Department for Work and Pensions

Angus Brendan MacNeil Excerpts

Tuesday 4th July 2023 Commons Chamber

[Wendy Chamberlain (North East Fife) (LD)]

It is a pleasure to follow the Chair of the Work and Pensions Committee, the right hon. Member for East Ham (Sir Stephen Timms). This is an opportunity for us to scrutinise the spending of the DWP as a whole, and I think it is important to reflect, as the Chair did, on the amounts of money that we are talking about. Spending on pensioner benefits equates to £134.8 billion and spending on universal credit and equivalent benefits equates to £82.8 billion, and that is before we look at disability and carer benefits, housing benefit, incapacity benefits and the one-off cost of living payments.

We are talking about a significant amount of money, but we are not just talking about it in the whole or in the round. I am sure that all of us here, as constituency MPs, know that casework associated with the DWP takes up a significant proportion of our casework teams’ time. Frankly, that is usually because of errors in the system. We know that every constituent’s circumstances are unique, but the themes are the same and the consequences for people’s day-to-day lives and living circumstances can be significant. I will highlight a survey carried out by the WASPI—Women Against State Pension Inequality—campaign that reports that nearly one in three women who have been impacted by changes to the state pension have fallen into debt in the last six months. That is people’s day-to-day lives. Given the amount of money spent on the DWP, I think we all, on a cross-party basis, would want the money that is spent to be used effectively and efficiently. I want to use my time this afternoon to highlight some of the inefficiencies in the system and seek updates from the Minister on points that I hope he will address in his concluding remarks.

On the state pension, it is important that we recognise that those who are most reliant on the state pension are those who are least able to work for longer. I want to highlight the current LEAP—legal entitlement and administrative practices—correction exercise for underpayments of the state pension, and to ask the Minister to confirm whether the Government are still on track to complete those corrections by the end of 2024. In February 2023, they had paid out only £200 million of the target of £1.5 billion.

I also want to highlight the uptake of pension credit. The Institute for Fiscal Studies has advised that there is a policy proposal on the table looking at combining the housing allowance and pension credit systems. It believes that that would increase uptake of pension credit, which I know the Pensions Minister—the Under-Secretary of State for Work and Pensions, the hon. Member for Sevenoaks (Laura Trott)—has been working very hard to do. If that is the case, why is it potentially being pushed back to 2028?

Home responsibilities protection errors were discovered last year and mentioned in the DWP’s annual report. When people had accrued HRP under the old state pension, there were errors in converting it to national insurance credits in the move to the new system, and that left people with incomplete records and underpayments. When I say people, it is generally women. We are still waiting for the report to set out the scale of the problem now and how the DWP plans to fix it. I would be grateful if the Minister mentioned when that correction exercise will start. I urge that it starts in parallel with the current correction exercise rather than being delayed until after the current exercise is finished. Again, a lot of these issues tend to be for women. It feels to me that the way systems are set up sometimes means that they do not recognise the situation of women who have been in the workplace, the decisions they make for family and other reasons, and their caring responsibilities.

I want to mention the missing national insurance credits for people who received universal credit. The Minister confirmed to me in a letter in March that the automatic system for updating the records did not work because the format of the UC data sent to His Majesty’s Revenue and Customs did not work with its systems, so that was suspended. This has meant that NI records are being manually updated, with errors being made as a result. I think this ties in with the Chair of the Select Committee’s comments about IT and the problems that legacy systems sometimes have. We all remember that the £20 uplift in universal credit was never seen by those on legacy benefits, and the initial reason given for that was that the IT systems could not cope, and that was never addressed. Does the Minister think that all those corrections to NI records will be made by the end of 2023-24, and may we have an update on the number of pensioners who are still missing out on their full entitlement?

If we want work to work, and to work effectively, we must acknowledge that we need to do more on pensions. For me, a startling statistic is the fact that most people are not in work a year before their pension age. For a variety of reasons people are not working, and they are therefore waiting for their state pension. Recent DWP reporting puts the gender pension gap for private pensions at a staggering 35%. Do the Government have an estimate of the gender pay gap if they include people who have no private pension entitlement at all? I suspect that if they have not been included, the gap will be somewhat larger. Will the Government make it a departmental statutory objective to close the gender pension gap?

That brings us back to women, because that changing portfolio of careers that women potentially experience will increasingly be the case for many people. I think about my own background before I came to this place. Increasingly, people do not stay in one organisation for 30-plus years and then draw down their pension from that organisation; they instead do a variety of different jobs in different places. As a result, the pension dashboard that was introduced by the Pension Schemes Act 2021 becomes even more critical so that people can keep track. Again, I would be grateful for an update from the Minister on that roll-out.

