Cost of Living: Public Well-being
Baroness Sherlock Excerpts(1 year, 6 months ago)
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Baroness Sherlock (Lab)
My Lords, my noble friend Lady Drake has done a characteristically brilliant job of describing the impact of the rising cost of living across the whole landscape. I will focus specifically on the impact of inflation on low-income households, especially those who depend on benefits for their survival. I warn noble Lords up front that this will get techy and dull in parts but, frankly, given what is happening down the other end, a bit of dullness would not do us any harm.
I get really cross when I hear jibes, to this day, about the idle poor and Benefits Street. If we are to be a country where your well-being is not determined solely by having chosen your parents with care, we need a thriving welfare state. We have the basics of it there but we do not need one that is simply a safety net. We also want something that can fulfil its original ambition to be a companion service to the NHS—something that pools risk across the population and across lifetimes, so that we pay in, work and contribute when we can and we take out when we cannot or when our needs are greater. We need a system that helps us: when we cannot work or can work only part-time; when we retire; if we get sick or injured; or if we are caring or bereaved.
We have a system but for it to work, benefits need to keep their value. Prior to 2011, rates were linked to the retail prices index—RPI—or a variation called Rossi. From 2011, they were linked to the consumer prices index—CPI. Incidentally, that RPI to CPI shift saved the Government a lot of money at the expense of the poor. The current measure used for uprating is the CPI 12-month rate for the September before the April when the increases take effect. That gap between September and April is allegedly there to allow the computers to be updated but, at a time of rising, high or unstable inflation, it can cause problems.
For example, the CPI rate in September 2021 was 3.1%, so benefits rose in April by that much; unfortunately, in April inflation was 9%. The CPI rate in the month just gone was 10.1%. Logically, that suggests benefits would rise by 10.1% in April—but if they do, the IFS says that would leave their real value around 6% below pre-pandemic levels, equivalent to about £500 per year for the average out-of-work claimant. That is because the rise last April was so much lower than inflation.
As noble Lords will have heard, many Ministers are now suggesting that CPI inflation uprating is too generous, and that perhaps some lower figure should be chosen. Does this mean that indexing is becoming a one-way bet, so that if inflation is low in September it must be stuck to, but if it is high in September it has to be rethought? What is the argument? Maybe it is that inflation is different for those on lower incomes. In fact, it is different. The ONS figures on inflation show that rising food prices were the biggest driver of rising inflation, at around 14%, but of course the poor spend far more of their income on essentials such as food. The IFS estimated that even with the energy price guarantee, from this month the poorest 1/10th will face an average inflation rate of 14%, compared with 10% for the richest. So maybe Ministers are arguing that these are very special circumstances, and that for one time only we have to move away from uprating by inflation, but let us look at what has happened since 2010.
The coalition Government limited most working-age benefits to a 1% annual increase for three years from 2013-14. The Conservative Government then froze those benefits in cash terms at their 2015-16 levels for another four years, so for seven years the value of benefits was slashed year on year, saving around £4.7 billion. Those cuts are baked in because every year future increases are a percentage of that lower value. That is before I even mention all the other cuts in benefit support—the two-child limit, the benefit cap, the bedroom tax, cuts in housing and council tax benefits, Sure Start and so much more.
Why would they do it? Ministers may say that they had no choice given the financial circumstances but let us look at a detailed study by Ruth Lupton et al, The Coalition’s Social Policy Record 2010-2015, which found that
“the poor bore the brunt of its changes to direct taxes, tax credits and benefits”.
Meanwhile, with the exception of the richest 5%, those in the top half of the distribution were net gainers. The report concluded:
“Perhaps surprisingly, overall the ‘welfare’ cuts and more generous tax allowances balanced each other out, contributing nothing to deficit reduction.”
Those austerity cuts were not needed to cut the deficit but to pay for tax cuts. Recently, when Ministers announced that they were going to cut taxes and might need benefit cuts to pay for them, this was a shift in scale rather than principle—albeit, I grant, a pretty dramatic shift in scale. I still cannot quite believe that we have seen a Government who have imperilled the stability of our entire economy, driven up inflation, interest and mortgage rates, and put pension funds at risk, then have the nerve to suggest that low-income families should pick up the bill for it.
Instability really matters on a macro scale because it shakes markets and makes us all poorer. It also matters on a micro scale because, when you can only just make ends meet, above all you need certainty. I am sure other noble Lords have had similar experiences, but I have never met so many people so scared about how they are going to manage in the weeks and months ahead. They are terrified that they cannot pay their bills, feed their kids or keep a roof over their head. Not only do we now have some 2,500 food banks, but already roughly 1,000 churches and 200 libraries have registered to become warm, welcome spaces because people cannot afford even to sit in their houses and heat them.
