Social Security Benefits Up-rating Order 2019

Tuesday 5th March 2019 Lords Chamber

Motion to Approve

15:36

Moved by

[Baroness Buscombe]

That the draft Order laid before the House on 30 January be approved.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, in my view the provisions in this order are compatible with the European Convention on Human Rights.

The Social Security Benefits Up-rating Order 2019 reflects the Government’s continuing commitment to: increase the basic and full rate of the new state pensions by the triple lock; increase the pension credit standard minimum guarantee in line with earnings; and increase carers’ benefits and benefits intended to meet additional disability needs in line with prices.

On the basic state pension, the Government’s continuing commitment to the triple lock means that, this year, the basic state pension will continue to be uprated by the highest of: earnings, prices, or 2.5%. The triple lock has been an invaluable tool in combating pensioner poverty. Maintaining it ensures that pensioners receive the financial security and certainty that they deserve.

This year, the increase in average earnings was the highest of the triple lock figures. As a result, the basic state pension will increase by 2.6%, rising from £125.95 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 in April 2010. We estimate that the basic state pension will be around 18.4% of average earnings—one of its 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 triple lock the full rate of the new state pension. Therefore, from April 2019, the full rate of the new state pension will increase from £164.35 to £168.60 a week. This is approximately 24% of average earnings.

On the additional state pension, this year state earnings-related pension schemes 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. In addition, we are continuing to take steps to protect the poorest pensioner households, including through the pension credit standard minimum guarantee—the means-tested threshold below which pensioner income should not fall. This will rise by 2.6%, in line with average earnings. From April 2019, the single person threshold will rise from £164.35 to £167.25 a week—more than £1,800 a year higher than it was in 2010. Pensioner poverty continues to stand at one of the lowest rates since comparable records began. These measures will help us keep it that way.

In the 2018 Autumn Budget Statement, the Chancellor announced additional assistance for those on universal credit. As such, universal credit work allowances will rise by £1,000 once they have been increased by prices. 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, I turn to disability benefits. The Government 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. So, disability living allowance, attendance allowance, carer’s allowance, incapacity benefit and the personal independence payment will all rise by 2.4%, in line with the increase in prices. In addition, the carer and disability-related premia paid with pension credit and working-age benefits, the employment and support allowance support group component and the limited capability for work and work-related activity element of universal credit will also increase by 2.4%. These increases will continue to ensure that our welfare system provides the most support to the people who most need it.

In conclusion, in this order the Government propose to spend an extra £3.7 billion in 2019-20 to increase benefit and pension rates. With this spending, we are maintaining our commitment to protect the country’s pensioners through the triple lock and helping the poorest pensioner households who count on pension credit. We are also ensuring that people on universal credit can earn more before their payment is reduced and providing essential support to disabled people and carers. On this basis, I beg to move.

[Baroness Lister of Burtersett (Lab)]

My Lords, last week I received notification from the Pension Service of the increase in my pension from 8 April, under the triple lock. If I were a hard-pressed mother, claiming child benefit and most other working-age benefits, I would not have been so fortunate.

It has become something of a tradition in these uprating debates that some of us focus on the benefits that are not being uprated because of the benefits freeze. I am sure it will come as no surprise to the Minister that I do not plan to break the tradition. It is particularly pertinent this year, given the growing pressure from a number of quarters to end the freeze a year early. I welcome the real increase in the work allowance, after it was defrosted last year. I hope that the Government will start thinking about a second earner work allowance as a targeted way of addressing child poverty and encouraging more women into paid work.

As my noble friend Lady Sherlock spelled out in the earlier tax credit uprating debate, with her customary forensic skill, the freeze has had a much greater impact on working-age benefits than was originally anticipated at the time of the Welfare Reform and Work Act 2016. This is because of higher than expected inflation, due largely to the outcome of the referendum. According to the Resolution Foundation, the overall, cumulative, real cut in benefits will amount to around 6% by this coming benefit year. The total saving to the Treasury is around £4.4 billion. That is £4.4 billion being taken out of the purses and wallets of some of the poorest members of our society.

