Social Security (Special Rules for End of Life) Bill [Lords]

Karen Buck Excerpts

2nd reading
Thursday 8th September 2022 Commons Chamber

[Ms Karen Buck (Westminster North) (Lab)]

May I welcome the new Secretary of State, who is not in her place, and the new Minister of State? This is a short but important and welcome Bill that has rightly been approached in a spirit of consensus and in a largely non-partisan manner. Hon. Members on both sides of the House and former Members have campaigned hard over many years to get us to this point; it may feel inevitable now that we have reached it, but I know that it does not feel inevitable while people are campaigning for it. The former Minister, the hon. Member for North Swindon (Justin Tomlinson), played his part as well. All credit must be paid to everybody who has brought us to this point, including the charities and campaigning organisations that have done so much work and have brought the evidence to the Government for making the change.

All Members who have debated the Bill this afternoon or in the other House agree that the experience for people with a terminal illness is almost inevitably one of financial worry as a result of lost earnings and additional costs. At the very time when they need the least stress in their life, financial worries all too frequently add not just to their own stress but to that of their loved ones and those who care for them. The last thing that people with a serious illness or a terminal condition need is to go through the worry of making benefit applications and amassing evidence. The fewer cliff edges in their path, the better. We need to do everything we can to reduce the stresses for people who are already living with unimaginable stress. The Bill is welcome because it will do that. It will relieve stress for many, many people for a considerable period.

As my hon. Friend the Member for Reading East (Matt Rodda) made clear in opening this short debate, it is a shame that it has taken us three years to proceed from the start of the evaluation of the special rules for terminal illness to where we are now, but we are none the less relieved that we are passing legislation, and doing so with everyone’s support. We want these changes to proceed with all speed. However, there are one or two areas in which we have sought additional assurances; no doubt they will be referred to in Committee as well.

First, can we be assured that as we pass from the general into the specific—the opening up of entitlement to potentially tens of thousands of individuals—no further barriers will be put in the way of claimants, and the system will have the capacity to process applications swiftly and compassionately? Perhaps during the Bill’s further stages the Minister will be able to say a bit little more about what capacity can be guaranteed in the Department for Work and Pensions to ensure that that will be possible.

Secondly, we have heard a little about the need for us to monitor the potential for different approaches as the Bill proceeds. As we heard from my hon. Friend the Member for Newport East (Jessica Morden), there will still be a great deal to do once the six-month rule has been consigned to history. It is important for us at least to keep an open mind as we monitor the implications of these changes, in view of the inevitable trade-offs. We must ensure that a time limit which has the benefit of administrative simplicity does not exclude the exceptional needs of people with an illness, because health conditions are so imprecise and the evaluation of the medical profession is inevitably precise. The circumstances of those whose condition takes them just over a period of qualification should be considered flexibly and compassionately. A more open-ended approach may be more complex, but it can ensure that individuals are treated in a more dignified and compassionate manner.

Obviously we have no intention of delaying the Bill’s progress. However, we seek assurances from the Minister that these issues will be considered further, that the impact will be closely monitored, and that attention will be paid to the merits of an alternative approach. That said, I hope that we can now move very quickly to complete the passage of the Bill.

Pensions Dashboards (Prohibition of Indemnification) Bill

Karen Buck Excerpts

2nd reading
Friday 15th July 2022 Commons Chamber

[Ms Karen Buck (Westminster North) (Lab)]

I congratulate the hon. Member for Cheadle (Mary Robinson) on bringing forward the Bill. The Opposition agree with the principle that pension scheme trustees must be responsible for any failure to meet their legal requirements. The Pensions Regulator has recently warned that many trustees are at risk of failing to meet their legal pensions dashboard responsibilities, and research shows that the majority of trustees have yet to prepare.

Last month, the regulator said:

“Trustees will have legal duties they must be ready for. We will take a dim view of trustees who carelessly fail to prioritise their dashboard responsibilities.”

There is indeed a very real risk that fines could be issued. Without the provisions of the Bill, those fines could fall on scheme members. It should never be the case that mistakes, failures or a lack of action to meet legal requirements on the part of trustees should land with scheme members. People who pay into pensions their whole lives should not be left with less because of the action or inaction of fund managers and trustees. We therefore support this important Bill. In fact, we would have liked to see these provisions in the original pensions dashboard legislation; so although I wish the hon. Member for Cheadle every success with her Bill and commend her for her work, it would be helpful if the Minister told us whether the omission was deliberate on the part of the Government or simply an oversight.

Pensions policy is a long-term policy area. The legislation brought forward in this Parliament and the last Parliament will have implications for many years to come. The Bill is therefore a timely reminder of the need for ongoing work on the pensions dashboard and ongoing work to ensure that people are saving enough for retirement generally and, as the hon. Member for Broxtowe (Darren Henry) says, that they can track and monitor their pension savings and repair problems in their savings history if necessary. We have to ensure financial security for all those who are over state pension age.

I will raise one final point. The dashboard is an important attempt to make information more easily accessible to pension scheme members. We welcome it and think it a helpful way to ensure that people save for retirement, but the Government cannot rely on the programme as a solution for all their pension woes. As a country, we must go further to ensure that more people are saving enough for retirement. If we do not, we will potentially be storing up a future cost of living crisis that will last for decades.

