Social Security Benefits Up-rating Order 2017

Debate between Lord Kirkwood of Kirkhope and Baroness Thomas of Winchester

Tuesday 21st February 2017 Grand Committee

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I am grateful to the Minister for that helpful opening statement. I will make one or two comments on what he has said.

However, I will also spend a moment—if I do not impose too much on the Committee—talking about the process available to us as parliamentarians more generally to observe, be confident of, and have assurances about, how the annual social security spend is surviving some of the impositions arising from the Government’s more general fiscal rule—to save £12 billion during this Parliament. That is a significant sum. I absolutely acknowledge—and the Minister was right to explain this, under the terms of the order—that sensible provision has been made for our retired population. The pension rates, the triple lock—everything that he has explained—make perfect sense and sit well with the requirements of that part of our population that is past retirement age.

However, we must have some concerns whether proper provision that, arguably, is being made for those over retirement age, is also being made for those of working age. I want to focus on paragraph 4.3 of the Explanatory Memorandum. In the final sentence—this will come as no surprise to any of us—it is accepted that the main rates of benefit are frozen at their 2015-16 rates, under the 2016 Act. They were not part of the Secretary of State’s review. My opening question derives from the fact that I have been doing uprating statements for as long as anybody—since I first entered Parliament in 1983. They used to be very big occasions, because they were responsible for disbursing huge amounts of public money, and that is still the case. We are, however, getting to the position where I am no longer confident that the protection provided by Section 150 of the Social Security Administration Act is the assurance that it used to be.

As a policymaker, legislator and parliamentarian, I always had confidence that Secretaries of State for Social Security or Work and Pensions sat down once a year and thought carefully, on advice from the detailed research that Secretaries of State have available to them, about whether what was being proposed to Parliament was adequate for the purpose. I do not think we can say that any more, and if that is even halfway true, we as policymakers and the Opposition need to be looking at other ways, if we cannot get assurance from Section 150 of the 1992 Act, to discover what the Government are doing in the department and in their discussions with the Treasury to make proper provision for the rest of this Parliament. This is the only occasion that I can think of when we can do that, although I understand that under the strict terms of the order, I might be on the cusp of what is technically in order.

The plea I make to the Minister—he may not have an answer for this more general question—is that in his new role and as part of a new and very capable ministerial team within what is effectively a new Government taking a fresh look at responsibilities for social protection, he should reflect carefully on how he and his colleagues will be able for the rest of this Parliament to give me the assurance that is absent now that we have restricted consideration for annual review.

My second question relates to the change that we made some years ago, moving to the CPI from the RPI measure. It is significant, historical and very easy to miss. I notice that in its April 2015 data review, the Office for Budget Responsibility calculated that as a result of that single change there was reduction in spend of £5.2 billion a year by 2019-20. I do not expect the Minister to have this figure at his fingertips, but it is very important that for the rest of this Parliament we track the estimates made by the Office for Budget Responsibility and the Department for Work and Pensions of the cumulative results of that single change, which is so significant for all benefits. Monitoring that is part of the work we should be doing.

In the uprating statements for the rest of this Parliament, will the Minister be good enough to monitor exactly how the £12,000 million social security spending reduction is being effected in practice? Where is that money being saved? I know that it is an estimate. That has been made clear by the OBR, the IFS and others. We need to know the relative savings achieved from the freeze, the new two-child limit, the cuts to universal credit, the cuts to ESA and the reduced household benefit cap. If we do not have that information in debates of this kind for the rest of this Parliament, we will be at a significant disadvantage in trying to work out what lower-income households are facing.

I have one further point before I finish, but I shall be brief because I think I am pushing my luck slightly. The order does not contain any reference to working-age benefits. There is a real risk in using cash limits to set benefit upratings in future, but we are getting into a habit of doing that. We froze benefits on a cash basis in 2013-14, and we are doing so now. Two things happen with that. First, the Government are transferring the risk of inflation to benefit recipients, and I do not think that is fair because no one can truly judge what is going to happen to inflation. Colleagues may have more to say about that. Secondly, there is no way of knowing exactly where the saving will be if you rely on inflation. The Government are in a much safer position if they take decisions that can lead to calculations and assessments of what is expected in future.

I am no economist, but I do not think you need to be one to understand that inflation is increasing. The impact of that will bear down on working-age families, particularly those with children. The IFS and the Resolution Foundation have done some excellent work trying to point out the risks that we as a country will be running for the next three or four years. The Child Poverty Action Group reminded us in a recent leaflet that child benefit has risen since the 2010s to where we are now by something like 2%, whereas costs will have risen for the client group that CPAG seeks to represent by about 35% between 2010 and 2020. These are forecasts, and of course forecasts can be wrong, but they are frightening in what we may be facing, particularly for families with children in the lower income brackets.

My plea is that we look at this more carefully and that, if these uprating statements are less useful technically in looking at the totality of the benefit spend, the Minister in his new position goes back and discusses this with his departmental colleagues. He has vast resources, he has some very experienced, talented and clever research people in the department, and I am sure he can help them to ensure that we avoid some of the really regressive scenarios painted by some pressure groups, which know what they are talking about. If we do not, Parliament will find it more difficult in future to be confident that we know exactly what is happening and the disposition of what is an essential policy area for the safety-net provision for low-income families in the UK.

