Budget Resolutions and Economic Situation

Chris Stephens Excerpts

Thursday 16th March 2023 Commons Chamber

[The Secretary of State for Work and Pensions (Mel Stride)]

This Budget and the measures it sets out for providing additional support and encouragement for millions of people to re-engage with the labour market spoke to the very heart of our Conservative principles of compassion, of incentive, of self-reliance and of collective responsibility. Above all, it spoke to that age- old truth that work matters: that work is the source not just of income or paying the bills, and not just of supporting businesses or growth, but of something arguably greater still—of individual pride, of self-worth, of better health, and of making a fundamental contribution to the whole of society. That is the Conservative way.

[Chris Stephens (Glasgow South West) (SNP)]

The Secretary of State talks about compassionate Conservatism; does he believe the measures in the Budget will increase or decrease sanctions over the next 12 months?

[Mel Stride]

Our policy and rules around sanctions have not been changed by the Budget, but it is important that where somebody can work and is offered support to work and decides to take benefits and not engage with the system, sanctions can under certain circumstances be appropriate. That is not to say that sometimes people will not have perfectly reasonable reasons for not engaging with the jobcentre, in which case no sanction will be applied. The hon. Gentleman seems so often to be suggesting that there is no scope or role for sanctions whatsoever within our benefit system, and that is not going to help the very people we are out to support.

This Budget will help break down the barriers stopping people moving into work or progressing within it, and it is most particularly a Budget for those who face the greatest employment challenges. It is a Budget for disabled people and those with health conditions, with new and extended employment support, better integration of work and health services, and, through our health and disability White Paper, the biggest reform to the health and disability benefits system for a decade. It is a Budget for older workers, with the removal of disincentives in the pensions tax system, and with more help to retrain and reskill and more tools to help people plan for the future.

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[Mel Stride]

The right hon. Gentleman will know that hitherto we have indeed focused on a gap. The Department will come forward with something to say on that in the not-too-distant future, and he will have to wait until that point to know the exact kind of target, although I recognise that the current measure has value.

The measures we have set out in the Budget and in our health and disability White Paper will help to remove barriers, so that disabled people have the same opportunity as anybody else to thrive in work. Some 20% of those who have been assessed through the work and capability assessment as having limited capability to work and to look for work say that they want a job at some point in the future, but one of the barriers to work is the health and disability benefits system itself. For too many disabled people, the system feels like it focuses on what they cannot do, rather than what they can do.

Having listened to disabled people, the White Paper that we published at Budget yesterday sets out how we will fundamentally rewire the benefits system, changing it from a system that can often leave people feeling that moving towards work is too risky and that they might not be able to return to benefits if that work does not work out. I want to give people the confidence to try work without the worry that they will not be able to access benefits again promptly if a job does not last. Under our new approach, people will have the confidence that they will receive support for as long as it is needed. Our reforms will also provide additional support to those disabled and long-term sick who request it.

These reforms have been years in the making and follow the Green Paper that we published in July 2021. We have engaged widely on these changes, including with disability charities and disabled people’s organisations, as well as with disabled people themselves who have been through the current process and understand how and why it needs to change. Just as we have taken a measured approach to developing this way forward, so we will operationalise this approach with care.

[Chris Stephens]

The Secretary of State is being generous in giving way. A number of disabled charities are sceptical about the package that he is putting together because of the severe delays to the Access to Work scheme, which are blocking people from going into employment. How does he plan to tackle that in the coming year?

[Mel Stride]

As I just suggested, we will take a measured and appropriate approach to the delivery of a fundamental reform of how these benefits will work. It will involve primary legislation, most likely in the next Session next year, and it will be rolled out some time after that. There will be plenty of time to ensure that we have thorough engagement with stakeholders, disabled people and those who represent them, to ensure that we get exactly those matters right.

In addition, our new Work Well partnerships programme —delivered through the health system—will pilot a new model for delivering integrated work and health support in local areas, providing employment-based targeted health support to prevent people from falling out of work or to enable a return to work quickly. For those who need more intensive help, there will be universal support. We will work directly with employers to quickly match people with jobs and provide up to 12 months of personalised place and train support. This approach means that after helping someone into work, we will stay with them to ensure that they remain in employment.

We are also investing to expand the additional one-to-one support that work coaches are already providing to disabled claimants in one third of jobcentres. From the spring, we will start to make this extra support more widely available, so that it is in place across the entire jobcentre network by 2024. We will also work with the occupational health sector and employers to reform the market and improve access to quality occupational health services. That will include testing financial incentive and support models to help small and medium-sized businesses and the self-employed overcome barriers to occupational health services.

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[Chris Stephens (Glasgow South West) (SNP)]

First, I refer the House to my declaration in the Register of Members’ Financial Interests, as I will be making some remarks about public sector pay.

