Social Security Benefits Up-rating Order 2025

Debate between Baroness Sherlock and Baroness Lister of Burtersett

Tuesday 25th February 2025 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Sherlock) (Lab)]

In speaking to this order, I will also speak to the draft Guaranteed Minimum Pensions Increase Order 2025. In my view, the provisions in both instruments are compatible with the European Convention on Human Rights.

Let us begin with the draft Social Security Benefits Up-rating Order. This instrument will increase relevant state pension rates by 4.1%, in line with the growth in average earnings in the year to May to July 2024. It will increase most other benefit rates by 1.7%, in line with the rise in the consumer prices index in the year to September 2024. As such, the up-rating order commits the Government to increased expenditure of £6.9 billion in 2025-26. In so doing, it maintains the triple lock, benefiting pensioners in receipt of both the basic and the new state pensions; raises the level of the pension credit safety net beyond the increase in prices; increases the rates of benefits for those of working age; and increases the rates of benefits to help with additional costs arising from a disability or health condition, as well as carers’ benefits.

I turn now in more detail to the issue of state pensions. The Government’s commitment to the triple lock means that the basic and full rate of the new state pension will be uprated by the highest of the growth in earnings or prices, or 2.5%. This will therefore be 4.1% for 2025-26, in line with the conventional average earnings growth measure. As such, from April 2025 the basic state pension will increase from £169.50 to £176.45 a week, and the full rate of the new state pension will increase from £221.20 to £230.25 a week. The basic and new state pensions will increase by 4.1% in April of this year, benefiting 12 million pensioners by up to £470 next year. That is up to £275 more than if pensions had been uprated simply by inflation. Other components of state pension awards, such as those previously built under earnings-related state pension schemes, including the additional state pension, will increase by 1.7%, in line with the statutory minimum requirement of prices.

The safety net provided by the pension credit standard minimum guarantee will increase by 4.1%. For single pensioners it will increase from £218.15 to £227.10 a week, and for couples it will increase from £332.95 to £346.60 a week. The Government are committed to supporting pensioners on the lowest incomes and want everyone entitled to this support to receive it. That is why we launched the national pension credit campaign.

I turn now to the support given to those in the labour market, such as universal credit and the legacy means-tested benefits it replaces. The up-rating order increases the personal and standard allowances of working-age benefits, including universal credit, by 1.7%, in line with the increase in prices in the year to September 2024. Around 5.7 million families are forecast to benefit from the uprating of universal credit, with an average annual gain for a family estimated to be £150. Additionally, this order increases statutory payments by 1.7%, including statutory maternity pay, statutory paternity pay, statutory shared parental pay and statutory sick pay.

The up-rating order will also increase rates by 1.7% for those with additional disability needs and for those who provide unpaid care for them. This commits the department to increased expenditure of £0.9 billion in 2025-26. This means that benefits such as disability living allowance, attendance allowance and personal independence payment, intended for those who have additional costs as a result of disability or health conditions, will rise in line with the rise in CPI in the year to September 2024.

This order will also increase carer’s allowance by 1.7% from April 2025, from £81.90 to £83.30 per week. Recognising the vital role played by unpaid carers, the Government have also announced that from April, the weekly carer’s allowance earnings limit will be tied to the level of 16 hours’ work at the national living wage.

I turn now to the draft Guaranteed Minimum Pensions Increase Order 2025—the GMP order—which is a routine, technical matter we attend to each year. I shall therefore be brief.

The GMP order was laid before the House on 16 January 2025. It sets out the annual percentage increase that must be applied to the GMP part of an individual’s contracted-out occupational pension earned between 1988 and 1997. Occupational pension schemes that provide GMPs are required to increase GMPs earned during that period, and which are in payment, by 1.7% for the tax year 2025-26.

The 1.7% figure is taken from the CPI inflation rate for the year to September 2024. That approach is broadly consistent with other uprating approaches, and it balances the need to provide members with a measure of inflation protection while giving schemes greater certainty about their ongoing liabilities.

In summary, the draft Social Security Benefits Up-rating Order implements the Government’s commitment to the triple lock; it provides for a real-terms increase in the value of the safety net in pension credit; and it increases the rates of benefits for those in the labour market, as well as those with additional disability needs, and those providing unpaid care to people with those needs.

