Cost of Living: Low Income Families with Children

Baroness Lister of Burtersett Excerpts

Wednesday 13th July 2022 Lords Chamber

Asked by

[Baroness Lister of Burtersett]

To ask Her Majesty’s Government what financial support they have provided specifically for low income families with children to help with the increased cost of living.

[The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office and Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, our £37 billion cost of living package is particularly focused on low-income households. Children living in families receiving qualifying means-tested benefits will receive the cost of living payment of £650 in two instalments. Households with a domestic electricity bill will receive the £400 energy bill rebate. We require at least a third of the current £421 million household support fund in England to be spent on supporting households with children. That fund will continue with a further £421 million from October, for which guidance will be announced in due course. The devolved Administrations have received separate funding through the Barnett consequentials.

[Baroness Lister of Burtersett (Lab)]

My Lords, children, especially those in larger or lone-parent families, are at disproportionate risk of poverty. This has been made worse by a decade of social security cuts. Children in poverty are among those hardest hit by the cost of living crisis. Ministers stress that the latest help with the crisis targets those who most need it, yet, as the Children’s Commissioner lamented last week, children were overlooked—and not for the first time. What will the Government now do to ensure there is specific support —not discretionary support through local authorities but specific, as of right, national support for children—as the cost of living crisis worsens this autumn?

[Baroness Stedman-Scott (Con)]

The Government’s position is that we have made money available throughout the cost of living crisis. We are doing extra things for children, such as free school meals and all the other holiday support payments. As it stands at the moment, I am not able to say if we will be doing anything further. As we have always promised, we keep everything under review and respond where we can.

Social Security (Additional Payments) Bill

Baroness Lister of Burtersett Excerpts

3rd reading & 2nd reading & Committee negatived
Monday 27th June 2022 Lords Chamber

[Baroness Lister of Burtersett (Lab)]

My Lords, I welcome the much-needed additional support that this Bill offers and the recognition that the social security system represents the obvious mechanism for providing it, despite concerns that are raised about the nature of the support. I am grateful to the Minister and the Minister for Welfare Delivery for the very helpful briefing that they provided last week.

At last, the Government are responding to the fact that the cost of living crisis is hitting those on benefits and pensions hardest, not least because the differential impact of inflation means that they face an even higher inflation rate than the rest of us—an estimated 10% or so for the bottom tenth of the population, according to the Institute for Fiscal Studies and the Resolution Foundation. The latest package, of which this Bill is a part, is progressive in its impact. Nevertheless, there is a “but”; I am sure that the Minister would be surprised if this were not the case.

My concerns stem in large part from the decision to provide one-off payments rather than increase benefit rates themselves so that they reflect the actual inflation rate instead of the 3.1% recorded last September. I understand and accept that there are technical difficulties when it comes to uprating benefits other than universal credit—although many stakeholders do not—but, if the Government had not delayed in bringing forward this package, would an autumn uprating really not have been possible? Even now, is it really the case that a decision to increase benefits in May could not be implemented in the autumn instead of a second lump sum payment?

Can the Minister explain how it was technically possible to uprate benefits twice in 1975, in April and November, in response to high inflation—a point made in the Commons but studiously ignored by the Minister there? Can she also tell us, in a subsequent letter if not now, exactly how long it would take if all the stops were pulled out to uprate universal credit, the legacy benefits that it replaces, the other benefits covered by the Bill and the other benefits not covered, in particular the carer’s allowance and contributory benefits? How long are we going to allow “computer says no” to drive policy?

A key group to lose as a consequence of the decision to make lump sum payments rather than uprate benefits is families with children—especially larger families because payments will not be differentiated according to family size. Thus, according to the Resolution Foundation, the average amount gained from the Bill by families with three or more children is less than that received by those with no children because the latter are more likely to receive a disability benefit. Yet spending on essentials is significantly affected by family size. The foundation suggests that fuel spending among families with three or more children is likely to go up by over £500 more than for those without children. It calculates that, had benefits been uprated by 9.5% in October, larger families would have received more than £100 more on average than they will from the May support package.

In the Commons, the Minister emphasised that the payments are targeted at “those in greatest need”, as did our Minister. This is true and commendable, up to a point, but it ignores children—especially those in larger families, who are already at a significantly disproportionate risk of poverty, including deep poverty. This greater risk has grown over the past decade thanks mainly to government social security policies, including the two-child limit and the benefit cap. It is welcome that the payments covered by the Bill will be disregarded for the purposes of the cap. Nevertheless, as the chair of the Work and Pensions Committee pointed out in the Commons, it is high time that the level of the cap, which has not changed since it was established six years ago, is subject to the review required by statute. The Minister’s response to him was that it would be reviewed “at the appropriate time”. Can the Minister tell us when the appropriate time will be, as many would argue that it is already high time?

A growing body of evidence shows how much families with children generally are suffering. Just last week, the Childhood Trust reported that the mental health of children living in poverty is already suffering as a result of the cost of living crisis. Hungry, Anxious and Scared is how it summed it up. It quoted Charlotte, aged nine:

“Your emotions just drown and the only emotion that’s left is sad”.


That made me feel pretty sad and actually very angry. When the Chancellor was questioned by the Treasury Select Committee about the lack of additional support for children, he rather sidestepped the question but acknowledged that no analysis has been done of the package’s impact on child poverty. However, we were told by the Minister for Welfare Delivery last week that the lack of differentiation for families with children was due to technical reasons.

There is a pattern here that suggests an underlying disregard for the needs of children. The welcome universal credit uplift during the worst of the pandemic did not include any uplift in the allowances for children. It was only thanks to Marcus Rashford that action was taken on school meals at the height of the pandemic, and now the Government refuse to extend free school meals to all children on universal credit despite the recommendation in the independent national food strategy and the calls from teachers and others—although I do applaud its extension to all qualifying families with no recourse to public funds. According to analysis of government data by the Child Poverty Action Group, of which I am the honorary president, over one in three—more than 800,000—children in poverty do not qualify for free school meals.

If the Government really cared about hungry children, they would have found a way to boost their financial support and at the very least would have extended free school meals and also put more money into free school breakfasts as called for by Magic Breakfast. The Treasury has, understandably, highlighted the progressive vertical distributional impact of its latest package of support, but nowhere has it shown the horizontal distributional impact as between those with and without children, which also matters. Can the Minister explain why the Government time and again ignore children when it comes to financial matters?

The Secretary of State has herself previously warned that one-off payments are less helpful from a budgeting perspective than a steady stream of money—a point made also by charities such as Sense and CPAG. One consequence is less security. Another consequence of making lump-sum payments linked to entitlement on a specific date is the much steeper cliff-edge that it creates, adding to the insecurity created by often fluctuating incomes and circumstances among those on low incomes. What estimate has been made of the numbers who might become eligible for one of the qualifying benefits in the period until next April when they are next uprated but who do not qualify for the payments in the Bill because they were not entitled to a qualifying benefit at the specified times? Anyone who, say, starts claiming benefit because they have lost their job or become ill after the second cut-off date will get nothing at all. This seems like very rough justice.

Even rougher justice is the issue raised by my noble friend Lady Sherlock in last week’s briefing, and by MPs, where someone has not qualified for UC in the specified month because of the way their wages are paid. Has thought been given to the suggestion made by Nigel Mills MP that the qualifying period be extended to two months? Another group who are victims of rough justice is low-income self-employed people who do not receive UC during the qualifying period solely due to the operation of the minimum income floor. Equity has challenged the response to this point in the Commons, and I ask the Government to reconsider the exclusion of this group.

Just to follow up on the briefing meeting, the Minister for Welfare Delivery promised to let us know how payment will be made to the small number of people without a bank account. Is the Minister able to tell us today? For the record, can she confirm that all recipients will be informed individually as soon as possible after payment has been made so that they know why this extra payment has appeared in their account?

I have emphasised the failure to help children; I am also very concerned about the exclusion of carer’s allowance. I realise it is not a means-tested benefit and that some recipients will qualify via a means-tested benefit they are claiming but, according to Carers UK, there are several hundred thousand carers in receipt of carer’s allowance who do not receive means-tested benefits and many of them are facing serious financial stress. Carer’s allowance is lower than other equivalent benefits. Many carers face additional costs associated with caring. Why, therefore, could not the disability payments have been devised in such a way as to include carers? Nine out of 10 carers surveyed by Carers Trust earlier this year said that they feel ignored by the Government. The exclusion of carer’s allowance from the Bill’s qualifying benefits will only reinforce this sense of being ignored and, of course, many of those affected will be women who also bear the main burden of budgeting in low-income families. It is also not clear why the qualifying disability benefits do not include contributory employment and support allowance—an example of the downgrading in importance of contributory benefits. Can the Minister please explain why it is not included?

