Thursday 9th September 2021

(8 months, 2 weeks ago)

Lords Chamber
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Question for Short Debate
15:54
Asked by
Baroness Tyler of Enfield Portrait Baroness Tyler of Enfield
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To ask Her Majesty’s Government what impact assessment they have made of the proposed withdrawal of the £20 uplift to Universal Credit.

Baroness Tyler of Enfield Portrait Baroness Tyler of Enfield (LD)
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My Lords, I draw attention to my interests in the register, particularly as a member of the Financial Inclusion Commission and president of the Money Advice Trust. I very much look forward to hearing the contributions of other noble Lords, who I know feel passionately about this issue—one that goes to the heart of who we are as a nation and our moral obligations to each other. I thank the Library for its excellent briefing note setting out the context around the proposed withdrawal of the £20 uplift in universal credit.

The basic facts are as follows. In March 2020, the Chancellor announced that the standard allowances of universal credit and the basic element of working tax credit would be increased by £1,000 a year, or £20 a week, describing this very welcome uplift as a measure to “strengthen the safety net” during the pandemic. It was part of a wider package of support for family finances hit hard by Covid, including the Coronavirus Job Retention Scheme and the Self-employment Income Support Scheme. This package was generally considered to be well-judged and the right thing to do in quite extraordinary circumstances.

In March 2021, the Government announced that the uplift, initially intended to last 12 months, would be extended for a further six months. In July, the Government confirmed that they would withdraw the uplift at the end of September. What has been the impact of this and how has it been received?

Back in November 2020, the Legatum Institute reported that, although poverty had risen because of the pandemic, government policy, including the uplift to universal credit and working tax credits, “has insulated many families” from it. It estimated that the policies had protected 690,000 people from poverty in winter 2020. On the day that the withdrawal was announced, Boris Johnson told the House of Commons Liaison Committee that, as Covid-19 restrictions eased, the emphasis

“has got to be on getting people in work and getting people into jobs”.

This statement, suggesting that there was a binary choice to be made between work and benefits, completely ignored the high and rising levels of in-work poverty.

It is fair to say that the withdrawal announcement has been met with widespread criticism across the political spectrum. Among others, the Centre for Social Justice, the chairs of the relevant committees in the House of Commons and devolved assemblies, the influential Economic Affairs Committee of your Lordships’ House and, quite remarkably, six former Conservative Work and Pensions Secretaries have called upon the Chancellor to make the uplift permanent, with many calling on it to be extended to legacy benefits. Tellingly, the six former Tory Secretaries of State argued that

“work remains the best way out of poverty for those who can work, but we want to make sure that those who cannot work are supported with dignity”.

It is hard to disagree with that statement.

In September, 100 organisations, including charities, health professionals and others, called on the Government to abandon their plans to remove the uplift. They argued that the decision would

“pile unnecessary financial pressure on around 5.5 million families, both in and out of work”.

That list is not just the usual suspects; it is a much wider cross-spectrum of opinion.

Crucial to this debate, what assessment did the Government make of the impact of this highly controversial decision? There has been no shortage of calls for the Government to publish any impact assessment or analysis they have done on the effect of withdrawing the uplift. I was shocked to learn that, in response to a Written Question on 22 July, asking the Government to publish the impact assessment for the removal of the uplift, Will Quince, Minister for Welfare Delivery, said,

“no assessment has been made”.

I ask the Minister if she will explain whether such an assessment is now available and, if not, why not, when it will be published and, ideally, what it says. Is there any truth to the report in yesterday’s Financial Times that an internal Whitehall analysis says that the Government should be braced for a “catastrophic” end to the welfare uplift?

Given this gaping hole, various organisations have produced their own analysis of the potential impact, including the Joseph Rowntree Foundation and Citizens Advice—both highly respected organisations. Among others, these assessments have commented that 6 million low-income families will lose over £1,000 from their annual incomes; 0.5 million more people will be pulled into poverty, including 200,000 children; working families make up the majority of families who will be affected by the cut; families with children will be disproportionately impacted; and the impact of the cut will be greatest across the north of England, Wales, the West Midlands and Northern Ireland.