In this House a couple of years ago, I made a comparison that the Government were rather like those wicked characters the Warleggans in the period drama “Poldark”. I did not quite realise that that was a premonition on my part, because once again we have a Budget that benefits the rich on the backs of the very poor. The real issue here is what the Budget does not say and the huge disappointment it was.

Ministers confirmed this week that they are reneging on the promise given to me three years ago to publish the Department for Work and Pensions review of the factors driving food bank usage. The Chancellor referred repeatedly in his speech to the Prime Minister’s ambitions and objectives. One thing that the Chancellor did not mention was the Prime Minister’s stated wish to eliminate the need for food banks. Why no mention? Why no review? Why no costed plan to deliver on that particular ambition? The most vulnerable yet again are being failed by the Government and by the state. What possible reason or reasons can there be for not publishing what should be vital research to address the very factors that cause too many of our citizens across these islands to turn to food aid provision? Is it because the very factors that do so are the responsibility of the Government?

As we have been reminded by the leader of the Public and Commercial Services Union, of which I am the parliamentary chair, more than 40,000 civil servants—people on the Government’s own payroll—are having to resort to food aid provision. We know that many of those relying on it are people who have received a sanction from the Department for Work and Pensions, but we also know that some who are using it actually work for the Department, and are themselves responsible for and employed in delivering benefits to the poorest. Yet the Budget tells us in no uncertain terms that more people, not fewer, will be sanctioned. It is hard to reach any conclusion other than that the failure by Ministers to publish the Department’s own research on food bank use is due to decisions made by Ministers past and, I regret to say, present.

We had an exchange with the Secretary of State about sanctions, during which he said that there were some circumstances in which they were appropriate. However, we know from the Government’s own figures that the number of sanctions has skyrocketed in the last year. In response to recent written parliamentary questions, the Department has said it “would incur disproportionate cost”—yes, the answer to a written question contains the words “disproportionate cost”; I know that some Members will find that unusual—to find out how many children were living in households where a sanction had been applied, how many people living in sanctioned households were receiving hardship payments, how many people with a sanction had a medical condition, or how many people had been in hospital or attending a medical appointment when they were deemed to have failed to comply and were therefore sanctioned.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

My hon. Friend is talking about the impact and the scale of sanctions. Does he agree that the people who are sanctioned are pushed further and further into poverty, which goes against the Government’s own stated objective of getting people into work? The further into poverty people are, the more difficult it is for them to enter the workplace.

[Chris Stephens]

That is exactly what happens. What is also happening is that people who receive sanctions then miss out on cost of living payments, so they incur not just one punishment but a double punishment—and that, too, is pushing people into poverty.

[Mel Stride]

I have enormous respect for the hon. Gentleman, as he knows, but I genuinely wish to clarify one point. Is he at least saying that there are some circumstances in which a sanction is appropriate?

[Chris Stephens]

I will come on to that point, and yes, I will say that; but how can be it be humane to proceed with a ramping up of sanctions without knowing the basic facts, when Members are asking questions about, for example, how many children are living in households where a sanction has been applied? Does the Secretary of State not accept that with more people at risk of being sanctioned, now is the right time to roll out the yellow card benefit warning system for which many of us have been arguing, to ensure that misfortune does not lead to people being left destitute?

There are some things that the Secretary of State could do before sanctions are applied, and I believe that such a warning system is one of them and would help people into work. The Department did consider it, and we thought, when I was a member of the Work and Pensions Committee, that it was heading in that direction, but then it changed course. Perhaps the Secretary of State will want to look at the issue again. I would encourage him to look at the great work done by the Committee in this regard, and particularly at its suggestion that the yellow card system would be appropriate.

The fact remains that the measures in the Budget require those who are struggling on low incomes to jump through extra hoops, such as attending jobcentres even when they are working in what we all agree are vital roles, for example as teaching assistants or care workers. The earnings threshold has more than doubled in the space of just a year. This puts hundreds of thousands more people at risk of benefits sanctions, although we know sanctions do not work ethically, practically or economically. The Chancellor needs to understand that, no matter what he is promising for the future, far too many people are struggling to survive now.

There remains a large degree of scepticism about the employment support package, which the Secretary of State talked about today and the Chancellor referred to yesterday. Some believe that tighter sanctions will likely be a disaster for people on universal credit, and they will not help people into work, as my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) said. The Federation of Small Businesses has said that the proposals to help people with poor health to get back to work are “ill-designed” and poorly thought out, and some “won’t happen for years”. Those with health conditions and disability have been let down by a Government who have ignored employers’ views on what can best help. The FSB continued:

“Small measures on subsidising occupational health are welcome but not the big bang needed.

