Social Security (Additional Payments) Bill
Wednesday 22nd June 2022
(2 years, 5 months ago)
Commons ChamberRead Full debate Social Security (Additional Payments) Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 22 June 2022 - (22 Jun 2022)
Madam Deputy Speaker (Dame Eleanor Laing)
I must inform the House that the reasoned amendment in the name of Kirsty Blackman has not been selected.
The Secretary of State for Work and Pensions (Dr Thérèse Coffey)
I beg to move, That the Bill be now read a Second time.
The cost of living challenge facing many families right now is being driven by forces beyond their control. The aftershocks of covid on global supply chains, and Putin’s invasion of Ukraine, have caused a hike in prices and a spike in bills, particularly for energy costs. As a result, household budgets are being stretched further than at any time in recent memory, so just as we did during covid, the Government are stepping up at this challenging time to help families who are feeling the strain. It is because we got the big calls right that we have the fiscal firepower to take decisive and direct action to help millions of people across the country.
Although we have always been clear that the Government cannot cover every situation or solve every problem, we are providing financial support to every household to help relieve some of the pressures that people are under, and to help them cut costs across their household expenditure. Approximately four in five households—all those living in band A to band D homes—are receiving a £150 discount on their council tax, with millions already benefitting from the money landing in their bank accounts, and all households that are domestic energy customers will get £400 towards their energy bills this autumn, in the form of a grant with nothing to repay. We are, however, principally targeting help at those who need it most, helping ease the squeeze for those on low and fixed incomes, who we know spend a higher than average proportion of their income on energy.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
There is an issue with people who live in park homes—I have a few sites in my constituency—because the energy rebate does not make it through to them. Are the Government looking at innovative ways of addressing the issues faced by those individuals and households?
Dr Coffey
My understanding is that the Secretary of State for Business, Energy and Industrial Strategy, my right hon. Friend the Member for Spelthorne (Kwasi Kwarteng), is aware of that particular channel. I am led to believe that a solution is being developed so that people will benefit from that cost even if they do not receive the money directly, because a lot of park home owners do not pay their energy bills directly. I know that my right hon. Friend is aware.
Returning to what we are doing to help people, we are providing a direct cost of living payment of £650—split into two payments of £326 and £324—to over 8 million families who already get help through means-tested benefits. This includes people on universal credit, income-based jobseeker’s allowance, income-related employment and support allowance, income support, working tax credit, child tax credit and pension credit—both guarantee and savings credit recipients. On top of that, we are providing a £150 payment for approximately 6 million people with disabilities who are on qualifying benefits, and giving 8 million pensioner households an additional £300 alongside their winter fuel payment. Combined, that is extra support of at least £1,200 this year for the majority of households that are least able to absorb rising costs, which takes our total support package to £37 billion.
Sir Stephen Timms (East Ham) (Lab)
I just want to check one point. At the moment, about 150,000 working-age people who receive universal credit have their benefits limited by the benefit cap. Am I right to say that these additional payments are not constrained at all by the level of the benefit cap?
Dr Coffey
Yes, that is the case. I was planning to cover that later. For the record, I will still make that point.
Our household support fund administered through local authorities in England and the money given to devolved Administrations are further avenues for people to seek help with the cost of essentials. From October, the Government are adding an additional £500 million to the fund, extending support through the winter. That equates to an additional £421 million in England and £79 million for the devolved Administrations, and that will take total funding for this UK-wide household support to £1.5 billion.
Hywel Williams (Arfon) (PC)
One group of people who receive universal credit and are in some difficulty are those who lose some of their universal credit because they received a universal credit advance for the first five weeks. Some 92,000 households in that situation in Wales are getting about £60 a month less, and that comes to a total of about £5 million being denied to them. I hope that the Secretary of State is prepared to reconsider her position on that. Obviously, that is not in the Bill, so she has taken a decision in the short term, but I press her to reconsider.
Dr Coffey
The hon. Gentleman is incorrect in saying that money is denied to people. The whole point of receiving an advance is that there is phasing and, instead of receiving 12 payments in a typical calendar year, 13 payments are made. We extended that recently so that people can choose whether to have 25 payments over 24 months. It is not a case of people being denied.
The Social Security (Additional Payments) Bill before the House is a short Bill of 11 clauses that gives us the powers necessary to administer payments to families on means-tested and disability benefits. As one-off new benefit payments, they will be delivered by the UK Government to eligible households right across the United Kingdom in England, Wales, Scotland and Northern Ireland. The timing of such payments will vary, starting with the first payment of £326 for DWP means-tested benefit claimants from 14 July. The second payment will arrive in the autumn for those eligible. Those on tax credits who do not receive DWP means-tested benefits will get each instalment later to avoid duplicate payments.
People not eligible in time for the first £326 payment because they were not getting a qualifying benefit in the month before the announcement may get the second £324 payment if they have a qualifying entitlement to a benefit in the month before the next eligibility date. We have deliberately not included the next eligibility date in the Bill to try not to change claimant behaviour. Instead, there is the power to set a date through regulations.
Those on qualifying disability benefits will get their £150 as a single payment from September. Where eligibility for any of these cost of living payments is found retrospectively—for example, someone who had applied for personal independence payment but not yet been awarded it—people will still receive that disability cost of living payment; it will just be at a later date.
Marsha De Cordova (Battersea) (Lab)
In opening, the Secretary of State alluded to the fact that 6 million disabled people would qualify for the additional disability support payment of £150. Does she acknowledge that some disabled people—particularly those in receipt of disability living allowance, PIP or attendance allowance—who no longer qualify for the warm home discount since her Government changed the rules, will lose out? In effect, they have taken away £150 through the warm home discount, and the additional £150 really does not do anything to meet the extra costs for people who have already lost out.
Dr Coffey
The warm home discount is not relevant to the Bill, but I understand the point. It is the policy of my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy, but I do not know that the intention was—[Interruption.] I am trying to answer the hon. Lady’s question. My understanding of the policy rationale is that because PIP is not means-tested—it is not income-based—a decision on warm home discount eligibility was made to include many more households on the basis of income rather than PIP eligibility. I am sure that she will welcome the fact that we have included £150 in this legislation.
These one-off tax repayments do not count towards the benefit cap and will not affect existing benefit awards. They will provide a budget boost for millions of the lowest-income households right across the United Kingdom.
Dr Coffey
No, I will not.
This Government have supported and continue to support those most in need. I am proud of our record of lifting people out of poverty.
Anyone listening to Opposition parties could be forgiven for thinking that poverty was going up. The fact is that in 2021 there were 1.2 million fewer people in absolute poverty, before housing costs, than when we came into government in 2010. Between 2019-20 and 2020-21, every measure of poverty, whether absolute or relative, saw a reduction in poverty. In terms of statistics, on absolute poverty, our preferred measure, the number of working-age people in poverty is down by 100,000, the number of children in poverty is down by 200,000, and pensioner poverty is down by 200,000.
We know from the latest available data that for most families the best way out of poverty is through work.
Dr Coffey
I will not take any further interventions from the hon. Gentleman, because he has already intervened. I am sure that if he wants to contribute to this debate he will have put in to speak.
In 2019-20, children in households where all adults were in work were about six times less likely to be in absolute poverty than children in a household where nobody works. That is why our economic priority during the pandemic was to protect, support and create jobs through the furlough scheme and the many other measures we took as part of our plan for jobs.
Jonathan Ashworth (Leicester South) (Lab/Co-op)
The Secretary of State will of course know that her figures on absolute poverty and relative poverty are disputed by the various stakeholders who work in this field. One of the issues that is concerning people with regard to poverty is the failure to uprate benefits this year along the lines of this year’s levels of inflation. She has rightly said that pensions and benefits such as disability benefits and universal credit—and, hopefully, the minimum income guarantee and pension credit—will rise in line with inflation this September. She is coming under some pressure on that now. Can she give us a guarantee that she will not resile from that position?
Dr Coffey
The right hon. Gentleman may not be aware that I cannot make any declaration about the rises in benefits; I can only point to our policy in terms of, for example, the triple lock for pensioners. That is because I am required by law to undertake a review of the benefits once a year and I have not yet done so. I am sure that he will judge us on past performance, especially in following the regular legislation.
The unemployment rate is now below the low level we saw before the pandemic—close to the lowest since 1974—and we have more people on payrolls than ever before, but we are not resting on our laurels, particularly with a record number of vacancies in the labour market. We want people to get into work and to boost their incomes, which is why we launched the Way to Work scheme, quickly connecting claimants with employers looking to fill vacancies. Having turbo-charged jobcentres into super, almost dating, agencies in the way that they match people looking for work to people offering work, I am confident that we will achieve our target to move half a million people into jobs by the end of the month. There are hundreds of thousands more people benefiting from a pay packet, along with the prospect of a better job tomorrow and a future career.
Mr Richard Holden (North West Durham) (Con)
Will the Secretary of State confirm that the payments in this Bill, to almost 25,000 of my constituents, are on top of the support that has already been put in place, with the £1,000 that families will benefit from through the taper rate, the living wage rise and the £330 that most of those in work will get through raising the national insurance threshold, meaning that tens of thousands of people in North West Durham will be better off as a result of these changes and showing that we are providing support now, just like we did during the pandemic, during the cost of living issues due to international factors such as Russia’s invasion of Ukraine?
Dr Coffey
My hon. Friend is right to point out the additional measures. I do not know exactly how many people in his constituency will be affected, but I rely on his excellent local knowledge as a great constituency MP. Absolutely—I am setting out additional measures to those that he has outlined.
The Bill will deliver one-off additional payments responding to the challenges faced by people in every part of our country over the coming months. I thank the usual channels and the House more broadly for agreeing that it can make its necessary progress today. Its provisions are intentionally straightforward and will enable a straightforward approach for claimants, with no complicated forms, no bureaucracy and nobody having to make an additional claim, as payments will automatically go into people’s bank accounts.
The actions in the Bill will boost the budgets of millions of stretched families in every part of the United Kingdom, helping them through the cost of living challenge. I commend it to the House.
Madam Deputy Speaker (Dame Rosie Winterton)
I call the shadow Secretary of State, Jonathan Ashworth.
Jonathan Ashworth (Leicester South) (Lab/Co-op)
Let me begin by being clear with the Secretary of State: we do not intend to divide the House. We understand that the Government need to put in place the architecture to make these arrangements swiftly. None the less, we want to put on the record a number of points, on which I hope Ministers will provide some clarity in their response to Second Reading and throughout proceedings today.
Like many Members, the message that I am hearing up and down the country could not be clearer: for many of our constituents, these are the toughest times that anyone can remember. More than a decade of underwhelming economic growth has meant that today the cost of living is skyrocketing and pay packets are failing to keep pace with inflation. By next April, wages will be worth £2,000 less in real terms than in 2020, with real pay in the UK falling at the fastest rate for 20 years, leaving household finances stretched to breaking point. Prices are up in the shops and the cost of petrol is through the roof. Energy bills are sky-high, and the lifting of the price cap later this year means that they will increase further. Families everywhere are saying, “Enough is enough!” It should be no surprise that today’s statistics show a 12% increase in those with council tax arrears.
The Secretary of State took great care to explain why she is taking action to help those in need now, and the measures are welcome as far as they go, but the House has to understand that the future is bleak: energy market expert Cornwall Insight is warning that the energy cap could rise by a further £1,000 in October; inflation is at 9.1% today, with worse on the way; the cost of living will rapidly rise further; pensioners will see the value of their pensions and savings attacked by inflation; and working families will be left desperate to protect the value of their wages from the ravages of inflation—and the edict of Ministers tells them to take a pay cut.
Ministers hope that interest rates and tax increases will dampen demand in the economy, and thereby slow economic output. Pain today and pain tomorrow is their policy to get inflation under control, even though the Office for Budget Responsibility warned, following the spring statement, that we are heading for the biggest fall in living standards since the 1950s, with more children set to be pushed into absolute poverty. Labour was clear that taking no action following the spring statement would have amounted to the wilful impoverishment of many of our constituents—a price that we never believe is worth paying. We therefore proposed a windfall tax on North sea gas and oil producers to help families and pensioners, and we are pleased that after some months the Government finally listened to our representations.
We recognise the extra support that the Government are allocating today, but in reality this legislation—important though it is—is a short-term sticking plaster because of a series of long-term policy failures to grow our economy sufficiently, and to address the longer-term problems and hardship that have been growing over the last 10 years due to attacks on social security and unfair pay settlements.
Jonathan Edwards
Does the shadow Secretary of State agree that missing from the Bill is any support for unpaid carers, and does he share my hope that the Government will bring forward proposals in the near future to help that group?
Jonathan Ashworth
The hon. Gentleman anticipates a point I am going to make, which is why now is a good moment to turn to the specifics of the Bill. I want to raise a number of points that I hope Treasury Benchers will address throughout proceedings this afternoon, particularly regarding how the Bill impacts on four groups: the self-employed on universal credit; disabled people and carers; pensioners; and larger families.
First, on the self-employed who claim universal credit, the minimum income floor will reduce universal credit payments for some self-employed people to zero. Could the Minister clarify, in responding to the debate, whether self-employed universal credit claimants whose UC payments are zero purely because of the minimum income floor will be entitled to these cost of living payments?
Secondly, on how this impacts on disabled people, the disability charity Sense has warned today of the increasing numbers of disabled people pushed into debt as a result of the rising cost of living. Those on the Treasury Bench must surely understand that many disabled people have needs that make heating and electricity to power equipment particularly central to their wellbeing, so that economising on energy can bring severe hardship.
As my hon. Friend the Member for Battersea (Marsha De Cordova) raised a few moments ago, disabled people on non-means-tested benefits will get £150 as a minimum, and indeed those on means-tested benefits will get the £650. I appreciate that the Secretary of State says this is a responsibility of the Business Secretary, but Ministers did recently change the rules on the warm home discount scheme so that 290,000 people on disability living allowance, PIP and attendance allowance are no longer eligible.
For people on PIP, that means that the Government are giving £150 to them after it was taken off them through the changes to the warm home discount scheme. This is robbing Peter to pay Paul, and it suggests that one hand of Government does not know what the other hand of Government is doing. How can that be justified?
Marsha De Cordova
My right hon. Friend is making an excellent point, and he probably articulated it even better than I did. Does he also agree with me that the whole premise of DLA, PIP and attendance allowance is to help meet some of the extra costs faced by disabled people? The Secretary of State has stated that this is a different Department—it is BEIS—but she must none the less acknowledge the purpose of these benefits, and taking away one payment and giving some money back with another is actually going to leave nearly 300,000 disabled people worse off.
Jonathan Ashworth
My hon. Friend is absolutely right. I can assure her that she speaks with an eloquence on these matters that I rarely muster, and I thought she put her points powerfully.
Even though many disabled people have been given an additional £150, for many of them that will not cover the additional cost of inflation when applied to disability-related benefits. For example, for those on universal credit, the supplement for someone unable to work or engage in work-related activity rose by about £240 a year less than if it had been uprated in line with the consumer prices index. In addition, someone receiving the daily living component of PIP is worse off by £185 on the standard rate and by £274 on the enhanced rate as a result of the sub-inflation upratings later this year.
That is one of the reasons why many people out there are particularly concerned that the Secretary of State—I understand that, in legislation, she has to review these matters—and the Government may well resile from their commitment to inflation-increase benefits and pensions this September.
Equally, the hon. Gentleman who sits for a Welsh constituency that I cannot remember, and I am not sure I can pronounce it either—[Interruption.] The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) raised carer’s allowance, and people claiming carer’s allowance will not get any extra support. Carers often have higher energy bills because of their caring responsibilities, yet people in receipt of carer’s allowance—remember that they provide care for at least 35 hours a week and earn less than £132 a week—are likely to be hit hard without additional support. Why were carers left out of this package?
Thirdly, I want to talk about pensioners. We have 2 million pensioners in poverty, and the number is rising. The Prime Minister promised that pensions would keep pace with wages and prices, but, without any thought as to how hard pensioners are finding it to make ends meet, Ministers broke that promise by removing the so-called triple lock. That meant a real-terms cut of about £500 in the basic state pension—the biggest real-terms cut, I believe, for about 50 years. I was pleased to see Ministers commit to honouring the triple lock for next year, but we can see the pressure Ministers are coming under and we hope the Secretary of State does not break that promise for the next financial year.
We also need clarity from Ministers on whether the standard minimum guarantee of pension credit will be uprated in line with the consumer prices index in September. Pensioners on pension credit will receive the £650, as the Secretary of State knows, but pension credit uptake is not what it should be. If we could drive up the uptake of pension credit, Loughborough University estimates than an extra 440,000 retirees could be lifted out of poverty. With approximately 850,000 pensioners not claiming pension credit, a huge number are set to miss out. Failing to do more to increase pension credit uptake could mean that two thirds of the poorest pensioners will not get the extra £650.
