Bereavement Benefits

Baroness Sherlock Excerpts

Thursday 6th April 2017 Lords Chamber

[Lord Henley]

My Lords, I am aware of the letter that my noble friend refers to. My right honourable friend will answer it in due course. I can give an assurance that we have consulted on these matters—my noble friend will be aware of this because she was a part of it—legislated on them and consulted on them again. We made changes to the regulations before we introduced them and we have made a commitment in the impact assessment that there will be a further review. Nevertheless, I will convey my noble friend’s concerns to my right honourable friend, and I am sure that, his door always being open, he will be more than happy to see her.

[Baroness Sherlock (Lab)]

My Lords, I also signed the letter and was pleased to do so. There is genuine feeling around the House that the Government have made a mistake on this. What will happen in practice is that a six year-old who lost her father last year will be supported until she leaves school; if her father dies next year, that support will stop after 18 months. That cannot be right. I know that I gave the Minister a hard time a few weeks ago when the regulations were in Grand Committee, but I do not blame him; I know that he did not make the decision. I think that we are now at the point where the whole House recognises that the Government have made a mistake. These cuts were simply part of an attempt to cut £12 billion off social security. The House does not believe that the Government should be taking money away from bereaved children. Will he please tell his Secretary of State that?

[Lord Henley]

My right honourable friend will obviously listen to what the noble Baroness has had to say, but I reject her allegation that these are cuts. There will be no savings to the taxpayer in the first two years; thereafter, as was made clear in the impact assessment, there will be some savings. The important point to get over is that we have increased the initial payment, which was frozen by the previous Government in 2001 and remained frozen for many years, from £2,000 to £2,500. We then make payments for 18 months to those with children. Obviously, no element of money will resolve the problems that individuals who have lost one or other parent will have. This is designed to help with the immediate costs of that bereavement. That is why we think that, by increasing the initial payment, we have made a very real change and provided some support for those with children.

Local Authorities: Relationship Support Services

Baroness Sherlock Excerpts

Wednesday 5th April 2017 Lords Chamber

[Lord Henley]

I am grateful to my noble friend for that question and I can give her an assurance that we will be evaluating phase one of the programme, which has been completed, and then phase two, about which I have just given details. We aim to publish an evaluation of phase one later in the summer, whenever that might be, and in due course we will consider an evaluation of phase two.

[Baroness Sherlock (Lab)]

My Lords, I should like to return to the answer given by the Minister to my noble friend Lady Lister. Perhaps he should go back to his own paper entitled Improving Lives: Helping Workless Families, which came out yesterday. Paragraph 33 cites evidence that problem debt and financial burdens can put pressure on relationships. It attributes those issues to persistent low income and income shocks. Will he think again not only about the damage that has been done by cutting £12 billion off social security for those out of work? Also, given that this is aimed at workless families, if the DWP wants to get them back into work, why is the department persisting in cutting in-work benefits, the very things that make work pay? Before the Minister tells us more about the living wage, perhaps I may remind him of what he knows already. Most of the living wage for the poorest people goes straight back to the Treasury in taxes and lower benefits. Will the department look again at its strategy and make work pay?

[Lord Henley]

There is no need for the noble Baroness to try to answer my question because I will answer it in my own way.

Disabled People: Independent Living

Baroness Sherlock Excerpts

Thursday 30th March 2017 Lords Chamber

[Lord Henley]

My Lords, I understand the problems to which the right reverend Prelate refers. The department is looking at these matters. My honourable friend the Minister for Disabled People, Health and Work is well aware of them. As the right reverend Prelate will know, schemes are available for one-off cash payments to help those who are losing their cars. We shall certainly look at speeding up the whole appeals process to make sure that the problems to which the right reverend Prelate referred do not get any worse.

[Baroness Sherlock (Lab)]

My Lords, to pursue this a little further, I appreciate that the Minister may be thinking about this but the point made by the right reverend Prelate is that people cannot wait. Between October and December last year, 800 people a week were having to hand back their Motability cars because they did not have the money to pay for them any more as a result of PIP reassessment. The Motability website says clearly that you get only six weeks from that decision to hand back your car. Frankly, the DWP is a long way off speeding up assessment to the point where appeals are concluded within six weeks. Will the Minister please look at this a little more urgently?

