Benefits Uprating Bill: Andrew George and Charles Kennedy’s arguments AGAINST

by Stephen Tall on January 22, 2013

The Government last night won the vote for its Benefits Uprating Bill, with the third and final reading passed by 305 votes to 246. A fortnight ago, six Lib Dem MPs voted against or abstained from the Coalition line that benefits rises should be capped at the same rate as public sector pay (a below inflation 1% pa) for each of the next three years.

Andrew George, Charles Kennedy and other Lib Dems sought to move an amendment to the Bill, linking future welfare increases to the rise in average earnings. However, time expired before it was put to the vote. Skimming the Hansard record of the debate the quality of the exchange of views between the ‘rebels’ and Steve Webb on behalf of the Government struck me. So here below are the filleted speeches of Andrew and Charles. In a separate post I’ll copy Steve’s response to them (update: link now live here).

andrew george

Andrew George (St Ives) (LD):

I have no clairvoyant skills whatsoever and would never follow my forecasts on the future of the economy or prices, but the Bill is asking us to forecast what is likely to happen, particularly in relation to prices. In the context of food price volatility, which we know takes place, and of tremendous uncertainty in the energy market and, indeed, other markets, we are being asked to predict what the circumstances are likely to be in 2016, beyond the next general election.

In his opening remarks, the hon. Member for Gateshead (Ian Mearns) said that large swathes of people are out of work in some parts of the country and in work in other parts. There are also many places, including my own in west Cornwall and the Isles of Scilly, where a lot of people spend their lives going in and out of work because of the seasonality of the area’s economy. Not only are such people moving in and out of work—not of their own choice, but because of their circumstances—but there is also a plethora of zero-hours contracts and of people who exist on the basis of putting together part-time work.

I congratulate the Government on their achievement in rolling out apprenticeships, but the fact is that those apprentices are being paid £2.65 an hour for their apprenticeship and have to do bar work, waitressing and other work at the weekend in order to get themselves up to a living wage. An apprenticeship offers a good opportunity, but we have to acknowledge that, among working people and those who are moving in and out of wages, there is a class or group who are, in effect, on the very margins of survival. They will be significantly affected by the proposal to peg benefits at 1%. Some argue that the Bill is about ensuring that we make work pay and that clause 1 is entirely about out-of-work benefits, but the fact is that a significant number of people—many thousands—who are in work or, indeed, in and out of work will be affected by it. That is the most difficult position. …

If we look back at the principles set out by the Chancellor in the first emergency Budget, we will see that we were clearly told that we were all in it together, that those with the broadest shoulders would bear the greatest burden and that the vulnerable would be protected. Those are the principles against which we must measure the Government. We all have different views on where the lines should be drawn with regard to achieving those objectives, and that is where we get into specifics such as those in the Bill.

It would be a kamikaze mission for me to begin a debate—I am only seven minutes into my speech—by asking my hon. Friend the Minister, for whom I have the highest respect: what on earth does he know about benefits? He is highly regarded in that sphere. He is respected considerably by people and, indeed, by his political opponents—and rightly so—for what he has achieved. I think we would have ended up with something a great deal worse had he not been in his position.

… Having listened to what has been articulated by those in the Conservative party in recent months, we have to acknowledge what would have happened had my hon. Friend and, indeed, the Liberal Democrats not been in the coalition Government. First, we have to question whether we would have had the increase in the personal tax allowance, on which I congratulate the coalition Government. The Conservatives made it quite clear that they wished not only to freeze benefits altogether but to do so for six years, so we would not even be getting a 1% rise. There would have been a wider impact on pensioners and the disabled, which would have been significant. Child benefit would have been constrained, as well as being cut from families with more than two children.

… I said earlier that one big weakness of the Government’s proposal, and the reason why I opposed it, was the inflexibility of the 1% uprating. It takes no account of what may happen to food prices, for example, by 2015-16. It is all very well having a Bill that takes a clairvoyant view that a 1% increase will not press large numbers of working families, as well as out-of-work families, into severe and extreme hardship. However, we have experienced this year in the UK the impact of significant volatility in our climate. There has been significant climate change, which is having an impact on the food baskets of the world, including those in many developing countries and here. We therefore need to ask ourselves whether we can confidently say that there will not be food price spikes such as we saw only a few years ago. I suggest that we may see such spikes again. There is also tremendous concern about the potential volatility of energy prices. The 1% uprating figure is inflexible and somewhat arbitrary, and we cannot say with confidence that we will not need to introduce further primary legislation to revise that figure in 2016.

We must also consider the impact of the 1% uprating on housing. In their emergency Budget, the Government proposed to cut housing benefit from the 50th percentile of rents to the 30th percentile. Whether or not we like the fact that only 30% of the private rental market might be available to people in receipt of housing benefit, rather than half of it, it is essential that the rate is linked to the variation in private sector rents. The 1% uprating will break the link with what is available in the market and instead peg housing benefit back. In my area, and I know in many others, the Government’s attempt to peg it back by cutting the rate to the 30th per- centile of rents has failed to constrain private sector rents, so it has not had not the desired impact. Maybe it has in some areas, but certainly not in mine or many others.

The measures that the Government have brought forward in the Bill have been ill thought through, and I fear that we will have to reconsider the figure set out in it next year or the year after.

Charles Kennedy

Mr Charles Kennedy (Ross, Skye and Lochaber) (LD):

Before the last election, I shared a party platform at one of our conferences with the leader of my party. We were speaking about aspects of social policy, and the point I made to him and to the audience I repeat tonight. We can be tough-minded—indeed much more tough-minded than many an outside commentator ever expected the Liberal Democrats would or could be when the coalition was entered into two and a half years ago—and that has been proven. What we have to remind people of—with a view to the next election—is that our party and our cause is not just
21 Jan 2013 : Column 87

about the head, but must also be about the heart. Many people will view this Bill as hard-hearted, and many will remember that when they come to cast their votes. In part, what we are trying to do here is remind that section of our electorate, our membership, our activists, our sympathisers and our supporters whom we want to come back over the second half of this Parliament, that while the head remains rigorous in government, the heart has not been lost in the wider environ that is UK Liberal Democracy.

My final point is one that I believe my hon. Friend the Member for Argyll and Bute (Mr Reid), who has had such excellent and characteristically detailed input to our internal discussions, raised with the Prime Minister only last Wednesday at Prime Minister’s questions. In setting this arbitrary and post-2015 set of legislative strictures on what will happen to benefits uprating, what account had been taken of the difficult art of gazing into the crystal ball where future levels of inflation are concerned, not least where trends in food and energy prices are involved? The answer, frankly, in any fair-minded way, came there none from the Prime Minister to my hon. Friend.

* Stephen Tall is Co-Editor of Liberal Democrat Voice, a Research Associate for the liberal think-tank CentreForum, and also writes at his own site, The Collected Stephen Tall.

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