When announcing the package, the Chancellor acknowledged that small numbers will fall between the cracks and gave the example of those in receipt of housing benefit not also claiming other benefits but—“fear not”—they can claim help from the additional £0.5 billion that is being put into the local authority household support fund from October. The problem is that those raising concerns about, for instance, children in poverty—not exactly a small group—excluded carers or low-income self-employed people are also being directed to the fund. I fear it is the loaves and fishes approach to policy-making, which we have seen all too often. While the fund has provided much needed help to some, it is discretionary and cash-limited and, as such, is no substitute for weekly payments as of right. What will be done to direct excluded groups in need to the fund, what monitoring of the fund’s use is taking place and what happens if a local authority runs out of money, as we know they do? Can the Minister also tell us whether any thought has been given to the calls from stakeholders, including the Lloyds Bank Foundation, for the suspension of deductions from benefits, at least until next April when benefits are uprated?

This brings me to my final point—which I am sure will be a great relief to noble Lords. I welcome the confirmation that, subject to the Secretary of State’s review, benefits and pensions will be uprated next April in line with this September’s inflation rate, although claimants will face a long, hard winter before that. I hope the Government will ignore the siren voices arguing against such inflation-proofing. The Chancellor concluded his Statement by noting the need to put the measures into context. We need to do the same, but it is a rather different context to that highlighted by the Chancellor. Overall, working-age and children’s benefits have been reduced by approaching £40 billion a year as a result of freezes and cuts since 2010. The latest OBR Welfare Trends Report notes that the

“decline in the real value of unemployment-related benefits … even excluding the effects of the removal of the … £20-a-week uplift … represents the largest fall since annual uprating began half a century ago”.

As the Covid Realities research demonstrates, the reality of life on a low income is one of perpetual crisis. This Bill represents no more than a temporary salve to mitigate the crisis, welcome as it is. We now need a commitment to a review of how benefits are uprated, as called for by the chair of the Work and Pensions Committee and others. Ad hoc one off-payments and discretionary local authority support do not provide the security that those on low incomes desperately need and that the social security system ought to provide.

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

I thank all noble Lords for their contributions to the debate today. I hope we agree that this package of support will make a significant difference to families up and down the country, notwithstanding the points that have been made.

As I said earlier, the Government are committed to going further to provide support to relieve the financial pressures families are facing. The measures announced by my right honourable friend the Chancellor will provide an estimated millions of low-income households with £1,200 of one-off support in total this year to help with the cost of living, with all domestic electricity customers receiving £400 through the energy bills support scheme. This Bill will give us the necessary powers to deliver the additional payments set out in this package to families on the means-tested and qualifying disability benefits which we have been debating today.

There were a huge number of questions, which I shall endeavour to answer. There are some where I will have to write and the answers will be much better if I do so, so I hope noble Lords will accept that.

The noble Baronesses, Lady Lister and Lady Sherlock, asked why we are not uprating benefits. The one-off cost of living payment will enable timely direct transfers, ahead of the next uprating review of benefits and pensions, which will commence in the autumn, with any change in rates being payable from April 2023. This will help to support households most in need in managing increased costs. Our cost of living policy will also provide a payment of £650, as we have already said, whereas uprating the same benefits by 9% from April 2022 would be worth, on average, only £530. These payments will be tax-free, will not count towards the benefit cap and will not have any impact on existing benefit awards. This approach will allow households to retain the full value of the payments they receive. There is no need for people to fill out complicated forms, as we have tried to reduce bureaucracy.

Separately from the 2022-23 cost of living support package, benefit and pension rates are subject to an annual review. As mentioned by the Chancellor on 26 May, the uprating of benefits is a matter for the Secretary of State for Work and Pensions. Her annual statutory review of benefits for the tax year 2023-24 will commence in the autumn, when she measures inflation using the September consumer prices index. Following completion of her review, the Secretary of State’s decisions will be announced to Parliament in November. For the avoidance of any doubt, we are committed to the triple lock for the remainder of this Parliament.

The noble Baroness, Lady Lister, asked whether the uprating process will be adjusted in the future. The work of the department in 1975 was mainly undertaken by hand and on a claim-by-claim basis. It was therefore possible to uprate twice in one year, provided the trained manpower resources were available or could be secured. The department began to computerise the payments of benefits in the mid-1980s; we have indicated the constraints of the core IT systems in undertaking a mid-year uprating and the risk that would pose to payments. The Social Security Administration Act 1992 provides for a statutory annual review of uprating and is the basis on which Parliament has required successive Secretaries of State to act. The requirement is for one review each tax year.

The noble Baroness, Lady Lister, asked how long it will take to uprate all benefits, including UC and legacy benefits. I will need to write to her on that, which I will do and place a copy in the Library. She also asked about the flat rate of payments not tailored to circumstances. She said that this disadvantages children in large families and that the issue should have been solved by uprating benefits. The Government are committed to providing direct and timely relief to those who need it most through these one-off cost of living payments. Flat-rate payments are the quickest way to deliver support to those who need it most; they will allow us to make timely transfers to more than 8 million people and 6 million disabled people before the next benefit uprating in April 2023. As I have said, we have deliberately kept the rules as simple as possible. The Government are spending over £5 billion on qualifying means-tested benefits—around £2 billion more than the additional cost if the qualifying benefits increased in July 2022 to 9% higher than the previous year.

The noble Baroness, Lady Lister, who has been very busy, asked about the focus being on reforming UC and said that the two-child limit means that people do not receive enough money. Statistics from the Office for National Statistics show that in 2021, of all families with dependent children, 85% had a maximum of two in their family; for lone parents, this was 86%. The Government feel it is proportionate and fair to taxpayers to provide support through child tax credit and universal credit for a maximum of two children.

[Baroness Lister of Burtersett (Lab)]

I am sorry to interrupt the Minister. Clearly, we cannot amend this legislation but I think it is accepted across the House that there is nothing in here for children. Can she take that message back to her colleagues in government and could they look at other ways they might be able to help children during this period?

[Baroness Stedman-Scott (Con)]

I am always happy to take things back to the department and am quite prepared to do that. I may need a little more information from the noble Baroness, but I am sure that will be forthcoming.

The next review of the benefit cap has been raised. As all noble Lords will know and as we have said many times, our statutory duty is to review the levels of the cap at least once in every five years and this will happen at the appropriate time. The current unusual economic period, with potentially counterintuitive and shifting trends, will need to be considered in the context of any decision in respect of the review.

The noble Baronesses, Lady Lister and Lady Sherlock, raised their concern about those who receive two lots of earnings in one universal credit period not being eligible. We anticipate that the vast majority of people entitled to one of the qualifying benefits will receive their first payment. Because of a change of circumstance, however, some may not qualify. Again, we have deliberately kept the rules simple and, unfortunately, it is not possible to distinguish those who have a permanent increase to their earnings from those whose earnings temporarily fluctuate. If a UC claimant’s income subsequently falls, these claimants will return to having a positive award after the cut-off date and may be eligible for the second cost of living payment, worth £324.

The noble Baronesses also raised a point about people who become eligible later. Where a person is found to be eligible for a qualifying social security benefit or tax credit payment but did not receive a payment, a retrospective payment will be made automatically. This could occur if a claimant successfully challenges the DWP’s decision on their social security benefit entitlement.

The noble Baroness, Lady Lister, and the noble Lord, Lord Fox, asked why we are excluding those in receipt of the carer’s allowance from the cost of living payment. Nearly 60% of working-age people on carer’s allowance will get a one-off payment as they are on means-tested or disability benefits. Carer’s allowance recipients will benefit from the £400 per household with a domestic energy supplier, provided through the energy bills support scheme.

The noble Baroness, Lady Lister, asked why we are excluding those on contributory based benefits from receiving the one-off payment. Non-means-tested benefits are not eligible benefits in their own right, but low-income recipients can claim an eligible means-tested benefit alongside them. Contributory and new-style benefits were not included because people claiming these benefits may have other financial resources available to them. They may also benefit from other parts of the package of support, including the £400 per household domestic energy help. Claimants who require further financial assistance may be eligible for universal credit; if their claim is successful, they may then qualify for the second cost of living payment in the autumn.

The noble Baroness, Lady Lister, raised the important issue of children—and I agree with the noble Baroness, Lady Sherlock, about the knowledge and experience the noble Baroness has in this area. I am advised that this is an issue where we will need to write to the noble Baroness. We will probably need to have some continued communication to ensure that I answer her questions to the level and standard that she wishes.

The noble Baroness, Lady Lister, and the noble Earl, Lord Clancarty, asked about fluctuations in earnings. As I have said, we have deliberately kept the rules as simple as possible. I have said before that it is not possible to distinguish between those who have had a permanent and temporary increase. I do not think I can say more on that at this point.

