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The tax credit system needs to be reformed to increase stability and reduce overpayments. We need to return to fixed, six-monthly awards so that people keep the money that is given to them. We should also reverse the burden of proof when overpayments are caused by
official errors, introduce a right of appeal to an independent tribunal and simplify the complicated awards notices.
We have all met constituents who say that they will never apply for tax credits again because of the debt into which they were forced by being overpaid through no fault of their own. The system must be reformed to give everyone confidence in it instead of causing debt and stress to many on low incomes. Tax credits should also be focused more on those on low incomes by increasing the taper rate and removing the right of high earners to them.
Doubling the 10p rate of income tax has obviously hit those on low incomes. We hear about a compensation package but many are not aware of their entitlement to tax credits and I hope that the Government will explain how the promised compensation scheme will take into account those who are entitled to tax credits but do not claim them. The 10p tax hits them, too.
It is significant that a high proportion of parents with a disabled child are unemployed, and disabled children are twice as likely to live in poverty as children without disabilities. The parents of disabled children often find it harder to get child care and more needs to be done to help those families find it.
More effort must go into improving the take-up of tax credits and benefits and helping people find work.
Mr. Tom Clarke: I hope that the hon. Gentleman will accept my genuine thanks to members of the Liberal Democrat party who took part in the review on disabled children. He must be as disappointed as I am about the implications so far in Scotland. However, I thank those Liberal Democrats.
Mr. Reid: I am grateful for the right hon. Gentleman’s intervention. Yes, we are disappointed and urge the Scottish National party Government to review that part of their policy.
To assist the take-up of credits and benefits and help people find work, we would replace Jobcentre Plus with a new first steps agency—a single, one-stop shop for all benefit and tax credit claims. The front-line staff should be equipped with basic knowledge of the tax credits and benefits system so that they can assess whether a household is claiming its full entitlement and give advice. The new agency would also engage with the private and voluntary sectors to provide high quality, tailored, back-to-work support.
Jobcentres have an important role, but they must be located in local communities, where the staff understand local circumstances, not in large call centres. In the past four years, the number of staff in jobcentres in my constituency has almost halved as jobs have been transferred to call centres. The pattern has been repeated throughout Scotland. That is a double blow to jobs in rural areas. First, it removes Government jobs and, secondly, it takes away valuable local knowledge, which could help local people find jobs. To many jobseekers, a phone call to a call centre is no substitute for a face-to-face discussion with someone with local knowledge. That is particularly true in constituencies such as mine, where the islands create special circumstances that those in call centres often simply cannot understand. The Government should reverse their misguided policy. They should transfer Government jobs to rural areas, not take them away.
Sandra Osborne: Does the hon. Gentleman agree that it is unreasonable to expect people with mobile phones rather than land lines to pay to contact such call centres?
Mr. Reid: I am grateful to the hon. Lady for raising that important point and I agree with her.
The Minister of State, Scotland Office (David Cairns): I would be grateful if the hon. Gentleman provided the House with a rough estimate of how much it would cost to give every community in Scotland a new super jobcentre that combined work on tax credits and assessments.
Mr. Reid: We would utilise the jobcentres and buildings that are already there, but the Government are taking staff away. Almost half the jobcentre staff in my constituency have been lost in recent years, owing to transfers to the call centre at Clydebank.
I want to talk about the problems caused by the world energy crisis that people on low incomes face. Paying their fuel bills, both to keep their homes warm and to travel, is a serious problem for people on low incomes. To help tackle the problems that people on low incomes face in keeping their homes warm, the energy companies should be forced to use some of their huge windfall profits to ensure that all poor and vulnerable people have access to cheap social tariffs. The higher utility pre-payment charges should be abolished. It is a scandal that people with pre-payment meters should pay more for their fuel than those who have access to direct debits. We should work for the swift roll-out of smart meters in every home, so that people can have more control over their energy consumption.
Mr. Weir: I very much agree with the hon. Gentleman. Like me, he represents a rural area, so does he recognise another aspect of fuel poverty, which is that many people in our rural areas rely on oil-fired heating, which has rocketed in price? That is causing problems for people in rural areas. Although there is perhaps less help for those with electricity and gas problems than there should be, there is currently no help at all for people with oil-fired heating.
Mr. Reid: I am grateful for the hon. Gentleman’s intervention. He raises a serious problem.
The charging regime for meters should be reversed, so that the first units of energy consumed are the cheapest, unlike under the current system, where people who use small amounts of electricity and gas often pay a higher unit cost. The availability of low-cost energy conservation measures should be extended and the winter fuel allowance should be extended to those on higher-rate disability benefits.
Another respect in which the rising price of fuel causes tremendous problems for people on low incomes is through rapidly rising transport costs for those who live in our remote communities. The Scottish Affairs Committee was absolutely correct when it said:
“It is too easy to assume that poverty in Scotland is limited to deprived urban areas, made visible by problems such as poor housing or graffiti.”