It has been good to hear hon. Members speaking about pension schemes today. I hope that the Bill is a reminder of the importance of well-run, good pension schemes that give people financial security and the confidence to plan for their retirement.

Oral Answers to Questions

Karen Buck Excerpts

Monday 11th July 2022 Commons Chamber

[Chloe Smith]

The answer is no, and that is because, first, my right hon. Friend the Secretary of State updated the House through a written ministerial statement only recently in which she explained precisely the point about the prior piloting and exploratory work. Secondly, Parliament voted in 2012 to end legacy benefits and replace them with a single, modern benefit system, and on top of that, committed to providing transitional financial protection. That is the key point in this case: where a claimant may not already be better off—as we have said, in the majority of cases, they are—they are supported.

[Ms Karen Buck (Westminster North) (Lab)]

The truth is that many people migrating will be worse off because of the timing—in a period of high inflation. We know that the legacy benefit group to be transferred on to UC is on average much more vulnerable than those in the existing UC caseload; the great majority of legacy ESA clients are in the support group. Can the Minister tell us exactly how the migration process is going? Has it been tested at scale to ensure that it is safe for vulnerable clients?

[Chloe Smith]

As my right hon. and hon. Friends have laid out extensively to the House, the process being followed is one of initial discovery. After that, it will be possible to provide fuller answers to the House of Commons about how the broader process will work. The vast majority of claimants will either be better off or no worse off, and I want to lay on record one more time that 55% of people will see an increase in their award, 10% will see no change, and 35% will be protected transitionally.

Cost of Living

Karen Buck Excerpts

Tuesday 5th July 2022 Commons Chamber

[Ms Karen Buck (Westminster North) (Lab)]

This has been a short debate, but a very valuable one. As always, I pay tribute to the Chair of the Work and Pensions Committee, my right hon. Friend the Member for East Ham (Sir Stephen Timms), for framing it for us. In all the contributions, we have heard similar themes.

Notwithstanding the emergency cost of living payments in the Social Security (Additional Payments) Bill, which we debated a couple of weeks ago, and other help, we have to see the situation in the context that it has been 12 years in the making. We are now deep into a cost of living crisis that is fast eroding standards of living for almost everyone in the country, but as always, it is those with the least who are most seriously affected.

Several hon. Members have referred to research that has been brought to our attention over weeks and months. Only yesterday, new analysis by the Institute for Fiscal Studies revealed that poverty among lone parents, who are always most at risk of poverty, has risen spectacularly since 2010, reaching 49%—almost half of lone parent families are in poverty. Some 1.5 million children are being left behind their peers. Two out of three lone parents report skipping meals and going hungry. Even though parents will do anything to protect their children, including from the knowledge of the struggles that the family are going through, the children know. Children see, children understand and children are damaged by that experience. It is no wonder that the experience of living on an inadequate income, coupled as it so often is with all the shame, fear and anxiety of debt and arrears, contributes to poor mental health as well as to physical ill health and educational underachievement.

Poverty places a strain elsewhere on public services. It adds to the homelessness budget, it adds to the pressures on local authorities, it adds to the pressures on schools and it adds to the pressures on the national health service. It is also true, with a bitter irony, that it is almost invariably low-income households that are exposed to the additional costs of living in poverty.

It bears saying once more that none of these struggles is visited only on people who are not in work. Of course, people who are out of work—people who are too sick to work, people who have caring responsibilities, people who have disabilities, pensioners—deserve the support and dignity that society can offer them, but in-work poverty has soared to record levels. Despite the rhetoric, being in work is no guarantee of being out of poverty.

The Government’s response to the cost of living shock of 2022—the one-off payments that we have been debating—cannot be entirely separated from what came before. My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) made that point very well. One-off payments in response to the current inflationary shock simply will not undo the erosion of benefits that has taken place as a matter of deliberate Government policy over the past 12 years.

Child benefit has been left to wither since 2010. The local housing allowance, which was designed to support people with the actual cost of housing, has been allowed to fall away from real-world rents since 2011; it was briefly restored to its normal value in response to the pandemic and has now been frozen again by the Government. More than half of households who need to turn to the Government for help with rent are above the maximum level of local housing allowance support, with an average shortfall of £100 a month. Several hon. Members have mentioned the impact of deductions arising from the five-week wait and from other sources, but the shortfall in rent is one of the principal ways in which people are driven below the minimum level on which families are meant to be able to live.

Most working-age benefits were frozen from 2016 to 2020. The four-year benefit freeze was a permanent real-terms reduction in the value of benefits, offset only temporarily by the pandemic universal credit uplift, which of course did not apply to legacy benefits. Benefits lost 7% of their real-terms value in those four years alone, and those losses have not been made good. Inflation matters all the time—not just now, when there is a sudden surge.

What does the stop-start history of benefit uprating tell us about the Government’s priorities? It tells us that they have no settled policy on social security and that they regard maintaining the real-terms value of benefits as an optional extra. It tells us that it takes an emergency—a pandemic or a cost of living crisis—before the Government will make any attempt to do what previous Governments have done as a matter of course: take account of inflation in social security policy.

Of course the emergency cost of living payments are welcome—anything that helps to offset this crisis is welcome—but coming after 12 years in which inflation was allowed to erode benefits, they cannot be seen as a comprehensive solution. The Government’s adamant refusal to bring forward next year’s benefit uprating to deal with this year’s cost of living crisis means that benefits face yet another real-terms cut in 2022-23. The Government are having to rely too much on one-off payments, which should be part of the solution but not the whole solution.

