Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2018

Lord Kirkwood of Kirkhope Excerpts

Tuesday 6th March 2018 Lords Chamber

[Baroness Primarolo (Lab)]

My Lords, I do not wish to detain the House for long today but I want to ask the Minister some questions specifically about the tax credits and guardian’s allowance regulations. I should say that I asked a Minister similar questions in a debate last week on social security. I had asked her some questions about the freeze on tax credits, child benefits and child tax credits, and she responded by saying:

“I respond by simply saying that the Treasury is responsible for these benefits and it announced the 2018-19 rates”,—[Official Report, 27/2/18; col. GC 13.]


and so on. I decided that as a former Treasury Minister it was a good idea to come today to ask a former Treasury Minister, and a current Treasury Minister in this place, some questions about child benefit.

I am grateful for the noble Lord’s introduction of the orders, but I want to focus on the question of rising inequality and poverty among children in our country. According to the Resolution Foundation, inequality is projected to rise to record highs by 2022-23, and it says that this is a sad,

“story of the poorest working-age households being left behind”.

The driver of this is the freeze in most working-age benefits. According to the Resolution Foundation, by 2020, child benefit beyond the first child will be worth less than 32 years ago and child benefit for the first child will be at its lowest level in real terms in the past 20 years.

Child poverty is on the increase, and absolute child poverty, in particular, is rising. Yet we see the shocking prospect, in a country which has the sixth-largest economy in the world, of more and more children’s and families’ lives being blighted by poverty. The Child Poverty Action Group says that as a result of the cumulative cuts to social security, we are pushing more children into poverty. Its analysis is that 1 million more will be in poverty, two-thirds of them in working households.

Does the Minister accept those figures as correct? Does he accept that as a result of the freeze, 10.5 million households will see their average yearly income cut against a backdrop of rising food prices, now standing at 4.1%, at exactly the same time as the Treasury is saving £4.7 billion, more than originally estimated, by the freeze in those benefits?

I am sure that the Minister will say, and I would not disagree, that the best way out of poverty is work, but he knows as well as I do that families face precarious work situations, zero-hours contracts and rising inflation. It is a heady cocktail that they cannot fight by themselves, and the Government need to step in.

The Explanatory Memorandum which accompanies the orders makes it clear that the Treasury was not required to review the impact of the freeze on child benefit, as the decision had been taken before. I ask the Minister three simple questions. How will the Government stop the rise in child poverty? Will he agree to publish an assessment of the benefit freeze and its impact on child poverty? Finally, will he go back to the Treasury to persuade it that it needs to reconsider the decision to freeze child benefit, bearing in mind the vast amount of money that it has saved, to share some of it with mothers by giving it to them as an increase in their child benefit so that they can spend it on their children in times of desperate challenge for families?

[Lord Kirkwood of Kirkhope (LD)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Primarolo, who has a lot of experience, having been a Treasury Minister. I agree largely with her plea for a better context in which to consider these orders. Like her, I was in the Grand Committee last week when we looked at the social security uprating order, which is a sister order. In the normal annual review that we have had in the past, they are normally considered, pari passu, together, in a way that enables a more joined-up debate to take place. I absolutely agree with what has just been said about the importance of the context of what we are considering.

The Minister, in his usual efficient way, explained exactly what these orders are doing, and he is right. I am perfectly prepared to believe that the orders are legal and accurate and what is required by law. But if we are talking about £130 billion of contributions through the national insurance fund, £24 billion of which is allocated now to the National Health Service, I think we deserve a better context in which to discuss these things.

This is a procedural point rather than anything else, but I am getting more and more worried about how the deregulation provisions that we passed in the Act some years aback are now being used more and more to deflect some of the routine things that Parliament needs to be consulted about. It is called “ambulatory provision”, for those who are students of these things. I am getting frightened that the consideration of these important orders, including the social security uprating orders that we considered last week, is being pushed further and further into the long grass. I do not need to tell the Minister, because he was there at the time but, in the old days, when we were all in the House of Commons, these were big debates. It was understood that it was a significant sum of money. The biggest spending department in the Government by a mile was under examination and scrutiny in Parliament. We now do that through these restricted orders, which, stricto sensu, as the noble Baroness, Lady Primarolo, said, is technically out of order. I agree with her—and in a moment I shall indulge in the same kind of latitude that she took.

