Today at Prime Minister’s Questions, I challenged David Cameron over some of the measures in last week’s budget, including his cuts to tax credits which will make millions of working families on low incomes worse off. I also questioned him over changes to party funding and trade unions. There is an issue about big money in politics but it must be dealt with fairly, it must be done on a cross-party basis. It cannot be one rule for the Labour Party but something completely different for the Tories.
Ms Harriet Harman (Camberwell and Peckham) (Lab): May I ask the Prime Minister a question about Greece? It is important that a deal on Greece has now been reached. The economic trauma that the people of Greece are going through is on a scale unprecedented in Europe since the end of the second world war, and the agreement should be implemented in a way that is fair to the people of Greece as well as being acceptable to the creditors. It is being reported this morning that the IMF is concerned about whether the deal is sustainable. Will the Prime Minister tell the House whether the Chancellor has had discussions with Christine Lagarde about how those concerns can be addressed?
The Prime Minister: The right hon. and learned Lady is absolutely right to raise this. We all feel for the Greek people, who have had a very difficult time, and there are no early signs of relief on the way. We talk regularly to the IMF, and the point that it is making that there needs to be debt relief for Greece must be right. The problem is that there is an argument at the heart of the eurozone about whether it is a single currency in which member states have to look after each other’s debts and have a
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fiscal union, a banking union and a social union—that is one view—or whether the single currency should have very strict rules and cannot deal with these things. Frankly, it is in our interests for the eurozone to resolve these issues. We are not involved in the debate directly because we are not in the euro—[Hon. Members: “Hear, hear!”] And we are not going to join the euro. But the eurozone needs to resolve these issues and it needs to resolve them quite fast.
Ms Harman: It is important that the deal is sustainable, and it is interesting to hear the Prime Minister’s view about a measure of debt relief being necessary. Does he agree, however, that with President Putin waiting in the wings, this is about more than just economics—it has wider geopolitical significance? What is his view about that?
The Prime Minister: The right hon. and learned Lady is absolutely right. Greece is a member of the European Union, as well as of the euro. It is a friend and ally of Britain—we are NATO members and trading partners. It is not for Britain to bail out eurozone countries, and we would not do that, but, as a member of the European Union, if Greece were to leave the euro and it wanted humanitarian assistance, I am sure this House and the British public would take a more generous view. Sorting out the problems of the eurozone—we have always warned about the dangers of it—is a matter for eurozone countries, but she is right about the dangers of Russian involvement.
Turning to the Budget, we are all concerned to see today’s rise in overall unemployment. For those in work, the Chancellor said that his changes on pay and tax credits will make working families better off, but they will not. The Institute for Fiscal Studies has now made it absolutely clear that the idea that a higher minimum wage will compensate for the loss of tax credits is “arithmetically impossible”. Will the Prime Minister now admit that as a direct result of his cuts to tax credits millions of working families on low incomes will be worse off?
The Prime Minister: First, let me comment on the unemployment figures. The right hon. and learned Lady is right in that there are mixed messages in the figures. It is disappointing that the claimant count has gone up, having fallen for so many months in a row—it is still at the lowest level since 1975—but long-term unemployment is down, youth unemployment is down and the rate of employment for women is at a new record high. Interestingly, when you look across the last year, you can actually see that all of the rise in employment in the last year has been among people working full time. Interestingly, in the light of the debates we had in the last Parliament, wages are up by 3.2% in these figures, which compares with yesterday’s inflation figures of zero. On the Budget, I remember her asking me from that Dispatch Box and making the point that reforming welfare would not work unless we increased minimum wages by a quarter. I can tell her that we are not going to—we are increasing them by a third, through the national living wage.
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Ms Harman: So the Prime Minister is refusing to accept the fact that has been clearly established by the IFS: that the minimum wage increase will not compensate for his cuts in tax credits. That takes me to another claim he made about the Budget. He said that he would protect the most vulnerable. You are obviously vulnerable if you have a condition such as Parkinson’s or you are being treated for cancer, but the Budget changes mean that the support people like that will get will be cut from £100 a week to £70 a week. We agree that the deficit needs to come down, but what kind of Government is it that think the way to do that is to hit people who, through no fault of their own, are suffering from life-limiting illnesses? That is what his Budget is doing.
