Social Security and Pensions

Debate between John McDonnell and Stephen Timms

Monday 6th February 2023 Commons Chamber

[Sir Stephen Timms]

I absolutely agree. That was the one point at which food bank demand fell, and of course it went straight back up once the £20 uplift was removed.

The level of the safety net is now too low for it to do its job properly from the standpoint of economic efficiency. People are being forced to accept unsuitable jobs, with no prospect of training or advancement, simply in order to subsist. That is one reason why the UK’s productivity record is so poor, and we will not deliver economic growth until we tackle that productivity failing. Interesting cross-party thinking on the matter is under way, for example in the work of the Poverty Strategy Commission set up and chaired by the noble Baroness, Lady Stroud. Our Committee’s inquiry will be able to draw on that and other work.

It is clear that the immediately preceding Administration —the interim Government, as the hon. Member for Blackpool North and Cleveleys described it—would not have honoured those obligations. The right hon. Member for South West Norfolk (Elizabeth Truss) told us yesterday that her Administration was brought down by a left-wing conspiracy in the financial markets. It is not clear whether she regards my right hon. Friend the Member for Hayes and Harlington (John McDonnell) as having been responsible for organising that.

[John McDonnell (Hayes and Harlington) (Lab)]

I knew I’d get the blame somehow.

[Sir Stephen Timms]

Actually, of course, it was brought down by economic reality. But I do not think that that Administration would have delivered an inflation uprating, so it is to the credit of the current Administration that they have done so.

I also welcome the increase in the benefit cap. The cap was introduced in 2013 and then reduced in 2016; it has never been increased at all. At the beginning of April it finally will be, thank goodness, but only by the overall rate of benefit uprating, which means that in effect it is a standstill increase. The impact of the benefit cap will not get worse in the coming year, but that will not affect the worsening impact of the cap’s falling in real terms every year since it was introduced.

UN International Day of Persons with Disabilities

Debate between John McDonnell and Stephen Timms

Thursday 24th November 2022 Commons Chamber

[Sir Stephen Timms (East Ham) (Lab)]

I welcome the initiative that my hon. Friend the Member for Battersea (Marsha De Cordova) has taken in applying for and obtaining this debate. I want to pick up on a number of important points that she made in her excellent speech, but I will begin by commenting on the problem that the Government have over engagement with disabled people.

We know that poverty is particularly focused among families living with disability. That is very clear in the work of the Social Metrics Commission, chaired by the noble Baroness Stroud, who was the special adviser to the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) when he was Secretary of State for Work and Pensions, so this is not a partisan point at all. Poverty is focused among those families, so it is not surprising that disabled people, from time to time, have cause to criticise the benefits system.

In the last few years, the Department for Work and Pensions has tended to respond to that by pulling up the drawbridge and refusing to talk properly to people, which led to the fiasco of the disability strategy to which my hon. Friend referred. It was launched with some fanfare in July last year but declared unlawful in January this year because of the failure to consult disabled people. As far as I know, it is still languishing—stuck and going nowhere—as a consequence.

The Social Security Advisory Committee is appointed by the Government and made up of experts, not politicians. It is chaired by Stephen Brien, who was one of the original architects, with the Centre for Social Justice, of universal credit. The committee produced a useful paper in December 2020 called, “How DWP involves disabled people when developing or evaluating programmes that affect them”—a slightly long-winded title, but it is clear what it is about. It says:

“DWP officials themselves acknowledge that the Department is not trusted by many disabled people and by some of the organisations who are led by, or work with, disabled people. Our own research confirmed this. Some of the individuals we spoke to did not believe that the Department engaged with disabled people’s organisations or sought views from individual disabled people. There was also a widespread belief that DWP would not represent accurately disabled people’s views when they did seek them.”

The committee therefore recommended that:

“DWP should develop a clear protocol for engagement…It should cover both national and local engagement”.

That is a clear, straightforward, constructive and helpful suggestion to try to overcome that serious problem, but the Department’s response was simply to reject the recommendation.

The committee also recommended that the Department should routinely report on its engagement with disabled people, but the Department rejected that as well. It said:

“We believe that our existing reporting provides sufficient information on our engagement with disabled people and stake- holders.”

I must say, however, that that is not the view of disabled people, as a Conservative Member of the House of Lords, Lord Shinkwin, told the Work and Pensions Committee that

“the DWP is handling its engagement with disabled people badly”

and, he said, with “palpable disrespect”. We now know that it is not the view of the courts either, hence the fiasco over the disability strategy.

