Social Security Benefits Up-rating Order 2021

Baroness Sherlock Excerpts

Wednesday 10th February 2021 Grand Committee

[Baroness Sherlock (Lab) [V]]

My Lords, I thank the Minister for introducing these orders and all noble Lords who have spoken today. The guaranteed minimum pensions order is a routine uprating, but I have one question about it. When the House debated the GMP increase order on 3 March last year, I asked the Minister what guidance the DWP would give to pension schemes in the wake of the High Court decision on the Lloyds pension scheme. At that point, some matters had still not been clarified by the court, particularly in relation to past transfers out. However, on 20 November 2020 the High Court ruled that pension schemes have to proactively revisit individual transfer payments made since 17 May 1990, to check if any additional value is due as a result of GMP equalisation. Members who exercised their statutory right to transfer their benefits will be able to have a top-up payment if there is a shortfall between the original transfer payment and what would have been paid if benefits had been equalised at the time, with interest at 1% per annum.

The judgment clarified trustees’ obligations to revisit past individual transfers out when it comes to equalisation, but it also begged the question of how easy it would be for trustees to trace transfers back to 1990. Some schemes may face difficulties in complying. The data may no longer exist or the cost of checking and contacting members may exceed the benefit to them. There are no time limits on claims. Although the court judgment confirmed that past individual transfers must be equalised, details of implementation were left to schemes to decide. Will the Minister update the Committee and say whether the DWP plans to issue any further guidance and support to pension schemes?

On the social security uprating, Labour supports the Government’s decision to honour the triple-lock commitment that will see the basic and new state pensions rise by 2.5% this year. I am glad that the increase has been passed through to the standard minimum guarantee and pension credit. I will be listening carefully to hear the Minister’s answers to the crucial questions raised by my noble friends Lord Foulkes and Lady Drake and to the information relating to pensions sought by my noble friend Lord Davies of Brixton and other noble Lords.

Can the Minister explain the rationale for uprating the savings credit threshold in pension credit only by CPI? The other main working-age benefits and allowances go up in line with September CPI at 0.5%. I am glad that there is an uprating, but people are still suffering the effects of the Government having frozen benefits between 2016 and 2020. Excluding the Covid-related increases, most working-age benefits were between 9% and 17% lower last year than they would have been if benefits had been uprated by CPI since 2010. Those figures are from the House of Commons Library.

When the Minister mentions £7 billion in pandemic support, has she remembered that the OBR estimated that the 2015 Budget would cut more than £9 billion from social security spending by the end of this financial year? No wonder that, prior to the £20 uplift, unemployment support was at its lowest level in real terms since 1992.

I have four questions for the Minister. First, what is happening to the £20 a week uplift to universal credit, an issue raised by many noble Lords? Is it still being taken away in April? Parliament and, more importantly, those who depend on universal credit need to know. Increasing UC by 0.5% is neither here nor there if the Government are going to take £20 a week off it in April. People need that money. Has the Minister read the latest report from the Resolution Foundation, mentioned by the noble Baroness, Lady Janke? Has she heard Citizens Advice say that of the people it is helping, three-quarters of those on uplifted benefits would have a negative budget if the £20 was cut? Has she read the Trussell Trust research showing that one in five UK claimants reported it very likely that they would be forced to turn to a food bank? Has she heard CPAG warn that we are going to see another 200,000 children pushed into poverty? I concur with the concerns raised by the noble Lord, Lord Empey, about food poverty, but I add that a growing number of poor children are in working families.

What about the number of older workers, which is growing during this pandemic? They are at particular risk of long-term unemployment. They do not need their income cut by £20 a week. What of the impact on economic recovery? Money given to poor families is not saved: that £20 a week is spent in shops and businesses, stimulating the economy. We all want to know, what are the Government going to do?

Secondly, why has the £20 not been extended to those on legacy benefits, as mentioned by many noble Lords? Many of them are disabled people or carers. The Disability Benefits Consortium surveyed disabled people claiming legacy benefits and found that almost half—44%—report being unable to pay rent and household bills. I have never had a satisfactory answer to this question, so let me try again: how do the Government justify this blatant unfairness?

Thirdly, why has the benefits cap not been uprated? It has been at the same cash level since November 2016, and the growing number of families hit by the cap see no benefit from any increase, but their living costs are going up too. December’s figures show that 170,000 families are seeing their benefits reduced by £246 a month, on average; 85% of them are families with kids. As the nine-month grace period comes to an end, more and more people who fell out of work in this pandemic are going to bang their heads on that cap and will be hit badly.

Finally, why has bereavement support payment once again not been uprated at all? Can the Minister tell us by how much bereavement support payment has fallen in value since the Minister introduced it by abolishing the previous benefits? Why is it not being uprated?

People out there are desperate: they need help, and they, and we, look forward to the Minister’s reply.