Social Security Benefits Up-rating Order 2024

Baroness Sherlock Excerpts

Tuesday 27th February 2024 Grand Committee

[Baroness Janke (LD)]

My Lords, we too welcome the uprating of benefits and will support today’s SI but, as the noble Baroness, Lady Lister, has said, there are ever-rising numbers in poverty, as drawn to our attention by the Joseph Rowntree Foundation’s 2024 report on poverty, published a short while ago. According to its previous report, around 20% of the population were in poverty in 2020-21—around 13.4 million—of whom 7.9 million were working adults, 3.9 million were children and 1.7 million were pensioners. Poverty among people on universal credit remained high at the same time at 46%, it said,

“despite the temporary £20-a-week uplift and a resetting of Local Housing Allowance”

to better reflect the level of rents in an area. Poverty rates remained highest in the social and private rented sectors

“and much higher for households including a disabled person or an informal carer”.

The cost of living crisis is having a major effect on poorer families. The Joseph Rowntree Foundation’s cost of living tracker found the following shocking results in October 2022, across the poorest fifth of families: six in 10 families were unable to afford an unexpected expense; over half were in arrears; around a quarter were using credit to pay bills; and more than seven in 10 were going without essentials. The report found that there are elements in the benefit system that increase poverty, such as the two-child limit on income-related benefits, the benefit cap, the five-week wait for the first payment of universal credit and unrealistic debt repayment deductions. Will the Minister say what plans there are to reassess the impact of these measures? I have not been doing my job in this area for some time, yet I recall that, when I was, these measures were constantly raised as causes of poverty that need to be addressed.

The report finds that the level of benefits is inadequate for people to afford the basic essentials, which is a damning finding. It also urges a resetting of benefits that would ensure that income cannot fall below these levels through debt repayment deductions or repayment of advances. This is essential for people on benefits as a proper safety net, not just during the cost of living crisis but for anyone who is on benefits. When will a full assessment take place of the efficacy of universal credit as an adequate safety net for those who need it? What is the Minister’s response to these findings?

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for introducing this order and all noble Lords who have spoken. As he has explained, the Social Security Benefits Up-rating Order will increase most working-age benefits in line with CPI. We too welcome this instrument, because of course we want to see social security keep pace with prices, particularly at a time of spiking inflation and economic instability. That used to be the norm among both Labour and Conservative Governments, of course, but the past decade has seen a marked change.

There were of course the years of shame between 2013 and 2020, when most working-age benefits and tax credits were either frozen or uprated by small amounts, such as just 1%. Although today we are back to uprating mostly by CPI and occasionally by earnings, as my noble friend Lady Lister said, once again that uprating has been preceded by a period of speculation, which is deeply unhelpful. I can assume only that this is driven from somewhere inside the Government, because it happens too regularly. The speculation suggests that maybe this year the uprating will not be by the full amount or maybe will not happen at all.

As my noble friend mentioned, that speculation causes real stress and worry for people who depend on benefits and tax credits to survive. I begin to wonder: is it a strategy to allow Ministers the option of either freezing benefits or not uprating them fully so that, if they then finally do the right thing, people are supposed to be suitably grateful? As my noble friend Lady Lister pointed out, it is good that benefits are being uprated, but it is not an act of unusual generosity; it is simply a decision not to cut the value of benefits during a cost of living crisis.

This instrument, as we have heard, also increases the state pension by earnings in line with the triple lock. I accept the distinction that my noble friend Lord Davies helpfully made. The rates of basic and new state pensions will rise by 8.5%, as will the standard minimum guarantee in pension credit and the higher rate of widows’ and widowers’ pensions in industrial death benefit. However, this does not apply to a number of the others. I will be interested in the Minister’s response to that. In particular, can he explain the position on the deferred state pension? If someone chooses to defer their state pension and the pattern is that the deferred amount is uprated by CPI rather than the triple lock, are they made aware of that? When people make a decision about deferral, do they understand the consequences?

I had some other questions on pensions and pensioners but I was entirely thrown by the decision to separate these two instruments this year. Most years, we do them together in a single block, so I wrote a wonderful speech waxing lyrical and weaving in pensioners and old age, but now here I am. I shall come back, if the Minister will indulge me, to a couple of more general questions on pensioners when we come to debate the next instrument.

The context for this year’s uprating, as my noble friend Lady Lister expounded in some detail—aided ably by the noble Baroness, Lady Janke—is absolutely brutal. I will not repeat the extensive critique that my noble friend made or her unpacking of the economic climate in which so many families are living, but it is brutal. The basic fact is that there are now more than 4 million children living in poverty. There are 400,000 more children living in poverty now than when Labour left office in 2010.

One of the things that bothers me about this is that, whenever somebody raises this, the Minister—I know it is in his brief—will at some point in the response use the line that the Government believe that work is the best route out of poverty. Yet, clearly, the facts speak for themselves: more than two-thirds of children who live in poverty have parents in work. Something in that picture does not work. It is something that all of us in politics must address.

We in Labour have been looking at what we would do. We have a plan to give people a better life, so that they are able to make ends meet and have a good start for their children. We are looking at making sure that there is a breakfast club in every primary school and at giving people access to cheaper energy and an insulated home. We will reform universal credit, jobcentres and employment support so that people can get a better job with better pay. We will also have a child poverty strategy. Can the Minister tell the Committee in his response what the Government’s strategy is? What is their plan to do that? Other than simply declaring that work is the best route out of poverty, what is the Government’s plan to deal with the challenge of child poverty today? I look forward to the Minister’s response.

[Viscount Younger of Leckie (Con)]

My Lords, I thank all those who have spoken in this short debate. Before I attend to the number of questions asked and subjects raised, I would like to say at the outset—I normally do this but, today, I give special feeling and meaning to it—that this Government really do fully recognise the challenges facing people across the country due to the higher cost of living.

Although inflation is trending in the right direction, with the Bank of England now forecasting a fall to a target rate of around 2% in three months’ time, I acknowledge that pressures on household budgets very much persist. I saw this for myself in a recent visit to the Earlsfield Foodbank. The Government are not complacent about such matters; I hope noble Lords will recognise that the Government have taken action on a number of fronts to address these concerns, which were raised by a number of Peers—four, to be precise—this afternoon. I may not be able to answer all the questions but I will do my very best.

Let me start at the outset—I do not think I have done this before—by saying that, although I acknowledge the remarks made by the noble Baroness, Lady Lister, I am generally disappointed that every single item was a negative. I am disappointed that nothing she said seemed to support what we have done in these regulations or what we are trying to do. We really are trying. There was a long litany of faults coming from the Government: that the uprating was not enough; on the loss of the cost of living payments; on the freeze in the LHA, which is all for the future as we do not like where we stand on that yet; on the household support fund; and on the benefits cap review, including why it was not being done.

The noble Baroness is right to ask questions but I say gently that there is no mention of the genuine headwinds that all Governments have been facing. This Government have not been alone in the experiences of the pandemic and coming out of it, as well as of the war in Ukraine. There was no indication of these whatever. It is a bit disappointing. I know that the noble Baroness will understand why I have said these things but I thought it would be worth mentioning them.