Welfare Benefits Up-rating Bill

Debate between Baroness Lister of Burtersett and Lord Bishop of Ripon and Leeds

Tuesday 5th March 2013 Lords Chamber

[Baroness Lister of Burtersett]

My Lords, Amendment 11 is in part inspired by the speech made by the right reverend Prelate the Bishop of Leicester at Second Reading. He suggested that this was an occasion for considering,

“the moral responsibility of this House”,

and warned that this Bill,

“looks like part of an ideologically motivated attempt to alter the very nature of the welfare state”.—[Official Report, 11/2/13; col. 469.]

He voiced his fear that we are heading towards a US-style system, where pensions are protected,

“but working-age provision is less generous and more stigmatised, barely providing enough for people to live on without relying on charitable handouts”,

and asked:

“Is this really the kind of society that we want to live in?”.—[Official Report, 11/2/13; col. 471.]

It certainly is not the kind of society in which I want to live.

The purpose of this amendment is to facilitate a debate on that fundamental question of the generosity of benefits for working-age people and their children. The first part addresses the question of whether the social security benefits affected by this nasty Bill are adequate in the first place, and the second the principles that should govern the uprating of benefits in the future once the Bill’s provisions have ceased to have effect. Of course, the two questions are related because the current level of benefit reflects uprating policies over the years.

As the House of Commons Library briefing notes:

“It is a misconception that benefit rates in the UK are based on some regular, systematic estimate of minimum needs”.

In fact, they are not even based on an irregular systemic estimate, for as the briefing points out,

“no government has … attempted any official empirical study of adequacy”,

since a covert study undertaken by the National Assistance Board back in the 1960s, despite countless fundamental reviews of social security, which some of us have lived through to tell the tale.

There are various indicators that we can use to assess benefits’ adequacy. The most basic is whether they are sufficient to keep people out of poverty and, patently, they are not, as so many people living on benefits are in poverty if one uses the relative income and material deprivation measures. The income support received by, for example, a couple with two children or a lone parent with one child is around 30% below the poverty line. Briefings from children’s charities underline the hardship that families already experience as a result. For instance, research undertaken by Barnardo’s among its service users found that two-thirds were cutting back on fuel and half were borrowing money. Three-quarters reported that food poverty was impacting on their children’s health and well-being. Similarly, a Children’s Society survey of teachers found that nearly half of those surveyed are seeing children coming into school hungry. Recent peer research undertaken by five Gingerbread community researchers in partnership with the Poverty Alliance found many lone parents skipping meals to feed their children. As one said, “Occasionally, I’ll miss meals and things like that just to make sure that they get wee bits and pieces. It makes me feel better about them having than me having”. This is an example of a common phenomenon, where mothers deprive themselves of basics to try to protect their children against the worst impact of poverty, as they act as the shock-absorbers of poverty. It is an example, too, of a point made by the noble Baroness, Lady Howe of Idlicote, on our first day in Committee about how women are disproportionately affected by the Bill.

The most sophisticated benchmark of adequacy is the minimum income standard developed by the Joseph Rowntree Foundation. It represents what members of the public through group discussion have arrived at as the minimum acceptable standard of living: what you need in order to have the opportunities and choices necessary to participate in society. I emphasise that it is about needs, as socially determined, rather than about wants.

The latest calculations indicate that a couple with two children, or a lone parent with one child living on the basic safety net benefit of income support, receive only three-fifths of the income needed to meet the minimum income standard. A single working-age person receives only two-fifths. The researchers, who are colleagues of mine at the Centre for Research in Social Policy at Loughborough University, observe that, because increases in costs have not been adequately captured by the consumer prices index, out-of-work benefits fall even further short, providing a lower minimum income living standard for non-pensioners than they did in 2008 when the MIS was first calculated. They concluded, even before this Bill was proposed, that the gap between the incomes and needs of the worst-off households is widening, especially for families with children. While the JRF is not suggesting that benefits should be raised to the level of the MIS, the sheer scale of the shortfall is indicative of how far they fall below the decency benchmark established by members of the public.