On the minimum income floor, which was raised by the noble Baroness, Lady Lister, and the noble Earl, Lord Clancarty, it is the same thing: we have deliberately kept the rules as simple as possible. For those who are not eligible for this support, or families that still need additional support, the Government are providing the household support fund with an additional £500 million to help households on top of what has been provided. Since October 2021, the household support fund has gone up to £1.5 billion. In England, this will take the form of an extension to the household support fund backed by £421 million and administered by local authorities.

Child Poverty Strategy

Baroness Lister of Burtersett Excerpts

Monday 6th June 2022 Lords Chamber

[Baroness Stedman-Scott (Con)]

My Lords, Ministers and officials engage regularly across government to ensure a co-ordinated approach to this very important issue. We keep all priorities under review, but, as I said, with almost 1.3 million vacancies across the UK, our focus is to ensure that we can fill those vacancies with people who can work so that they can become independent. The latest available data on in-work poverty shows that, in 2019-20, a child in a home where adults were working was around six times less likely to be in absolute poverty before housing costs.

[Baroness Lister of Burtersett (Lab)]

My Lords, recently the Prime Minister admitted that we cannot level up without tackling child poverty, and the Deputy Prime Minister declared himself heartbroken at the story of Emma, whose son provided her with a bowl of cereal because he had not seen her eat for days. Does this not underline the urgent case for a child poverty strategy? According to the Social Mobility Commission, England is the only country in the United Kingdom without such a strategy. Does that not also make the case for immediate urgent help for children so far lacking in the face of the cost of living crisis?

[Baroness Stedman-Scott (Con)]

The case study the noble Baroness relays is definitely harrowing, and I wonder whether I might meet with her to talk more about it and to understand it in more detail. However, the Government are absolutely committed to dealing with the issues of poverty. We have just allocated another £15 billion support package. This will include a £650 payment to more than 8 million low-income households and a £300 increase to the winter fuel payment. Individuals receiving disability benefit will receive £150 as a one-off payment in September, and this will not be taken into account for tax purposes on benefits. We have cut the taper rate, and we have also given a non-repayable £400 reduction in energy bills. Those in houses in council tax bands A to D will get £150, and for other people who do not get that there is a further £144 million. We understand the issues of poverty, and we are placing vast sums of money to do what we can to help.

Social Security System: Rising Cost of Living

Baroness Lister of Burtersett Excerpts

Tuesday 17th May 2022 Lords Chamber

[Baroness Stedman-Scott (Con)]

I have no doubt at all that real case studies have been presented—they have certainly been presented to my Secretary of State. I know that everyone is impatient, and I understand that, but the Government stand ready to do what they can once a decision has been made. I understand that talking to real people is the best way to learn. I was in Brighton on Thursday, opening the new job centre. I met a lady there whose life had been absolutely chaotic, and now she has a job with G4S and she is cooking. We understand personal testimony.

[Baroness Lister of Burtersett (Lab)]

My Lords, faced with the biggest fall in the real value of basic benefits for 50 years, according to the Joseph Rowntree Foundation, and the terrifying increase in the cost of basics, as my noble friend has said, what are struggling parents who have already cut back to the bone supposed to do when the Government refuse the uplift in benefits called for widely, including on the Government’s own Benches? What would the Minister herself do, if she was in their shoes?

[Baroness Stedman-Scott (Con)]

I do not think I can answer on behalf of the people who make the decisions but I understand the point that the noble Baroness is raising. I know that there are families who are struggling. As I have said, a committee has been set up—I am sorry, but noble Lords know how government works. As I said, we stand ready.

Social Security Benefits Up-rating Order 2022

Baroness Lister of Burtersett Excerpts

Wednesday 23rd March 2022 Lords Chamber

There are numerous other ways of doing this. We could change the way that national insurance is levied. At the moment—although this is going to change next month—up to £50,300, national insurance is levied at the rate of 12%, but beyond that at only 2%, which is utterly regressive. If we said all of that were to be subject to a 12% national insurance charge, it would raise £14 billion, which would be more than enough to give our senior citizens dignity. I fully support my noble friend Lord Davies’s Motion.

[Baroness Lister of Burtersett (Lab)]

My Lords, I am grateful to my noble friend Lord Davies of Brixton for tabling this regret Motion, and it is very well-timed given that today was the Spring Statement.

The Chancellor promised that he would stand by people in the face of the cost-of-living crisis, but it seems that this promise does not extend to parents struggling on social security benefits. Instead, I fear it is an attitude of “Let them stand on their own two feet”, and wait a year for “smoothing”, as benefits catch up with inflation—a year when some parents could go under with the strain. For all the talk of “security” in the Chancellor’s speech, there is nothing to address the insecurity experienced by social security recipients. Additional assistance to local authorities for discretionary help is no compensation for the security provided by weekly benefits that meet people’s needs. As the Women’s Budget Group points out in its very quickly produced Spring Statement analysis,

“The Chancellor has left women in the lurch”,


and raising social security would have done much more for those on low incomes than raising the national insurance threshold.

Since we debated the uprating order in Grand Committee two weeks ago—it feels like a lifetime, but it was two weeks ago—three research reports have been published that reinforce the arguments I put then for an additional uprating to match the inflation rate. I am not going to go over everything I said then, but the Trussell Trust pointed to a

“crisis of our social security system, which is failing to support people to keep their heads above water.”

A recent Carers UK survey found that, among carers in receipt of carers allowance or the UC carer element, nine out of 10 are already stressed and anxious about their finances, and generally carers’ financial situation has worsened considerably over the six months since it last did the survey. The findings of a new Covid Realities report published this week was summed up in the conclusion that

“‘There is nothing left to cut back’ - people have reached the limits of their budgeting practices and resourcefulness.”

with implications for their physical and mental health. The report commented on the

“disbelief at the perceived lack of understanding among policy-makers of the scale and severity of the difficulties people were facing.”

I am afraid we have seen all too many examples of this in the last few weeks. When, in an OQ last week, I asked the Minister’s colleague, the noble Baroness, Lady Scott of Bybrook, what are parents on benefit, who have already cut back to the bone, supposed to do if benefits are uprated at a fraction of the inflation rate, in response she intoned what the Government are spending in total on benefits but did not answer the question. Following the very disappointing Spring Statement, I ask again: when there is nothing left to cut back, what are parents struggling on an inadequate benefit supposed to do over the coming year? How are they supposed to get by?

I believe that this Minister does understand, to some degree, the difficulties faced, and she cares. Unfortunately, she can do no more, it appears, than take messages back to the department and the Treasury. But she can at least today answer the question. Indeed, I ask her to tell us: what would she do if she had to get by on inadequate benefits that are being eaten away by inflation?

[Lord Shipley (LD)]

My Lords, I thank the noble Lord, Lord Davies, for his regret Motion, which I agree with.

It is estimated that one in five pensioners in the UK is living in poverty, that 1.3 million retirees are undernourished and that 25,000 pensioners die each year due to cold weather. As we know, the cost of energy has doubled, and older people are more susceptible to the cold, particularly if they are housebound or suffering from a disabling illness.

The Government failed to accept that inflation was going to rise at an alarming rate when benefits and the state pension were uprated for this April. They insisted on basing the uprating on September’s inflation figure of 3.1%, as usual. The Motion of the noble Lord, Lord Davies of Brixton, quotes the Bank of England’s prediction of 7.25%, but that is now being fast overtaken by events, and a figure of nearer 10% is now forecast during the year. It is unthinkable that poor pensioners, at the end of their lives, should have to experience such a sudden change in circumstances. Up to now, they have been protected by the triple lock but, because of what was seen as a one-off adjustment in incomes as a result of a recovery from the pandemic, the Government abandoned the triple lock. Had it still been in place, a rise of 8% would have equalled the predicted rate of inflation in April, when the uprating comes into effect.

Age UK has estimated that soaring energy prices will plunge 150,000 older households into fuel poverty this winter. It has said that the number of fuel poor older households could reach more than 1.1 million by the spring, unless the Government take urgent action.

We have one of the least generous state pensions of any country in Europe, and it is still below its 1979 value. The triple lock was introduced in 2010 in the light of a hugely devalued state pension. Some recovery has taken place since then, but the state pension still does not provide enough support to keep 2.1 million pensioners out of poverty.

For women pensioners, the situation continues to get worse, with one in five now in poverty. Analysis of government figures shows that, in 2012-13, 14% of female pensioners across the UK were living in relative poverty—that is, they were living in households with less than 60% of median average household income, after housing costs. By 2019-20, this had increased to about 20%. That increase comes despite increases in women’s state pension age, meaning that the number of female pensioners in the UK has fallen by about 800,000 since 2012-13.