Child Support: Unpaid Maintenance

Baroness Sherlock Excerpts

Thursday 30th March 2017 Lords Chamber

[Lord Henley]

My Lords, as I said, this goes back a long way. It covers Conservative Governments, Labour Governments and the coalition Government. We have all tried to sort this out. I am afraid that a lot of this money is lost for ever. We are looking at a new arrears scheme and will consult on that to try to get what we can, but I am sure the House would agree that the first priority should be to get money that can still benefit the children of today rather than trying to get the money that was owed yesterday, or the money that is owed to the department. The bulk of the money is very historic.

[Baroness Sherlock (Lab)]

My Lords, I am happy to take the Minister at his word. Let us look at today, but in doing so I declare an historic interest as a member of the board of CMEC before I came into the House. The Government are closing the CSA and if you have an active case on the CSA, instead of transferring it to the new system, it is shut down and you are invited to apply to the new system. The Government estimated that two-thirds of parents would apply to the new system. The NAO has found that only one in five is doing so. The Government have said that most of the rest would make private, family-based arrangements. More than half of families have no arrangement at all in place. This matters because it is not just important for tackling child poverty: a decent child support system sends out a message to the world at large that you might divorce your spouse or separate from your partner but you do not stop being responsible for your kids. Will the Government sort this out?

GovCoin

Baroness Sherlock Excerpts

Monday 27th March 2017 Lords Chamber

[Lord Henley]

My Lords, I wondered whether the noble Baroness would want to get in to highlight the fact that she produced the report that came out on Saturday. I think the report was embargoed until midnight on Friday and I have not yet had the opportunity to read it. I glanced at it but assure the noble Baroness that the Government will give it due consideration.

[Baroness Sherlock (Lab)]

My Lords, I am tempted to invite the Minister to explain how bitcoin and blockchain technology work, but I will take pity on him. For people like me, it is much simpler. I understand that volunteers were given an app through which, essentially, electronic, digital money was paid to them and they could spend it only in certain ways which were tracked and recovered. Obviously, that raises significant issues about privacy and data. My understanding is that the Government’s own report on what is called distributed ledger technology said that it clearly needs a regulatory, ethical and data framework. In the absence of that, when the DWP started this, how did its Ministers assure themselves that benefit claimants were genuinely giving free, informed consent to be able to use this? If it is now to be a much larger-scale project, what kind of parliamentary oversight and scrutiny will there be?

[Lord Henley]

My Lords, as I said, we have not yet decided to move on to a fuller and larger trial, but if we did, no doubt that would have the appropriate checks and balances and be examined by the noble Baroness and others in due course. This is a simple, small-scale trial involving some 20 or 30 people. I am assured that they all gave full and proper consent to it, and that some of them found it very useful indeed. I am grateful to the noble Baroness for not asking me to explain the more technical matters, which are probably beyond her—and me. As she knows, it is a very simple app designed in the form of jam jars into which one can put one’s money and then take it out for specific tasks. As I said earlier—and the assurance I gave on this would apply to any further trials—the department and the Government will have no access to that information; that is, what has come out of the jam jars and gone into housing or whatever.

Homelessness: Housing Benefit

Baroness Sherlock Excerpts

Thursday 9th March 2017 Lords Chamber

[Lord Henley]

My Lords, I fully accept the noble Lord’s point. That is why he will find a list in the regulations—I do not want to delay the House by reading it out in full—of some 25 different exemptions for 18 to 21 year-olds. That will be operated in the most sympathetic manner, and I do not think that anyone with a genuine reason to leave home is likely to suffer at all. I am more than happy to show the list to the noble Lord and to others—but reading it out in full would waste the House’s time.

[Baroness Sherlock (Lab)]

My Lords, there are so many reasons why young people choose not to live at home, but remarkably few of them do. If somebody is out there on their own aged 18, something else is going on. The Minister can give all the lists he wants, but people out there who have suffered from repeated bad decisions when they have applied for disability benefit or all kinds of other benefits will not trust them. Is it not the case that all the homeless charities have pointed out that the proposal is likely to increase homelessness? Even though there are young people who want to go out and rent independently, the National Landlords Association said:

“Never mind the nuances, all landlords will hear is that 18-21 year olds are no longer entitled to housing benefit … they just won’t consider them as a tenant”.