We have talked about working-age benefits, but pensioners have also taken a real-terms cut—the biggest in about half a century. There are 2 million pensioners in poverty, and the number is rising. Ministers have been promoting pension credit uprating, which is good, but that momentum needs to be maintained and expanded. With approximately 850,000 pensioners not claiming pension credit, a huge number are set to miss out. Failing to do more to increase pension credit uptake could mean that more than two thirds of the poorest pensioners will not get the additional means-tested benefit.

We need to be clear about the limitations of one-off payments. As we have heard, they do not reflect family size, so families with more than one child will get exactly the same as a single-person household. Entitlement depends on receipt of one of the means-tested benefits in the month leading up to one of the qualifying days, meaning that people’s circumstances in just two months of the year are taken into account. The problem is that people’s circumstances change all the time. The Government simply do not recognise that families and households move on and off benefits all the time. A one-off payment tied to just two dates in the year is inevitably a crude approach to matching funding to need. I am particularly concerned about how people with fluctuating incomes will fare. It seems inevitable that a large number of employed and self-employed people with low and irregular incomes will be arbitrarily denied help under the policy.

Had the Government acted earlier and brought forward next year’s benefit uprating, as the Opposition and so many others called for, they would have been less reliant on one-off payments. Had the Government not deliberately eroded the value of benefits for much of the past 12 years, we would have been in a much better position to weather this year’s inflation surge. The emergency package is welcome—any contribution to relieving the widespread hardship experienced by households across the country will be welcome—but it is deeply regrettable that the Government could not see their way to a more comprehensive, sustainable solution to the crisis of poverty that is now gripping us.

Social Security (Additional Payments) Bill

Karen Buck Excerpts

Committee stage
Wednesday 22nd June 2022 Commons Chamber

[Ms Buck]

I thank the Minister for that introduction. There is clearly no need for me to cover the points that we discussed on Second Reading, but I will make a few comments about new clauses 1 and 2.

As the Minister said, the Bill as drafted states that the second qualifying date is to be no later than the 31st of October, which allows for a span of several weeks during which the date could be set. In her introductory remarks, the Secretary of State talked about the need to keep that open because of the potential behavioural impact. It would be helpful if the Minister told us a little about why the Department reached that conclusion.

As we know, families and household are looking for clarity. We expect the energy cap to rise significantly again in the autumn, and there is real fear and anxiety in the country about what energy price inflation, and general inflation, are doing to household incomes. People are looking for certainty, and the sooner they are able to know exactly when their qualifying period will be and when the payment will be made, the better it will be for those families. It would also be helpful for us to know what the implications are of a qualifying date that could be one month early, so as to cover the span of options for that date. Although, we will not be seeking to press these amendments to a vote, can the Minister advise on whether he will be able to pick up that point and come back to us with answers?

New clause 2 would address the distribution and the equality impact assessment. We have indeed had some analysis from the Treasury, and we have had some looks at the economic distributional impact and the decile impact. As we would expect from measures heavily directed towards means-tested benefits, they are indeed progressive, and that is absolutely right, but the single most important topic that we discussed in the short Second Reading was the downside of single payments that are household unit payments and therefore do not reflect differences in household composition. The impact assessment does not give us that information, and it is critical that we have it, so I will press the Minister on the point. We need a much fuller assessment of what the Treasury expects to be the impact of a reliance on single payments, rather than an accurate updating within the benefits system. We also need, as soon as possible after the first payments have been made, an assessment of the actual impact in terms of the distribution.

Household composition is probably the single most important of the areas of analysis that we need to track. It is the one that is worrying people the most and where the disparity between a direct payment through the social security system and a one-off payment is most marked. We want to see analysis that looks at different recipient groups and at the impact on pensioners, on people with disabilities, on families, on single people and on working people of the distribution of the payments as they go out. It would be helpful also to look at how different working groups are affected, such as the self-employed, who we have discussed, and working households as opposed to households on out-of-work benefits.

The other area on which I will spend a couple of minutes in the context of analysis is the various payments that have been distributed through local government and how we can look at their impact. The Minister has repeated that his principal aim was to try and get benefit payments out as quickly as possible to those who need them most. In fact, the February announcement of the distribution of income through local authorities, through council tax, does the exact opposite. As I am sure he is aware, local authorities have had to go to the considerable length of writing to every household that pays council tax other than through direct debit, wait for them to respond, wait for them to provide information confirming who they are and their entitlement, and then to send the payment out. That of course means that large numbers of people reliant on that £150 have not yet had it, and it is likely to be weeks and weeks still before those families actually get the payment.

The payment requires people to deal with official correspondence, and I do not know whether Ministers have seen some of the letters that have gone out from local authorities, but I certainly have, and I struggle to understand them. A number of those forms have gone out without any reference to people on council tax support, for example, so people do not know that they are likely to be covered by the scheme. It is important therefore that we understand a distributional impact of the household support funds and of the distribution of funds by local authorities.

The Government have been keen to stress the value of those schemes, that they are locally sensitive and that local government has an important role to play in delivering them. That may be the case, but as the Opposition have said all along, it is undoubtedly a more complex and bureaucratic system for delivering help into people’s hands than uprating and delivering that directly through the social security system. Given what we know about inflation and energy costs soaring and the likelihood that we will have to return to this place to consider more emergency support later in the year, it is critical that we understand exactly how the delivery of the Government’s support package affects people, who it affects and whether it is the best way to provide help to people in need.

