Welfare Cap

Daisy Cooper Excerpts

Wednesday 29th January 2025 Commons Chamber

[Alison McGovern]

We published in November an extensive reform programme for the Department to get Britain working. We showed how in some parts of the country—I will come to this in more detail shortly—people have been abandoned and their labour market has not supported enough good jobs for a very long time. We showed how, by acting on better health and better local support services, we will reintroduce ambition into our support services.

We want to help people get into a job that will support their family finances and help our economy thrive. We have a huge change programme underway in the Department for Work and Pensions, and we will be doing even more than we set out in that White Paper. The challenge is huge, but the potential is also massive. I worry about everybody who is out of work, but particularly our young people, who have effectively been thrown on the scrapheap. It is a disaster now in exactly the same way that it was a disaster, brought about by the economic turbulence that I grew up in, in the 1980s, which is the period the right hon. Member refers to. We will therefore take the challenge of restoring employment—proper employment—in this country extremely seriously.

In doing that, I want to talk about the Government’s wider responsibilities, not just in reforming the social security system but far beyond that. You will forgive me, Madam Deputy Speaker, if I return to the founding document of our social security system, the Beveridge report. In 1942, William Beveridge identified the

“establishment of comprehensive health and rehabilitation services, and maintenance of employment…as necessary conditions of success”

in social security.

That lesson is forgotten again and again in this country, and we will never have a social security system that functions well unless we have an NHS that works and we maintain policies designed to move towards full employment. Social security cannot soak up every single problem in this country if the Government forget their wider responsibilities. I note that the Beveridge report considered the consequences of war and the injury to the nation that that had brought about. In many ways, we ought to learn the lessons of the pandemic: that the health of the nation can never be taken for granted and that, in setting us on the right path in terms of both health and employment, we can plot a course towards a more sustainable future. As I have said, is it any wonder that our social security system is broken given the health of the nation, given what we have been through and given the last Government’s neglect of the NHS and the state of our labour market?

To look backwards again for a moment, we know that in our country’s economic history, we had periods when whole towns and cities were deindustrialised and left to fend for themselves. Economies simply failed, and while great progress has been made, including in my constituency, in my city region in Merseyside and in other places whose economies have moved on greatly since that time, sadly, too many have never properly recovered. As a result, we have a labour market that simply fails to offer good work everywhere.

As part of our “Get Britain Working” White Paper analysis, we found that when students are not counted, the inactivity rate, to give the example of Blackpool, is 29%. That is nearly a third of working age people. That can never be a good platform on which to build a thriving economy, and I am determined that we will turn it around.

More than half of the 20 local authorities with the highest rates of inactivity in England are in the north, while none are in the south-east. It is, however, far from a north-south divide. We have identified 14 types of labour markets in the United Kingdom and considered their features: what they share and what divides them. We want to identify those places that are furthest behind, precisely so that we can help.

It is not just the prevailing economic circumstances or what has happened in the recent past to a local authority that defeats people, but, unfortunately, the jobcentres that are supposed to be there to help. When we did our analysis for our “Get Britain Working” White Paper, we uncovered the record of the last Conservative Government. I was shocked to find that only around 8%—only 8%—of universal credit claimants in the “searching for work” group move into work from one month to the next. In the “no work requirements” group, 92% were still there after six months. That is the very definition of being on the scrapheap: no work and no help to get work. That is just failing people.

Then there is the price tag. Spending on universal credit and disability benefits was £10.9 billion higher than anticipated when the level of the welfare cap was calculated. That is a dreadful record. For the reasons that I set out earlier, the breach of the cap is unavoidable this year, but this Government are taking the action necessary to drive up opportunity in employment while driving down the benefits bill. Our “Get Britain Working” White Paper, as I have mentioned, set out the biggest reforms to employment in a generation, with a radical new approach backed by £240 million of investment. We are overhauling our jobcentres and creating a new jobs and careers service, doing away with needless admin and freeing up work coach time, so that my colleagues can give real, high-quality support to people.

Although I am often disappointed in the help that people receive in jobcentres, I am never disappointed by what our work coaches do. The thing that lets the work coaches down is the system in which they work. For example, they are told that they can see someone for only 10 minutes. How are they supposed to help in 10 minutes? They have to carry out numerous admin checks that could be done with modern technology, when the person in front of them is just sat there waiting, not receiving any help. Our work coaches are full of ideas, full of local knowledge and full of determination that we will make a new system work. I take this opportunity to put on record my thanks to every single DWP member of staff who has embraced change with gusto.

[Daisy Cooper (St Albans) (LD)]

When I visited the jobcentre in St Albans last year I, too, was struck by the fantastic support given by some of the work coaches. However, I was also struck by what some of the jobseekers had to say. One said that she had been in full employment, but had to give up her job to look after her two children because they could not get the special educational needs and disabilities support that they needed in school. Another said that they were struggling with addiction and could not hold down a job because they could not get the support needed from the NHS. Does the Minister agree that, while our work coaches are doing a really good job, ultimately, we need to get our public services, particularly the NHS, back on their feet?

[Alison McGovern]

I agree with the hon. Lady. Can we just take this moment to thank the DWP team in St Albans? They sound like they are doing a great job and they are also briefing their local MP, which is really good of them. I encourage all colleagues in the House to ensure that they have a regular catch-up with their jobcentre colleagues so that they know the kind of things that our work coaches have to deal with. Often, Members of Parliament can be quite helpful in putting people in touch with other organisations, so I encourage all colleagues to do as the hon. Lady has done.

