Social Security (Up-rating of Benefits) Bill

Baroness Lister of Burtersett Excerpts

2nd reading
Wednesday 13th October 2021 Lords Chamber

[Baroness Lister of Burtersett (Lab)]

My Lords, it is a genuine pleasure to follow the noble Lord, Lord Freud, which is not something I thought I would be saying. Although the Bill is about the triple lock, it would not be right in the present circumstances to ignore the wider questions about the uprating of social security benefits that he mentioned, as did the right reverend Prelate.

First, however, I am on record as calling for a public debate about the triple lock’s future, not least because the risk of poverty is now higher among children than among pensioners. That said, the rise in recent years in relative pensioner poverty, mentioned by my noble friend Lady Drake, reinforces the case made by a number of bodies and noble Lords, including today, for a proper strategy to improve the take-up of pension credit, which research by colleagues at Loughborough University indicates could reduce pensioner poverty significantly. Ministers have responded with a number of welcome measures, but they fall short of the kind of strategy called for. What progress has been made in improving take-up?

Despite the rise in pensioner poverty, I accept that it would be difficult to justify an 8% or so pensions increase, given the artificial nature of that figure. Speaking personally—I stress that this is a personal view—it is time for a review of the triple lock. The triple element of 2.5% is an arbitrary figure, as the noble Baroness, Lady Altmann, implied. The case has been made by a number of bodies for reverting to an earnings/prices double lock, which was abolished by the incoming Conservative Government in 1980, but with a smoothed earnings link that would maintain pensions at an agreed percentage of average earnings while ensuring that they did not lose their value at times when inflation outstripped earnings, a point made by the noble Baroness, Lady Greengross.

One reason why I believe it is time to review the triple lock is the growing gap between pensions and benefits for working-age people and their children, which, as we have heard, have been subject to a decade of cuts and freezes. As the Centre for Social Justice and others have made clear, this is the context in which we have to understand the widespread support for the retention of the £20 uplift to universal credit.

Given the likely effects of such a cut on many people in vulnerable circumstances, is it not extraordinary that Ministers tell us there has been no impact assessment on the grounds that the £20 was temporary and therefore an assessment was not required? If there has been no impact assessment, how was it that a Whitehall official was able to tell the Financial Times that internal modelling showed that the impact will be catastrophic in terms of increased poverty, homelessness and reliance on food banks?

I ask the Minister, who I know is a humane person, to put herself in the shoes of a mother struggling to make ends meet. If she first claimed UC since the start of the pandemic, the uplift, which was very welcome, is all that she will have known. If she is a longer-term claimant, she will remember how much more difficult it was to manage before it was added. Either way, she would really struggle now.

Academic research and evidence from civil society groups shows both the difference that the £20 has made and that life on UC has still been a struggle with it. Most recently, a large, nationally representative survey of claimants undertaken by the Welfare at a (Social) Distance project showed that half of UC claimants were food insecure and a quarter severely so even before the removal of the uplift. Not only will removing the £20 push many more people into poverty, as the Legatum Institute and others have warned, but it is likely to worsen deep poverty as UC recipients are pushed further below the poverty line.

To make matters worse, as debated yesterday, the cut coincides with an increase in inflation, particularly in basics that represent a disproportionate chunk of claimants’ budgets. As the Resolution Foundation has pointed out, much of this increase will probably come too late to be incorporated into the uprating of UC based on the September inflation rate. Will the Minister undertake to look at how this problem might be addressed?

Ministers seek to justify the withdrawal of the £20 on the grounds that the priority must now be to get people back into reasonably paid work. Of course this is important, but nearly two-fifths of UC recipients are already in paid work and increasingly it is not providing an insurance against poverty. Also, as the New Policy Institute has shown, a significant proportion of recipients have caring responsibilities that limit the amount of paid work, if any, they can do. For instance, it is been estimated that more than 300,000 informal carers will be affected by the cut. Telling them to work extra hours to make up the loss is simply not realistic. Moreover, we know that hardship can undermine job-seeking efforts when energies are depleted by the exhausting struggle to get by on an inadequate income. There is evidence that the £20 has helped with job-seeking, so even in terms of the Government’s own priorities the cut is likely to be counterproductive.

The Government have tried to counter the growing pressure to retain the £20 by announcing a new temporary local authority household support fund—a fig leaf waved prominently by the Minister yesterday. A discretionary fund is not an appropriate, efficient or secure way to meet everyday needs that cannot be met because of the cut to benefits, as the former Secretary of State Sir Iain Duncan Smith has pointed out. Although talk of a possible cut in the taper is welcome, it will not target additional help on those in greatest need.

The Government have also tried to argue that the country cannot afford to maintain the £20 without a tax rise—indeed, according to the Prime Minister, “There is no alternative”. But the Centre for Social Justice has argued that the cost, which it suggests is in any case overstated by the Treasury, is not onerous and the consequences of withdrawing the money

“outweigh the benefits from any saving.”

Of course there is an alternative because the decision to withdraw the £20 is a political choice. The cost is but a fraction of the annual £36 billion or more that has been estimated had been cut from social security benefits pre-pandemic. The refusal to go some way towards making good that loss speaks millions about the Government’s priorities.