[Kirsty Blackman]

I have a few things to say about the specifics of the Bill and the points that have been raised in the debate. I understand the Minister’s point about the second qualifying date and the Secretary of State’s earlier point about not wanting to make clear what that is. I will not argue with that, but I have a question about the timelines for the payment.

We had a qualifying date of 27 May and we are looking at the payment being made on 14 July, which is a significant lag. If there is a similar length of time between the second qualifying date and that additional payment, people may not get it until nearly Christmas. The Minister was clear that the support is being given in two payments partly to help with budgeting, and people would like some certainty about the dates on which the payments will be made. I will not press him on the qualifying date; as I said, I do not necessarily disagree with the choice to not publish that now and to bring it forward through negative delegated legislation, which makes some sense.

The other issue for people relates to the other payments that they may be able to receive. We have heard from the hon. Member for Westminster North (Ms Buck) that people have not necessarily received a council tax payment and do not know when they might receive that money. For people who are struggling now, it would help to have some certainty about when the payments will come. I do not think the legislation has even been brought forward for the £400 for energy bills; I am not aware when that will happen or when those dates will be. The Government are saying that there will be £1,200 for some families, and it would be really helpful for people to know when they are likely to receive that potential income so that they can plan.

On the negative resolution that will be brought forward to set the second qualifying date, I assume that we are not likely to see that until after the summer recess. If the Minister can confirm that that is the case, it would be helpful for us to understand that. If he cannot do that, that is fine.

The hon. Member for Amber Valley (Nigel Mills) talked about people who get two payments in a month, because they are paid on a four-weekly basis or because they receive bonuses or anything of that sort. It would be helpful if the Minister, when he sets the second qualifying date, tries to ensure that it is not in a cycle that will disadvantage the same people twice. If the date means that people whose universal credit is paid on a cyclical basis—for a significant number of people, it is clear that there is a regular cycle every three months—lose out on the £324 and the £326, even though they are regular universal credit claimants over the year, I would be concerned that the Government were not doing that in the right way. The hon. Gentleman’s suggestion of doing it over a two-month period would probably have been a better way to do it than the way that the Government are proposing. As was stated, if further additional cost of living payments need to be made to people in future, perhaps it would be helpful for the Minister to consider that.

In the context of making payments too quickly, the Minister mentioned the recovery of incorrect payments and how that might work, or need to work. He said that if payments are made too quickly, people might receive a payment that they are not entitled to and then it would need to be clawed back. Given how he phrased that, I am slightly concerned that we might end up with people through no fault of their own receiving payments in error that they think they are entitled to, who then have them clawed back from future payments from the DWP. We have seen that over the years with tax credits and how people are still paying back legacy benefit overpayments that they received, and we have seen the pain and suffering that that can cause people.

Social Security (Additional Payments) Bill

Karen Buck Excerpts

2nd reading
Wednesday 22nd June 2022 Commons Chamber

[Ms Karen Buck (Westminster North) (Lab)]

This has been a short but useful debate. The Opposition will not oppose or seek to delay these payments, because any measure that puts money into the pockets of people on low incomes is to be welcomed, but it is important that we put on record some concerns about how the situation has come about.

The cost of living crisis hammering millions across the country comes on top of 12 years of a squeeze in living standards for people who have needed to draw on social security at various points to support their income. We went into the pandemic with child poverty rising for larger families, by the relative poverty measure; even by the absolute measure that the Government prefer, larger families are deeper in poverty. That is a consequence of years and years in which parts of the social security system such as tax credits and universal credit were either frozen or uprated by only 1%, even before we take into account the impact of the various caps and deductions.

As a result of the poor state of the social security system in 2020, the Government felt that they had to respond by introducing the £20 uplift, the impact of which can be seen from this spring’s poverty statistics. Of course, we want as many people as possible to do well in employment and receive a rise in real wages so that they do not have to draw on means-tested benefits, but many people need support, particularly families with children. When it is adequate, that support has a real and profound impact on child poverty.

Having lost the £20 uplift last autumn, we are in the midst of a sudden and dramatic surge in inflation: the CPI rate is now at 10 times the level of spring 2021. That has left a large proportion of the population struggling with their bills. In particular, those on the lowest incomes face the lived choice between eating, putting food on the table for their children, heating their homes when it is cold, covering their rent, putting school uniforms on their children’s back, and other essential costs. It remains true that if someone is on a low income, their costs are higher. We know, although it is not built into Government policy, that the poorest pay a premium for their goods and services, and they face the highest inflation. As a consequence of the changes in Government policy and the loss of the £20 uplift last year, the number of children living in poverty will be even higher when we measure it next year.

At every stage, the Government have been on the back foot and running to catch up—a point that my right hon. Friend the Member for East Ham (Sir Stephen Timms), who chairs the Work and Pensions Committee, and the hon. Member for Amber Valley (Nigel Mills) both made powerfully. When we debated the uprating, it was already in the context of rising inflation; we discussed the possibility of uprating benefits at a more up-to-date level that reflected real-world price rises, but it was found that that could not happen. There were a set of measures, including assistance with council tax, that were poorly targeted and difficult to administer. Weeks later, the Government had to come back with a larger package of measures than would otherwise have been required.