According to House of Commons Library calculations for Neil Gray MP, the higher than anticipated inflation rate means that around £1.2 billion is being cut this coming year over and above that originally budgeted for. The Joseph Rowntree Foundation has warned that maintaining the freeze for this final year will mean 10.7 million people living in poverty missing out on £220 to help cover the increased cost of living, and as many as 200,000 more being locked into poverty. The scenario will be even worse in the event of a no-deal Brexit.

15:45

The freezes have been identified as a key driver of the increase in poverty projected by independent think tanks such as the Resolution Foundation and the IFS. The foundation’s Living Standards Outlook 2019 projects a shocking increase in child poverty of more than 1 million by 2023-24, with the figure on course to hit a record high of nearly two-fifths of children. The proportion of parents in poverty is also projected to hit a record high of nearly three in 10. While it raises questions about the actual statistics, it stresses that they do not affect the trends identified.

As well as the numbers in poverty, the impact on the depth of poverty should also concern us. The depth of poverty was highlighted in the Social Metrics Commission report on poverty measurement. Given that many of those affected by the benefits freeze will already be living in poverty, its impact is more likely to show up in poverty depth or gap statistics than in incidence statistics. I raised this issue in a QSD on the commission’s report, pointing out that the experience of poverty is very different if you are one of the more than 4 million estimated by the report to be living at 50% or more below the poverty line from that if you are one of the 1.3 million living within 5% below it. My plea that the Government should undertake to publish regular poverty depth statistics received no response from the Minister, so perhaps she could respond today.

The latest ONS statistics indicate that inequality is also starting to rise again as living standards at the bottom are squeezed by social security cuts. Housing charities have warned of the impact on homelessness of the freeze in local housing allowances. Indeed, research by Shelter suggests that by the coming financial year, four-fifths of areas in England will be unaffordable to those receiving LHAs. Even the HCLG Secretary has now acknowledged that there may be a link between the increase in rough sleeping and social security cuts.

As we traditionally use the uprating order debate to highlight the benefits freeze, Ministers traditionally respond to our concerns with a familiar set of arguments. It is disappointing that the Minister in the Commons did not engage with the arguments made across that House yesterday. I hope our Minister will do so. I will not list them all, but we are told, for instance, that the freeze was necessary because social security spending was out of control. Yet the OBR’s 2014 Welfare Trends report noted:

“The proportion of national income devoted to welfare spending has not shown a significant upward or downward trend over time”.

More recently, it estimates that on current trends, spending on the support of children and working-age people would be at its lowest share of GDP since 1990-91. That is not something to be proud of. Relevant to this is a recent addition to the ministerial quiver of arguments that the,

“UK provides more benefits for families than any other advanced nation”.

Leaving aside that the statistic includes services as well as benefits, a Question for Written Answer elicited that it relates to 2013—six years ago and before the Government’s full onslaught on social security benefits.

Also relevant is the argument that the cuts were necessary to get the public finances into order, but analysis by the LSE’s Centre for Analysis of Social Exclusion, cited by my noble friend Lady Sherlock in the tax credits uprating debate, showed that in effect social security cuts have paid for increases in tax allowances. A number of commentators, including the UN special rapporteur on poverty, have pointed out that it was a political choice in last autumn’s Budget to prioritise raising tax allowances over ending the benefits freeze, which would, in his words, have helped to “move the needle on poverty”.

Ministers are also always keen to point out that the freeze is only part of the picture and that we should also take into account policies such as the increase in tax allowances and the introduction of the national living wage. Fair enough, but raising tax allowances is regressive in its impact, providing no benefit to those whose incomes are too low to pay income tax and of limited benefit to taxpayers in receipt of universal credit. Welcome as improvements in the living wage are, they do not compensate. As the IFS explains,

“only a minority of those who are likely to gain most from the NLW are in the low-income households that stand to lose the most from the benefit reforms since July 2015. In other words, minimum wages are far less tightly targeted on those with low household incomes than are working-age benefits”.