Have the Government thought about that?

[Lord Henley]

Of course the Government have thought about it. That is why we are bringing forward this measure and why we will be working with stakeholders such as the National Landlords Association and others to develop appropriate engagement for landlords to make them understand how the new rules will operate. As I said, protections have been built into this that mean that no one who has to move away from home will suffer. We think it is right that there should not be a perverse incentive that encourages people to move away from home and live on benefits at the expense of the taxpayer.

Universal Credit

Baroness Sherlock Excerpts

Thursday 9th March 2017 Lords Chamber

Asked by

[Baroness Sherlock]

To ask Her Majesty’s Government what assessment they have made of the impact on claimants of the time taken between applying for Universal Credit and receiving payments.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Henley) (Con)]

My Lords, the universal credit assessment period and payment structure is a fundamental part of its design, reducing welfare dependency by mirroring the world of work. Safeguards are in place to help the minority of claimants who are in genuine need to transition to universal credit. This includes advances and budgeting support. We continue to work closely with landlords, local authorities and other organisations to ensure claimants are supported.

[Baroness Sherlock (Lab)]

My Lords, if only it were that simple. In 2013 the Government introduced a rule that when you first claim benefit you are not entitled to any money for the first seven days. The problem is that universal credit is paid monthly in arrears so it means you get no money at all for six weeks. That does not sound very long, but the typical family in social housing has only £200 in savings and some people are in debt. Social landlords are now saying that tenants are getting into big arrears and people are turning to payday lenders and even loan sharks. Even the noble Lord, Lord Freud, recently told the Work and Pensions Select Committee that the seven-day waiting period should be dropped. Please can the Minister not be complacent about this. Will he go back to his department, look again at the evidence and please take action before anyone else is pushed into debt?

[Lord Henley]

My Lords, I repeat what I said in my original Answer. It is a fundamental part of the design. That argument was put forward by my noble friend Lord Freud during the passage of the Bill and was debated at great length. We recognise that this does not necessarily suit everyone. That is why I again made clear in the second part of my Answer that there are safeguards in place. We introduced universal credit advances for new claimants. Claimants can apply for an advance immediately if they are in need and can receive up to 50% of their indicative award soon afterwards. To go back to the original point, it is important to make sure that we mirror the world of work where 75% of employees are paid monthly.

Personal Independence Payments

Baroness Sherlock Excerpts

Tuesday 28th February 2017 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for repeating the Statement to the House. I want to concentrate on the judgment on the mobility component of PIP. Despite what the newspapers may have reported, the tribunal ruling does not mean that anyone with mental health problems can get the higher rate of PIP. What it does mean is that assessors cannot arbitrarily ignore all mental health problems when working out whether someone is entitled to the higher rate of PIP to deal with the higher costs that they face. Despite the Minister’s comments, MIND has pointed out that the Explanatory Memorandum for the original Act said that the higher rate was right if someone’s mobility was,

“severely limited by the person’s physical or mental condition”.

If these regulations go through, it seems that someone who is blind and needs help to plan or navigate a journey could get the higher rate of PIP but someone who, for example, has autism or early-onset dementia and could not manage to plan or navigate a journey without help would not be able to get the higher rate of PIP. My question is very simple: how does that sit with the Government’s commitment to parity of esteem between physical and mental health and to the Prime Minister’s promise to tackle the stigma associated with mental health problems?

[Lord Henley]

My Lords, what the tribunal said was that there was some uncertainty in our regulations, despite the fact—I am sure the noble Baroness will remember this far better than I can, because I was not in this position at the time—that these matters were extensively debated during the passage of the Bill a year or so ago and agreed in Parliament. The tribunal said that there was uncertainty and we are trying to put that right.

The noble Baroness specifically referred to the example of people who are blind in comparison to those with psychological distress. That was a matter considered in one of the two cases that we are dealing with. Mental health conditions are more likely to fluctuate than conditions such as visual impairment or blindness, and people who cannot navigate due to a visual or cognitive impairment are more likely to have a higher level of need and therefore face higher costs. What we are seeking to do, quite simply, is amend the criteria to reinstate the distinction between those two groups, as was originally intended in the order. It is no more than that.