If the Government had been able to update social security this spring to be more in line with inflation, additional assistance would undoubtedly have been needed, but we would not have required the same level of emergency package. Importantly—this is the central point—pensioners and families would have had an income in their pocket, week by week, so that they could plan and manage their finances. That would undoubtedly have been a better way for households to cope with the rising crisis than having to manage one-off emergency payments from different sources. Many of those families, because they did not get that assistance in April, even though it is only a few months later when the first of these payments will be made, will have found themselves in debt—in financial difficulty—in the interim. The debt that families get into is itself expensive. There cannot be many Members who have not been dealing with constituents who have come to them because they are facing bailiffs at their door, or are caught in payments schemes that have left them struggling with very high repayments, because of the difficulties that they have got into.

It is simply not the case that one-off payments were the only way of delivering timely support to families on means-tested benefits. While welcoming, as I said, any support—and it is a large package of support that we are considering today—it is clear that this approach is still going to lead to a lot of rough justice that would have been mitigated had a broader package of support been put in place, when there was time, through the mainstream social security system.

Entitlement to the one-off payments is triggered by receipt of one of the means-tested benefits in the month leading up to one of the qualifying days. This means that people’s circumstances in just two months of the year are taken into account, so families who have the same income and face the same cost of living pressures over the course of the year could wind up being treated very differently depending on the point of the year at which they are dipping into an application for a means-tested benefit. Some will receive the initial support and some will not. The problem is that people’s circumstances change all the time, not just in two months of the year, and the numbers involved are very large. For example, every three months about 1 million people of working age leave employment, becoming unemployed or economically inactive. At the moment, an even larger number move into new employment. However, it is the scale of the churn rather than the net outcome that is important. Similarly, there are about 150,000 starts on universal credit every month, the great majority due to changes in family circumstances. With families moving on and off benefits the whole time, a one-off payment that is tied to just two dates in the year is inevitably a crude approach to matching funding to need.

I am particularly concerned about how people with fluctuating incomes will fare under this policy. The Bill provides that only people in receipt of a benefit payment of at least 1p in the month leading up to the qualifying day are entitled to the one-off payment, but universal credit is supposed to adjust to fluctuations in income on a monthly basis. Some people will be entitled to no payment in one month and payment in the next month, depending on their earnings. Indeed, one of the selling points of universal credit was that people would not have to make a new claim every time their earnings fluctuated above and below the cut-off level. It therefore seems inevitable that large numbers of people, employed and self-employed, with low and irregular incomes will be denied help under this policy in a completely arbitrary way.

The Government need to clarify what steps they intend to take to mitigate this risk. Is it really necessary to insist that only people who have actually received a payment in the month leading up to the qualifying day should receive help? Should all self-employed people whose universal credit is reduced to zero in one of those periods, solely due to the operation of the minimum income floor, be excluded from support? We have also heard about the limitations of these measures in terms of adjusting to family size. That is one of the critical ways in which delivering directly through universal credit, and indeed legacy benefits, was preferable and more sensitive to the needs of families.

Emergency and one-off measures such as those in this Bill have a place in exceptional circumstances, but they do not give people living desperately precarious lives the security they need. They do not, in many cases, match individual circumstances as the social security system does, however imperfectly. Any and all measures that help us to relieve hardship in these difficult times are welcome, but overall our social security system needs to be more fit for purpose, just as the wider economy needs to be more fit for purpose—more resilient and more productive, with decent and secure employment opportunities and investment in the future.

Oral Answers to Questions

Karen Buck Excerpts

Monday 6th June 2022 Commons Chamber

[Mr Speaker]

I call the shadow Minister, Karen Buck.

[Ms Karen Buck (Westminster North) (Lab)]

The Government have been scrabbling to catch up with the escalating cost of living crisis. Any and all help for lower-income families is very welcome, but the fact is that the protection of those on universal credit and other benefits from the worst impacts of inflation depends on their having adequate and predictable levels of income. How is it acceptable, then, that 42% of universal credit claimants face deductions of, on average, £61 a month? What is the Minister going to do about that?

[David Rutley]

We have already set out our cost of living payments, which will benefit 8 million households in the UK. They are significant and much needed as we face these current cost of living challenges. It is also important to highlight that, over the past couple of years, we have seen the maximum amount that can be taken in deductions from benefits fall from 40% to 30% and now down to 25%.

Working Tax Credit and Universal Credit: Two-Child Limit

Karen Buck Excerpts

Thursday 21st April 2022 Westminster Hall

[Ms Karen Buck (Westminster North) (Lab)]

It is a pleasure to respond to this debate under your chairmanship, Mr McCabe. I congratulate the hon. Member for Glasgow Central (Alison Thewliss) on introducing it. We have heard some very strong contributions from Members, both speeches and interventions, outlining the community impact of this policy and drawing on personal life experiences, which should inform debates such as this.

Tackling child poverty should be a moral imperative. This policy and others introduced by the Government over the last 12 years are major impediments to our moral imperative to end child poverty. Five years on from the introduction of the two-child limit, we are finally beginning to see the results of that social policy experiment and to be in a position to evaluate whether the policy achieved the purposes set out for it, and whether it had impacts that were foreseeable but were not what the Government explicitly sought to achieve.

As we have heard, as of April last year, 317,500 families and over a million children were affected by the policy. We are now able to understand just what a damaging impact it is having. For a few minutes, I will focus on what the Government sought to achieve and the arguments that were set out when the policy was introduced in the 2015 legislation, and how it has measured up.