Policy has been more successful in ensuring that pensioners can achieve minimum income standards, which is of course a good thing, but according to Professor Jonathan Bradshaw, the decision to uprate pensions by 2.5% and working-age benefits by 1% for three years is going to exacerbate further the absurd differentials in benefit rates that have developed over time. In 1948, a single pensioner received only 10p more than a single person on national assistance. Now, a single female receives £71 per week in jobseeker’s allowance. When they are eligible, they get £142.70 on pension credit. A lone mother with one child gets only £133.21 a week. These differentials, Professor Bradshaw says, clearly have nothing to do with need.

That brings us to the second half of the amendment, on the principles underlying uprating policies. The significance of these policies was underlined in an earlier JRF study. It pointed out that uprating policies have big effects over time. They are among the most significant decisions taken by Chancellors. Their gradual effects seem imperceptible on a year-to-year basis yet they carry immense implications for the future. This year’s decisions will certainly be perceptible, and the implications for the future are even more immense, because, whatever decision is taken by future uprating policies, they will be uprating benefits that have been significantly depressed in real terms over a three-year period.

The report called for a more open debate about this often hidden area of public policy, so that decisions that prevent the poorest members of society keeping up with rising living standards would not be taken in the dark. Unknown to most people, uprating policies have resulted in a significant erosion of relative living standards among benefit recipients over most of the past three decades. Recently, this has been exacerbated by the use of CPI rather than RPI as the measure of inflation, particularly during the period when prices of necessities that represent a disproportionate share of spending among benefit recipients have risen faster than prices generally—a point that we made on the first day in Committee. As Donald Hirsch of the Centre for Research in Social Policy comments, in this context, the index used to uprate benefits has become a highly imperfect mechanism for preserving their real value and a rather arbitrary means of raising benefits by an amount that politicians feel that the country can afford rather than of protecting living standards.

Of course, assessments of affordability cannot be ignored. They can also be contested, as we are doing in relation to this Bill, but looking to the future I agree with Donald Hirsch that there is a need to establish principles linking benefit uprating to some stable concept of what is fair, rather than just ad hoc decisions about what can be afforded. He suggested that, as a start, this might involve reasserting the principle of human decency whereby the real value of benefits is genuinely protected and that, in the longer term, if prosperity starts to grow again, we need to consider how those in greatest need can share in such growth.

I suggest that a report to Parliament that addresses these fundamental questions is the least that we can ask of a Secretary of State willing to preside over a deliberate reduction in the living standards of the most deprived members of our community. I beg to move.

[The Lord Bishop of Ripon and Leeds]

My Lords, I have put down my name in support of the amendment and am very grateful to the noble Baroness, Lady Lister, for her tabling of it and for her powerful advocacy of it. I have done so because I am repeatedly told by citizens advice bureaux and the like of the uncertainty which is being introduced by this Bill. It is ironic that we have talked so much of certainty in setting the rates for the years up to 2015-16, when those on benefit and providing advice feel uncertain as to its short and long-term effects.

So long as benefits have been uprated by inflation, it has been possible to budget taking them into account. But this cap on uprating is a major and apparently long-term change to the whole principle of our benefit system. Recipients and those who work with them are owed an explanation. I am not looking for commitments from either Front Bench beyond 2015, but I would be very grateful for comment from both of them on whether this is to be seen as a temporary reduction with the aim of restoring benefit values after 2016 so that we ensure a decent living standard for those on benefit—the requirement that has been so ably put by the noble Baroness, Lady Lister. Or is this actually a permanent reduction to a lower level, which will then be stabilised in real terms after 2016, or a continuation of a gradual reduction expected to continue after 2016? None of those options is desirable, but they are very different in the effect that they will have, and a sense of purpose and direction from the Government and Opposition is important in all this. It is important to know just where benefits are anticipated to be going in future, both from the opposition and the government Front Bench. I hope that they can supply that in the debate on this amendment.