Bereavement Support Payment Regulations 2017

Baroness Sherlock Excerpts

Tuesday 21st February 2017 Grand Committee

[Lord Jones (Lab)]

My Lords, I am glad to follow the right reverend Prelate’s caring remarks, and my intervention will be brief. I thank the Minister for his thoughtful outline of the impact of these complicated regulations about serious matters. I note that Article 19 of the order to follow—the Social Security Benefits Up-rating Order 2017—refers to bereavement benefits. Can the Minister give us an estimate of the numbers of those claiming such payments in the past year? On the basis of that insight, can he estimate the number of future claimants under the new regulations?

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for his explanation of these draft regulations and all noble Lords who have spoken today.

As we have heard, these regulations enact the provisions of the Pensions Act 2014—which, as the right reverend Prelate pointed out, we debated at some length. They introduce a new single payment to replace bereavement payment, bereavement allowance and widowed parent’s allowance for those whose spouse or civil partner dies on or after 6 April 2017. The Government’s case is that this will modernise the current provision and increase simplicity for those who are bereaved and seeking support. I am grateful to the Minister for confirming that the Government’s main aim is not to save money. However, I am pleased to reassure him that they are, accidentally, about to save quite a bit of it. I confess that my antennae always start twitching whenever I hear Ministers promise that a social security reform is mainly just about making things simpler. The first question is always to look at who stands to gain as a result of the new simplicity—the claimant or the Treasury. On this occasion, after two years of an introductory period the answer is, I am sorry to say, the Treasury. The Explanatory Memorandum tells us that after two years of reform, steady-state savings are expected to be about £100 million a year. In other words, these reforms take £100 million a year from bereaved families and give it to the Exchequer.

The Explanatory Memorandum offers two other objectives for the reforms: for the system to be fair and to promote self-dependency. I suspect that if the Government had tested public opinion on the matter of fairness, being kind to widows might come high up the list. Has the Minister reflected again on the issue of promoting self-dependency? People who get married or civilly partnered and have children were not intending to be self-dependent. They formed a family which had been ruptured, presumably by the death of their spouse or partner. That was precisely the sort of situation for which the welfare state was designed to step in. We on these Benches registered our concerns about the impact of these reforms during the passage of the Bill. Indeed, concern was expressed across the House. I still remember the powerful speech given by the right reverend Prelate the Bishop of Derby when we discussed these matters; his interventions were very much taken to heart by many in the House. We sought to amend the Bill to mitigate some of the effects but, sadly, we were unsuccessful —so here we are.

On matters of detail, concern was expressed by the Social Security Advisory Committee and the Work and Pensions Select Committee about a number of areas, and I am pleased to see that the Government have responded to one criticism raised by both committees by extending the period that the bereavement support payment can be accessed from 12 to 19 months. Unfortunately, that is less generous than it sounds because the Government have simply redistributed the amount of money that they originally proposed over a longer period, so people get the same amount but for a longer time.

There are notional gainers, such as younger widows, although figures in the original impact assessment seemed to me to suggest that, perhaps unsurprisingly, and fortunately, there are very few of those, with the vast bulk of the current caseload in the over-55 bracket. Despite the time extension, the Childhood Bereavement Network, which I thank for the very comprehensive briefing that it sent to all interested noble Lords, suggests that 91% of parents will still be supported for a shorter time than under the current system and that the DWP’s own figures admit that 75% of claimants with children will get less money. Can the Minister confirm that those figures are correct and, if not, give the Committee the department’s own estimates instead?

Those with young children will be disproportionately affected, as the parents can currently claim for longer. The current widowed parent’s allowance is paid until the youngest child leaves full-time education. As the briefing from the Childhood Bereavement Network briefing pointed out, a six year-old child losing her father in 2016 would be supported until she leaves school. A six year-old losing her father in 2018 will be supported for just a year and a half. I suspect that her mother might be willing to deal with a bit of complexity for the sake of another decade of additional support to feed and clothe her daughter. The Childhood Bereavement Network says that those with younger children could be up to £31,000 worse off in total than they would have been without these reforms. Can the Minister confirm that this is correct?