The draft GMP order requires formerly contracted-out occupational pension schemes to pay an increase of 1.7% on GMPs in payment earned between April 1988 and April 1997. This provides people with a measure of protection against inflation, paid for by their scheme. I beg to move.

[Baroness Lister of Burtersett (Lab)]

My Lords, I have lost count of the number of these debates I have participated in while in opposition on the Benches opposite. This is the first debate I have participated in while knowing that there is a commitment to tackle child poverty and a serious government taskforce drawing up a strategy to do so. So I can applaud that, and the welcome improvements in benefits announced in the Budget. But I am afraid I have to concur with the Joseph Rowntree Foundation, which in its recent poverty review described the improvements as “timid” and falling

“a long way short of what is required to deliver the scale of changes needed.”

So this speech is less supportive than I would have liked.

As already noted, the uprating of working-age and children’s benefits by 1.7% follows the convention of increasing them in line with inflation the previous September. But as JRF points out:

“According to OBR and Bank of England forecasts, this may well be the low point of inflation in the near term, with inflation in 2025/26 likely to be higher, meaning benefits will lose a little value next year”.


Indeed, inflation is already at 3%, and just today we heard of a higher than expected energy price cap increase. Losing a little value may not sound very significant, but when benefits are so low to begin with, as I will come back to, it can make a real difference for families struggling to get by.

My noble friend the Minister previously raised the long reference period for the uprating, as did the Work and Pensions Committee in last year’s report on benefit levels. Disappointingly, the DWP told the committee that even in the longer term, when the migration to universal credit is completed, it has no plans to shorten the reference period. Can my noble friend say whether this might be looked at again under the new Administration?

The Work and Pensions Committee also recommended that limits on benefit entitlements such as the benefits cap be uprated annually. Again, it is disappointing that no such increase was announced for this year. As a recent report by the IPPR, supported by Save the Children, notes, the effect of the near constant freeze is to make the policy

“considerably more punitive than at the point of introduction”.

The stock response from the DWP—that the legislation requires the level of the cap to be reviewed every five years only, and that therefore, following the 2022 review, another review is not required until November 2027 —simply is not good enough. It may not be required but it is permitted, and so long as the cap continues, it should be reviewed annually so that, at the very least, those hit by it, mostly families with children, can benefit in full from the annual uprating.

Together with the two-child limit—also ignored in the Budget—the cap is a key driver of child poverty, as well as contributing to homelessness and disproportionately affecting survivors of domestic abuse. Research has shown that it is not achieving its aims. I know that my noble friend will say that we have to await the outcome of the child poverty review for any decision on the cap and the two-child limit, but every day they continue spells misery for many thousands of parents and children.

The other serious omission in this year’s uprating is the local housing allowance. As the IPPR report points out, this is tantamount to a benefit freeze for housing support and breaks the principle that support should be tied to changing rents in a local area. The result is that, for those with housing costs at or above the current LHA, the real value of their uprated UC will in effect be cut.

The impact of all this has to be understood in the context of benefit levels that, in the words of JRF, fall a

“long way short of what is needed to enable recipients to escape poverty”,

and that mean that many continue to “struggle needlessly”. Paid work may be the best route out of poverty, but it is not a route open to all. For too many, it proves a cul-de-sac, as they swap out-of-work poverty for in-work poverty. Inquiries by the All-Party Parliamentary Group on Poverty, of which I am co-chair, and the Work and Pensions Committee received

“a wealth of evidence that benefit levels are not meeting need”.

Benefit levels were never generous, but the effect of years of freezes, cuts and restrictions imposed by the Conservatives have meant that, in the words of the Financial Fairness Trust,

“we do not have a safety net worth its name”.

As a result, claimants are denied access to the most fundamental material resources needed to function day to day and to have healthy lives. The Work and Pensions Committee’s recommendations concerning the establishment of a benchmark for assessing benefits adequacy and the review of the extent to which current benefit levels are meeting this benchmark were rejected by the previous Administration. I urge my noble friend and her colleagues to look at them again. I ask her whether any consideration has been given to Trussell’s and JRF’s proposals for a protected minimum floor in UC, as a first step towards an essentials guarantee. For anyone who believes that poverty is relative, this is a pretty minimalist demand.