Not all benefit recipients benefited from the £20 uplift. Some lost out because of the benefit cap and others because they were in receipt of legacy or related benefits. The research on food insecurity, to which I referred earlier, found a sharp rise among the latter group during the pandemic but not among those who received the extra £20, which is significant. Disabled people in particular lost out as a result of the refusal to extend the uplift to legacy and related benefits. In this context, will the Minister say why the research commissioned from NatCen on the usage of health and disability benefits, which I understand was completed last year, has not been published or even referred to in the recent Green Paper Shaping Future Support, consultation on which has just ended? In an extraordinary exchange between the chair of the Work and Pensions Select Committee and the Secretary of State, the latter failed to give a reasoned answer to this question and the former suggested that the department may be in breach of government protocol on the publication of social research. The Government have certainly committed a breach of trust with the 120 disabled people who took part in the research in good faith, having been assured that the findings would be made publicly available.

What are the Government trying to hide? From the bid pack and the draft interview guide, it is clear that a wealth of data would have been generated about the extent to which the needs of those in receipt of health and disability benefits are, or are not, being met. Surely, as the Disability Benefits Consortium has argued, all this evidence should have been published to help inform the consultation on the Green Paper, which totally failed to address the crucial question of the adequacy of disability benefits. Will the Minister undertake to publish it now to inform the next stage of the process?

It is with this more general question of adequacy, which the noble Lord, Lord Freud, mentioned, that I want to conclude. I am very happy to echo the words of another former Work and Pensions Secretary, Stephen Crabb, who suggested in the Commons that the £20 uplift constituted “a recognition that the” UC

“standard allowance … was too low to provide anything like a decent, respectable level of income replacement”,

and he warned:

“It is that question of adequacy to which I think we will return time and again”,


for

“Anyone who thinks that we have generous benefits in this country is wrong.”—[Official Report, Commons, 15/09/21; col. 1004.]


Indeed, the IFS described their level as,

“unusually thin by international standards”.

Two Lords committees have called for a review of benefit levels. The Economic Affairs Committee concluded that UC is too low and

“should be set at a level that provides claimants with dignity and security.”

The Select Committee on Food, Poverty, Health and Environment called for benefits uprating to take account of official dietary guidance to ensure that claimants can afford to meet it. It cited written evidence from the Government that suggested the current benefit rates:

“derive from a review in the 1980s,”

but that review did not consider the adequacy of benefit rates. Indeed, according to the late Professor John Veit-Wilson there has been no such review of adequacy since the 1960s.

We have had review after review of benefits, yet it appears no Government for more than half a century have asked themselves whether the rates they set each year actually meet claimants’ needs. The one independent benchmark we have, provided by Loughborough University for the Joseph Rowntree Foundation, indicates that UC rates are well below what the general public deem to be an acceptable minimum standard of living.

As Stephen Crabb underlined, the outcry over the withdrawal of the £20 uplift means it is high time that we considered the underlying question of benefit adequacy. A prominent slogan at the Conservative Party conference was “build back better”. Restoring UC to its original meagre level is hardly building back better for our fellow citizens living in some of the most vulnerable circumstances, nor is it consistent with promises of levelling up, as a number of Conservative MPs have pointed out. If the Government continue to refuse to do the right thing, at the very least they could now promise a proper review of benefit adequacy as the first step towards building back better for those struggling to get by.

Social Security (Up-rating of Benefits) Bill

Baroness Lister of Burtersett Excerpts

Committee stage
Tuesday 26th October 2021 Lords Chamber

[Lord Davies of Brixton (Lab)]

My Lords, there are two issues being discussed in Committee that I particularly want to address. First, what should be the provisions to determine the operation of the triple lock? Secondly—a distinct issue—what is the desirable level of the fixed-rate state pension, and how can we get there? These are clearly linked but distinct issues, which is why I sought to have them grouped apart. In this group, Amendments 1 to 4, we are dealing with the first issue. The question is: how should the triple lock work? We need to thank the noble Baroness, Lady Altmann, for her work in producing these amendments, as well as the Minister, for the immense amount of time and effort she has put into explaining the Government’s position.

On the clause stand part debate, I will say that I am in favour of the 8% increase; I will explain why at that stage. However, as I said at Second Reading, given the Government’s clear and unambiguous commitment in their election manifesto to sticking by the triple lock, I do not understand why they are not prepared to adopt one of the approaches proposed by the cross-party group of noble Baronesses before us today. Unfortunately, of course, we have a Government who are now in the habit of breaking their promises; in this case in a relatively blatant fashion and, as has been explained, unnecessarily.

The Minister should understand that her Government’s refusal to give any consideration to any of these proposals is why there is so much fear—in this House and more generally—that this is not a one-off, that a precedent will be set that will be attractive to austerity-minded Chancellors in future, and that other excuses for breaking the link will be found. This is clearly not a party-political point. No one could accuse Age UK of being partisan, but it has said that

“it’s asking a lot for older people to believe that any scaling back of the triple lock would only be temporary, rather than permanent.”

The organisation goes on to point out that

“some of the prominent voices arguing for a suspension of the triple lock in response to the pandemic, are the same people who have called for its abolition in the past.”

