The Parliamentary Under-Secretary of State for Work and Pensions (Justin Tomlinson)
I beg to move,
That the draft Social Security Benefits Up-rating Order 2019, which was laid before this House on 30 January, be approved.
In my view, the provisions in the order are compatible with the European convention on human rights. The order reflects the Government’s continuing commitment to increase the basic and full rate of the new state pension by the triple lock, to increase the pension credit standard minimum guarantee in line with earnings, and to increase carer’s benefits, and benefits intended to meet additional disability needs, in line with prices.
The Government’s commitment to the triple lock means that the basic state pension will continue to be uprated by the highest of rises in earnings, rises in prices or 2.5%. The triple lock has been an invaluable tool in combating pensioner poverty, and keeping it in place gives pensioners the financial security and certainty that they deserve. This year the increase in earnings was the highest of the triple lock figures. As a result, the basic state pension will increase by 2.6% to £129.20 a week for a single person. Consequently, from April this year the basic state pension will be over £1,600 a year higher than it was in April 2010. We estimate that the basic state pension will be around 18.4% of average earnings, which is one of the highest levels relative to earnings for over two decades.
Three years ago, the Government introduced the new state pension, which provides a transparent and sustainable foundation for private saving and retirement planning for people reaching state pension age on or after 6 April 2016. We have also committed to increase the full rate of the state pension by the triple lock. As such, from April 2019 the full rate of the state pension will increase to £168.60 a week—about 24% of average earnings.
Sir Peter Bottomley (Worthing West) (Con)
If the Minister will not say this, may I? That increase does not go to half our overseas pensioners, including those in South Africa, Canada and Australia and other places—50 countries around the world. Does he agree that it is about time we considered that?
Justin Tomlinson
I thank my hon. Friend, who has campaigned tirelessly on this issue. It has been the case for some 70 years that we do not uprate those pensions, and at this stage there are no plans to make any changes to that.
On the additional state pension, this year the state earnings-related pension scheme and the other state second pensions, as well as protected payments in the new state pension, will rise by 2.4% in line with prices. With pension credit, we are continuing to take steps to protect the poorest pensioners, including through the pension credit standard minimum guarantee—the means-tested threshold below which pensioner incomes should not fall. That will rise by 2.6% in line with average earnings. From April 2019, the single person threshold of this safety-net benefit will rise to £160.25—over £1,800 a year higher than it was in 2010.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
What assessment have the Government made of the changes to pension credit that will come in in May this year, making it unavailable to people whose partner is under 65? How many more pensioners will be driven into poverty as a result?
Justin Tomlinson
There are two elements to that. First, it depends on individual circumstances and the impact of factors such as different arrangements in whether people are working, their caring responsibilities, and their health conditions. Secondly, it is about the principle of fairness, in that those of working age should not be accessing pension-related benefits. We should not be taking people of working age out of the workplace. Pensioner poverty continues to stand at one of the lowest rates since comparable records began, and we intend to keep it that way.
Justin Tomlinson
I will come back to the hon. Lady.
Turning to universal credit, in the 2018 autumn Budget statement the Chancellor announced additional assistance for those on universal credit. As such, the universal credit work allowance will increase by £1,000 after they have been increased by prices, helping 2.4 million working families. This measure raises the amount someone can earn before their universal credit payment is reduced and directs additional support to some of the most vulnerable low-paid working families.
Finally, let me turn to disability benefits. This year the Government will continue to make sure that carers and people who face additional costs as a result of their disability will get the additional support they need.
Alison McGovern (Wirral South) (Lab)
I have to ask the Minister: is that it? We are in the middle of a benefits freeze that is seeing family poverty rise—is that all he has got to say about it?
Justin Tomlinson
With this uprating order, I am bringing forward plans to increase support for some of the most vulnerable people in society to the tune of £3.5 billion, with £3 billion alone to help those with disabilities and long-term health conditions, and pensioners—key people who the Government, as we share the proceeds of growth, will continue to target support towards. That is why the incomes of the lowest-paid have risen by over £400 in real terms since 2010 while the wealthiest fifth of society have seen their income fall by £800. We recognise the right places to target support through additional measures, including the introduction of the national living wage, worth £2,000 a year, and the increase to the income tax threshold of £1,200.