On these Benches, we think it is essential to protect the poorest pensioners who depend on the state pension and that it is crucial to bring the value of the state pension to a realistic level in relation to earnings and living costs. It is vital to make sure that those already in poverty and dependent on benefits do not become poorer than they already are. As has been said, it is not enough to claim that an upward adjustment will be made next year, because the problem exists now.

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[Baroness Stedman-Scott (Con)]

I cannot undertake to say if and when that will happen, but I will write to the noble Lord and place a copy in the Library with any updated information that I can glean.

The noble Lords, Lord Sikka and Lord Shipley, raised a point about pensioner poverty. Absolute pensioner poverty, both before and after housing costs, has fallen by 200,000 since 2009.

[Baroness Lister of Burtersett (Lab)]

Most academics would use the relative poverty rate these days, so could the Minister give us that?

[Baroness Stedman-Scott (Con)]

I do not have the relative rate in front of me because the Government are using the absolute rate, but I will find out and write to the noble Baroness. The Government prefer to look at absolute poverty over relative poverty because the latter can provide counterintuitive results. Relative poverty is likely to fall during recessions due to falling median incomes. Under this measure, poverty can decrease even if people are getting poorer. For example, some think tanks have projected that relative poverty fell sharply in 2021, during the pandemic.

The noble Lord, Lord Sikka, asked why we did not recycle savings in the pandemic. This Government locked down the economy to a large extent to protect our older people. That came at an enormous cost, and I therefore cannot agree with the noble Lord that the Government have not invested to protect their senior citizens.

The noble Lord, Lord Sikka, raised the issue of women and state pensions. Reforms to the state pension have put measures in place to improve state pension outcomes for most women. Over 3 million women stand to receive an average of £550 more by 2030 as a result of recent reforms.

The noble Lord, Lord Sikka, raised the point about linking the state pension to the national living wage. The national living wage and the state pension are two very different things; the national living wage is designed to protect low-income workers and provide an incentive to work by ensuring that all workers benefit from as generous a wage as possible, and the state pension is supported by further measures for older people, which I outlined earlier in my remarks.

The noble Lord, Lord Shipley, again raised the issue of fuel poverty. We know that low-income households in homes with a low energy-efficiency rating will find it harder to heat their homes, as energy costs rise. We are addressing the energy efficiency of homes to tackle fuel poverty in the long term. Right now, measures are in place to protect consumers and mitigate the effects of debt. We are providing support with energy bills this winter through the warm home discount, winter fuel payments and cold weather payments. The noble Lord asked how we were supporting pensioners with fuel poverty. As I have read out this evening, it is through the warm home discount scheme, winter fuel payments and cold weather payments.

The noble Baroness, Lady Lister, is passionate about support for parents, and has raised the point. Although we are talking about pensions in particular, I shall say, as I have said many times before, that the best way to help people out of poverty is to help them into work. Our changes to universal credit are designed to achieve that. There is also more support for childcare costs than in the tax credits system that the universal credit system replaced. Of course, there is no requirement to seek work for those with very young children.

[Baroness Lister of Burtersett (Lab)]

I accept that not everybody out of work is required to seek work or able to seek work, whether because of their caring responsibilities, or whatever. I asked a very specific question. The evidence is that parents and others on benefits—and this is an uprating order about benefits as well as pensions—are already cutting back to the bone and do not know how they are going to cut back further. What are they supposed to do? That is the question that I asked, and which I asked the other day in Oral Questions of the noble Baroness, Lady Scott, and I still do not have an answer.

[Baroness Stedman-Scott (Con)]

The noble Baroness is right to point out that there are those on low incomes who are unable to work, and I shall talk to my noble friend Lady Scott and write with actions that the Government are taking. I do not have that information to hand.

The noble Lord, Lord Hendy, and the noble Baroness, Lady Wilcox, raised the point that we are making savings at the expense of pensioners. We have increased most state pensions by 2.5% this year, when CPI in the relevant period was 0.5%. We made primary legislation to make sure that that happened, and we locked down the economy precisely to protect our older people. I cannot therefore recognise the points made by the noble Lord and the noble Baroness.

The noble Baroness rightly raised the issue of state pension underpayments. That should not happen, and we have apologised unreservedly, but I can confirm that the department has a dedicated team working on the correction activity. Sufficient additional staffing resources have been allocated to progress this activity, and further resources are being allocated through 2022-23. The Government are fully committed to ensuring that these historical errors made by successive Governments are addressed as quickly as possible to ensure that individuals receive the state pension that they are rightfully due in law.

The noble Baroness, Lady Wilcox, raised the issue of pensioner poverty for women. Reforms to the state pension have put measures in place to improve state pension outcomes for most women, and over 3 million women stand to receive an average of £550 per year more by 2030.

On the state pension underpayments, the noble Baroness, Lady Wilcox, asked, understandably, how we are prioritising cases. Resolving these errors is a priority for the department, as I have already said, and we are committed to doing so as quickly as possible. We have started reviewing cases when the individual is alive; in doing so, we are initially focusing available resources on older cases and those who we believe are most likely to be vulnerable.

I am conscious of the time. I have mentioned many things—but I hope that noble Lords will be reassured that the Government are fully aware of the concerns that people have over rising prices, and we have taken action, where possible, to help. I finish by again thanking the noble Lord, Lord Davies, for giving me the opportunity to set out the Government’s position.

Universal Credit (EAC Report)

Baroness Lister of Burtersett Excerpts

Wednesday 23rd March 2022 Grand Committee

[Baroness Lister of Burtersett (Lab)]

My Lords, I congratulate the committee on a first-class report and commend its then chair for having championed some of its recommendations, even today, notably concerning the withdrawal of the £20 uplift. The departmental response was, though, depressing, with what the then chair described in a letter to the Secretary of State as “perfunctory replies” to some of its “most urgent recommendations”. Although I noted numerous “do nots” and the occasional “acknowledge” or “note” in the response, the word “accept” was notable by its virtual absence. Thus, over one and a half years on, the problems identified by the report remain and some have got worse.

I have frequently quoted the report, in particular with reference to the benefit cap, which has still not been reviewed; the two-child limit, which is dragging more and more larger families into poverty; the already referred to five-week wait, which is not solved by repayable advances, especially given the level of other debts recuperated from weekly benefit; and the implications, especially of the single household payment, for victims and survivors of domestic abuse, ignored in the Domestic Abuse Act.

I will highlight just two areas now that stem from two of the valuable sets of principles framing the report, which were ignored in the DWP’s response: that universal credit should

“provide claimants with adequate income”

and

“provide security and stability—income must be predictable”.

These principles, and many of the report’s criticisms, were echoed by participants in two more recent studies but were found sadly lacking in their experiences of relying on UC. One participant in the Covid realities research, to which I referred yesterday in my OQ, said that

“the title ‘social security’ is laughable. We have never felt so insecure”

and the report referred to

“chains of insecurity and uncertainty”.

Likewise, an ESRC-funded study of couples on UC, carried out by a team that included the committee’s specialist advisers, found that in particular the monthly assessment of earnings, the whole-month approach to changes of circumstances—under which circumstances on a single day decide entitlement for a whole month—and monthly payment all contributed to insecurity, instability and lack of predictability. These issues were all raised by the report, as the noble Lord said, but given short shrift in the department’s response.

With regard to adequacy, the report argues that UC should be set

“at a level that provides claimants with dignity and security”

and pointed out that the £20 uplift

“shows the original rate was not adequate”.

Well, the evidence of its inadequacy was mounting even before the cost of living crisis, but, despite that, as we have heard, claimants now face a cut of more than 4% in the real value of these inadequate benefits over the coming year. Women as the shock absorbers and managers of poverty will bear much of the brunt of this cut. As the Minister knows, I feel strongly that there has to be an additional uprating, preferably in April but failing that in October. If a second uprating requires emergency legislation, so be it; this is an emergency. Additional funds to local authorities for discretionary support, announced today, are no substitute for the security provided by weekly benefits that meet people’s needs. In the longer term, we need a proper review of the adequacy of benefits—as the report sort of calls for.

I hope that the noble Lord will excuse me if I spend the rest of my time on an issue that is not explored in the report but is highly relevant to its recommendations on support with claiming, namely migration to UC. I recently attended a meeting of the UC all-party parliamentary group, of which I am an officer, and we heard evidence about the issue of migration that made me realise that I for one had taken my eye off the ball of migration, which now threatens to hit and bruise badly many claimants. I am grateful to the Child Poverty Action Group, of which I am honorary president, for its help on this.