The only way for the Government to mitigate these widespread concerns is to demonstrate commitment, either by sticking to the current legislation or, more likely in practice, through an appropriate amendment to this Bill. Such an amendment is now necessary to demonstrate the Government’s continued commitment —in practice and not just in fine words—to the key earnings element of the triple lock.

We must thank the Minister for her letter—which eventually reached me—and her explanation of why the Government believe that it is so difficult to adopt another definition of the earnings increase that would satisfy Section 150A of the Social Security Administration Act 1992. I am also glad to have had meetings with the Minister, at her instigation, to discuss the issue in detail. I thank her. But the case essentially comes down to “legal risk”. Unfortunately, I still find the argument less than compelling. On the face of it, the choice of the index is a decision for the Secretary of State. Subsection (8) could not be more definitive:

“The Secretary of State shall estimate the general level of earnings in such manner as he thinks fit.”


This puts it in the hands of the Secretary of State, so long as, that is, she does it in a way that is not irrational.

In truth, it is the decision to drop any link to earnings that is irrational—and, anyway, if it were correct that the Secretary of State’s choice is so open to challenge, it would be surprising that it has not been challenged in the past. For example, the prices index is based on a single month, September, whereas earnings are based on the three-month average from May to July. What sense does that make and why has one or other choice not been challenged? Earnings indices, along with those for prices, are inherently a matter of judgment and interpretation. It is not as though there is one true earnings index buried under the data that might ultimately be revealed in the course of legal action. Is any court really going to substitute its judgment for that of the Secretary of State? I am afraid that the excuses being offered for why the Government are unwilling to accept the approach suggested in these amendments bear all the hallmarks of post hoc-ism, the sort of clutching-at-straws justification that is commonly introduced to justify a decision that has already been made. The Minister has to understand that this is exactly why so many people continue to doubt the Government’s protestations that this is simply a one-off.

For these reasons, I shall support Amendments 2 and 3, in the spirit of helping the Government out of a hole that they have dug for themselves. Unfortunately, although I often agree with the noble Baroness, I am against Amendment 4. Just to give a brief history lesson, the idea of predicting prices figures is fatally flawed. I criticised it back in 1975 when my pensions hero, Barbara Castle, tried it, and I am against it now. Unfortunately, we are not allowed to use visual aids in this Chamber, but those noble Lords who have to hand the House of Commons briefing document can turn to page 22 and see a graph of the real value of the basic pension against earnings. Noble Lords will see that in 1975, when Barbara Castle was Secretary of State, there was a sharp downward dip, which is when they decided to adopt a projected rather than a hard figure. I am against it—I am sorry, because I am sure that the intentions are the best, but it gives too much scope for the Government to adjust the figures.

[Baroness Lister of Burtersett (Lab)]

My Lords, at Second Reading I accepted the Government’s case for not increasing pensions by 8% or so, and I called for a review of the triple lock, because of the arbitrary nature of the triple element of the lock—that is, the 2.5%—while emphasising the importance of maintaining pensions and related benefits relative to average earnings as a general principle. I therefore support Amendments 1 and 2, which are consistent with that argument.

At Second Reading, as we have heard, the Minister argued that there was no robust methodology for establishing what the underlying increase in earnings had been this last year. But surely the ONS range of estimates, on which these amendments are based, is at least based on some kind of methodology, which is more than one can say about 2.5%, which can be used to increase pensions should it exceed earnings and prices. As it is, the jettisoning of earnings this year has given rise to understandable fears that the earnings link might be abandoned altogether in the longer term, just as it was by the Conservative Government in 1980, leading to a steady deterioration in the position of pensions relative to average earnings during the following two decades.

Moreover, the case for basing pensions on the underlying increase in earnings is the stronger, given what is happening to inflation, which is addressed by Amendment 4. All the indications are that inflation is going to rise above the 3.1% on which the uprating will be based. The Bank of England’s chief economist has warned that it could go as high as 5% in the next few months. For pensioners and others reliant on social security, the effective rate of inflation is likely to be higher still, given the differential impact of inflation when the increase in basics such as fuel and food, which constitute a disproportionate part of low-income budgets, is a key driver of inflation, as already mentioned. I raised this issue at Second Reading and asked the Minister whether she would undertake to look at how the problem might be addressed, but she did not respond then or in her subsequent letter.

The other day, the Chancellor said:

“I know that families here at home are feeling the pinch of higher prices and are worried about the months ahead. But I want you to know, we will continue to do whatever it takes, we will continue to have your backs—”


whatever that means—

“just like we did during the pandemic.”

The amendments we are debating here today would be one way of doing whatever it takes. I hope, therefore, that the Minister will take them seriously and, if she does not accept any of them, explain how the Government will do whatever it takes to protect those reliant on social security in the face of rising inflation.

Finally, on pension credit, the subject of Amendment 3, I believe that the uprating should be protected legally. But I would like to return briefly to the issue of take-up raised at Second Reading by the noble Baroness, Lady Bennett of Manor Castle, which also has implications for later amendments on pensioner poverty. I welcome the willingness of Ministers—and our Minister in particular—to discuss with Peers ways of improving the lamentably low take-up rate. I had understood that it had been agreed that one way of doing so was to include a suitably arresting and well-designed leaflet or similar in communications with pensioners. I have received a couple of communications from the DWP since then, neither of which has drawn my attention to pension credit. Just last week, the letter I received about the winter fuel allowance made no mention at all of pension credit. Could the Minister tell us whether the idea of such a leaflet has been abandoned and, if so, why?

