Social Security (Additional Payments) Bill

Baroness Sherlock Excerpts

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

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for her introduction to the Bill and all noble Lords who have spoken. I thank my noble friend Lady Lister for halving the length of my speech by her excellent analysis. I would be really interested to hear the Minister’s response because, as a critique of what has happened to families with children, there are many questions that the Government have to answer, and I really hope that she will take the time to do it properly. There can be few Members of this House who know more about child poverty than my noble friend Lady Lister. When she makes a critique like that, it needs to be listened to.

These are the toughest times that most British people alive now will have had to live through. By next April, wages will be worth £2,000 less in real terms than just in 2020. Real pay in the UK is falling at the fastest rate for 20 years. Inflation is over 9% and rising. Fuel prices are skyrocketing and we are warned that the energy cap could rise by as much as another £1,000 in October. People are more desperate than they have been in a very long time.

Following the Spring Statement, the OBR warned that we were heading for the biggest fall in living standards since the 1950s, with more children set to be pushed even into absolute poverty. It was to avoid this catastrophe that Labour proposed a windfall tax on North Sea gas and oil producers to help families and pensioners. I am delighted that, after some months—indeed, after many months of ridiculing the policy—the Government have adopted it. If the Minister wants other ideas on how the Government should change their mind, I look forward to her having a chat with me and I can gladly supply her with some in future.

We recognise the extra support that the Government are now allocating, and these measures are welcome as far as they go. However, I share my noble friend’s concern that help is once again being given by a series of one-off payments, rather than addressing the underlying problem, which is the inadequacy of the social security system. I know that Ministers know that the welfare state is not fit for purpose because, when the pandemic hit and millions of people were flowing on to benefits, they had to add £20 a week to universal credit because they knew people could not manage. Once millions of people could see that, they would realise the system was not fit for purpose. However, that £20 was taken away just as inflation started to rise and now millions of people are struggling to feed and clothe their children and pay their bills. Why has it taken us so long to get to today? The pandemic may have been a shock overnight but the rise in prices was not—we have seen this coming. As the chair of the Work and Pensions Committee said when this Bill was debated in another place,

“the decision has been taken to replace adequate uprating with ad hoc payments from the Treasury”.—[Official Report, Commons, 22/6/22; col. 897.]

The Government should have put in place a broader package of support through our social security system. It has been established that one-off packages, with heavily simplified eligibility, lead both to increased fraud and to the kind of rough justice we have heard about. We have heard about rough justice for children. Can the Minister really justify a scheme that gives the same amount to a single person on benefits as to a couple with three children when their energy, food, clothing and other costs are so radically different? Families in the bottom half of the income distribution with two or more children spend twice as much on food, essential household goods and services, clothing, footwear and transport, but there is no recognition of this. The social security system acknowledges things such as family size up to a point, but this does not and cannot. Does the Minister accept that this is rough justice?

Does the Minister also accept that it is rough justice for people with fluctuating incomes, a point made by the noble Earl, Lord Clancarty, in a helpfully clear critique of the impact on people who are self-employed? As we have heard, this £650 payment comes in two parts. To be eligible for each, the claimants must be entitled to a minimum amount of benefit or tax credit in respect of an assessment period covering a specified date. However, the Minister often tells us how happy she is about universal credit coming in, because it is really flexible—it flexes to someone’s circumstance—yet she has designed a system that makes that a disadvantage. Universal credit is designed to flex month by month, so some people will be entitled to a payment one month but nothing the next because their income is lumpy in that way. If they are unlucky with how that falls, and they get nothing in the month in question, they will not get one penny from this system. That can even hit people whose earnings do not change at all, just because they happen to have two paydays within one universal credit assessment period—for example, the last Monday of the month. When that happens, the system thinks their pay has doubled, they earn too much, get no universal credit and, therefore, they will not be eligible for this. Given that the Government boast about the flexibility of universal credit, what are they going to do about these payments, to give support to those for whom that flexibility is taking away any chance of any support at all? I would be interested in hearing whether someone who is self-employed, who is simply getting nothing just because of the minimum income floor, will therefore be excluded entirely from the payments.