Poverty exists in rural communities as well as urban ones, often in homes off the beaten track and not
noticed by those who come to look at the marvellous scenery. The Committee was right to state that
“poverty in rural areas is exacerbated by specific factors including the availability and quality of employment opportunities, transport costs and a dispersed population.”
High fuel prices deliver a triple whammy to people living in remote areas. First, petrol and diesel cost more than in urban areas. Secondly, people have further to drive to get to work or the shops. Thirdly, there is a lack of public transport alternatives. The rising cost of transport makes it more difficult to sustain businesses and can sometimes mean that a low-paid job is not worth taking, owing to the cost of travel to and from work.
As well as removing opportunities for parents to earn money, the high cost of transport can lead to social exclusion for many children living in poverty. Children living in remote communities need to travel to meet other children of their age and engage in social pursuits such as sport, playing in bands and singing in choirs. The highlands and islands have a rich heritage of music and songs. Bands and choirs have to travel great distances to take part in concerts and competitions, but the rapidly rising cost of fuel makes fundraising for the pipe band, the Gaelic choir and the football or shinty team much more daunting.
Mr. MacNeil: I hear what the hon. Gentleman says about the rising cost of fuel. Is he minded to support the Scottish National party’s idea of a fuel price regulator?
Mr. Reid: If the hon. Gentleman bears with me, I shall come to that issue shortly.
There is a risk that children from the poorest homes will miss out when it comes to teams, choirs and bands because of the higher cost of fuel. They might therefore miss out on an important part of growing up.
I was delighted that the Committee urged
“the UK Government, the Scottish Executive and local authorities to consider ways in which the high costs of transport in rural areas can be alleviated.”
It is urgently necessary that that recommendation be taken on board. Those of us who represent Scotland’s remote communities tabled amendments to the previous two Finance Bills, on Report, for a lower rate of fuel duty in remote communities. We will table similar amendments this year. The Government would not accept our amendments to the previous two Bills, and the Conservative party sat on its hands, but the situation is now critical. I hope that, this year, both the Government and the Conservative party will take the Committee’s recommendations on board and support amendments that would allow fuel duty to be charged at a reduced rate in remote communities.
I have been focusing on powers reserved to the UK Government, but I now want to draw the House’s attention to two disastrous SNP policies that will increase poverty in many parts of the highlands and islands. First, the SNP reversed the plans of the previous Labour-Liberal Democrat coalition at Holyrood for a 40 per cent. ferry fare discount for passengers who live on many of our islands and peninsulas. That is a complete scandal, as those discounts were targeted at passengers, not cars, and would have helped the poorest islanders with their travel costs.
Mr. MacNeil: Will the hon. Gentleman give way?
Mr. Reid: I shall certainly give way to the hon. Gentleman if he will explain why he believes that poor children from Colonsay should not get that 40 per cent. discount when they travel to the mainland.
Mr. MacNeil: The hon. Gentleman well knows that the Liberal Democrats sat on their hands for eight years. Does he welcome the fact that the SNP is introducing a road equivalent tariff to Coll and Tiree?
Mr. Reid: I certainly welcome its extension to Coll and Tiree. Originally, it was meant only for the Western Isles, and I have campaigned for its extension to the whole of my constituency. However, cheap ferry fares are needed to all the Scottish islands and peninsulas, not just those that the hon. Gentleman represents.
Ms Katy Clark: On that point, I fully appreciate why the hon. Member for Na h-Eileanan an Iar (Mr. MacNeil) might be very grateful for the scheme that the Scottish Government have brought in, but my constituents who use the lifeline services to Arran and Cumbrae are seeing significant increases in ferry prices. There seems to be discrimination in the way in which the measures are being applied. We are seeing ferry price increases of about 29 per cent. A great deal of party politics seem to be being played on this issue. Does the hon. Gentleman agree that whatever measures are introduced should be fair to all communities in Scotland?
Mr. Reid: I am grateful to the hon. Lady for that intervention. She is perfectly correct. Cheap ferry fares should be available to all islands and peninsulas, not just those that the hon. Member for Na h-Eileanan an Iar (Mr. MacNeil) represents.
Mr. MacNeil: Will the hon. Gentleman give way?
Mr. Reid: I shall give him one more chance to explain why ferry users from Colonsay have to pay high fares, while his constituents get off with cheaper fares.
Mr. MacNeil: Perhaps a more pertinent question would be: why did the hon. Gentleman’s party wait for eight years? The Liberal Democrats, who were in power with the Labour party for eight years, did absolutely nothing for the good people of Colonsay. We now have a pilot scheme going in the Western Isles that will, in turn, I hope, help the good people of Colonsay. That has come from the SNP, but the Liberal Democrats sat on their hands— [Interruption.]
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I realise that I might be taking my life into my hands, but I venture to suggest that we are getting into a little too much technical detail and moving away from the general theme of the debate.
Mr. Reid: Thank you for your guidance, Mr. Deputy Speaker. I will move on. If the hon. Member for Na h-Eileanan an Iar wants to find the answer, he should read my letter in this week’s Oban Times.
