Poverty and Disadvantage

Baroness Sherlock Excerpts

Thursday 14th December 2017 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, I thank the noble Lord, Lord Bird, and all noble Lords who are speaking today. Before I speak, I want to correct something I said in the House on Monday. In asking a Question about why kinship carers were being hit by the two-child policy, I said that the House had voted to exempt them from the rule. In fact, the House did not divide because the Minister responded to our amendment by conceding the argument and promising to bring forward regulations to exempt kinship carers. I am pleased to put the record straight and I apologise to the Minister and the House.

I cannot analyse the causes of poverty in three minutes, so I am not going to try. I am just going to do one thing and I hope the noble Lord, Lord Bird, will forgive me. I want to make the case for why the welfare state is the best bulwark against poverty—the best preventer of it that we have. It was created alongside our NHS and with a similar aim: that as a nation, as a community, we will pool our risks and ensure that if anyone falls on hard times, we will not leave them to suffer alone.

Social security plays a variety of roles. There is a safety net which is meant to stop anyone from being destitute—although it is being severely tested at the moment. Other bits of the system have different functions: some, like tax credits, are there to make work pay; some, like child benefit or child tax credit, are a transfer from the population as a whole to those with dependent children, because we all recognise that children are our future; some, like DLA or PIP, are there to recognise that some people have extra costs because they are disabled or chronically ill, or have disabled kids. Some recognise that bad things can happen to anyone—so, if you lose your job, get widowed, have an accident or get sick and cannot work, JSA or ESA kicks in. Having contributory versions of those benefits is really important as a collective insurance process for which the welfare state can pay. Some recognise that there are life stages when you need extra help: for the birth of a child or at retirement age, when the state pension kicks in. Of course, the state pension accounts for 41% of our total social security bill; JSA is just 1%.

We always need to make it better and it is never just about money but I believe that our welfare state, along with our NHS, is a testament to our values of social solidarity. But if we value it, we need to pay for it. The last OBR Welfare Trends Report stated that coalition policies would cut £33 billion a year from social security spending by the end of this Parliament, and this Government’s policies another £11 billion by 2020-21. The IFS, using Treasury and OBR data, projects that inequality will rise over the next four years and that child poverty will rise by seven percentage points.

Ministers often say that the system is unsustainable, but the best test of sustainability is the cost of social security as a percentage of GDP, which has barely changed for decades. However, the OBR predicts that if these cuts go ahead until 2020-21, the money being spent on children and working-age people will account for the lowest share of GDP since 1990-91. Politics is about choice. When Lupton et al analysed the coalition policies, they found that the social security cuts and tax breaks balanced each other out; they contributed nothing to deficit reduction. So it is about choices. Trouble could be around the corner for any one of us. Let us be proud of our commitment to walk with each other along the road of life. Let us be proud of the welfare state.