The right reverend Prelate the Bishop of St Albans raised the question of cohabiting couples, and I am sure that the House was glad to hear concern for those cohabiting couples and their children, notwithstanding his support for the institution of marriage. In their consultation response, the Government said:

“The Government position on this issue is unchanged: there are still no plans to extend eligibility for bereavement benefits to those who are not married or in a civil partnership”.


No reason was offered as to why the Government had rejected this proposal. Given that the right reverend Prelate had given his blessing and feels that the institution of marriage will be safe should the Government venture into this territory, can the Minister take the opportunity to tell the Committee why the Government chose not to extend provision in this way?

Lastly, I would like to ask a couple of questions about universal credit—first, on the interaction of universal credit with bereavement support. I think that I heard the Minister say—and I apologise as I did not quite follow the argument, which is entirely my fault—that BSP will be disregarded in full when calculating entitlement to universal credit. Can he confirm that in his reply? I apologise for making him revisit the matter.

Secondly, paragraph 7.13 of the Explanatory Memorandum says:

“Payments will be subject to a disregard within the calculation of income-based benefits; Payments will also not be counted as benefit income when calculating the maximum amount of other benefits a person can be paid”.


I think that that means that BSP will not count towards the benefit cap, but could he just confirm that? I apologise if he did so and I missed it.

There is then the question raised by the right reverend Prelate about those who need to claim universal credit as well as BSP and will be subject to conditionality. I understand that those conditionality requirements, as the Minister said, will be suspended for six months following the death of a partner or child, but during the passage of the Bill we had a lot of discussion about this point—the position of parents with children who are dealing with the consequences, not just for themselves but for their children, of losing a partner or parent. The consequences were emotional for the children and for the parent having to deal with their own and the child’s emotions, but also practical in a range of ways. During the passage of the Bill, the noble Lord, Lord Freud, agreed to conduct a review of the position of parents whose children had suffered distress in bereavement, in response to points made in the Chamber by the noble Baroness, Lady Finlay. Parents whose children’s distress and bereavement disrupts their normal childcare responsibilities are, I understand, able to request a one-month suspension of work-related requirements. If I have read this correctly, you can request another one month every six months for up two years. So that would be potentially four one-month periods but only one every six months. I believe from my reading of the regulations that that was enacted in Regulation 8 of the Universal Credit and Miscellaneous Amendments (No. 2) Regulations 2014. Can the Minister confirm that that is the only specific provision available for parents in this circumstance? If it is, can he tell the Committee—or agree to write if not—how many claimants have used, or are expected to use, this facility?

On backdating, paragraph 7.17 of the Explanatory Memorandum states:

“Given the vulnerability of this claimant group there will be a period from the date of death in which the claimant can make a claim without losing any money. If a claim is received more than 3 months after the date of death payments can be backdated for three months before the date of claim. This time limit is extended to 12 months for the initial higher payment to help ensure that people do not miss out on this payment”.


I am glad that the Government are acknowledging that people are vulnerable after a death and that they may not always quickly manage to turn their attention to making a claim for bereavement support payment. However, given that the Government have accepted that, what is the rationale for limiting that flexibility only to the lump sum? Why not allow people the same flexibility in relation to the monthly payments?

I endorse the point made by the right reverend Prelate about whether or not it is the Government’s intention to update the value of this payment in line with other benefits. It would seem that it is not. I hope that we have misread that and that the Government can tell us now whether it is their intention or that we can expect a change of policy on that matter very soon.

I thank my noble friend and the right reverend Prelate for their contributions and I look forward to the Minister’s reply.

--- Later in debate ---

[Lord Henley]

I am grateful to the right reverend Prelate for saying that it has been rejected. By that, I take him to mean that it is still not possible for those of the opposite sex to have a civil partnership. Civil partnerships will therefore apply to those of the same sex, and marriages to those of the same sex and those of the opposite sex. We took the view that it was better and simpler to confine it to those groups, rather than to extend it to cohabitees. Cohabitees, as we have always known, have the ability to take steps to rectify their position and become married or, in certain cases, to become civil partners. To add the complexities, which I accept already face cohabitees regarding, for example, income-related benefits, such as UC, to a payment of this sort would not be appropriate. It can be dealt with by people themselves if they wish to regularise their position, which is always important to know.