When taking account of the whole picture, remember that the current freeze is just one of many cuts euphemistically called reforms, notably the two-child limit, the benefit cap and the cuts in real value that preceded the freeze. According to the House of Commons Library, cited by the Work and Pensions Committee, this coming year affected households will have to live on,

“incomes that are between £888 and £1,845 lower in real terms than if benefits had been consistently uprated”,

in line with inflation, since 2010. The cumulative impact assessment of tax and benefit policies since 2010 carried out for the Equality and Human Rights Commission demonstrated their overall regressive impact.

Taking a historical perspective, the Resolution Foundation warns that the real value of the basic level of support for the unemployed this coming financial year will be at its lowest since 1990-91, and its lowest ever relative to average earnings. Compare and contrast that with the figures the Minister gave for pensions. Child benefit—the cornerstone of financial support for children in both working families and families out of work—will be lower than at any point except 1990 since its full introduction 40 years ago. For two-child families, its value has never been lower. Of course, families with three or more children may also be coping with the two-child limit on children’s credits.

Over and above the arguments for lifting the freeze early in light of higher than anticipated inflation is the fear of the impact of Brexit on the poorest in our society—raised in this House during the Brexit debates most notably by the most reverend Primate the Archbishop of Canterbury. According to a recent Times report, Ministers are looking at how to protect people in poverty from the possible impact on their cost of living of a no-deal Brexit, including through tax and benefits policy. The other week a group of charities headed by the JRF wrote to all MPs urging pre-emptive action to smooth exit from the EU for those who have endured years of benefit cuts and freezes, starting with lifting the freeze now. The Times earlier reported that five former Cabinet Ministers, including Iain Duncan Smith, were leading a call among senior Conservatives to end the freeze. Heidi Allen MP, formerly of the Minister’s parish, has questioned its morality. Most recently, the Work and Pensions Committee has added its weight in a letter to the Secretary of State. It points out that, even if the freeze were ended now, the Government would still save £2.5 billion from the cumulative impact of the freeze hitherto and argues that they should use some of the current budget surplus to prioritise lifting the freeze to protect families facing destitution—yes, it used the term “destitution”—because of the erosion of the support they need.

I know that to do so would require legislation because, against the advice of your Lordships’ House—in particular, I think, the noble Lord, Lord Kirkwood, who is not in his place—the Government tied their legislative hands. But I cannot imagine that anyone would object to an emergency two-clause Bill to end the freeze immediately. Indeed, the shadow Work and Pensions Secretary in the Commons yesterday offered to facilitate such a Bill if the Government were to bring it forward. Where there is a will, there is a way. I call on the Government in the Spring Statement to show they have the will and end the freeze, which is causing so much hardship.

[Baroness Janke (LD)]

My Lords, I too thank the Minister for her announcement today. It is always a privilege to follow the noble Baroness, Lady Lister, who knows so much about this subject. I too feel struck by the benefits that are not in this order. I suspect we will all today mention the Joseph Rowntree Foundation, which described this as “the biggest policy driver” of poverty. The Joseph Rowntree Foundation is the organisation that established the concept of the minimum income standard. The statistics for that are breathtaking. The noble Baroness, Lady Lister, has given us important figures and shocking facts but we should look at the minimum income standard.

A single person has to earn £18,400 to reach the minimum income standard. Each parent in a working family must earn £20,000. The minimum wage is too low to reach the minimum income standard. A lone parent with two children, working full-time, had disposable income 4% below the minimum income standard in 2008; today it is 20% below it. The freeze is set to cost working-age families £4.4 billion a year in 2019-20, and the average single parent will be £710 worse off—that is 3% to 7% of their income.

