Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2019

Baroness Lister of Burtersett Excerpts

Monday 11th February 2019 Lords Chamber

[Lord Bates]

My Lords, I thank the noble Baronesses, Lady Janke and Lady Sherlock, for their questions on these important orders. I do not dissent at all from the assessment by the noble Baroness, Lady Janke, that we are talking here about some of the most vulnerable people in society, and therefore that our approach should be extremely focused.

Nor, though, would I want the accusation to stand that we have been somewhat impassive to the needs of people in the circumstances in which they find themselves, because one of the greatest routes out of poverty, as we all know, is that of employment. This may not be very helpful, but the noble Baroness referred to my noble friend Lord Young taking these orders through last year. At the time he mentioned the increase in employment, which is now at record levels—I am sure that she, being fair-minded, would recognise that as being something that is helping the poorest in our society immensely; the reform of benefits to ensure that work always pays; and some of the important measures that have been taken, not least the national living wage, the increase in which by 4.9% to £8.21, significantly above CPI, will mean an increase in full- time wage workers’ annual earnings of over £690. Unemployment has fallen by over 1.1 million since 2010.

At the time when my noble friend took the orders through, we made a serious point and there was a rationale for the arguments being made for welfare reform. From 1997-98, welfare spending rose by £84 billion in real terms—

[Baroness Lister of Burtersett (Lab)]

I am sorry to interrupt, and I am sorry that I missed the beginning of the Minister’s statement. Before we move on to the more general question about spending, I do not think he has addressed my noble friend’s point. Given that paid work is supposed to be the best route out of poverty, why are the Government freezing the tax credits paid to people in paid work?

[Lord Bates]

That decision was taken through the 2016 Act that I mentioned in my introduction. It was taken then as part of the need to get our public finances into the right order. That was the rationale for it. I say to the noble Baroness, who is someone else who cares immensely and focuses on these areas, that that was the rationale that we used at the time.

On the specific questions, I turn to the point about CPI that was raised by the noble Baroness, Lady Sherlock. She said the previous Government had announced in the Summer Budget of 2010 that CPI would be used for the indexation of benefits and that they would review the use of CPI for the indexation of taxation and duties. Consistent with that, the default indexation assumption is CPI. RPI is no longer recognised as a national statistic.

The noble Baroness, Lady Janke, asked about the impact of the benefit freeze. The Government are committed to taking action to help the most disadvantaged, with the focus on tackling the root causes of poverty. Our welfare reforms are incentivising work and supporting working families. Since April 2016, the universal credit childcare element has covered up to 85% of eligible childcare costs. We will be investing over £6 billion a year in childcare by 2020. Since 2010, 300,000 fewer children are living in absolute poverty and 630,000 fewer children are living in workless households—a record low. We are committed to helping lone parents to find work that fits around their caring responsibilities. We have extended free childcare for three to four year-olds for working families to 30 hours a week, with over 340,000 children benefiting in the first year.

The noble Baroness, Lady Sherlock, asked some specific questions, which she very kindly said that she would give me the opportunity to answer in writing. If that is acceptable, I will write to her and copy in the noble Baronesses, Lady Janke and Lady Lister, who have also spoken in the debate.