Let me return to benefits and the insufficiency of income. A number of us were present at the statement on the disability cost of living payment, and there was a general acknowledgement, certainly on this side of the House, that insufficiency of income is at the root of that. DWP data shows that in 2021 one in six people were in relative poverty, and one in five after accounting for housing costs, while 13% were in absolute poverty and 17% after housing costs. The Resolution Foundation estimates that that figure will rise in 2023-24 to 18.4% after housing costs.

Keeping people in poverty has negative outcomes. When people are financially insecure, they are more likely to have health or mental health problems, and more likely to struggle to get into work—it becomes a self-fulfilling prophecy. I echo the comments of the Chair of the Work and Pensions Committee on the uprating of benefits. The previous uprating, which was welcomed, was simply to keep up with inflation. If the problem is insufficiency of income, not committing to do that going forward just makes the problem worse.

I co-chair the all-party parliamentary group on ending the need for food banks, and our “Cash or food?” inquiry deals specifically with how we better support people and ensure a decrease in the use of food banks. In my constituency—indeed, this is something the Scottish Affairs Committee is looking at—the rural poverty premium is real. The Chair of the Committee mentioned transport costs, and going from East Neuk in my constituency to the jobcentre in Levan costs £9 on the bus. When talking about the small amounts of money that constitute universal credit, we can quickly see where that money goes, and that is before someone potentially has to go shopping in premium local shops as opposed to Aldi and Lidl. Money goes very quickly.

[Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

The hon. Lady made a good point about benefits and the key role that they play in creating a wealthy society. She may or may not know that there is an interesting TED talk called “Where in the world is it easiest to get rich?” The answer is: in Norway, Sweden and Denmark, where they have identified that one of the key aspects of creating a wealthy society is a good benefits system that enables workers to go around with some security, and society and children to have security as well. If we want to have millionaires and billionaires, we need a very good benefits system.

[Wendy Chamberlain]

I thank the hon. Gentleman for that contribution. Absolutely; I think we all look to the Scandinavian countries to see how they promote quality of life and support individuals, and we must think about how we can better support that. Indeed, the public generally tend to support that. They are comfortable potentially paying more in tax to have better services, and that debate must continue to be had.

I am pleased that my carer’s leave private Member’s Bill is now the Carer’s Leave Act 2023, and it will for the first time give employment rights to unpaid carers. One of the huge challenges when I was engaging with unpaid carers in my constituency—I have said this in the Chamber before—was the number of people who had left work because of their caring responsibilities, and therefore they would not benefit from provisions in the Act. Sadly, it is a fact that too many unpaid carers and the people they care for are living in poverty.

Carers UK estimates that unpaid carers are providing care worth £162 billion a year, and when we contrast that with the costs of the Department through the estimates debate, we can see the comparators. Without unpaid carers, our economy would be severely strained. Some 45% of unpaid carers are estimated to be unable to afford their monthly expenses, and two thirds of those who receive carer’s allowance or the universal credit carer element say that they cannot meet their monthly expenses. The level of carer’s allowance needs to be increased urgently—I have called for that before, and I will continue to do so.

We must also think about how we taper carer’s allowance. Caring never stops, and we should not have people falling off a cliff edge in relation to hours worked. Frankly, that is a disincentive for people going into work, because if they have the choice between working or caring for their loved one, they will choose their loved one every time. For young carers, I am not just concerned about their education; I am also concerned that we will never get them into the workplace if we do not provide them with the support to get there.

I am conscious that some unpaid carers decide to step out of the workplace for some time and then their caring responsibilities end, potentially through the loss of a loved one. What are we doing to support unpaid carers, who might have been out of the workplace for some time, to get back into work? There are similarities with issues such as parental leave and other decisions, and we should be looking at that body of people, who frankly are some of the best multitaskers I know, given their skillsets, and how we can help them into work.

Finally—this is an issue that other Members will be hugely aware of—child benefit thresholds are becoming an increasing problem, particularly given some of our frozen levels of income tax. It is a ticking timebomb. Families do not apply for child benefit if they know that they will not be entitled to it, but because those levels have never changed, that is increasingly an issue for stay-at-home parents—again, those are usually women; there’s a theme—who then miss out on accruing national insurance credits for the state pension. They do not realise that if they do not apply for child benefit payment, even to be told that they do not apply, they cannot pick up the national insurance credits, and that can be a real issue. Will the Minister consider reviewing the scheme for accruing credits for stay-at-home parents, or at the very least doing an awareness-raising campaign, as has been done for pension credits and other things? This is a good opportunity, whether a Member has an interest via the Committee, or otherwise, but as a constituency MP I want, and my casework team want, the DWP to be working as effectively as possible, so that those who need help get it, and those who can get into work are supported to do so.