Let us look at the Government’s attempt to define the problem. The former DWP Minister, Lord Freud, speaking in the other place, said:

“Currently, the benefit system adjusts automatically to family size, while many families supporting themselves solely through work do not see their budgets rise in the same way when they have more children.”—[Official Report, House of Lords, 7 December 2015; Vol. 767, c. 1328.]

The 2015 Budget said:

“The government believes that those in receipt of tax credits should face the same financial choices about having children as those supporting themselves in work.”

The fact that benefits adjust “automatically to family size”, as Lord Freud said, might be seen as a positive feature of the system rather than a bug, but the phrase that keeps recurring is

“supporting themselves solely through work”,

in contrast with being

“in receipt of tax credits”.

What is meant by supporting oneself “solely through work”? It tells us a great deal about this Government’s attitude towards our society and our welfare state, and their lack of interest in or concern about them. At the time those statements were made, two thirds of families in receipt of tax credits were in work—yes, that goes for families with three or more children as well. It is clear that the Government were predominantly referring to working families when they contrasted them with those

“supporting themselves solely through work”.

The word “solely” is carrying awful lot of weight in that sentence.

I have three points. First, the group that is, in the Government’s view, not supporting itself “solely through work” now comprises 42% of all families with children. That is the share of all families with children that are receiving tax credits or universal credit. How plausible does the Government’s problem definition sound when we are talking about nearly half of all families, rather than an unspecified minority?

Secondly, the Government’s idea of what it means to support oneself solely through work needs examination. Why are tax credits and universal credit the only parts of the welfare state that are singled out? The Office for National Statistics publication “Effects of taxes and benefits on UK household income” shows that most families with children—60%—receive more from the welfare state in cash benefits and the value of services than they pay in taxes. Even after taxes, the value of benefits and services received by families with children in the fifth decile is equivalent to 23% of their market incomes.

Our welfare state redistributes resources towards families with children on a large scale, and that is exactly how it should be. However, it means that most families with children cannot be said to be supporting themselves solely through work, but through a combination of work and state support, because we believe that the state has a role in supporting children. That is absolutely the purpose of the welfare state. This is not a permanent situation for most families. Over the life cycle, most of us move between being net beneficiaries—not supporting ourselves only through work—and net contributors at different points. That is also exactly how the system is supposed to work. That brings me to my third comment on the purported problem that the two-child policy was supposed to address: the Government simply ignored the fact that people move on and off tax credits and universal credit all the time. Instead, they want to treat recipients as an immobile group of benefit recipients, as if it was a permanent characteristic of some people.

Surely, after the huge rise in universal credit claims during the pandemic, even the Government must realise that whether a family will have to rely on social security benefits is something they cannot predict. The most charitable view possible is that the Government got themselves in a muddle by trying to impose a disastrously over-simplified vision on to a reality that it did not fit. A less charitable view is that they decided on a policy for whatever reason—austerity, they would say, although I might be more inclined to believe that it was political opportunism—and then set themselves to manufacturing a rationale for it.

Even if we suspend our disbelief and take the Government’s rationale seriously, we now have evidence against which it can be assessed. If tax credits incentivised people to have large families, the policy should have led, by now, to measurable changes in the number of births to families that already have two or more children. That has not happened, as the thorough and fair-minded research by Mary Reader, Jonathan Portes and colleagues has shown.

If any good has come out of this awful policy experiment, it is that the hypothesis on which it was based can be firmly rejected. Meanwhile, the situation for families with three or more children continues to worsen. As Ruth Patrick and her colleagues at the LSE have shown, those families are particularly vulnerable to changes in social security policy. The record over recent years shows just how severe the impact of austerity has been.

As the Government do not like the standard relative poverty measures that everyone else talks about, I will refer to their favourite measure: so-called absolute poverty, where the poverty line is fixed in real terms at 2010-11 values. The reason this Government like that measure so much is that it tends to show a downward trend over time as real incomes rise—although the downward trend since 2010 has been remarkably weak. For families with three or more children, the trend in absolute poverty after housing costs was in the opposite direction, with 300,000 more children in absolute poverty between 2016-17 and 2019-20. Some 38% of all children in those families are in poverty, measured against a threshold that was set 12 years ago. Measured against a contemporary poverty threshold, 47% are in poverty after housing costs, up from 41% in 2016-17. It is not solely due to the two-child policy; the whole raft of austerity measures since 2016-17 has particularly impacted these families.

However, the two-child policy can only drive child poverty higher, as more children born since 2017 come within scope of the policy. As we have heard, the Resolution Foundation’s modelling shows poverty for children in these families rising precipitously, with half of those children already in poverty in 2021-22. The Government should respond to that by ditching the two-child policy now. That would be the correct response to the evidence and would remove from our social security system the obscene requirement for rape victims to provide evidence to the Department for Work and Pensions of what the Government term “non-consensual conception.” It would remove the perverse incentive for couples with separate families to maintain two separate households and it would help to address the rise in child poverty, restoring the principle that our welfare state treats all children equally.

--- Later in debate ---

[Alan Brown]

rose—

[Ms Buck]

rose—

[David Rutley]

I will give way to the SNP spokesperson, but then I will make some progress, because others have made many points and I have several to make myself.