Another example of where the Scottish National party is contributing to poverty in the highlands and islands is by cutting the budget of Highlands and
Islands Enterprise—the local agency that helps businesses, particularly those just getting off the ground, in the highlands and islands. The SNP cuts mean that fewer jobs are available, a grim prospect when the forecast is for an economic showdown—I mean slowdown.
David Cairns: Or even showdown, who knows? The hon. Gentleman began his speech by saying that issues of poverty are neither devolved nor reserved and that we need to work together. He will know that an initiative for these areas that was begun by Lord Forsyth was the Convention of the Highlands and Islands. Since its inception and particularly since devolution, it has looked at which issues should be devolved and which reserved; many of the decisions on issues affecting the highlands and islands are still taken here. Does the hon. Gentleman have any explanation, other than sheer spite, of why the new SNP Administration have cut Westminster out of the Convention of the Highlands and Islands, depriving people in the highlands and islands of the opportunity to put to Westminster Ministers many of the issues that he has rightly highlighted?
Mr. Reid: I am grateful to the Minister for that intervention. Like him, I can think of no good reason, and I wonder whether any SNP Members want to answer.
Travel costs are very important in rural areas and they must be reduced. Valuable services such as jobcentres and post offices must also be retained in our more remote communities so that sources of help and advice are available to be accessed close at hand. All policies should be rural-proofed to ensure that the level of poverty in rural communities is not increased. All levels of government have to co-operate with the right policies to eradicate poverty from both urban and rural communities by 2020. It is a difficult task, but a vital one. With the policies I outlined earlier, I believe that that important goal can be achieved.
3.32 pm
Sandra Osborne (Ayr, Carrick and Cumnock) (Lab): I begin by congratulating the Scottish Affairs Committee on its valuable work on poverty. It is some years since I was a member of that Select Committee and a great deal of work has been done subsequently. We all know that the life chances of too many Scots have been strangled at birth, so it is timely to take a look at how far we have come, what progress has been made and where there is room for improvement.
It was Labour in opposition that led the assault on the scourge of poverty under the Tories; it was Labour that provided a detailed analysis of the root causes of poverty under the Tories; and only Labour had the underlying values and ideology to address poverty in government and to make real progress in tackling poverty in Scotland and in the UK more widely.
Child poverty is of the utmost importance because in eradicating it we are paving the way for a society in which for the first time every child has a chance in life—a chance that will not lead to a dead end. Childhood poverty leads, for the most part, to lifelong poverty. Even those who escape financial poverty are left with the scars, which is why we hear so many Scots from working-class communities saying that they will never forget where they came from.
As we have heard from many hon. Members today, poverty needs to be addressed in all its aspects, because they are all interlinked. Unemployment, low pay, pensioner poverty, family poverty, women in poverty, the disabled, poor housing, deprivation, education, class and inequality, poverty and ill health are all connected and must all be addressed. Labour has recognised for decades how important all those issues are, but only when in power has it been able to start to do something about them. Therein lies a lesson for us all on the Labour side.
We have heard the statistics that show how well the Government are doing in tackling child poverty. We have heard about the record rises in child benefit, with 600,000 taken out of poverty—impacting even more in Scotland, which started out with higher poverty levels. As we have heard, that has received a warm welcome from many organisations in civil society in Scotland, including Barnardo’s, the Child Poverty Action Group, Citizens Advice Scotland, the Church of Scotland and Save the Children. Statistics can be boring, but they matter to the individuals whom they affect: the person who has seen his or her income rise substantially thanks to the minimum wage, or the lone parent who now has a living wage thanks to the working tax credit and affordable child care. The Government’s approach has been, and as we have heard from the Minister will continue to be, targeted support for those who need it most, work for those who can, breaking the cycle of deprivation, and delivering high-quality public services. That is a long-term approach that will bring about long-term change, to offer every individual and every generation the opportunity and support to raise and fulfil their aspirations.
Where I grew up, we had few aspirations and even less chance of realising them. Then the Tories came along, and we were completely scuppered. It is a positive fact that the aspirations of most young people now are entirely different from the hopelessness of the 1980s. Scotland has moved on, but still too many are left behind. We are making a difference, as the Select Committee’s report acknowledges. When the Government are criticised, it is usually for not doing enough, and not doing it quickly enough, not for doing nothing, as was the case with previous Tory Governments.
The Committee’s report and the many organisations that have briefed us for this debate all make the point that progress has stalled, so that must be our main focus. Nevertheless, it never does any harm to highlight, as a starting point, what has been achieved and can be built on. It seems that there is a consensus now that it is not a question of if, but how and when. What a change that is from the days in poverty under the Conservative party, which seems to have a new-found concern for the issue. As other hon. Members have said, that is certainly welcome, but will they put their money where their mouth is and commit to public spending on the issue? In Scotland, will the Scottish Government make the hard decisions needed to protect the most vulnerable in our country, who are not always popular causes, or will they play to the gallery?
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