My Lords, I have tabled this new clause because I think it is fundamentally important. Noble Lords will recollect that Members of all parties and none were pleased when the Chancellor dropped his plans to cut tax credits. That happened only because of the pressure put upon him by this House.
I have put down this amendment because the universal credit changes are identical to the tax credit changes, so the arguments are almost identical. Although the universal credit changes come in later and will affect the flow, not the stock, of claimants, they will have exactly the same effect as the tax credit cuts. This impact has been confirmed both in the Red Book and by the Institute for Fiscal Studies, which says that the tax credit cuts will, in the long run, make no difference, as the cuts to universal credit will affect the very same people. On average, low-income working people will lose £1,000—again echoing the tax credit cuts.
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These changes are immensely troubling for a number of reasons. First, these cuts, as with tax credits, will hit low-income working people. They undermine the principal reason for creating universal credit—to ensure that work always pays. This has been a principle that the Chancellor has never really supported. During the coalition, Nick Clegg, among others, worked very hard to block attempts by the Chancellor to change the withdrawal rate in universal credit, yet the changes to which this amendment relates show that the Chancellor has now got his way. That should be deeply concerning for everyone who supports the aims of universal credit.
The second reason is that the changes will mean that, for the first time, universal credit will bring about an additional cut in people’s benefits. It will not be, as was originally envisaged, a mechanism to make low-income working people better off. According to the IFS, these changes will mean that, in total, 2.6 million working families will lose an average of £1,600 a year, compared with only 1.9 million gaining an average of £1,400. That is a long way from the proposals set out in the original plans for universal credit.
The third reason is the way these cuts will impact on families. As I said, the universal credit cuts will affect the flow of new claimants, not the stock of existing claimants or those migrated on to universal credit. However, the cuts will affect those who, having been migrated on to universal credit, see a change in their circumstances, and this is where, from our perspective, one of the nastiest points of the policy arises.
As I said in Committee, a change of circumstance can mean a change in the household make-up, including a new partner. That means that a single parent who finds a new partner and decides to become a two-parent family will lose a notional entitlement of around £1,000 in their benefit. We hear a lot from members of this Government about the benefits of two-parent families, but this change to universal credit amounts to a disincentive to that. What is more, regardless of the merits of two-parent families, the change acts as a disincentive to someone finding a new partner. Essentially, it amounts to what can only be described as a penalty on love—a “love tax”. How can we countenance a benefits system that provides such perverse incentives? Surely we cannot.
Turning from the impact of the cuts to the nature of the amendment, I am aware that some will say that it bears a relation to the vote that I instigated in this House to reject the mirroring statutory instrument on tax credits. While I and my noble friends on these Benches still believe that that was the right thing to do, as I said at the time, I did not discount the views of those who did not want to use the power of this House to decline to approve a statutory instrument on that occasion.
However, this amendment is not a Motion to decline or approve; it is an amendment to a Bill. It is perfectly right and reasonable for this House to consider an amendment to change or repeal regulations in the same way that we would consider any other amendment. Should this House agree to the amendment, as I hope it will, it would not kill off the regulations but would simply ask the Commons to consider its position, as is the role of this House. We would be doing our job in scrutinising. To be clear, this amendment is not a constitutional issue. For me and my colleagues on these Benches, it is purely one of principle—on the impact of the cuts to universal credit.
It is possible that we may also hear from the Minister about the cost of such a change. It is true that the amendment would have a high price tag, and it may be that the Commons would consider it financially privileged. However, if the Chancellor wisely accepted the principle of the arguments made in this House about tax credits, surely the principle of the argument against the same cuts but for the longer term must also stand—there would be no logic otherwise. If making work pay is a point of principle then the savings from this cut are surely not the issue. Universal credit was intended to enable those who wanted to get off benefits and into work to do so without losing out.
In a week when it has been revealed that large corporations have been allowed certain freedoms, it runs rather contrary that the Government want to interfere with the private lives and finances of hard-working people on low incomes.
Finally, I want to address the Labour Party and its Amendment 46A. I am deeply disappointed in that amendment. I have the utmost respect for the Labour Party’s Front Bench, but Amendment 46A is barely a shrivelled fig leaf. It asks for a review of the impact of these cuts. We know the impact: the Budget scores the savings, the IFS confirms the impact, and the NGOs and others have identified how it will affect people. Either you agree with this cut going ahead or you do not. Seeking a review to determine what we already know adds nothing and simply wastes valuable resources.
As I have said, reasonable objections to voting down a statutory instrument, which may have been the reason for Labour’s reticence to support our amendment previously, do not apply today given that this is simply an amendment to the Bill. I am therefore at a loss to understand why there would be objections to our amendment—unless the Labour Party simply supports the Government’s cut to universal credit. I ask everyone in the House to support this amendment in the Lobbies tonight and challenge the Government’s clear error of judgment over universal credit. The Chancellor got it right when he overturned the previous decision, and
we can do the same again today. Not doing so must surely be seen as a derogation of our duty to all those who will be affected by these cuts. I beg to move.