The Department commissioned a report from a respected external agency to investigate disabled people’s experiences of the benefits system. It talked to a large number of disabled people in carrying out that research. When asking if they would take part in the study, it told each of them that the results would be published. When Ministers saw the report, however, they decided not to publish it, which is a clear breach of the cross-Government protocol on social research that requires such documents to be published. The Select Committee used its powers to obtain a copy of the report from its authors and published it, so that it reached the public domain.

It is true, of course, that being open about criticisms and difficulties exposes Ministers to awkward questions, but refusing open discussion and trying to keep things secret or keep a lid on them does far more damage than letting such debates take place in the open. I warmly welcome the new Minister and his colleagues in the ministerial team to their posts and I hope that they will take the opportunity to have a fresh look at how they deal with, talk to and engage with disabled people and their organisations. The practice of the team led by the previous Secretary of State was unnecessarily disastrous—there was no need to try to hide all those things. It would have been far less damaging to be open and to, yes, sometimes have a robust exchange. To try to keep it all hidden was very damaging and counterproductive.

As a first step, we have been told by the Department that it will not publish the number of work capability assessments that it carries out each month—I have no idea why; it is absolutely basic and fundamental data. I suppose the reason is that, if people know how many are being carried out, they can ask awkward questions about what is going on. That is another example of that damaging and counterproductive attempt to bury what is really happening.

[John McDonnell (Hayes and Harlington) (Lab)]

I am sorry that I came late to the debate; I was delayed in traffic after another meeting. I remind my right hon. Friend that some of the concerns expressed by disabled organisations over the years commenced largely around the WCAs. I remember that he, I and several other hon. Members simply asked the DWP whether it was monitoring, for example, the consequences and impact of WCAs on certain vulnerable people and the suicides that were taking place. It denied us that knowledge at the time, so it is understandable that a number of disability organisations are sceptical about its role.

[Sir Stephen Timms]

My right hon. Friend is absolutely correct that this has quite a long history, but my sense is that it has got considerably worse in the last few years and the Department has stopped publishing things that obviously should be published and answering perfectly reasonable questions. As a result, it has badly damaged its reputation with disabled people. I hope that the new ministerial team will want to rebuild those links and rebuild trust.

My hon. Friend the Member for Battersea made some important points about the disability employment gap, which has increased in the last two quarters. Many disabled people would like to work but cannot. The pandemic has had a damaging impact, because since then, there has been a steep rise in the number of people who are out of work on health grounds. We urgently need to be able to support disabled people who would like to work into jobs, because that is one of the key ways to tackle the current labour shortage. We can take advantage of that big opportunity.

In July last year, the Select Committee published its report on the disability employment gap. Shortly before the 2015 general election, David Cameron announced a target to halve the disability employment gap, but the target was scrapped shortly after that general election. We want it reinstated. Our report called for a radical overhaul of employment support for disabled people. The big national Work and Health programme is helpful but it is not working for many people. The truth is that, as we can all recognise, smaller specialist providers are often best placed to deliver the help that is needed. People have to be on the ground locally to know who can do the best job; that kind of support cannot be commissioned from Whitehall.

We proposed that funding for this employment support should be devolved. Where the capacity exists, we want groups of local authorities, probably based on the new NHS integrated care system boundaries, to be responsible for commissioning and delivering employment support for disabled people. The Department should allocate funding, monitor performance and publish detailed comparative performance data, but it should not deliver the support, which should be closely integrated with the local health service, colleges and voluntary sector groups. In its response to our report, the Department did not reject that idea, but it has not moved in that direction at all since; I hope that it will.

My hon. Friend was right about Access to Work, which is vital to overcoming work-related obstacles resulting from disability. It is a lifeline for many, but it is not well enough known. Many employers do not know about it and it is dogged, as she said, by a bureaucratic and extraordinarily cumbersome application process that puts people off and leaves many in limbo. Once they have applied, they sometimes have to wait for quite a long time to find out what support they will receive. If somebody benefits from Access to Work in one job and then changes job, they have to go back to square one. There should be a passporting arrangement, as my hon. Friend argued. If they apply for a new job at the moment, their potential new employer cannot be certain what, if any, help Access to Work will provide.

The Minister’s predecessor told the Select Committee about a planned “digital transformation” for Access to Work, which I hope will address those obvious failings, and I hope the Department will involve disabled people themselves in the redesign of the Access to Work programme. I would be particularly grateful if the Minister, in winding up, could give us an update on the progress of that initiative.

