Social Security (Additional Payments) Bill

Baroness Lister of Burtersett Excerpts

3rd reading & 2nd reading & Committee negatived
Monday 27th June 2022 Lords Chamber

[Baroness Lister of Burtersett (Lab)]

My Lords, I welcome the much-needed additional support that this Bill offers and the recognition that the social security system represents the obvious mechanism for providing it, despite concerns that are raised about the nature of the support. I am grateful to the Minister and the Minister for Welfare Delivery for the very helpful briefing that they provided last week.

At last, the Government are responding to the fact that the cost of living crisis is hitting those on benefits and pensions hardest, not least because the differential impact of inflation means that they face an even higher inflation rate than the rest of us—an estimated 10% or so for the bottom tenth of the population, according to the Institute for Fiscal Studies and the Resolution Foundation. The latest package, of which this Bill is a part, is progressive in its impact. Nevertheless, there is a “but”; I am sure that the Minister would be surprised if this were not the case.

My concerns stem in large part from the decision to provide one-off payments rather than increase benefit rates themselves so that they reflect the actual inflation rate instead of the 3.1% recorded last September. I understand and accept that there are technical difficulties when it comes to uprating benefits other than universal credit—although many stakeholders do not—but, if the Government had not delayed in bringing forward this package, would an autumn uprating really not have been possible? Even now, is it really the case that a decision to increase benefits in May could not be implemented in the autumn instead of a second lump sum payment?

Can the Minister explain how it was technically possible to uprate benefits twice in 1975, in April and November, in response to high inflation—a point made in the Commons but studiously ignored by the Minister there? Can she also tell us, in a subsequent letter if not now, exactly how long it would take if all the stops were pulled out to uprate universal credit, the legacy benefits that it replaces, the other benefits covered by the Bill and the other benefits not covered, in particular the carer’s allowance and contributory benefits? How long are we going to allow “computer says no” to drive policy?

A key group to lose as a consequence of the decision to make lump sum payments rather than uprate benefits is families with children—especially larger families because payments will not be differentiated according to family size. Thus, according to the Resolution Foundation, the average amount gained from the Bill by families with three or more children is less than that received by those with no children because the latter are more likely to receive a disability benefit. Yet spending on essentials is significantly affected by family size. The foundation suggests that fuel spending among families with three or more children is likely to go up by over £500 more than for those without children. It calculates that, had benefits been uprated by 9.5% in October, larger families would have received more than £100 more on average than they will from the May support package.

In the Commons, the Minister emphasised that the payments are targeted at “those in greatest need”, as did our Minister. This is true and commendable, up to a point, but it ignores children—especially those in larger families, who are already at a significantly disproportionate risk of poverty, including deep poverty. This greater risk has grown over the past decade thanks mainly to government social security policies, including the two-child limit and the benefit cap. It is welcome that the payments covered by the Bill will be disregarded for the purposes of the cap. Nevertheless, as the chair of the Work and Pensions Committee pointed out in the Commons, it is high time that the level of the cap, which has not changed since it was established six years ago, is subject to the review required by statute. The Minister’s response to him was that it would be reviewed “at the appropriate time”. Can the Minister tell us when the appropriate time will be, as many would argue that it is already high time?

A growing body of evidence shows how much families with children generally are suffering. Just last week, the Childhood Trust reported that the mental health of children living in poverty is already suffering as a result of the cost of living crisis. Hungry, Anxious and Scared is how it summed it up. It quoted Charlotte, aged nine:

“Your emotions just drown and the only emotion that’s left is sad”.


That made me feel pretty sad and actually very angry. When the Chancellor was questioned by the Treasury Select Committee about the lack of additional support for children, he rather sidestepped the question but acknowledged that no analysis has been done of the package’s impact on child poverty. However, we were told by the Minister for Welfare Delivery last week that the lack of differentiation for families with children was due to technical reasons.

There is a pattern here that suggests an underlying disregard for the needs of children. The welcome universal credit uplift during the worst of the pandemic did not include any uplift in the allowances for children. It was only thanks to Marcus Rashford that action was taken on school meals at the height of the pandemic, and now the Government refuse to extend free school meals to all children on universal credit despite the recommendation in the independent national food strategy and the calls from teachers and others—although I do applaud its extension to all qualifying families with no recourse to public funds. According to analysis of government data by the Child Poverty Action Group, of which I am the honorary president, over one in three—more than 800,000—children in poverty do not qualify for free school meals.