First, the CPAG reports growing concerns among advisers about the “lobster pot” aspect of natural migration, which means that there is no going back once a UC claim is made, even if it proves to be to the claimant’s detriment. It and other charities recently called on the DWP to allow test claims so that the many households—including, for instance, many of those with disabled children—that turn out to be worse off on UC after making a voluntary claim can return to the legacy benefits system. Alternatively, they suggest that they could be covered by the transitional protection that will be available under managed migration, now called Move to UC. Could the Minister give us the department’s response to this recommendation?

Turning to Move to UC, the process of managed migration was supposed to be based on the outcome of a three-stage pilot. This was, understandably, paused at the start of the pandemic after just eight months, during which I understand that fewer than 13 households were confirmed as having made the move to UC. The purpose of the pilot was, according to Neil Couling of the DWP, to develop a

“measured approach to roll out, ensuring the system works for everyone.”

But, instead of continuing the pilot as originally promised, the DWP now says that it has gleaned a “considerable amount of learnings”, sufficient to proceed. Those learnings have not been made public and it is hard to be confident that the department has the necessary information from such an attenuated pilot.

Proceeding without the level of testing originally envisaged, or proper reflection and scrutiny, puts claimants’ well-being at risk. As the DWP has acknowledged, those who fail to respond to an official notification about migration will have their benefits stopped, threatening increased vulnerability and possible destitution. To ensure that this will not happen, can the Minister assure us that further piloting will take place so that the DWP can design a process that we can be confident will work? Will she publish the evaluation of the pilot, such as it was, without further delay and give an assurance that the department will fulfil the commitment to publish the evaluation strategy for the pilot? Finally, can she also assure us that Parliament will have the opportunity to scrutinise the managed migration/Move to UC regulations before the cap allowing no more than 10,000 claimants to be migrated to UC is lifted?

I can understand why the department wants to get on with it after the time lost during the pandemic, but surely it is more important to get it right. I therefore support the CPAG’s call for a pause in the Move to UC programme until it has been properly piloted, the evaluation has been published and Parliament has had a chance to scrutinise the plans. Can the Minister also say when the department envisages being able to publish take-up figures for UC, because, as the report points out, the promise of increased overall generosity rests on higher take-up? This higher take-up has been promised to flow from the supposed simplification of combining most means-tested benefits into a single award. The response to the report’s recommendation on publication of take-up figures simply said that

“The Department does not publish estimates of UC take-up rates”


and implied that there were no plans to do so. Well, I hope I read that wrong and that there will be plans to do so. We need to know when that will be possible. I understand why it may not be possible now, but it has to be possible at some point.

Finally, what is the Government’s response to the principle enunciated by the committee that UC

“must … reflect the lived experience of claimants—they must be at the heart of its design and involved in devising solutions to problems”?

This is a principle that was raised in yesterday’s OQ and that the Scottish Government have taken to heart, but I have yet to see evidence that the UK Government have.

--- Later in debate ---

[The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office and Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, I congratulate the committee and my noble friend on the report that we have been considering today. I will start by saying that I completely appreciate the depth of feeling and passion on the issues that have been raised.

I start by disagreeing slightly with something. When it is said that universal credit is not working, I would have to disagree. If we had had the legacy system in place and the issues around Covid-19, I doubt that anybody would have got any money on a regular basis. There are certainly a lot of elements of UC that work, but today all noble Lords have raised concerns that we must take account of, and we must change where it is possible to change.

The reform of universal credit is an ongoing process. It is under the leadership of Neil Couling and his team. I congratulate them on their excellent work.

My noble friend Lord Forsyth mentioned pre-paid meters. At this stage, let me say that I completely agree about the issues and additional expense that they cause. This situation rests with BEIS but I undertake to follow up on it personally, as I agreed to do in the Chamber earlier this week.

I completely agree with noble Lords that this is a difficult time. I would like to set the record straight, if I may. On universal credit and the monthly assessment period, if we had had the tax credit system, there would have been an annual assessment. That is why we have the debt we do. A monthly assessment is far better for the individuals we are trying to serve.

I thank noble Lords for their contributions to this debate. It is worth noting, as some have said, that this report was commissioned prior to Covid-19. In what has been a very difficult period, the universal credit system has proven its worth through the invaluable support it has given to the 6 million people who faced financial insecurity during this time, with the pandemic seeing the amount of universal credit claims double and many people—a high proportion of them—being paid on time.

On the cost of living, which all noble Lords raised, the Government have introduced new measures to help with energy costs on top of the existing £12 billion of support that they are providing to help families during this financial year and the next. We are increasing the national living wage to £9.50 but I take the point made by the noble Lord, Lord Desai, about whether it is a living or a thriving wage; however, we have increased this amount as the years have gone on.

I will come on to more interesting points about housing costs, but we have helped with the cost of housing. Discretionary housing payments can be paid and are very flexible. In 2021-22, the Government made £140 million of discretionary housing payments available to local authorities. Vulnerable renters struggling due to the impact of the pandemic will be helped by a £65 million support package announced by the Department for Levelling Up, Housing and Communities. The funding will go to councils in England to support low-income earners in rent arrears, helping to prevent homelessness.

The noble Baroness, Lady Janke, and the noble Lord, Lord Kerr, raised the issue of energy bills. The Government have announced that they will provide significant financial support of up to £350 to the majority of households, protecting them from half of the forecast £700 rise in energy bills. This support is worth £9.1 billion in 2022-23.

There is also a £150 non-repayable cash rebate on council tax for 80% of households, and the Government will provide £144 million in discretionary funding for local authorities to support households that would not be eligible for that. There is the warm home discount scheme, cold weather payments and help with basic food costs through Healthy Start food vouchers. We are investing more than £200 million a year in our holiday activities programme while ensuring that children get food in the school holidays.

Noble Lords have said that our record on the cost of living is poor. I do not accept that. We have a proud record of being on the side of working people. Since 2010, under successive Governments, we have doubled personal tax thresholds, which we increased again today. We have doubled free childcare, which I will come on to. We have increased the work allowance and cut the taper rate; my noble friend was right to say that this measure was in his report prior to us doing it. Of course, as I said, we have also extended free school meals.

The robustness of the UC system was evident in dealing with an unprecedented event, which we could not have foreseen. As I have said, this would not have been possible under the legacy system. The digital nature of universal credit allowed for its adaptability during this period, where we managed to get a record number of claims processed within the first few months. This ensured financial security at a very uncertain time, with around 95% of claims being paid at the end of their first assessment period, despite pressures on the UC system. Regrettably, I must say that during this period organised criminals and opportunists sought to exploit the extraordinary circumstances of a global pandemic for gain.

Last autumn, we announced a 75% uplift in our investment in counter-fraud, compliance and debt operations, taking our funding to £1.4 billion over the next three years. With this funding, we are: setting up a new, targeted review of universal credit claims; investing in enhanced data and analytics to prevent fraud and error occurring; increasing our capacity to address serious and organised crime; and scaling up our existing operations, through funding for around 2,000 additional trained specialists to identify and stop scammers. This investment will generate billions of pounds of savings over the scorecard period.

The noble Lord, Lord Shipley, and the noble Viscount, Lord Chandos, raised Help to Claim. We recognise the challenges that a digital platform may pose for those who are unable to use this technology. That is why we have support through Help to Claim, and the alternative of being able to make a claim by telephone. A £21.3 million investment has been made available for the Help to Claim provision, providing support for a further 12 months, following a recent competition. From 1 April 2022, people will be able to access Help to Claim support online and over the phone through Citizens Advice and Citizens Advice Scotland. The service will be available at any time until the first full, correct payment of universal credit is made. People who are unable to access support, or to make their claim to universal credit by telephone or online, will be able to go to their jobcentre, where jobcentre staff will identify the right support to meet their needs.

The use of assessment periods ensures that we calculate a household’s benefit entitlement correctly, reducing overpayments and debt for families who already face financial uncertainty. The use of real-time information further enables this with accurate and current earnings information, ensuring the robustness of the assessment of entitlement.

All noble Lords have raised the issue of advances. I must confirm that, for those in financial need, the introduction of new claims advances allows for an eligible claimant to receive their full benefit entitlement up front, resulting in 25 payments of UC over 24 months. For those looking for work, universal credit works alongside existing provision to get people back into work, and to help fill the 1.2 million vacancies available. To highlight this, the Government’s Plan for Jobs initiative has made great strides in its bid to help 2 million people back into work. Further evidence can be seen through Kickstart, which is integrated with the universal credit system, resulting in over 130,000 young people getting valuable work experience to assist them to move forward in their careers. This is complemented by the reduction of the earnings taper and increased work allowance to ensure that work does pay, and results in 1.9 million households keeping, on average, around an extra £1,000 a year.

