Department for Work and Pensions Debate
Full Debate: Read Full DebateDavid Linden
Main Page: David Linden (Scottish National Party - Glasgow East)Department Debates - View all David Linden's debates with the Department for Work and Pensions
(1 year, 5 months ago)
Commons ChamberI am very grateful to have been granted today’s debate about DWP spending.
I will focus in particular on universal credit, whose roll-out started 10 years ago in 2013. The DWP is forecast to have, by some considerable margin, the highest expenditure of any Government Department, at £279.3 billion in this financial year, followed by the Department of Health and Social Care, at £201 billion. DWP spending is the largest by a considerable distance.
Of course, the DWP forecast is uncertain. Almost all its funding counts as annually managed expenditure; it is hard to forecast demand-led spending. DWP’s admin spending—departmental expenditure limits—is 27% lower in real terms this year than in 2010-11. Universal credit spending is forecast to be £50.8 billion this financial year, which is £8.8 billion higher than forecast in these estimates last year, reflecting the recent much-needed uprating and a higher case load. In February, 4.5 million households were receiving universal credit payments.
A key argument in the business case for universal credit was the prospect of reducing fraud and error. Nearly a quarter of the £34 billion net present value gain expected over 10 years from introducing universal credit was due to come from lower fraud and error. In fact, fraud and error have been much worse than they were for legacy benefits. The Department’s statistics show that the universal credit overpayment rate decreased, but from an astronomical 14.7% in May 2021 to 12.8% last year. I know that the Department is setting out to address that problem, and that it has obtained resources from the Treasury to do so. Underpayments were at their highest-ever recorded rate last year, at 1.6%. I hope the Minister will be able to tell us about plans for tackling those problems.
An additional reason that it is so important to get decisions right at the moment is that universal credit is a passport to cost of living support payments. There was a strong case for merging the various benefits into universal credit, and the success of the system in getting urgently needed support out effectively during the pandemic was very important and very impressive. However, there are some big problems—above all, the problem of the five-week wait between applying for the benefit and receiving the first payment. With legacy benefits, the first payment would usually arrive a week and a half or so after applying. With universal credit, having spent hundreds of millions of pounds on what we were always assured was agile technology, the same thing now takes five weeks. That is a fundamental and unnecessary flaw; the security is absent from social security.
In January 2021, the Government rejected the Select Committee’s recommendations to eliminate the wait and instead pay all first-time claimants of universal credit a starter payment equivalent to three weeks of the standard allowance, just to tide people over. The Government response pointed out that claimants can access advances, but of course, those are loans. Repayments reduce the already low monthly awards, and repaying advances is a major driver of the explosive growth in food bank demand that we have seen. Our colleagues in the other place, those on the Lords Economic Affairs Committee—with its Conservative Chair—succinctly highlighted the consequences of the five-week wait in July last year:
“the five-week wait for the first payment…drives many people into rent arrears, reliance on foodbanks and debt.”
As such, I ask the Minister once again whether the Government will reconsider our recommendations, or whether we have to wait for a different Government for that fundamental flaw to be addressed.
I am very pleased to say that one area in which the Government have listened to the Committee is reimbursement of childcare costs for people claiming universal credit. I warmly welcome the lifting of the cap and up-front payments for childcare announced in the Budget, and I hope that our future reports will have comparable levels of success. Those changes will support people to be in work in future.
Last week, the Child Poverty Action Group published a fascinating report called “You reap what you code”, highlighting areas where the universal credit computer system does not deliver what it should. It gave the example that legislation and guidance allow some groups to submit a universal credit claim up to a month in advance, but the system does not allow that, nor is there an adequate workaround outside the digital system. As such, some care leavers and prisoners expecting release can miss out on an entitlement that they are due. For all its success in the pandemic—I am unstinting in my recognition of that success—the rigidity of the digital system is a problem. Can the Minister tell us whether a fix is planned for that problem of early claims, which the Child Poverty Action Group highlighted last week?
Does the level of benefits meet need in the way it is supposed to? Do benefits represent value for the taxpayer? The Committee is conducting an important inquiry into benefit levels in the UK, and will report in the first half of next year. Benefit levels are very low. The Joseph Rowntree Foundation and the Trussell Trust told the Committee that
“the basic rate of Universal Credit—its standard allowance (or equivalents in previous systems)—is now at its lowest level in real terms in almost 40 years (CPI-adjusted) and its lowest ever level as a proportion of average earnings.”