I recognise that the Minister for Pensions and Financial Inclusion—the hon. Member for Hexham (Guy Opperman), who is not in his place—has been leading a campaign to drive up the uptake and has even been ballroom dancing with Len Goodman. However, the Bill’s impact assessment, which the Government have published today, shows that 1.4 million pensioners are benefiting, but in the second round it is estimated that 26,000 fewer payments will be made to pension credit recipients. Can the Secretary of State or the Minister responding to the debate—the Under-Secretary of State, the hon. Member for Macclesfield (David Rutley)—explain why that is and what it says about the success, or otherwise, of the Government’s pension credit take-up campaign?
Families with children are poorly served by flat rate payments. Families in the bottom half of the income distribution with two or more children spend twice as much on food, essential household goods and services, clothing, footwear and transport. Families with three or more children are likely to spend an additional £500 on energy, but the support on offer is not adjusted for size of family.
We recognise that the cost of living payment, combined with the £150 council tax rate, will provide £1,200 for working-age households in receipt of means-tested benefits. However, that will not cover the whole increase in energy bills, especially as further large increases in the price cap, perhaps of £1,000, are expected in October. Nor will it provide much mitigation of the wider price food rises.
Let me spell it out. We know that there will be another rise in gas and electricity prices, possibly of £800 to £1,000, for a family who have already faced an increase of £850. That family will therefore need to find at least £1,650. They will get the council tax deduction of £150; they will get the energy bill loan, turned into a grant, of £400; and they will get £650, paid in two instalments, supposedly to cover the year ahead. That is £1,200 in total, which will still leave them £450 worse off because of the energy price rises this year. As that comes on top of last October’s £20-a-week cut in universal credit, that family’s standard of living will be down by £1,450 on last year—£28 a week. That is even before we take into account the food shopping bill, which Kantar has today predicted will go up by at least £380. The Governor of the Bank of England has warned of “apocalyptic” increases in food prices.
Surely more Government action is needed. Ministers will retort that they are helping families to find employment; employment should indeed be the best defence against the rising cost of living, but under this Government, 8 million people in work are in poverty and are picking up food parcels for their families because of low pay and family circumstances. Some 2 million working families are on universal credit and have suffered similar losses to those who are out of work: they have lost the £20 uplift, they faced a real-terms cut in universal credit in April, and their wages are being outpaced by inflation, even after the national living wage increase.
I recognise that the Minister will respond that the Chancellor has reduced the UC taper rate and increased the work allowance, and that those with the highest earnings who qualify for universal credit gain the most from the reduced taper. However, for those with very low earnings, the gains are much less than the losses elsewhere. A lone parent with two children would lose £1,200 if they were not working, but would lose £1,300 if they were working 10 hours, nearly £700 if they were working 20 hours and £400 if they were working 30 hours. These families have already lost substantial amounts, and the package that the Chancellor has announced does not make up for it. Those examples are not exceptional. They will have a familiarity to every Member who speaks to their local food bank or citizens advice bureau. The problem is that the flat payment system takes no account of family size or special needs.
I hope the Minister addresses those points this afternoon, because we need more than quick fixes to protect the living standards of our constituents and tackle the chronic injustices of poverty. We entered the living standards crisis not just on the back of years of underwhelming economic growth, but after years of cutting, freezing and restricting access to social security, which left us with a threadbare system and an explosion in food bank, baby bank, bedding bank and fuel bank usage. The real-terms value of out-of-work benefits is the lowest for years. We have seen the pernicious two-child policy, caps on support, inadequate help with housing and council tax, and real-terms cuts to universal credit—real-terms deductions to the amount that people on universal credit are forced to grapple with.
That is why child poverty is rising on its way to 5 million, with half a million more children destitute and 500,000 children going without a decent bed at night. The outcry from our communities forced the Government to take short-term action, but we need a long-term plan to rebuild social security, grow the economy, raise living standards, and defeat child and pensioner poverty, so that the victims of poverty can participate fully in society. That is what I am determined to build.
Madam Deputy Speaker (Dame Rosie Winterton)
I have now to announce the result of today’s deferred Division on the Abortion (Northern Ireland) Regulations 2022. The Ayes were 215 and the Noes were 70.
[The Division list is published at the end of today’s debates.]
Lee Anderson (Ashfield) (Con)
Thank you for calling me so early in the debate, Madam Deputy Speaker; it is a great privilege.
There will be no surprise that I welcome this Bill, which will help millions of families during these very difficult times. The Labour party thinks that the only way to help families is to just keep increasing benefits, but working-class people in places such as Ashfield are a bit more savvy than that. They realise that we make families better off by increasing opportunities through the job market, and education and training, which leads to promotion and better job prospects.
For the purposes of this debate, we need to go back in history a bit, to the end of the ‘90s, when Tony Blair came into government and introduced something called the tax credit system. Although at the time it seemed an incredibly kind thing to do, we are now feeling the unintended consequences. It has damaged businesses and damaged the prospects of millions and millions of people throughout the UK. I will give the House a good example.
A friend of mine refused to work more than 16 hours for over 10 years because she was a single parent. However, that backfired when her daughter got to 18 and my friend lost all her tax credits, her child benefit and her child support. Now we have a lady in her 40s who has, overnight, just lost half her weekly income, and she is stuck in a low-skilled, low-paid, minimum-wage job. She has never upskilled, despite her employer wanting her to upskill for years and years, so she has missed out on that career development, which could have led to a better job and less dependency on benefits, all because she did not want to work more than 16 hours a week.
This Government are trying to fix things like that with the universal credit taper, which will now allow people like my friend to work more hours and get a better paid job without it affecting their income as much as it would have affected hers all those years ago. That is the way to tackle poverty and help to people achieve their goals, but what Labour did is trap people—millions of people—into just having 16-hour—[Interruption.] Opposition Members can shake their heads and chunter away, but it is true. I know hundreds of people in Ashfield who were trapped in 16-hour-a-week jobs, and what good has it done them, years later? Ten years later, they are still in a minimum-wage or living-wage job, they have not upskilled and they have not moved any further, and they lose all their benefits when their children leave school. That is not progress.
The answer that the Labour party had, when all these people were stuck in 16-hour jobs and we could not get them to work a full-time job, was simple: open the floodgates and import cheap foreign labour, which is what happened. Twenty years later, we have a failed migration policy and a failed benefits policy, which has led to millions of people being trapped in a poverty cycle. We have spent the last 12 years trying to put right this mess and it is not easy when people are trapped in a poverty cycle —[Interruption.] Lots of Members on the Opposition Benches are grinning, but I will crack on.
Our benefits system in the UK is very generous—[Interruption.] It is generous. I will give an example. If my friend was a single parent now, living in Ashfield with two children and working 16 hours a week on the living wage, she would be getting £18,000 a year in universal credit and £6,000 or £7,000 a year in wages, which is an income of about £24,000 a year. She would not be paying any income tax, which is a bonus. To have that sort of income, a person would have to earn about £30,000 a year, which is a good wage in Ashfield.
Kirsty Blackman (Aberdeen North) (SNP)
If the hon. Gentleman thinks that is very generous, how does it compare with benefits systems across the EU, for example, that are significantly more generous?
Lee Anderson
I will tell the hon. Lady what is generous: a single parent, like my friend and I were all those years ago, getting £24,000 a year for working 16 hours a week. [Interruption.] The hon. Lady can shake her head, but I think that is a pretty generous payment. That person would not be paying any income tax. Come to Ashfield and ask if £24,000 net is a good income. It would be a struggle to find people who are earning that sort of income so, yes, it is a generous income.
As we level up the country, we need to level up the skills of people who are trapped in this life of benefit dependency caused by the Labour party—I will stick to my words. In the meantime, this caring Government realise that families need extra support, which is why we are providing £37 billion to support families. Remember this is taxpayers’ money. There is no magic money tree, so hard-working people are having to pay for this.
This Bill will ensure swift action by providing the power to make two cost of living payments of £650 to 8 million households throughout the UK. This is real, targeted help for real, vulnerable people. The £200 rebate on energy bills has been doubled to £400, and it is now a grant, so it will not be paid back. The living wage is up, the national living wage is up, the universal credit taper rate is up and national insurance has been cut, so 70% of those who pay national insurance will pay less and more than 2 million people will pay no national insurance at all. We are doing all we can to ensure we help to keep people’s head above the water by spending more than £80 billion on universal credit and legacy benefits, which now represent 3.8% of our GDP.
We cannot keep asking the hard-working taxpayer to put their hand in their pocket to pay more and more. We must all do our bit. Although I welcome that the Bill will get immediate support to families, we must all work hard to make sure every single person in this country has the chance to support themselves. The benefits system should be there to help people in their hour of need; it should not be a way of life.
If it were left to Labour, everyone would be sat at home feeling sorry for themselves, but I am different. I want people to have a good job, to earn more money and to enjoy the fruits of their labour.
Madam Deputy Speaker (Dame Rosie Winterton)
I call the SNP spokesperson, Kirsty Blackman.
Kirsty Blackman (Aberdeen North) (SNP)
It is a pleasure to speak for the SNP on the Social Security (Additional Payments) Bill. The Chancellor announced this uprating a number of weeks ago, having dragged his feet for so long. He announced the energy loan at the Budget, after announcing it earlier in the year, with a “Ta-da! Look at this! This is wonderful. We are giving you all this.” It was never sufficient. We called immediately for the energy loan to be a grant and for it to be increased.
The big announcement at the Budget was, “Hey, look, you can have cheaper solar panels!” That does not help my constituents, who are literally unable to buy food. We called for these changes then, and the Chancellor waited and waited until the end of May to make this announcement.
It has been a few weeks since the end of May, and we saw this Bill only last week. Parliamentarians have been able to scrutinise this Bill for only one week. The Government, or the Secretary of State, may say that this is because the Bill is so complicated, but they had weeks beforehand in which to decide what it would look like, and they have had weeks since the announcement in which to present it and give us an opportunity to see it. We should not be doing this in a single day. I appreciate that there is a tight timescale and that the Bill must be put through now in order for the payments to be made; what concerns me is the time during which we have not been able to scrutinise it effectively.
My other concern about process involves the money motion. It is drawn as tightly as possible. No doubt when we reach the Committee stage the Government will say what they say in every Finance Bill Committee: “All the amendments are about having reports. All the Opposition want are reports, rather than any actual changes to the Bill.” However, such a tight money motion makes it impossible for us effectively to put forward the asks that we have and to make it clear that this is wholly insufficient and that there are massive changes that we want to introduce.
Nevertheless, I congratulate the House on the fact that we are actually debating spend. That is very exciting—it is wonderful—because we never debate spend. We get the estimates for five days a year, or is it three? For a handful of days a year, we are allowed to debate those. To be fair, we are now allowed to debate spend, but it does not happen. We have the Budget, and then we have the Finance Bill. The Finance Bill is entirely about taxation: it is not about spend. We do not get the opportunity to debate and scrutinise spend properly, so it is very nice to get the chance to do so today—albeit with a money motion that is so unbelievably restrictive that we cannot put forward any amendments that make any sense or assist our constituents in any way.
Before I proceed, I want to thank Chris Mullins-Silverstein and Linda Nagy, who have been incredibly helpful in putting stuff together very quickly to enable me to make a speech that makes sense—or, I hope, largely makes sense.
This is the situation in which we find ourselves. As we heard from the right hon. Member for Leicester South (Jonathan Ashworth), in October, energy bills will be up by £1,500 for the average household, which is far more than the amount that the Government propose to provide for people—and that is before we take into account the other increases that we are seeing. According to the Office for National Statistics, pasta is up by 50%, bread by 16% and rice by 15%. I pay tribute to Jack Monroe for the huge amount of work she has done on the “Vimes Boots” index, which allows inflation to be measured not just in the way in which it has historically been measured, but in a way that relates to how people shop—the people at the lowest end of the income spectrum, who count every single penny in the supermarket to work out whether they can possibly afford what they have put in their baskets. Inflation for those lowest-income families has increased by significantly more than inflation for the families who are earning more. It is even worse for disabled householders, who are seeing even more significant increases in energy bills, and the same goes for pensioners.
I was delighted to hear the hon. Member for Ashfield (Lee Anderson) suggest that things are very generous. He cannot have the same inbox as me. According to my inbox, things were dire before Brexit, dire before covid, and dire before the massive increase in inflation that we are seeing now, and they have only got worse. The fact is that the impact of Brexit has increased our food prices. Less migration means less money for the Government to spend, while net migration reduces net public sector debt and increases the amount that the Government have to spend. The former Chancellor George Osborne’s Red Books make that explicit. It is clear that he was seeking to crack down on migration, and that doing so would reduce the amount of money that the Government had to spend. It costs money for us to reduce migration. It means that we will have less to spend on people who stay here, who live here, who work here.
The announcement that this is a £37 billion package is genuinely a joke. In the Government’s calculation of the £37 billion, they have included the fuel duty changes. A significant number of my constituents, especially the poorest, do not drive. They are impacted by the price of supermarket vans having to drive around and small businesses’ costs increasing, but the fuel duty does not make a difference to their daily lives. They do not fill up their fuel tanks because they do not have fuel tanks. They cannot afford cars. So including the fuel duty rise in the £37 billion is ridiculous. Including the freeze on alcohol duty is one of the cheekiest things I have ever seen in this place, and I was here all the way through the Brexit debates. The Government cannot include an alcohol duty freeze and say that they are helping with the cost of living. “We are helping the poorest people to save money on their alcohol.” People who cannot afford pasta are not helped by freezing alcohol duty.
These things that are being included in the £37 billion are listed on the factsheet on the Government’s website, by the way. The £37 billion also includes lots of already planned stuff. It includes what has happened with national insurance, and it includes things that were put in place when the Government thought that increasing benefits by 3.1% in April 2020 was sufficient. It includes a massive chunk of that. The Government cannot stand up and realistically say that this is a £37 billion package, because it is not. These are not the positive changes that my constituents and people across Scotland and the UK want to see.
I am pleased to hear that disabled people are getting an additional amount of money. That is a good move by the Government, but it does not take into account the increased costs that disabled people are seeing, including the massive increase in scarcity affecting gluten-free diets, for example. More disabled people have specialist diets than people who will not get the £150 increase. Disabled people spend more time at home, and it is the same for pensioners. The increases that are happening for those two groups are not sufficient to cover the increases they are facing in their energy costs, particularly, and in specialist diet costs.
Stephen Crabb (Preseli Pembrokeshire) (Con)
I am listening very carefully to the hon. Lady’s arguments, and she is making some important and useful points, but I have to disagree with her. She cannot honestly stand up here this afternoon and almost dismiss this enormous sum of expenditure that the Government are making by saying that it is not sufficient and that she wants more. Perhaps she could explain where all this extra resource is going to come from. I personally believe that the Chancellor of the Exchequer listened and took on board arguments that many of us were making earlier this year about the rising cost of living, and that he has done everything possible to make his pounds go as far as they can in providing relief to those on low incomes.
Kirsty Blackman
The Chancellor of the Exchequer did listen to the arguments that were made, and I absolutely welcome the fact that he came back and said, “What we did before was not enough.” I do not know if he actually said that, but he said that he was going to do more and bring forward more. I am pleased that we are discussing this today, and I am pleased that these increases are happening, but I am making the case that the additional payments that are being made do not cover the cost of living increases. I do not think they are sufficient. and I do not think they will assist our constituents who are already struggling. The right hon. Member asked where the money would come from. We have always said that the windfall tax should be applied more broadly than just to oil and gas companies. We have always said that it should be for all those who made excessive profits during covid. Why should the Amazons and the Sercos of this world get away with making so much money during the pandemic and not have the Government look at that?
The reality is that the UK Government do not have to run a balanced budget. That is how the UK Government budget works. The Scottish Government have to run a balanced budget by law; the UK Government do not. There is far more flexibility in the budget than the Chancellor explains. When he stood up on 27 May, he was already looking at an additional £30 billion of fiscal headroom in the next few years, compared with his earlier projections and targets—compared with what he had hoped to get. There was already extra space, before he made the decision to introduce the supplementary tax on oil and gas companies. There is money there to do the additional payments and the additional requests that we are asking for today.
The UK Government have failed in a number of places. For example, they have failed to keep the triple lock for pensioners. They failed to keep the universal credit lifeline. They failed to implement a pension credit take-up strategy. They failed to come forward with cost of living measures as early as they should have during the course of the Budget. They have failed to scrap the evil sanctions regime. They have failed to produce a strategy to tackle child property. They have failed to bring in a minimum child maintenance payment. They have failed to uprate benefits by anywhere close to inflation this year. They have failed to scrap the rape clause. They have failed to bring in a real living wage that people can actually live on. They have failed to bring forward the long-promised employment Bill. They have failed to end the Department for Work and Pensions vicious loans clawback.
In contrast, the SNP Scottish Government running that balanced budget is delivering for people in Scotland. In Scotland, we are mitigating the bedroom tax. We are doubling our game-changing Scottish child payment. We are uprating benefits by double the level that the UK Government are. We are paying carer’s allowance supplement to people who are carers. We are paying £200 child winter heating assistance to families with severely disabled children and young people. We are increasing our school clothing grant, which is not available across the board in England and is at the discretion of local authorities here. We are offering 1,140 hours of childcare to all eligible children, no matter their parents’ working status. We are providing five new benefits worth up to a maximum of more than £10,000 by the time a first child turns six. That is £8,200 more than that provided in England and Wales. We are also providing additional money for subsequent children that is significantly in excess of the amount being provided here.