We have talked about removing the freeze a year early and we would support that. As the noble Baroness, Lady Lister, said, where there is a will there is a way. If we removed the freeze for the last year, the result would be to reduce the number of people in poverty by 200,000 in 2020-21; 27.5 million people would gain, at a cost of £1.4 billion to the Treasury; and a proposed cut of £250 to single parents’ budgets would be prevented.

In the last Budget, the OBR found £13 billion in extra headroom, £1.3 billion of which went to cut tax for higher earners. Commentators today are saying that they expect the forecast for public finances to improve, so will the Government consider using the £1.4 billion to end the benefits freeze a year early? Can the Minister explain the freezing of bereavement support payments for the coming year, even though the widowed parent allowance it replaces has been raised in line with inflation?

I support and associate myself with the remarks of the noble Baroness, Lady Lister. I hope the Government will listen and look at this issue again. It is getting to alarming proportions and should shock us about the state of our country.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for her introduction to this order and both noble Baronesses who have spoken. As we have heard, the purpose of the order is to make changes to the rates of those benefits which have been fortunate enough to escape the Government’s freeze, which is causing so much damage, as we have heard from the noble Baronesses. We now have a series of different categories of benefit which get treated in different ways when it comes to uprating time.

We have a category which is going to be uprated by at least the increase in earnings: the state pension because of the triple lock; the standard minimum guarantee of pension credit; and some aspects of widows’ and widowers’ pensions in industrial death benefit. They all get to go up by 2.6%, which is the increase in earnings.

Then we have a category which will have to be increased by at least the increase in prices. This includes attendance allowance, carer’s allowance, DLA, PIP, severe disablement allowance, other aspects of widows’ benefits, the additional state pension, graduated retirement benefit and increments to the state pension. They all get to go up by CPI—inflation.

Then there is a category over which the Secretary of State has discretion. She has decided to use that discretion by uprating some benefits by CPI—by inflation—including statutory sick pay, maternity and paternity pay, adoption and parental leave pay, the support group components of ESA, disability and carer premiums, the carer element of universal credit and the limited capability for work and work-related activity element of universal credit. They go up by 2.4%.

Then there are the benefits which are not being uprated at all. These include all the main means-tested working-age benefits, including: the personal allowance elements of income support; jobseeker’s allowance; the personal allowances and work-related activity components of ESA and housing benefit; and the standard allowance, limited capacity for work element and the lower disabled child addition of universal credit. Those are the main things on which most of our poorest fellow citizens depend. However, they have been frozen at the 2015-16 cash levels, having previously been increased by only 1%. Now, as we have heard, we have to add to the list bereavement support payment. It will be paid at the same cash rate as it was last year, which means that, like all those benefits, its value is being cut yet again. There is no triple lock for anybody except pensioners.

16:00

Obviously, I welcome any increase in benefits that are being uprated, and I welcome the increase in the universal credit work allowance, which will go some way towards undoing the very severe damage done by the Government’s decision to slash work allowances in both tax credits and universal credit. Many noble Lords may remember that tax credits got a reprieve, thanks to the marvellous campaign led by my late and very much missed friend Lady Hollis, who led this House in asking the Government to think again. However, that cut was still imposed on universal credit and now we are getting some of that money back.

Like my noble friend Lady Lister, I make it a point of principle never to allow these occasions to go by without pointing out the damage that has been done by leaving these benefits out of uprating. However, given the rather marvellous speech that she has just made, and given the fact that I recounted this in some detail in the debate on the uprating of tax credits, noble Lords will be relieved to hear that I will not rehearse those arguments all over again. “Hear, hear!” is a little harsh, I think. In any case, my noble friend Lady Lister literally wrote the book on this subject—Poverty, which is the classic work in this area and remains so about 15 years after she wrote the first edition—so I have nothing to add to the rather marvellous analysis that she has given us.

However, I want to ask a couple of questions of the Minister. In doing so, I remind her that the Work and Pensions Select Committee in the other place has just written to the Secretary of State, setting out the damage that has been done by this freeze and urging her to consider ending it a year early. I hope that when I sit down, the Minister will be able to give us some good news which, unaccountably, the Government failed to share in the Commons yesterday.

