Social Security Benefits Up-rating Order 2018

Baroness Primarolo Excerpts

Tuesday 27th February 2018 Grand Committee

[Baroness Lister of Burtersett (Lab)]

My Lords, I had not planned to speak this afternoon, since I was supposed to be in two different places. But then I had this horrible memory of reading Hansard from our most recent debate on the uprating order, and of my noble friend Lady Sherlock naming and shaming me, in the nicest possible way, for not being there. I thought that I could not let this happen two years running, so here I am.

The Minister rightly said that the orders are compatible with the European Convention on Human Rights. However, there are other international obligations with which I do not think they are compatible. I would like to talk about the elephant in the room—those benefits that are not being uprated. This happened last year and the Minister very fairly accepted that it was a reasonable thing for us to do, because we cannot talk about uprating the benefits without thinking about benefits in the round.

As the Minister is aware, the European Committee of Social Rights recently issued a report, saying that levels of contributory benefits to the sick and unemployed are inadequate and therefore do not conform with Article 12 of the European charter. That was based on 2015 levels on benefits, so they would be even more inadequate now because of the benefits freeze in most working-age benefits.

In a report published last week the Resolution Foundation said that,

“in every year from 2016-17 to 2022-23 the UK is projected to miss its international commitment—through the 2030 Sustainable Development Goals”.

Those goals apply to us, as well as to poorer countries. The report said that it will fail,

“to deliver higher growth for the poorest 40 per cent of the population than for the population as a whole”.

Inequality is projected to rise to record highs by 2022-23. The Resolution Foundation says that this is,

“a story of the poorest working-age households being left behind”.

A key driver is the freeze in most working-age benefits. This is a policy choice. The Minister will talk about the living wage and personal tax allowances at some point but all this is taken into account. The fact is that the poorest people are falling behind, largely because of the benefits freeze.

According to the Resolution Foundation report, by 2020 jobseeker’s allowance and child benefit beyond the first child will be worth less than 32 years ago and child benefit for the first child will be at its lowest real-terms level in 20 years. I am sure that the noble Lord, Lord Kirkwood, will feel the same as me: as someone who has been working in this area for so long I find it very depressing to see how seriously we are going backwards.

The Minister gave us the welcome news about how pensions are improving relative to average earnings, but child benefit for a two-child family is less generous that at any previous point in the almost 40 years since it was fully introduced. It is set to fall even further over the next five years. Jobseeker’s allowance—unemployment benefit as was—was around a fifth of average full-time pay in the 1970s. It is now around 11% and is on track to fall to 10% by 2022, which will be a new low.

Does the Minister have the figures for what these key benefits, for people of working age and their children, would have been had they been uprated in line with prices since 2010? If she does not have them here—I would not expect her to read them all out anyway—would she be able to send them to Members of the Committee? It is important that we know what effect this freeze is having.

Given the way benefits are falling behind, it is hardly surprising that more people are turning to food banks and that poverty, especially child poverty, has started to rise again and is projected to increase by more than 1 million by the next decade. It is quite shocking. We are happy to allow the poorest to pay the price of increased inflation while the better off continue to enjoy cuts in taxation which do nothing for those whose income is too low even to pay income tax. I was very struck by reading in the paper yesterday that the Archbishop of Canterbury has said:

“Austerity is a theory for the rich and a reality of suffering for the poor”.


As the Resolution Foundation and others have said, these are choices. How we have responded to the financial crisis has been a matter of choices. I believe they are the wrong choices and that those with the narrowest shoulders are being asked to carry the burden. With inflation continuing to be significantly higher than it was projected to be at the point when the benefit freeze was first announced, is it not time that the Government think again about that policy and come back at the next available opportunity to say that they will now lift the benefit freeze?

[Baroness Primarolo (Lab)]

My Lords, I shall briefly follow the points that my honourable friend made and developed to ask the honourable Lady—I beg their pardon; I am not in the other place and should say my noble friend and the Minister—some specific questions about the Social Security Benefits Up-rating Order with regard to child benefit and child tax credit, which are not in the order, and in particular how it fits with previous decisions by this Government to cap uprating at 1% between 2013 and 2015 and subsequently to put a freeze on the vast majority of social security payments.

I want to address rising child poverty and, in particular, the rise of absolute child poverty. I am sure that the Minister will be aware that the evidence shows that money paid through child benefit and tax credits directly to the parent, mainly the mother, is spent directly on children, yet in this period we have seen a shocking increase in child poverty in a country which has the sixth largest economy in the world, notwithstanding the points that my noble friend made. While the price of food and energy is rising at 4% and more, the poorest families will see their income drop as they struggle to balance feeding their children and heating their home, and many of them will fall prey to loan sharks.

Does the Minister accept that, as CPAG has said, as a result of the cumulative cuts to social security, which are pushing more people into poverty, the failure to uprate benefits in line with inflation is the single biggest driver of child poverty? What is her assessment of the impact of the decisions contained in this uprating order on poverty levels and, in particular, child poverty? Does she accept the CPAG’s analysis that 1 million more children will be pushed into poverty? One million! I mean, one child would be awful; I cannot think of a word to describe adequately the prospect in our society of 1 million more children in poverty as a direct result of this Government’s policies and the cuts to universal benefit.