Economy: The Growth Plan 2022

Baroness Stroud Excerpts

Monday 10th October 2022 Lords Chamber

[Baroness Stroud (Con)]

My Lords, I refer to the Register of Lords’ Interests and my role as chair of the Social Metrics Commission and CEO of the Legatum Institute.

It goes without saying that the UK is facing an uncertain economic future. That is why it is absolutely right that the Government’s focus is on growth, boosting productivity, delivering more jobs and attracting more businesses, investment and trade to the UK. But we need to go beyond this to ensure that growth benefits all people, families and communities right across the UK. Doing this will require an understanding of people’s living standards, and this in turn requires two things. First, the Government need to have an effective, official UK measure of poverty, which the Government currently refuse to implement. Secondly, it requires us to protect those with the lowest incomes by ensuring that benefits are not eroded in real terms—which we hear the Government are currently considering backing away from.

Over the last three years, we have seen the economic, social and personal impacts of the pandemic fall hardest on those who are least able to shoulder the burden. Now, with the rising cost of living, it is those very same people, families and communities who face a perilous winter.

But it could have been even worse. The Government’s action on energy bills and emergency cost of living support has protected more than 1.5 million people from poverty. If the Government had a measure of poverty, they could be demonstrating how their policies were protecting the most vulnerable. With such positive action taken so far, it is remarkable that we hear rumours of limiting the uprating of benefits next year. To do so would be to provide a significant real-terms reduction in incomes for families right across the UK who are struggling to make ends meet.

Our estimate at the Legatum Institute suggests that uprating benefits by earnings, rather than CPI inflation, would increase poverty in the UK by a further 450,000 people. If the Government had a measure of poverty, they would know this and take steps to avoid it. Uprating benefits only by earnings would increase poverty among working families by 350,000 people. It would increase poverty among families that include a disabled person by 250,000 people. These are the very people and families that society should be protecting from the impacts of the cost of living crisis, not consigning to a winter of precarity.

Perhaps this is the problem: that policy-making and political debate about poverty and the lives of those on low incomes are conducted in a vacuum of effective measures. This need not be the case.

For the past five years, I have been leading the Social Metrics Commission. Our goal has been to create a measure of poverty which both accurately reflects the lives and experiences of people on low incomes and has a broad consensus of cross-party support behind it. In 2018, we published our findings and in 2019, with the support of statistics experts, charities and the Office for National Statistics, the Conservative Government committed to developing experimental statistics based on our measure. This work has now been stopped without explanation or reason. As a result, policy decisions are being taken blind to the impact they could have on poverty.

What does all this mean? First, uprating benefits by inflation next year is the right thing to do. Even if the Government are successful in boosting trade, driving strong economic growth and increasing employment, failing to do so would increase poverty among working families and disabled people and fail to protect many of the most vulnerable in society.

Secondly, it means that the adoption of the Social Metrics Commission measure as an official statistic would allow the Government to show the positive impact they are having on people’s lives right now and take the necessary steps to protect vulnerable people at a moment of global crisis. Looking forward, it could be the foundation for the Government driving an economic and growth strategy which ensures that, for the first time in a generation, as a society we can see a meaningfully lower level of poverty.