Welfare Reform Bill (Programme) (No. 2)

That is an interesting contribution, but in truth I fail to see how those charities can make those calculations when we have not yet brought any proposals to the table. It is difficult to understand how those calculations were made, unless they were based on hearsay or assumptions. Asking the experts to look at this on our behalf will enable us to introduce a set of proposals that will work. Also, hon. Members should be reassured by the fact that we will allow Parliament to look again at the proposals before they are enacted. That will allow scrutiny once they have been developed in detail. I agree with Opposition Members who have stated that the free school meals policy needs to work. Ultimately, there is no point in creating a reform to the welfare state to make work pay if it does not take into account the impact of the free school meals entitlement. We need to be careful about new clause 4, because it fails to take into account the complexities that I have discussed with colleagues in the Department for Work and Pensions relating to the different arrangements for prescription charges in the various parts of the United Kingdom. Of course universal credit must take into account the need for some kind of support for prescription charges in England, but the situation is different in Wales and Scotland, where, for reasons best known to the Governments in Cardiff and Edinburgh, people do not need to pay for their prescriptions. I find that policy very odd. I can walk into a chemist in Llandudno and get a free prescription, whereas I would have to pay for it in London. Personally, I would be happy to pay a small contribution rather than getting support in that way. The issue of passported benefits relating to prescriptions is an important one that needs to be looked at. We cannot end up with a system that builds compensation for prescriptions into a universal benefit for the whole United Kingdom without taking into account the complexity that I have just described. I applaud the fact that we are looking at this in detail and trying to introduce a policy that will be fair to all. I am surprised that the Opposition see the fact that we are giving these matters a great deal of care and attention as something to belittle, rather than something to celebrate. As a Conservative Member, I would find it difficult to argue against the presumption of people saving for a rainy day. I find surprising some Opposition Members' arguments that people who fall on hard times should not use their savings. If that had always been the argument in relation to every possible hard time, there might be some merit to it. However, we heard the bizarre argument from the hon. Member for Edinburgh East against someone who had had their working hours reduced having to use their savings rather than rely on universal credit, even though I suspect that she would be willing to continue with the current situation, in which someone who becomes unemployed, which is much worse, is expected to use their savings before being able to claim anything from the state. Our proposals for universal credit are trying to be fair across the board, and I do not think that we can have a rule that someone will have to use their savings if they are unlucky enough to become unemployed, but that the state will support someone whose hours are reduced, even if they have £50,000 saved in an ISA. I cannot see the logic of that proposal. Never mind the cost of the £70 million that Opposition Members have talked about, I simply do not understand someone who becomes unemployed having to use their savings while someone whose hours have been reduced is able to call on the support of the state. I sincerely hope that, in better times, as we see a transformation in the public finances, we will be able to increase the limits on savings. I want people to be self-reliant. I want them to save for a deposit on a house, for their children's weddings or for their retirement. We must bear in mind, however, that we need to be fair to all taxpayers. There is nothing acceptable in amendments 23 and 24. I see nothing logical in a proposal that the state should step in to support someone with £50,000 in an ISA whose working hours are reduced, yet if that same person were made unemployed they would be expected to use those savings to pay their way until the savings were exhausted. The Government's welfare reform proposals are much more logical, in that they try to ensure that people have an understanding of the importance of self-reliance. Amendments 27, 28 and 29 deal with the situation for the self-employed. The right hon. Member for East Ham (Stephen Timms) noted from my contributions in Committee that I was supportive of small businesses, and he was astounded to hear me supporting the Government's proposals on how universal credit will relate to the self-employed. I want to state categorically that the universal credit system must support self-employment. My constituency is highly dependent on small businesses and, indeed, micro-businesses. The definition of a micro-business is one that has between one and nine members of staff. Most small businesses in my constituency do not even have five. I fully appreciate the importance of self-employment to the economy of Aberconwy and to Wales. I would not be standing here supporting a proposal that attacked the ability of the self-employed to benefit from the universal credit system. However, the system has to be fair and reasonable. The Department for Work and Pensions is trying to re-establish the enterprise allowance scheme, which is an indication of its commitment to encourage people to consider self-employment as a route out of worklessness. I do not for a second believe that the Government would encourage people into self-employment with one policy while penalising them for so doing with another. I support the Department's attempts to find a way of avoiding self-employment being used as a means of claiming universal credit payments when they are not actually justified. My example, which drew a degree of scorn from the right hon. Gentleman, is not made up; it is one that I came across in my previous life before being elected as a Member of Parliament. Someone set up a small business and, in an entire year of being self-employed, managed to generate sales of less than £80. It would be completely unacceptable for someone in that situation to get universal credit payments based on their being self-employed. Most people in small businesses work extremely hard, and they would not recognise £80-worth of sales in a year as running a small business. The key issue is that the Department must recognise the hours put into small businesses by their proprietors. It would be unfair to the self-employed if we ended up saying that somebody who ticked a box on a form saying that he or she had worked a 70-hour week in their business should have that calculated on the basis of the minimum wage. Having had discussions with the Minister, I do not think that that is the intention; rather, it is to have a clear level at which the self-employed are expected to perform before they can benefit from universal credit. That is reasonable and acceptable. I encourage the Department to continue to consult the small business community, who will be able to add a lot to the debate in ensuring that we get this right. The system must support small businesses, but it is not unreasonable to expect it to do so sustainably and fairly. As a Government, we have to think carefully about what is deemed to be the income level of the self-employed and about the potential burdens that we might place on small businesses with a reporting system that is too demanding in terms of regular responses. I think the Minister alluded to the possibility of quarterly returns, and that is not unreasonable. Many small businesses in my constituency will not thank me for saying this, but they are quite happy to deal with their VAT returns on a quarterly basis. They would love to be without that requirement, I must admit, but they deal with it on that basis and are used to doing the same with their pay-as-you-earn returns. They would not necessarily find too unreasonable the burden of having to report their earnings in relation to universal credit on a quarterly basis. We need to take that into account. Although using net profit as a means of calculating the income of the self-employed is equivalent to how the self-employed are dealt with for tax purposes, it might not necessarily result in a fair outcome in creating a system that provides support from the taxpayer for their living needs. An annual investment allowance of £100,000 for capital allowances does not sound like a huge amount of money for large concerns, but for many small businesses it means that they could invest in one piece of capital and immediately wipe out their profit. The frustration for other taxpayers when that type of thing happens is that they see somebody running a successful small company, investing in brand-new capital and getting a 100% tax allowance in one instalment, which means that they are reporting a zero income for tax purposes. I question whether that is an appropriate basis on which to calculate universal credit entitlement, because it is a means by which the self-employed have the capacity to reduce their earnings for universal credit purposes that is not open to those who are in paid employment. I believe myself to be a champion of the self-employed, but the Department is right to think carefully about how to ensure that we have a reporting system for the self-employed that is not only fair to them and encourages self-employment but fair to the general taxpayer and to other universal credit recipients. Many of the amendments and new clauses are interesting, but when one considers the Bill in full, it is difficult to support any of them.