The damage is really very severe. As both noble Baronesses pointed out, this is the single biggest driver of the damage that has been done in relation to child poverty in our country. When we discussed the uprating of tax credits, I asked the Minister, the noble Lord, Lord Bates, whether he could justify the freeze on tax credits. He said to me in a letter of 21 February:

“Prior to the freeze the tax credits system was too generous”.

What is the rationale for the freeze in benefits? Were they too generous as well?

Previous rationales that we have been given, as my noble friend pointed out, have allegedly been about incentivising work, even though they have cut the work allowances that make people better off in work and they also include various in-work benefits. We have been told that it is necessary to cut the deficit, despite the fact that, as the noble Baroness pointed out and as research shows, the coalition Government spent the same amount on tax cuts as they did on cutting benefits, contributing nothing to the reduction of the deficit. If the aim were to incentivise work, why include tax credits for those in work? The same people whose incomes from work are squeezed as wages have lagged behind inflation find that the tax credits that should top up those incomes are cut in value year on year. This has been causing real hardship across the country, as both noble Baronesses have explained, and the Government are now saving a lot more money than they expected to.

I want to ask the Minister some specific questions. First, what assessment have the Government made of the impact of the freeze on benefits on poverty levels? When I asked the noble Lord, Lord Bates, the same question about tax credits, he said in a written reply that the Government routinely publish distributional analyses of their policies at fiscal events. Although interesting, that was not directly relevant, as I had not asked about distributional analysis; in fact, I had asked about the impact assessment on poverty levels. I ask the Minister the same question now. I presume that this analysis will have been done, as I cannot believe that the Government, who I know care about the poorest, would have set about a policy of this magnitude without having considered its impact on poverty levels. Therefore, can she share that with the House?

Secondly, can she tell the House the Government’s latest estimate of the savings to the Exchequer of this four-year freeze in benefits over and above the amount originally scored? When I asked the noble Lord, Lord Bates, the equivalent question about tax credits, he wrote in reply that the OBR had scored the original saving from the freeze at Budget 2015 at £4.01 million by 2020-21. I knew that because I had said it in my speech but I wanted to know what the latest assessment was. The IFS is able to assess this, so I cannot believe that the Government are not. As Parliament was induced to vote for this freeze on the grounds that it would save £4 billion, and the expectation now is that it will save at least an extra half a billion, it does not seem unreasonable for the Minister to tell Parliament the latest assessment of the saving, as the money being saved by the Exchequer is of course being taken directly from the pockets of some of the poorest people in our country.

Finally, if the Government are not willing to end the freeze a year early, why not? Why is that not a priority when making decisions about spending? I look forward to the Minister’s reply.

[Baroness Buscombe]

My Lords, I thank all noble Lords who have taken part in this debate. It has certainly focused on things outside the order itself, but I thank noble Lords for appreciating the upratings made in the order. It feels like 10 minutes ago that we were debating this last year, so I was, to some degree, ready for some of the points that would be raised; I expected there to be references to the benefit freeze and various other issues.

I begin by referencing something that my honourable friend, Justin Tomlinson MP, stated last night in a similar debate in another place. He said that we will always share the proceeds of economic growth to target our support for the most vulnerable in our society. That is why we are spending £7 billion more than in 2010 to support those with severe disabilities and mental health issues.

It is true that things have changed. Our approach is, to some degree, different to that of the party opposite when it was in government. We want to incentivise people; we want to look at the root causes of poverty and lift people out of it. We know—we have research that tells us this—that lifting people out of poverty and into work is the best route. Our welfare reforms incentivise moves into work and support working families. What we are providing is different in some ways, but we know this approach is working. The number of people in work is now at a record high. Through our welfare reforms, the Government have introduced 30 hours of free childcare a week for working families in England; cut income tax for 31 million people; and provided the lowest earners with their fastest pay rise in 20 years through the national living wage.