The Work and Pensions Committee also recommended that the local authority household support fund should be made permanent, so that local authorities can better plan the support they provide. This is not the place to go into detail but, if my noble friend has not already done so, I urge her to read the recent proposal from Trussell for a permanent and effective system of discretionary cash-first local crisis support, with broad statutory duties and ring-fenced funding that would incorporate both the household support fund and welfare assistance schemes where they still exist. It sees such a scheme as a crucial element in meeting our manifesto pledge to try to end mass dependence on emergency food parcels, which is a moral scar on society. At a recent meeting of the APPG on Ending the Need for Food Banks, the Minister for Employment assured us that the reform of local crisis support is definitely under review. It would be good if my noble friend could confirm this on the record in Hansard. As welcome as the extension of the fund for another year is—and it is welcome—those working on the ground need to be given some hope for the future. We heard reports at the meeting that food bank workers on the front line are scared and are burning out.

Scared, too, are many in receipt of disability benefits, in the face of mounting speculation about cuts to their benefits. It is worth remembering that disabled people are at disproportionate risk of poverty, in part because of the additional costs associated with disability. A recent report by Pro Bono Economics for Z2K warned that cutting the benefits that go some way toward meeting these costs could have a seriously damaging impact on the health and well-being of disabled people.

Also looking ahead, the Minister for Social Security and Disability advised, in the Commons debate on this order, that the Government would “set out shortly” how they plan to fulfil the manifesto commitment to a review of UC. Is my noble friend able to say any more at this stage about, for example, whether it will follow the example of the child poverty review in taking evidence from stakeholders, including those with lived experience of UC?

“Get Britain Working” White Paper

Debate between Baroness Sherlock and Baroness Lister of Burtersett

Wednesday 27th November 2024 Lords Chamber

[Baroness Sherlock (Lab)]

I am sorry to hear of the experience that the noble Baroness’s friend or family member had. What she said goes right to the heart of what we are doing. The point of the national jobs and careers service is that it is not just for people claiming benefits: it is for anybody who needs help getting into work, getting back to work or getting on in work. If we narrow it down to simply being about benefits, we will end up putting the incentives in the wrong place.

One thing that worries us about how the system has worked is that a lot of work coaches’ time is spent checking up to see whether everyone has ticked all the boxes and whether those on benefits have done all the right things. Of course, conditionality will always be a part of the system, but we want to see whether there are ways to reform that so that we can test different ways of making sure that people stay connected and work coaches can spend more time devoted to individuals —including the person that the noble Baroness described —to get them back into work if they want. There are 600,000 people out there who are long-term sick or disabled who want to work, but somehow they are not able to. We have to do something about that and we are determined to.

[Baroness Lister of Burtersett (Lab)]

My Lords, there is much to welcome in these proposals for reform of employment support and their aim of better health and good work. But can my noble friend please assure me, first, that the emphasis will be more on carrots than on sticks? Secondly, can she assure me that transforming a department for welfare into a department for work will not mean further social security cuts or abandoning any attempt to repair the serious damage wreaked on the social security system over the past 14 years, at the cost of its role in addressing poverty and providing genuine security?

[Baroness Sherlock (Lab)]

Let me reassure my noble friend of two things. First, we are absolutely committed to tackling the scourge of child poverty, and the Government are completely committed to making sure that how the social security system works is part of that—so I can reassure her on that front.

Secondly, we often talk in terms of carrots and sticks, but I am not sure that that is very helpful. Most people want to get on: they want a satisfying job that will be rewarding in itself and that will also feed them and their family. People want the same things that we want for them, but lots of things get in the way. Our job is to set the system up so that it is aligned to go with that—to get barriers out of the way, to support people, to give them all the help they can get and to get them over the line.

Obviously, some people will not be able to work on grounds of severe disability or perhaps sickness, or maybe their caring responsibilities do not make that possible. The Department for Work and Pensions is there to support them, as it is to support pensioners and those who need our help. A small number of people really do not want to work and, frankly, they should. We are quite clear that we will support them and, in return, we expect them to do their bit. But, in between, surely we can design a system that is not just carrots or sticks but goes with the grain and helps people to be themselves.

Pensioners: Winter Support

Debate between Baroness Sherlock and Baroness Lister of Burtersett

Tuesday 29th October 2024 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, nobody went out thinking that this is where we would like to be, but the noble Baroness knows very well the economic situation that we inherited, and she will know exactly why it was necessary to save money in year. I remind the noble Baroness that, by definition, the poorest pensioners are getting the support they need provided they apply; we will make it as easy as possible for them to do that. For everybody else, the Government have committed to sticking to the triple lock for this Parliament. That means that somebody on the new state pension will find that, over this Parliament, the value of that state pension will rise by £1,700, and the value of even the basic state pension will rise by £1,300. That is where the huge extra support will come from for the pensioners that she is talking about.