If the Government really cared about hungry children, they would have found a way to boost their financial support and at the very least would have extended free school meals and also put more money into free school breakfasts as called for by Magic Breakfast. The Treasury has, understandably, highlighted the progressive vertical distributional impact of its latest package of support, but nowhere has it shown the horizontal distributional impact as between those with and without children, which also matters. Can the Minister explain why the Government time and again ignore children when it comes to financial matters?

The Secretary of State has herself previously warned that one-off payments are less helpful from a budgeting perspective than a steady stream of money—a point made also by charities such as Sense and CPAG. One consequence is less security. Another consequence of making lump-sum payments linked to entitlement on a specific date is the much steeper cliff-edge that it creates, adding to the insecurity created by often fluctuating incomes and circumstances among those on low incomes. What estimate has been made of the numbers who might become eligible for one of the qualifying benefits in the period until next April when they are next uprated but who do not qualify for the payments in the Bill because they were not entitled to a qualifying benefit at the specified times? Anyone who, say, starts claiming benefit because they have lost their job or become ill after the second cut-off date will get nothing at all. This seems like very rough justice.

Even rougher justice is the issue raised by my noble friend Lady Sherlock in last week’s briefing, and by MPs, where someone has not qualified for UC in the specified month because of the way their wages are paid. Has thought been given to the suggestion made by Nigel Mills MP that the qualifying period be extended to two months? Another group who are victims of rough justice is low-income self-employed people who do not receive UC during the qualifying period solely due to the operation of the minimum income floor. Equity has challenged the response to this point in the Commons, and I ask the Government to reconsider the exclusion of this group.

Just to follow up on the briefing meeting, the Minister for Welfare Delivery promised to let us know how payment will be made to the small number of people without a bank account. Is the Minister able to tell us today? For the record, can she confirm that all recipients will be informed individually as soon as possible after payment has been made so that they know why this extra payment has appeared in their account?

I have emphasised the failure to help children; I am also very concerned about the exclusion of carer’s allowance. I realise it is not a means-tested benefit and that some recipients will qualify via a means-tested benefit they are claiming but, according to Carers UK, there are several hundred thousand carers in receipt of carer’s allowance who do not receive means-tested benefits and many of them are facing serious financial stress. Carer’s allowance is lower than other equivalent benefits. Many carers face additional costs associated with caring. Why, therefore, could not the disability payments have been devised in such a way as to include carers? Nine out of 10 carers surveyed by Carers Trust earlier this year said that they feel ignored by the Government. The exclusion of carer’s allowance from the Bill’s qualifying benefits will only reinforce this sense of being ignored and, of course, many of those affected will be women who also bear the main burden of budgeting in low-income families. It is also not clear why the qualifying disability benefits do not include contributory employment and support allowance—an example of the downgrading in importance of contributory benefits. Can the Minister please explain why it is not included?

When announcing the package, the Chancellor acknowledged that small numbers will fall between the cracks and gave the example of those in receipt of housing benefit not also claiming other benefits but—“fear not”—they can claim help from the additional £0.5 billion that is being put into the local authority household support fund from October. The problem is that those raising concerns about, for instance, children in poverty—not exactly a small group—excluded carers or low-income self-employed people are also being directed to the fund. I fear it is the loaves and fishes approach to policy-making, which we have seen all too often. While the fund has provided much needed help to some, it is discretionary and cash-limited and, as such, is no substitute for weekly payments as of right. What will be done to direct excluded groups in need to the fund, what monitoring of the fund’s use is taking place and what happens if a local authority runs out of money, as we know they do? Can the Minister also tell us whether any thought has been given to the calls from stakeholders, including the Lloyds Bank Foundation, for the suspension of deductions from benefits, at least until next April when benefits are uprated?