--- Later in debate ---

[David Rutley]

I do not think that the hon. Member was here for the whole debate. I will take interventions from others, who have had the courtesy to be here for the whole debate, but I will carry on for now.

On the point about monitoring, we are keeping all our policies under review, but this policy seeks to strike the right balance between supporting those in need and fairness for taxpayers and those who support themselves primarily through work, who do not see their incomes rise when they have more children.

The hon. Members for Arfon (Hywel Williams) and for Cynon Valley (Beth Winter) made some points about poverty and whether this policy is impacting it. I am sure they are assiduously following the latest households below average income statistics, which show that the support we put in place around benefits and incentives for people to get into work—creating a vibrant labour market so that people can get into work and progress—means that 1.2 million fewer people were in absolute low income, before housing costs, in 2020-21, compared with 2009-10. That included 200,000 fewer children and 500,000 fewer working-age adults. Furthermore, there are now nearly 1 million fewer workless households and, very importantly, almost 540,000 fewer children living in such households than in 2010.

[Ms Buck]

Can the Minister confirm that he accepts the point I made in my speech—that the number of families with three or more children that are in absolute poverty has gone up significantly?

[David Rutley]

Our policy is to seek to ensure that we get more children out of workless households, which we are succeeding in doing, and that there are more employment opportunities for people. We are moving that agenda forward very successfully in the current labour market, and we need to continue to move it forward.

The most sustainable way to lift children out of poverty is by supporting parents to get into, and progress in, work wherever possible. The Government have consistently said that the best way to support people’s living standards is through good work, better skills and higher wages. We have provided significant work incentives, which I have already highlighted, through universal credit, but also through our plan for jobs and the kickstart and restart schemes, which demonstrated the Department’s commitment to supporting families to get into, or to progress in, work. We have a range of policies that support people and families across the tax and benefits systems, and the household support fund for those who are particularly vulnerable.

I would highlight, one final time, that on 9 July 2021, the Supreme Court handed down the judicial review judgment on the two-child policy. The court found that the policy was lawful and not in breach of the European convention on human rights. The policy to support a maximum of two children strikes a balance between providing support for those who need it and ensuring a sense of fairness to taxpayers.

Oral Answers to Questions

Karen Buck Excerpts

Monday 21st March 2022 Commons Chamber

[David Rutley]

With a record 1.3 million vacancies in the UK, our top priority needs to be to get people into work. We have the household support fund to help people who have vulnerabilities in their lives. That has played a very important role, with £500 million.

[Ms Karen Buck (Westminster North) (Lab)]

The new report from the centre-right Centre for Social Justice is about the latest scourge to hit the desperate and the destitute: illegal money lending. Over a million people have been driven into the arms of illegal money lenders. The report—by the Centre for Social Justice, not the Labour party—states:

“We can expect this to get worse. The emergent cost-of-living crisis casts a looming shadow of financial anxiety.”

It adds that

“pressures on household budgets, low financial resilience and increasingly limited credit options”

are creating “a perfect storm”, driving people “towards exploitation”. Given soaring inflation and falling real living standards, does the Minister expect that there will be more or fewer people in destitution this year?

[David Rutley]

We work hard to ensure that people receive the money they need and we also work hard to ensure people get into work. As far as people needing debt management advice, we can do that through our jobcentres. The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham (Guy Opperman), also does a huge amount of work in this area to provide the right sort of advice on money and pensions.

Regional Inequalities: Child Poverty

Karen Buck Excerpts

Wednesday 2nd March 2022 Westminster Hall

[Ms Karen Buck (Westminster North) (Lab)]

It is a pleasure to serve under your chairmanship, Dr Huq. I congratulate my hon. Friend the Member for Blaydon (Liz Twist) for introducing the debate, and also for an excellent speech that set out very clearly a framework for tackling poverty in her constituency and region—a framework against which we should judge other actions in tackling poverty across the country. We have heard a number of excellent speeches in a well-attended debate—on the Opposition’s side— including contributions from my hon. Friends the Members for Bolton South East (Yasmin Qureshi), for Washington and Sunderland West (Mrs Hodgson), for Easington (Grahame Morris), for Luton South (Rachel Hopkins), for Salford and Eccles (Rebecca Long Bailey), for Mitcham and Morden (Siobhain McDonagh), for Sheffield, Hallam (Olivia Blake), for Middlesbrough (Andy McDonald) and for City of Durham (Mary Kelly Foy). All of those speeches drew very powerfully from my hon. Friends’ constituency experiences.

Poverty, wherever we experience it, is a grinding, soul-destroying experience. It is a limiter of opportunities and it erodes physical and mental health. That is true in the north-east, the north-west, London, the midlands and Cornwall; it is true wherever people are growing up in poverty. It is true if you own a home that you cannot afford to maintain. It is true if you are a council tenant or if you pay your rent to a private landlord. It is true if you are a parent or if you are collecting your pension, and it is true if you are a carer. It is true if you are unable to work because of a severe illness or disability, and it is true if you are in insecure or poorly paid work. One of the very strong themes that has come through from many contributors this afternoon is the growth of in-work poverty, which is now at a record level. It is true whether we call poverty “food poverty,” “bedding poverty,” or “energy poverty,” whether we talk about it in terms of the inability of parents to send their children to school in a school uniform, or whether we talk about it in terms of their children going to school hungry. Whatever the nature of that poverty, it is all under that same umbrella.