[Baroness Thomas of Winchester (LD)]

My Lords, I hesitate to intervene after the powerful speech from my noble friend Lord Kirkwood, but the DWP bus does not come along very often, so I fear I must take this very small chance to jump on it. The Explanatory Memorandum was actually very helpful, which has not always been the case with DWP statutory instruments. Often the DWP has not had many accolades for its Explanatory Memorandums being helpful, so I would like to say that this one was. At the very end of the memorandum, paragraph 11.2 says:

“Small businesses, like all employers, meet the costs of Statutory Sick Pay without reimbursement but are able to access the services of the Fit for Work Service, a free occupational health service funded by Government for employees absent from work through ill health for four weeks or more”.


Can the Minister tell the Committee whether that service is being taken up? Small businesses are not always good at knowing what the law is, and I know that many of them have never heard of the access to work service for the employment of disabled people. That is very important if the Government want to halve the disability unemployment rate. I would like an update on the fit for work service, which I know was designed by Dame Carol Black, and I would be happy for the Minister to write to me.

Welfare Reform Bill

Debate between Lord Kirkwood of Kirkhope and Baroness Thomas of Winchester

Monday 28th November 2011 Grand Committee

[Lord Kirkwood of Kirkhope]

My Lords, this amendment is tabled in my name and that of my noble friend Lady Thomas of Winchester. I think I can dispatch this with as much speed as possible. It is an important probing amendment to try to persuade the Government to clarify the position of the Social Security Advisory Committee beyond doubt in the context of this Bill.

As we all know, the Social Security Advisory Committee sheds light on some of the more obscure regulations and regulatory powers that flow from primary legislation and has an important additional duty to give advice and assistance to the Secretary of State. I know that the noble Lord, Lord Freud, who I think is the responsible Minister, is very careful in his duty to the Social Security Advisory Committee, which is welcome. It is welcome as far as the committee is concerned as well.

After Royal Assent, there is a process that has been going on for some time. Members of the Social Security Advisory Committee—they are technical experts, in the main—can self-refer pieces of secondary legislation where they feel there is an important point to make, to explore or to advise Parliament of. They sift every statutory instrument, and they use their discretion to self-refer. It all works rather well. As far as I can recall, until the Social Security Administration Act 1992 primary social security statutes were much more expansive and descriptive and most had their own time limit at which the Social Security Advisory Committee could take charge of regulations and self-refer. It was usually after a period of something like six months, but sometimes different statutes made different arrangements.

After 1992, there was an understanding that six months was the most appropriate period because Parliament could in theory be considered to have introduced all the salient facts, discussed them and come to conclusions that would not change much in six months. I think things have changed since then, because we are now dealing with skeletal primary statutes. This Bill is no exception. There must be up to 200 regulations in here. In the past we have seen some regulations being scrutinised by the Social Security Advisory Committee only after six months of the implementation of the provisions in the individual clauses.

This is a probing amendment. I hope that the Government will go away and think carefully about this. In this Bill in particular, because it is a significant change of direction, regulations will start pouring out of the department, so we will have many hours of happy discussions downstairs in secondary instrument debates almost as soon as this Bill gets Royal Assent. I want to be clear about exactly where the SSAC fits into the future of that. The implementation of the Bill and the rollout of provisions will, in any case, take a long while, so circumstances could change quite dramatically not just financially but socially, culturally and in others ways as well. I for one would feel safer if we had an assurance—even if it was in the Bill—that there was no doubt in anyone’s mind that, six months after Royal Assent and when the ink was dry after Her Majesty’s pen had scraped the official signature— if that is what happens these days—across the goatskin, the Social Security Advisory Committee would immediately thereafter have access to the regulation-making power that flowed from the universal credit and all the other provisions in this particular legislation.

Obvious questions flow from that. Does the SSAC have the discretion, authority or interest in picking what regulations to concentrate on? Speaking for myself, I trust its judgment in doing that. If, for every 10 secondary instruments that it looked at, it said that Parliament should look at two, I would be absolutely content to leave it to make that decision and use its discretion in that way. That is based on years of working with the committee and being confident that its members know what they are doing and have regard to the public interest, as well as having the depth and knowledge of experience that they have arrived at over many years. I can give colleagues comfort that they could do that properly.

I am not even going to ask for more resources. I would like to, but in these straitened times it would be hard to say that as we could double the workload we need to double the staff. I am not saying that. I am asking for clarity about when its remit commences. I think that we will all need help in trying to understand. I know that the Minister has done his best to provide the Committee with draft regulations as soon as they become available, but there are still huge gaps. We are taking a lot on trust. As legislators, we could feel more confident that we were on top of what was being done in Parliament if the Social Security Advisory Committee had unfettered access to discretionary self-referral of statutory instruments after six months after Royal Assent. I beg to move.

[Baroness Thomas of Winchester]

My Lords, my name is also on this amendment. My noble friend has explained the six-month rule. I would say that the DWP has recently interpreted it creatively. The rule was originally brought in partly to allow for the quick implementation of regulations and partly to stop the wasteful duplication of the same evidence being produced for the statutory consultation undertaken by the SSAC as for the parliamentary debate on the Bill. It dates back to 1973 and the predecessor committee, the National Insurance Advisory Committee, but that reasonable rule has been stretched beyond reason when a year, say, after Royal Assent, whole sections of Acts can be activated, at which point the DWP starts the clock to begin the six-month exclusion period.