Our reforms have been highly redistributive. The latest analysis shows that, since taking office in 2016, the poorest households have gained the most as a percentage of net income. The annual average income of the poorest fifth of households has risen in real terms by more than £400 since 2010, while incomes of the richest fifth have fallen. Income inequality is lower than it was in 2010. In 2019-20, the 10% of households with the lowest incomes will receive more than four times as much support in public spending as they contribute in tax. We believe it is right that the poorest households should gain the most as a percentage of net income.

The noble Baroness, Lady Lister, referenced several studies showing that the number of children in poverty will increase substantially over the next few years. However, experts such as the IFS, who undertake these forecasts, acknowledge a degree of uncertainty around them. We stay with our firm belief and principle that work offers the best chance for families to get out of poverty.

Since 2010, there are more than 3.4 million more people in work and around 637,000 fewer children living in workless households. Children are about five times more likely to be in poverty if they live in a workless household, compared to a household where all adults work. There are 300,000 fewer children in absolute poverty, both before and after housing costs, compared to 2010, meaning we are currently at a historic low. We know that children in workless families can face real disadvantages to their development and prospects. This is why we will continue with policies that support and encourage employment, reform the welfare system to make work pay—as I always say, to make work transforms lives—and introduce universal credit to strengthen incentives for parents to move into and progress in work.

The rates of children in material deprivation have never been lower. As I said, children in households where no one works are more likely to be in poverty, but we will be investing more than £6 billion a year in childcare by 2020. There are a number of key ways in which we are demonstrating that our approach is different.

[Lord McKenzie of Luton (Lab)]

My Lords, the Minister has touched on the Opposition’s policy for work in previous debates. How would she respond to the executive summary of a White Paper produced when we were in government, which states:

“This White Paper sets out a vision and route map for a welfare state where everyone is given the help they need to get back to work, matched by an expectation that they take up that support”—


a concept supported by the noble Lord, Lord Freud? Indeed, he worked on that programme for the DWP.

[Baroness Buscombe]

My Lords, what the noble Lord just referenced goes to the heart of what we are trying to achieve. The reality is that we are providing support in every which way to help people into work, and to help people through our jobcentres with our work coaches and case managers. The important thing is that the first thing people do when they go into a jobcentre is talk to a work coach who is interested in ensuring that they have the right support, the right benefits and a roof over their head. We signpost them to the right support where that is lacking. From there, we do all we can, working with a bespoke work coach and case managers. It could take months, weeks or days to encourage people to go into work. Of course, as we know, some of these people have never been in work. Indeed, in 2010 a fifth, of all households in the United Kingdom—20%—were entirely workless. We have brought that down to 13.9% of all UK households. That is still an enormous number of households where nobody is actually working. We genuinely believe it is crucial that we change that, and we are changing it.

[Lord McKenzie of Luton]

Can the Minister tell me what the figure was when the Conservative Government left office previously?

[Baroness Buscombe]

I am not able to share that figure with the noble Lord, but I believe so strongly that what we are doing in introducing and developing universal credit with bespoke and universal support is a far cry from what previous Conservative Governments prior to 1997 and the party opposite in Government up to 2010 did with legacy benefits, when people had no contact.

[Baroness Altmann (Con)]

I offer my noble friend a little assistance, because the Government should be rightly proud of the enormous strides that have been made in employment for older people. The Government have made specific efforts to ensure more older people are supported back into work. That has not been done by previous Governments.

[Baroness Buscombe]

I thank my noble friend for that. It is a very important point because, as we know, life expectancy is extending. The reality is that there are so many people out there, particularly women, who have never had the confidence to go back to work after having children. So many of my peer group would love to have had the confidence to go back to work. That is the sort of thing the Government have been doing and are working so hard at. We have all sorts of projects and support systems in place. In fact, two Secretaries of State have announced in the last year different projects to encourage older women particularly. When we say “older”, we—

16:15

[Baroness Lister of Burtersett]

On the point about encouraging women back into work, which I very much agree with, would the Minister be willing to take away my point about work allowance? At present, second earners have little incentive to get back into paid work. She made the point that we need all adults to be in paid work to have the full impact on poverty. I do not expect her to say that the Government are going to do that but perhaps she might consider my point when developing universal credit policy.