The department firmly believes that the best way to support claimants is through empowered work coaches, who engage proactively with claimants to help them identify the options they need to help build their skills, increase their confidence and return to employment. The claimant commitment is a tool for setting out, and getting the claimant to take ownership of, what they need to do in return for receiving their UC. In this sense, conditionality is indeed adapted dynamically with the claimant to ensure that the requirements for receiving support are appropriate and proportionate to the claimant’s current situation.

The claimant commitment is a key enabler to support claimants into work or to increase their earnings. For staff, it should be an enabler which supports robust setting and monitoring of work-related activities, and fair decision-making in relation to sanctions. The claimant commitment is a living document and is continually reviewed with the claimant, as appropriate, to ensure that it reflects their current situation. As such, the department considers that this meets the needs of the claimant, as well as our work coaches, in supporting claimants back into work.

When moving into work, there is additional support through the universal credit childcare offer. I completely understand the challenges that people face with childcare and that it sometimes stops them moving back to work. Eligible UC claimants can claim back up to 85% of their registered childcare costs each month, regardless of the number of hours they work, compared to 70% in tax credits. These can be claimed up to a month before starting a job and eligible claimants can receive help for upfront childcare costs by applying for help from the flexible support fund. Our work coaches absolutely love the flexible support fund and will use it legitimately for anything that helps to remove barriers for people going back to work. That help is non-repayable and paid directly to the childcare provider, where it is used for childcare fees. Additionally, a universal credit budgeting advance is available to eligible UC claimants to assist with upfront costs.

The Government are committed to improving the lives of disabled people and delivering the most ambitious disability reform agenda in a generation. In 2017, we set a goal to see 1 million more disabled people in work by 2027. In the first four years of the goal, between quarter 1 2017 and quarter 1 2021, the number of disabled people in employment increased by 850,000.

For those unable to work because of ill health or disability, universal credit provides generous support. A claimant who is determined to have limited capability for work and work-related activity is awarded an additional amount of benefit; it is currently £343.63 per calendar month, which is more than double the equivalent rate paid in employment and support allowance. Additionally, claimants who are assessed to have limited capability for work, or for work and work-related activity, are eligible for a work allowance and, in couple claims where one is working, access to help with childcare.

I try to be as respectful to noble Lords as I possibly can in all these debates. The two areas that the noble Baroness, Lady Lister, raises frequently—I respect her for it—are the benefit cap and the two-child policy. There is always a balance that must be struck between supporting those in need and having a system that provides a strong work incentive and fairness for hard-working tax households. This is not a new concept.

I remind all noble Lords that the proportion of households capped remains low, at 1.9% of the overall working-age benefit caseload. Exemptions from the cap also exist, such as those for households with earnings of at least £617 in an assessment period, and for those who are vulnerable and receiving disability benefits or are entitled to carer benefits. In addition, it is worth highlighting that the national cap of £20,000 is equivalent to gross family earnings of around £24,000, while the London cap of £23,000 is equivalent to gross family earnings of around £28,000.

The two-child limit is based on statistics from the Office for National Statistics showing that, in 2020, 85% of all families with dependent children had a maximum of two in their family; for lone parents, it was 83%. On the latest figures, 62% of households with a third or subsequent child that are in receipt of UC or CTC are not affected by the two-child policy. It is important to support families, but it is also important to be fair to the many working families who do not see their budgets rise when they have more children.

I will come on to some of the more specific points raised. I will see what I can do within the limits on my time.

A question was asked by my noble friend Lord Forsyth, the noble Lord, Lord Shipley, and others about why it is paid monthly. Universal credit is designed to top up earnings from employment, adapting to changes in the amount of earnings received each month. I must tell noble Lords that the department has no plans to change either universal credit assessment periods or payment structures. The current approach reflects the world of work, where the majority of employees receive wages monthly. Paying in this manner will encourage claimants to take personal responsibility for their finances and budget on a monthly basis, which could save households money. Ensuring similarities between paid employment and receiving benefits also eliminates an important barrier, which could prevent claimants adjusting to paid employment.

I cannot say this with utter confidence but I am quite sure that, where claimants are in difficulty and hardship, work coaches can help them. Rather than give information that is not 100% correct, I will write to noble Lords to confirm the additional support for when people are in difficulty.

The right reverend Prelate the Bishop of St Albans referred to the monthly assessment periods. Entitlement to UC is calculated in monthly assessment periods and the amount paid reflects as closely as possible the actual circumstances of a household in each assessment period, including any earnings reported by the employer in that period. Monthly reporting allows UC to be adjusted monthly, which I can only say is better than the tax credit yearly reconciliation. It ensures that, if a claimant’s income falls, resulting in a rise in their universal credit, they will not have to wait several months to receive it.

My noble friend Lord Forsyth raised the whole-month approach. As I have said before, universal credit is assessed and paid on a monthly basis. It is paid in arrears for each month and the amount will not vary to reflect the number of days in the month. To simplify the policy, we took a whole-month approach to changes of circumstance. This is a fundamental design principle of universal credit and is more straightforward for claimants to understand as they can anticipate how much universal credit they will receive, so can budget accordingly.

I come to the work of the work coaches. From all my dealings with them, all the visits I have done and all the times I have spoken to them, I know they are doing a first-class job. Nothing makes their heart sing more than when people get the right support and get into work, and where their payments are made correctly. We have 104 intensive work search claimants per work coach. To meet the demand for jobcentre services, DWP successfully recruited 13,500 new work coaches by March 2021. If any noble Lord wishes to meet a work coach, I would be only too happy to make those arrangements so that they can talk to them and see at first hand what they do. Whether the issue is money, childcare, personal circumstances, domestic abuse or anything else, they stand ready to help our clients.

My noble friend Lord Forsyth and the noble Baroness, Lady Janke, mentioned written warnings. In 2018, we committed to look at processes to give claimants a written warning instead of a sanction, sometimes referred to as a “yellow card”. We have restarted the work to test issuing a written warning instead of a sanction for a first sanctionable failure to attend a work search review. A second proof of concept is testing the operational viability of a warning system, and a further proof of concept is planned for later in the year. Once the proofs of concept are complete, we will assess the results and determine whether a larger-scale pilot is required. On sanctions, let me just say that no work coach or person in the system goes to work with a target to sanction so many people. They go to work thinking, “How many people can I progress today and get into work?”

Many noble Lords, including my noble friend Lord Forsyth, the right reverend Prelate the Bishop of St Albans, the noble Lord, Lord Shipley, and the noble Baroness, Lady Wilcox, talked about advances. For UC, new claims advances are available urgently if a claimant needs support during their first assessment period and budgeting support is available for anybody who needs extra help. Advances of 100% of potential UC entitlement are available urgently. With an advance, claimants receive an additional UC payment, resulting in 25 payments over a 24-month period. We have reduced the normal maximum rate of deductions from 30% to 25% and have made numerous improvements to UC, including ensuring that people get the money they need as soon as possible through advances.

There was reference to the advances creating debt. I think the noble Viscount, Lord Brookeborough, mentioned people who have never been in debt in their life. I understand the delicacy around this, but we are trying to get money to people who need it and for them to repay it, which is not unreasonable, over a period that they can cope with.

My noble friend Lord Forsyth made points about the current system supporting the long-term unemployed to move from one low-paid job to another. Our job is to get people into work, a better job and a career. We are managing to achieve this through our Plan for Jobs programme, with more news to come on the in-work progression system when that works.

I have already talked about the five-week wait. Nobody has to wait five weeks; I can only endorse that again.

We have talked about the benefit cap and the two-child policy. Through everything they have raised, noble Lords have talked about fairness in the system, which I understand. For policy areas that are often open to criticism that are highlighted in this report, such as the benefit cap and the two-child policy, there is always a balance that must be struck between supporting those in need and providing a system that provides a strong work incentive and fairness for hard-working taxpaying households. This is not a new concept and one that we will not change.

A benefits structure adjusting automatically to family size is unsustainable, and the Government have had to take the difficult decision to stabilise our economy and build a welfare system that works for those who use it, as well as those who pay for it. The Government’s view is that providing support for a maximum of two children in UC and CTC ensures fairness between claimants and taxpayers who support themselves through work. I doubt that I could have done anything to placate noble Lords on that issue, but it is the Government’s position.

The noble Baronesses, Lady Janke and Lady Lister, talked about the adequacy of the benefits system. All benefit uprating since 1987 has been based on the increase in the relevant inflation index in the 12 months to the previous September, as happens now. We all know that 3.1% was used this year.

The noble Baroness, Lady Lister, raised the move to universal credit. The pilot scheme that had been active in Harrogate was suspended as the department focused on delivering the Government’s ongoing response to Covid. Ahead of restarting activity around the move to UC this year, we want to ensure that claimants are aware of their entitlements and to support those who wish voluntarily to move to UC to do so. The department will make an announcement in due course on the plans for the move to universal credit. I have no doubt that there will be all-Peers briefings and meetings for us to discuss that.