My point is that the Minister is a very experienced hand in this. Will he go away and reflect how we can, particularly at the beginning of a Parliament—and this is a new Parliament, with its first Budget—think about sustainability and affordability and about the adequacy of benefits, child benefit being principal among them, as well as about the social change that surrounds that? The world of work has changed quite dramatically in a number of respects, particularly in relation to self-employment. I want to talk about class 2 and class 4 contributions in a moment.

The Minister understands these things perfectly well. There should be some occasion, maybe a day in government time, to which these uprating orders are appended, when we can have a proper discussion on the context in which these contributions are being raised and the benefit spend is being agreed. That would give some of us more confidence, at least once at the beginning of every Parliament, that the Government were willing to open themselves and be transparent about their longer term aims and ambitions. Basically, I guess that they would say that they were doing their best with universal credit and doing their best to try to understand the challenges when disability costs are increasing. But we should have a grown-up discussion about that—it is not for now, but I hope that he will go away and reflect on that carefully.

Universal Credit

Lord Kirkwood of Kirkhope Excerpts

Thursday 16th November 2017 Lords Chamber

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I add my congratulations to the noble Baroness, Lady Hollis. No one has done more in this important field of public policy over the years than she has. At the same time as we are discussing this important subject in the House of Lords, the House of Commons is discussing exactly the same topic. If ever there was any doubt about the importance of the subject, the conjunction of these two debates today should have significance for the Minister.

I will do a deal with the Minister: I will ditch what I was going to say, because I concur with so many of the points that have been made, as they are sensible. In return, if I give her a little more time to reply, I ask her to help me to understand three questions. The first was asked by the noble Baroness, Lady Hollis, who was right about the broken promises. I certainly feel cheated, as does she. She and I spent a lot of time working together in the exceptional Committee stage of the Welfare Reform Act 2012. We have come a long way now. We have come even further from dynamic benefits, which I signed up to; I signed up to test and learn, universal service delivered locally and in-flight corrections.

It was understood that we were going to put in a generous floor that did not just deal with work. The problem in this debate is that colleagues on the Conservative side of the House are pursuing—almost exclusively, if I can put it so pejoratively—the importance of work. That is right, but more than 1 million people who are going to move on to universal credit will never be asked to look for work, and we have to cater for them too.

The noble Baroness, Lady Hollis, and I started back in David Donnison’s day with supplementary benefit. That was a safety net, as the noble Lord, Lord McKenzie, mentioned. He made an important point because what we are missing here is the universal safety net that will need to be applied before people can even contemplate approaching the labour market. If this benefit were called “universal job search”, it would be perfect and I would support it 100%, as long as it were in place with a safety net underneath it.

I have three requests for the Minister. First, it would help me enormously if she could make a commitment—not a pledge or a manifesto commitment—saying that the Government intend, in the fullness of time, when resources allow, to put back some of the things mentioned by the noble Baroness, Lady Stroud, and the noble Lord, Lord Kerslake. If she said that that was the Government’s ambition, it would go some way toward dealing with an important broken promise.

Secondly, there really needs to be some practical change. Next week is a key moment. We do Budgets now only once a year, rather than once every six months. Therefore, if we do not get the resources we need—I would sign up to the package proposed by the noble Lord, Lord Kerslake, and I also like the idea of the fortnightly grant, which would get over some of the short-term, immediate problems staring us in the face—the whole thing could be prejudiced. There is a danger that this becomes so toxic that we will not want anything to do with universal credit. This is a very important long-term policy for the country, so next week’s Budget is essential. If we miss that, we will not get another shot at this until a year’s time, and that will be too late.

Thirdly, I urge the Minister to go back to the Treasury—we understand her position: we are not stupid—and stress that if something serious is not done or some serious intentions are not made clear, we are in danger of risking future collapse in public confidence in this very important policy. That would not be in the interests of anyone: not the United Kingdom, not low-income families and not even those who are comfortable and have found their way early into the labour market. There is a lot at stake here. It has been a very important debate and I hope the Minister gets a chance to respond to it in good time.

Working-age Benefits

Lord Kirkwood of Kirkhope Excerpts

Thursday 16th November 2017 Lords Chamber

[Lord Kirkwood of Kirkhope (LD)]

My Lords, it is a pleasure to follow the noble Lord, Lord Beecham, who brings a wealth of valuable experience from his local government work. I am very grateful to the right reverend Prelate for this debate. It is something I was trying to get on the agenda myself, as it meets my intrinsic need to replace the now-gone annual uprating debates that we used to have on social security. I held the record for attending 27 years in a row without missing one. I wanted the box set until the Government went and did this dastardly act, and now I have to rely on the Church to give me the opportunity to go through the 37 means-tested benefits that are covered in this benefits freeze in my nine-minute speech.