They estimate from pretty careful research that a single adult needs £120 per week to cover essentials: food, utilities, vital household items and travel. That is excluding rent and council tax. Universal credit’s standard allowance is £85 per week for a single adult over 25. That is a shortfall of at least £35 per week, and deductions—for advance payments, for example—often pull actual support well below the headline rate.
The Joseph Rowntree Foundation and the Trussell Trust call for an essentials guarantee. They make the point—which has been suggested this week in the press—that we might get a below-inflation uprating of benefits next year, making those problems even worse. I would be grateful if the Minister gave an assurance on that front, because that would be very bad news indeed.
Does the Chair of the Select Committee agree that the Government need to resist the temptation to try to plug the gaps with one-off payments? They should actually look at the wider, more structural problems that they have with the social security system, rather than just try to plug gaps when the system is falling apart at the seams.
The hon. Gentleman makes an important point, and I very much value his contribution to the work of the Select Committee. He is quite right, and I hope that we will be able to look at some of those structural issues over the course of the inquiry.
If universal credit did meet basic needs, other demands—including on food banks—would decrease. When the £20 a week uplift to universal credit was introduced, there was a significant drop in food bank use; when that uplift was removed, food bank use went straight back up again. Universal credit was intended to make work pay, but how can it achieve that aim if people do not have the means to pay a bus fare, for example? In evidence to the Committee, the Trussell Trust, the Joseph Rowntree Foundation and the Public Law Project all highlighted not being able to buy public transport tickets as a significant barrier to work. As far as we can tell, the Government have made no assessment at all of whether benefit levels are adequate. If I am wrong about that, I would very much welcome the Minister telling us, but there is certainly no evidence of such an assessment ever having been made. I hope the Department will look very carefully at the findings of our report when they are published in due course.
One other point was highlighted in a briefing for this debate prepared by the charity Barnardo’s. That charity describes the two-child limit as the single biggest policy driver of child poverty in the UK, and says that ending it would be the most cost-effective way of reducing child poverty, lifting a quarter of a million children out of poverty and easing the poverty of a further 850,000 children. The cost of doing so would be £1.3 billion per year. I must say that I am puzzled about the justification for the two-child limit: it presumably reflects a belief that parents should not have more than two children, but as far as I understand it, that is not the Government’s view. Indeed, Government Members are understandably starting to worry about our falling birth rate, so why do we refuse to provide support for children beyond the first two? Is it not time to just scrap that limit, which does not seem to make any sense?
Another reason for higher DWP expenditure this year is the continuation of cost of living support. Expenditure is forecast to increase by just over £2 billion this year, due to higher payments—£900 in this financial year, compared with £650 last year—and higher take-up. Those payments have been crucial, but they do not fully meet need, particularly the £150 disability support payment. Last month, Maddy Rose of Mencap told the Select Committee that the payment is “clearly not commensurate” with the extra costs that those eligible incur, and we have heard other strong evidence to the Committee along those lines. Helen Barnard of the Trussell Trust told us last month that the cost of living payment
“has certainly helped the families that have got it, but of course, it is a flat payment. It is not calibrated for the number of people you are trying to feed, so it has clearly gone less far if you are a family with children than if you are a single person or a couple.”
That is one of the reasons why the Trussell Trust data shows a faster rise in food bank demand among families with children than among families without.
The lump sum nature of the payment is problematic. Citizens Advice, speaking for many, told the Committee that increments to universal credit would be better than one-off payments. Our colleagues on the Treasury Committee called on the Government last December to provide monthly payments over a six-month period to give more households support at the time of their greatest need and reduce the severity of the disincentives to work. The Government rejected that proposal, essentially due to the limitations of the IT system, but as we know from the pandemic, monthly universal credit can be increased overnight.
The need to meet a specific qualifying period for each payment window has led to what evidence to the Committee has described as
“a cliff edge where receiving a nil UC award one month—maybe due to a sanction or a higher salary due to backpay or a bonus—caused recipients to become ineligible for the entire cost of living support payment in that qualification period.”