Justin Tomlinson
I will make some more progress.
These increases will cover disability living allowance, attendance allowance, carer’s allowance, incapacity benefit and personal independence payment. They will all rise by 2.4%, in line with prices, from April 2019.
Neil Gray (Airdrie and Shotts) (SNP)
I thank the Minister for giving way. I appreciate some of the uprating, but we have to note, as key stakeholders in this sector have, that the biggest driver of child poverty that this Government are enforcing is the benefit freeze. With £4.5 billion due to be saved this coming year, why have the Government not brought forward the necessary legislation to scrap the final year of the freeze?
Justin Tomlinson
As I have set out before, as the economy has continued to grow, we have been able to share the proceeds of growth to support some of the most vulnerable in society. That has seen increases to the income tax threshold, which will reach £12,500 this year, taking 4 million of the lowest earners out of paying any income tax at all. We are also seeing significant additional support for those with children. Whereas spending on childcare was £4 billion in 2010, it will be £6 billion by 2020—a 50% increase as part of our doubling of free childcare support, particularly helping lone parents who seek to take advantage of the record employment in all regions.
Alison McGovern
I thank the Minister for giving way again. He knows as well as I do that none of the figures he has just announced add up to the £12 billion of welfare cuts previously announced in this House by George Osborne. By the end of the benefit freeze and the other measures that the Government have introduced, children in poverty in this country will be worse off—is that not right?
Justin Tomlinson
But we know from announcements in the last two Budgets that spending on working-age benefits will be £2 billion higher than it would have been under the legacy benefits. That is why we now see 300,000 fewer children in absolute poverty, as we continue to target support at the most vulnerable in society.
Justin Tomlinson
I am going to make some progress.
In addition, the carer and disability premiums paid with pension credit and working-age benefits, the employment and support allowance support component and the limited capability for work and work-related activity elements of universal credit will increase by 2.4%. Those increases will ensure that our welfare system continues to provide the most support for the people who need it.
In conclusion, in this order the Government propose to spend an extra £3.7 billion in 2019-20 on increasing benefit and pension rates. With this spending, we are upholding our commitment to the country’s pensioners by maintaining the triple lock, helping the poorest pensioners who count on pension credit, ensuring that working people can earn more before their universal credit payment is reduced and providing essential support to disabled people and carers. I commend this order to the House.
Margaret Greenwood
My hon. Friend makes an absolutely pertinent point, and she does so with her usual alacrity and attention to detail.
These vital social security payments should lift people out of poverty and ensure that they do not become destitute, but under this Government that aim is not being met. Last year, research by the Joseph Rowntree Foundation found that more than 1.5 million have experienced destitution in the UK, and the social security freeze is a key reason for that. To put this in perspective, destitution in this context—[Interruption.] Yes, destitution. I do not know why the Whip on the Government Front Bench finds destitution such a matter for mirth.
The Lord Commissioner of Her Majesty’s Treasury (Craig Whittaker)
You don’t know the meaning of the word.
Margaret Greenwood
Well, let me explain. In this context, destitution means that a person has lacked two or more of the six essentials in the last month—[Interruption.]
Justin Tomlinson
I thank all those from across the House who have taken the time to speak in this debate. As in last week’s estimates day debate, there was a lot of passion about very important issues. Although we do not agree on everything, this is a helpful debate in focusing our minds as we share the proceeds of growth in the coming years to make sure that we are targeting support at those who most need it.
