Cost of Living: Support for Young People

(Limited Text - Ministerial Extracts only)

Tuesday 18th October 2022 Westminster Hall

[The Economic Secretary to the Treasury (Richard Fuller)]

What a great pleasure it is, Ms Ali, to serve under your chairmanship. I thank the hon. Member for Leeds North East (Fabian Hamilton) for securing the debate, and I thank the hon. Members who have contributed, including the hon. Members for Bath (Wera Hobhouse) and for East Dunbartonshire (Amy Callaghan). I thank my friend, the hon. Member for Sheffield Central (Paul Blomfield), for a number of very useful interventions, and the SNP spokesperson, the hon. Member for Glasgow Central (Alison Thewliss), and my colleague on the Front Bench opposite, the hon. Member for Ealing North (James Murray), for their contributions.

It was good that the hon. Member for Leeds North East started by referring to the YMCA publication entitled “Inside the cost of living crisis: The experiences of young people living at YMCA”, which was published earlier today, along with some other reports. I would like to draw colleagues’ attention to the statement with which that report starts, with which I am sure we can all agree:

“Everyone should have a fair chance to discover who they are and what they can become.”

The YMCA does great things across the country to enable people to achieve that objective.

There are real challenges facing our economy after two decades of low inflation. The world is now confronted with a high bout of fast-growing prices and the United Kingdom is not immune. While that takes place, we should all remember that our friends in Ukraine are at war, and the United Kingdom will continue to support them in a number of ways. We recognise that Putin is using energy as a weapon of war, pushing up prices and piling pain on citizens across the free world and particularly in Europe.

We should also recognise that young people can be in a particularly precarious position, because they are still in education or just starting out in their careers. They may not have had time to build a financial safety net. Many are at a critical stage of identifying and then seeking to accelerate their potential. I want to be clear: this Government are responding to help the most vulnerable to get through these tough economic times.

I want to answer some of the questions that have been raised. Very directly, on the uprating of welfare benefits in line with inflation, I will be honest: there are difficult decisions to be made. I want to reassure people that helping the most vulnerable will continue to be central to our decisions, just as it was when we announced support of £1,200 for millions of the most vulnerable households. The Government are required to review the rates of benefits annually to determine whether they have kept pace with price inflation. The Work and Pensions Secretary is yet to conduct her annual review of benefits and more will be said in the medium-term fiscal plan.

I think I heard the hon. Member for Glasgow Central ask why the universal credit standard allowance is lower for people under 25. That is to reflect that those claimants are more likely to live in someone else’s household and to have lower living costs. However, it is acknowledged that some claimants under 25 do live independently, which is why universal credit includes separate elements to provide support to claimants for those additional costs.

I want briefly to talk about the trend of poverty since 2009-10. Between 2009-10 and 2021, 2 million fewer people were in absolute poverty after housing costs—a figure that includes 500,000 children. In 2021, 536,000 fewer children were in workless households than in 2010. The youth unemployment rate fell by 1.3 percentage points in the quarter to August 2022 and is at a record low of 9%, which is around a quarter below its pre-pandemic level.

That progress requires us to talk about economic stability, which is vital for everyone and particularly for young people who may be looking for their first jobs or next steps. Instability affects the prices of things in shops, the cost of mortgages and the value of pensions, meaning that bringing stability to the economy will ease the cost of living for everyone. As the Chancellor has said, the United Kingdom will always pay its way and we remain committed to fiscal discipline. There will be more difficult decisions to take on both tax and spending as we deliver our commitment to get debt falling as a share of the economy over the medium term. We will publish a medium-term fiscal plan to set out our responsible fiscal approach more fully at the end of the month.

The only real way to create better jobs, deliver higher wages and spread opportunity is growth. Growth is what frees us to invest in the services that ordinary people need and to give people the financial security to live their lives as they want. Stability is a prerequisite for growth.

[Wera Hobhouse]

I do not think anybody could disagree that we all want growth, but the question is, how do we make that growth happen? My point was that we need to invest in people, particularly young people, to make that growth happen.

[Richard Fuller]

Yes of course, but the hon. Lady did not answer her question. The question is, how do we tap that potential? It is important to design policies that tap that potential. I was struck by a point made by the hon. Member for Glasgow Central about migrant families coming to this country and how they start their life. It is a fact around the world that first-generation migrant families, more often than not, contribute a greater proportion to the growth of the country that they go to than the population that they join. That seems to be a fact. I have not forgotten previous discussions with her before I took this role. The hon. Member for Bath said that we have to focus on people’s potential, but we have to find that strategy to achieve growth.