“Measures on the over 50s are token efforts at best…The principle of what’s announced on childcare is positive—but this Government’s Achilles heel is in delivery”.

So, as the FSB says, we will believe it when we see it.

The Royal National Institute of Blind People has said:

“For those of working age, employment should be a route to coping with rising costs. “

But it remains of the view that urgent action is needed

“to fix the Access to Work scheme—a scheme where, right now, thousands of people are facing severe delays of many months to get the support and equipment they need to do their jobs”.

I hope that the Secretary of State will note its comments, because Access to Work is clearly not helping enough people and the delays are preventing people from getting into work.

Not everyone is convinced that the childcare reforms will help get people into work. Even if the money is there to pay for childcare, there is no workforce—the pay is very bad—to deliver it. The UC changes in the administrative earnings threshold will mean more Department for Work and Pensions staff caught up in in-work conditionality, as well as swathes of extra work for staff in jobcentres. There was no mention in the Budget about whether there are any extra staff to deliver what we believe will be huge amounts of additional work. The Secretary of State is saying that there will be, so while he is answering that question, perhaps he can say what pay rise he is going to give DWP staff as well. They took industrial action yesterday. [Interruption.] I am chair of the Public and Commercial Services Union parliamentary group, but my union is Unison, of which I am a proud member. I think that answers the question from the Exchequer Secretary. I would have thought he would have done his research to have known that. Perhaps there is a very real need for civil service pay to be addressed, and I will come on to that later.

Another issue that has not been tackled is deductions. One measure that would have cost the Government very little but could have resulted in many fewer people needing to use food banks would have been to ease significantly the rate of deductions from UC. Better still would have been to waive deductions resulting from official error, or to introduce a one-off amnesty on deductions. Why no action on that, the single biggest factor affecting people going to food banks? Despite almost half of all households on UC now facing a deduction, during the last six-month period, ending January 2023, just 14 cases were fully waived and a further five were partially waived. So will the Secretary of State revise the guidance to ensure every household subject to a deduction is automatically informed of their right to request a waiver?

On public sector pay, the Budget offered nothing. As the Prime Minister sorts out his swimming pool heating, it is incredible that public swimming pools were the only public services mentioned for support in the Budget speech. Although the pension cap cut might help our NHS to retain doctors, the measure could have been limited to medicine or the NHS, rather than being a lifetime tax cut for the wealthy. The only mention, without actually announcing more money, was that cutting public sector debt would lead to more money for public services. Public sector pay bodies have noted that only a 3.5% pay rise is affordable under current Treasury allocation; as the IFS said, that is a political choice. The TUC has said that the lack of support for public services and for public pay is the “elephant in the room”. The Budget goes nowhere near a high-wage, high-skills economy.

With strikes all over the country, it is striking that the Budget said nothing about them. Public transport, public health and even public sector TV hosts are on strike, but the Government seem to prefer to fight a culture war over Gary Lineker than pay attention to ensuring that our public services have the funds they need.

The Government are again scrambling to fix the economic problems of their own making. Yesterday’s Budget is a huge disappointment to people, businesses and charities left paying for the UK Government’s mistakes. They created a crash a few months ago—there is selective amnesia about that—and they have not yet said sorry for it. There is, however, one thing on which I agree with the Chancellor, who said:

“Independence is always better than dependence.”—[Official Report, 15 March 2023; Vol. 729, c. 844.]

We could not have put that better ourselves.

[Several hon. Members rose—]

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[James Cartlidge]

The quote says,

“doing away with the cap”.

The removal of the cap is a tax measure that applies to all people who qualify for it. There is a really important point that Opposition Members probably want to listen to: there is a real danger in making up policy as one goes along. To be clear, our tax change will come in immediately, or as soon as we can possibly do it—it will come in on 6 April—but it is our view that a specific scheme for the NHS would take up to a year to put in place. Were we to bring forward an NHS-only scheme, the Department of Health and Social Care would have to consult on that scheme and then respond to the consultation. Only after that could it start to develop the scheme, because it could not predetermine the consultation. After that, the Department would have to transfer eligible people into the scheme. All that assumes that there would not be legal challenges from those who would argue that such a scheme should apply to other key people in the public sector, such as headteachers, senior police officers and senior people in the Ministry of Defence who might think that they too work hard in our public services. The Labour party has made it up as it has gone along. The fact is that Labour has U-turned from a perfectly sensible policy back to being ridden with the politics of envy, which we have heard from every single Opposition Member today.

