Social Security (Additional Payments) Bill

Baroness Stedman-Scott Excerpts

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

Moved by

[Baroness Stedman-Scott]

That the Bill be now read a second time.

[The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office and Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, the Government are fully aware of the acute pressures that families across the UK are under due to the rising cost of living. This is why we have brought forward this important Bill to your Lordships’ House.

A series of global economic shocks have led to price rises unseen in the UK for decades. As a result, families up and down the country are seeing their budgets squeezed, with many struggling to make ends meet. That is why we have decided to provide more than £15 billion of further support, targeted at those in greatest need. This is on top of the £22 billion announced previously, bringing the Government’s support for the cost of living to more than £37 billion this year. This £37 billion includes the means-tested and disability additional payments for which the Bill makes provision, as well as a one-off increase of £300 to the winter fuel payment for pensioner households, a non-repayable £400 discount in their energy bill this autumn for domestic electricity customers in Great Britain—the UK Government are working to ensure that the people of Northern Ireland receive the equivalent of this support as soon as possible—and a £150 non-repayable rebate on council tax bills for all households in bands A to D in England, to name only a few measures we have taken.

Although we as a Government have always been open about the fact that we cannot cover every situation or solve every problem, we are committed to going further to provide support to relieve the financial pressure people are facing. Taken together, this £37 billion package will provide at least £1,200 of additional support for the majority of households least able to afford the rising cost of living. The Bill before the House today builds on that commitment and will enable us to make additional payments targeted to those on the lowest incomes. It legislates for two additional payments which form part of our wider package to support families with the cost of living. The first is a direct cost of living payment of £650, split into two separate payments of £326 and £324, which will go to more than 8 million people receiving means-tested benefits. The second is a £150 payment to disabled people on a qualifying disability benefit. This will be paid on top of the cost of living payment for people who are eligible, and is estimated to benefit 6 million disabled people. Both new payments will be delivered by the UK Government to eligible households across the UK.

Social security is a transferred matter in Northern Ireland. However, this Bill will legislate for the whole of the UK in the absence of a fully functioning Assembly and Executive. This approach has been agreed by the caretaker Minister for Communities in Northern Ireland, who has also laid a Written Statement confirming this position. The timing of both payments will differ. For the cost of living payment, the first payment of £326 for households claiming a DWP means-tested benefit will be paid from 14 July, with the second payment of £324 coming in the autumn. Payments to those claiming tax credits only will be paid later to avoid duplication. Those not eligible for the first payment in time may become eligible for the second payment if they receive a qualifying benefit in the month before the next eligibility date.

We have intentionally excluded the second eligibility date from the Bill to prevent increasing fraudulent applications for benefits and fraudulent reporting of changes of circumstances. The Secretary of State will lay further regulations to specify the eligibility date for the second payment; however, it will be no later than 31 October. For the disability payment, those on a qualifying disability benefit will be paid from September. Where eligibility at the qualifying date for any of these payments is established beyond the expected payment dates, people will still receive the cost of living or disability payment, albeit at a later date. Both payments are tax free and will not count towards the benefit cap or affect existing benefit awards.

For families who miss out on this additional support but still find themselves in additional need, the Government are providing an additional £500 million to help households on top of what has been provided since October 2021, bringing total funding for this support to £1.5 billion. In England, an additional £421 million will be used to extend the household support fund from October 2022 until March 2023. Also, the Barnett formula will provide around £79 million to the devolved Administrations.

This deliberately straightforward Bill, stretching to only 11 clauses, will enable us to get support to families in need swiftly and without the need for additional bureaucracy. No one eligible for these additional payments will need to fill out any forms to claim them and payments will be made automatically. We have deliberately kept the rules for these payments as simple as possible because this is the only way of ensuring that we can develop the systems and processes required to deliver them at pace.

I know that many of your Lordships take a particular interest in delegated powers, of which this Bill makes provision for two. The first allows the Government to set a second eligibility date for the second part of the cost of living payment; the second is to facilitate the existing overpayment and recovery procedures for the qualifying benefits, to be applied to the cost of living payment. These are powers to allow for the effective administration of the payments, particularly to protect the public purse. I note that, in its report, the DPRRC raised no concerns for the Government to respond to.