It is ironic to note that, according to Citizens Advice, people are 1.5 times more likely to claim universal credit in places the Government have said they want to invest in, including those areas prioritised by their levelling-up fund. Indeed, it seems that this decision will take more money out of these local economies than it would put in, which is an extraordinary case of giving with one hand, but taking—in brackets more—with the other.

I am particularly concerned about the real-life impact: heart-rending decisions that individual households will need to take on whether to put food on the table, pay the rent or pay the bills—in short, going without essentials or being forced into debt to cover the costs. According to recent research from Toynbee Hall looking at the experiences of Londoners disproportionately affected by Covid, for many, income has reduced, expenditure has increased and debt has risen.

The Financial Inclusion Commission, of which I am a member, has argued that continuing the uplift is a key measure in avoiding the future financial and human costs of unpaid bills, evictions and debt recovery. For the most financially vulnerable households there is a real danger that people will have no option other than to turn to high-cost credit or illegal lenders to meet basic costs. The charity StepChange has highlighted how the termination of this uplift will be a cliff edge for millions, pushing them into deficit budgets. Can the Minister say what plans the Government have to ask all financial services providers and utilities suppliers, as part of their vulnerable customer activity, to signpost claimants to the freely available benefits and grants information and advice provided by a wide range of charities?

On the impact on mental health, many people with severe mental illness rely solely on benefits to survive, and the uplift has provided a much-needed lifeline to people who cannot work because of their condition. According to a recent Rethink Mental Illness survey, 76% of UC claimants said that over the last 12 months, concerns about money had impacted on their mental health “a lot” and over half said that they had experienced not having enough money to pay for food.

I want to ask the Minister, who I know thinks deeply and feels passionately about these issues, the following questions. First, all of the last six Work and Pensions Secretaries have described the uplift as a vital improvement in the adequacy of social security, joining hundreds of charities and other experts who have warned that this cut will cause real hardship, rising poverty and debt. Why are the Government ignoring this warning from such a wide array of voices and taking welfare support back to inadequate levels, particularly at a time when energy bills are set to rise?

Secondly, we keep hearing the Government’s plan for jobs as the justification for this cut. However, the majority of people who will be impacted by the cut are in fact already in work, and universal credit provides vital support for families moving back into work at precisely the same time as other pandemic-related government support schemes finish. How does this add up?

Thirdly, what are the Government’s plans for families on universal credit who are unable to work due to caring or disability? Surely, we believe these families should live above the poverty line and with dignity.

Finally, what assessment have the Government made of the interaction between the ending of the uplift and Tuesday’s announcement about the rise in national insurance to fund health and social care? Will there be any overlap between universal credit recipients and those earning enough to pay national insurance, in which case is this a double whammy?

I end by making a heartfelt plea to the Government, adding my voice to so many others, urging them to keep the £20 uplift, make it permanent and extend it to legacy benefits.

16:03
Baroness Eaton Portrait Baroness Eaton (Con)
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My Lords, today’s debate is a very important one. The subject matter is understandably highly emotive and families, especially those with children, who are suffering poverty need our concern and our practical help. Unfortunately, universal credit has had naysayers from its inception. I feel it has been the unsung hero of the pandemic, with 3 million extra claimants rapidly joining the system. The old tax credit system would have let people down badly, and errors and delays would have led to massive hardship in the depths of lockdown. The book by the noble Lord, Lord Freud, said that paperwork got lost in 40% of tax credit claims.

It is clear to all of us that the days of the pandemic have been difficult for people, but they have also been difficult for government. Difficult decisions have had to be made. When the pandemic hit, the Government created a range of measures and it was always made clear that the uplift to universal credit was temporary. Can the Minister say whether the £6 billion cost of universal credit was modelled on a zero improvement in the labour market? Obviously, the economy is now revving up, so there are so many more job vacancies. Now the labour market circumstances have dramatically changed, there are more work opportunities.

The aim of and philosophy behind universal credit is to help people to escape the negativity of a life spent permanently on welfare. Attempts by previous Governments, such as tax credits, have trapped people in welfare. While the uplift is being removed, the Government are increasing the number of jobcentres and work coaches—factors to help people to find more, and better, jobs. The problem of in-work poverty is concerning. Can my noble friend the Minister inform the House about the in-work progression scheme, which, I understand, is aimed at helping with this situation?

