Personal Independence Payments

Debbie Abrahams Excerpts

Wednesday 15th March 2017 Commons Chamber

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

(Urgent Question): To ask the Secretary of State for Work and Pensions to make a statement regarding the recommendations of the Social Security Advisory Committee on the new Personal Independence Payment (Amendment) Regulations 2017, which are due to come into force tomorrow.

[Damian Green]

(The Secretary of State for Work and Pensions): Recent legal judgments have interpreted the assessment criteria for personal independence payments in ways that are different from what was originally intended. The Department presented regulations, which clarify the original policy intent, to the Social Security Advisory Committee. I welcome the SSAC’s careful consideration and we are looking closely at its suggestions.

Let me be clear. The SSAC decided that it did not require the regulations to be formally referred to it and would therefore not consult publicly on them. I believe it was right to move quickly to clarify the criteria, and it is clear that the SSAC is not challenging that decision.

I want to make it clear again that this is not a policy change and nor is it intended to make new savings. This is about restoring the original intention of the benefit, which has been expanded by the legal judgments, and providing clarity and certainty for claimants. I reiterate my commitment that there will be no further welfare savings beyond those already legislated for. This will not result in any claimants seeing a reduction in the amount of PIP previously awarded by the Department for Work and Pensions.

[Debbie Abrahams]

You will recall, Mr Speaker, that on 23 February the Government issued these new regulations by which disabled people or people with a chronic mental health condition would be assessed for eligibility to personal independence payments. These regulations were laid down without any consultation with the Social Security Advisory Committee and without any debate.

As the Secretary of State said, the Committee examined this issue on 8 March and sent a letter with its recommendations to the Secretary of State, which was published yesterday. The Committee made a number of recommendations, including the need to consult more widely on the proposed changes and to test or pilot them before they come into force, so will the Secretary of State commit to implementing these recommendations in full before the regulations come into force?

Parliament has had no opportunity to debate the regulations fully, or to vote on them. When will it be able to do so? The Committee found that

“it is possible that some claimants may have been awarded the mobility component or a higher rate of mobility component…following earlier decisions by the Upper Tribunal on this issue.”

That directly contradicts statements by the Prime Minister and the Minister for Disabled People, Health and Work that no one would see a reduction in their PIP award. Will the Secretary of State take this opportunity to correct the record? Will he guarantee that that will not be the case when claimants are reassessed?

The Government’s decision to change the law on PIP is a clear demonstration of the fact that people with mental health conditions are not given equal treatment. Does the Secretary of State agree with his Department’s new guidance, issued yesterday, which states that mobility impairments caused by psychological issues are “not relevant”? An analysis published today by Scope shows that 89% of PIP cases resulted in successful decisions for claimants following either mandatory reconsideration or appeal. Will the Secretary of State now review the flawed PIP process as a matter of urgency?

We have argued for some time in favour of parity of esteem for mental and physical health. The Prime Minister famously said that there needed to be more support for people with mental health conditions. Will not the Government finally honour that pledge?

[Damian Green]

Let me deal with the hon. Lady’s questions in turn.

We will of course respond to the letter from the Social Security Advisory Committee. Obviously, we take everything that it has said very seriously. We will also maintain the practice—in which the Government have always engaged—of continuous improvement in the PIP guidance. The assessment guidance is freely available, and can be viewed on gov.uk. We are constantly changing it, and the way to do that is to make parliamentary regulations, which is precisely what we are doing in this case. I am conscious that the hon. Lady has personally prayed against these regulations, which gives Parliament a chance to scrutinise them. That process will go through the normal channels, as it always does.

The hon. Lady asked a number of other detailed questions. I can only repeat what I have said before, and what has been said by my hon. Friend the Minister for Disabled People, Health and Work: no claimants will see a reduction in the amount of benefit that they were previously awarded by the DWP. The Committee says that a tribunal may have lifted the awards of some people, and it is indeed possible that that has happened. We will not claim back money that those people have received during the period before the new regulations come into force, and no one will receive less than they were awarded by the DWP. That is what I have said all along. [Interruption.] As the hon. Lady knows, reassessment happens regularly in the case of PIP and other benefits.

Let me now respond to a very serious point made by the hon. Lady. I want to clear up the position and reassure people, because I think that millions would be put into a state of unnecessary distress if they thought that PIP was not fair to those with mental health conditions. The truth is that PIP is a much better benefit for people with such conditions than its predecessor, disability living allowance. Under the regulations, people with a cognitive impairment alone can receive the highest rate of the mobility component of PIP. It is simply not the case that people with mental health conditions will not be able to do so. If the hon. Lady reads the regulations, she will see why that has happened.