I wish to pick up on a few points raised in this debate. A number of speakers said that we were not supporting those too sick to work. Let me be absolutely clear that the employment and support allowance support group rate will be increased from £37.65 to £38.55, and the severe disability premium will increase from £77.65 to £79.50. The hon. Member for Wirral West (Margaret Greenwood) was spot on when she talked about the impact of unemployment; we could not agree more, which is why we are proud to have delivered record employment in every region. That is in stark contrast to every Labour Government, who have left office with higher unemployment. This was echoed in the speech made by the hon. Member for High Peak (Ruth George), who continues to attack job creation policies, seeking to remove the opportunity for people to fulfil their potential.
Jim McMahon
The Minister must surely know that the reason there are more people in work is that there are more working-age people. In my constituency, unemployment is higher this year than it was last year, and there is still a struggle to get people on long-term unemployment back into the labour market. He must know that, surely.
Justin Tomlinson
What we know is that every region of the UK is seeing more people working. Youth unemployment increased by 45% under the last Labour Government, but it has almost halved under this Conservative Government, and that will continue.
Ruth George
I assume that in claiming that I am attacking policies aimed at job creation, the Minister is referring to the huge cuts in mainstream corporation tax, which I analysed at the Union of Shop, Distributive and Allied Workers when working on some of the major supermarkets. They actually took their corporation tax reduction and refused to even put that amount into wage growth, let alone into jobs. This is not a job creation scheme; it has made profits for shareholders, not for workers.
Justin Tomlinson
It is delivering record employment in every single region. Increased corporation tax receipts are the folly of the hard-left failed economic policies that deliver higher unemployment every single time, which is why voters repeatedly reject failing Labour Governments.
Justin Tomlinson
I will just make some progress.
Many speakers talked about poverty. Income inequality has fallen—it increased under the previous Labour Government. Rates of low income and material deprivation for children and pensioners have never been lower. There are 300,000 fewer children in absolute poverty and 200,000 fewer pensioners in absolute poverty. In the past five years food affordability has almost halved and is well below the EU average.
Debbie Abrahams
According to the Child Poverty Action Group, 100,000 children are in severe poverty as a result of the benefits freeze. Would the Minister like to accept that fact?
Justin Tomlinson
The stats are very clear: there are now 300,000 fewer children in absolute poverty. Where we are in agreement in this debate is that all speakers rightly welcomed the additional £1.7 billion for the universal credit work allowances. We continue to support those who are seeking to enter work, increase their hours or increase their pay.
Overall, this order is about striking the balance between targeting support to those who most need it and what is fair for the taxpayer. Under the previous Labour Government, who increased welfare spending by £84 billion—the equivalent of £3,000 per working household—that was not a fair balance.
Jim McMahon
Can we just take away this artificial divide between taxpayers over here and claimants over there? People who claim benefits also pay tax. They contribute and work hard, and they deserve a better deal than this.
Justin Tomlinson
That is why we are delivering record employment and increasing support for those who most need it, and why we are today announcing the latest sharing of growth with those who most need it, with a £3.7 billion increase. We are maintaining the Government’s commitment to the triple lock for both the basic and full rates of the new state pension; increasing the pension credit standard minimum guarantee by earnings to support the poorest pensioners; increasing the universal credit work allowances so that claimants can earn more before their payments are reduced; and increasing benefits to meet additional disability needs, and carer benefits, in line with prices. I commend this order to the House.
Question put and agreed to.
Resolved,
That the draft Social Security Benefits Up-rating Order 2019, which was laid before this House on 30 January, be approved.
Patrick Grady (Glasgow North) (SNP)
On a point of order, Madam Deputy Speaker. I notice that we now move on to some 18 different remaining orders, some of which are very important and will affect the outcome of Brexit for this country on a whole range of issues, from road traffic to animals, gas, energy and arms and ammunition—all kinds of things. If each of these remaining orders were subject to an individual Division, by my calculations it would take up around four and a half hours of the House’s time, which is quite incredible. I believe, though, that if we get past 10 o’clock, we can have the much more sensible opportunity of voting on these issues using the deferred Division procedure. Can you advise us on what steps we can take to make sure that Members are not unnecessarily detained this evening by multiple complex Divisions, until such a time as this House introduces a more sensible, modern electronic voting system?