[Baroness Buscombe]

Yes, I noted somewhere in my papers and will say now that of course it is right that we look at every way to incentivise the second earner to go back into the workplace; that is very much our thinking at the moment. We are looking to find different ways to help and incentivise people. We also have to think about affordability. We touched on that when we debated these uprating measures a year ago; it has to be taken into account as well. The noble Baroness, Lady Janke, talked about how much was spent at the last Budget, but actually quite a large proportion of that—£4.5 billion—went towards the work that we are doing at the Department for Work and Pensions in supporting people, so we have to ensure—

[Baroness Sherlock]

On the affordability question, will the Minister address the point that I and another noble Lord made: the Government are likely to save half a billion pounds more on this freeze than they did from the 2014-15 Budget, so why could that money not be put to this purpose? While she is at it, her comments about work are very interesting, but if I could bring her back to the order under discussion, if the aim of this freeze is to incentivise work, why are the Government freezing payments made to some of the people on employment and support allowance whom they have deemed not fit to work? Why does the freeze include benefits paid to mothers of very young children, whom the Government do not require to work? Why does it apply to in-work benefits designed to make work pay?

[Baroness Buscombe]

Because of the issue of affordability, we have to make some difficult choices. I will not pretend that we are not constantly looking at this; indeed, the Secretary of State for Work and Pensions made a speech only today amplifying the fact that we are looking at different ways of supporting people with disabilities. They may not attract a price tag, if I may put it that way, but they are going to help transform the lives particularly of people with severe disabilities, because the reality is that we cannot simply take that difficult leap and say that we are going to lift the benefit freeze. As my noble friend said last night in another place, we have to face the fact that under the previous Labour Government, welfare spending increased by £84 billion—the equivalent of £3,000 additional cost for every working household in this country. We have to strike a fair balance between those who are funding the welfare system and those who are in receipt of it. It is always a difficult balance, but again, I thank noble Lords who are making suggestions and encouraging me to amplify the fact that we have a particular interest in supporting those who may not have been in work for a number of years, or who may never have worked, to have the confidence to do so.

[Lord Judd (Lab)]

My Lords, the Minister is speaking with great passion and conviction about her commitment to get people back into work. Is it not also incumbent on us all, irrespective of party, to keep constantly under review exactly what some of this work amounts to? It is hardly surprising that there are large numbers of families still not in work: the attraction of going into the sort of work available is the attraction of going into hell.

[Baroness Buscombe]

I am pleased to say that the vast majority of jobs which people are taking are full-time employment but, as I have said before at this Dispatch Box, it is really important that we focus on low pay. We have introduced the living wage, which has made an enormous difference. However, there is an issue not just in the private sector but in the third sector and others, where low wages are paid on the expectation that they will be supplemented by the state. We have to think about how we can tackle that. It is a very tough one. In a sense, I speak now not as a Minister but we have to take it on board. The reality is that until we have more people being paid what one might call properly, so that they do not have to turn to the benefits system, there will be the issue of how we maintain and sustain an affordable welfare system in the years ahead.

The costs are going up. I do not know whether I dare say this without checking my notes but the reality is that in a few short years—here we are, it is by 2022—our expenditure on welfare will rise by a further £28 billion. We are already spending more than £100 billion on benefits for people of working age. That £100,000 million will go up by £28,000 million by 2022.

[Baroness Altmann]

It is important for the House to recognise that there are a number of people, particularly older workers—yet again, I declare my interest—who want to work part-time and on zero-hours contracts. It is not as simple as it might appear from looking at the bald figures. That is perhaps work that the department might wish to take further but it is an important point.