I have a very simple point to make. I endorse what the right reverend Prelate said, but it seems to me that, in Parliament, one of the important defence mechanisms in our social protection network was that we accepted the principle that there would be a valorisation of the benefit levels—that the rates, which had to be considered by the Secretary of State for Social Security every year, were in some way linked to a cost of living measure. You could have arguments about whether RPI or CPI was right or wrong, but that for me was a cardinal protection for people. I would be prepared to go on any doorstep in the United Kingdom, however prejudiced the household might be, and argue with them that as wealth increases—or decreases—the people who are supported by our social network protections should both share in any increase and take the decrease if that is what the economy is facing. That seems to me to be an unanswerable proposition for securing annual rates for benefits.

It is a real disappointment to me that the Government set their face against making these cuts on an annual basis, because they had the power that enabled them to do that, through the existing uprating mechanism. They set their face against that, which suggested to me that they were prepared to coldly and calculatingly accept some of the rates of poverty that we now know exist. The right reverend Prelate set them out clearly, particularly in relation to child poverty. I agree with that. We know what we are doing and we are making children poorer.

It would have been a much better position for the Government to say, “We will look at this every year, and if adverse circumstances apply”—and they do—“we will justify the increase or decrease year by year”. That would give me more confidence that all these very competent people in the DWP doing the research and monitoring these things are not just doing other things, such as Brexit Bills or something. I would like an assurance from the Minister, if he can give it to me, that someone is actually doing that and looking at it. We may not have to do this work, because we are not covered by the annual uprating requirements, but somebody in the DWP should be doing it and making sure that a line is not crossed—because the circumstances have dramatically changed since 2016. We had an inflation rate of 0.3% and now we have a rate of 3%. I do not know that we expected that, although I thought it would happen—and it is important to remember as well that it is 4% for food and drink.

The noble Lord, Lord Beecham, knows about this better than I do, but as much as anything, the ability of local authorities to soak up some of the downstream consequences, which are inevitable in terms of public services, is diminished in a way that in 2015 and 2016 I did not expect to see. So for all these reasons, it is not safe just to say, “This is it for four years, and we’ll come back and look at it in 2020 or whenever”. I would be grateful for any comfort that the Minister can give me about how we are handling the interim period between now and then, and monitoring some of these issues.

The Resolution Foundation, the Joseph Rowntree Foundation, the IFS and CPAG are serious, well-respected organisations. We are extremely well served in the United Kingdom by these organisations, which are beyond reproach. Of course they are making forecasts and estimates, and they do not have a crystal ball, so you have to look at the assumptions carefully, but they are well respected across Europe for the work that they do, and they are all queueing up and showing the RAG lights on the risk analysis as amber going red on this. I am not sure that we can go through the four-year freeze without risking public disillusion, mistrust and misery. If we allow that to happen, it will be a great shame.

I could not say this in the earlier debate, because I was so generous to the Chief Whip with my time, but the seven-day waiting period applies to these benefits as well. We may be in the business between now and next week of making some mitigation to the seven-day period, which used to be three days—and there was a big row when it went to three days, although you can understand that when you are trying to deal with a situation that avoids churn in the labour market. Another ask from me would be whether, in gremio of the wider consideration of universal credit, the seven-day wait could not be looked at as well.

I say absolutely openly that I would much rather the Government considered postponing the increase in the personal tax allowance to £12,500. They can still get there by their manifesto commitment period if they miss a year. If the Minister is looking for money—and it would need big money to mitigate some of these benefit freezes—the £2 billion or £3 billion that you could save by not introducing that promised tax cut, which affects higher-income households disproportionately, would be a good place to start.

I do not know whether the Minister has had a chance to look at it, but I was very struck by the recent survey the Financial Conduct Authority published, which was based on a huge sample of 13,000 people, divided into families that are struggling, squeezed and cushioned. The fragility that that survey revealed surprised me. I look at these things as closely as anybody, and it is worrying that we are sitting on a level of household debt that is bound to increase. If that is the base from which we are starting, we really have significant problems—not to mention withdrawing from the European Union, because the economy is bound to take a hit from doing that.

I have a final ask. We have the Social Security Advisory Committee available to us. It is another gold-standard institution. It is very experienced in all of this. I think that the Government should ask SSAC to monitor the remainder of this four-year freeze because it is big enough and ugly enough at telling the truth to Ministers privately in a way that might cause the Government to change their mind. It has a busy agenda and does not have an awful lot of extra resources, but it would be money well spent. If that were to happen, I certainly would sleep slightly easier in my bed at night. I hope that the Minister will think about that carefully.