Turning to some of the speeches, my right hon. Friend the Member for Norwich North (Chloe Smith) made an excellent contribution. She speaks with great expertise and passion on the matter of getting the disabled into work. She made the very important point that that is not just for the Government and that we also need to talk about the role that employers can play. I hope she will be pleased to hear that in the build-up to the Budget I, along with my hon. Friend the Minister for Employment and the small business Minister—my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake)—engaged directly with employer groups and worked with them to come up with some of the Budget’s proposals, particularly the extension of the occupational health subsidy pilot, the returneeship policy and boot camps for over-50s. Those are very positive measures.

The hon. Member for Glasgow South West (Chris Stephens) said that all the measures we have taken are on the backs of the poor, while the hon. Member for Jarrow (Kate Osborne) and other Opposition Members said that we have let down those on the lowest incomes. I remind the House that this year it is possible, for the first time, to earn £1,000 a month without having to pay any income tax or national insurance. We have doubled the personal income tax allowance since 2010, and in the last year we have increased benefits in line with inflation. On energy support, this financial year we have given a £650 cost of living payment to those on benefits, and in the financial year to come it will be £900. Those are not the actions of a Government turning their back on the poor. This is a Government taking difficult decisions to balance the books of this country, but in a compassionate way that helps those who have the least.

[Chris Stephens]

If the Government are doing so much for the poor, can the Minister tell us why in-work poverty is on the rise and why 40,000 civil servants, who work for this Government, are having to use food banks?

[James Cartlidge]

The key statistic is that since 2010 we have cut unemployment by 1.2 million. We have near record lows in unemployment and almost record highs in employment. Of course, we want to go further.

I am glad that the Chairman of the Work and Pensions Committee, the right hon. Member for East Ham (Sir Stephen Timms), welcomed some of the Budget’s measures, particularly the important increase in the universal credit childcare cap and aspects of the White Paper. I am sure he is looking forward to engaging in detail with my right hon. Friend the Work and Pensions Secretary, who is sitting next to me.

My right hon. Friend the Member for Chipping Barnet (Theresa Villiers) was absolutely right to say that the Prime Minister has set these targets and that this year we are making fantastic progress on three of them. Inflation is set to more than halve this year. That is not a minor detail. Inflation—driven, after all, by Putin’s invasion of Ukraine—has been the biggest reason why there have been problems with growth in countries all around the world. She also made very important points about the extension of the energy price guarantee. Yes, inflation is falling, but that shows that we continue to take steps to support people with the cost of living. We know that those pressures have not completely gone away. The elevated prices of food and other products in our shops have all come from that surge in energy prices. That is why we have extended the energy price guarantee and continued the freeze on fuel duty and the 5p tax cut on petrol and diesel for motorists.

The hon. Members for Eltham (Clive Efford) and for Easington (Grahame Morris) both put forward some very interesting proposals, which I hope have been noted by shadow Front Benchers, for a range of new wealth taxes to undermine the competitiveness of the UK. If there has been a theme among Opposition Members today, it has been a return to the politics of envy and of undermining aspiration and competitiveness.

My hon. Friend the Member for South Dorset (Richard Drax) made an excellent point. We may exchange views on which taxes we should take action on, but he reminded us of the reason why we have had to take those difficult decisions. It is because of huge external factors that Opposition Members do not like to talk about. They include a pandemic, followed, literally, on 24 February, the day on which the pandemic regulations ceased, by Putin’s invasion of Ukraine. It has been an extraordinarily challenging time, requiring us to put in place £390 billion of additional support. We can debate whether it should have happened, but it did happen and, as my hon. Friend the Member for Thurrock (Jackie Doyle-Price) has said, that has consequences for taxes and we have had to take those difficult decisions.

I also agree with the very important point made by my hon. Friend the Member for South Dorset about energy security. He is absolutely right. We are proud of the huge progress that we have made in reducing our emissions, at a faster rate than any other G7 country. Last year, 40% of our electricity was from renewables. The figure in the United States was just 20%. Yes, we welcome the steps that the US is taking through the Inflation Reduction Act 2022, but no one should be under any illusion that we are not making huge steps forward ourselves. However, we must always remember the role of energy security, which is why my hon. Friend the Member for South Dorset is right that, rather than turning our back on the North sea as others have suggested, we should be maximising the UK’s domestic supplies of energy. That is why I hope that colleagues will welcome the steps that we are taking in respect of small modular reactors. There was also the important announcement, which was welcomed by several Opposition Members, including the hon. Members for Preston (Sir Mark Hendrick) and for Stockton North (Alex Cunningham), of £20 billion investment in carbon capture and storage.

I am delighted that my hon. Friend the Member for Milton Keynes South (Iain Stewart), the Chair of the Transport Committee, welcomed the news on East West Rail, which we have had exchanges on in previous Treasury questions. He is absolutely right about the central role that new infrastructure plays in driving growth and connectivity, and I hope that the announcement brings great benefit to his constituents.