I therefore have some calls for the UK Government. I would like the UK Government to now uprate all social security benefits by 10% and backdate that to April 2020. The Chancellor stood there and said that uprating benefits would be less than the additional payment he is making—I want him to do both. This is a sticking plaster. Giving this additional one-off payment does not solve things for next year. It does not undo the fact that this year’s increase was woefully insufficient.
I would like the UK Government to make an additional £25 a week uplift to universal credit and to extend that to all legacy benefits to undo the harm done by cancelling the £20 a week increase last year. I would like them to cancel the rape clause, the two-child limit and the bedroom tax. There is only so much mitigation that the Scottish Government can do within our balanced budget.
I would like the UK Government to produce a child poverty strategy and to make tackling child poverty a national mission, as it is in Scotland. I would like the UK Government to bring in the long-promised employment Bill. They promised 28 times that they would bring in an employment Bill in the Queen’s Speech, and no employment Bill appeared in the Queen’s Speech. I would like them to match Scotland’s commitment to dignity and respect for those claiming disability benefits. I would like them to bring in a real living wage and to scrap the ageism in the pretendy living wage.
From day one of the Chancellor’s energy loan, which he announced earlier this year, we called for it to be a grant, rather than a loan. In May, the Chancellor U-turned. He changed it from a loan to a grant and he increased it, like we had asked. Now, we must see a U-turn on the five-week wait for universal credit. We must see that payment become a grant for those who get universal credit. We must not see those payments being clawed back.
The UK Government have 85% of the powers on social security. They have all the powers that relate to energy, all the powers that relate to the minimum wage and all the powers that relate to national insurance. We are being failed time and time again by the UK Government. We have asked for these measures to be devolved. We have amended things for these measures to be devolved. We have voted for these measures to be devolved. We have called, at every opportunity, for devolution of employment law, for devolution of energy, for devolution over the minimum wage, and for devolution over national insurance. The UK Government refuse. The UK Government are continually refusing and clawing back powers from the Scottish Parliament—in their United Kingdom Internal Market Act 2020, for example. The Brexit Freedoms Bill is set to remove powers from this Parliament and centre it even more in the Executive than it already is. This is not the way to run a democracy.
People are struggling. Even with these payments on the horizon, people still struggle to see how they will get through the year. The only choice is for Scotland to become an independent country. Only by having the full powers of independence will we be able to protect people and help them through the cost of living crisis, in contrast to the UK Government who refuse to do so.
Sir Stephen Timms (East Ham) (Lab)
I am very pleased that the Bill is in front of us. The Select Committee has been clear in the past few weeks that, without a big measure on this kind of scale, low-income families would be in very serious trouble indeed in the coming months. I echo the tribute that has just been paid by the hon. Member for Aberdeen North (Kirsty Blackman) to Jack Monroe and her campaigning on this. She gave very compelling evidence to the Select Committee at our meeting on 9 March.
The package that has come forward has been widely welcomed. We put out a call for evidence on the cost of living in May. In response, the Joseph Rowntree Foundation said that,
“the package provided much-needed support for households, which will protect many of them against rising costs over the coming year.”
Citizens Advice welcomes the targeted support to low-income households and hoped that it would
“start to reverse the worrying trends we have seen in our data, including record-breaking food bank referrals.”
Unlike the previous announcements, this May package is properly targeted on low-income families, as it needed to be. The Resolution Foundation described it as offsetting
“the poor targeting of previous announcements.”
It also described it as “serious redistribution”. It is, I think, a serious response to a serious problem. I also welcome the Chancellor’s change of heart over the windfall tax to fund some of the help that is needed.
However, we need to be clear: the reason the Bill is needed is that the system for social security uprating has failed. It is a long-standing system. There is nothing new about the way it is done, but the unforeseen burst in inflation means that it simply has not worked this year. On this occasion, the decision has been taken to replace adequate uprating with ad hoc payments from the Treasury, which will certainly help us through the next few months. We need now to rethink the uprating system to make sure that it does not let us down again.
Jonathan Ashworth
I have a question for my right hon. Friend, the Chair of the Select Committee. Is he aware that, in 1976, the then Social Services Secretary, Barbara Castle, came to the House and uprated benefits and pensions for a second time in a year—there was a cost of living crisis then as well. The policy of the then shadow Secretary of State, Norman Fowler, was that uprating should take place twice a year. I wonder whether the Select Committee will consider the arguments that were made in the 1970s.
Sir Stephen Timms
My right hon. Friend makes a very important point. The Select Committee will certainly be looking at that. We are conducting an inquiry later this year on the question of the level of benefits, and the issue of how benefits should be uprated will certainly feature. I am intrigued to learn that the Secretary of State was able to do that in the 1970s given that we have been told that the IT systems in the 2020s cannot cope with it. I am certainly interested in seeing more on that.
Stephen Crabb
The right hon. Gentleman is making an interesting and important point about how we do upratings. I urge him not to get drawn too far down the path of looking at the system in the 1970s, which was in very different circumstances. There is an issue about the timing of uprating and the figures that are used to calculate it, but the bigger practical issue is the different IT systems and the plethora of different benefits that are still in play. Does he agree that we need to find a way to rationalise and simplify them?
Sir Stephen Timms
That would help—just modernising the old systems would help, and I will say something about that in a moment.
We are getting ad hoc payments from the Treasury to tide us over. The Secretary of State rightly spelled out to the Committee the downsides of one-off ad hoc payments such as those that the Bill enables. In oral evidence in February last year, she told the Committee that there were higher risks of fraud attached to one-off payments and that they can make it difficult for claimants to budget effectively—both quite telling points. She said that one-off payments were not
“one of the Department’s preferred approaches”
for providing that financial support. She noted:
“There are some challenges about fraud”
and that there would be difficulties if people claiming tax credits received a one-off payment and then moved to universal credit shortly afterwards. On the question of what might work best for claimants, she told us:
“Previous experience would be that a steady sum of money would probably be more beneficial to claimants and customers, to help with that budgeting process.”
I think she is right; it is not ideal for the Treasury to provide lump sums instead.
Why was proper uprating not done in this case? The Chancellor pointed out that legacy benefits cannot be quickly uprated because they are run on antiquated IT systems, as the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) referred to, so uprating takes several months. The Chancellor told us that that was why he was unwilling simply to uprate benefits: it could have been done quickly for universal credit, as we discovered in the pandemic, but not for legacy benefits.
In an earlier debate, I recall the shadow Secretary of State, my right hon. Friend the Member for Leicester South (Jonathan Ashworth) brandishing a document from an IT company, perhaps Oracle, about the front end that it had built for the Department’s legacy systems, which it said enabled changes to be made to them more quickly. I wonder whether the Minister, in closing, could tell us the truth behind that claim about the front end that had been provided. I know that the Department has certainly commissioned such front ends for the legacy systems over a long time, so I am interested to know why, notwithstanding what that brandished document said, it is apparently still the case that uprating takes four or five months. Are front ends in place? Why have they apparently not made faster changes possible?
In our June 2020 report on the Department’s response to coronavirus, the Select Committee recommended an increase in the speed with which changes could be made to legacy benefits. We said:
“People will be claiming legacy benefits until at least September 2024, the Government’s most recent estimate for completing the rollout of Universal Credit. It is simply not tenable for the Department to continue to operate antiquated systems that prevent Ministers from making timely changes to the rates at which legacy benefits are paid. We recommend that the Department work to increase the speed with which changes can be made to legacy benefit rates.”
In its response in September that year, the Department said that it
“recognises the need to be able to respond to events flexibly which is why we are investing in Universal Credit which is more agile than the systems that support legacy benefits.”
While substantial numbers of people depend on legacy benefits, the Government surely need to keep the systems that support those benefits fit for purpose. They are clearly not fit for purpose at the moment, and that ought to be addressed.
Kirsty Blackman
On that note, the new systems that we have created in Scotland under Social Security Scotland are doing exactly what the right hon. Gentleman asks. It has the ability to make those extra payments, because we set up the systems. Does he agree that the Government need to just invest to sort that out for many thousands of people?
Sir Stephen Timms
It certainly does need to be done. I am pleased to tell the hon. Lady that on Monday the Select Committee will visit Social Security Scotland and that our vice-chair, the hon. Member for Amber Valley (Nigel Mills), who is in his place, will be part of that group. We look forward to that visit.
The reason why benefit uprating has not worked this year is, of course, the six-month gap between September, when the inflation figure forms the basis of uprating for the following year, and April, when increases take effect. In response to our call for evidence on the cost of living, the Joseph Rowntree Foundation called on the Government to
“commit to a much shorter timeframe for annual uprating between measuring inflation and uprating accordingly, to ensure benefit uprating genuinely reflects inflation for the year in question.”
Lloyds Bank Foundation told us that the Government should
“consider uprating benefits in line with inflation in the autumn to ensure they more accurately reflect the true cost of living.”
That sounds like what was done in the 1970s. The Legatum Institute also suggested reducing the delay between CPI measurement and the application of uprating as well as introducing a mid-year uprating review. Citizens Advice called for a more sustainable, responsive uprating approach, which means
“addressing the lag between benefit uprating decision-making and implementation and the exclusion of the benefit cap from wider uprating.”
It says that while the one-off payments to be made under the Bill
“are more generous…for some households than if uprating had been brought forward”,
there are problems. For example, as we were reminded by my right hon. Friend the shadow Secretary of State, the one-off payments are the same amount regardless of family size. They also have cut-off dates, which risks arbitrarily excluding people from support.
Flat-rate payments being irrespective of family size appears to be pretty unfair to larger families. Overall, the package is somewhat more generous than early benefit uprating would have been, but it is less generous for larger families. The justification for that is not clear.
The North East Child Poverty Committee told us that
“a flat-rate £650 payment for all households on means-tested benefits, regardless of household size, additionally fails to recognise the clear link between family size and essential outgoings, with many larger families (already at much greater risk of poverty, a situation compounded by the two-child limit) facing intolerable financial pressures as a result of rising household bills.”
I will make one final point. One great advantage of the Chancellor’s package for low-income families, compared with a straightforward benefit uprating—I was grateful to the Secretary of State for confirming this—is that the benefit cap does not apply. It is striking that when it appears that the headline rate of social security benefits is likely to be raised by perhaps 10-plus per cent. next year, there is no indication at all about the benefit cap being lifted at all. That means that the growing number of families whose benefit has been capped will receive no increase in their income at all at a time when inflation is likely to be over 10%.
In evidence to the Select Committee, the Child Poverty Action Group Told us that
“the Government has made a welcome commitment to increase benefits in April 2023 in line with prices. However, not all price-related elements of the system are included in the annual uprating exercise and the benefit cap means a substantial minority of claimants—an estimated 150,000—will see no increase at all and face another real terms cut to their benefits.”
At a time when inflation is so high, surely at least the level of the benefit cap must be reviewed. Will the Minister give us any encouragement that it will be, ahead of April next year? For now, and in the context of the Bill, it is welcome, and quite a significant precedent, that the benefit cap will not apply to these additional payments.
Sarah Olney (Richmond Park) (LD)
It is vital that we provide additional support to those in receipt of disability and means-tested benefits who are covered under this Bill, but in itself it is not an adequate response to the depth and breadth of the cost of living crisis we are currently experiencing. The Chancellor is already hammering families with an £800 tax hike this year, more than wiping out measures in this Bill for those who will benefit from it. The national insurance rise and the freezing of income tax thresholds are unfair tax rises, making the cost of living crisis worse for millions of families across the UK by decreasing employees’ take-home pay. Households are facing the highest tax burden in 70 years; the typical family will see a hit of £1,200 a year through a combination of Conservative party tax rises and soaring energy prices, according to the Resolution Foundation. We welcome the Bill’s provision creating the £650 payment, but call for it to be paid in full in July instead of being paid in two instalments in July and October, because people need that support right now—although more support might still be required in the autumn.
The simplest way for the Government to help people right now would be to scrap the tax hikes to which I have referred. What we most want is an emergency VAT cut. Cutting VAT from 20% to 17.5% for one year would save families an average of £600; it would put money back into people’s pockets right now, boosting the economy and supporting struggling businesses. The Office for Budget Responsibility forecasts that the Treasury is due to take in an extra £8.6 billion in VAT due to inflation, which is £430 per family, so we think the Government could afford to fund that.
Cutting VAT would help to address spiralling inflation as well as keeping costs down for families. A similar VAT cut in 2008 boosted retail sales by about 1% and aggregate expenditure by 0.4%; that shows the difference it could make to struggling businesses right now. At the time of that same VAT cut in December 2008 inflation fell from 4.1% to 3.1%, and a similar saving right now could make a huge difference to struggling families.
In addition to the welcome targeted support announced in this Bill we would like the £20 uplift to universal credit restored. We accept all the arguments that that was an emergency measure, but this is also an emergency. The Government said at the time that higher wages are a better option than benefit increases, but we have seen just this week the tension caused between the historically high rate of inflation and the downward pressure the Government would like to maintain on employee wages, and this debate will be played out in many different circumstances across the summer and into the autumn. The Government’s argument that wage increases are the route to restoring household finances will come under considerable pressure, so I encourage them to think about that £20 a week uplift once more, because it would provide some of the poorest households on UC with an additional £1,000 a year, and we all know from our postbags what a difference that would make to the very poorest in our constituencies.
Much as we welcome the measures in the Bill, some of the most vulnerable groups in our society are not going to receive any additional support in facing the cost of living crisis thanks to these measures. The Government must look at that again. Several Members across the House have mentioned unpaid carers, and I want to add our contribution on that. They have once again been forgotten by the Government, who have provided no additional support despite the invaluable role unpaid carers play; it is difficult to calculate the additional pressures there would be on our care system if they did not play that role. As has been said, unpaid carers face additional costs as a result of their caring responsibilities. Those claiming carer’s allowance are being excluded from the list of eligible benefit recipients, leaving hundreds of thousands of unpaid carers, including 40% of working-age carers in receipt of carer’s allowance, without any additional support as a result of this Bill.
Millions of vulnerable adults and children depend upon the efforts of our country’s carers, yet as we see time and again, their voices are not being heard by the Government and again they are being excluded from support; they are being abandoned by the Government. The Liberal Democrats will keep championing the cause of unpaid carers, and I really impress on the Government the need to do more for those families.
Another issue that has been raised by a number of right hon. and hon. Members is families with multiple children in poverty. A flat-rate payment does not take into account the number of people in a household, which means that larger households, particularly those with more children, will face the squeeze much more severely. Of course, it is much more likely that a larger household will be made up of more children, so it is children who will suffer the most from having a flat-rate payment. Families in the bottom half of the income distribution with two or more children spend twice as much as equivalent families without children on food, essential household goods and services, clothing, footwear and transport, which leaves larger families in an especially vulnerable position when it comes to the level of inflation that we are seeing. The presence of younger children in a family exacerbates the prevalence of poverty due to the increased financial pressures that come with caring for a young child. Families with under-fives are therefore especially vulnerable.
My team recently met representatives of Little Village, a baby bank organisation that operates mainly in London. They told me that they are expecting to support an additional 1,000 families this year, and that they helped over 6,000 last year. Families cannot just go along to the baby banks; they have to be referred by education, health and social care professionals. These are only the families that have been identified by authorities as being most in need, so we know that the real impact of the cost of living squeeze on families with young children is likely to be much more widespread. Little Village staff told me that pregnant women are skipping meals in order to feed their toddlers, and that families are cutting toes out of their baby onesies to avoid having to buy new ones. This is what families are already having to do to deal with the cost of living crisis. The total number of children in poverty is predicted to rise to 5.2 million by 2023-24—an increase of 1.1 million children. We really need to do more to recognise the size of the households that are being targeted by some of this help.
I also want to mention rural communities and rising fuel prices. The Liberal Democrats want to see an expansion of the rural fuel duty relief scheme. It is currently available only in a handful of remote areas of the UK, but we know that the huge price rises in petrol across the country are having a disproportionate impact in areas where people cannot switch to public transport, particularly the most rural areas. The Government should immediately think about extending the rural fuel duty relief scheme where public transport options are limited, which would include Devon, Cornwall, Shropshire, Cumbria and some parts of Wales, and they should double the relief to 10p a litre. We are seeing real impacts on the rural economy because people are limiting how much they are driving, which affects not just local businesses and the rural economy, but young people accessing educational and employment opportunities. This is something that the Government really must address as a matter of urgency.
I want to take the opportunity to raise the case of my constituent Edna Price, who lost her right arm in a horrifying industrial accident some 45 years ago. Most of her income since then has come from her industrial injuries compensation fund, but this is not a qualifying benefit. For Edna, it causes a number of practical, everyday problems. The income that she earns from the fund is not large, but because it is income from that particular source, and not from pension credit or a qualifying source, she regularly misses out on some of the other, non-financial benefits that are offered to people who are on qualifying benefits. I have written to the Department about Ms Price’s case and would really welcome the opportunity to speak further to the Minister, because Edna will miss out again on this benefit, even though she already struggles to afford her fuel bills. I would very much welcome the opportunity to talk further to the Minister about how my constituent can potentially qualify for some of the other targeted benefits, to supplement her industrial injuries compensation.