This Bill will make a real difference in easing the stresses being felt by people up and down the country by supporting them on the rising cost of living at this most challenging time, and doing so simply and swiftly. I commend it to the House.

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

I thank all noble Lords for their contributions to the debate today. I hope we agree that this package of support will make a significant difference to families up and down the country, notwithstanding the points that have been made.

As I said earlier, the Government are committed to going further to provide support to relieve the financial pressures families are facing. The measures announced by my right honourable friend the Chancellor will provide an estimated millions of low-income households with £1,200 of one-off support in total this year to help with the cost of living, with all domestic electricity customers receiving £400 through the energy bills support scheme. This Bill will give us the necessary powers to deliver the additional payments set out in this package to families on the means-tested and qualifying disability benefits which we have been debating today.

There were a huge number of questions, which I shall endeavour to answer. There are some where I will have to write and the answers will be much better if I do so, so I hope noble Lords will accept that.

The noble Baronesses, Lady Lister and Lady Sherlock, asked why we are not uprating benefits. The one-off cost of living payment will enable timely direct transfers, ahead of the next uprating review of benefits and pensions, which will commence in the autumn, with any change in rates being payable from April 2023. This will help to support households most in need in managing increased costs. Our cost of living policy will also provide a payment of £650, as we have already said, whereas uprating the same benefits by 9% from April 2022 would be worth, on average, only £530. These payments will be tax-free, will not count towards the benefit cap and will not have any impact on existing benefit awards. This approach will allow households to retain the full value of the payments they receive. There is no need for people to fill out complicated forms, as we have tried to reduce bureaucracy.

Separately from the 2022-23 cost of living support package, benefit and pension rates are subject to an annual review. As mentioned by the Chancellor on 26 May, the uprating of benefits is a matter for the Secretary of State for Work and Pensions. Her annual statutory review of benefits for the tax year 2023-24 will commence in the autumn, when she measures inflation using the September consumer prices index. Following completion of her review, the Secretary of State’s decisions will be announced to Parliament in November. For the avoidance of any doubt, we are committed to the triple lock for the remainder of this Parliament.

The noble Baroness, Lady Lister, asked whether the uprating process will be adjusted in the future. The work of the department in 1975 was mainly undertaken by hand and on a claim-by-claim basis. It was therefore possible to uprate twice in one year, provided the trained manpower resources were available or could be secured. The department began to computerise the payments of benefits in the mid-1980s; we have indicated the constraints of the core IT systems in undertaking a mid-year uprating and the risk that would pose to payments. The Social Security Administration Act 1992 provides for a statutory annual review of uprating and is the basis on which Parliament has required successive Secretaries of State to act. The requirement is for one review each tax year.

The noble Baroness, Lady Lister, asked how long it will take to uprate all benefits, including UC and legacy benefits. I will need to write to her on that, which I will do and place a copy in the Library. She also asked about the flat rate of payments not tailored to circumstances. She said that this disadvantages children in large families and that the issue should have been solved by uprating benefits. The Government are committed to providing direct and timely relief to those who need it most through these one-off cost of living payments. Flat-rate payments are the quickest way to deliver support to those who need it most; they will allow us to make timely transfers to more than 8 million people and 6 million disabled people before the next benefit uprating in April 2023. As I have said, we have deliberately kept the rules as simple as possible. The Government are spending over £5 billion on qualifying means-tested benefits—around £2 billion more than the additional cost if the qualifying benefits increased in July 2022 to 9% higher than the previous year.

The noble Baroness, Lady Lister, who has been very busy, asked about the focus being on reforming UC and said that the two-child limit means that people do not receive enough money. Statistics from the Office for National Statistics show that in 2021, of all families with dependent children, 85% had a maximum of two in their family; for lone parents, this was 86%. The Government feel it is proportionate and fair to taxpayers to provide support through child tax credit and universal credit for a maximum of two children.

[Baroness Lister of Burtersett (Lab)]

I am sorry to interrupt the Minister. Clearly, we cannot amend this legislation but I think it is accepted across the House that there is nothing in here for children. Can she take that message back to her colleagues in government and could they look at other ways they might be able to help children during this period?

[Baroness Stedman-Scott (Con)]

I am always happy to take things back to the department and am quite prepared to do that. I may need a little more information from the noble Baroness, but I am sure that will be forthcoming.