The uplift is costing £6 billion. I believe that there can be, and must be, more and better ways for the Government to help people.

16:06
Baroness Donaghy Portrait Baroness Donaghy (Lab)
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My Lords, I thank the noble Baroness, Lady Tyler of Enfield, for initiating this debate. She was so comprehensive that I do not think I will use all my time, so as not to repeat her.

I want to make a couple of points, if I may, in reply to the noble Baroness, Lady Eaton. Somebody who was born on the day the old benefits disappeared and UC arrived has probably celebrated their 10th birthday by now, so I wonder how long that argument will be played out in this Chamber. I congratulate the noble Baroness on her stalwart defence but, really, it is getting a bit thin and memories of how bad the old system was are fading. I am the first to accept that it was a bad system; I just do not think that this is a particularly good one. I agree with the noble Baroness that it came into its own during the pandemic, however.

I slightly resent—this is not against the noble Baroness, Lady Eaton, or anybody individually—the fact that, if the benefits were adequate, we would not be having this discussion about a £20 uplift. If the benefits were decent, people would not be struggling. We are not talking about people falling into poverty here; we are talking about people falling deeper into poverty so that they cannot even afford the basics.

I want to say a little about the impact on actors, writers and other creative workers, who are often ignored in these debates. Some 65% of Equity members rely on universal credit and other welfare to stay in the industry. Removing the £20 uplift would mean 53% of them experiencing financial hardship, with 41% unable to meet housing and other essential costs. These figures were taken from a recent impact survey; I thank Equity for its excellent briefing. It joined 100 other organisations across the UK that wrote to urge the Government to abandon their plans. Only 9% of its actors and creative workers had received a grant or other funding from Arts Councils, and more than 40%

“have not received help from the Self Employed Income Support Scheme”.

Of equal concern is the reintroduction of the minimum income floor. These moves will risk an exodus of talent from our world-leading creative industry, already clobbered by the Brexit legacy. Obviously, there will be time in future to discuss the minimum income floor and Brexit, but families will receive significantly less help from the social security system now than they would have a decade ago. The loss of the £20 uplift will take the main rate of out-of-work support down to its lowest level in real terms since 1990.

I am aware that the chairs of the relevant House of Commons Select Committees have written to the Government to ask for the uplift to be made permanent. As the noble Baroness, Lady Tyler, has already said, six former Conservative Work and Pensions Secretaries have urged the Chancellor to make the uplift permanent. If they cannot change the Government’s mind, I begin to despair. Why will they not publish the impact assessment mentioned by the noble Baroness, Lady Tyler? If—

Baroness Bloomfield of Hinton Waldrist Portrait Baroness Bloomfield of Hinton Waldrist (Con)
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I hate to interrupt a good speech but the noble Baroness is almost a minute over the suggested speaking time.

16:10
Lord Bishop of Gloucester Portrait The Lord Bishop of Gloucester
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I am grateful to the noble Baroness, Lady Tyler, for introducing this important debate, and I declare my interest as a trustee of Feeding Britain. I will focus my time on the impact that withdrawing the £20 uplift will have on food poverty. More than 500 anti-poverty workers, volunteers and supporters within the Feeding Britain network have signed a petition calling on the Government not to remove the increase, and that petition will be delivered to No. 10 in about an hour.

Food banks in the Feeding Britain network have credited the £20 increase with helping to stabilise, or indeed reduce, the levels of need for crisis support. As has been said, the decision to remove that increase coincides with the ending of other support schemes, such as furlough and local support grants and, with the imminent predicted increase in food and energy prices, there is deep concern that withdrawing this uplift will lengthen the queues outside food banks.

A survey published this week for the Trussell Trust found that, faced with a cut of £20 a week, 1.2 million people—20% of those who claim universal credit—say that they are very likely to need to skip meals, and nearly 1 million—that is, 15%—say they are very likely to need to use a food bank as a result of the cut. I find it really shocking to read a stat from the Food Foundation, which estimates that in order to eat according to government guidelines for a healthy diet, the poorest in our society would have to spend 74% of their disposable income, compared to only 6% for the richest.