Social Security (Up-rating of Benefits) Bill

Debate between John McDonnell and Stephen Timms

Consideration of Lords amendments
Monday 15th November 2021 Commons Chamber

[Stephen Timms]

The Minister did indeed say that in response to my intervention, but that does not answer the question. The question was: do the Government intend the value of the state pension, over time, at least to keep track with earnings? I was hoping that he would reaffirm that. I do not think that is controversial—it is a policy long held by the Labour Government, the coalition Government and this Government—and I hoped that he would say that that was still their intention, even though in the current year, for reasons that we all understand, the value of the state pension will fall significantly behind the increase in earnings.

As I hope I made clear in my intervention, I think it is entirely reasonable not to increase the state pension by 8% this year; I completely understand the case for not doing that. It looks as though we will get an increase of around 3%, in line with CPI. The hon. Member for Glasgow East (David Linden), who spoke for the SNP, talked about the likely rates of inflation, and, depending on increases in prices and earnings next year, it is quite likely that the state pension will never catch up with earnings unless there is a catch-up initiative of some kind. The Lords amendments would provide such a mechanism. If there is not a catch-up at some point, that would be contrary to the Government’s long-held intention that the state pension should at least keep track with earnings. The fact that—as the Minister has now told the House twice—it will get back in line with the triple lock next year does not solve the problem, because there is a significant backwards move this year. Will there be a catch-up initiative at some point? It looks and sounds as though there will not.

Keeping the value of the state pension going up in line with earnings was a key pillar of the new pensions framework set out in the report by Adair Turner and his fellow commissioners John Hills and Jeannie Drake, published in 2005 and 2006. The settlement’s key elements were that the state pension should keep track with the increase in earnings over time, and auto-enrolment. It was accepted by the Government then and by every Government since.

The importance of that needs to be spelled out. It is not just about being more generous to pensioners and helpful to older people. It is important because it ensures a sound foundation for pension saving, so that people auto-enrolled into pension saving through that successful initiative, which we have all celebrated, are not being encouraged by the state into a bad deal. If the value of the state pension will no longer at least keep track over time with earnings, some people will be better off spending their money now, rather than saving into the pension pot that they are being auto-enrolled into, and later relying on the means-tested safety net of pension credit.

If the state pension slips behind earnings, modest pensions accrued through auto-enrolment will become worthless, because those who claim them in due course will not get above the means-tested threshold and they will still have to depend on pension credit for their income in retirement, and the fact that they have saved into a pension will do them no good at all. That will be a growing problem if the level of the state pension is allowed to slip behind the increase in earnings.

If that does happen, people who are looking forward and saving but are going to end up with fairly modest pensions should instead spend the money at the time they earn it, rather than save it in a pension that, in the end, is not going to take them above the means-tested threshold and so will not give them any additional income. That is why what the Minister is arguing for is such a threat to the success of auto-enrolment. Auto-enrolment will no longer be a sound basis for pension saving if the level of the state pension is allowed to drift below the level of earnings.

People must be able to trust in the state pension under the policies of the Government. They have been able to do so up to now, and now they will not. That raises a pretty fundamental question about the future of the Government’s pensions policy. There is a real danger in allowing, almost by sleight of hand albeit for reasons that we all understand and sympathise with, the state pension to fall permanently behind the increase in earnings and weakening the pension framework that, as far as we all know, is still the basis of the Minister’s policy.

We should not allow that to happen. We need either a measure, and the Minister needs to reassure us that there will be, such as a catch-up initiative to make sure that the state pension over time—not this year, but by next year or the year after—will keep track with the increase in earnings, or the House needs to accept the amendment agreed with a significant majority in the other place, because that keeps the pension framework in place and keeps it effective. There is a real worry if there is a significant falling behind. If there is a 3% increase in the state pension at a time when earnings have gone up by 8%, that will be a one-off 5% fall in the state pension behind the level of earnings. Depending on what happens to earnings growth, which will certainly not carry on at 8%, and on inflation rises next year, that fall could well be locked in for good and the pension framework will have been weakened.

I hope that I have made it clear why this is actually quite important. It is not just about whether we are being generous enough to pensioners. The question is: are we keeping in place a robust and reliable framework for pension saving based on which people can plan with confidence for the future?

[John McDonnell (Hayes and Harlington) (Lab)]

May I say that we in the Opposition, and I think Members on both sides of the House, take pride in the expertise of my right hon. Friend the Member for East Ham (Stephen Timms)? Time and again, as Chair of the Work and Pensions Committee, he has warned the House —both sides of the House, at times—about the approach that needs to be taken if we are to have a stable social security and pensions regime. I pay tribute to the work he does.