[Baroness Sherlock (Lab)]

My Lords, I thank the noble Baronesses, Lady Altmann and Lady Janke, for introducing their amendments, and all noble Lords who have spoken. We had a good discussion at Second Reading about the way the Government have gone about trying to find an alternative to the triple lock that would deal with the impact of the pandemic on earnings data. But I think it is fair to say that the Minister will have worked out from the contributions that this has not entirely satisfied noble Lords around the House as a way forward.

Let me look briefly at the three sets of issues raised by the amendments in this group. Amendments 1 and 2 from the noble Baroness, Lady Altmann, would replace the provisions of this Bill with the provision to uprate using an earnings measure designed to reflect an underlying rate of earnings growth. Amendment 1 sets that at 3.8%, being chosen as the midpoint in the range of this now famous blog by the ONS. I suspect the person who wrote it must be wondering whether they will ever blog again. But that blog suggested a range that—if you were to strip out the base and compositional effects—would give an indication of underlying basic earnings growth.

Amendment 2 takes a similar but less prescriptive approach, leaving it to the Secretary of State to pick a number informed by that same ONS piece of work. Given that a number of noble Lords have expressed scepticism about the Government’s defence—that one of the reasons they do not want to move away from average weekly earnings is fear of legal action—could the Government rehearse again exactly what they are worried about and why? I think that would be helpful, because, clearly, noble Lords are not persuaded by that.

I do not think anyone is very happy with where the Government have landed. My noble friend Lady Drake contributed, I have to say, another piece of astonishing, wonderful analysis. I say to the noble Baroness, Lady Wheatcroft, that I think it is possible that my noble friend is an even greater expert than the noble Baroness, Lady Altmann, based on the strength of her contribution. We have huge expertise in this House, and we are greatly blessed by it. My noble friend summarised the matter when she said that, essentially, in this Bill, the Government have contrived to find a way forward in which they apply neither the triple lock nor the earnings indexation on which the triple lock is meant to build.

The quote from the PPI about what would have happened if the triple lock had been applied over two years was interesting. When we debated the Social Security (Up-rating of Benefits) Bill 2020, I asked whether the Government had considered some sort of smoothing process, such as applying the principles of the triple lock over two years instead of one. I went back and read Hansard again today, and the Minister said—I paraphrase—it was all a bit uncertain. But that would have avoided the methodological complexity and any associated legal risks that Ministers are worried about, since presumably, they are using an established measure—immune, I imagine, to legal test. I ask the Minister again: did the Government consider it? Looking back, does she think that might have been a safer way forward?

--- Later in debate ---

[Baroness Boycott (CB)]

My Lords, I am pleased to support this amendment in the name of the noble Baroness, Lady Sherlock. I thank her for that incredibly good and detailed outline of what the problem is.

I want to speak briefly as the chair of the charity Feeding Britain, where I succeeded the wonderful Frank Field—the noble Lord, Lord Field of Birkenhead. We began three years ago to support the rollout of affordable food projects. We originally held the assumption that most of the people who would want it would be working-age groups, disabled people or families with kids, but that assumption proved to be wrong. We have 80 affordable food projects in our network. In many of them, between 30% and 40% of the members are pensioners on low incomes. They either could not or would not use a food bank. Pensioners find it extremely difficult to go to a food bank. I think that when you have paid your taxes and national insurance all your life, to find yourself at 85 having to ask someone whether they will give you a can of baked beans is both humiliating and almost impossible. Indeed, we have heard stories of many people who would really rather go without than have to endure that.

In Glasgow, where we have set up many affordable food projects, we have now set them up particularly in areas where there are lot of pensioners. People have really been supported by this. One said to us: “It’s been a godsend, really, because all the prices are going up—electricity, the cost of food and the lot.”

When I was a kid, my parents both did meals on wheels, and I used to go round with them once a week and deliver meals to people’s houses. It was kind of a joy; my parents really enjoyed it. When I chaired the London Food Board, I spent a lot of time seeing what we could do to bring meals on wheels back. The reality is that no councils have any money for this anymore. As always happens when it is about food, it is a budget that gets cut, or the costs go up and it becomes not many people, so it gets struck off the list of things that you could do. One thing we could do would be to start looking at a service like that.

As the noble Baroness, Lady Sherlock, pointed out about energy, you have to pay a lot to be poor in this country. It is certainly true of food. If I go to a shop, I can buy a large size of washing powder or rice or whatever it happens to be. If you are scraping along on very little money, you pay a great deal more. We did a survey in Greenwich which pointed out that your average shop would cost you 30% to 40% more in your corner store than if you had been able to go to your local Aldi. You pay a price to be poor. That is really terrible, and it is why I support the amendment in the name of the noble Baroness, Lady Sherlock.

[Baroness Lister of Burtersett (Lab)]

My Lords, these amendments raise important issues about the impact of the Bill on poverty. I simply want to raise a point about the measure of poverty that should be used.