This is most certainly not about laying all the solution for addressing food poverty at the Government’s feet. The role of civil society and community engagement, particularly during the pandemic, has been inspiring and has involved many faith groups, and it needs to continue to be fanned into flame. During the first six months of the pandemic, a project involving the diocese of Gloucester partnering with a charity in Stroud called the Long Table delivered over 35,000 meals to the vulnerable and NHS workers. However, to enable civil society and community responsibility, we need the Government to put the right enablers and safeguards in place, and that means keeping this £20 uplift.

In 2018, I added my voice to the End Hunger UK campaign. Three years later, the fundamental point remains. While celebrating the work that churches and other faith and voluntary groups are doing to respond to urgent need, it is clear to me that structural change needs to happen to reduce the need for food banks in the first place. That now includes retaining the uplift to universal credit.

16:13
Baroness Fookes Portrait Baroness Fookes (Con)
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My Lords, I rise to contribute to this debate with very mixed feelings. I was very approving of the Government’s decision to have a substantial uprating at the beginning of the pandemic and to extend it from the original 12 months to 18 months, but I query the wisdom of ending it abruptly at the end of this month. Others have made mention of those six Conservative Secretaries of State who have urged that this should be permanent. I remind everyone that the architect of universal credit, Sir Iain Duncan Smith, was one of those who contributed to this, and I think his views are worth a great deal. That said, I have been long enough in politics to know that it is one thing to give a benefit but quite another to take it away. Whatever the merits or demerits might be of doing so, as night follows day, there will be instances of real hardship—real, agonising true-life stories—which will immediately diminish the reputation of the Government for doing something that was in fact very good indeed.

I know that the Government are setting great store by getting more people into work, and I fully subscribe to that. I am delighted by the number of schemes that are afoot to try to help, particularly those that will give people greater skills and therefore the chance of earning better money in better jobs, which would bring them off universal credit altogether. Others have mentioned the fact that many people on universal credit are also working. That is something that we ought to see the end of as soon as possible. In the meantime, I am deeply concerned about such an abrupt ending—what I call the “cliff edge”. I am sure there are other ways of dealing with this, if the Government feel they cannot make the uplift a permanent arrangement, as they have made clear. Surely it would be more sensible to have some gradual diminution of the amount rather than doing it all in one go. I do not know whether that has been considered in government circles, but I think they should take another look at it to ensure that, as I say, we do not cause people immense hardship by an abrupt ending of something on which so many people rely.

I know the Minister understands very well the position of people who have not had it very good in life and who have been at the bottom of the pile, since much of her work has dealt with that, so I look to her to see if she can bring her powers of persuasion to bear on the powers that be.

16:16
Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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My Lords, it is good to see the Minister again; we have spent a lot of time together this week.

We have to give credit to the Government for having had the sense and the compassion to introduce the £20 uplift in the first place, so equally we must now condemn them now that they want to take it away. It goes without argument that we should have a proper assessment of the impact of withdrawing the uplift. Indeed, we have several clear assessments and measured judgments of the impact—just not from the Government. We have the assessment of reputable organisations including the Joseph Rowntree Foundation and Citizens Advice, and they have made the position clear. I also had the privilege of attending a meeting of the All-Party Parliamentary Group on Universal Credit earlier this week. We heard from a wide range of organisations, including the Trussell Trust, which has been mentioned, but also, crucially, from individuals who were able to enlighten us about their real experiences and their fears of what faces them after the cut in their benefits.

We are recovering from the pandemic, but much more slowly than we hoped and expected earlier in the year, not least with the expected increases in unemployment and the consequent poverty and financial difficulties. It is also worth mentioning the loss of the economic stimulus that will arise because of the withdrawal of the uplift; that money is being taken out of local economies across the country.

My question to the Minister is simple: given the overwhelming weight of opinion and evidence, from and on behalf of those in receipt of universal credit, how can the Government in all conscience proceed with this action?

16:18
Baroness Bennett of Manor Castle Portrait Baroness Bennett of Manor Castle (GP)
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My Lords, I thank the noble Baroness, Lady Tyler, for securing this debate.