I can remember some of the debates on various Private Members’ Bills, particularly one which I think was promoted by the noble Lord, Lord Lester of Herne Hill. He said that there was gross ignorance about this matter and that people thought being a common-law wife or husband gave them the same rights. I think that by now, most people should know that it does not give them the same rights; their rights are distinctly different if they are cohabitees. As I said, it would add excessive complications to a benefit of this sort, and I do not see the reason for extending it.

The noble Lord, Lord Jones, asked about the numbers of those who are likely to be affected. In the past, it has been something of the order of 40,000 a year and we have no reason to believe that it will be any different. I can add to that one other figure, which will be of interest to him and the Committee: of those 40,000, some 8,000 also have dependent children. That figure might or might not surprise the noble Lord. I was slightly surprised, since we are talking about claimants of working age, that it should be as low as that. But that is the figure, and I have no reason to believe that it will change.

Finally, I can confirm to the noble Baroness, Lady Sherlock, that bereavement support payment will be disregarded for universal credit and for income-related benefits. I think I made that clear in my speech. If even Homer nods, perhaps even the noble Baroness occasionally nods.

[Baroness Sherlock]

In a different way.

[Lord Henley]

She was nodding in a different way but anyway, I can confirm that it will be disregarded, as it will be for the benefit cap.

Finally, the noble Baroness talked about the time for claiming the benefit and the fact that the monthly payments must be claimed within three months but that in terms of the basic amount, they had a full year. The simple answer is that for monthly payments it is appropriate to have a cut off that is shorter than for the lump sum. I do not believe—this is the important thing—that there is much ignorance, once people are bereaved, about benefits of this sort. Certainly the evidence we have and the evidence we have had in the past, which implies a very high take up of this benefit, seems to suggest that most people get to know about it very quickly. It is one of those things that, for example, I am sure undertakers know about and will advise on, as will others.

I hope that, with the assurance that I may find that there are one or two points I have not answered, the Committee will accept the regulations.

Motion agreed.

Social Security Benefits Up-rating Order 2017

Baroness Sherlock Excerpts

Tuesday 21st February 2017 Grand Committee

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for his introduction of this order and the noble Lord, Lord Kirkwood, and the noble Baroness, Lady Thomas of Winchester, for their contributions. The noble Lord, Lord Kirkwood, and I gather around this time every year—sometimes to decreasing effect, it feels—and we miss my noble friend Lady Lister, who is usually with us on these occasions. In the absence of her enormous knowledge, I will do my best to fight the good fight for these Benches.

I reassure the noble Lord, Lord Kirkwood, that he is not out of order because the order increases the disability premium and some elements of working-age benefits. Therefore his area of comment is wholly in order for addressing these questions today. It was a comment in which I have an interest because I am about to do the same thing.

While obviously not objecting to the 1% uprating of the benefits that are covered, the triple lock or in-line-with-earnings increases as described by the Minister, we have serious concern about the increasing impact of the Government’s approach to benefit uprating on the millions of people who rely on benefits to look after themselves and their families. The real action here, as the noble Lord, Lord Kirkwood, pointed out, is happening offstage. It applies to the many benefits that should be on this list and are not.

The summer Budget 2015 listed a series of working-age benefits that would be frozen for four years from 2016-17 to 2019-20. We should remember that they had had only 1% uprating from 2013 and that there was the massive effect, described by the noble Lord, Lord Kirkwood, of the shift from RPI to CPI as the measure for increasing benefits. That list includes child benefit, JSA, ESA, income support, housing benefit under women’s state pension age, LHA rates, child tax credit, working tax credit, universal credit and bereavement support payment. Many of these benefits affect working people and working families, but they all affect people who are dependent on benefits to survive. It is good that the disability and other premiums paid with these benefits are being increased by 1%, and I am glad to see that.

The freeze to the other levels of social security payments are having a detrimental impact on those who depend upon them. Between 2008 and 2014, the prices of essentials rose three times faster than wages. Combined with the period of 1% uprating and then the freeze, low-income households have seen a significant deterioration in their income. Now that inflation is starting to pick up, we need to be reassured by the Government about how they are going to ensure that Parliament can understand the degree to which households are protected from the consequences of those changes in ways that we could reasonably expect them to do.