I am an ardent advocate of the coalition Government’s policy on the triple lock. That seems somewhat ironic, given the history of this policy, but I am. The historical background is that I was a total opponent of Mrs Thatcher’s breaking of the link between pensions and earnings. To be frank, the state pension still has not recovered from breaking that link. I was elected in 1997, and at the end of Conservative rule in 1997 the basic state pension would have been 50% higher in value if Mrs Thatcher had not broken the earnings link in 1980.

From 1997, I prepared alternative Budgets to the new Labour Budgets. Gordon Brown had a sense of humour about that, and when I was on a platform with him recently—when I was the shadow Chancellor—he said, “Actually, he’s always been the shadow Chancellor,” because I was producing alternatives to his Budgets. In every alternative Budget, I put forward the restoration of the link between earnings and pensions. I did so because the breaking of that link had undermined the progress we had seen until then in improving the state pension and lifting pensioners out of poverty. That is why I was a strong supporter of the triple lock when the coalition Government introduced it. Despite a decade of the triple lock, however, the basic state pension would still be 37% higher if the earnings link had been maintained. That means that today a single pensioner on the basic state pension would be £2,662 a year better off, and a pensioner couple would be £4,277 a year better off, if the link had not been broken by Mrs Thatcher all those years ago.

According to figures on pensioner poverty from Age UK, there are 2.1 million pensioners living in poverty in our country at the moment, up from 1.6 million in 2014—a 30% increase. What is interesting about this, and not shocking to some in this House, is that the majority of pensioners living in poverty are women. In addition, pensioners from black and Asian communities are about twice as likely to be living in poverty.

What I find interesting are some of the individual examples we can bring to the House about what this means. I remember that, the last time energy prices rose, I had a constituent who used her bus pass to stay on the bus all day to keep warm. Such stories about the reasons why people were living in such fuel poverty were not uncommon. I remind the House that this year fuel bills are increasing on average by £139 and they are expected to rise again next year, so I predict that we will have more of our pensioner constituents going cold this winter and, if we are not careful, in future winters as well, especially as, as has been said, inflation is now likely to be 4% and some are even predicting 5%.

I just wonder what this row is all about, because I support the amendments. I would have given the 8%, because I do not believe that people should break the principle of a manifesto commitment in such circumstances and I believe the additional top-up would have worked. However, the Altmann amendment is moving towards a 5% increase and the Government will award a 3% increase, so the difference we are talking about—this is the argument—is about £2.75 a week. Even if we went to the full amount of the 8%, there would only be an additional £7 a week between the 3% and the 8%. Are we really having a row in this House about robbing pensioners of £2.75 a week? I just find it unbelievable that we can even contemplate that.

I have seen the range of costings, but I have examined the DWP estimates on the effect of the Altmann amendment. They said it would cost £1.3 billion in ’22-23; that was in comparison with the uprating with prices. I was in the House a few weeks ago. We are arguing about an additional £1.3 billion for pensioners. Actually, a £25 billion corporate tax break was given away by the Chancellor in the Budget. It will be £12.5 billion next year.

Budget Resolutions

Debate between John McDonnell and Stephen Timms

Thursday 12th March 2020 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

As we face the coronavirus crisis, it is vital that we demonstrate to the people of our country that we are meeting it head-on and that we will defeat it—and we will. As I have said elsewhere, this is no time for partisan political knockabout or, for that matter, publicity stunts. We have lives to save, so we must all work together. We will work with the Government and parties across the House to protect our people and to contribute to the worldwide effort to overcome the outbreak of this virus.

We welcome the Government’s package of measures announced yesterday. We must ensure, though, that alongside the medical and scientific strategy to contain, mitigate and halt the spread of the virus, the economic strategy is equally comprehensive. We agree with the Government that the NHS must receive whatever resources it needs. I pay tribute to and thank our NHS staff, who, as always, are rising to this challenge with their usual professionalism and dedication. We acknowledge that they are doing so at a time when they are already under extreme pressures, but we offer them our thanks.

The other key service that we need to support in this emergency is social care. It is unclear from Government statements so far what additional support is being provided to social care. Social care is already in crisis in this country. Before this virus outbreak, 1.5 million people were not receiving the care they need. There are more than 120,000 staff vacancies, and many of the private providers have been on the financial edge for some time. The majority of those who receive social care are older, disabled and vulnerable people—the very people who are most at risk from coronavirus infection. We have an £8 billion funding gap in social care budgets as the result of 10 years of austerity. Providers and local authorities are already stretched to breaking point in many areas, so we need to know how much additional support is being provided specifically for social care and what contingency plans are in place if individual providers are unable to cope. Like our support with regard to NHS funding, the Government will have our support to bring forward the resources, whatever it takes.