Public Services: Economic and Climatic Challenges

Lord Kirkwood of Kirkhope Excerpts

Thursday 23rd January 2014 Lords Chamber

[Lord Kirkwood of Kirkhope (LD)]

My Lords, it is a great pleasure to follow my good friend the noble Lord, Lord Maxton, who made a very powerful speech. He has convinced me of most of his ideas just by bullying me incessantly on every occasion we meet, but he has not yet convinced me about identity cards. However, the debate can continue. I am also grateful to the noble Lord, Lord Rooker, who is a wise parliamentarian. I have followed his career and, if he thinks that this is an important subject, that is good enough for me. His experience in government puts him in a very good position to take an overview and we owe him a debt for the way he introduced his debate. I confess that I share his sense of frustration and urgency and I hope that this debate will start bringing some much needed focus to this very important subject.

To lighten his reading load a little, I suggest something for him apart from reading his erudite philosopher. I picked up a very interesting book by an American professor, Tim Morton, entitled Hyperobjects: Philosophy and Ecology After the End of the World. It is about ignoring knowns, and he makes a very important point. He describes “hyperobjects”, some of which the noble Lord, Lord Rooker, certainly identified. I have not finished it yet, so I do not know if there is a happy ending, but I would recommend it to colleagues for reading in future.

I suddenly became interested in the subject in autumn last year, when the Grangemouth Ineos dispute took place. Noble Lords will remember that it was a pretty tense moment north of the border. There was a lot of trade union and party-political infighting, and it had a resolution that was, thankfully, reasonably sensible. I was astonished to find that one company was in control of 85% of the petrol distribution in Scotland, a private company with some quite headstrong, controversial directors, who were making personal decisions. I think that it was all part of the war game. I am not completely naive; I think that there was quite a lot of tic-tac going on in the press to gain advantage in the dispute with the trade union. Some 800 jobs were at risk, and that is a very serious blow. But I was completely surprised to learn that North Sea oil could effectively be closed down for swathes of the northern part of the United Kingdom, simply because of the local difficulties of an individual commercial company.

It made me think that we need to think more carefully and deeply about how fast society is changing. The noble Lord, Lord Maxton, is right about that. The rate of change that we have in this country is often underestimated, and we do not think about it carefully enough. In particular, I am concerned about the long-time effect of ageing; it is good, because we are all going to live to 120, and I am making plans. But the resilience of us individually, physically, will change society really dramatically, not only in the dependency ratio in terms of creation of wealth to pay for pensions but the ability to be able to contribute to your local community. I have lived in the same village for 30 years; I used to play football with my neighbours, but we now have book clubs and meet for interest evenings. Intellectually, everybody is as sharp as a knife, but we all have new knees or shoulders, or whatever—and God bless the National Health Service, which provides these things. But with the best will in the world, if something dramatic and untoward happened, the physical ability that we had when I first came to live where I do has gone. That is a really significant change, which we have not bottomed out yet.

On top of climate change and the global integration of society, specialisation is the order of the day and you all know a little bit about the life you live but everything else is done by everyone else, so if a bit of it goes wrong, the resilience of the system fails. The rate of change is something that we must be concerned about in the course of this debate.

Politics does not handle this particularly well. That is a statement of the obvious, but the timeframe is too long for normal party politics. I am in favour of party politics; I agree with the noble Lord, Lord Maxton, by the way, that we need to invest some money in party politics. My 32 year-old son has raised exactly that question about the pencil cross once every five years as being absolutely useless in terms of what he wants to contribute. He is right about that. But the political system considers capital expenditure as an easy target; if there is ever any pressure on any budget, the first thing that goes is capital expenditure—and nobody cares, because they do not really know about it. I am getting much more concerned about the effect of continually salami-slicing long-term plans; you do not see it from month to month or from year to year, but over the distance, you suddenly find that 85% of the petrol distribution in Scotland is in the hands of one man. The political process needs to waken up to that.

It is also a bad thing that it is so cross-departmental. The noble Lord, Lord Rooker, has had experience of many departments, and he is in a very good position to have an overview of this. The Civil Service is still in silos, and society does not live in silos as much as it used to. The Cabinet Office does its best, and it gets high marks for doing the important work that it is doing with big data, and trying to stay abreast of technological issues. But somebody needs to give me confidence that in central government there is somebody like the noble Lord, Lord Rooker—there may be a job for him—who stands back and can say, “In 15 or 20 years’ time we will be thinking of whatever it is”. We have the expertise here; we have the Meteorological Office, for example, which is a world expert at looking at climate change as it affects the weather. We need to think about how the political process deals with this long-term problem, which is becoming more and more of a problem.