I am pleased that the Chancellor is using the social security system to target this payment to households most at risk of hardship. I make the point again that it is a much more effective method than the use of council tax banding to calculate who is eligible for a rebate. In my constituency I think we have, out of all constituencies in the UK, the sixth-highest average house price, which causes residents who live in social housing in my constituency quite a few issues. They are on very low incomes, but the properties they live in often attract a high council tax band valuation, not least because the valuations were done back in the early ’90s on much narrower value bands than I think we would think about using if they were to be done again today.
Too many of my low-income constituents are living in houses that do not qualify for the council tax rebate, in particular those in a number of socially rented homes in the Kingston Borough part of my constituency. When they were valued back in 1991, they were assigned a market value based on the privately sold homes around them. I am thinking of a particular estate in north Kingston with very small homes that house particularly vulnerable people. Those homes have been valued too highly to qualify for the council tax help with fuel bills. If there is anything the Minister can say in summing up, or that we could hear in due course from the Chancellor, on how that could be addressed, I would be very grateful. I wrote to the Department on this issue back in March and I have not had a response. As I say, in a constituency like mine with high housing values, it is a big issue for my low-income constituents.
I would like to close by saying that we welcome the measure in the Bill, but there is still so much more to do and so much more that the Government can do not just in spending, but in thinking about the way they identify people in need of assistance. I welcome the opportunity to hear more about that in due course.
Mr Deputy Speaker (Mr Nigel Evans)
I am sorry you have had to wait, Mr Mills.
Nigel Mills (Amber Valley) (Con)
I am grateful, Mr Deputy Speaker. I was not planning to speak, but I have been tempted to say a few words.
There is a danger, in a debate where we have a quite a small audience, that we think that despite spending billions and billions of pounds, this is a small insignificant thing and not one of the biggest spending items the Government have tried to put through in rushed legislation in history. We should recognise that the Government have responded to a probably unprecedented crisis in a very generous and creative way. Those of us who have been wrestling with this issue for the last few months—almost the same crowd were here for the benefits uprating debate in February, pleading for more help and for a more generous uprating—would never have believed that we would see this level of support and ingenuity, given all the financial turmoil the country has been through in recent years. We must give the Government credit for what they have tried to do to help people through what we all hope is a relatively short-term blip, rather than a long-term, sustained problem.
With the £150 through council tax and the £200 loan via energy companies, that certainly seemed to be the original plan: we were hoping we could get people over a few months of a spike, and then things would get back to normal. We have to recognise now that that is not likely to be the case. We will have to have a much higher rise and one that is perhaps sustained for a longer period, unless some very happy events happen around the world and the situation starts to reverse more quickly than everybody seems to think.
For the next few months, the Government need to think about what they are trying to do and where they are trying to get to. The strategy may be to pass this money out on a one-off basis until next year’s upratings, which we hope will have taken into account inflation so that people with income from benefits and pensions will be able to match the raised outgoings and we will have solved the problem. However, I am not convinced that that will be the case if inflation remains at 9% or 10% for a long period. In April, we will be giving people inflation based on the year to September 2022. There could be another 5% of inflation before we get to March and we may well be back in this position in a year’s time.
Some clarity from the Government on the long-term plan would be helpful. We—the Select Committee and others—have been calling for a while for the Government to do some work to rebase benefits and ensure that key household compositions are provided with enough to meet the cost of living so that the increases will maintain that situation. Otherwise, there is a danger that in the next financial year, even with the uprating, people will get less than they had with this year’s benefits plus the one-offs. In that case, people would be worse off in a year’s time, even though their benefits would have gone up, because they would not have gone up by quite enough. We would be back in a similar crisis, needing more one-off payments in the next financial year—repeating those made in this financial year. That does not strike me as a long-term, sustainable way of running a welfare system.
Huge congratulations to the Government for what they have done in the legislation to get us—I hope—through this problem, but they now need to step back and work out the long-term, sustainable way of delivering welfare at a level that meets the essential living standards that we expect it to. I do not think we can get there through haphazard one-offs and increases that are not based on real-terms inflation at the time such provisions are made. A second uprating in a year may be one way of mitigating that. In fact, it would probably help the Government, because when benefits are uprated, there is often a taper, meaning that not everybody gets the full amount, which could result in a bit of cost saving. The Government could also make use of the taper to be more generous at the lower end of the earnings spectrum, with a higher base amount, and less generous at the higher end, accepting that some people would not get the full amount. We are asking not necessarily for huge amounts of extra spending, but for more targeted and better use of the systems that are in place.
It is interesting that in February we were told that the Government could not possibly use any inflation number that was less than six months old because the systems could not cope, yet we now appear to have managed to come up with some ideas in late May and will make the first payment to people about seven weeks later, in the middle of July. That suggests that when there is a will and desire, things can be done at less than six months’ notice. I hope that that will be built on when we get to next year’s uprating, when we could at least try to creep the inflation number from September to December, so that it is only three months out of date by the time we get there.
On ingenuity, the Government’s one-off help payments now involve: a payment by councils, reverse-engineering the council tax system; effectively a payment by energy companies for what was the loan and is now the gift; a payment through the welfare system; a payment through the tax credit system; and a payment that I think is the winter fuel allowance being increased for the year. That is quite a creative way of spreading the workload to make all those payments, but it produces a complicated system, whereby people do not really understand what help they have from who and why, and when they should have had it and if they have received the right amount.
Now that we have some more time to plan, if there are any future rounds—I hope we do not need them, but if we need them, we ought to have them—I would hope that we could find a way of such payments being made through one mechanism, or at least one for benefits and one for pensions. Having a multitude of mechanisms risks people missing out, because they just do not know who they should be checking with, or what they should be claiming and chasing.
It will be far more beneficial to my constituents if they get the first of these payments in the middle of July, as sadly many still have not had the £150 through the reverse running of the council tax system because the council still does not have the approved form to put on its website for people to fill in. That means it cannot make the payment to those who do not pay by direct debit; people still are not receiving the support we wanted them to have in April, and it will probably be a good few weeks before they get it.
There is much to welcome in the legislation. We should not be mealy-mouthed in our praise for the Government, as this is exceptional support at an exceptional time. I hope that we can do what we did through the pandemic: rush things out at the start, and then think them through and develop better systems if we have to do a re-run as the crisis continues.
Ms Karen Buck (Westminster North) (Lab)
This has been a short but useful debate. The Opposition will not oppose or seek to delay these payments, because any measure that puts money into the pockets of people on low incomes is to be welcomed, but it is important that we put on record some concerns about how the situation has come about.
The cost of living crisis hammering millions across the country comes on top of 12 years of a squeeze in living standards for people who have needed to draw on social security at various points to support their income. We went into the pandemic with child poverty rising for larger families, by the relative poverty measure; even by the absolute measure that the Government prefer, larger families are deeper in poverty. That is a consequence of years and years in which parts of the social security system such as tax credits and universal credit were either frozen or uprated by only 1%, even before we take into account the impact of the various caps and deductions.
As a result of the poor state of the social security system in 2020, the Government felt that they had to respond by introducing the £20 uplift, the impact of which can be seen from this spring’s poverty statistics. Of course, we want as many people as possible to do well in employment and receive a rise in real wages so that they do not have to draw on means-tested benefits, but many people need support, particularly families with children. When it is adequate, that support has a real and profound impact on child poverty.
Having lost the £20 uplift last autumn, we are in the midst of a sudden and dramatic surge in inflation: the CPI rate is now at 10 times the level of spring 2021. That has left a large proportion of the population struggling with their bills. In particular, those on the lowest incomes face the lived choice between eating, putting food on the table for their children, heating their homes when it is cold, covering their rent, putting school uniforms on their children’s back, and other essential costs. It remains true that if someone is on a low income, their costs are higher. We know, although it is not built into Government policy, that the poorest pay a premium for their goods and services, and they face the highest inflation. As a consequence of the changes in Government policy and the loss of the £20 uplift last year, the number of children living in poverty will be even higher when we measure it next year.
At every stage, the Government have been on the back foot and running to catch up—a point that my right hon. Friend the Member for East Ham (Sir Stephen Timms), who chairs the Work and Pensions Committee, and the hon. Member for Amber Valley (Nigel Mills) both made powerfully. When we debated the uprating, it was already in the context of rising inflation; we discussed the possibility of uprating benefits at a more up-to-date level that reflected real-world price rises, but it was found that that could not happen. There were a set of measures, including assistance with council tax, that were poorly targeted and difficult to administer. Weeks later, the Government had to come back with a larger package of measures than would otherwise have been required.
If the Government had been able to update social security this spring to be more in line with inflation, additional assistance would undoubtedly have been needed, but we would not have required the same level of emergency package. Importantly—this is the central point—pensioners and families would have had an income in their pocket, week by week, so that they could plan and manage their finances. That would undoubtedly have been a better way for households to cope with the rising crisis than having to manage one-off emergency payments from different sources. Many of those families, because they did not get that assistance in April, even though it is only a few months later when the first of these payments will be made, will have found themselves in debt—in financial difficulty—in the interim. The debt that families get into is itself expensive. There cannot be many Members who have not been dealing with constituents who have come to them because they are facing bailiffs at their door, or are caught in payments schemes that have left them struggling with very high repayments, because of the difficulties that they have got into.
It is simply not the case that one-off payments were the only way of delivering timely support to families on means-tested benefits. While welcoming, as I said, any support—and it is a large package of support that we are considering today—it is clear that this approach is still going to lead to a lot of rough justice that would have been mitigated had a broader package of support been put in place, when there was time, through the mainstream social security system.
Entitlement to the one-off payments is triggered by receipt of one of the means-tested benefits in the month leading up to one of the qualifying days. This means that people’s circumstances in just two months of the year are taken into account, so families who have the same income and face the same cost of living pressures over the course of the year could wind up being treated very differently depending on the point of the year at which they are dipping into an application for a means-tested benefit. Some will receive the initial support and some will not. The problem is that people’s circumstances change all the time, not just in two months of the year, and the numbers involved are very large. For example, every three months about 1 million people of working age leave employment, becoming unemployed or economically inactive. At the moment, an even larger number move into new employment. However, it is the scale of the churn rather than the net outcome that is important. Similarly, there are about 150,000 starts on universal credit every month, the great majority due to changes in family circumstances. With families moving on and off benefits the whole time, a one-off payment that is tied to just two dates in the year is inevitably a crude approach to matching funding to need.
I am particularly concerned about how people with fluctuating incomes will fare under this policy. The Bill provides that only people in receipt of a benefit payment of at least 1p in the month leading up to the qualifying day are entitled to the one-off payment, but universal credit is supposed to adjust to fluctuations in income on a monthly basis. Some people will be entitled to no payment in one month and payment in the next month, depending on their earnings. Indeed, one of the selling points of universal credit was that people would not have to make a new claim every time their earnings fluctuated above and below the cut-off level. It therefore seems inevitable that large numbers of people, employed and self-employed, with low and irregular incomes will be denied help under this policy in a completely arbitrary way.
The Government need to clarify what steps they intend to take to mitigate this risk. Is it really necessary to insist that only people who have actually received a payment in the month leading up to the qualifying day should receive help? Should all self-employed people whose universal credit is reduced to zero in one of those periods, solely due to the operation of the minimum income floor, be excluded from support? We have also heard about the limitations of these measures in terms of adjusting to family size. That is one of the critical ways in which delivering directly through universal credit, and indeed legacy benefits, was preferable and more sensitive to the needs of families.
Emergency and one-off measures such as those in this Bill have a place in exceptional circumstances, but they do not give people living desperately precarious lives the security they need. They do not, in many cases, match individual circumstances as the social security system does, however imperfectly. Any and all measures that help us to relieve hardship in these difficult times are welcome, but overall our social security system needs to be more fit for purpose, just as the wider economy needs to be more fit for purpose—more resilient and more productive, with decent and secure employment opportunities and investment in the future.
The Parliamentary Under-Secretary of State for Work and Pensions (David Rutley)
I thank those who have contributed to this debate. I echo the points made by my right hon. Friend the Secretary of State to stress the importance of this urgent legislation to support people up and down the country. The sharp increase in the cost of living is a challenge shared across the globe due to the aftershocks of covid on global supply, amplified by Russia’s unacceptable invasion of Ukraine. This Bill is the flagship component of our bold package of cost of living additional payments which have been designed to help people to cope with increased costs.
We are grateful for the support of Opposition Front Benchers in facilitating the speedy progress of the legislation. It is vital that these payments get to the people who need them. I am also very grateful for the contributions that have highlighted that these are a serious response to serious challenges, such as those made by the Chair of the Select Committee, the right hon. Member for East Ham (Sir Stephen Timms), as well as by my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) and my hon. Friend the Member for Amber Valley (Nigel Mills).
The support provided through this Bill is timely and comprehensive, and we are taking significant steps and targeting resource to support those in greatest need. The spirit of this Bill is in line with the approach that the Government have taken since the start of the pandemic, which has been shown to deliver for the people of this country in challenging times. We will continue to work hard to help people on low incomes get the support that they need.
We have worked hard through the vaccine roll-out, through the dedication of amazing people, to reopen society, and our economy has responded positively. There are record numbers of people in payroll employment, unemployment is just 3.8%, which is around the lowest level since the 1970s, and there are 1.3 million vacancies, which we are working diligently with employers and communities to fill. My hon. Friend the Member for Ashfield (Lee Anderson) will be pleased to know that, given his focus on work.
With all the work going on to help get people into work and progress in work, we recognise that people do need additional support in dealing with the cost of living challenges. That is why the Chancellor has set out his generous package, with another £15 billion of targeted support, which brings our total package to £35 billion this year alone. Of these additional payments, a particularly important one is the means-tested benefit that will provide a £650 one-off cost of living payment. It will be paid in two instalments to recipients entitled to qualifying means-tested benefits or tax credit. The first starts on 14 July and the second, of £324, later in the year. The hon. Member for Richmond Park (Sarah Olney) asked if there could be one payment. I understand the point she made, but we have consciously staggered the payments to help people on low incomes with their budgeting, which I hope she will welcome. The other important element of the Bill is providing disability cost of living payments of £150, which will go to 6 million people in the United Kingdom and will be paid in September.
We have deliberately kept the rules of the additional cost of living payments as simple as possible, because that is the way we can ensure that we develop the systems and processes required to make the payments at pace. I pay tribute to the hard work of officials across the Government to make that possible.
There are a number of contributions in the debate to which I need to respond. The benefit cap was raised by the right hon. Members for East Ham and for Leicester South (Jonathan Ashworth) and also by my hon. Friend the Member for Amber Valley. We have kept the payments very simple both for those receiving them and for Government systems. They are tax-free, they will not impact on benefit entitlement or the benefit cap, and they will be paid to people without the need for paperwork. They will be paid into people’s bank accounts.
The hon. Member for Aberdeen North (Kirsty Blackman) made points about uprating. Of course, as the Secretary of State said in her speech at the start of the debate, there will be an annual review of benefits and pensions for the tax year 2023-24, which will commence in the autumn as per convention.
Some hon. Members have highlighted the legacy systems and pensions, and asked why we cannot do uprating more frequently. I think we know that the legacy systems are not that agile. Of course, what we are trying to do and working very hard to do—recognising how flexible universal credit is and how resilient it has proven through the pandemic—is to move people through to universal credit by the end of 2024.
Sir Stephen Timms
I want to go back to what the Minister said about the benefit cap, and I welcome the point he made. Does he recognise that, in a very high inflation environment, there really is quite a compelling case for looking again at the level of the benefit cap for next year alongside the other benefit uprating matters?
David Rutley
There is a statutory duty to review benefit cap levels at least once every five years, and this will happen at the appropriate time. When the Secretary of State decides to undertake the review, she will consider the national economic situation and any other matters she considers relevant at that moment in time.
I reiterate that carer’s allowance is not a means-tested benefit. Nearly 60% of working-age people on carer’s allowance will get the cost of living payment as they are on means-tested benefits or disability benefits. Carer’s allowance recipients will benefit from the £400 per household universal support being provided to help with the cost of energy bills.
People who receive carer’s allowance may live in a household that will benefit from the Government’s support package. For example, they may live with someone who receives a means-tested benefit, a disability benefit or tax credits. If so, the household will benefit from the cost of living payment.
The hon. Member for Westminster North (Ms Buck) has asked me in a number of debates why this measure does not more fully reflect different family sizes and formations. The challenge is trying to get these payments out as fast as possible. To do that, we need to get the payments out to “single benefit units,” as they are described, and households. The important thing to highlight is that most low-income families will be able to receive the £150 council tax support and the energy bill support, on top of the work allowance taper and the increase in the national living wage.
It is not possible to distinguish between those who have a permanent increase in their earnings and those whose earnings are temporarily fluctuating. If a UC claimant’s income subsequently falls, they will return to having a positive award after the cut-off date, and they may be eligible for the second payment.
