Social Security Benefits Up-rating Order 2025

Baroness Drake Excerpts

Tuesday 25th February 2025 Grand Committee

[The Lord Bishop of Chelmsford]

My Lords, it is very good to be here today and I am glad to be able to contribute on this important subject. As we consider a proposed uprating of 1.7%, as compared with 6.8% last year and 10.1% the year before, I am mindful of the different backdrop to this year’s decision. We may no longer be in a period of soaring inflation, but costs remain high in just about every area of life. The discrepancy between the inflation rate from September 2024, by which most means-tested benefits will be uprated, and the current rate of 3% will be felt particularly by those who have not benefited from wage growth this year. This is a timely moment to explore social security as the Government set out their wider agenda in this area.

The manifesto commitments to review universal credit as a means of supporting people into work and addressing poverty and to produce a child poverty strategy could give us a basis on which to improve the lives of millions of people in our country. Indeed, bold action is required in both these areas and, like other noble Lords, I await the outcome of these reviews with keen interest.

As the Church of England’s lead bishop for housing, I see the consequences of not aligning housing support with housing costs, with half of private renters on housing benefit experiencing poverty. I suggest that local housing allowance ought to be linked to private rents as a matter of course, especially taking into account research from the Joseph Rowntree Foundation, which shows that 81% of low-income private renters in receipt of housing benefit are going without essentials such as food, heating and warm clothing. I very much hope that the Government will consider the adequacy of social security in their review of universal credit. For the first time since its introduction, we have an opportunity to explore how well the system works and to consider carefully the impact of sanctions, deductions and the five-week wait on the lives and incomes of people who rely on social security simply to make ends meet.

I welcome the introduction of the fair repayment rate, which is an important step towards ensuring that deductions do not cause people to fall below the threshold of what we would consider an acceptable standard of living. Despite this, I still worry about the impact of the deductions. I draw the Committee’s attention to the Private Member’s Bill brought forward by the right reverend Prelate the Bishop of Manchester, which would equalise the standard allowance of universal credit for care leavers under the age of 25. Care leavers have shared their experiences of deductions from their universal credit, which, when taken from an already lower rate, can leave them struggling to afford essentials. This cohort of young adults cannot necessarily rely on the same level of family support as many of their peers.

Even though we have resumed uprating benefits in line with inflation, their real-terms value is low by historic standards. The major issue is that benefits are not calculated in relation to the day-to-day costs people face. One solution could be for benefits to rise in line with wages rather than prices, as advocated by, among others, the Resolution Foundation. Another could be to introduce a minimum floor in universal credit to ensure that people have the money they need to afford the essentials, as advocated by the Trussell Trust and the JRF. It seems eminently sensible to calculate benefits in relation to the day-to-day costs people face. We have a precedent for this, with pensions credit calculated by comparing a person’s income with the amount the Government think necessary to live on. I would be grateful to hear the Minister’s views on whether means-tested benefits could be subject to a similar assessment.

As I close, I reflect on the impact of poverty on our places of worship and wider communities. There will always be a place for voluntary provision, particularly when it comes to support that requires a more human and relational touch; but we must be attentive to the reasons why there is so much demand for food banks, warm spaces, breakfast clubs and the many other activities hosted in church buildings and by other faith groups and charities. We see first hand what the statistics bear out: poverty is deepening in our country. Investment in social security, alongside reforms in other areas, is essential in order to turn the tide on poverty.

[Baroness Drake (Lab)]

My Lords, I refer to my entry in the register of interests as a trustee of pension schemes, and I thank the Minister for her clear explanation of the two statutory instruments before us.

I want to raise an issue concerning the Guaranteed Minimum Pensions Increase Order 2025. Given the pace at which DB pension schemes are transitioning to buyout contracts, this raises the issue of the extent to which, and how, a buyout contract contains liability for a guaranteed minimum pension, and the contractual provision of a promise to provide at least that pension from the age of 60 or 65. Is this a liability that all buyout contract providers must take on when they accept the original transfer from the defined benefit pension scheme? Secondly, does the DWP intend to update its guidance on the guaranteed minimum pension, considering the extent of buyout activity now taking place among DB pension schemes?

[Baroness Janke (LD)]

My Lords, I, too, thank the Minister for her presentation. I also support very strongly the Government’s commitment to the triple lock, despite the loud and frequent calls for it to be abandoned. It is worth repeating that those who call for it to be abolished often do so from a position of financial security, conveniently ignoring the fact that large numbers of pensioners are dependent on the state pension, which is still one of the lowest in Europe.

I also welcome the capping of automatic deductions on debt from universal credit that leave people far below the amount they need to live on. But over the last year there have been reports of record levels of deductions from universal credit, and I wonder if the Minister could comment on the reasons for those.

The 1.7% uprating for other benefits will be of little comfort to the growing numbers in poverty. The Joseph Rowntree report has been mentioned already; it tells us that one in five people in the UK—21%—are in poverty. Of these 14.3 million people, 8.1 million are working-age adults, 4.3 million are children and 1.9 million are pensioners. Children, as we have heard, have higher risks of poverty overall, at 30%, versus 21% for the whole population. But larger families with three or more children have consistently faced a higher rate of poverty: 45% of children in large families were in poverty in 2022-23. That is an appalling indictment of this policy, which Labour Oppositions have criticised so much, as the noble Baroness, Lady Lister, acknowledged. I wonder how long it will take for the Government to abolish it.

Today’s uprating means that we are looking to approve a basic rate of universal credit of £92 a week for a single person aged over 25, and £145 for a couple. Yet the Joseph Rowntree Foundation and the Trussell Trust have estimated that at least £120 is needed for a single person, and £200 for a couple, in order to afford even the basic essentials—a shortfall of around £30 a week on the bare minimum needed to survive. Shortfalls in the benefit system are key drivers of poverty, depriving people of the basic necessities for survival. Specific features have been found to increase the numbers in poverty, including the benefits cap and the two-child limit, and the erosion of the value of universal credit means that its standard allowance is now at around its lowest levels as a proportion of average earnings. I too support the Joseph Rowntree Foundation on having a basic minimum floor for universal credit.

Another feature is that the capital cut-off for universal credit has been frozen since the benefit was introduced. This is a form of taxation by stealth of the least well-off, and it hits hard people in their 50s and 60s who are on benefits, having saved something for later life. For example, if they have more than £16,000 in non-pension ISAs, they are disqualified from universal credit. I wonder whether this needs to be looked at again.

The House of Lords Select Committee report Hungry for Change recommended that:

“The Government should embed consideration of the cost of the Eatwell Guide into calculations of benefit payment rates”.


Many of us were very surprised to hear that this is not factored into the calculation of the amount of benefits needed to live on. The report continued:

“The cost of the Government’s dietary guidance should be built in as a reference point to consideration of government interventions, including those relating to welfare and public food provision”.


It also cited, horrifyingly, that

“the poorest decile of UK households would need to spend 74% of their after-housing … income on food just to meet the cost”

of the Government’s Eatwell Guide, as

“compared to just 6% in the richest decile”.

With individuals and families denied the means of buying bare essentials, will the Government undertake a proper assessment of the adequacy of benefit payments to pay for the cost of essentials, including food?

The uprating today, as others have said, is not realistic in the face of ever-increasing poverty in the UK. A far-reaching and radical review of the benefits system is needed to tackle some of the fundamental problems. I know that we all look forward to the forthcoming benefit review, and the child poverty strategy, which we very much hope will address some of these desperate issues that continue to condemn families and individuals to a life of insecurity, hunger and misery, and children to a childhood of deprivation that will stay with them for life.