The 1% uprating is based on the rate of CPI prevailing in the year to September 2016, which was reported at 1%. However, since then, inflation is clearly on the rise. Last week, we saw the release of the latest figures which showed that the consumer prices index rose by 1.8% in the year to January 2017. Last week we also saw the Bank of England inflation report which said:

“In the central projection, conditioned on market yields that are somewhat higher than in November, inflation is expected to increase to 2.8% in the first half of 2018, before falling back gradually to 2.4% in three years’ time”.


As the Resolution Foundation pointed out in a report entitled Under New Management in November 2016, the effect of rising inflation is that this policy is saving the Treasury rather more money than it expected. The report estimates that rather than the £3.6 billion the policy was due to save the Exchequer by 2020-21, the savings would rise to £4.6 billion. Can the Minister tell the Committee whether that £4.6 billion figure is accurate and, if not, what is the value of the savings now estimated to be according to his department or the Treasury?

On the other hand, the effect of these changes on households in receipt of benefits is also far greater than Parliament expected at the time when the decision was made to freeze benefits, and people on the lowest incomes are least able to withstand the effects of inflation because they have the least disposable income and in most cases they have little or no savings to depend on as a cushion. That is why Parliament has traditionally protected them from these risks by inflation-proofing benefits. As the IFS puts it:

“This policy represented a significant takeaway from a large number of working age households. But it also represented a shifting of risk from the Government to benefit recipients. Previously, higher inflation was a risk to the public finances, increasing cash spending on benefits. Now the risk is borne by low-income households: unless policy changes higher inflation will reduce their real incomes”.


That point was also made by the noble Lord, Lord Kirkwood. The IFS also points out that, as of last March,

“the freeze represented a 4% cut in the value of those benefits … relative to previous plans”.

Last October, the IFS, based on its inflation forecasts at that point, produced some other observations on the impact on claimants, saying:

“As a result, 11.5 million families were expected to lose an average of £260 a year, saving the government £3.0 billion in 2019-20. Given the latest inflation forecasts from the IMF, the policy now represents a 6% cut to affected benefits. The same 11.5 million families are now expected to lose an average of £360 a year (£100 a year more than expected in March), saving the government £4.2 billion in 2019-20 (i.e. an additional £1.2 billion on top of what was expected back in March). Greater losses are found among families—typically those on lower incomes—who receive more in benefits”,


so,

“8.3 million families affected now expected to lose an average of £470 a year”.

The Minister might claim, truthfully, that his party had a manifesto commitment that the working-age benefit system should be made less generous over this Parliament, but as the IFS pointed out,

“it is hard to see why the appropriate size of cut should be arbitrarily determined by the impact of movements in sterling on prices”.

Quite, but if the Minister does not want to listen to the Resolution Foundation or the IFS, or the noble Lord, Lord Kirkwood, or the noble Baroness, Lady Thomas, or, unaccountably, even me, perhaps he might be persuaded by the following comments, reported in the Independent from another parliamentarian:

“When the original benefit freeze was set it was set against an estimate of a much lower rise in inflation … Therefore I’m sure the Treasury will want to look at to keep that under review because the purpose was not to have such a dramatic effect on incomes against a forecast of rising inflation … I’m sure the Treasury will want to look at that and keep that under review so that doesn’t actually happen and make it adverse in a way that it was not completely intended”.


That was Iain Duncan Smith, speaking to an event in Westminster, reported in the Independent on 8 November last, and that was before inflation hit the heights that we saw last week.

My questions for the Minister are simple. First, can he tell the Committee the latest estimate of the savings to the Exchequer of this four-year benefit freeze, as against CPI uprating, over and above the amount originally scored? Secondly, how big would the gap have to be between projected and actual impact on claimants of this freeze before the Government would revisit it? Finally, to echo the noble Lord, Lord Kirkwood, whom I commend for his determination to come back to this matter on behalf of all parliamentarians every time we discuss it, what is the mechanism for Parliament to revisit the issue and be assured of the adequacy of social security benefits in the absence of any appropriate annual mechanism?

[Lord Henley]

My Lords, again, I thank all noble Lords who have spoken in this debate. The noble Lord, Lord Kirkwood, spoke about his experience of uprating statements going back to, I think he said, 1983. I feel a mere child in these matters going back only to the 1989 uprating statement. I did a few after that, but I do not think that I have quite the assiduous record that the noble Lord has in these matters.