The right hon. Member for Leicester South talked about the minimum income floor, which ensures we do not prop up unproductive employment or self-employment indefinitely. There is a start-up period to protect newly self-employed people. Beyond that, having a minimum income floor is the right policy. If it means there is a nil UC payment, the claimant would not be entitled to the means-tested payment. However, they would get the £400 energy payment and the £150 council tax rebate, and they would potentially be eligible for the household support fund. It is worth recognising that there are paid employment opportunities out there, given the high level of vacancies.
We have heard about the take-up of pension credit, and I am sitting next to the expert, the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham (Guy Opperman).
David Rutley
Whatever we want to call him, he will take this forward with aplomb, that is for sure.
There was a serious question about why the number of means-tested benefit recipients will fall in the second cost of living payment period, and it is because the projections reflect mortality rates. However, they do not reflect the important work many of us are doing to raise awareness, so hopefully many more people will claim it.
I think I have now answered most of the questions. The hon. Member for Richmond Park asked about industrial injuries disablement benefit, on which I would be more than willing to talk to her separately. We should not underestimate the additional payments from the household support fund to help people with the cost of essentials. The Chancellor announced another £500 million in his latest statement, and it will be available from October 2022 to March 2023.
In England, the £421 million household support fund will be administered by local authorities, and the devolved Administrations will receive £79 million through the Barnett formula. Importantly, there will be new guidance to local authorities on this latest extension of the household support fund to reflect the fact that some people who are not able to secure these additional payments will be able to go to their local council to secure support.
Kirsty Blackman
Some household support funds ran out months earlier than expected. Does the Minister expect the new funds will be sufficient and will last as long as they are supposed to last?
David Rutley
The current tranche of household support fund is on top of all the other benefits we have talked about. As we have said, these are substantial additional support payments that are being made available, and the £500 million on top is there to help those people who have further needs with the cost of essentials. Further guidance will be made available.
We are working at unparalleled pace to get money into people’s pockets. It is vital that we meet the deadline for Royal Assent by 30 June, after a fast-tracked passage, so that we do not create a strong risk that we fail to make payments in July. We want to make sure that the most vulnerable people in our society—people on low incomes, people with disabilities—get the payments and support that they need. As I have highlighted already, this payment package in total comes to £37 billion this year alone. The Bill helps to deliver key elements of the support package to those who need it most. I strongly support these measures and commend the Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time; to stand committed to a Committee of the whole House (Order, this day).
Further proceedings on the Bill stood postponed (Order, this day).
Social Security (Additional Payments) Bill: Money
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Social Security (Additional Payments) Bill, it is expedient to authorise the payment out of money provided by Parliament of:
(1) a sum not exceeding £326 to anyone who is entitled, in respect of 25 May 2022, to—
(a) universal credit or state pension credit,
(b) an income-based jobseeker’s allowance, an income-related employment and support allowance or income support, or
(c) working tax credit or child tax credit;
(2) a sum not exceeding £324 to anyone who is entitled, in respect of a day after 25 May 2022 and not later than 31 October 2022, to a benefit mentioned in paragraph (1);
(3) a sum which, together with any sum paid as mentioned in paragraph (1) or (2), does not exceed £650 to anyone who receives a working tax credit or child tax credit of at least £26 in the tax year 2022- 23;
(4) a sum not exceeding £150 to anyone who is entitled, in respect of 25 May 2022, to—
(a) a disability living allowance,
(b) a personal independence payment,
(c) an attendance allowance or a constant attendance allowance,
(d) an adult or child disability payment,
(e) an armed forces independence payment, or
(f) a mobility supplement.—(Michael Tomlinson.)
Question agreed to.
Social Security (Additional Payments) Bill
Wednesday 22nd June 2022
(2 years, 5 months ago)
Commons ChamberRead Full debate Social Security (Additional Payments) Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 22 June 2022 - (22 Jun 2022)
The Second Deputy Chairman of Ways and Means (Mr Nigel Evans)
With this it will be convenient to discuss the following:
Clauses 2 to 11 stand part.
New clause 1— Assessment of bringing forward the second qualifying day—
‘The Treasury must publish, no later than six weeks after the day in which this Act is passed, an illustrative analysis of the impact of this Act on household incomes if the second qualifying date was no later than 1 October.’
New clause 2—Assessment of cost of living support package—
‘(1) The Treasury must publish, no later than the next fiscal event after the day on which this Act is passed, a full and detailed analysis of the impact of this Act on households.
(2) The Treasury may include in the analysis the effect of support for households announced in February 2022 in response to recent energy price rises.
(3) The analysis must include an estimate, based on the latest available reliable data, of the impact on household incomes of—
(a) payments made under this Act to households on mean-tested benefits,
(b) payments made under this Act to recipients of disability benefits.
(4) The analysis must show impacts across all deciles of household income distribution—
(a) in cash terms, and
(b) as proportion of net household income.
(5) The analysis must take into account where relevant differing policy contexts in Northern Ireland, Scotland and Wales.
(6) The analysis must include an assessment of the impact of this Act on households of different types, including singleparent families, larger families, and pensioner households.’
New clause 3—Payment date—
‘The Secretary of State and HMRC must seek to make all payment due under this Act no later than 14 July 2022.’
New clause 4—Review of distributional effects—
‘The Secretary of State and the Treasury must make a joint assessment of the distributional effects of this Act on—
(a) rural communities;
(b) families eligible for free school meals;
(c) unpaid carers; and
(d) households in each income decile
no later than six weeks after this Act is passed and must lay a copy of the assessment before both Houses of Parliament.’
David Rutley
We have had a useful debate on Second Reading and I welcome the chance for more detailed examination of the Bill in Committee of the whole House. We had an extensive debate, with some probing questions, so I will endeavour—with the support of the Opposition Front Bench and your permission, Mr Evans —to move as fast we can through the Committee stage.
Clause 1 will ensure that the £326 and £324 cost of living payments totalling £650 will be made to an individual or couple who have a qualifying entitlement to a social security benefit or tax credit. The clause also sets out the qualifying benefits and tax credits. Where a claimant is entitled to both a qualifying social security benefit and a tax credit, the social security benefit will be the qualifying benefit for the purpose of receiving a cost of living payment.
Clause 2 sets out who is eligible for the two payments that make up the £650 cost of living payment. It ensures that only those with the entitlement to a positive payment or award in respect of the passporting social security benefit or tax credit will receive a cost of living payment. The aim is to ensure that we target payments to those on the lowest incomes. The clause also defines the relevant eligibility period in relation to the qualifying days set out in clause 1.
Nigel Mills
The Minister will be aware that there are some situations in which an employer pays a month’s wages late, wages are paid on a four-weekly cycle and two payments are made in a month, rather than one, or a one-off bonus is paid in a certain month. Those situations could mean that someone who ordinarily gets a UC payment in a month has a month in which they are entitled to nothing. If that happened to be the month that was used for the qualifying payment in this situation, the person would miss out on the whole £326. Would the Minister be tempted to use a two-month period, so if someone gets at least 1p in either month they would get the £326, rather than risk the strange one-offs that could wipe out someone’s monthly payment?
David Rutley
I understand the point that my hon. Friend makes. We have already talked about fluctuating earnings. The important thing here is that we have had to define these eligibility periods to be able to get the payments out speedily, and we have also made sure that there is a protection mechanism. There is a wider package of support that is available other than just the £650 cost of living means-tested benefit. There is also the further funding of the household support fund, which will help these individuals.
Clause 3 addresses the situation in which a person has a qualifying entitlement to a social security benefit or a tax credit more than once. It ensures that, where the person is entitled to both universal credit and another social security benefit, they will receive the cost of living payment as a result of their entitlement to universal credit only.
Where a claimant is entitled to both a qualifying social security benefit and a tax credit, the social security benefit will be the qualifying benefit for the purpose of receiving a cost of living payment. Where a person is entitled to both child tax credit and working tax credit, but not a qualifying social security benefit, they will receive the cost of living payment as a result of their entitlement to child tax credit only. That will ensure that a person does not receive duplicate cost of living payments irrespective of whether they have a qualifying entitlement to more than one passported social security benefit or tax credit.
Clause 4 places a duty on Her Majesty’s Revenue and Customs to make a cost of living payment to people whose entitlement to qualifying tax credits only becomes apparent at a later date. The clause will ensure that those people will not miss out, which is a point that has been raised by others in this debate.
Clause 5 places a duty on the Secretary of State to make a disability cost of living payment of £150 to 6 million people who receive eligibility benefit in respect of 25 May 2022. This disability cost of living payment will support disabled people with the additional costs they may face. The clause also sets out the eligible benefits, or the qualifying benefits, for this particular additional payment. To be eligible, the person must have been entitled to a payment of one of these benefits in respect of 25 May 2022.
Clause 6 confirms that the administration rules used for each cost of living payment are the same as the benefit or payment that conferred the eligibility. Clause 7 provides for co-operation between the Secretary of State, the Department for Work and Pensions and HMRC in the delivery of cost of living payments. The scale and scope of the measure also require collaboration with other colleagues across government. Together, the bodies set out in the clause ensure that the intended recipients of the cost of living support are paid. There is a need to have data sharing to minimise the risk of duplicate payments and to support operational delivery.
On clause 8, some important points have been raised on this already on Second Reading. It ensures that the cost of living payments are disregarded for the purposes of tax and social security. I can confirm that the cost of living and the disability cost of living payments are exempt from tax. Payments will not affect a person’s entitlement to social security benefits or tax credits, either as capital or as income. I can also confirm that the payments will not be subject to the benefit cap.
Nigel Mills
When my hon. Friend says that they will be disregarded as capital, does that mean that, if somebody quite prudently puts the money in the bank and saves for their high energy bills in the winter, that would not take them over the £16,000 savings limit for universal credit? Effectively, they could ignore not just the receipt of the income, but that part of their savings as well if they were to treat them in that way.
David Rutley
Just to clarify, yes. That is the important thing. The clause ensures that every person who is entitled to a cost of living payment receives every penny, as all Members across the Chamber will want to see.
Clause 9 sets out the definition and interpretation of certain terms used in the Bill. Clause 10 explains the procedures for laying the regulations, previously referred to under the powers contained in clause 1(4), to specify the qualifying day for the second cost of living payment, which will be no later than 31 October, and clause 6(5), to apply and disapply regulations around the administration of payments, including overpayments and recovery, as is required. These provisions ensure that regulations made under the Bill can enable the efficient delivery of the second payment in the autumn. Finally, clause 11 defines the territorial extent of the Bill, whose provisions extend to England and Wales, Scotland and Northern Ireland. This ensures that the payments will be payable throughout the United Kingdom.
Ms Buck
I thank the Minister for that introduction. There is clearly no need for me to cover the points that we discussed on Second Reading, but I will make a few comments about new clauses 1 and 2.
As the Minister said, the Bill as drafted states that the second qualifying date is to be no later than the 31st of October, which allows for a span of several weeks during which the date could be set. In her introductory remarks, the Secretary of State talked about the need to keep that open because of the potential behavioural impact. It would be helpful if the Minister told us a little about why the Department reached that conclusion.
As we know, families and household are looking for clarity. We expect the energy cap to rise significantly again in the autumn, and there is real fear and anxiety in the country about what energy price inflation, and general inflation, are doing to household incomes. People are looking for certainty, and the sooner they are able to know exactly when their qualifying period will be and when the payment will be made, the better it will be for those families. It would also be helpful for us to know what the implications are of a qualifying date that could be one month early, so as to cover the span of options for that date. Although, we will not be seeking to press these amendments to a vote, can the Minister advise on whether he will be able to pick up that point and come back to us with answers?
New clause 2 would address the distribution and the equality impact assessment. We have indeed had some analysis from the Treasury, and we have had some looks at the economic distributional impact and the decile impact. As we would expect from measures heavily directed towards means-tested benefits, they are indeed progressive, and that is absolutely right, but the single most important topic that we discussed in the short Second Reading was the downside of single payments that are household unit payments and therefore do not reflect differences in household composition. The impact assessment does not give us that information, and it is critical that we have it, so I will press the Minister on the point. We need a much fuller assessment of what the Treasury expects to be the impact of a reliance on single payments, rather than an accurate updating within the benefits system. We also need, as soon as possible after the first payments have been made, an assessment of the actual impact in terms of the distribution.
Household composition is probably the single most important of the areas of analysis that we need to track. It is the one that is worrying people the most and where the disparity between a direct payment through the social security system and a one-off payment is most marked. We want to see analysis that looks at different recipient groups and at the impact on pensioners, on people with disabilities, on families, on single people and on working people of the distribution of the payments as they go out. It would be helpful also to look at how different working groups are affected, such as the self-employed, who we have discussed, and working households as opposed to households on out-of-work benefits.
The other area on which I will spend a couple of minutes in the context of analysis is the various payments that have been distributed through local government and how we can look at their impact. The Minister has repeated that his principal aim was to try and get benefit payments out as quickly as possible to those who need them most. In fact, the February announcement of the distribution of income through local authorities, through council tax, does the exact opposite. As I am sure he is aware, local authorities have had to go to the considerable length of writing to every household that pays council tax other than through direct debit, wait for them to respond, wait for them to provide information confirming who they are and their entitlement, and then to send the payment out. That of course means that large numbers of people reliant on that £150 have not yet had it, and it is likely to be weeks and weeks still before those families actually get the payment.
The payment requires people to deal with official correspondence, and I do not know whether Ministers have seen some of the letters that have gone out from local authorities, but I certainly have, and I struggle to understand them. A number of those forms have gone out without any reference to people on council tax support, for example, so people do not know that they are likely to be covered by the scheme. It is important therefore that we understand a distributional impact of the household support funds and of the distribution of funds by local authorities.
The Government have been keen to stress the value of those schemes, that they are locally sensitive and that local government has an important role to play in delivering them. That may be the case, but as the Opposition have said all along, it is undoubtedly a more complex and bureaucratic system for delivering help into people’s hands than uprating and delivering that directly through the social security system. Given what we know about inflation and energy costs soaring and the likelihood that we will have to return to this place to consider more emergency support later in the year, it is critical that we understand exactly how the delivery of the Government’s support package affects people, who it affects and whether it is the best way to provide help to people in need.
Kirsty Blackman
I have a few things to say about the specifics of the Bill and the points that have been raised in the debate. I understand the Minister’s point about the second qualifying date and the Secretary of State’s earlier point about not wanting to make clear what that is. I will not argue with that, but I have a question about the timelines for the payment.
We had a qualifying date of 27 May and we are looking at the payment being made on 14 July, which is a significant lag. If there is a similar length of time between the second qualifying date and that additional payment, people may not get it until nearly Christmas. The Minister was clear that the support is being given in two payments partly to help with budgeting, and people would like some certainty about the dates on which the payments will be made. I will not press him on the qualifying date; as I said, I do not necessarily disagree with the choice to not publish that now and to bring it forward through negative delegated legislation, which makes some sense.
The other issue for people relates to the other payments that they may be able to receive. We have heard from the hon. Member for Westminster North (Ms Buck) that people have not necessarily received a council tax payment and do not know when they might receive that money. For people who are struggling now, it would help to have some certainty about when the payments will come. I do not think the legislation has even been brought forward for the £400 for energy bills; I am not aware when that will happen or when those dates will be. The Government are saying that there will be £1,200 for some families, and it would be really helpful for people to know when they are likely to receive that potential income so that they can plan.
On the negative resolution that will be brought forward to set the second qualifying date, I assume that we are not likely to see that until after the summer recess. If the Minister can confirm that that is the case, it would be helpful for us to understand that. If he cannot do that, that is fine.
The hon. Member for Amber Valley (Nigel Mills) talked about people who get two payments in a month, because they are paid on a four-weekly basis or because they receive bonuses or anything of that sort. It would be helpful if the Minister, when he sets the second qualifying date, tries to ensure that it is not in a cycle that will disadvantage the same people twice. If the date means that people whose universal credit is paid on a cyclical basis—for a significant number of people, it is clear that there is a regular cycle every three months—lose out on the £324 and the £326, even though they are regular universal credit claimants over the year, I would be concerned that the Government were not doing that in the right way. The hon. Gentleman’s suggestion of doing it over a two-month period would probably have been a better way to do it than the way that the Government are proposing. As was stated, if further additional cost of living payments need to be made to people in future, perhaps it would be helpful for the Minister to consider that.
In the context of making payments too quickly, the Minister mentioned the recovery of incorrect payments and how that might work, or need to work. He said that if payments are made too quickly, people might receive a payment that they are not entitled to and then it would need to be clawed back. Given how he phrased that, I am slightly concerned that we might end up with people through no fault of their own receiving payments in error that they think they are entitled to, who then have them clawed back from future payments from the DWP. We have seen that over the years with tax credits and how people are still paying back legacy benefit overpayments that they received, and we have seen the pain and suffering that that can cause people.
David Rutley
I am grateful for the contributions made; I will respond to them briefly. On Scottish qualifying benefits, yes, individuals will be able to receive the £150. As for the second payment, we are having to be careful in setting out the details definitively because of fraudulent behaviour. We certainly saw that with other payments made during the pandemic, so, now that we know the levels of fraud going on around benefits, we cannot be as explicit as perhaps we might have been. However, I assure hon. Members that consideration of the regulations on the second payment will take place after recess.