The Prime Minister: First, let us deal with the effects of this Budget and let me give the right hon. and learned Lady the figures. A family with two children where both parents work full time on the minimum wage will be better off by 2020 by a full £5,500. I do not think the Labour party has fully grasped the importance of this national living wage. Labour fought an election on it being £8 by the next election, but it is going to be over £9 by the next election because of the action of this Government.
“we won’t oppose the Welfare Bill, we won’t oppose the household benefit cap”—
“restricting benefits and tax credits for people with three or more children”.
I welcome that. What a pity the rest of her party does not agree with her. She asked specifically about employment and support allowance, and it is really important that we get this right. There are two groups of people on ESA, with the first being the support group, who will continue to get extra money—more than on jobseeker’s allowance—for as long as they need it. In terms of future claimants in the work-related activity group, existing claimants keep the existing amount of money but it is right that new claimants should get the same amount as jobseeker’s allowance and then get all the help that we give to jobseekers to help them into work. [Hon. Members: “Why?”] Members ask why. I will tell them why: we want to get people into work. We want to give people a chance. We want to give people a life. That is what this Budget was all about.
Ms Harman: The Prime Minister talks about new claimants, but he does not really understand the reality of the situation. A lot of these people are in and out of work—they want to work but can do so only intermittently. Every time they go back into work and then come out of work, they are treated as a new claimant. I do not need to be patronised by the Prime Minister about not understanding the minimum wage—we introduced it. The Institute for Fiscal Studies says that 3 million families will be at least £1,000 a year worse off. The Minister for Skills, the hon. Member for Grantham and Stamford (Nick Boles), was on the radio this morning talking about party funding. He said that the Government’s curbs on trade union donations were not an attack on working people and the Labour party. Well, it does not look that way. There is an issue about big money in
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politics, but it must be dealt with fairly. Will the Prime Minister commit not to go ahead with these changes unless it is on a cross-party basis? Will he include the issue of individual donation caps? It is not acceptable for him to be curbing funds from hard-working people to the Labour party while turning a blind eye to donations from hedge funds to the Tories.
The Prime Minister: Finally, we see where all those questions were going. The Labour party can go round and round and round, but it always comes back to the trade unions, which call the tune. Let me answer all the questions that the right hon. and learned Lady asked. First, , if the Labour party is so keen on the national living wage, why did it vote against it in the Budget last night? Secondly, on the employment and support allowance, the number of people coming off jobseeker’s allowance is more than seven times higher than that for those who have come off incapacity benefits since 2010. We want to help these people get back into work. Now she asks about the issue of trade union funding for the Labour party. There is a very simple principle here: giving money to a party should be an act of free will. Money should not be taken out of people’s pay packets without them being told about it properly. If this was not happening in the trade unions, the Labour party would say that this was appalling mis-selling. It would say that it was time for consumer protection. Why is there such a blind spot—even with the right hon. and learned Lady—when it comes to the trade union paymasters?
Ms Harman: There is a simple principle here—it must be fair. What the Prime Minister is doing amounts to one rule for the Labour party but something completely different for the Tories. To be democratic about this, the Prime Minister must not act in the interests of just the Tory party. Instead of helping working people, he spends his time rigging the rules of the game. Now he wants to go even further and attack the rights of working people to have a say about their pay and conditions. That is on top of the Government already having changed the rules to gag charities and trade unions from speaking out. The Prime Minister says he wants to govern for one nation, but instead he is governing in the interests of just the Tory party.
The Prime Minister: The law for company donations was changed years ago, but the law for trade union donations has been left untouched. The principle should be the same: whoever we give our money to, it should be an act of free will. It should be a decision that we have to take. The money should not be taken from people and sequestered away without them being asked. Today we have seen it all. I thought that the right hon. and learned Lady was the moderate one, and the leadership contenders were the ones who were heading off to the left. What have we heard from them? They oppose every single one of our anti-strike laws; every single one of our welfare changes; and some of them even describe terrorist groups such as Hamas as their friends. In the week when we are finding out more about Pluto, it is quite clear that they want to colonise the Red Planet.