I started by contemplating £20. What does that mean to different people in our society? Like the right reverend Prelate, I focused on food. I thought about the people in this Chamber and those who live around us here in Westminster. I looked at some of the restaurants around us here in Westminster. At the Corinthia London Hotel, just up the road, you can get a baked fig starter for £18. At the Ivy restaurant you can get a shepherd’s pie for £19.50. If you have lunch at the Ritz, you can get a veal sweetbread starter for £28.

Also visiting us here briefly at Westminster were people testifying to the Work and Pensions Committee, telling it what £20 meant to them. Anthony Lynam said that it means,

“do I go hungry, do my kids go hungry?”

Amina Nagawa said that already with the £20 she goes without food and her son cannot eat something nutritious. Gemma Widdowfield said that she would buy essentials on her credit card and just stack up the debt.

The right reverend Prelate talked about the need for structural change. We have a crisis of inequality in our society. £20 means the world to some people or a veal sweetbread starter to others. As the noble Lord, Lord Davies, just said, this involves not just individual households but whole communities. Citizens Advice assessed the community impact of this cut as the Government appear not to have done. It worked out that for each £1 of investment that the Government might put in their levelling-up fund, £1.80 was being taken from local economies targeted by the levelling-up fund, the poorest in our society.

We come back to food. We think about what people might be eating in Doncaster, Wigan or Merthyr Tydfil. If they are eating out at all, it might be spending £2 in the café for a pie and chips. They probably will not be eating out at all but shopping around in supermarkets to find the cheapest possible thing to put food into people’s mouths. The people dining at the Ritz and the Ivy are taking the food out of the mouths of the children who cannot eat now. Twenty pounds is not much, but taking it away as well is absolutely unconscionable.

16:22
Lord Desai Portrait Lord Desai (Non-Afl)
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My Lords, it is almost a universal law of poverty studies—I used to do that 40 years ago—that any level of payment at which the Government of the day fix as being necessary is 15% short of what is really needed. Peter Townsend, a great economist carried out a study way back in the 1970s in which he was able to show that what we then had by way of supplementary benefits was 15% to 20% short.

When the £20 extra was given in the pandemic, the Government just fixed the existing allowance to what it should always have been. One of the things that happens when you puts your name down to speak is that people write letters. The actors’ union, Equity, has written to me. Actors are peculiar people because even in normal circumstances they have a precarious career. They never know when they will get a role, especially in the pandemic because of the restrictions on large gatherings. Even now, when the theatre and film industries are reviving, the situation is always peculiar. Even when one is employed, one is insecure and inadequately compensated. For them, saying that the economy has recovered and wages are rising is not good enough. There is a large class of such jobs; even when one has a job, one is not actually secure.

For those people, £20 is a lot of money. Two-thirds of actors are in the position whereby under universal credit they are insecure in terms of having an adequate amount of money. I therefore urge the Government to extend their hand—I know things are hard—and perhaps do what the noble Baroness, Lady Fookes, said. If they have to do it, please do it slowly. Break it down into stages and try to see from the data where it will hurt most and do something. Please do not do it suddenly. The best of all possible worlds would be to make the extra £20 permanent.

16:24
Lord Farmer Portrait Lord Farmer (Con)
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My Lords, I join other noble Lords in thanking the noble Baroness, Lady Tyler, for securing this debate and focusing on impacts.

It has been said that the national insurance increases announced this week will hit the poorest and younger workers hardest, and these categories will often include UC claimants moving into employment, so not maintaining the uplift could be a double whammy for those cohorts. Can my noble friend the Minister give us an indication as to the impact of the interaction of these two measures? If a claimant is paying increased national insurance on their earned income, does that mean that there is now, effectively, an even higher taper rate and they lose more than 63p of every £1 they earn? I am sure my noble friend will put me right if I am misunderstanding how UC and NI work together.

Much has been written about a decade of underfunded reform, but the focus should be on adequately resourcing the principles of UC, which promised to make work pay. I am particularly interested in the impact on work incentives of not maintaining the uplift. Instinctively, it can be argued both ways. Has modelling been done to establish whether its retention is a marginal disincentive to moving into work or, in fact, a security blanket that keeps morale high and makes moving into work less daunting?

As the Government are rightly very exercised by job vacancies and skills shortages are very high, work incentives are of paramount importance. Strengthening these would make better use of any ongoing increase in the welfare budget than this emergency blunt instrument, which boosted the incomes of almost all claimants regardless of circumstances. If the Government decide against maintaining the uplift, they should decrease the taper rate so that it is closer to the 55% level mooted in early design of UC in 2009-10.