The noble Lord also talked about the process by which we go through these matters, and asked whether it is still the case that my right honourable friend the Secretary of State sits down and considers what uprating is necessary. I assure him that, within the confines of current legislation, he does and that he takes note of comments received in both Houses. I assure the noble Lord that I shall report back to my right honourable friend and others about the course of this debate.

Obviously, we have to make very difficult decisions on welfare spending. The noble Lord, Lord Kirkwood, is aware of that, as is the noble Baroness, Lady Sherlock. We also know very well that work, not welfare, is the best route out of poverty and that anything that can encourage people into work will be good for them in all possible ways. That is why our welfare reforms are designed to incentivise work for those who can and go wider than just the benefit system. They include such things as the national living wage, which will be up to £9 an hour by 2020, cutting income tax for more than 30 million people and the rollout of universal credit. At the same time, we remain committed to protecting all those who need support. That is why we made the reforms we did. As someone coming back to this world after some years out of it and having had some experience of seeing benefit offices, it is gratifying to see the rollout as it begins and to hear the comments of those making use of it. I am sure it is going to be a success. Anyway, I can give an assurance that my right honourable friend sits down and considers these matters.

The noble Lord, Lord Kirkwood, talked about the change from using CPI as opposed to RPI, an issue also touched on by the noble Baroness, Lady Sherlock. I appreciate that there is no ideal measure of inflation, and there never will be, but we certainly think that CPI is a better measure than the old RPI. I understand that the ONS is making changes to RPI, and it may be that some improvements can come forward in due course. However, at the moment, we are committed to CPI, which we think is a better measure and is the target rate used by the Bank of England. It also takes better account of how behaviour changes in response to price changes, using a methodology in line with international standards, and better reflects benefit recipients’ and pensioners’ experience of inflation by excluding mortgage payments. Again, we have to recognise that all the measures of inflation affect different people in different ways. I think all would agree that there is no ideal measure that we can use. CPI is the best and using the September-to-September measure is the only practical way in which to introduce the change in April the following year. I am sure that the noble Baroness would accept the difficulties of having to use a figure some months ahead, but any subsequent inflation will be taken into account in following years, so there is a catch-up designed into the system for future years.

The noble Baroness, Lady Sherlock, is not happy about the whole subject of freezing benefits, which goes wider than the uprating statement we are debating today. As she is aware, we have by statute frozen working-age benefits for a number of years—until the end of this Parliament, if I remember the dates correctly. It is not a matter for discussion today, but I repeat what I have said: we are dealing not merely with benefits but with work, which is the best route to get people out of poverty. As I said in response to the questions from the noble Lord, Lord Kirkwood, we want to incentivise work for those who can work, while supporting those who cannot. The noble Baroness then asked a number of detailed questions about our estimate of the savings and cited estimates made by this or that group and ending up with the comments made by my right honourable friend Mr Duncan Smith. I shall not comment on any of those estimates at the moment; this is not necessarily the right and proper place to have that debate. If we have some appropriate figures that I think the noble Baroness will find useful, I am more than happy to make them available to her.

--- Later in debate ---

[Lord Henley]

I will have to write to the noble Baroness to assure her on that point.

I appreciate that the noble Baroness, Lady Sherlock, would prefer a greater and longer debate on freezing benefits. As I said, I do not think that this is either the time or the place.

[Baroness Sherlock]

I confess to being disappointed by both the content and the tone of the Minister’s response to the questions put not just by me but by the noble Lord, Lord Kirkwood. I wonder whether he could tell me two things. First, does he accept that a number of the benefits being frozen are in-work benefits? Secondly, if this is not the occasion on which Parliament can expect to hold the Government to account to find out what in fact will be the impact of a measure which now looks to be much more expensive to benefit- claiming families than they were assured in the first place, what is?

[Lord Henley]

My Lords, this is the occasion to deal with the uprating of those benefits which are being uprated. Parliament debated on another occasion, during the passage of the 2014 Bill, the freezing of benefits. The noble Baroness will not find it hard to find other occasions to raise the subject. When we are debating those benefits which we are uprating, it is not the time to pursue the question of the freezing of benefits.