I am looking forward to discussing cost of living support further with the Minister responsible for social mobility, youth and progression—the Under-Secretary of State for Work and Pensions, the hon. Member for Mid Sussex (Mims Davies)—at the Committee tomorrow morning.
A very important aim in achieving effective spending is transparency over how the money is being spent and what is being achieved. The Department has had a very poor record in recent years, so I warmly welcome signs of a new commitment to transparency since the appointment of the new Secretary of State. Keeping things hidden, which has been the Department’s practice, has the short-term advantage for Ministers of avoiding having to answer sometimes awkward questions, but over the medium and long term, people depending on the Department form the impression that it is conspiring against them. The result is terrible mistrust, causing the Department very serious problems over time—for example, the very serious lack of confidence in the DWP among disabled people at the moment. It does not have to be like that, but changing things requires deliberate effort on the Department’s behalf.
None of the recently introduced employment support initiatives had regular performance reporting on introduction. I warmly welcome the Minister’s announcement of six-monthly performance reports for the restart scheme. That is one of the signs of welcome change in the Department’s approach, but it should be the norm and part of the arrangements built in at the outset, not something that has to be dragged from the Department kicking and screaming subsequently. Greater openness could deliver a wholly different relationship between the Department and the people depending on its services, with the Department seen to be working with those it serves, rather than conspiring against them.
An interesting suggestion in the Child Poverty Action Group report I mentioned earlier, “You reap what you code”, is that the source code for the universal credit computer system should be published. There would no doubt be some security concerns about doing that, but could not a small team—with experts from disability groups, Citizens Advice and software experts—be charged with reviewing that software and proposing improvements, perhaps in an annual report, a little bit along the lines of what the Social Security Advisory Committee does at the moment?
Let me briefly say a word about a different aspect of the Committee’s work. We have been worried by the cuts to the funding of the Health and Safety Executive, and one result has been drastically fewer inspections of workplace asbestos. We published a report on this last year, and called in particular for two things—a target to remove all workplace asbestos within 40 years together with a plan to deliver it, and a central digital register of all workplace asbestos and of its condition. The Government rejected those recommendations, although I do welcome the agreement of the Under-Secretary of State for Work and Pensions, the hon. Member for Mid Sussex, to meet a group of us, together with three industry groups and the Health and Safety Executive, to discuss further the idea for a register. That meeting will take place later this month.
I very warmly welcome the launch of the campaign by The Sunday Times at the weekend drawing attention to the continuing scale of the tragedy being inflicted by asbestos even now, a quarter of a century after its use was banned. It is still the biggest source of workplace-related deaths. The Sunday Times campaign headlines in particular our two recommendations, and I do hope that Ministers will now recognise the need to act. I welcome the fact that The Sunday Times will be running this campaign on a consistent basis.
I again thank the Backbench Business Committee for recommending today’s debate. I would be very interested to hear from the Minister specifically how Ministers are assessing whether the different cost of living support payments meet needs and whether they are reaching the right people, and also how and when Ministers will decide whether payments along these lines will be needed next year. I look forward to the debate we are about to have.
May I start, as others have, by sending my thanks to the Chair of our Select Committee, the right hon. Member for East Ham (Sir Stephen Timms), for securing today’s debate and for setting the scene so well? The debate takes place against the backdrop of an ongoing Westminster-made cost of living crisis that affects the livelihoods and lives of people across Scotland and these islands. The harsh, yet inescapable reality is that people in Scotland can no longer afford to pay the price for the economic mismanagement of a Westminster Government they did not elect. Indeed, we have not voted by majority for the Conservatives since 1955.
In May, CPI was still at 8.7%. Prices are still soaring and the cost of living under Westminster control is still far too high for many families who were already struggling to get by after 13 long, brutal years of Tory cuts, Brexit and economic mismanagement. We know that inflation disproportionately impacts lower-income groups such as single parents, who spend a relatively high proportion of their income on food and fuel. Indeed, new Trussell Trust research shows that families are going hungry as a result of the Westminster-made cost of living crisis, with one in seven people in the UK facing hunger in the last year due to a lack of money. Ministers often tell us that the reasons for food bank usage are complex. It is not complex—it is because people do not have enough money.
