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Living Standards

No, I shall not, as I have already said. According to the shadow Chancellor, who, as ever, cannot be quiet, low interest rates are a sign of trouble. He would rather have higher interest rates, a bigger squeeze on families and an even bigger fall in living standards. The simple truth is that the Opposition have no credible response to the economic challenges that this country faces, which is why we must never return the keys to those who crashed the car. It is we who have the answers to tackling the deficit and securing our prosperity. I know that for many families, however, these are tough times. That is why we have taken substantial steps to protect living standards and to ensure we support our poorest and most vulnerable families. That is why we secured the largest ever cash rise in the basic pension and why we uprated working age benefits by 5.2%, protecting the real incomes of the poorest. We are taking the same approach as we reform our welfare system, targeting support where it is needed most. Tackling the deficit in a fair way means that we have to ensure that tax credits are targeted at our poorest and most vulnerable families, unlike the path taken by the previous Government, who spent more than £150 billion on tax credits and let nine out of 10 families be eligible for them. That is a staggering, untargeted and unsustainable level of spending and it is right and fair that we should reform it. Let me turn to the working tax credit. It is not fair that a couple with children can claim the credit if one partner works 16 hours, whereas a lone parent has to pull in the same time on their own. Increasing the working hour requirements for a couple is entirely fair. It is right that they should put in more hours than a lone parent before receiving the working tax credit. That also creates a clear work incentive signal, which many Members have sought in this debate, to potential second earners who could benefit from tax credits if they moved into work or increased their hours—and hours are available. Let me answer this one. In the quarter to January, there were 11,000 vacancies across the economy, meaning that 1 million people moved into work. That paves the way for the principles of universal credit because work must pay. At the same time, we are right to reform child benefit to target it towards those families who need it the most, rather than millionaires. I fully understand that it is a vital income boost, but it comes at a substantial cost to the Exchequer, including more than £2 billion a year in payments to higher rate taxpayers. It is right that we should refocus resources where we need them most, and that means taking the tough decision to withdraw child benefit from families with a higher rate taxpayer, because it is simply not fair that working parents on low incomes should subsidise child benefit for millionaires. None of these points ignores the fact that across the board, we know that this will be a tough year for households. That is why we have gone even further to support families and businesses across the country, limiting the increases to Transport for London and regulated rail fares and funding South West Water to enable it to cut bills by £50 a year for households that face the highest water bills in the country. We are helping pensioners, setting aside an extra £675 million for local authorities in England that freeze or reduce their council tax, deferring the fuel duty increase that was due to take effect on 1 January to August this year and cancelling the further increase for August. As a result, tax on petrol will be a full 10p lower than it would have been under the shadow Chancellor's plans, meaning families with the average family car will save £144. As we fix the failures of the past and repair our economy, we are committed to supporting families across the country. It is a tough challenge to ensure and secure our economic stability and to lay the foundations for sustainable growth, but in our determination to do so and to restore the economic prosperity of this country, we will put fairness at the heart of our recovery. We are protecting living standards for the poorest and most vulnerable families by lifting millions out of tax, taking steps to reduce the cost of living and refocusing welfare on those who need it most. Yes, that means that those on the highest income will bear the heaviest burden as we pull together to tackle the deficit, but it is right that those who can contribute the most should do so. A fair and sustainable recovery demands leadership, and that is what this Government are providing. Question put. The House divided: Ayes 220, Noes 284.