The noble Lord, Lord Rooker, was absolutely right to mention housing. If we got a housing policy that was worth the name and were systematic and careful, it would transform the lives of many of our citizens. It would certainly start to seriously attack the housing benefit budget, which is just lining the pockets of landlords, and that is in no one’s long-term interest.

The Cabinet Office is the place where this whole issue is brigaded. It would help me if it could try to co-ordinate across departmental budgets the resources that are in play here. I do not blame Owen Paterson, the Secretary of State, for getting slightly blindsided about what was actually being spent on flooding, because some of it is private and some of it is public. It is an easy thing to do. But I have no sense of what is happening in the pockets of the other departmental budgets, which are dealing with long-term planning for resilience, climate change and the rest, and I do not know if the figure exists. I am well aware of the national risk register, which I remind noble Lords was drawn up in 2008. I know that it has been updated since then, but 2008 was a different world in the context of how we live these days. So I have a plea to my noble friend on the Front Bench, if he can do it today. It would certainly make me sleep more easily in my bed at night if I had more of a sense of what across the piece central government is applying to resources. I am talking not just of financial resources but of the capacity of experts and the scientists in the labs. What is the global spend across central government that deals with this issue? We should know about that, and about the professional experts that we can call on to deal with these crises, as we must in future.

The policy prima facie looks okay. I have looked at some of the documentation, and there is a spread of interest over the phase of prevention, mitigation response and aftermath, with regard to implementation. All those areas are covered and should be covered. However, on the resources issue, how much operational weight is there behind policy? The consultation that was conducted in Scotland found favour with most of the respondents, but people did not actually believe that the money was behind the policy to make it work in the way set out in the documentation, and we should think about that more carefully.

I want to talk for a moment or two about technology. The noble Lord, Lord Maxton, knows more about this than I do, but he is right to say that technology is quintessentially important in education. I want to take that argument further in terms of what it can do in the event of untoward, unexpected environmental crises. There is what is happening with cloud computing and the extra services that are available that are internet-based, and the mobile nature of devices. If you have an internet connection, you can speak to anybody in the world at any time, day or night. I compliment the Cabinet Office for the excellent work that it is doing, allowing big data to be made available to everybody, open source, so that they can take advantage of that wherever they are. I am told that in a few years’ time, 75% of all government information will be online, which is an astonishing change. That is a resource that we have never had before.

Finally, and most importantly in the context of this debate, social media give people the capacity to interconnect in a way that we have never known before. We are not taking enough advantage of that. For example, if my village were suddenly cut off for some reason, we have enough communal knowledge about computing to be able both to communicate within the village community, and to tell the emergency centre, our local government and our regional government headquarters exactly what is going on.

Indeed, as the noble Lord, Lord Maxton, knows, devices will soon be wearable. We will all have Google Glass, and go around wearing specs with cameras on them. I wait for the day when the Clerk of the Parliaments comes in and brings the House to order wearing his Google Glass device, because they will be able to stream that to Hong Kong. No doubt there are people in Hong Kong who would like to know what he is looking at. I am being facetious; none the less, that does make my point. If I am in the middle of a crisis in my village and I want to know what is happening, I can just switch my specs on. We need to invest in that, in the capacity and in the confidence building for people who will happily volunteer in their own communities and try to help their neighbours in an adverse situation. I think that if that is properly planned and worked out, we can transform our ability to communicate in real time.

Feedback is really important. What really cheeses people off in a flood is not being able to get through on the telephone line—and even when they can, getting the message, “We’ve got no information.” That is unacceptable. We should not allow public service contracts to be let to anybody, whether energy providers or anybody else, unless there is a clause in the contract saying something like, “In extremis, you must keep some percentage of resilience available—and you’re not getting your money unless you can convince the Civil Service people letting the contracts that you will run call centres or technological communication systems that will at least say to people, ‘I know who you are. I don’t know what’s going on but I’ll get back to you, and you can rely on that’—and it happens”.

Something else that we do not do well enough is the wash-up procedures and the feedback after the event—the aftermath. So there is a lot to do. I congratulate the noble Lord, Lord Rooker. This is a very important subject, and I hope that the House will return to it in future. I also hope that the political process will get a better handle on the real future risks that we face.