My noble friend Lord Freud was unable to establish properly the system of universal support to run alongside universal credit to help those who will always struggle to get into work, with all the advantages to well-being for them and their children this entails. What progress is being made to help those furthest from the labour market to overcome barriers of addiction, mental ill health, poor education and family relationship problems which a more generous basic welfare payment would barely touch?

16:27
Baroness Smith of Newnham Portrait Baroness Smith of Newnham (LD)
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My Lords, I am grateful to my noble friend Lady Tyler for bringing this debate and to the Secretary of State for sitting in for a quite a lot of it. That was a good sign. She is no longer here, but I hope that the Minister will share her answers and the Hansard record with her, because it is about time the Government listened.

In July last year, your Lordships’ Economic Affairs Committee produced a report on universal credit. It called on the Government to make the £20 uplift permanent. It is an indictment of us as Peers that we have not yet found time to debate that report, over a year later. We need to do a better job of ensuring that we make use of such reports, because that committee raised a set of questions that necessitate considerable reflection.

In particular, the committee noted that universal credit can disadvantage women, disabled people and BAME, and that it was linked to increased food bank usage. The Leader of the other place has talked about the support given to food banks being “rather uplifting”. I do not find the support uplifting. It is a travesty that, in this country, people need to go to a food bank at all.

While I listened closely to the words of the right reverend Prelate the Bishop of Gloucester, and it is clearly encouraging that people have rallied around the most vulnerable during the pandemic, we should not need food banks in this country, ever. The state should ensure that people are not indebted to such an extent that they cannot afford to feed themselves and their children.

The noble Baroness, Lady Bennett, made absolutely the right points. For so many of us, £20 might seem a very small amount of money. How many chai lattes does it buy—how many things that seem so incidental to many people above the poverty line? But for others, that small amount of money makes all the difference. If it is right during the pandemic, it is right going forward as well, because we have heard that so many people are on in-work benefits. They cannot do more and more jobs. If they can get a better-paid job, fantastic—but if they cannot, there are questions to be raised.

I have a final question for the Minister. The Economic Affairs Committee, in calling for the uplift to be made permanent, said:

“Universal Credit should be set at a level that provides claimants with dignity and security.”


Does the Minister agree? If so, does she think that reducing the uplift will leave people with dignity and security?

16:31
Baroness Sherlock Portrait Baroness Sherlock (Lab)
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My Lords, I thank the noble Baroness, Lady Tyler, and all noble Lords for their contributions. The Government have very few supporters on this matter, and nor should they.

We have heard about the impact on poverty. Citizens Advice has said that 2.3 million people could fall straight into debt. That is because £20 is not a small amount of money. Basic universal credit for a single person over 25 will fall by 21% when this comes in. If they are under 25, the fall is more than 25% overnight. The noble Baroness, Lady Eaton, may think the Government were clear about this, but Turn2us surveyed people last month and found that 36% of respondents were unaware this cut was coming. Rethink found that many severely mentally ill people, because they do not go online, have no idea this is coming down the track.

The defence we have heard from the Prime Minister, that the Government want to prioritise work, is simply misleading. We have been here before. Back in 2012, George Osborne tried to justify cutting £10 billion from social security by talking about the need for fairness

“for the shift-worker, leaving home in the dark hours of the early morning, who looks up at the closed blinds of their next door neighbour sleeping off a life on benefits”,

even though he knew he was cutting in-work benefits. Now here we are again.

The Prime Minister will know that 38% of adults in families on universal credit are employed. This cut is a direct blow to low-paid workers, including many we feted as pandemic heroes not long ago. The RSA found that 660,000 low-paid key workers, including nurses, supermarket staff and carers, will be hit by this cut.

The noble Baroness, Lady Tyler, is right: when the Government take £1,000 a year from low-income families, they should remember that this money is spent in towns and cities across the country. Poorer families spend their money because they cannot afford not to. Taking that cash out of the economy, when the recovery is so fragile, damages us all—disproportionately so in the north and the Midlands.