The other point made was about the timing of cycles. That is important, and we will do everything that we can to ensure that the cycles do not align, so that people who may not have been able to qualify for the first payment will be able to qualify. It will be difficult, because we are moving at extreme pace and with huge volumes of claimants, but we will do everything we can to assist those individuals.
It is not often that the hon. Member for Aberdeen North (Kirsty Blackman) says things that I completely support and agree with, but she did on this occasion. All of us, and particularly the Government, need to do a lot more on communication about these payments. There are lots of them, and they are targeted, so there is a duty on us to communicate clearly when these things are going to happen. However, there are reasons why we cannot be as clear on the timing of the second payment.
I understand the point made by the hon. Member for Westminster North (Ms Buck) on household composition. Sometimes, it would be great to have more data in these situations, but we have produced an impact analysis—that is not always the case in these situations—to ensure that colleagues can understand what is available for their constituents at constituency level. We have also seen the distribution analysis that looks at comparator groups. That is really important data, and I think that it helps to paint a pretty broad picture of how these payments will help vulnerable and low-income families across the United Kingdom.
The household support fund will indeed ensure that we can provide support to people with the cost of essentials. It is vital that local authorities do the work and report back to Government on the work that they have been doing. I hope that, with those points, I have made the case for hon. Members not to press their new clauses.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clauses 2 to 11 ordered to stand part of the Bill.
The Deputy Speaker resumed the Chair.
Bill reported, without amendment.
Third Reading
4.50 pm
David Rutley
I beg to move, That the Bill be now read the Third time.
I thank the DWP Bill team and the cross-Government officials who have stood up to deliver this legislation and the payment mechanisms at pace. I also thank the House authorities, parliamentary staff, Clerks, Doorkeepers and Members across the House who have participated in today’s debates.
The Bill reflects the Government’s commitment to supporting low-income households and disabled people across the United Kingdom. Due to the current economic circumstances, many people need additional support to alleviate the financial pressures caused by the cost of living challenge. That is why this Government are providing a significant package of support worth £37 billion this year alone. It includes a £150 council tax rebate in England, £400 of support through the energy bills support scheme, a £650 cost of living payment for people entitled to qualifying means-tested benefits, a £150 disability cost of living payment for people entitled to a qualifying disability payment, and £300 in additional support for pensioners through a top-up to winter fuel payments. In practice this means people in receipt of UC or another qualifying means-tested benefit could receive £1,200 in additional support, which could increase to £1,350 if an individual also receives a qualifying disability benefit.
The Bill provides the Government with the necessary powers to administer the £650 cost of living payment and the £150 disability cost of living payment. These payments will provide targeted support to 8 million people including some pensioners and 6 million disabled people. We want to ensure these payments are in people’s bank accounts as soon as possible. We intend to begin phasing in payments from 14 July, subject to the Bill securing Royal Assent on 30 June.
This Bill is a further demonstration of the action this Government are taking to support people across the country and I commend it to the House.
Jonathan Ashworth
I join the Minister in thanking the Clerks, the Bill team and Members across the House who have spoken, and I thank you, Mr Deputy Speaker, for guiding us to what looks like an early finish with skill, as always. I also thank the Minister for the courtesy with which he has responded to the queries Members have raised; I did not always agree or get the answer I wanted, but I appreciate the way in which he engaged, with great detail and politely endeavouring to answer all points.
As I said on Second Reading, we do not intend to stand in the way of this Bill at all; we totally understand the need for the Secretary of State to make arrangements for these payments to be delivered swiftly, although we believe that the Government should have acted sooner. The result of not acting sooner has been considerable anxiety and hardship for many of our constituents, many of whom have already had to grapple with the £20 cut to universal credit and other measures such as the pernicious two-child policy over many years.
Many Members have raised the various hard edges still in place because of the flat-payment nature of the legislation. One way of dealing with that would have been by bringing forward a benefit uprating, and it is curious that Ministers told us that that was not possible, given that it was done in 1975 by the then Secretary of State for Health and Social Services, Barbara Castle, who said that two upratings in a year would be introduced because of exceptionally high rates of inflation. If they could do it in 1975, it is curious that we cannot do it 40-odd years later. The position of the Conservative party in those days was that uprating should happen twice a year. That was Norman Fowler’s position.
I was grateful to the Secretary of State for what she said in response to my question about the uprating for next year. With respect to the triple lock and the uprating of other pensions, we have heard from the Chancellor that they will be uprated in line with figures in September, but we can see the pressure that is being put on the Government by some voices in the media and so on. The Secretary of State said that those matters would be reviewed, as per the legislation. I hope that does not turn out to be a get-out clause for the Government on the triple lock and benefit uprating later this year. We will be watching these issues like a hawk.
Our big worry, although we will not stand in the way of the Bill, is that the Government still have no serious plan to deal with the ravages of inflation. There has been debate across the Chamber today about the second payment, but with inflation where it is today, that second payment, if paid in November or December, would, by my rough calculation, in real terms lose value from the £324 that the Government are legislating for to about £307 because of the levels of inflation. I fear that, unless the Government get a grip of inflation, they will have to come back to the House with an autumn statement or another emergency Budget, to pursue other measures to help some of the poorest and most vulnerable in our society.
We will not divide the House tonight. We welcome the legislation as far as it goes, but I fear that further help will be needed very soon.
Kirsty Blackman
I also join in the thanks, particularly to the Clerks’ team, who have been incredibly helpful, as ever. I expect nothing less, and have never received anything less from the House of Commons staff; they are always excellent. I also echo the Minister’s thanks to all those in DWP and HMRC who will be working so hard; we appreciate the additional work that it will mean, and has already meant, to get these things in place. We are massively supportive of all those staff who will be doing a really difficult job, and potentially working an awful lot, in order to pull this off. That is massively appreciated.
The provisions in the Bill, although welcome, although additional and although they go towards the cost of living, do not cover the cost of living increases that our constituents face. They do not even cover the energy price increases, never mind the inflation on the most basic foods which people just have to buy. You cannot get away without buying pasta, rice or bread. People are stuck with the massive price increases in those foods; they have to buy those things. There has already been a time lag—people are not getting the payments today, although I appreciate that they are getting them quickly—and people will already be feeling the squeeze and struggling. The £326 on the horizon is great; it is helpful, but it is not enough. It does not provide the level of support that uprating benefits in April could have provided, which would have helped with that squeeze resulting from the cost of living.
The one really big thing that the Government could do today to make a massive difference to people’s lives would be to put up the pretendy living wage to a real living wage—a wage that people can actually live on. That is reserved to Westminster—the Scottish Government do not have the powers to do that—and it would make a difference to people. The hon. Member for Ashfield (Lee Anderson) was talking about the hard work that his constituents do and the amount of money that people get on benefits. The thing is that 40% of the people on universal credit are in work. A huge number of the people going to food banks and their children are in households with at least one parent in work. I get that the Government want to get people into work, but people are in work and still cannot afford to live. They still have to have this top-up from the Government. The Government can help to fix that problem by increasing the minimum wage to a real living wage and giving it to everybody who is over 18, removing the inherent ageism.
The other thing that the Government have missed and failed on in this Bill relates to people who have no recourse to public funds. Those people are, by definition, missed. That is the intention of what the Government are doing, but we can see that the most destitute, desperate people in our society are those who have no recourse to public funds. The Bill fails to provide support to anybody who is not on the gateway benefits or to anybody who is struggling but does not fit into the criteria. This is particularly acute when people have no recourse to public funds. We are seeing children literally starving because their parents have no recourse to public funds. Some of these cases involve people who are fleeing domestic abuse and are not eligible for the destitution domestic violence concession because they are, for example, an EU citizen or because their partner was a student. There are a lot of problems with this.
Another thing that is missing is that we do not know when we are going to get the legislation on the pensioner cost of living payments. If the Minister could let us know when that legislation is coming, that would be very helpful. Could he also let us know when we are going to get the energy bills support scheme legislation? This Bill is only part of the package. We have been discussing the whole package, but this legislation only brings in a bit of it. The right hon. Member for Preseli Pembrokeshire (Stephen Crabb) asked me earlier where the money was going to come from to pay for all this, but we do not yet have any legislation on the charges that are going to be made on the energy companies. If we could just have had a timeline for when we could expect that legislation to come in, we would not have been in this situation, with this Bill appearing a week before we go through every single process in the Bill. MPs need longer to look at these other pieces of legislation that are coming through, and if the Government could do anything to ensure that we get even slightly more time to scrutinise the legislation as it comes in, that would be appreciated. As I have said, I thank the Government for bringing forward this package, but it is not enough. They need to go further, and they need to uprate benefits and backdate that to April, but we welcome this package.
Question put and agreed to.
Bill accordingly read the Third time and passed.
Business of the House (Today)
Ordered,
That, at this day’s sitting—
(1) the Speaker shall put the questions necessary to dispose of proceedings on the motion in the name of Mark Spencer relating to the Speaker’s Conference not later than one hour after the commencement of proceedings on the motion for this order; such questions shall include the questions on any amendments selected by the Speaker which may then be moved; and the business may be proceeded with, though opposed, after the moment of interruption; and
(2) Standing Order No. 41A (deferred divisions) shall not apply to either the business relating to the Speaker’s Conference or to the business relating to the Committee on Standards.—(Michael Tomlinson.)
Social Security (Additional Payments) Bill
Thursday 23rd June 2022
(2 years, 5 months ago)
Lords ChamberRead Full debate Social Security (Additional Payments) Act 2022 Read Hansard Text Amendment Paper: Committee of the whole House Amendments as at 22 June 2022 - (22 Jun 2022)
Social Security (Additional Payments) Bill
Monday 27th June 2022
(2 years, 4 months ago)
Lords ChamberRead Full debate Social Security (Additional Payments) Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 22 June 2022 - (22 Jun 2022)
The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office and Department for Work and Pensions (Baroness Stedman-Scott) (Con)
My Lords, the Government are fully aware of the acute pressures that families across the UK are under due to the rising cost of living. This is why we have brought forward this important Bill to your Lordships’ House.
A series of global economic shocks have led to price rises unseen in the UK for decades. As a result, families up and down the country are seeing their budgets squeezed, with many struggling to make ends meet. That is why we have decided to provide more than £15 billion of further support, targeted at those in greatest need. This is on top of the £22 billion announced previously, bringing the Government’s support for the cost of living to more than £37 billion this year. This £37 billion includes the means-tested and disability additional payments for which the Bill makes provision, as well as a one-off increase of £300 to the winter fuel payment for pensioner households, a non-repayable £400 discount in their energy bill this autumn for domestic electricity customers in Great Britain—the UK Government are working to ensure that the people of Northern Ireland receive the equivalent of this support as soon as possible—and a £150 non-repayable rebate on council tax bills for all households in bands A to D in England, to name only a few measures we have taken.
Although we as a Government have always been open about the fact that we cannot cover every situation or solve every problem, we are committed to going further to provide support to relieve the financial pressure people are facing. Taken together, this £37 billion package will provide at least £1,200 of additional support for the majority of households least able to afford the rising cost of living. The Bill before the House today builds on that commitment and will enable us to make additional payments targeted to those on the lowest incomes. It legislates for two additional payments which form part of our wider package to support families with the cost of living. The first is a direct cost of living payment of £650, split into two separate payments of £326 and £324, which will go to more than 8 million people receiving means-tested benefits. The second is a £150 payment to disabled people on a qualifying disability benefit. This will be paid on top of the cost of living payment for people who are eligible, and is estimated to benefit 6 million disabled people. Both new payments will be delivered by the UK Government to eligible households across the UK.
Social security is a transferred matter in Northern Ireland. However, this Bill will legislate for the whole of the UK in the absence of a fully functioning Assembly and Executive. This approach has been agreed by the caretaker Minister for Communities in Northern Ireland, who has also laid a Written Statement confirming this position. The timing of both payments will differ. For the cost of living payment, the first payment of £326 for households claiming a DWP means-tested benefit will be paid from 14 July, with the second payment of £324 coming in the autumn. Payments to those claiming tax credits only will be paid later to avoid duplication. Those not eligible for the first payment in time may become eligible for the second payment if they receive a qualifying benefit in the month before the next eligibility date.
We have intentionally excluded the second eligibility date from the Bill to prevent increasing fraudulent applications for benefits and fraudulent reporting of changes of circumstances. The Secretary of State will lay further regulations to specify the eligibility date for the second payment; however, it will be no later than 31 October. For the disability payment, those on a qualifying disability benefit will be paid from September. Where eligibility at the qualifying date for any of these payments is established beyond the expected payment dates, people will still receive the cost of living or disability payment, albeit at a later date. Both payments are tax free and will not count towards the benefit cap or affect existing benefit awards.
For families who miss out on this additional support but still find themselves in additional need, the Government are providing an additional £500 million to help households on top of what has been provided since October 2021, bringing total funding for this support to £1.5 billion. In England, an additional £421 million will be used to extend the household support fund from October 2022 until March 2023. Also, the Barnett formula will provide around £79 million to the devolved Administrations.
This deliberately straightforward Bill, stretching to only 11 clauses, will enable us to get support to families in need swiftly and without the need for additional bureaucracy. No one eligible for these additional payments will need to fill out any forms to claim them and payments will be made automatically. We have deliberately kept the rules for these payments as simple as possible because this is the only way of ensuring that we can develop the systems and processes required to deliver them at pace.
I know that many of your Lordships take a particular interest in delegated powers, of which this Bill makes provision for two. The first allows the Government to set a second eligibility date for the second part of the cost of living payment; the second is to facilitate the existing overpayment and recovery procedures for the qualifying benefits, to be applied to the cost of living payment. These are powers to allow for the effective administration of the payments, particularly to protect the public purse. I note that, in its report, the DPRRC raised no concerns for the Government to respond to.
This Bill will make a real difference in easing the stresses being felt by people up and down the country by supporting them on the rising cost of living at this most challenging time, and doing so simply and swiftly. I commend it to the House.
Baroness Lister of Burtersett (Lab)
My Lords, I welcome the much-needed additional support that this Bill offers and the recognition that the social security system represents the obvious mechanism for providing it, despite concerns that are raised about the nature of the support. I am grateful to the Minister and the Minister for Welfare Delivery for the very helpful briefing that they provided last week.
At last, the Government are responding to the fact that the cost of living crisis is hitting those on benefits and pensions hardest, not least because the differential impact of inflation means that they face an even higher inflation rate than the rest of us—an estimated 10% or so for the bottom tenth of the population, according to the Institute for Fiscal Studies and the Resolution Foundation. The latest package, of which this Bill is a part, is progressive in its impact. Nevertheless, there is a “but”; I am sure that the Minister would be surprised if this were not the case.
My concerns stem in large part from the decision to provide one-off payments rather than increase benefit rates themselves so that they reflect the actual inflation rate instead of the 3.1% recorded last September. I understand and accept that there are technical difficulties when it comes to uprating benefits other than universal credit—although many stakeholders do not—but, if the Government had not delayed in bringing forward this package, would an autumn uprating really not have been possible? Even now, is it really the case that a decision to increase benefits in May could not be implemented in the autumn instead of a second lump sum payment?
Can the Minister explain how it was technically possible to uprate benefits twice in 1975, in April and November, in response to high inflation—a point made in the Commons but studiously ignored by the Minister there? Can she also tell us, in a subsequent letter if not now, exactly how long it would take if all the stops were pulled out to uprate universal credit, the legacy benefits that it replaces, the other benefits covered by the Bill and the other benefits not covered, in particular the carer’s allowance and contributory benefits? How long are we going to allow “computer says no” to drive policy?
A key group to lose as a consequence of the decision to make lump sum payments rather than uprate benefits is families with children—especially larger families because payments will not be differentiated according to family size. Thus, according to the Resolution Foundation, the average amount gained from the Bill by families with three or more children is less than that received by those with no children because the latter are more likely to receive a disability benefit. Yet spending on essentials is significantly affected by family size. The foundation suggests that fuel spending among families with three or more children is likely to go up by over £500 more than for those without children. It calculates that, had benefits been uprated by 9.5% in October, larger families would have received more than £100 more on average than they will from the May support package.
In the Commons, the Minister emphasised that the payments are targeted at “those in greatest need”, as did our Minister. This is true and commendable, up to a point, but it ignores children—especially those in larger families, who are already at a significantly disproportionate risk of poverty, including deep poverty. This greater risk has grown over the past decade thanks mainly to government social security policies, including the two-child limit and the benefit cap. It is welcome that the payments covered by the Bill will be disregarded for the purposes of the cap. Nevertheless, as the chair of the Work and Pensions Committee pointed out in the Commons, it is high time that the level of the cap, which has not changed since it was established six years ago, is subject to the review required by statute. The Minister’s response to him was that it would be reviewed “at the appropriate time”. Can the Minister tell us when the appropriate time will be, as many would argue that it is already high time?
A growing body of evidence shows how much families with children generally are suffering. Just last week, the Childhood Trust reported that the mental health of children living in poverty is already suffering as a result of the cost of living crisis. Hungry, Anxious and Scared is how it summed it up. It quoted Charlotte, aged nine:
“Your emotions just drown and the only emotion that’s left is sad”.