[Baroness Lister of Burtersett (Lab)]

Could I ask the Minister about take-up estimates?

[Baroness Stedman-Scott (Con)]

I will write to the noble Baroness on that.

[Baroness Lister of Burtersett (Lab)]

I asked a number of questions about migration to UC. Perhaps the Minister could write about that as well.

[Baroness Stedman-Scott (Con)]

I will cover that in winding up; I am conscious of the time.

The noble Lord, Lord Shipley, raised food banks. Food banks are independent charitable organisations and the DWP does not have any role in their operation. There is no consistent and accurate measure of food bank usage at constituency or national level.

On third-party deductions, benefit debts and social fund loans can see deductions reduced or deferred as the creditor, DWP, will always try to ensure that government debt is recovered effectively without causing undue hardship.

The noble Lord, Lord Shipley, talked about an impact assessment. The Government recognise that the public sector equality duty set out in Section 149 of the Equality Act 2010 is ongoing. As such, a full equality impact assessment was completed prior to the introduction of the uplift to UC, and it was reviewed and updated prior to the implementation of the temporary six-month extension announced by the Chancellor at the Budget on 3 March 2021.

I have already covered cost of living issues, fully cognisant of the difficulties that people are facing. I have heaps of information here. I try to answer all your Lordships’ questions and to treat the Grand Committee with respect. I do not want anyone to think that I am not prepared to answer questions; I will go through Hansard and through all these questions. I will write, and all noble Lords will get a copy of that. I thank your Lordships for the time you have spent listening to me.

Social Security System

Baroness Lister of Burtersett Excerpts

Tuesday 22nd March 2022 Lords Chamber

Asked by

[Baroness Lister of Burtersett]

To ask Her Majesty’s Government what assessment they have made of the recommendations for reform of the social security system made in the report Covid Realities: documenting life on a low income during the pandemic, published on 24 January.

[The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office and Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, no specific assessment has been made. We are aware of the report and, as always, we constantly keep our policies and systems under review. Universal credit is a modern, flexible benefit, responding effectively to economic conditions. It replaces six outdated and complex benefits with one, helping to simplify the benefits system, providing support in times of need and making work pay. In 2021-22, we will spend more than £111 billion on working-age welfare, which is 4.9% of our GDP.

[Baroness Lister of Burtersett (Lab)]

My Lords,

“The title social ‘security’ is laughable. We have never felt so insecure.”


This quote sums up a key concern of social security claimants who took part in this important participative research project, and it is disappointing that the department has not actually read the report but is only aware of it. The recommendations, co-produced with participants, emphasise that benefits should provide genuine security and be adequate to meet needs, and that the lived experience of claimants should inform policy-making and implementation. What is the department doing to meet these very reasonable demands, which echo those of the Economic Affairs Committee?

[Baroness Stedman-Scott (Con)]

I can confirm, as I said, that the department is looking at the recommendations in the report. We are aware, as is the whole House, of the difficulties that people are facing at the moment. The department and the Government have moved to put in place finance to help the situation, but I cannot offer any other confirmation of funding. I guess we can wait for tomorrow in hope.

Women: Cost of Living

Baroness Lister of Burtersett Excerpts

Thursday 10th March 2022 Lords Chamber

[Baroness Stedman-Scott (Con)]

Claimants can apply to their local authority for a discretionary housing payment if they need help to meet rental costs. We have the flexible support fund to help people as well, and we have given help with energy costs, which are rising exponentially. Of course, I have not tried to claim those benefits myself, but I know from somebody who has that it is reasonably straightforward, and I am not aware of any backlog in dealing with those claims when they have gone in.

[Baroness Lister of Burtersett (Lab)]

My Lords, as the main managers and shock absorbers of poverty and inadequate social security benefits, women are bearing the brunt of not just the benefit cap but the two-child limit. When will the Government take the advice of the former Minister, the noble Lord, Lord Freud, and scrap these poverty-creating policies?

[Baroness Stedman-Scott (Con)]

I understand the passion with which the noble Baroness makes her points. All I can say, and I have said it time and again, is that I will take the representation back to the department and make it known, but I am not able to give the response.

Social Security Benefits Up-rating Order 2022

Baroness Lister of Burtersett Excerpts

Wednesday 9th March 2022 Grand Committee

[The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office and Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, I am required to confirm that the draft Social Security Benefits Up-rating Order 2022 and the draft Guaranteed Minimum Pensions Increase Order 2022 are compatible with the European Convention on Human Rights and I am happy so to do.

The Social Security Benefits Up-rating Order increases state pensions and benefits by 3.1% from April 2022, in line with the increase in the consumer prices index in the year to September 2021. This represents an additional £4 billion of expenditure on benefits for pensioners and £2.6 billion on benefits for people below state pension age in 2022-23. In November 2021, Parliament passed the Social Security (Up-rating of Benefits) Act, which made amendments to the Social Security Administration Act 1992, setting aside the earnings link in the state pension triple lock for the year 2022-23. This was in response to exceptional circumstances caused by the distorting effects of the pandemic on the earnings statistics used in the triple lock formula. Setting aside the earnings element is temporary, only for one year. We are committed to reapplying the triple lock in the usual way from next year and for the remainder of the Parliament.

From April 2022, the basic state pension will rise to £141.85 a week for a single person. This means that the basic state pension will be over £2,300 per year higher in cash terms than in April 2010. The full rate of the new state pension will increase to £185.15 a week and additional state pensions and protected payments in the new state pension will also increase by 3.1%. The pension credit standard minimum guarantee for a single pensioner will rise to £182.60 a week and the rate for a couple will rise to £278.70 a week. The personal and standard allowances in jobseeker’s allowance, employment and support allowance, income support and universal credit will increase by 3.1%. Certain elements linked to tax credits and child benefit will be increased in line with those payments. The monthly amounts of universal credit work allowances will also increase in April to £344 and £573.

Benefits for unpaid carers and those who have additional costs as a result of a disability or health condition will increase by 3.1%. These benefits include disability living allowance; attendance allowance; carer’s allowance; incapacity benefit; personal independence payment; the carer and disability-related amounts in pension credit and other means-tested benefits; the employment and support allowance support group component; and the limited capability for work and work-related activity element of universal credit.

I am aware that the noble Lord, Lord Davies of Brixton, has tabled a regret Motion against the uprating order and I respect his position on the matter. The regret Motion will be debated at a later date, but today we must agree the uprating order to ensure that my department can introduce the new rates of benefits and pensions from 11 April.

The Guaranteed Minimum Pensions Increase Order provides a degree of inflation protection for members of formerly contracted-out defined benefit occupational pension schemes. It requires schemes to increase guaranteed minimum pensions built up from April 1988 to April 1997. As set out in primary legislation, a guaranteed minimum pension in payment must be increased in line with the increase in the general level of prices as at September 2021, which was 3.1%, or 3%, whichever is less.

To conclude, with the Social Security Benefits Up-rating Order, the Government propose to spend an extra £6.6 million in 2022-23 on increasing benefit and pension rates. Furthermore, the Guaranteed Minimum Pensions Increase Order increases the guaranteed minimum pension by 3% in line with primary legislation. I beg to move.

[Baroness Lister of Burtersett (Lab)]

My Lords, it was tempting to do no more than recite the contributions from the Conservative MPs who spoke on the social security order in the Commons, as they said much of what needs saying about this shamefully low increase in social security benefits in the face of forecast inflation of 6% to 7.25% this April, which will go even higher later this year following the horrifying assault on Ukraine. It does not take a mathematician to work out how a 3.1% increase will mean a significant cut in benefits’ real value, without even taking account of the differential impact of inflation on people on low incomes, who spend a disproportionate amount of their income on the basics of fuel and food.

The Government’s answer to the cost-of-living crisis has been widely criticised as inadequate and poorly targeted towards those who will suffer most, including by the Conservative MP Peter Aldous in the Commons debate on the order. A huge increase in fuel poverty is now predicted, despite the measures taken. Why have the Government ignored the calls from a wide range of organisations, including the Institute for Fiscal Studies, the Resolution Foundation, Citizens Advice and the Joseph Rowntree Foundation, to raise benefits by 6%, 7% or even 8% in line with the anticipated inflation rate? At the relaunch of the book by the noble Lord, Lord Freud, Neil Couling of the DWP said that it would be technically feasible to do so for universal credit. Even if it is not possible to do this for other benefits immediately, recipients could presumably be given a delayed uprating or a lump sum grant in lieu.

Had the Government listened to us in the autumn when we debated the triple lock Bill, this would of course have been less of an issue, though at that point we had not anticipated inflation going quite so high. It is clear that the current uprating mechanism, based on inflation around half a year earlier, is not fit for purpose, as the Resolution Foundation, the IFS and Nigel Mills MP, in the Commons debate, have argued. Will the Minister undertake to take back the message that there needs to be a review of the uprating procedure?