I remind hon. Members that while tackling these economic challenges, the fundamentals of the UK economy remain resilient. Unemployment is at its lowest in nearly 50 years. Our growth rate since 2010 has been higher than that of Germany, France, Italy and Japan, and it is forecast to be higher than that of any G7 country this year. The Labour spokesperson, the hon. Member for Ealing North, is shaking his hands, but these are the facts.

Our need for competence and stability is not at odds with the help that we are providing to those struggling with the cost of living. That is why the Government are focused first and foremost on helping everyone with the cost of living, most notably the cost of energy. The energy price guarantee and the energy bill relief scheme are supporting millions of households and businesses with rising energy costs. The Chancellor has already made clear that they will continue to do so—

[Amy Callaghan]

rose—

[Richard Fuller]

I must finish up, if I may. They will continue to do so from now until April next year. The Government have also announced £37 billion of targeted support for the cost of living this financial year.

Many young people will have benefited as their wages got a boost from the national minimum wage increase. As a result of our changes to the national minimum wage, from April 2022 people aged 21 or 22 saw a 9.8% uplift, to £9.18 an hour, while 18 to 20 year-olds received a 4.1% rise, to £6.83 an hour, and 16 to 17 year-olds had an equivalent 4.1% increase, to £4.81 an hour.

[Alison Thewliss]

rose—

[Richard Fuller]

I just have one more minute—I think that is correct.

[Rushanara Ali (in the Chair)]

You can take an intervention if you want to.

[Richard Fuller]

In that case I would love to.

[Alison Thewliss]

Can the Minister explain why people of a younger age are not worth the same as someone older?

[Richard Fuller]

Yes I can. The fundamental point is that we are investing in young people. Many businesses wish to invest and add additional costs for training and support to tap into those skills, so that people can earn higher wages later on. It is because companies have the incentive to invest in young people that young people can then earn more. The hon. Lady shakes her head, but she should recognise that the national minimum wage is not a cap on what people can be paid but a floor. If companies invest in young people to get those skills, they can earn more.

Our youth offer provides guaranteed foundation support to young people searching for work on universal credit. That includes 13 weeks of intensive support to help new claimants into suitable opportunities and provision. Youth hubs are co-delivered by the Department for Work and Pensions and local partners, and youth employability coaches are available for those with complex needs.

We will always encourage labour market participation and make it pay to work. Through universal credit, the Government have designed a modern benefits system that ensures that it always pays to work and that withdraws support gradually as claimants move into work, replacing the old legacy system, which applied effective tax rates of more than 90% to low earners.

Questions were raised by the hon. Member for Bath about free school meals and breakfast clubs. The Government spent more than £1 billion on delivering free school meals to pupils in schools. Around 1.9 million disadvantaged pupils are eligible for free school meals, as well as an additional 1.25 million infants who receive a free meal under the universal infant school meal policy. The Government are also providing an additional £500 million toward the cost of extension, which has come via a six-month extension to the household support fund.

The hon. Member for Leeds North East talked about breakfast clubs. The Government are providing over £2 million a year to continue the holiday activities and food programme, which provides free holiday club places to children from low-income families. The Government are providing £24 million over two years for the national breakfast club programme, benefitting up to 2,500 schools.

The hon. Member for Sheffield Central and others asked questions about support for university students. He may know that the Government have increased maintenance loans every year, meaning that disadvantaged students now have access to the highest ever amounts in cash terms. He may know that the Government have made £260 million available through the Office for Students, which universities can use to boost their own hardship funds. He may know that many students also benefit from the wider package of cost of living support, and he will know that maximum tuition fees will be frozen until 2025. He mentioned one particular idea on thresholds, which I would be grateful if he could write to me about.

[Paul Blomfield]

I will write to the Minister on that point. It is all very well saying that the maximum loan has been increased, but people cannot access it because the threshold has not changed. I think there is some serious work to be done by the Government on that. It could make a very real difference to some of the most hard-pressed students.

[Richard Fuller]

I would be grateful for his insight on that issue. I want to close on the issue of mental health and young people, which is an issue close to my heart. We are all aware that the response to covid had a dramatic effect on the mental health and wellbeing of young people more than others. The Government appreciate the importance of responding to the significant demands on children and young people’s mental health. The Government are delivering record levels of investment in mental health services. These investments are part of the NHS’s long term plan and include an extra £2.3 billion per year for mental health services by 2023-24. This will give an additional 345,000 children and young people access to NHS-funded services or school-based support by 2024.

It has been an interesting and pithy debate. It is clear that we owe it to the next generation to deliver higher wages, new jobs and improved public services. We owe it to young people to deliver stability and a strong economy on which they can build their future securely. We must make sure they have the safety net they need now. The Government will help them with the cost of living today and continue to invest in them for the future; that is what young people will benefit from, and that is what the Government are focused on delivering.