At Second Reading, in her response to the debate the Minister referred to a fall in pensioner poverty since 2009-10 as measured by the so-called absolute poverty measure, and she did so again earlier this evening. In fact, it is not a measure of absolute poverty as such but is better described as an anchored measure which measures any change by adjusting the 2010-11 poverty line for inflation. In contrast, the House of Commons Library briefing, using the relative poverty measure, recorded an increase in pensioner poverty from an historic low of 13% in 2011-12 to 18% in 2019-20, as my noble friend Lady Sherlock said. With reference to Amendment 8, single female poverty is higher than the overall figure—a point already made.

However, the Minister was dismissive of the use of a relative measure, stating:

“The Government believe that absolute poverty is a better measure of living standards than relative poverty, which can provide counterintuitive results”.—[Official Report, 13/10/21; col. 1885.]


Criticisms of the relative poverty measure as potentially counterintuitive have tended to focus on when it is used for short-term, year-on-year comparisons, but, in this case, we are talking about a rise in relative poverty over a period of eight years, which surely should have triggered some alarm bells in the department.

Relevant here is a recent Work and Pensions Committee report. Although its focus was on measuring child poverty, what it has to say is relevant also to pensioner poverty. It states:

“The Secretary of State is of course right to say that a relative measure can, in the short term, produce counter-intuitive results—but it has great value for assessing long term trends. We are concerned to see Ministers focusing on a single measure, rather than drawing on the rich information offered by DWP’s own set of income-based measures, which combines relative, ‘absolute’ and broader material deprivation statistics … Ministers should reaffirm their commitment to measuring poverty through all four measures”.


Similarly, I have a Written Answer from the Minister’s predecessor, dated May 2018, which states:

“No one measure of poverty is able to fully capture the concept of a low standard of living in all economic circumstances.”


Yet increasingly, Ministers use the so-called absolute measure, as if it is the only appropriate measure. Will the Minister reaffirm that commitment as called for by the Work and Pensions Committee? After all, I remind her that, when he was leader of the Conservative Party, David Cameron explained:

“We need to think of poverty in relative terms—the fact that some people lack those things that others in society take for granted. So I want this message to go out loud and clear: the Conservative Party recognises, will measure and will act on relative poverty.”


Can the Minister explain why that is no longer the case? What has changed, other than that the Government’s record on poverty looks worse using the relative poverty measure that Mr Cameron championed?

[Baroness Drake (Lab)]

My Lords, I will speak to Amendment 3. To quote from a publication by the Institute for Fiscal Studies,

“We’ll know we are on the way to levelling up when differences in health and life expectancy across the country start to drop. Sadly, that’s one measure of inequality that has clearly been moving in the wrong direction over the past decade.”


Associated with those growing inequalities is pensioner poverty, which, as we have heard, has risen from 13% to 18% and is likely to rise even further. For older pensioners, the rise is even higher. With the rising energy and food costs that we can all see coming down the track, there will be a lot of old people this winter with very little money, sitting in cold houses, fearing that they will not get any help when they fall ill. That will be the reality for many thousands of people in the coming winter months.

We know that there is a major problem generally of households on low incomes with rising debt who will not be able to weather the storm of the growing cost-of-living problems that we are beginning to see. Then again, looked at from a regional perspective, in the majority of regions in England pensioner couples have average weekly incomes below the pensioner couple average, and we are seeing this problem in particular regions: in the north-east, the north-west, east Midlands, West Midlands, Yorkshire and indeed in London, which now has the highest relative level of pensioner poverty. As Imperial College research now shows us, life expectancy is falling in urban areas in these regions—in Leeds, Newcastle, Manchester, Liverpool and other areas. Cuts to health and social spending will have contributed to that trend, and we have not yet experienced a winter with the backlog that the NHS is dealing with.

Pensioners with low incomes are more sensitive to indexation changes because they are more dependent for their income on those benefits. Yet we have seen no assessment of the impact of suspending the triple lock, or indeed what could be the implications of decisions the Government will take next year or the year after, given that through the Bill they have suspended both the triple lock and the legislative underpin of earnings. We know that projected levels of pensioner poverty will vary according to the uprating provisions applied to the state pension, given its dominance in pensioner income. If you play negatively with pensioner income, pensioner poverty will go up. That sensitivity to indexation will continue to increase, as fewer and fewer pensioners reach state pension age without the generous defined benefits or defined contribution pensions which, in the past, cushioned the fall in the state pension that occurred under successive Governments.

Pensioner poverty is not a legacy issue. State pension is and remains a dominant source of income for the majority of both current and future pensioners. Research by the Pensions Policy Institute—your Lordships can tell that I am a governor—reveals that the UK is currently on course for a quarter of people approaching retirement being unlikely to receive even a minimum income. Of the 11 million people in the UK between the age of 50 and state pension age, around 3 million will not receive a minimum income.

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[Baroness Boycott (CB)]

I will be very brief, given the hour. As I said, I am chair of Feeding Britain, and I would like to briefly report from the front line, so to speak, on the effect of the stopping of the £20. I totally agree with the noble Lord, Lord Freud, and the noble Baroness, Lady Stroud, that this needs to be put before the other House so that there can be a vote on it.