On the point that the hon. Lady makes about SEND, she is absolutely right: this is a major barrier. If Members want to understand what a struggle to get to work and to stay in work looks like, they should ask the parent of a disabled child. This issue of where the effect of poverty and the SEND crisis can compound is being considered by the child poverty taskforce in particular. The hon. Lady is absolutely right: good public services and a good, strong economy go hand in hand. It is not “public services or a strong economy”—we called that ideology “austerity”, and it did not work. The two go hand in hand. We need to look in that rounded way to see how we can help people, and that is the approach that we are taking. We want to make every jobcentre in the country a place that people who are looking for work, and employers, will actually want to use. We know that what happens early on in a career echoes down the years; as I have said, our young people—the pandemic generation—were failed. That is why our youth guarantee will give every 18 to 20-year-old access to quality education, training or employment.

On top of that, we are working with local leaders who know their towns and cities best, supporting them to produce their own local “Get Britain Working” plans that join up work, health and skills to support their communities. I have mentioned the major fractures still in the UK economy following previous economic events that were not managed properly. That is how we know that the same thing just will not work everywhere. The DWP will reform itself so that we are able to localise support services, and we will work with local leaders to do that.

All of that will ensure that we help people to enjoy the benefits that good work brings to wellbeing—and I do mean “good work”. The choice in this country should never be between the scar of unemployment and the scar of poor work that does nothing but keep people poor. Poor work does not reduce the pressure on our social security system; it just means more people working too hard for their poverty. That is why we will improve the security and quality of work through our plan to make work pay. We will create more good jobs in every part of the country with a modern industrial strategy and local growth plans. Together, they will help us to meet our long-term ambition for an 80% employment rate.

We will create the conditions for success in social security. As I have outlined, the changes made to social security were ill-thought through. A fresh approach is needed to make our social security system sustainable, and we will build that system to give people the help that they need to find great jobs and feel the benefit of work. We want to tackle poverty and target support at those who need it most. We will set out our proposals in a Green Paper on reforming the health and disability system in the spring. We will work with disabled people and their organisations to get that right.

A strong social security system needs the confidence of us all. Anyone might suddenly find themselves unwell or with the extra costs that children bring, and we all hope one day to enjoy the benefits of the state pension, so we must protect the social security system now and in the future. Not only did we confirm at the autumn Budget that we would keep a welfare cap in place with a margin of 5% to account for the volatility of recent forecasts, but later this year we will publish a new annual report on social security spending across Government, setting out the DWP’s plan to ensure that it is on a sustainable path. The days of setting spending targets without a proper plan to meet them are over.

--- Later in debate ---

[Daisy Cooper (St Albans) (LD)]

Years of mismanagement by the previous Conservative Government damaged our economy, hit people’s living standards and left our public services on their knees—especially our NHS and care—so it is no wonder that we have seen the welfare bill go up. The Conservatives left GP and hospital waiting times soaring. They also saw staff vacancies spiralling, and local public health funding was slashed. The cancer treatment target has been missed every year since 2015. They promised 6,000 GPs and left government with fewer of them. Of course, the 40 new hospitals fell apart—literally in some cases—leading to inefficiencies in our health service as staff and patients battle cramped and crumbling buildings. I remember a former Conservative Prime Minister standing on the steps of No. 10 and promising to fix social care once and for all, but, as we know, millions of people around the UK are left to pick up the pieces of a broken social care system.

That disgraceful legacy and the blatant mismanagement of our economy has left millions of people unable to work due to long-term illness and having to rely on support instead, impacting growth and productivity. Under the last Conservative Government, the number of people not looking for work, especially due to ill health, reached record levels, and Government spending on welfare went up drastically as a result. Their mismanagement has left so many people unable to seek work and reliant instead on Government support.

We Liberal Democrats have always understood that a healthy economy requires healthy people. As I have said a number of times in the House, health and wealth are two sides of the same coin. The best way to bring down welfare spending is for the Government to act with urgency and ambition to end the crisis in our NHS and care, empowering people to join the workforce and reducing the need for welfare support in the first place.

The Conservatives’ mismanagement of the economy has had a direct impact on decisions being made today. At informal assessments in 2020, 2021 and 2023, the OBR clearly said that the welfare cap was on track to be breached this year, but the new Labour Government must do far more to fix our health and care services so that fewer people require Government support in the first place. I have to say that the Conservative party has lost every right to criticise the current situation when its fingerprints of failure are all over it.

We have previously discussed the impact of the Government’s national insurance contributions rise and other changes. The Government have said repeatedly that these changes are inevitable as a way to fund the NHS, but they know, and we know, that some of this is really not needed. The national insurance contributions rise will impact our GPs, dentists, public health providers, primary care providers, pharmacists, social care providers and hospices—the list goes on. Those people and businesses are propping up our NHS.

I use this opportunity once again to encourage the Government to reverse the national insurance contributions rise and look to other means of raising those funds. Fundamentally, the best way to bring down welfare spending is for the Government to act with urgency and ambition to end the crisis in our NHS and social care. We Liberal Democrats made that our No. 1 priority during the general election, and with 72 MPs, it remains our No. 1 priority in this House.