This brings me to my final point—which I am sure will be a great relief to noble Lords. I welcome the confirmation that, subject to the Secretary of State’s review, benefits and pensions will be uprated next April in line with this September’s inflation rate, although claimants will face a long, hard winter before that. I hope the Government will ignore the siren voices arguing against such inflation-proofing. The Chancellor concluded his Statement by noting the need to put the measures into context. We need to do the same, but it is a rather different context to that highlighted by the Chancellor. Overall, working-age and children’s benefits have been reduced by approaching £40 billion a year as a result of freezes and cuts since 2010. The latest OBR Welfare Trends Report notes that the

“decline in the real value of unemployment-related benefits … even excluding the effects of the removal of the … £20-a-week uplift … represents the largest fall since annual uprating began half a century ago”.

As the Covid Realities research demonstrates, the reality of life on a low income is one of perpetual crisis. This Bill represents no more than a temporary salve to mitigate the crisis, welcome as it is. We now need a commitment to a review of how benefits are uprated, as called for by the chair of the Work and Pensions Committee and others. Ad hoc one off-payments and discretionary local authority support do not provide the security that those on low incomes desperately need and that the social security system ought to provide.

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

I thank all noble Lords for their contributions to the debate today. I hope we agree that this package of support will make a significant difference to families up and down the country, notwithstanding the points that have been made.

As I said earlier, the Government are committed to going further to provide support to relieve the financial pressures families are facing. The measures announced by my right honourable friend the Chancellor will provide an estimated millions of low-income households with £1,200 of one-off support in total this year to help with the cost of living, with all domestic electricity customers receiving £400 through the energy bills support scheme. This Bill will give us the necessary powers to deliver the additional payments set out in this package to families on the means-tested and qualifying disability benefits which we have been debating today.

There were a huge number of questions, which I shall endeavour to answer. There are some where I will have to write and the answers will be much better if I do so, so I hope noble Lords will accept that.

The noble Baronesses, Lady Lister and Lady Sherlock, asked why we are not uprating benefits. The one-off cost of living payment will enable timely direct transfers, ahead of the next uprating review of benefits and pensions, which will commence in the autumn, with any change in rates being payable from April 2023. This will help to support households most in need in managing increased costs. Our cost of living policy will also provide a payment of £650, as we have already said, whereas uprating the same benefits by 9% from April 2022 would be worth, on average, only £530. These payments will be tax-free, will not count towards the benefit cap and will not have any impact on existing benefit awards. This approach will allow households to retain the full value of the payments they receive. There is no need for people to fill out complicated forms, as we have tried to reduce bureaucracy.

Separately from the 2022-23 cost of living support package, benefit and pension rates are subject to an annual review. As mentioned by the Chancellor on 26 May, the uprating of benefits is a matter for the Secretary of State for Work and Pensions. Her annual statutory review of benefits for the tax year 2023-24 will commence in the autumn, when she measures inflation using the September consumer prices index. Following completion of her review, the Secretary of State’s decisions will be announced to Parliament in November. For the avoidance of any doubt, we are committed to the triple lock for the remainder of this Parliament.

The noble Baroness, Lady Lister, asked whether the uprating process will be adjusted in the future. The work of the department in 1975 was mainly undertaken by hand and on a claim-by-claim basis. It was therefore possible to uprate twice in one year, provided the trained manpower resources were available or could be secured. The department began to computerise the payments of benefits in the mid-1980s; we have indicated the constraints of the core IT systems in undertaking a mid-year uprating and the risk that would pose to payments. The Social Security Administration Act 1992 provides for a statutory annual review of uprating and is the basis on which Parliament has required successive Secretaries of State to act. The requirement is for one review each tax year.

The noble Baroness, Lady Lister, asked how long it will take to uprate all benefits, including UC and legacy benefits. I will need to write to her on that, which I will do and place a copy in the Library. She also asked about the flat rate of payments not tailored to circumstances. She said that this disadvantages children in large families and that the issue should have been solved by uprating benefits. The Government are committed to providing direct and timely relief to those who need it most through these one-off cost of living payments. Flat-rate payments are the quickest way to deliver support to those who need it most; they will allow us to make timely transfers to more than 8 million people and 6 million disabled people before the next benefit uprating in April 2023. As I have said, we have deliberately kept the rules as simple as possible. The Government are spending over £5 billion on qualifying means-tested benefits—around £2 billion more than the additional cost if the qualifying benefits increased in July 2022 to 9% higher than the previous year.