A large section of our care workforce is now under threat from the Government’s recently announced immigration policy. Some Members may have seen the GMB union calculation that the Government’s immigration policy will cost the care sector up to 500,000 staff. Without foreign careworkers, our care system would collapse. The message to the Home Secretary is clear: do not put our social care system at risk. Pragmatism must override ideology and policy at this stage.

Social care in this country largely falls on the shoulders of family members, and in our culture it is still usually the older women in our families. The pension age for many of those women was increased without proper consultation or notification. They were effectively robbed of many years of their pension, and this Government—despite all the Prime Minister’s promises before the election —have refused to compensate them. I met the WASPI women last week, and it is no wonder they are still angry. We may well look at what support can be given to individual carers within families as they cope with this crisis.

If any good is to come out of this developing tragedy, it must be the lessons we learn from it. It is overwhelmingly clear now that no Government can inflict a decade of cuts and austerity on our public services, such as the NHS and care services, without impacting on their resilience in a time of crisis. Ten years of cuts and a failure to invest in services mean that we are extremely ill-prepared for dealing with this type of large-scale health risk to our community.

We know that the NHS is already under pressure—intense pressure—as a result of underfunding and understaffing. Some 17,000 beds have been cut. Bed occupancy levels were at 94% last week, and critical care bed occupancy was at 80%—those are the beds we rely upon in episodes like coronavirus. The NHS is short of 100,000 staff, including more than 40,000 nurses and thousands of doctors. We have to recognise that the NHS needs to be put on a longer-term stable footing, with secure financial backing for the long term. Just as we have over the coronavirus outbreak, we must listen to the clinicians and the experts when it comes to what is needed. It should not take a crisis to secure for the NHS the resources it needs.

I turn to support for individuals and businesses. We welcome many of the Government’s measures set out by the Chancellor yesterday. The Budget stated that statutory sick pay will be paid from the first day of sickness absence and that people will be compensated for self-isolation, but we need more clarity. The Government guidance appears to exclude workers on zero-hours contracts, part-time workers and people earning below the lower earnings limit of £118 per week, saying that they are ineligible for statutory sick pay and are advised to make a claim for universal credit. Can we be absolutely clear who will be covered by statutory sick pay and who will not?

Sick pay is currently set at the low rate of £94.25 a week—that is about £18 a day. Average pre-tax earnings are £511 per week in nominal terms. Without lifting statutory sick pay, the financially secure will err on the side of caution and self-isolate, and all but the most financially secure will be asked to take a significant pay cut in order to self-isolate. That leaves people inevitably choosing between health and hardship.

For those being directed by Government to universal credit, I ask: what, if anything, has been done to reduce the five-week delay in receiving universal credit and to ensure the staffing resources in the Department for Work and Pensions to cope with the volume of demand? The suggestion is that these low-paid workers apply for universal credit, which then becomes a loan. That will push many low-paid workers into debt, which will cause significant hardship for some.

The Chancellor announced yesterday a £500 million fund for councils to administer. Could the Secretary of State clarify how much that means for each local authority and how it will be distributed? Will hard-stretched local authorities receive support for delivering that scheme? Councils are also being asked to administer £2.2 billion of funding to support businesses in meeting their ongoing business costs. Could we be clear about what resourcing councils will be given as they are asked to take on these responsibilities, after 10 years—to be frank, as a result of the cuts that have taken place—of local authorities often being hollowed out of the staffing resources they need?

[Stephen Timms (East Ham) (Lab)]

My right hon. Friend is making some powerful points. Does he agree with me that the announcement of the £500 million fund is a recognition, belatedly, by the Government that we do need something to do the job that the social fund, funded by the Government, used to do?

[John McDonnell]

That is an extremely important point. For those of us who remember the social fund, it was a resource that many of our constituents fell back on in times of need. It did give them the support they needed, and in many ways it was administered relatively well. It got resources to the people with needs, and it did so with minimal costs.

The Government urgently need to provide the certainty that the public deserve on all these matters. Our worry is that, because this package does not at the moment appear to be comprehensive, it ultimately will not make us all safer, and it may put people at risk, as especially those in low-income groups may have to make the very difficult choice, as I have said, between health and hardship.

Although it has been reported that there has been some communication between Finance Ministers internationally, it is certainly not clear whether it is of the scale or depth of co-ordination in, for example, the crisis in 2007-08. As a result, whatever statements have been made have not had the effect of steadying markets or reassuring people more generally that, basically, there is an internationally agreed strategy to address the economic consequences of this emergency.