To return to the immediate crisis, in order to understand just how damaging this uprating will be, we need to put it into context, as the noble Lord, Lord Freud, made clear in the debates on the triple lock Bill. It is a context in which benefits have been cut or frozen for much of the period since 2010. Families with children have been particularly badly hit, thanks to the two-child limit and benefit cap, described by the noble Lord as “excrescences” that should be got rid of. It is worth noting here that, according to the Child Poverty Action Group, of which I am honorary president, 180,000 families will see no benefit increase next month because of the cap, which has not been uprated at all since it was set in 2016.

Moreover, the withdrawal of the welcome £20 uplift means that the Government will have been responsible for two cuts in the real value of benefits in under six months, as pointed out by the JRF. It estimates that 400,000 people could be pulled into poverty by the April cut. However, the underlying issue is the inadequacy of benefits to meet people’s needs. I quote the Tory MP, Nigel Mills, who is a member of the Work and Pensions Committee:

“I genuinely fear that many of the benefits we have are now lower than people need, so a lower than inflation rise for benefits that are already too low leaves people in an impossible position … It should not be a big challenge or a contentious point of debate to want to ensure that the benefits we are giving the poorest in society are enough for them to live on”.—[Official Report, Commons, 7/2/22; cols. 723-24.]


There is plenty of research that shows that all too often they are not. It was a recurrent theme in the Covid Realities research, conducted by a number of universities in association with the CPAG. It underlined that inadequate benefits contribute to the insecurity that many people living on benefits feel. One participant, when asked how she felt about the withdrawal of the £20, answered that she was “terrified”. She explained:

“We only started to claim universal credit in the middle of the pandemic due to my husband being made redundant, so up until recently I had no idea we were in receipt of any ‘uplift’ … To be told that now all of a sudden £86 per month will be taken is horrifying.”


Another participant commented:

“I’d like people to think about why it was necessary to introduce a £20 uplift … Surely this is an acknowledgement in itself that the support given to low-income households just isn’t enough for them to live on.”


Evidence about the inadequacy of the benefits received by disabled people can be found in the NatCen report on the uses of health and disability benefits that the DWP tried to suppress but which was eventually published in an unprecedented move by an exasperated Work and Pensions Committee, although a whistleblower revealed that some references to “unmet need” had already been excised following pressure from the department. While overall the ability to meet needs depended on the extent to which recipients had other sources of income, those of limited financial resources reported often not being able to meet not only health-related needs but also essential day-to-day living needs such as heating their house or buying food.

The Minister in the Commons, Chloe Smith, disputed such a reading of the research, arguing that it showed that

“health and disability benefits … help to meet almost all identified areas of additional need.”—[Official Report, Commons, 7/2/22; col. 666.]

But helping to meet needs is not the same as being sufficient to meet them. The health and disability Green Paper made no mention of the question of benefits adequacy. As Minister with responsibility for research in the DWP, will the noble Baroness give us an assurance that the White Paper will do so, taking account of this research which was commissioned by the DWP? Will she take back the message that we need a proper review of the adequacy of social security benefits more generally?

In conclusion, the Minister in the Commons tried to reassure MPs that there was nothing to worry about because of the smoothing effect, which meant that this April’s inflation rate would be reflected in next year’s uprating. However, Torsten Bell of the Resolution Foundation dubbed it more of a “rollercoaster” on yesterday’s “Today” programme—anything but smooth. The Minister demonstrated his complete lack of understanding of what it is like to struggle on a low income. If you are already facing difficulties feeding your children adequately and keeping your home warm, it is no help or comfort to know that today’s rocketing inflation rate will be smoothed out in benefit rates in a year’s time. Indeed, some of those affected might not even be claiming some of those benefits in a year’s time, so they will, in effect, have been cheated of what is arguably rightfully theirs. I urge the Minister not to use the smoothing argument in her response because, frankly, it is cruel when parents and others on benefits are worried sick about how they are going to manage and she is not a cruel woman.

[Lord Jones (Lab)]

My Lords, it is good to follow an informed speech. The uninitiated may find, as I do, these many details in so many pages difficult to follow. One finds on page 34 of the order, in Schedule 5, that Regulation 20(9)(c) refers to an enhanced disability premium of £25.35 concerning polygamous marriage. My reference is not an objection but an instance of facts buried in the necessary but challenging minutiae. But it is heartening to read of increases, for example, in adoption, maternity, bereavement and disability benefits. The late Lord McKenzie—Bill—is surely watching over this Committee. All this was made for the late, lamented Bill. He always mastered regulatory detail.

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[Baroness Lister of Burtersett (Lab)]

If that is the case, how come it was possible to add £20 to universal credit at such short notice? If such a long lead-in time is needed, and I recognise that a longer time is needed for legacy benefits—but not necessarily that long—how come it was possible to uprate universal credit by £20 in a matter of weeks during the pandemic? As I said, according to Mr Couling of the DWP, universal credit can be uprated at very short notice. As my noble friend said, that is supposed to be part of its agility. There is growing pressure on the department to look again. I quite understand that it has been like this for X number of years, but we now have more powerful computers and so forth. I really think that the DWP should look at it and see what might be possible, because we may well be going into a longer period of volatile inflation.

[Baroness Stedman-Scott (Con)]

I think that the noble Baroness appreciates that the UC system is more modern and able to do things, but her point about the £20 uplift is already on my list to take back to the department. I will write to the noble Baroness and place a copy of the response in the Library.

The noble Baroness, Lady Lister, the noble Lord, Lord Shipley, and others raised the issue of inflation and anticipating peaks. Benefits are paid over the course of the year and looking at the peak alone is a little misleading. Any move to implement a mechanism to anticipate peaks would require a mechanism to do the same to account for troughs. DWP believes that this kind of complex adjustment mechanism is not appropriate. For shorter-term shocks such as the current energy price increases, the Government have other responses which do not permanently commit the taxpayer to fund higher benefits.

The noble Baroness, Lady Lister, mentioned disability benefits. The department is considering contributions to the Green Paper and it would not be right for me to prejudge now what might be in the White Paper later this year. I shall talk to the Minister for Disabled People, Chloe Smith, and pass on the points.

The noble Lord, Lord Jones, as ever, took us on focused journey to Wales. It is a wonderful country—I am sure that my noble friend Lady Bloomfield, who is no longer in her place, would agree. I would get myself into a lot of trouble, which I know the noble Lord would not want, if I started talking about devolution and what might happen.

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[Baroness Stedman-Scott (Con)]

I shall do so. The noble Baroness also raised the benefit cap not being increased. Again, there is a statutory duty to review the levels of the cap at least once in each Parliament. I am advised that this will happen at the appropriate time.

[Baroness Lister of Burtersett (Lab)]

Given that we have asked about the benefit cap a few times during this Parliament, can the Minister tell us what the “appropriate time” will be?

[Baroness Stedman-Scott (Con)]

I am afraid that I cannot. I am sorry.

On support for people affected by the benefit cap, as I have said, our work coaches are cognisant of all these things, and I am sure they will try to find people work that helps them and alleviates some of the impact of the cap. Claimants can also apply to their local authority for a discretionary housing payment if they need help to meet rental costs.

The noble Baroness, Lady Sherlock, talked about the Private Member’s Bill. The Government continue to support this Bill and hope that it achieves Royal Assent in due course. I thank all noble Lords for their contributions.

Benefit Sanctions on Jobseekers

Baroness Lister of Burtersett Excerpts

Thursday 3rd February 2022 Lords Chamber

Asked by

[Baroness Lister of Burtersett]

To ask Her Majesty’s Government what assessment they have made of the impact of their policy to impose benefit sanctions after four weeks rather than three months if an unemployed jobseeker fails to seek or take work in any field; and whether they will publish their evaluation of the effectiveness of such sanctions.

[The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office and Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

No assessment has been made. We are not changing the reasons why we may apply a sanction, including refusing to take a job that has been offered, nor the rates applied. As part of the Way to Work campaign, we are changing the period in which a claimant can limit their job search to their usual occupation to promote wider employment opportunities, supporting people into work more quickly. As the noble Baroness knows, we no longer plan to publish a report.

[Baroness Lister of Burtersett (Lab)]

My Lords, given the general view that tougher sanctions will have only a limited impact on labour supply in today’s market, the inability of the Government’s evaluation to assess their deterrent effect, the independent evidence that they typically push people out of the formal labour market or into poor jobs at the cost of longer-term better-quality jobs, and that they are associated with serious hardship and ill health, what justification is there for introducing a significantly harsher policy now without even public consultation?