[Baroness Lister of Burtersett (Lab)]

My Lords, with reference to the triple lock, my noble friend the Minister will be aware that a number of charities have been calling for a double lock on benefits for children; that is, that they should uprated in line with either earnings or prices. Given this Government’s commitment to putting children at the heart of policy-making, might this be considered for the future?

[Baroness Sherlock (Lab)]

My Lords, obviously the noble Baroness will not expect me to comment on the Budget, or I would be back asking questions rather than answering them as quick as she can say “Chief Whip”. She will be aware that the work of the child poverty commission to develop a strategy will involve looking in the round at the challenge of child poverty in our country, including social security systems. It will be looked at in that context.

Child Poverty: Benefit Cap

Debate between Baroness Sherlock and Baroness Lister of Burtersett

Tuesday 22nd October 2024 Lords Chamber

[Baroness Lister of Burtersett]

To ask His Majesty’s Government what assessment they have made of the impact of the benefit cap on child poverty.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Sherlock) (Lab)]

Child poverty is a multifaceted issue and the benefit cap is just one factor that can influence the level of financial support available to children and families. Comprehensive action is essential to address the root causes of child poverty. This Government are committed to examining all the ways to dismantle barriers to opportunity, alleviate poverty and help families move towards sustainable employment. The child poverty task force is driving forward this work and will publish its strategy in the spring.

[Baroness Lister of Burtersett (Lab)]

My Lords, as my noble friend knows well, not only is the cap a driver of child poverty, especially deep poverty, but it undermines government goals with regard to homelessness and domestic abuse. Will she therefore impress on the child poverty task force the case for its abolition alongside the two-child limit and, in the meantime, do what she can to ensure that at least the cap is uprated in line with inflation as a matter of course so that some of the poorest families are not denied the protection of the annual uprating?

[Baroness Sherlock (Lab)]

My Lords, the Secretary of State is currently in the process of reviewing the levels of social security benefits that are uprated annually, and a statement will be made in due course. When the benefit cap was introduced by the coalition Government in 2013, the legislation required that it be reviewed every five years. The next review is due by November 2027. However, I hear my noble friend’s comments about the challenges facing many families in poverty. The child poverty task force, which is getting to work already, is determined to use all available levers to drive forward short-term and long-term actions across government to reduce child poverty. It is taking evidence from families, activists, local government and people across the country, and I will make sure that her comments are conveyed to it.

Household Support Fund

Debate between Baroness Sherlock and Baroness Lister of Burtersett

Wednesday 24th July 2024 Lords Chamber

[Baroness Lister of Burtersett]

To ask His Majesty’s Government what plans they have for the future of the local authority Household Support Fund, due to expire in September.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Sherlock) (Lab)]

My Lords, the household support fund is a scheme to provide local support to those most in need. For the period April to September 2024 DWP has provided £500 million, of which £421 million is for local authorities in England to spend at their discretion, with the balance going to the devolved Administrations. No funding was budgeted beyond September. As a new Government, we keep all policies under review, including the household support fund.

[Baroness Lister of Burtersett (Lab)]

My Lords, I welcome my noble friend to her rightful place. May I urge her to impress on her government colleagues the urgent need for the fund’s extension for at least six months, to give local authorities certainty and to enable the development of a longer-term, ring-fenced local crisis support scheme to replace also the discretionary welfare assistance that many authorities have scrapped and that is vulnerable to further cuts? As she knows, the alternative is even greater hardship for people in very vulnerable circumstances and even greater reliance on food banks.

[Baroness Sherlock (Lab)]

My Lords, I thank my noble friend for that question and for the warmth of her welcome. We appreciate very much the crucial role that local authorities are playing in providing crisis support to vulnerable people in their areas. Indeed, my department is engaging closely with each local authority in England to make sure that we understand the ways in which they are using the household support fund.

She mentioned that it is not the only source of support; some local authorities still have local welfare assistance schemes and there are other forms of localised support. But the Government are very conscious of the financial pressures facing local authorities and we are committed to ensuring that councils have the resources they need to provide public services to their communities. As I say, the policy is under review but my noble friend’s points are well made and I will take note of them.