Even if the hon. Lady and other Opposition Members are not willing to accept what I have said, may I please ask them to go away and look at the facts? The facts are these: 65% of PIP recipients with a mental health condition received the enhanced-rate daily living component, whereas 22% used to receive it under DLA. As for the specific mobility aspect, to which the hon. Lady referred. 27% of PIP recipients with a mental health condition receive the enhanced-rate mobility component, whereas 9% received it under DLA. It is perfectly clear from the facts that the regulations restore PIP to its original policy intent, and that that policy intent is better for people with mental health conditions than earlier benefits were.

Personal Independence Payments

Debbie Abrahams Excerpts

Tuesday 28th February 2017 Commons Chamber

[Damian Green]

I completely agree with my right hon. Friend, who obviously has huge expertise in this area, that we need clarity. In particular, the vulnerable people receiving PIP deserve clarity. I reassure them and the House that all the regulations will do is to restore us to the situation that everyone knew they were in late last year, and in which they have been ever since PIP was introduced.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

As we have heard, on Thursday the Government issued the new regulations by which disabled people or people with a chronic condition will be assessed for eligibility for personal independence payments. PIP helps disabled people to fund their living costs and, in particular, the additional costs that they face because of their condition. The regulations will come into force in just over two weeks’ time, but they were issued without any consultation with the Social Security Advisory Committee. The Government have said that this is because of the urgency of the issue.

The Government are in effect overturning two tribunal rulings that allow chronic “psychological distress” to be included in the PIP assessment. However, if the Secretary of State was so unhappy with the tribunal rulings, why did he not use his powers under sections 25 and 26 of the Social Security Act 1998 and regulations 21 and 22 of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 to challenge those rulings in the courts?

The Secretary of State’s actions not only undermine the judicial process, but reduce eligibility to PIP support for over 164,000 people with debilitating mental health conditions, including those not able to go outside their own homes. What discussions has the Secretary of State had with disabled people’s organisations ahead of bringing forward these regulations? What is his assessment of the effects on the health and wellbeing of the people affected by the cuts? Given that disabled people are twice as likely to live in poverty as non-disabled people as a result of the extra costs they face, how many disabled people will be driven into debt or face poverty as a result of these cuts? What is the cumulative effect of these cuts along with the employment and support allowance work-related activity group cuts that are due to come into effect in April, which will affect 500,000 disabled people? Finally, why are the Government contradicting their earlier argument in the 2015 upper tribunal case of HL v. the Secretary of State for Work and Pensions in which they argued that “psychological distress” should be included in PIP assessments?

We have been arguing for parity of esteem for mental health with physical health for some time now. Indeed, the Prime Minister famously said that people with mental health conditions need more support. Why will the Government not honour that?

[Damian Green]

Let me deal with some of the detailed points raised by the hon. Lady. Incidentally, we are appealing the judgments, but because of the lack of clarity that would be caused by leaving the current regulations in limbo following the upper tribunal’s decisions, it is better to move quickly. I should also say that the tribunal has itself said that the assessment criteria are not clear. If the tribunal believes that, I am more than happy to accept it—indeed, I am grateful to it for telling us that the criteria are not clear—so I am now taking the opportunity to clarify the existing regulations.

The hon. Lady talked about the effect on disabled people. I absolutely agree with her that that is the central core of what we are trying to do. I point out to her that over two thirds of PIP recipients with a mental health condition get the enhanced rate daily living component, compared with just 22% who used to receive the highest rate of DLA care. That is why PIP is a better benefit than DLA. That happened previously under the existing regulations, and I am now restoring that situation.

The hon. Lady’s questions were predicated on this being a cut. It is simply not a cut; it is not entirely honest of her to say that it is a cut. If she looks at the facts of the case, she will recognise that people claiming PIP—specifically those with mental health conditions—have been and are better off with PIP. We are making the benefit clear. We are making the change so that the benefit is paid as it has been since it was first introduced, which is better for people, particularly those with mental health conditions.

Intergenerational Fairness

Debbie Abrahams Excerpts

1st reading: House of Commons
Tuesday 28th February 2017 Commons Chamber

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

It is a pleasure to speak in this important debate on behalf of the Opposition. I need to extend the apologies of my right hon. Friend the Member for Birkenhead (Frank Field), who I believe is doing media rounds following the news about BHS that we heard this afternoon.