The Joseph Rowntree Foundation’s latest cost of living tracker found that 5.7 million low-income households are having to cut down or skip meals because they do not have enough money for food, while the number going without items such as food, heating and basic toiletries has remained at about 7 million for more than a year—all of that in the sixth largest economy in the world.
The average interest rate for a two-year fixed-term mortgage has risen to 6%. The Resolution Foundation has said that average annual mortgage repayments are set to rise by £2,900 for those renewing next year. In short, that is the eye-watering Westminster mortgage premium that Scots are paying for the pleasure of a Tory Government they did not elect.
What is more, analysis by the consumer group Which? shows that the prices of popular family meals have risen by 27% in the last year. The Irish and French Governments have reached agreements with major supermarket retailers to reduce food prices, while the Tory Government are sitting on their hands. It is those low-income families I represent in Parkhead, Shettleston and Baillieston who are paying the price for the sheer intransigence of Conservative Ministers here in London. Even at this late hour in the cost of living crisis, I urge the British Government to use all the powers at their disposal to tackle that crisis on the scale that is required. That does mean that they will have to be bold and radical, and the same is true of the pro-Brexit Labour party.
I turn specifically to universal credit, which is obviously the main focus of the debate. In short, the British Government’s continual refusal to fix the extensive and known-about problems with universal credit is unacceptable, and it is without doubt subjecting some of the most vulnerable people in our communities to additional and unnecessary hardship. With the three main parties in this place now agreeing on the principles of universal credit, there is an opportunity, so we should put our heads together to look at what we can do to fix it.
I will start with the level of universal credit. JRF research shows that support has eroded over decades and that the basic rate of universal credit is now at its lowest level as a proportion of average earnings. Indeed, the JRF’s latest cost of living tracker warns that about nine in 10 low-income households on UC have gone without at least one essential for the third survey in over a year.
For most people referred to food banks in the Trussell Trust network, the design and delivery of the social security system are major contributors to their inability to afford the essentials. The majority of people—indeed, some 89%—referred to food banks in the Trussell Trust network receive a means-tested benefit such as universal credit, but that did not provide them with enough to cover the cost of the essentials. As the right hon. Member for East Ham said, JRF and the Trussell Trust are together calling on Ministers to implement that essentials guarantee to ensure that, at a minimum, the basic rate of universal credit covers life’s essentials and that support can never be pulled below that level.
Is not another problem the insane part of the system where people pay back money because of advances and the level of deductions—more than £60 a month is being deducted from my hon. Friend’s constituents’ and my constituents’ universal credit? That envelops that cycle of poverty.
I am grateful to my hon. Friend for putting that point on the record. He was my predecessor on the Select Committee and follows this work well. I will come to debt and deductions, because that is one of the big issues raised in the evidence that the Select Committee receives, certainly by the stakeholders that we meet. He is spot-on to draw attention to the £60 from each of our constituents that is paid back to the Government when it could be spent in our local economies.
New CPAG research finds that the digital aspects of universal credit routinely lead to wrong amounts being awarded to claimants—often those who are most vulnerable—and to breaches of rule of law principles. That is why I have repeatedly called on the Government to reverse their cuts to universal credit and working tax credits. Let us not forget that this was the biggest overnight cut to welfare in 70 years, inflicting hardship on people who were already struggling. To have done that as we came out of the teeth of the pandemic was particularly cruel.
Rather than offering one-off payments to shore up struggling families’ incomes, the DWP should reverse the damaging policies that are impacting on the most vulnerable people. It should reinstate the UC uplift at £25 per week and, of course, extend it to legacy benefits. Let us not forget the 2.5 million disabled people, so ably advocated for by the hon. Member for Oldham East and Saddleworth (Debbie Abrahams), who were cruelly left behind without that uplift during the pandemic. The Government also need to remove the benefit cap and the two-child limit with its associated rape clause. They also need to halt the punitive sanctions regime so that all households are lifted out of poverty now and in future.
I turn to the benefit cap. As the Poverty Alliance points out, the cap’s design means that those who require the highest level of support from the benefit system are the most likely to be affected. That is simply unjust. Based on the latest departmental figures, 114,000 UK households have had their benefit capped and 86% of those are families with children. The benefit cap disproportionately impacts lone-parent families, the majority of whom are women—a point made by the hon. Member for North East Fife (Wendy Chamberlain) —as well as larger and ethnic minority families.