Our experience at Feeding Britain has suggested that the £20 increase in universal credit was responsible for a drop in the number of people needing to use food banks this year—it was 17% lower than before the pandemic. Of course, we also had the school meals campaign by Marcus Rashford and various other people but, since then, in the three weeks since the increase was removed, our social supermarkets, which are affordable food projects, have started to show signs of distress.

Some of those who used to shop monthly for low-cost food, and for whom membership represented a nice insurance policy, are now there every week, if not more. Some who used to use a debit card are now using credit cards. Some of those who used to rely only on our option of low-cost food now also want help with gas and electricity. Some cannot even afford their membership fees, which are as little as £3. They are instead going without the food or having to use food banks. People are really clinging by their fingertips to avoid that nightmare scenario.

I very much agree with the noble Lord, Lord Freud, that we need skills and ways to help people try to avoid the traps that they are in, which is what our social supermarkets do. Being poor is not only an expensive thing to do in this country; it is also very hard work as you spend your life drifting from one office to another trying to find someone who can help you sort out your problems with rent, food, schools et cetera. I am very glad that this House is bringing this amendment forward, because if we do not do it, who will?

[Baroness Lister of Burtersett (Lab)]

My Lords, I am very grateful to the noble Baroness, Lady Stroud, for tabling this amendment. Like the noble Lord, Lord Freud —I must be careful I do not get into a habit of agreeing with him—I will focus on the substance of the issue, although I say to the noble Baroness, Lady Stowell of Beeston, that this is not about dictating to the House of Commons, as the noble Baroness, Lady Stroud, said.

Like the noble Baroness, Lady Stroud, I am disappointed that apparently no attempt was made to assess the impact of what constitutes an unprecedented overnight cut in universal credit claimants’ income, despite the Financial Times reporting that an official had told it that the impact would be “catastrophic” in terms of poverty, homelessness and, as we have already heard, food bank use.

The lack of a formal impact assessment has been criticised by the UN rapporteur on extreme poverty, Olivier de Schutter. He told the Government that as a signatory of the International Covenant on Economic, Social and Cultural Rights, they must adequately justify what he defined as a retrogressive measure by carrying out such an assessment. Indeed, he warned that it was prima facie doubtful whether the removal of the £20 uplift is a measure that conforms to international human rights laws and standards. What was the Government’s reply to him?

Olivier de Schutter clearly did not see the original temporary nature of the uplift—repeatedly cited in justification—as a conclusive argument for withdrawing it now. The other main argument deployed by Ministers has been that the priority is to get people into reasonably paid work, as if that and maintaining the uplift are somehow alternatives between which we have to choose. Given that we know that hardship can undermine job-seeking efforts, what attention has been paid to the likely impact on job seeking of increasing hardship at the stroke of a computer key? What thought has been given to the impact on the significant minority who cannot be expected to seek work or work longer hours because of caring responsibilities or lack of fitness for work?

The Government have also tried to bolster their case by pointing to the £500 million household support fund referred to by the noble Lord, Lord Freud. But a discretionary fund of this kind is totally inappropriate for meeting the kind of regular needs that the UC standard allowance is supposed to meet. It offers no security or certitude to claimants in the way that a regular payment does. Not all local authorities are well placed to administer the money, especially if they are one of the significant minority which does not even run a welfare assistance scheme. I took part in a workshop last week where one participant said that her local authority had begged her food bank to administer a previous pot of money released by the Government to it because otherwise the local authority would have to return it for lack of administrative capacity.

A further sticking plaster is more money for family hubs, which could well find themselves picking up the pieces of families buckling under the strain of the loss of the £20. If, as rumoured, the Chancellor announces a cut in the taper rate tomorrow, again while welcome, it will do nothing to target the necessary help on those worst hit. Similarly, while the proposed increase in the national living wage is welcome, as both the IFS and the Resolution Foundation have made clear, it does not compensate for the loss of the uplift, not least because many of those earning the living wage are not in households in receipt of UC.

The very fact that the Chancellor was moved to introduce the uplift—which was welcome as far as it went—was tacit recognition, as we have heard, that UC rates are too low, a point made in the Commons by former Work and Pensions Secretary Stephen Crabb. Just how low is in part attributable to a decade of cuts and freezes, which took well over £30 billion a year out of the social security system, as the noble Lord, Lord Freud, has said.

As Mr Crabb pointed out, the cut raises a more fundamental question about the adequacy of the benefits we expect our fellow members of society to live on—an issue also raised by two committees of this House. While the narrow scope of the Bill does not enable us to have the more fundamental debate about benefit adequacy that I had hoped for, the amendment at least opens up the possibility of a serious vote in both Houses on the desirability of reinstating the uplift—a question that cannot be divorced from the underlying question of the adequacy of UC to meet needs.