The next review of the benefit cap has been raised. As all noble Lords will know and as we have said many times, our statutory duty is to review the levels of the cap at least once in every five years and this will happen at the appropriate time. The current unusual economic period, with potentially counterintuitive and shifting trends, will need to be considered in the context of any decision in respect of the review.

The noble Baronesses, Lady Lister and Lady Sherlock, raised their concern about those who receive two lots of earnings in one universal credit period not being eligible. We anticipate that the vast majority of people entitled to one of the qualifying benefits will receive their first payment. Because of a change of circumstance, however, some may not qualify. Again, we have deliberately kept the rules simple and, unfortunately, it is not possible to distinguish those who have a permanent increase to their earnings from those whose earnings temporarily fluctuate. If a UC claimant’s income subsequently falls, these claimants will return to having a positive award after the cut-off date and may be eligible for the second cost of living payment, worth £324.

The noble Baronesses also raised a point about people who become eligible later. Where a person is found to be eligible for a qualifying social security benefit or tax credit payment but did not receive a payment, a retrospective payment will be made automatically. This could occur if a claimant successfully challenges the DWP’s decision on their social security benefit entitlement.

The noble Baroness, Lady Lister, and the noble Lord, Lord Fox, asked why we are excluding those in receipt of the carer’s allowance from the cost of living payment. Nearly 60% of working-age people on carer’s allowance will get a one-off payment as they are on means-tested or disability benefits. Carer’s allowance recipients will benefit from the £400 per household with a domestic energy supplier, provided through the energy bills support scheme.

The noble Baroness, Lady Lister, asked why we are excluding those on contributory based benefits from receiving the one-off payment. Non-means-tested benefits are not eligible benefits in their own right, but low-income recipients can claim an eligible means-tested benefit alongside them. Contributory and new-style benefits were not included because people claiming these benefits may have other financial resources available to them. They may also benefit from other parts of the package of support, including the £400 per household domestic energy help. Claimants who require further financial assistance may be eligible for universal credit; if their claim is successful, they may then qualify for the second cost of living payment in the autumn.

The noble Baroness, Lady Lister, raised the important issue of children—and I agree with the noble Baroness, Lady Sherlock, about the knowledge and experience the noble Baroness has in this area. I am advised that this is an issue where we will need to write to the noble Baroness. We will probably need to have some continued communication to ensure that I answer her questions to the level and standard that she wishes.

The noble Baroness, Lady Lister, and the noble Earl, Lord Clancarty, asked about fluctuations in earnings. As I have said, we have deliberately kept the rules as simple as possible. I have said before that it is not possible to distinguish between those who have had a permanent and temporary increase. I do not think I can say more on that at this point.

On the minimum income floor, which was raised by the noble Baroness, Lady Lister, and the noble Earl, Lord Clancarty, it is the same thing: we have deliberately kept the rules as simple as possible. For those who are not eligible for this support, or families that still need additional support, the Government are providing the household support fund with an additional £500 million to help households on top of what has been provided. Since October 2021, the household support fund has gone up to £1.5 billion. In England, this will take the form of an extension to the household support fund backed by £421 million and administered by local authorities.

[The Earl of Clancarty (CB)]

I thank the Minister for giving way. On the concern I raised about the minimum income floor and fluctuating incomes, can the Government keep an eye on this? It would be very helpful if the noble Baroness could promise to do that. She says that it is very simple, but maybe it is too simple for this particular problem. If the Government could keep a close eye on that, it would be helpful.

[Baroness Stedman-Scott (Con)]

I am very happy to go back to the department and request that. I am not in a position to commit to doing it, but I will go back and write to the noble Earl with the outcome of those discussions.

Another important point that the noble Baroness, Lady Lister, raised was about how we are making customers aware of these payments. We are working on an extensive communications plan. There will be digital advertising, social media and display materials such as posters and leaflets for jobcentres and stakeholder premises.

The noble Baronesses, Lady Lister and Lady Sherlock, raised the issue as to whether the household support fund is sufficient. Local authorities in England have ties and local knowledge to best determine how this support should be provided to their local communities. They have the discretion to design their own local schemes within the parameters of the grant determination and guidance to the fund. We are going to publish new guidance for local authorities for this latest extension of the household support fund ahead of the fund going live at the start of October.

