, and many of the pre-existing problems in our economy are now exacerbated considerably by the decision to leave the EU. We also know, as my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) said, that it is going to get a lot worse before it gets better. The Institute for Fiscal Studies reports that pretty much every forecaster says things are going to get extremely challenging. Six months ago we could have got $1.5 dollars for £1; today, we would be lucky to get $1.25. As those changes feed through, we are going to see a rise in prices and in inflation.
James Cartlidge
Con
South Suffolk
The point about the currency has been made several times now. I campaigned for remain, but in terms of the cost of living, which is obviously key to this debate about poverty and living standards, the hon. Gentleman must surely recognise that our country’s economy is unbalanced and there is significant benefit from a lower pound. We need to export more if we are to have sustainable growth.
Tommy Sheppard
Lab
Edinburgh East
The Government are facing a significant challenge in managing the necessary deficit, and their response will be a critical test of their commitment to protecting vulnerable groups. The UN report criticises government policies affecting disabled people; the government's dismissive reaction is unacceptable. Over 500,000 individuals, including over 60,000 in Scotland and over 1300 in Tommy Sheppard's constituency, will be affected by cuts to Employment and Support Allowance (ESA). These changes are not incentives but significantly impact those already struggling financially due to illness or disability. Testimonies from Dean Reilly and Lauren Stonebanks highlight the detrimental effects of these proposed cuts.
James Cartlidge
Cons
South Suffolk
Supports the principle of universal credit based on personal experience in running a small business, highlighting issues with tax credits which disincentivise work and encourage dependency. Universal credit aims to smooth out these issues by offering better support for childcare and encouraging part-time workers to increase their hours. Emphasises the intergenerational impact of welfare changes, noting that pensioners are now better off than working-age individuals due to housing cost considerations, with 68% of benefits going to pensioners.
Ian Blackford
Lab
Responds to James Cartlidge's comments about pensioners being better off, arguing that pensions are not a benefit but an entitlement for those who have paid national insurance contributions. Defends the current system of paying into the national insurance fund, which is currently running at a surplus and expected to increase.
James Cartlidge
Con
South Suffolk
The debate centres around pension benefits, particularly the triple lock system. The speaker argues that while protecting pensioner benefits is a political pledge, the cost of maintaining such benefits is unsustainable and must be addressed in a cross-party manner. He also welcomes reforms like universal credit to encourage people to reduce their benefit dependency.
Helen Goodman
Lab
Not specified
The speaker discusses the impact of proposed ESA cuts on individuals and local economies, highlighting that over 6,000 constituents will be affected. She criticises the lack of detailed distributional analysis published by the Chancellor and calls for a return to providing such details.
Justin Tomlinson
Con
Not specified
The speaker emphasises positive economic trends, including the introduction of the national living wage and increases in personal tax allowance. He also notes record employment figures and improvements for disabled workers entering the workforce.
Justin Tomlinson
Con
North Swindon
Discussed the Government's initiatives to extend childcare and provide additional support for people with disabilities. He also highlighted the importance of ESA but noted that only a small percentage of claimants manage to come off it each month despite their desire to work.
Alison McGovern
Lab
Birkenhead
Critiqued the Government's changes, especially regarding the Work programme and its impact on people with disabilities. She emphasised the need for a distributional analysis to ensure that decisions do not disproportionately affect those in poverty.
Asked Alison McGovern about the increased UK contribution to the EU due to the fall in sterling's value post-Brexit vote, questioning the irony of such an increase during a debate on budget cuts.
Heidi Allen
Con
Tewkesbury
Ms Heidi Allen argued against the cuts in universal credit that would leave low-earning families worse off. She emphasised the need for compassionate policies and detailed impacts on working families, such as a single parent without housing costs being up to £2,800 a year worse off than their tax credit neighbours.
David Burrowes
Con
Enfield, Southgate
Mr David Burrowes questioned the priority of making changes ahead of the autumn statement rather than waiting until April.
Debbie Abrahams
Lab
Oldham East and Saddleworth
The Government have failed to reverse the cuts to capital gains tax, corporation tax, and inheritance tax. These measures disproportionately affect disabled people who live in poverty due to their condition or disability. The government's changes since 2010 adversely affected those on low incomes, worsening inequality. Universal credit cuts will significantly reduce work incentives for disabled people.
The Minister addressed the complexity in measuring and tracking progress on closing the disability employment gap and invited all Members to an event on December 5th where they would receive information about the Green Paper and how to get involved in the consultation at a local level.
Penny Mordaunt
Con
The welfare state should act as a safety net, but it must also anticipate and empower individuals. The system has been improved through tweaks that enhance the delivery of services, such as stopping reassessments for those with degenerative conditions and increasing access to hardship funds. She acknowledges concerns raised about sanctions on people with mental health conditions. Penny Mordaunt commits to building capacity in organisations and ensuring programmes work better. To address liquidity issues, she mentions the flexible support fund and the travel discount scheme for those receiving universal credit or ESA. Additional measures include negotiating better deals on expenditure not directly related to employment and extending the hardship fund. She also emphasises the importance of providing a pathway to work for those who want it.
Government Response
Defended the Government’s approach to incentivising work through measures like the national living wage, personal allowance increases, free childcare expansion, and universal credit reforms. He also addressed employment rates for disabled individuals and the changes to Employment Support Allowance. The Minister acknowledged the complexity of measuring and tracking progress on closing the disability employment gap. She invited Members to an event where they could receive information about the Green Paper and how to get involved in local consultations.
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Assessment & feedback
Summary accuracy
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