Such a vote is needed because, although presented as somehow inevitable, the decision to withdraw the uplift was a political choice. The fact that it was originally intended to be temporary is neither here nor there, as the UN rapporteur made clear. Temporary often becomes permanent—and so it should when the overwhelming evidence shows that, be it from the perspective of food insecurity, as we have heard, debt or general hardship, the UC standard allowance is simply, to quote Stephen Crabb,

“too low to provide anything like a decent, respectable level of income replacement”—[Official Report, Commons, 15/9/21; col. 1004.],

Although inevitably so far largely anecdotal, it is clear that claimants are extremely anxious as the money disappears out of their accounts; not all of them were even aware that it would do so. An increase in fear and anxiety is how a pastor in Burnley described it to the journalist John Harris. Therefore, I hope that this amendment will be deemed admissible by this House.

Social Security (Up-rating of Benefits) Bill

Baroness Lister of Burtersett Excerpts

Report stage
Tuesday 2nd November 2021 Lords Chamber

[Baroness Wheatcroft (CB)]

My Lords, I have put my name to Amendments 1 and 7 in this group, as well as to Amendments 3 and 4 which will be debated later. I am delighted to follow the noble Lord, Lord Rooker. He spoke sanely about what these amendments would do and why they should do it.

The noble Baroness, Lady Altmann, made the case very clearly. There are 2 million pensioners living in poverty and 1 million in extreme poverty. Noble Lords need to know that this Bill would put more people in this position. We should not be passing it unamended.

I find the arguments against our amendments pitifully thin—I am sorry, but I do. I remind the House that, in Committee, the Minister, who wants to do the right thing, said:

“The Government’s triple lock manifesto commitment remains in place”.—[Official Report, 26/10/21; col. 738.]


I know that that is a reference to the fact that we are told that the suspension will be for only one year, but that is not good enough. If you suspend the earnings lock for one year, the cumulative effect goes on, so the commitment is lost.

The commitment was to keep the earnings lock in place because earnings might well be greater than inflation—particularly CPI inflation—and there is no doubt that that will be the case. After all, the Government keep telling us that they want a high-wage economy. But they do not seem to want higher increases for pensioners. We know that, in most cases, these people’s spending is very curtailed. It goes predominantly on fuel and on food. Those are constituents of the CPI, but they are not in the same proportion as they are in pensioners’ spending. Therefore, increases in fuel and food prices hit pensioners harder.

I am still bemused as to how, in Committee, the Minister was able to tell us that,

“we are not currently expecting widespread, significant and sustained increases in consumer food prices in the coming months”.—[Official Report, 26/10/21; col. 740.]

I do not know what she knows, but the supermarkets certainly are. These price rises are already coming through. They are not yet fully reflected in the CPI, but we know that prices in the shops are going up. And the more that wages go up in this new, high-wage economy where we are encouraging drivers of HGVs to demand more money—which the Government say they deserve—the more this will feed through into increased food prices.

We need to make sure that our pensioners can eat. I do not want to be responsible for pensioners going hungry —or even hungrier than they have been in the past—and I do not believe that the Minister does either. It is imperative that we do what should not be beyond the wit of any Government and come up with a number that approximates effectively to where underlying earnings have gone in the last year. I have every confidence that the ONS can do this. Indeed, CPI is not quite as robust as the Minister would have us believe; it is often adjusted after a few months, or even a year, because a lot of numbers have to be adjusted as new information comes through. We could come up with an adjusted earnings figure which would enable the Government to maintain their manifesto commitment, which I am sure it would really like to do. It would enable the rest of us to ensure that pensioners –those on pension credit, as well those on the basic pension—lead a slightly better life. This is all part of the levelling-up agenda.

[Baroness Lister of Burtersett (Lab)]

My Lords, in speaking briefly in support of Amendment 5, although I also support the other amendments in this group, I will spare noble Lords the full lecture on the use of relative and so-called absolute poverty measures that I gave in Committee. As the Minister completely ignored the point in her response to that group of amendments in Committee, I return to it now. In discussing an assessment of the Bill’s impact on pensioner poverty—which is certainly necessary—we should be clear how we measure poverty.

When mentioning poverty, the Minister constantly uses the so-called “absolute measure”, and no doubt she has been briefed to do so today. I say so-called because it is better described as an anchored measure, anchored to the poverty line in 2010-11 adjusted for inflation, but taking no account of changes in living standards in the intervening period. In doing so, she ignores what has happened using the more commonly used relative measure, which is part of the suite of official measures.

--- Later in debate ---

[Baroness Altmann (Con)]

My Lords, I rise to move Amendment 3 and give notice that I intend to divide the House on this amendment. I am enormously grateful for the support of colleagues across the House, including the noble Baronesses, Lady Wheatcroft and Lady Janke, and the noble Lord, Lord Hain. I am, of course, grateful to my noble friend and the officials who have engaged with us over the past weeks on this Bill. However, I still believe that these amendments are necessary. Amendment 3 would retain the earnings link uprating for the state pension triple lock rather than removing it as the Bill proposes.

I appeal to noble Lords on these Benches, as well as across the House, to recognise that these amendments are seeking to protect a solemn manifesto commitment made at the 2019 general election. Amendment 3 would preserve the important social security principle and the triple-lock promise of protection for the basic and new state pensions against rises in average earnings. Amendment 4 is consequential on Amendment 3. It was accepted by the Whips yesterday but, if the Minister does not agree, I ask her to confirm that and explain why she might not accept it when she responds. It would permit the Secretary of State to adjust the traditional average weekly earnings statistics produced by the Office for National Statistics, which have been used for uprating in past years, for the effect of the pandemic, which has upwardly biased the figures.

