Covid-19: Department for Work and Pensions Update

Baroness Sherlock Excerpts

Tuesday 5th May 2020 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for repeating that Statement. I want to record our thanks to each member of staff working on the DWP front line for all they are doing during this crisis to process the unprecedented volume of claims that have been made.

I want to say at the outset how much we welcome each of the steps that the Government have taken to improve the welfare state to deal with this crisis, but the social security system that we had going into the crisis was a safety net with holes in it. I am glad that the Government have recognised the need to start shoring some of those up.

Labour has five proposals to enable the social security system better to respond to the crisis. The first is to increase legacy benefits. The Government have increased universal credit by £20 a week for this year, but those on legacy benefits such as JSA or ESA do not get that increase. More than 100 charities point out that this discriminates against disabled people. Can the Minister explain that?

The second proposal is to suspend the benefit cap. The House of Commons Library estimates that at least 18,000 extra families in Great Britain could be hit by the cap as a result of the increase in UC and housing help. That would take the total number of families affected this year to over 100,000. The cap affects not just big families; half of those 18,000 families have only one or two dependent children. More often, it is the high cost of housing. Ministers normally say, “You can escape the benefit cap by getting a job, working more hours or moving to cheaper housing”, but all those are impossible during this crisis. No wonder so many bodies, from the IFS to CPAG, are calling for the cap to be suspended. Will the Government do that now?

Thirdly, suspend the savings limit in universal credit. Anyone with savings of over £16,000 is banned from claiming UC altogether. That does not happen in tax credits, where the means test simply takes account of any income from savings. Why should someone who has put money aside for a housing deposit or is saving for a substantial item be completely frozen out of universal credit? They paid into the system when they were able to work, so should it not be there for them now? Will Ministers review those savings limits?

I have a brief question. Can the Minister tell me whether this would affect someone who is self-employed and who had a viable business that has collapsed since the Covid crisis? The Government have put back the date for paying tax. If you have that money sitting in your bank account, would it be treated as savings income and thus stop you getting universal credit?

Fourthly, remove the two-child limit. Ministers argued for this policy on the grounds that those who receive social security benefits should have to make the same family choices as those who do not. That was always a deeply flawed argument, but this crisis shows the absurdity of it. Some 2 million people have applied for benefits over the past few weeks. Do we really think that when, three years ago, some of them decided to have another child, they could possibly have imagined that a global pandemic would virtually shut down our economy? The policy is pushing ever more children deeper into poverty, so will Ministers please think about it again?

Fifthly, end the five-week wait for universal credit. I know that I go on about this a lot, but it is simply wrong that people have to wait five weeks for their money, or else they take a loan that will be deducted from future payments that will leave them with less to live on each month than the basic universal credit amount. That five-week wait has been the single biggest driver of housing arrears, short-term debt and food bank usage, so will Ministers act now either to end it or give grants instead of loans?

I want now to ask some specific questions. First, given that the noble Baroness, Lady Scott, is standing in for the Minister, I recognise that she may need to write to me in response to some of them. However, I would really appreciate some specific answers. First, she mentioned that the Government have now allowed maternity and adoption pay and maternity allowance to be calculated on salary rather than on furlough pay, which may be lower. Will they now backdate payments to women who have already had their payments calculated on their furlough pay rather than their full salary?

Secondly, universal credit disregards statutory maternity pay when it applies to the work allowance, but it does not do that for maternity allowance, which is the benefit paid to many low-income women. This means that a low-paid pregnant woman could be as much as £4,000 a year worse off. Will the Minister correct this?

The Minister went on to mention how people are struggling to get through to the DWP on the phone. She talked about the “Don’t call us, we’ll call you” approach? Can she explain that? If I want to call the DWP and I cannot get through, can I leave a message and will someone call me back? If so, on average how long will it take—or is it simply that the department will call me only if it wants information? People need help in the first place, and they ought to be able to get through.

This crisis has revealed two things. It has shown how unjust and unequal our labour market is, and it has also shown how our basic welfare state has been quite significantly eroded in recent years.

The Secretary of State told the Commons yesterday that universal credit was only there to help the poorest in society. I do not think that it is giving enough help to them. Our welfare state is meant to provide a safety net to support any of us who are hit by a crisis. Like the NHS, it is a means of pooling our risk because we do not know who will be affected by disability, unemployment or bereavement, or indeed by a virus. How many of the millions of people who have claimed universal credit of late ever thought that they would need help from the welfare state? We all know of people who have been paying in all their lives expressing shock at how low SSP is and how low benefits are, probably because they have heard Ministers claim for so long that the benefits system is far too generous—even though we know how really ungenerous it is for many people.

As the Government plan for the recovery and not just the immediate response, is the department looking at all of the recent learning and thinking about how best to use the system to address the inequality, poverty and insecurity which have been revealed by this crisis? I look forward to the Minister’s reply.

[Baroness Janke (LD)]

I thank the Minister for repeating the Statement and I would also like to thank the staff of the DWP for their commitment to answering and addressing the huge additional workload which is the result of the current crisis. What is clear is that, despite their hard work, there are now many people in desperate straits who are struggling to survive. Many people whose income has dropped to zero have been trying desperately to access money through universal credit to meet their daily needs. They cannot wait the required five weeks when they have no money and a family to feed. Equally, people with no income cannot be expected to pay back any emergency advance.

The two-child limit hits families with children hard and is a major factor in causing child poverty, which is now at 4 million and thus one of the highest rates of childhood poverty in Europe. The benefit cap seriously hits families with children, in particular the poorest. As the noble Baroness, Lady Sherlock, has just said, it affects people on low pay with insecure jobs. It is a major problem in the current situation for people who are on such very low incomes.

I would ask the Government to consider taking the following crisis measures to help those who are most in need. First, the initial universal credit payment should be sent after five days rather than five weeks, and the clawing back of UC advance payments should be suspended. The Government should suspend the two-child limit and the benefit cap for at least three months, subject to a further review. They should suspend all benefit sanctions and introduce an additional dedicated hardship fund via local authorities for people in urgent need who cannot access funds through universal credit. I look forward to the Minister’s response.