That made me feel pretty sad and actually very angry. When the Chancellor was questioned by the Treasury Select Committee about the lack of additional support for children, he rather sidestepped the question but acknowledged that no analysis has been done of the package’s impact on child poverty. However, we were told by the Minister for Welfare Delivery last week that the lack of differentiation for families with children was due to technical reasons.
There is a pattern here that suggests an underlying disregard for the needs of children. The welcome universal credit uplift during the worst of the pandemic did not include any uplift in the allowances for children. It was only thanks to Marcus Rashford that action was taken on school meals at the height of the pandemic, and now the Government refuse to extend free school meals to all children on universal credit despite the recommendation in the independent national food strategy and the calls from teachers and others—although I do applaud its extension to all qualifying families with no recourse to public funds. According to analysis of government data by the Child Poverty Action Group, of which I am the honorary president, over one in three—more than 800,000—children in poverty do not qualify for free school meals.
If the Government really cared about hungry children, they would have found a way to boost their financial support and at the very least would have extended free school meals and also put more money into free school breakfasts as called for by Magic Breakfast. The Treasury has, understandably, highlighted the progressive vertical distributional impact of its latest package of support, but nowhere has it shown the horizontal distributional impact as between those with and without children, which also matters. Can the Minister explain why the Government time and again ignore children when it comes to financial matters?
The Secretary of State has herself previously warned that one-off payments are less helpful from a budgeting perspective than a steady stream of money—a point made also by charities such as Sense and CPAG. One consequence is less security. Another consequence of making lump-sum payments linked to entitlement on a specific date is the much steeper cliff-edge that it creates, adding to the insecurity created by often fluctuating incomes and circumstances among those on low incomes. What estimate has been made of the numbers who might become eligible for one of the qualifying benefits in the period until next April when they are next uprated but who do not qualify for the payments in the Bill because they were not entitled to a qualifying benefit at the specified times? Anyone who, say, starts claiming benefit because they have lost their job or become ill after the second cut-off date will get nothing at all. This seems like very rough justice.
Even rougher justice is the issue raised by my noble friend Lady Sherlock in last week’s briefing, and by MPs, where someone has not qualified for UC in the specified month because of the way their wages are paid. Has thought been given to the suggestion made by Nigel Mills MP that the qualifying period be extended to two months? Another group who are victims of rough justice is low-income self-employed people who do not receive UC during the qualifying period solely due to the operation of the minimum income floor. Equity has challenged the response to this point in the Commons, and I ask the Government to reconsider the exclusion of this group.
Just to follow up on the briefing meeting, the Minister for Welfare Delivery promised to let us know how payment will be made to the small number of people without a bank account. Is the Minister able to tell us today? For the record, can she confirm that all recipients will be informed individually as soon as possible after payment has been made so that they know why this extra payment has appeared in their account?
I have emphasised the failure to help children; I am also very concerned about the exclusion of carer’s allowance. I realise it is not a means-tested benefit and that some recipients will qualify via a means-tested benefit they are claiming but, according to Carers UK, there are several hundred thousand carers in receipt of carer’s allowance who do not receive means-tested benefits and many of them are facing serious financial stress. Carer’s allowance is lower than other equivalent benefits. Many carers face additional costs associated with caring. Why, therefore, could not the disability payments have been devised in such a way as to include carers? Nine out of 10 carers surveyed by Carers Trust earlier this year said that they feel ignored by the Government. The exclusion of carer’s allowance from the Bill’s qualifying benefits will only reinforce this sense of being ignored and, of course, many of those affected will be women who also bear the main burden of budgeting in low-income families. It is also not clear why the qualifying disability benefits do not include contributory employment and support allowance—an example of the downgrading in importance of contributory benefits. Can the Minister please explain why it is not included?
When announcing the package, the Chancellor acknowledged that small numbers will fall between the cracks and gave the example of those in receipt of housing benefit not also claiming other benefits but—“fear not”—they can claim help from the additional £0.5 billion that is being put into the local authority household support fund from October. The problem is that those raising concerns about, for instance, children in poverty—not exactly a small group—excluded carers or low-income self-employed people are also being directed to the fund. I fear it is the loaves and fishes approach to policy-making, which we have seen all too often. While the fund has provided much needed help to some, it is discretionary and cash-limited and, as such, is no substitute for weekly payments as of right. What will be done to direct excluded groups in need to the fund, what monitoring of the fund’s use is taking place and what happens if a local authority runs out of money, as we know they do? Can the Minister also tell us whether any thought has been given to the calls from stakeholders, including the Lloyds Bank Foundation, for the suspension of deductions from benefits, at least until next April when benefits are uprated?
This brings me to my final point—which I am sure will be a great relief to noble Lords. I welcome the confirmation that, subject to the Secretary of State’s review, benefits and pensions will be uprated next April in line with this September’s inflation rate, although claimants will face a long, hard winter before that. I hope the Government will ignore the siren voices arguing against such inflation-proofing. The Chancellor concluded his Statement by noting the need to put the measures into context. We need to do the same, but it is a rather different context to that highlighted by the Chancellor. Overall, working-age and children’s benefits have been reduced by approaching £40 billion a year as a result of freezes and cuts since 2010. The latest OBR Welfare Trends Report notes that the
“decline in the real value of unemployment-related benefits … even excluding the effects of the removal of the … £20-a-week uplift … represents the largest fall since annual uprating began half a century ago”.
As the Covid Realities research demonstrates, the reality of life on a low income is one of perpetual crisis. This Bill represents no more than a temporary salve to mitigate the crisis, welcome as it is. We now need a commitment to a review of how benefits are uprated, as called for by the chair of the Work and Pensions Committee and others. Ad hoc one off-payments and discretionary local authority support do not provide the security that those on low incomes desperately need and that the social security system ought to provide.
The Earl of Clancarty (CB)
My Lords, this Bill is clearly welcome. It is a good thing that cost of living payments can be made to those who most need them, so the policy is a good one. There are obviously a number of ways that this could be addressed—some potentially more effective than others—but anything that helps is to be welcomed.
However, there is a “but”—like the noble Baroness, Lady Lister, I have a “but”, and it is one that she has already mentioned. My concern is how the Bill will affect those self-employed whose earnings fluctuate from month to month, including many creative professionals; I am grateful to Equity for its briefing on this. The particular concern here is for those who did not receive a universal credit payment in the qualifying month and therefore will not be eligible for the cost of living payment because of low and irregular incomes. Can the Government ensure that the £650 cost of living payment be made to those whose entitlement to universal credit has been reduced to zero because of the minimum income floor?
There has been concern from the self-employed sector about the reintroduction of the minimum income floor after its welcome suspension during the pandemic. Of course, I am not trying to address that in relation to the Bill, but I ask the Government to acknowledge the effect of the MIF on the cost of living payment and reassess how fairly some self-employed—and, indeed, employed—workers will be treated. Despite the recent fall in the number of self-employed, the Government should acknowledge better the trend towards increasing self-employment in the longer term: currently, 15% of the workforce and 35% of the creative industries, which, pre-pandemic, were the fastest-growing sector of the economy and second in importance only to the financial sector.
The Government’s qualifying rules ignore the very nature of payment to creative professionals, which is often irregular and cannot be equated directly with salaried work. To ask people to change their behaviour work-wise to accommodate benefits such as these does not take into consideration the fundamental character of much creative work. There should instead be an acknowledgement by the Government of the need to be both realistic and fair in their rule-making. They should accept the validity of the self-employment work structure for creative professionals and others. This is on top of the fact that claimants are in any case being assessed on a past period—that is, the month until 25 May—so it is not something they can do anything about even if they had been able to; I believe that they should not be asked to.
The key issue is that payments such as these are intended to go to those in need. Self-employed people in the hospitality and entertainment sectors are among those who are poorly paid, at least partly down to the fact that they are among the last to come out of the pandemic and are now being hit by another crisis: the cost of living crisis. As Equity points out, missing out on these payments will have a devastating impact on many entertainment professionals. Young people just starting out—for example, those coming to the end of a start-up period—and those from diverse backgrounds will be among the significant number who may be affected in this way.
I appreciate that this is a money Bill and that it would have been frowned on to have introduced an amendment to the Bill in Committee and disrupted proceedings for the day, but I ask the Government to do everything they can to address this concern and provide a solution to a problem that is ultimately one of fairness.
Lord Fox (LD)
My Lords, I should first explain that my noble friends Lady Kramer and Lady Janke, who normally speak on these issues, are unable to attend today so your Lordships have me instead.
This is a small and, in a sense, relatively modest Bill that we do not oppose—indeed, we cannot oppose it due to its nature as a money Bill. We have heard some really knowledgeable input from the noble Baroness, Lady Lister, and the noble Earl, Lord Clancarty, who made important points on the subject of children and families with children and about the self-employed, particularly those working in the creative sector. I hope that the Minister will take those on board.
As we heard from the Minister, the Bill implements some of the cost of living support that was announced by the Chancellor in his emergency Statement—specifically, the £650 support for households in receipt of means-tested benefits, which comes in two instalments, as the Minister set out, and the £150 for recipients of non-means-tested disability benefits.
The Bill does not include the other support mentioned by the Minister, presumably because it is not needed from a legislative perspective. As I intend to suggest later, it also does not include many of the measures that the Chancellor should have announced in the light of the situation that the country finds itself in today. Even as we debate here today, the economy is the major concern on everyone’s radar, especially with the official rate of inflation predicted to reach double digits very soon. Then, as well as the worry of inflation, households are facing the highest tax burden in 70 years. The typical family will see a hit of £1,200 a year thanks to the Conservative Party’s tax rises. I hardly need to remind the Minister that the UK is in very difficult territory.
At the heart of all this is a much wider endemic issue that needs to be at the front of our minds when we debate an issue such as this. I am going to presume that the Minister would describe herself as a capitalist; I describe myself as a capitalist as well. However, for the UK to be a successful capitalist country, its citizens need either to have capital or to have a reasonable expectation that they will obtain it. Yet, in Conservative Britain today, it is quite clear that the gap between those with capital, and therefore a stake in the economy, and those who stand little or no chance of ever acquiring it is getting wider every day.
Worse than that—never mind savings and capital—while the top 10% of the country’s earners tighten their grasp on our economy, an increasing number of citizens are slipping below the subsistence line. It is not just global shocks that have caused that to happen, as the Minister put it. The slide was already happening, then Covid came and made it worse, and now inflation is rapidly increasing the number of people in economic peril and the pace with which, in some cases, they are traveling towards destitution. Proud families who never dreamed that they would find themselves in trouble are now struggling to pay the bills.
At the last election, the Conservative Party successfully campaigned on the idea that there are specific geographic areas that have been economically left behind. Although that is undeniably true, the party’s careful selection of particular towns and cities skirts over the underlying issue: the ever-widening income gap across the whole of our country. Although that gap is somewhat defined by geography, it is far more complex than that, being caused by demographics, educational opportunities and—let us face it—who your parents are.
That ever-widening gap is the real challenge at the heart of many issues that we are seeing in the UK today. So what is the modern Conservative take on it? While one part of the Government is signalling for the EU cap on already huge banker bonuses to be lifted, another department is seeking to limit public sector pay increases to one-third or one-quarter of the rate of inflation. Clearly this Government are not even trying to address the gulf between the richest and the rest of our country; in fact, it seems to look like the opposite.
When it comes to acknowledging the need to arrest the pain inflicted on the poorest in society, the Bill takes a few small steps in the right direction. However, as the noble Baroness, Lady Lister, eloquently expressed, it is a completely inadequate response to the cost of living crisis. It fails to reinstate the £20-per-week universal credit cut, which would have provided households on universal credit with an additional £1,000 a year. It fails to cut the main rate of VAT to 17.5% for one year, which would have put an average of £600 in the pocket of every UK household while lowering inflation and, importantly, helping our high streets, giving them a much-needed boost and increasing economic growth. A similar VAT cut in 2008 was found to increase retail sales by 1% and increase aggregate expenditure by nearly one-quarter of 1%.
The Bill also fails to consider repealing the national insurance rise and freezing the income tax thresholds. These are unfair tax rises that are making the cost of living crisis worse for millions of families across the UK. It fails to support rural communities concerned with rising fuel prices through the rural fuel duty relief scheme, which was promoted today by the newly elected MP for Tiverton and Honiton. It also fails to include those claiming the carer’s allowance from the list of benefit recipients qualifying for additional support.
Furthermore, provisions in the Bill allow for payments to be made in two instalments. By paying all the support on 14 July, the day of the first instalment, the Government could have supported people who need assistance more immediately. Perhaps the Minister would concede that, given the increase in the rate of inflation, the second payment should be accelerated as well.
It has been a pleasure to speak, briefly, in this short debate. I am looking forward to the Minister’s explanation of how the ever-widening income gap will be addressed in the second half of this Parliament. Most of all, I am looking forward to the Minister explaining how the Bill even scratches the surface when, across the country, thousands of honest, hard-working families are slipping ever deeper into poverty.
Following the by-election defeats inflicted on the government party last week, the current Prime Minister, Boris Johnson, said:
“We’re now facing pressures on the cost of living … spikes in fuel prices, energy costs, food costs—that’s hitting people. We’ve got to recognise there is more we’ve got to do.”
What is this “more” and when will it be done? Or, as is usually the case, is the Prime Minister’s statement merely empty words with no substance, no policy and no prospect of implementation?
Baroness Sherlock (Lab)
My Lords, I thank the Minister for her introduction to the Bill and all noble Lords who have spoken. I thank my noble friend Lady Lister for halving the length of my speech by her excellent analysis. I would be really interested to hear the Minister’s response because, as a critique of what has happened to families with children, there are many questions that the Government have to answer, and I really hope that she will take the time to do it properly. There can be few Members of this House who know more about child poverty than my noble friend Lady Lister. When she makes a critique like that, it needs to be listened to.
These are the toughest times that most British people alive now will have had to live through. By next April, wages will be worth £2,000 less in real terms than just in 2020. Real pay in the UK is falling at the fastest rate for 20 years. Inflation is over 9% and rising. Fuel prices are skyrocketing and we are warned that the energy cap could rise by as much as another £1,000 in October. People are more desperate than they have been in a very long time.
Following the Spring Statement, the OBR warned that we were heading for the biggest fall in living standards since the 1950s, with more children set to be pushed even into absolute poverty. It was to avoid this catastrophe that Labour proposed a windfall tax on North Sea gas and oil producers to help families and pensioners. I am delighted that, after some months—indeed, after many months of ridiculing the policy—the Government have adopted it. If the Minister wants other ideas on how the Government should change their mind, I look forward to her having a chat with me and I can gladly supply her with some in future.
We recognise the extra support that the Government are now allocating, and these measures are welcome as far as they go. However, I share my noble friend’s concern that help is once again being given by a series of one-off payments, rather than addressing the underlying problem, which is the inadequacy of the social security system. I know that Ministers know that the welfare state is not fit for purpose because, when the pandemic hit and millions of people were flowing on to benefits, they had to add £20 a week to universal credit because they knew people could not manage. Once millions of people could see that, they would realise the system was not fit for purpose. However, that £20 was taken away just as inflation started to rise and now millions of people are struggling to feed and clothe their children and pay their bills. Why has it taken us so long to get to today? The pandemic may have been a shock overnight but the rise in prices was not—we have seen this coming. As the chair of the Work and Pensions Committee said when this Bill was debated in another place,
“the decision has been taken to replace adequate uprating with ad hoc payments from the Treasury”.—[Official Report, Commons, 22/6/22; col. 897.]
The Government should have put in place a broader package of support through our social security system. It has been established that one-off packages, with heavily simplified eligibility, lead both to increased fraud and to the kind of rough justice we have heard about. We have heard about rough justice for children. Can the Minister really justify a scheme that gives the same amount to a single person on benefits as to a couple with three children when their energy, food, clothing and other costs are so radically different? Families in the bottom half of the income distribution with two or more children spend twice as much on food, essential household goods and services, clothing, footwear and transport, but there is no recognition of this. The social security system acknowledges things such as family size up to a point, but this does not and cannot. Does the Minister accept that this is rough justice?
Does the Minister also accept that it is rough justice for people with fluctuating incomes, a point made by the noble Earl, Lord Clancarty, in a helpfully clear critique of the impact on people who are self-employed? As we have heard, this £650 payment comes in two parts. To be eligible for each, the claimants must be entitled to a minimum amount of benefit or tax credit in respect of an assessment period covering a specified date. However, the Minister often tells us how happy she is about universal credit coming in, because it is really flexible—it flexes to someone’s circumstance—yet she has designed a system that makes that a disadvantage. Universal credit is designed to flex month by month, so some people will be entitled to a payment one month but nothing the next because their income is lumpy in that way. If they are unlucky with how that falls, and they get nothing in the month in question, they will not get one penny from this system. That can even hit people whose earnings do not change at all, just because they happen to have two paydays within one universal credit assessment period—for example, the last Monday of the month. When that happens, the system thinks their pay has doubled, they earn too much, get no universal credit and, therefore, they will not be eligible for this. Given that the Government boast about the flexibility of universal credit, what are they going to do about these payments, to give support to those for whom that flexibility is taking away any chance of any support at all? I would be interested in hearing whether someone who is self-employed, who is simply getting nothing just because of the minimum income floor, will therefore be excluded entirely from the payments.