Let us remember one thing. There is a reason why the Government had to increase universal credit when millions of people flooded on to it: because people could not live on the benefits at the level they were at previously. They had gone up under Labour Governments —historically, they have not always been bad—and the Government cut over £10 billion out of our system, so people could not afford to live on the system that was there. As my noble friend Lady Donaghy pointed out, that is why the Resolution Foundation is right that if this goes ahead, we will be back to the lowest level of basic benefits for three decades.

We deserve a decent social security system and an economy with secure, well-paid jobs. We do not get there by plunging the poorest people into deeper poverty. Can the Minister tell us now whether the FT is right? Is there really internal modelling saying that this will have a catastrophic effect, leading to a rise in homelessness and poverty and soaring use of food banks? Is that true? I find it impossible to credit that a Minister would look at that assessment, shrug their shoulders and do it anyway.

16:34
Baroness Stedman-Scott Portrait The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)
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My Lords, I thank the noble Baroness, Lady Tyler of Enfield, for securing this debate, and I thank all those who have contributed to today’s discussion on this important question. I know how important it is, and I understand the depth of feeling.

I was pleased to hear some balance and the view that the Government had done well in supporting people through the pandemic and through their work to get people into work. The debate has been wide-ranging, and there is no doubt that the last 18 months have brought unprecedented challenges: we all had to change the way we lived and worked, and, in the face adversity, this Government provided an unprecedented response, delivering support to people right across the country in response to the crisis.

We have heard how the £20-a-week uplift to universal credit has made a difference to households facing economic shock and financial disruption as a result of the pandemic. The noble Baronesses, Lady Donaghy and Lady Tyler, the right reverend Prelate the Bishop of Gloucester and others have made reference to the £20 uplift. It was clear right from the word go that it was temporary and not going to be permanent. I remind the House that the Chancellor has always been clear that the universal credit uplift was a pandemic response. He has ensured that support was in place well beyond the end of restrictions and reopening the economy, and we are not finished supporting those who need our help. No one wants to see anyone in poverty, so I agree with my right honourable friend the Chancellor when he says that he does not accept that people will be forced into poverty because it is now right that we switch our focus to getting people back into work and improving their prospects to progress in work. Our comprehensive plan for jobs will help to deliver this.

As I have said, the £20-a-week uplift to universal credit and working tax credit was announced by the Chancellor as a temporary measure in March 2020. We took this approach in order to give those people facing the most financial disruption the help that they needed as quickly as possible. At the Spring Budget, we announced a six-month extension of the temporary £20-a-week increase, meaning that it would be in place well beyond the end of restrictions. The additional support has increased the universal credit standard allowance and working tax credit basic element by up to £1,560 since its introduction.

We have also provided other support, and we should look at that rather than just at the £20 uplift in isolation. We introduced the Covid winter grant scheme—now the Covid local support scheme—with £269 million provided to local authorities in England between 1 December 2020 and 20 June 2021 to help the most vulnerable children and families with the cost of food, utilities and other essentials. This temporary scheme has now been extended for the final time, with an additional £160 million for local authorities to help vulnerable households as the vaccine rollout continues. From April 2021, we increased the national living wage. It has always been this Government’s intention that this additional financial support and other Covid support will end once the economy has reopened. Now, as we open up and our recovery gathers pace, it is right that we switch our focus to getting people back to work and improving their prospects to progress in work.

My noble friend Lady Eaton, and the noble Baronesses, Lady Tyler and Lady Smith of Newnham, talked about dignity. In my career, I have never seen anything more dignified than someone having a job that enabled them to live and be independent. Our vacancies are currently above pre-pandemic rates, sitting just below a record high since the series began in 2018. This is a very promising sign that the economy is recovering.

In this context, extending the uplift, even by a further 12 months, would have been premature and come at a very significant cost—the equivalent of adding 1p on the basic rate of income tax in addition to a 3p increase on fuel duty—when we consider that total welfare spending in Great Britain will be £241 billion in 2021-22, with over £111 billion on working age welfare, or 4.9% of GDP. Universal credit provides a safety net but is not designed to trap people in welfare. Fundamentally, we recognise—and I support the fact—that work is the best route for individuals.