The same is true of the two-child limit. Thousands of families with children will be pushed into poverty because Ministers on the Treasury Bench refuse to scrap the two-child limit on child tax credits and universal credit. A new London School of Economics study found that the policy’s impoverishment of larger low-income households has helped few parents get a job. Instead, its main function has been to push families further into poverty and to damage their mental health.
I wonder why Ministers are so furled to the two-child limit. The vast majority of them are actually quite embarrassed by it, and that is before we get to the associated rape clause, or as the Government like to call it, the “non-consensual sex exemption”. When this Government go around lecturing people about the values of global Britain, I am pretty sure they do not tell folk that the state will only support the first two children in the family, but if someone can prove that their child was born as a result of rape, that is okay.
The Parliamentary Private Secretary is shaking his head at that, but probably because he is so embarrassed.
The five-week wait for a first payment is needlessly pushing people into hardship. The issue could easily be fixed by implementing the Scottish National party’s proposal to turn advance payment loans into non-repayable grants after the claimant has been deemed eligible. The Trussell Trust, which I referenced earlier, has consistently shown that the five-week wait for universal credit is a key driver in the need for food banks, both during those five weeks and after the payments have started.
I want to draw attention to the young parent penalty in UC, which Ministers must end. It denies single parents under the age of 25 the same level of social security as those above that age, and it pushes those affected into real poverty. Let us not forget that when under-25s go into Aldi, Lidl, Morrisons or whatever supermarket, they do not get a discount on their shopping because they are under 25. I find that Ministers have an obsession with that.
The hon. Gentleman has campaigned on this issue, as have I. Does he agree that the response I received from the previous Secretary of State on this point—that under-25s were treated differently because they tended to still be at home with their parents—is a pretty spurious argument and excuse from the Department?
That is right. It was not unusual for the previous Secretary of State to say things which, after some scrutiny, might not make sense. The hon. Lady is right. For Ministers to hide behind the housing crisis—caused by this Tory Government—as some kind of justification for ensuring that people under 25 get less support does not stand up to scrutiny. That point was hammered home to me on Friday, when I was in Drumchapel visiting the Christians Against Poverty debt centre, to meet staff and volunteers there, to whom I pay enormous tribute for their sterling work.
According to One Parent Families Scotland, as a result of the young parent penalty, young couple parents are around £100 worse off per month than single parents, and around £65 worse off a month than over-25s. That research found that 55% of children with a mum under 25 are in relative poverty, and 49% are in absolute poverty. Let us never forget that those statistics are the result of the structural inequality put in place by intransigent Ministers. Although I certainly welcome the change whereby people on UC will now be able to claim childcare support upfront, I am afraid that does not change the fundamental issue that the amount of UC that people receive is simply not enough. Families will still be required to make up the 15% shortfall in their overall childcare costs under UC rules.
An issue that continues to come up in evidence at the Select Committee is that far too many households face destitution because of DWP rules that push them into debt through sanctions and reductions—a point made eloquently by my hon. Friend the Member for Glasgow South West (Chris Stephens). Aberlour Children’s Charity produced a report that states that half of families with children in Scotland who receive universal credit are having their incomes reduced by the DWP to cover debts to public bodies. I hope the Select Committee will be able to drill into that a bit more. It is increasingly a problem, and I am sure I am not the only MP who sees people raising it regularly at advice surgeries.
It is well established and on record that the SNP completely opposes the widespread use of sanctions, as there is clear evidence that they do not work. Indeed, evidence from the Department’s report admits that sanctions have a minimal effect on moving people into work. Instead, people who are sanctioned end up earning less than those who have not been sanctioned, or simply become economically inactive.
The hon. Gentleman is making such important remarks. Does he agree that the impact of sanctions is detrimental to people’s mental health? We are facing a mental health crisis. If we want to support people getting into work, we need to make sure that they are not struggling on the breadline.
The hon. Lady is spot on. Sometimes, Ministers overlook when they take those decisions—yes, they might be driven by focus groups and such things—that the state bears the cost. If somebody hits a period of mental ill health or is made homeless, the health service or the local authority will pick up the pieces. It is not without cost for the state. I would like Ministers to have the wider picture as they pursue sanctions, because the research shows that they do not work.