There is a different form of rough justice for some disabled people who have non-means-tested benefits. They will be eligible for the £150 payment. However, the Minister can tell the House, I am sure, that the Government are in the process of changing the rules specifically to debar 290,000 people who get DLA, PIP or attendance allowance from getting £140 off their energy bills through the warm home discount scheme—“Have £150 here, give me back £140 over there and have £10.” In these circumstances, the reason disabled people get these benefits, even though they are non-means tested, is to cover the extra costs of disability. That includes things such as higher energy bills and higher transport costs. Can the Minister explain why the Government are giving help with one hand while taking it away with the other? I would also be interested to hear a response to the query about carer’s allowance from my noble friend Lady Lister.

The Minister points to the household support fund—this is always the answer, the great catch-all, whenever we raise a question. I think loaves and fishes were mentioned. I have a great affection for loaves and fishes and like to see them extended. However, much as I admire some things the Minister says, I do not think she yet has the power to multiply loaves and fishes. The household support fund will be a fixed amount of money. I have been looking at the websites for some councils, and many have already made their allocations for the period April to September. They specify what is for; they are often small grants for particular purposes. For April to September, is more money coming in, will the guidance change and, if not, will anyone get any help then, even they miss out on these payments altogether in the first tranche in July? For the extra money in the period from October, will the government guidance say that the kind of people we have described who miss out on the payment because of rough justice should be able to get the full £650 from the household support fund? If so, will there be enough, and what will happen to all the other things it is supposed to be spent on as well?

On pensions, I am sure the Government now regret breaking their manifesto promise commitment to the triple lock, given what is happening to pensioner poverty. It is good that those on pension credit will be able to claim the £650, but—it is a small point—why does the impact assessment show fewer people on pension credit getting the second payment than the first? Is there something going on there that the Minister wants to explain? The impact assessment projects the case load, the number of people on pension credit who will get payments 1 and 2. The number getting payment 2 is slightly lower than payment 1. This was asked in the Commons but not answered, so I hope her officials—someone behind the scenes who I would not dream of referring to—have had the opportunity to read Hansard and will therefore be able to advise on the answer to this question.

Emergency and one-off measures have their place, but they really do not give people the security they need or match the increases in costs that people are facing on the ground. The truth is that we came into these cost of living increases after years of underwhelming growth and savage social security cuts, which left our system simply unfit for purpose. I will mention just the two-child limit, the benefit cap, the bedroom tax, inadequate help with housing and council tax, and repeated real-terms cuts to universal credit and legacy benefits, as detailed by my noble friend Lady Lister.

I am glad that the Government have finally been dragged, kicking and screaming, into recognising the extent of need out there. But we now need a long-term plan to rebuild social security, grow our economy, sort out our labour market and raise living standards so that we can lift people, from children to pensioners, out of poverty. Surely we can all agree with that.

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

On the impact of the cost of living crisis on poverty, the latest available poverty statistics cover 2021 and projecting what has happened to poverty since then is complex and inherently speculative. It requires projecting how incomes will change for every individual in society; these are affected by a huge range of unknown factors. However, the Treasury published distributional analysis showing that the full package of measures announced on 26 May is well targeted at households on low incomes.

The noble Baroness, Lady Sherlock, asked why we waited so long to bring the measure forward. As the Chancellor set out, by waiting to know what the autumn and winter energy price cap is, we were better able to design and scale our policies across the package.

I am conscious that I have not answered every question—oh, here we go.

[Baroness Sherlock (Lab)]

Essentially, noble Lords all around the House have said, “This system is so simple but it’s creating rough justice. What will the Minister do?” The Minister’s answer is, “Give us rough justice, but that’s because the system is so simple”. All that everybody has asked today is, does the Minister understand that lots of people will miss out and others will get much less than they need? Are the Government going to even begin to think about addressing that in some way to mitigate it—yes or no?

[Baroness Stedman-Scott (Con)]

I cannot accurately answer that question because I honestly do not know, but I do know that, all the way through Covid and this cost of living crisis, the Government have responded at different times to issues raised in relation to additional support. All I can say is that I do not see that changing. I am sorry but I am afraid that I cannot give the noble Baroness the answer she wants, although I am quite sure that the Government will want to—I see that the noble Baroness is standing up; would she like to speak again?

[Baroness Sherlock (Lab)]

No.

[Baroness Stedman-Scott (Con)]

We will have to invent a board game for the Chamber. I know that I have not answered some questions, and I am sorry, but time is marching on. I will endeavour to write to all noble Lords whose questions I have not answered and to those to whom I have promised to write.

This Bill will enable the Government to provide support to families most in need across the country. I thank all noble Lords again for their contributions. As ever, I would be happy to speak to any noble Lord who wants to discuss particular issues further and, as ever, my door does not know how to close; it is open.