As we are aware, there have been significant positive developments in the public health situation since the extension to the uplift was announced and the vaccine rollout is now progressing well, with 80.3% of the population fully vaccinated. It is now right that the Government should shift their focus to supporting people into work and to progress in work. We have a comprehensive plan for jobs to do this.

We are spending over £7 billion, around £1 billion more than the cost of a one-year extension of the £20 uplift. This includes £2 billion on Kickstart; £2.3 billion on the number of work coaches, which we have doubled; tripling sector-based work academies; £2.9 billion on Restart; £200 million on JETS; and tripling the number of traineeships. Our work coaches will be working very hard to get people into work and to progress them.

The noble Baroness, Lady Tyler, asked about an impact assessment. The department has not completed an impact assessment on the ending of the temporary uplift as it was introduced as a temporary measure. We have no obligation to conduct an impact assessment as we are returning to business as usual as the temporary Covid uplift is expiring, as it was always intended to do. Understandably, the noble Baroness also asked us about fuel poverty. My noble friend Lady Bloomfield, who has expertise in this area, said to me that we are doing an awful lot on it. If I may, I will write to the noble Baroness to update her on what we are doing.

My noble friend Lady Eaton raised the point about a £6 billion improvement in the labour market and asked how we would spend it. I cannot answer that in detail, but I have every confidence that those discussions took place. She asked how we would use that money differently, if we could use it again. I cannot answer that, but I am sure that those discussions have taken place.

My noble friend also mentioned in-work progression. Currently, 4.2 million individuals are in low pay, and the Resolution Foundation has found that only one in six low-paid employees managed to escape low pay over the decade to 2016. There are 2.2 million universal credit claimants in work. These numbers have risen due to the impact of the pandemic. My noble friend Lady McGregor-Smith has conducted an in-work progression report, which I hope noble Lords have read. My colleague at the Department for Work and Pensions, the Minister for Employment, is busy trying to implement the things that will make a difference to people to achieve in-work progression.

The noble Baroness, Lady Tyler, also spoke about addressing poverty. Looking at the impact of poverty on an individual is complex and inherently speculative, as it requires projecting how incomes will change for every individual in society, which are affected by a huge range of unknown factors. In 2019-20, working-age adults in households where all adults were in work were six times less likely to be in absolute poverty after housing costs than adults where nobody worked.

The noble Baroness, and other noble Baronesses and noble Lords, asked why we are ignoring the comments and points that stakeholders have made. We are not ignoring them; we are listening but, at the risk of repeating myself, this was always meant to be a temporary measure. As I understand it, the Government have made their decision, but it is not just to stop it and run; they are investing in other areas where we hope this will make a difference to people’s lives.

The noble Baroness, Lady Tyler, raised the issue of planning for jobs. I could give her a running commentary on all that we are doing. Let me write to all noble Lords to tell them exactly what we are doing.

The noble Baroness, Lady Donaghy, and the noble Lord, Lord Desai, mentioned people in the creative industries who have precarious employment. These things have an impact on them when their work stops; I acknowledge that. I am pleased to say that the Minister for Employment in the Department for Work and Pensions has been working with the creative industries. We have been working with Pinewood Studios to help people into jobs there, because there are so many of them. I would be happy to arrange a briefing from the Minister for Employment for noble Lords to see how that work is progressing, and I hope that it will give noble Lords an opportunity to raise other things.

The right reverend Prelate the Bishop of Gloucester and the noble Baroness, Lady Smith of Newnham, talked about food bank usage. I pay tribute to the food banks; they are doing a great job in supporting communities. They have enabled people and communities to work together to benefit the people they are trying to help, but it is difficult to predict impacts on the use of food banks. There are many reasons why people use them, and their use cannot completely be linked to a single cause. Impacts also depend on the speed of economic recovery and how we can quickly return individuals to work.

Time has eluded me again—it does annoy me when that happens because I feel that I have not answered everyone’s questions and shown them respect—so I will conclude my remarks now. I will write to the noble Lords who asked me questions and place a copy of my answers in the Library, but let me say that I am also prepared to meet people to further this discussion, if that would be helpful.

Finally, our focus is rightly on continuing the implementation of our plan for jobs programme, which will continue to help millions of families into stability and on to the path of prosperity because a working Britain is at the heart of a Britain that works.