There is a different form of rough justice for some disabled people who have non-means-tested benefits. They will be eligible for the £150 payment. However, the Minister can tell the House, I am sure, that the Government are in the process of changing the rules specifically to debar 290,000 people who get DLA, PIP or attendance allowance from getting £140 off their energy bills through the warm home discount scheme—“Have £150 here, give me back £140 over there and have £10.” In these circumstances, the reason disabled people get these benefits, even though they are non-means tested, is to cover the extra costs of disability. That includes things such as higher energy bills and higher transport costs. Can the Minister explain why the Government are giving help with one hand while taking it away with the other? I would also be interested to hear a response to the query about carer’s allowance from my noble friend Lady Lister.
The Minister points to the household support fund—this is always the answer, the great catch-all, whenever we raise a question. I think loaves and fishes were mentioned. I have a great affection for loaves and fishes and like to see them extended. However, much as I admire some things the Minister says, I do not think she yet has the power to multiply loaves and fishes. The household support fund will be a fixed amount of money. I have been looking at the websites for some councils, and many have already made their allocations for the period April to September. They specify what is for; they are often small grants for particular purposes. For April to September, is more money coming in, will the guidance change and, if not, will anyone get any help then, even they miss out on these payments altogether in the first tranche in July? For the extra money in the period from October, will the government guidance say that the kind of people we have described who miss out on the payment because of rough justice should be able to get the full £650 from the household support fund? If so, will there be enough, and what will happen to all the other things it is supposed to be spent on as well?
On pensions, I am sure the Government now regret breaking their manifesto promise commitment to the triple lock, given what is happening to pensioner poverty. It is good that those on pension credit will be able to claim the £650, but—it is a small point—why does the impact assessment show fewer people on pension credit getting the second payment than the first? Is there something going on there that the Minister wants to explain? The impact assessment projects the case load, the number of people on pension credit who will get payments 1 and 2. The number getting payment 2 is slightly lower than payment 1. This was asked in the Commons but not answered, so I hope her officials—someone behind the scenes who I would not dream of referring to—have had the opportunity to read Hansard and will therefore be able to advise on the answer to this question.
Emergency and one-off measures have their place, but they really do not give people the security they need or match the increases in costs that people are facing on the ground. The truth is that we came into these cost of living increases after years of underwhelming growth and savage social security cuts, which left our system simply unfit for purpose. I will mention just the two-child limit, the benefit cap, the bedroom tax, inadequate help with housing and council tax, and repeated real-terms cuts to universal credit and legacy benefits, as detailed by my noble friend Lady Lister.
I am glad that the Government have finally been dragged, kicking and screaming, into recognising the extent of need out there. But we now need a long-term plan to rebuild social security, grow our economy, sort out our labour market and raise living standards so that we can lift people, from children to pensioners, out of poverty. Surely we can all agree with that.
Baroness Stedman-Scott (Con)
I thank all noble Lords for their contributions to the debate today. I hope we agree that this package of support will make a significant difference to families up and down the country, notwithstanding the points that have been made.
As I said earlier, the Government are committed to going further to provide support to relieve the financial pressures families are facing. The measures announced by my right honourable friend the Chancellor will provide an estimated millions of low-income households with £1,200 of one-off support in total this year to help with the cost of living, with all domestic electricity customers receiving £400 through the energy bills support scheme. This Bill will give us the necessary powers to deliver the additional payments set out in this package to families on the means-tested and qualifying disability benefits which we have been debating today.
There were a huge number of questions, which I shall endeavour to answer. There are some where I will have to write and the answers will be much better if I do so, so I hope noble Lords will accept that.
The noble Baronesses, Lady Lister and Lady Sherlock, asked why we are not uprating benefits. The one-off cost of living payment will enable timely direct transfers, ahead of the next uprating review of benefits and pensions, which will commence in the autumn, with any change in rates being payable from April 2023. This will help to support households most in need in managing increased costs. Our cost of living policy will also provide a payment of £650, as we have already said, whereas uprating the same benefits by 9% from April 2022 would be worth, on average, only £530. These payments will be tax-free, will not count towards the benefit cap and will not have any impact on existing benefit awards. This approach will allow households to retain the full value of the payments they receive. There is no need for people to fill out complicated forms, as we have tried to reduce bureaucracy.
Separately from the 2022-23 cost of living support package, benefit and pension rates are subject to an annual review. As mentioned by the Chancellor on 26 May, the uprating of benefits is a matter for the Secretary of State for Work and Pensions. Her annual statutory review of benefits for the tax year 2023-24 will commence in the autumn, when she measures inflation using the September consumer prices index. Following completion of her review, the Secretary of State’s decisions will be announced to Parliament in November. For the avoidance of any doubt, we are committed to the triple lock for the remainder of this Parliament.
The noble Baroness, Lady Lister, asked whether the uprating process will be adjusted in the future. The work of the department in 1975 was mainly undertaken by hand and on a claim-by-claim basis. It was therefore possible to uprate twice in one year, provided the trained manpower resources were available or could be secured. The department began to computerise the payments of benefits in the mid-1980s; we have indicated the constraints of the core IT systems in undertaking a mid-year uprating and the risk that would pose to payments. The Social Security Administration Act 1992 provides for a statutory annual review of uprating and is the basis on which Parliament has required successive Secretaries of State to act. The requirement is for one review each tax year.
The noble Baroness, Lady Lister, asked how long it will take to uprate all benefits, including UC and legacy benefits. I will need to write to her on that, which I will do and place a copy in the Library. She also asked about the flat rate of payments not tailored to circumstances. She said that this disadvantages children in large families and that the issue should have been solved by uprating benefits. The Government are committed to providing direct and timely relief to those who need it most through these one-off cost of living payments. Flat-rate payments are the quickest way to deliver support to those who need it most; they will allow us to make timely transfers to more than 8 million people and 6 million disabled people before the next benefit uprating in April 2023. As I have said, we have deliberately kept the rules as simple as possible. The Government are spending over £5 billion on qualifying means-tested benefits—around £2 billion more than the additional cost if the qualifying benefits increased in July 2022 to 9% higher than the previous year.
The noble Baroness, Lady Lister, who has been very busy, asked about the focus being on reforming UC and said that the two-child limit means that people do not receive enough money. Statistics from the Office for National Statistics show that in 2021, of all families with dependent children, 85% had a maximum of two in their family; for lone parents, this was 86%. The Government feel it is proportionate and fair to taxpayers to provide support through child tax credit and universal credit for a maximum of two children.
Baroness Lister of Burtersett (Lab)
I am sorry to interrupt the Minister. Clearly, we cannot amend this legislation but I think it is accepted across the House that there is nothing in here for children. Can she take that message back to her colleagues in government and could they look at other ways they might be able to help children during this period?
Baroness Stedman-Scott (Con)
I am always happy to take things back to the department and am quite prepared to do that. I may need a little more information from the noble Baroness, but I am sure that will be forthcoming.
The next review of the benefit cap has been raised. As all noble Lords will know and as we have said many times, our statutory duty is to review the levels of the cap at least once in every five years and this will happen at the appropriate time. The current unusual economic period, with potentially counterintuitive and shifting trends, will need to be considered in the context of any decision in respect of the review.
The noble Baronesses, Lady Lister and Lady Sherlock, raised their concern about those who receive two lots of earnings in one universal credit period not being eligible. We anticipate that the vast majority of people entitled to one of the qualifying benefits will receive their first payment. Because of a change of circumstance, however, some may not qualify. Again, we have deliberately kept the rules simple and, unfortunately, it is not possible to distinguish those who have a permanent increase to their earnings from those whose earnings temporarily fluctuate. If a UC claimant’s income subsequently falls, these claimants will return to having a positive award after the cut-off date and may be eligible for the second cost of living payment, worth £324.
The noble Baronesses also raised a point about people who become eligible later. Where a person is found to be eligible for a qualifying social security benefit or tax credit payment but did not receive a payment, a retrospective payment will be made automatically. This could occur if a claimant successfully challenges the DWP’s decision on their social security benefit entitlement.
The noble Baroness, Lady Lister, and the noble Lord, Lord Fox, asked why we are excluding those in receipt of the carer’s allowance from the cost of living payment. Nearly 60% of working-age people on carer’s allowance will get a one-off payment as they are on means-tested or disability benefits. Carer’s allowance recipients will benefit from the £400 per household with a domestic energy supplier, provided through the energy bills support scheme.
The noble Baroness, Lady Lister, asked why we are excluding those on contributory based benefits from receiving the one-off payment. Non-means-tested benefits are not eligible benefits in their own right, but low-income recipients can claim an eligible means-tested benefit alongside them. Contributory and new-style benefits were not included because people claiming these benefits may have other financial resources available to them. They may also benefit from other parts of the package of support, including the £400 per household domestic energy help. Claimants who require further financial assistance may be eligible for universal credit; if their claim is successful, they may then qualify for the second cost of living payment in the autumn.
The noble Baroness, Lady Lister, raised the important issue of children—and I agree with the noble Baroness, Lady Sherlock, about the knowledge and experience the noble Baroness has in this area. I am advised that this is an issue where we will need to write to the noble Baroness. We will probably need to have some continued communication to ensure that I answer her questions to the level and standard that she wishes.
The noble Baroness, Lady Lister, and the noble Earl, Lord Clancarty, asked about fluctuations in earnings. As I have said, we have deliberately kept the rules as simple as possible. I have said before that it is not possible to distinguish between those who have had a permanent and temporary increase. I do not think I can say more on that at this point.
On the minimum income floor, which was raised by the noble Baroness, Lady Lister, and the noble Earl, Lord Clancarty, it is the same thing: we have deliberately kept the rules as simple as possible. For those who are not eligible for this support, or families that still need additional support, the Government are providing the household support fund with an additional £500 million to help households on top of what has been provided. Since October 2021, the household support fund has gone up to £1.5 billion. In England, this will take the form of an extension to the household support fund backed by £421 million and administered by local authorities.
The Earl of Clancarty (CB)
I thank the Minister for giving way. On the concern I raised about the minimum income floor and fluctuating incomes, can the Government keep an eye on this? It would be very helpful if the noble Baroness could promise to do that. She says that it is very simple, but maybe it is too simple for this particular problem. If the Government could keep a close eye on that, it would be helpful.
Baroness Stedman-Scott (Con)
I am very happy to go back to the department and request that. I am not in a position to commit to doing it, but I will go back and write to the noble Earl with the outcome of those discussions.
Another important point that the noble Baroness, Lady Lister, raised was about how we are making customers aware of these payments. We are working on an extensive communications plan. There will be digital advertising, social media and display materials such as posters and leaflets for jobcentres and stakeholder premises.
The noble Baronesses, Lady Lister and Lady Sherlock, raised the issue as to whether the household support fund is sufficient. Local authorities in England have ties and local knowledge to best determine how this support should be provided to their local communities. They have the discretion to design their own local schemes within the parameters of the grant determination and guidance to the fund. We are going to publish new guidance for local authorities for this latest extension of the household support fund ahead of the fund going live at the start of October.
The noble Earl, Lord Clancarty, asked about low-income and self-employed people. We accept that earning patterns can vary substantially and it would be impossible to choose qualifying dates that work for every person on UC. However, a second qualifying date certainly reduces the risk that those with non-standard pay periods on UC miss out on a cost of living payment altogether.
The noble Lord, Lord Fox, raised the point about whether the Government are putting up taxes during the cost of living crisis and whether taxes should actually be reduced. The actions the Government have taken to return the public finances to a sustainable path post Covid mean that we are in a strong position to respond to the cost of living challenge. The Government’s goal is to reform and reduce taxes. The Chancellor’s Spring Statement set out the Government’s tax plan, which includes reducing the tax burden on working families by increasing the threshold at which people start paying NI contributions—a tax cut worth over £330 for a typical employee—and by cutting fuel duty by 5p for 12 months. The tax plan also shares the proceeds of higher growth with working people across the country by cutting the basic rate of income tax by one percentage point to 19% from April 2024, saving more than 30 million people £175 per year on average.
The noble Lord, Lord Fox, asked whether the cost of living payments are a sticking plaster. In total, the measures the Chancellor announced in May provide support worth £15 billion. Combined with other plans, as I have already said, this raises the money to support people during this cost of living crisis to £37 billion. This is more than or similar to the support in countries such as France, Germany, Japan and Italy. Importantly, around three-quarters of that total support will go to vulnerable households.
The noble Lord, Lord Fox, asked whether the Government were wrong to reduce the £20 uplift to universal credit. It was always to be a temporary measure, and it was a temporary measure. I do not think there is anything else I can say to noble Lords about that.
The noble Lord, Lord Fox, asked what we are doing to help people in rural areas. The boiler upgrade scheme has a budget of £450 million to support households in England and Wales to make the switch from fossil fuels to low-carbon heating. This helps people in rural areas transfer from fossil-based fuels to low-carbon heating with grants of £5,000 towards the cost of installing an air source heat pump, £6,000 toward the cost of a ground source heat pump and £5,000 for biomass boilers for properties not suitable for a heat pump, provided they are in a rural location and not connected to the gas grid. The home upgrade grant will provide upgrades to low-income rural households living off the gas grid in England to tackle fuel poverty and meet net zero. The Government have allocated £1.1 billion to the home upgrade grant over the next three years.
Again, the noble Lord, Lord Fox, asked why we are delaying half of the £650 to later in the year. Cost of living payments for those on means-tested benefits are deliberately being delivered in two payments to help support budgeting. This approach will also ensure that any newly eligible claimants can be paid the £324 payment even if they did not get the £326 payment and that all recipients of the second payment receive this closer to winter.
The noble Lord, Lord Fox, asked whether we were being more generous to those on means-tested benefits and said that £650 is not going to scratch the surface. The Government are providing over £15 billion in further support, as I have said. Three-quarters of it will go to low-income households. Each cost of living payment will be paid to 8 million people on a means-tested benefit. Millions of the lowest income households will get £1,200 of one-off support. I have said that the Secretary of State will use the CPI in September to decide on the uprating of benefits.
The noble Baroness, Lady Sherlock, asked what impact the cost-of-living crisis is having on poverty. The latest available—
Lord Fox (LD)
I thank the Minister for giving way. I appreciate the spirited defence of the measures that the Minister has just made. I am assuming that the Prime Minister was fully aware of what the Government are planning in terms of support when he spoke on Friday. On Friday, the Prime Minister unequivocally said that we are not doing enough, and we need to do more. Would the noble Baroness therefore agree with her own Prime Minister that the Government are not doing enough and need to do more?
Baroness Stedman-Scott (Con)
I agree that the Government have made great strides in providing additional finance. If my Prime Minister said that we need to do more, he was not saying that we are not doing enough. This will probably get me into trouble, but he would be daft to say that we need to do more in the current climate. It has been very nice knowing you all in this job.
Baroness Stedman-Scott (Con)
On the impact of the cost of living crisis on poverty, the latest available poverty statistics cover 2021 and projecting what has happened to poverty since then is complex and inherently speculative. It requires projecting how incomes will change for every individual in society; these are affected by a huge range of unknown factors. However, the Treasury published distributional analysis showing that the full package of measures announced on 26 May is well targeted at households on low incomes.
The noble Baroness, Lady Sherlock, asked why we waited so long to bring the measure forward. As the Chancellor set out, by waiting to know what the autumn and winter energy price cap is, we were better able to design and scale our policies across the package.
I am conscious that I have not answered every question—oh, here we go.
Baroness Sherlock (Lab)
Essentially, noble Lords all around the House have said, “This system is so simple but it’s creating rough justice. What will the Minister do?” The Minister’s answer is, “Give us rough justice, but that’s because the system is so simple”. All that everybody has asked today is, does the Minister understand that lots of people will miss out and others will get much less than they need? Are the Government going to even begin to think about addressing that in some way to mitigate it—yes or no?
Baroness Stedman-Scott (Con)
I cannot accurately answer that question because I honestly do not know, but I do know that, all the way through Covid and this cost of living crisis, the Government have responded at different times to issues raised in relation to additional support. All I can say is that I do not see that changing. I am sorry but I am afraid that I cannot give the noble Baroness the answer she wants, although I am quite sure that the Government will want to—I see that the noble Baroness is standing up; would she like to speak again?
Baroness Stedman-Scott (Con)
We will have to invent a board game for the Chamber. I know that I have not answered some questions, and I am sorry, but time is marching on. I will endeavour to write to all noble Lords whose questions I have not answered and to those to whom I have promised to write.
This Bill will enable the Government to provide support to families most in need across the country. I thank all noble Lords again for their contributions. As ever, I would be happy to speak to any noble Lord who wants to discuss particular issues further and, as ever, my door does not know how to close; it is open.
Royal Assent
Tuesday 28th June 2022
(2 years, 4 months ago)
Lords ChamberRead Full debate Social Security (Additional Payments) Act 2022 Read Hansard Text Amendment Paper: Committee of the whole House Amendments as at 22 June 2022 - (22 Jun 2022)