Social Security Benefits Up-rating Order 2019

Lord McKenzie of Luton Excerpts

Tuesday 5th March 2019 Lords Chamber

[Baroness Buscombe]

My Lords, I thank all noble Lords who have taken part in this debate. It has certainly focused on things outside the order itself, but I thank noble Lords for appreciating the upratings made in the order. It feels like 10 minutes ago that we were debating this last year, so I was, to some degree, ready for some of the points that would be raised; I expected there to be references to the benefit freeze and various other issues.

I begin by referencing something that my honourable friend, Justin Tomlinson MP, stated last night in a similar debate in another place. He said that we will always share the proceeds of economic growth to target our support for the most vulnerable in our society. That is why we are spending £7 billion more than in 2010 to support those with severe disabilities and mental health issues.

It is true that things have changed. Our approach is, to some degree, different to that of the party opposite when it was in government. We want to incentivise people; we want to look at the root causes of poverty and lift people out of it. We know—we have research that tells us this—that lifting people out of poverty and into work is the best route. Our welfare reforms incentivise moves into work and support working families. What we are providing is different in some ways, but we know this approach is working. The number of people in work is now at a record high. Through our welfare reforms, the Government have introduced 30 hours of free childcare a week for working families in England; cut income tax for 31 million people; and provided the lowest earners with their fastest pay rise in 20 years through the national living wage.

Our reforms have been highly redistributive. The latest analysis shows that, since taking office in 2016, the poorest households have gained the most as a percentage of net income. The annual average income of the poorest fifth of households has risen in real terms by more than £400 since 2010, while incomes of the richest fifth have fallen. Income inequality is lower than it was in 2010. In 2019-20, the 10% of households with the lowest incomes will receive more than four times as much support in public spending as they contribute in tax. We believe it is right that the poorest households should gain the most as a percentage of net income.

The noble Baroness, Lady Lister, referenced several studies showing that the number of children in poverty will increase substantially over the next few years. However, experts such as the IFS, who undertake these forecasts, acknowledge a degree of uncertainty around them. We stay with our firm belief and principle that work offers the best chance for families to get out of poverty.

Since 2010, there are more than 3.4 million more people in work and around 637,000 fewer children living in workless households. Children are about five times more likely to be in poverty if they live in a workless household, compared to a household where all adults work. There are 300,000 fewer children in absolute poverty, both before and after housing costs, compared to 2010, meaning we are currently at a historic low. We know that children in workless families can face real disadvantages to their development and prospects. This is why we will continue with policies that support and encourage employment, reform the welfare system to make work pay—as I always say, to make work transforms lives—and introduce universal credit to strengthen incentives for parents to move into and progress in work.

The rates of children in material deprivation have never been lower. As I said, children in households where no one works are more likely to be in poverty, but we will be investing more than £6 billion a year in childcare by 2020. There are a number of key ways in which we are demonstrating that our approach is different.

[Lord McKenzie of Luton (Lab)]

My Lords, the Minister has touched on the Opposition’s policy for work in previous debates. How would she respond to the executive summary of a White Paper produced when we were in government, which states:

“This White Paper sets out a vision and route map for a welfare state where everyone is given the help they need to get back to work, matched by an expectation that they take up that support”—


a concept supported by the noble Lord, Lord Freud? Indeed, he worked on that programme for the DWP.

[Baroness Buscombe]

My Lords, what the noble Lord just referenced goes to the heart of what we are trying to achieve. The reality is that we are providing support in every which way to help people into work, and to help people through our jobcentres with our work coaches and case managers. The important thing is that the first thing people do when they go into a jobcentre is talk to a work coach who is interested in ensuring that they have the right support, the right benefits and a roof over their head. We signpost them to the right support where that is lacking. From there, we do all we can, working with a bespoke work coach and case managers. It could take months, weeks or days to encourage people to go into work. Of course, as we know, some of these people have never been in work. Indeed, in 2010 a fifth, of all households in the United Kingdom—20%—were entirely workless. We have brought that down to 13.9% of all UK households. That is still an enormous number of households where nobody is actually working. We genuinely believe it is crucial that we change that, and we are changing it.

[Lord McKenzie of Luton]

Can the Minister tell me what the figure was when the Conservative Government left office previously?

[Baroness Buscombe]

I am not able to share that figure with the noble Lord, but I believe so strongly that what we are doing in introducing and developing universal credit with bespoke and universal support is a far cry from what previous Conservative Governments prior to 1997 and the party opposite in Government up to 2010 did with legacy benefits, when people had no contact.