The hon. Gentleman is being generous. Does he agree that the issue of poverty is so concerning for small children because it impacts on the development of the brain and how well they will be able to learn? If a child has a good five years at the start of their life, that will see them through life. So many children in desperate poverty who do not know whether they will get enough food are also in receipt of the anxiety their parents are in, as they battle those stressful situations.
I am proud that the Scottish Government invest in things such as the best start grant, the baby box and free school meals, to ensure that young people get the best possible start in life. My local authority in Glasgow is spending millions of pounds on holiday hunger programmes, to ensure that children who receive free school meals during school term time are still being fed. It is a damning indictment on the state that we have to spend money from local authority budgets feeding children because their parents do not have enough money. That is the situation we are in, in the fifth richest economy in the world.
Remarkably, as I am sure we will hear when the Minister responds to the debate, Ministers are still forcing more people into the sanctions regime, which further demonstrates the fundamental issue with the British Government’s attitude to those on low incomes: preventing vulnerable families from receiving the social security they are entitled to and, most importantly, when they need it the most.
Before I draw my remarks to a close, I want to turn to the local housing allowance. The freeze of LHA rates for three consecutive years is placing additional and needless pressure on tenants and housing associations, and is likely to increase poverty and inequality. That is why Ministers should protect household incomes and support renters by restoring LHA rates to the 30th percentile as a minimum. The SNP has long called for the British Government to fix those fundamental flaws in our social security system but, as is so often the case, it falls on deaf ears each and every time, to the extent that every time I take part in one of these debates, it feels like groundhog day.
The blunt truth is that the Scottish Government cannot change those policies while 85% of welfare expenditure and income replacement benefits remain reserved to this institution here in London. That includes universal credit. By all means, I am happy to take part in debates and make suggestions about how we repair the social security system, but it is difficult to conclude anything other than Westminster—whether the Tories or the pro-Brexit Labour party—has zero appetite to genuinely step in and sew up a system that is failing some of the most vulnerable people in society. For that reason, the only way genuinely to bring about that compassionate, fair and dignified social security system in Scotland is with the full powers of independence. Frankly, that cannot come soon enough.
It is an honour once again to present the case on behalf of the Department for Work and Pensions in an estimates day debate. I have lost track of the number of times I have done this, but I have certainly done so on numerous occasions during my seven years at the Department.
It is, first of all, my privilege to thank all DWP staff—whom I regard as a massive help and not a hindrance, as some may have suggested—for the fantastic work that they do up and down the country.
No.
The Government have never paid more for the pensions that we support in this country, we have never paid more for the benefit support that we provide in this country, we have never paid more for the housing support that we provide in this country, and we have never paid more for the disabled in this country. As we celebrate the 75th anniversary of the national health service, let me also put on record my thanks to the NHS. I have had my life saved twice by the NHS, once after I collapsed in Central Lobby in 2011. I got into politics because of my attempts to save my local hospital, and I am proud to have visited Hexham General Hospital this week to see the amazing new maternity suite that has recently been opened.
Much has been said today about a variety of issues, but I want to try to put the debate in context. The Government clearly understand the pressures that households are facing. We are all familiar with the root causes of our higher costs, including the global factors: the illegal war in Ukraine brought about by Vladimir Putin, the aftermath and consequences of the pandemic, and the furlough scheme and the other support that we set out in great detail and the country provided at a time of difficulty. We are committed to delivering on our priority of halving inflation, which will help to ease those pressures for everyone and raise living standards.
Alongside that work, we continue to implement a significant package of cost of living measures to support the most vulnerable during 2023-24. We have increased benefits and state pensions by 10.1%, and raised the benefit cap by the same amount so that more people feel the benefit of uprating. For low-paid workers, we have increased the national living wage by 9.7% to £10.42 an hour; that represents an increase of more than £1,600 in the gross annual earnings of a full-time worker on the national living wage. That increase, and the increases that we made in the national minimum wage in April, have given a pay rise to about 2.9 million workers. To help parents, we are delivering a significant expansion of childcare support, including a 47% increase in the maximum amount of universal credit childcare payments. As I said in the House last week, that is a dramatic increase. In addition, where there are gaps in provision, notwithstanding the above cost of living payments, the £842 million extension of our household support fund into 2023-24 means that councils across England can continue to help families with grocery bills and other essentials.