This Bill was perhaps not necessary. In the Social Security Administration Act 1992, which we are being asked to revise through the Bill, Section 150A (8) explicitly allows the earnings statistics to be adjusted. The legislation states that when reviewing how to uprate the state pension each year:

“the Secretary of State shall estimate the general level of earnings in such manner as he thinks fit.”

So this is not a question of having to use the 8.3% earnings statistic.

When Members of the other place voted on this Bill to abandon the manifesto pledge to 12 million citizens, they did so on three bases which I believe are flawed. First, they were led to believe that no alternative was available to using the 8.3% figure but, as I have just demonstrated, the Act would permit that in any case. However, to be helpful, we have laid Amendment 4, which explicitly states that, for the year 2022-23, should the Government believe that the earnings figures are distorted, they may adjust for the effect of the pandemic.

The second basis was that the other place was told that the 3.1% figure would still protect against rises in the cost of living. Indeed, when summing up, the Minister said that the so-called double lock of CPI or 2.5%

“will ensure that pensioners’ spending power is preserved and that they are protected from the higher cost of living”.—[Official Report, Commons, 2/9/21; col. 86.]

This also does not stand up to scrutiny. Since that debate, the inflation outlook has significantly deteriorated, but on further examination it is clear that September’s 3.1% CPI figure was downwardly biased by the effects of the pandemic. For example, there was a sharp fall in hotel and restaurant costs, as well as in household services, which hardly form a major part of most pensioners’ budgets. In his Budget speech, the Chancellor said that inflation in September was 3.1% but is likely to rise further. The OBR said:

“We expect CPI inflation to reach 4.4 per cent next year”


warned that it could peak at close to 5% and added that

“it could hit the highest rate seen in the UK for three decades.”

That is around 7.5%. Last month, gas and electricity bills rose by 12%. Food prices are rising, and the OBR warns of a further rise in the energy price cap next April. Yes, this is for one year only, but what a year to choose to do this, while older people are facing a cost-of-living crisis and the protection that they were relying on is being removed.

The third basis was that not doing this would cost £5 billion per year and that earnings fell last year, but pensioners received a 2.5% rise, so they will have money taken from them next year as some kind of payback. Using an adjusted figure would still save several billion pounds relative to the £5 billion cost. But after seeing alcohol and fuel duty cut in the Budget and the bank surcharge allowance raised, and adding up the amount of Exchequer savings that those measures entail, half the cost of not honouring the triple lock will cover the costs of just those three measures. I appeal to noble Lords across the House: is this really the country that we believe that we should be living in? Is that the priority for public spending?

This is also a perfect example of our role. If we are scrutinising legislation that has come over to our House and which we believe that it is flawed, that it was perhaps passed through on a false premise, or if circumstances require us to send it back for reconsideration, is that not precisely what we should be doing? Twelve million citizens depended on that commitment. We have a chance to ask the other place to reconsider, perhaps in the light of updated information. I hope that noble Lords across the House can support this.

[Baroness Lister of Burtersett (Lab)]

My Lords, as no one else is getting up, I will. I support Amendments 3 and 4 and congratulate the noble Baroness, Lady Altmann, on her tenacity in pressing this issue.

I have made it clear at each stage of the Bill that, while questioning the rationale for the triple lock, I strongly support the double lock that links pensions to earnings or prices as crucial to maintaining or hopefully even improving pensioners’ living standards. If under the triple lock it is possible to raise pensions by the arbitrary figure of 2.5% in some years, I do not understand why what is proposed in the amendments is deemed to be not sufficiently robust by the Government. I have yet to hear a convincing response to the very strong case made by the noble Baroness, Lady Altmann, nor have I received any letter from the Minister today. I have just checked my phone, and nothing has come through.

If, despite assurances to the contrary, and when an alternative that did not use the 8% figure was clearly available, there was a jettisoning of any earnings link, it is not surprising that this has given rise to fears that the link could be scrapped at some future point, just as it was in 1980. As has already been pointed out, the case for maintaining some form of earnings link, in line with the amendment, is all the stronger given the anticipated increase in inflation. Many people on low incomes—pensioners and others—face a bleak winter, especially if inflation rises as high as 5%, as predicted by the Bank of England’s chief economist recently—and that is before taking account of the differential impact of inflation on those on low incomes, for whom fuel and food represent a disproportionate proportion of their budget, as noted already. They will struggle during the winter months without any additional help with fuel, as called for by National Energy Action, and when they finally get their uprating next April, it will not be enough to compensate. While it is very welcome that the Government have finally agreed to produce an impact assessment of the Bill, it is a shame that we have not got it to inform our debate today.

Echoing what I said in the first group of amendments, I hope that, despite what she said earlier, when responding to these amendments, the Minister will not once again trot out the statistics based on the so-called absolute measure of poverty, when she knows full well that pensioner poverty, on the relative measure, is on the rise over a longish time period. Rather than avoid the issue of pensioner poverty, as it is experienced relative to the rest of society, the Government should be working to prevent a further increase. This amendment provides them with a means of doing so.