The noble Earl, Lord Clancarty, asked about low-income and self-employed people. We accept that earning patterns can vary substantially and it would be impossible to choose qualifying dates that work for every person on UC. However, a second qualifying date certainly reduces the risk that those with non-standard pay periods on UC miss out on a cost of living payment altogether.

The noble Lord, Lord Fox, raised the point about whether the Government are putting up taxes during the cost of living crisis and whether taxes should actually be reduced. The actions the Government have taken to return the public finances to a sustainable path post Covid mean that we are in a strong position to respond to the cost of living challenge. The Government’s goal is to reform and reduce taxes. The Chancellor’s Spring Statement set out the Government’s tax plan, which includes reducing the tax burden on working families by increasing the threshold at which people start paying NI contributions—a tax cut worth over £330 for a typical employee—and by cutting fuel duty by 5p for 12 months. The tax plan also shares the proceeds of higher growth with working people across the country by cutting the basic rate of income tax by one percentage point to 19% from April 2024, saving more than 30 million people £175 per year on average.

The noble Lord, Lord Fox, asked whether the cost of living payments are a sticking plaster. In total, the measures the Chancellor announced in May provide support worth £15 billion. Combined with other plans, as I have already said, this raises the money to support people during this cost of living crisis to £37 billion. This is more than or similar to the support in countries such as France, Germany, Japan and Italy. Importantly, around three-quarters of that total support will go to vulnerable households.

The noble Lord, Lord Fox, asked whether the Government were wrong to reduce the £20 uplift to universal credit. It was always to be a temporary measure, and it was a temporary measure. I do not think there is anything else I can say to noble Lords about that.

The noble Lord, Lord Fox, asked what we are doing to help people in rural areas. The boiler upgrade scheme has a budget of £450 million to support households in England and Wales to make the switch from fossil fuels to low-carbon heating. This helps people in rural areas transfer from fossil-based fuels to low-carbon heating with grants of £5,000 towards the cost of installing an air source heat pump, £6,000 toward the cost of a ground source heat pump and £5,000 for biomass boilers for properties not suitable for a heat pump, provided they are in a rural location and not connected to the gas grid. The home upgrade grant will provide upgrades to low-income rural households living off the gas grid in England to tackle fuel poverty and meet net zero. The Government have allocated £1.1 billion to the home upgrade grant over the next three years.

Again, the noble Lord, Lord Fox, asked why we are delaying half of the £650 to later in the year. Cost of living payments for those on means-tested benefits are deliberately being delivered in two payments to help support budgeting. This approach will also ensure that any newly eligible claimants can be paid the £324 payment even if they did not get the £326 payment and that all recipients of the second payment receive this closer to winter.

The noble Lord, Lord Fox, asked whether we were being more generous to those on means-tested benefits and said that £650 is not going to scratch the surface. The Government are providing over £15 billion in further support, as I have said. Three-quarters of it will go to low-income households. Each cost of living payment will be paid to 8 million people on a means-tested benefit. Millions of the lowest income households will get £1,200 of one-off support. I have said that the Secretary of State will use the CPI in September to decide on the uprating of benefits.

The noble Baroness, Lady Sherlock, asked what impact the cost-of-living crisis is having on poverty. The latest available—

[Lord Fox (LD)]

I thank the Minister for giving way. I appreciate the spirited defence of the measures that the Minister has just made. I am assuming that the Prime Minister was fully aware of what the Government are planning in terms of support when he spoke on Friday. On Friday, the Prime Minister unequivocally said that we are not doing enough, and we need to do more. Would the noble Baroness therefore agree with her own Prime Minister that the Government are not doing enough and need to do more?

[Baroness Stedman-Scott (Con)]

I agree that the Government have made great strides in providing additional finance. If my Prime Minister said that we need to do more, he was not saying that we are not doing enough. This will probably get me into trouble, but he would be daft to say that we need to do more in the current climate. It has been very nice knowing you all in this job.

[Noble Lords]

Oh!

[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.

Bill read a second time. Committee negatived. Standing Order 44 having been dispensed with, the Bill was read a third time and passed.