Poverty isolates people. It excludes people. It makes people feel somehow that it is their fault. One of the experiences of people living in poverty that we all hear time and again is this wrong sense—such an incredibly wrong sense—of shame. Poverty drives people into debt. It drives people into insecurity. It also damages communities, which have less spending power and greater need. Larger numbers of people on the lowest incomes make for poorer neighbourhoods, and a levelling-up agenda that fails to take that into account is definitely on the way to failure.

Although, as everybody has said this afternoon, income is absolutely central to the issue of poverty, it also exists in a wider context, particularly of services. We have heard about the experience of the fall in local authority spending power, which has been critical and was so important to us during the years of the Labour Government. One of the particular achievements to which I strongly pay tribute is Sure Start and the work of early intervention. I was most proud of Sure Start, and saw my constituency experience it. Because of the erosion of local authority spending, we saw that early intervention shrivel.

In the 21st century, in what is one of the world’s richer countries, we should now be on our way to eradicating poverty, but we are not. Before the pandemic, in 2019-20, child poverty after housing costs had reached 31% nationally, over 4 million children—a rise of 700,000 since 2010-11. There was no region in England where child poverty was not a major problem. The lowest regional child poverty rate was 24%, in the south-east. In other words, in what is generally regarded as the richest region of the country, nearly one in four children were in poverty.

It is likely that the next set of statistics on households below average income, which we will see very shortly, will show a reduction in the number in poverty, and the Government will point to that as an achievement. It will, of course, reflect the £20 uplift to universal credit and the uplift to the local housing allowance, which were introduced as a response to the pandemic and in recognition of the fact that new claimants would be shocked by the low level of social security. However, by this time next year, we will see the impact of the unwinding of the uplift, which was so unwisely removed in the autumn. During the course of this year, we will see the impact, too, of rising inflation and an energy price shock that will erode the living standards of millions of people already on the margins. That is before the further shock that we are likely to see as a result of the conflict in Ukraine, which is likely to feed through, tragically, into even more expensive energy costs.

As I have said, there was no region in England where child poverty was not a major problem, but there were enormous variations between regions: from 24% in the south-east to 36% in Yorkshire and the Humber, 37% in the north-east and 38% in London. As has been said, there are severe variations within regions, too—even within constituencies. It is good that the Government are finally turning their attention to regional inequalities—assuming that that is what the levelling-up agenda actually means; many interpretations are available. However, levelling up does not include child poverty as an indicator, and that is a very serious weakness in that agenda.

Any attention to regional inequalities would certainly be better than what we have seen over the last decade, when the Government quite cynically exploited regional inequalities for divisive purposes. Given, for example, the extreme inequity in housing costs and thus in benefit payments, it was not difficult to generate headlines about claimants in London receiving what seemed like huge payments. The average weekly private sector rent in the north-east is £117 a week; in London it is £340 a week. It is no wonder that voters in other regions found some of those payments in London incomprehensible, despite the need for support, as we heard from my hon. Friend the Member for Mitcham and Morden, who spoke about the impact of housing need in London. That has to be addressed in any sensible approach to regional inequalities in child poverty.

The Government’s approach of arbitrary cuts—including the bedroom tax, the two-child limit and the overall benefit cap—has not only led to rises in child poverty in every region in England, Scotland and Wales, but left us with an anarchic benefits system where claimants are hit by an unpredictable barrage of caps, deductions and benefit freezes. That, too, exacerbates regional inequalities.

The Government approach is to cut at national level and then pretend they can make it up through local discretionary pots. We have seen that approach in respect of housing costs; we are seeing it again as households face the energy costs crisis. Labour proposes assisting everyone with rising costs, with most going to those on lower incomes. Instead, £150 is being made available on the basis of 30-year-old property valuations topped up with a discretionary fund that local councils have to administer. Even there, it is rapidly becoming obvious that half of those eligible do not pay by direct debit, so councils do not have a means to pay them; there needs to be a process by which they can be contacted and their bank details obtained. As with all discretionary pots, the likelihood is that large numbers of people in the most acute need will not be able to get the assistance they require.

Before I conclude, I will quote from a letter that I received this morning, coincidentally. We have heard powerful testimonies from Members quoting their constituents about their experience of poverty.

“As a claimant in Westminster North, I am writing to you about my struggle to keep up with the rising costs of living. I have a severely disabled daughter. She has scars all over her face; she lost her eye in a car accident when she was 11 years old. The NHS couldn’t help her so I’ve taken out loans to pay for aspects of her care. Even before the surge in energy prices many people like me have been struggling to afford the essentials. I cannot afford my bills or my food shopping. We cannot actually live. I am a widow with loans to pay since I lost my husband. We limit the heating and we limit the lighting too. It is all too expensive.”

When the Chancellor announced the household support fund in September, he said that,

“Everyone should be able to afford the essentials, and we are committed to ensuring that is the case.”

It is not the case that my constituent can afford the essentials; it is not the case that the constituents my hon. Friends have spoken about can afford the essentials, and that is now. In a few weeks’ time, their ability to afford food, to heat and light their homes and to send their children to school clothed and shod will diminish still further. We have heard about the regional drivers of poverty, the experiences that vary between areas and the different factors helping determine how many fall into poverty, how deeply and for how long. The fact is that we have a deepening crisis of poverty in this country and, in spring 2022, the Government have to wake up and act.