[Baroness Buscombe]

Again, I thank my noble friend. It is a very important point. I often come across people who actually want to work on zero-hours contracts. They want to work in a flexible way so that they can work around their childcare arrangements or caring responsibilities. We live in a complex space. This is where I think the universal credit system is so brilliant, although we constantly seek to improve as we develop it. We inject every two weeks, on average, a new piece of software into that system to improve it, on the basis that everybody’s situation is different. We therefore have to have a system that can be as flexible as possible in responding to people’s way of working and their family arrangements, which are many and varied and can of course change literally overnight. People may then need to turn, maybe overnight, to our support and help.

That is why we are working hard to ensure that we can support the system in a way that provides for those who are in most need. We will not always agree about every benefit in it, but I hope noble Lords will accept that we at the Department for Work and Pensions are doing our best to develop many policies to encourage and empower people to go into the workplace to provide for their children, and therefore to have fuller lives and fulfil every opportunity for their potential.

[Baroness Lister of Burtersett]

I sense that the Minister is about to sit down—I apologise if she was not—but I made one point on which I asked her to respond. It would be a new policy but would not cost anything, other than the administrative costs of doing it. It would be to routinely publish the poverty depth statistics, which would help to answer for the future the question that my noble friend Lady Sherlock asked, which has not been answered. What attempts are the Government making, or have they made, to measure the impact on poverty of this freeze?

[Baroness Buscombe]

My Lords, the Welfare Reform and Work Act 2016 was supported by a number of impact assessments that considered the whole picture of the Government’s welfare reforms. Any estimate of the impact will fluctuate whenever the number of people claiming benefit, or assumptions about the economy, turn out differently from the forecasts at the time. Although CPI for this year is higher than anticipated, at the time of the impact assessment for 2017-18 CPI was lower than expected. Since the impact assessment for the Welfare Reform and Work Act, we have seen employment reach record levels. If people choose to move into work or to increase their hours, they may mitigate or never experience the notional loss. In total, freezing benefits and tax credits overall is expected to result in £3.5 billion of savings in 2019-20, but the 2015 impact assessment shows a saving from the benefit freeze this year of around £1.4 billion.

I reassure the noble Baroness, Lady Sherlock, that I will share with my colleagues the points that have been raised in this debate. We constantly review whether we have the right policies, what we can do to change them and what our constraints are given that we are just one of numerous departments. We account for 25% of the entire government budget. Therefore, it is always a tough challenge for us to influence change. I have huge respect for the previous and current Secretaries of State, who have been able to encourage the Chancellor of the Exchequer to make some changes.

A question was asked about those with a disabled child. All those qualifying for the disabled child addition also qualify for disability living allowance or personal independence payments, which are exempt from the freeze. Another question was asked about the two-child element. We believe that families on benefits should face the same financial choices when deciding to grow their family as those supporting themselves solely through work. A benefits structure adjusting automatically to family size is unsustainable. I think I have answered almost everything—

[Baroness Lister of Burtersett]

My noble friend asked a rather pertinent question: do the Government think that these benefits are too high?

[Baroness Buscombe]

My Lords, no; I can answer that very simply. We do not think that the benefits are too high, but we feel strongly that we have to focus them where the need is greatest.

I hope that noble Lords will agree that we have had a full debate, much of which has related to matters other than the uprating itself. The social security uprating order will provide an extra £3.7 billion of support for the most vulnerable in 2019-20. The triple lock on the state pension will provide an extra £3.6 billion for pensioners. The uprating of disability living allowance, personal independence payments and carer’s allowance are worth £0.7 billion in 2019-20 alone. The increase in universal credit work allowances by £1,000 will provide 2.4 million working families with an extra £630 a year from April 2019. This Government have a track record of increasing their generosity in welfare spending. Since 2016, they have invested more than £9.5 billion in universal credit. I thank all those who have taken part in this debate. I beg to move.

Motion agreed.