The problem with the rollercoaster politics we have been having is that no one trusts anything. Last night BBC News interviewed a pensioner, Betty from Sunderland, about the cost of living. She said:
“It fills you with dread. Are we going to have to start living on what little bit we’ve got saved? When that’s gone, where do we go from there?”
Faisal Islam told her the Government had decided they would after all uprate the state pension. She replied:
“That’s today. What happens tomorrow? They could change their minds by tomorrow because every day they change their minds.”
Quite so. This is not a game It is a life-or-death matter for millions of our citizens and they deserve better. I urge the Government to get a grip or get out.
Covid-19: Self-isolation Payment Scheme
Baroness Sherlock Excerpts(3 years, 7 months ago)
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Baroness Sherlock
To ask Her Majesty’s Government what are the eligibility criteria for the new payment scheme for people self-isolating and unable to work from home in areas with a high incidence of COVID-19.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Bethell) (Con)
My Lords, to be eligible for this payment, individuals must live in Blackburn with Darwen, Oldham or Pendle and have been asked to self-isolate by Test and Trace, be employed or self-employed, stand to lose income because they are unable to work from home while self-isolating, and receive at least one of the following benefits: universal credit, working tax credit, income-related employment and support allowance, income-based jobseeker’s allowance, income support or pension credit or housing benefit.
Baroness Sherlock (Lab) [V]
My Lords, I am grateful. People are told to quarantine as soon as they have symptoms and wherever they live. Can I ask the Minister two questions? First, why is the payment only for those who have had a positive test or been told to isolate by NHS test and trace? Secondly, the Government’s description of the scheme says that it is intended only for those in high-infection areas, but if there is an outbreak elsewhere, in a care home or a factory, do those workers not need support? If they cannot afford to stay at home, does that not risk creating a new high-infection area?
Lord Bethell (Con)
My Lords, the reality of the epidemic is that it targets some communities in specific areas with laser-like focus. The feedback from some of those communities, local authorities and community leaders is that support is needed in some areas where there has been a local lockdown. We have responded to those suggestions and put this financial support in place for specific communities in specific areas. In that, we are responding to local suggestions.
Covid-19: Social Care Services
Baroness Sherlock Excerpts(3 years, 12 months ago)
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Baroness Sherlock (Lab)
My Lords, I am grateful to my noble friend Lady Wheeler for securing this debate and for her excellent introduction. I want to talk about the financial circumstances of care workers, especially when they get sick. Care workers are on the front line doing important work in highly risky conditions, usually for the minimum wage, but what happens if they get sick?
Let us look at two circumstances. The first is a carer working in a care home for 35 hours a week on the minimum wage taking home about £277 a week. If she develops symptoms and has to self-isolate, the good news is that she qualifies for statutory sick pay. The bad news is that SSP is just £95 per week, so overnight her net income falls by two-thirds. Can the Minister tell the House how she is meant to manage? Can she apply for universal credit to top up her SSP? That is not made clear in any of the Government’s web pages.
The second example is someone caring for a number of people in their own homes and travelling between them. She works for two different employers but does not earn enough in either job to qualify for SSP. If she needs to self-isolate, she would have to claim universal credit, but how long would that take? The last figures published for universal credit showed on average 40,000 people a week claiming the benefit, but in the past month 1.4 million people have applied, so can the Minister tell the House what the average wait is for someone who has applied for universal credit in the past month? Secondly, even if our care worker’s claim is processed quickly, there is a built-in wait of five weeks to get money on universal credit. She can ask for an advance, but it is a loan deducted from future universal credit payments. She is only just managing as it is and is scared of getting into debt.
Ministers have made some welcome changes to universal credit, but these case studies show that carers need more. We need action on the two-child limit, the savings threshold and the failure to uplift legacy benefits. Most urgently I want to plead again with Minsters to abolish the five-week wait in universal credit. If they cannot or will not do that, will they give everyone an advance automatically when they apply, but as a grant, not a loan?
These may not sound like health issues, but their effects really are, because if carers cannot pay their rent and feed their families they may feel that they have no choice but to carry on working when they should be self-isolating. That is bad for carers, but also, since their work takes them from one person to another, they must be at serious risk of spreading the virus to some of the most vulnerable people in our country. I urge Ministers to act now.