The noble Baroness, Lady Lister, who has been very busy, asked about the focus being on reforming UC and said that the two-child limit means that people do not receive enough money. Statistics from the Office for National Statistics show that in 2021, of all families with dependent children, 85% had a maximum of two in their family; for lone parents, this was 86%. The Government feel it is proportionate and fair to taxpayers to provide support through child tax credit and universal credit for a maximum of two children.

[Baroness Lister of Burtersett (Lab)]

I am sorry to interrupt the Minister. Clearly, we cannot amend this legislation but I think it is accepted across the House that there is nothing in here for children. Can she take that message back to her colleagues in government and could they look at other ways they might be able to help children during this period?

[Baroness Stedman-Scott (Con)]

I am always happy to take things back to the department and am quite prepared to do that. I may need a little more information from the noble Baroness, but I am sure that will be forthcoming.

The next review of the benefit cap has been raised. As all noble Lords will know and as we have said many times, our statutory duty is to review the levels of the cap at least once in every five years and this will happen at the appropriate time. The current unusual economic period, with potentially counterintuitive and shifting trends, will need to be considered in the context of any decision in respect of the review.

The noble Baronesses, Lady Lister and Lady Sherlock, raised their concern about those who receive two lots of earnings in one universal credit period not being eligible. We anticipate that the vast majority of people entitled to one of the qualifying benefits will receive their first payment. Because of a change of circumstance, however, some may not qualify. Again, we have deliberately kept the rules simple and, unfortunately, it is not possible to distinguish those who have a permanent increase to their earnings from those whose earnings temporarily fluctuate. If a UC claimant’s income subsequently falls, these claimants will return to having a positive award after the cut-off date and may be eligible for the second cost of living payment, worth £324.

The noble Baronesses also raised a point about people who become eligible later. Where a person is found to be eligible for a qualifying social security benefit or tax credit payment but did not receive a payment, a retrospective payment will be made automatically. This could occur if a claimant successfully challenges the DWP’s decision on their social security benefit entitlement.

The noble Baroness, Lady Lister, and the noble Lord, Lord Fox, asked why we are excluding those in receipt of the carer’s allowance from the cost of living payment. Nearly 60% of working-age people on carer’s allowance will get a one-off payment as they are on means-tested or disability benefits. Carer’s allowance recipients will benefit from the £400 per household with a domestic energy supplier, provided through the energy bills support scheme.

The noble Baroness, Lady Lister, asked why we are excluding those on contributory based benefits from receiving the one-off payment. Non-means-tested benefits are not eligible benefits in their own right, but low-income recipients can claim an eligible means-tested benefit alongside them. Contributory and new-style benefits were not included because people claiming these benefits may have other financial resources available to them. They may also benefit from other parts of the package of support, including the £400 per household domestic energy help. Claimants who require further financial assistance may be eligible for universal credit; if their claim is successful, they may then qualify for the second cost of living payment in the autumn.

The noble Baroness, Lady Lister, raised the important issue of children—and I agree with the noble Baroness, Lady Sherlock, about the knowledge and experience the noble Baroness has in this area. I am advised that this is an issue where we will need to write to the noble Baroness. We will probably need to have some continued communication to ensure that I answer her questions to the level and standard that she wishes.

The noble Baroness, Lady Lister, and the noble Earl, Lord Clancarty, asked about fluctuations in earnings. As I have said, we have deliberately kept the rules as simple as possible. I have said before that it is not possible to distinguish between those who have had a permanent and temporary increase. I do not think I can say more on that at this point.

On the minimum income floor, which was raised by the noble Baroness, Lady Lister, and the noble Earl, Lord Clancarty, it is the same thing: we have deliberately kept the rules as simple as possible. For those who are not eligible for this support, or families that still need additional support, the Government are providing the household support fund with an additional £500 million to help households on top of what has been provided. Since October 2021, the household support fund has gone up to £1.5 billion. In England, this will take the form of an extension to the household support fund backed by £421 million and administered by local authorities.