I am a baby boomer, too. My girls are millennials. Many of the things that have been discussed today have been described up and down the country. How lucky I was to be able to go to university without the debt that my girls—and many other young people—are experiencing, and to be able to afford a mortgage in my late 20s, before we had our first daughter. My daughters simply do not have that opportunity. Their debt will be around their necks for a long while, and they are not in a position to buy their own homes, although they both work incredibly hard.

I absolutely agree with the premise of the Select Committee’s report—we do need to address the inter- generational inequality that is being experienced throughout the country—but I differ with it on the solutions. The report suggests that the state pension triple lock should be targeted for expenditure savings. According to the OECD, the basic state pension was one of the world’s lowest after the Thatcher Government broke the link between earnings and uprating in 1980. That led to a long decline in the value of pensions, which the last Labour Government strove to restore.

Although there have been positive efforts to ensure that the new single-tier state pension is fairer and of wider benefit to members of the current generation, there are problems with it. Over the course of their retirement, those in their 40s will be £13,000 worse off than otherwise, those in their 30s will be £17,000 worse off, and those in their 20s will be £20,000 worse off. A continued above-inflation rise will not only benefit those who are retiring now, but will be enjoyed by generations who are to retire. That is one of the central reasons for Labour’s commitment to maintaining the triple lock beyond 2020. I know that we differ from the Government in that regard, but underpinning our decision is the issue of inequalities within generations. We must not trade off the inequality of one generation against the poverty of another.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

Will the hon. Lady give way?

[Debbie Abrahams]

I hope that the hon. Gentleman will excuse me if I do not. I am incredibly pressed for time and I have already had to cut my speech considerably.

The Select Committee recognised that those who look solely at the intergenerational picture can lose sight of important inequalities within generations. It is important to protect the triple lock and universal pensioner benefits while making different choices to support other generations. The Labour Government made great strides—about 1 million pensioners were lifted out of poverty—but one in seven have remained in poverty since 2010. That level is still much too high, and it should worry us. That is not acceptable in one of the richest countries in the world, and we must do all that we can to ensure that the trend does not rise again. That extends to our commitment to the triple lock and universal pensioner benefits, and our commitment to act immediately on the fate of the 1950s WASPI campaigners. We are committed to ensuring that every older person has dignity and security in retirement.

What are the other choices that we believe should be made? Three specific policies could immediately help to address intergenerational imbalances in a way that would not deprive one generation while supporting another. First, we want to introduce a real living wage, based on what people actually need. After evaluating the effects of the national living wage that has been introduced, the Living Wage Commission said that it failed to meet the basic needs of low-income households. Analysis by the Institute for Fiscal Studies has shown that without significant policy change, real wages are likely to remain lower in 2021 than they were after the recession. Seven years of austerity have consistently failed to deliver pre-recession wages. The decline in the value of wages has been driven by what the Office for National Statistics has described as an unprecedented decline in productivity —unprecedented since world war two. At the same time, prices of basic household goods and services have risen dramatically.

That long squeeze has been coupled with repeated attacks by this Government and the coalition Government on income support provided through the social security system. Many Members have mentioned the issue of in-work poverty: 7.4 million people—one in eight—are living in poverty, including children. I beg to differ with the point that work is the route out of poverty. Four out of five people in low-paid work will still be in low-paid work 10 years later. Taken together, those dynamics have really impacted on standards of living.

Labour has therefore committed to intervene. At our party conference last year, the shadow Chancellor announced that he would introduce a real living wage of £10 an hour. That is what is anticipated will be needed in 2020. The second step is to invest in social and affordable housing. I mentioned my own experience and that of my daughters. It barely needs repeating that the rapid acceleration in house and rental prices, which is a direct result of the failure of all Governments, but especially this Government, to build social and affordable housing, is a key driver of the declining standard of living among those of working age. It might indeed be the fundamental dynamic driving intergenerational disparities.

The consensus is that we need to be delivering 200,000 homes a year, 80,000 of which should be at affordable social rent levels, if we are to keep up with household formation and address poverty levels. Last year, unfortunately, the Government got nowhere near that. Rather than raiding the state pension, the Government should invest in socially rented housing, or allow councils to replace stock sold under the right to buy. That would have a huge impact on intergenerational unfairness, as the Work and Pensions Committee recognises.

The third policy intervention to address the inter- generational imbalance is widening access to auto-enrolment saving. It is a testament to the previous Labour Government that 10 million additional workers are estimated to be newly saving or saving more as a result of auto-enrolment. A total of £17 billion of pension savings has been put away by low-income workers. However, 37% of women workers, 33% of workers with a disability and 28% of black and minority ethnic workers are still not eligible for auto-enrolment. That must be addressed in the review that will be undertaken. We will be pushing hard for that, as the Pensions Minister would expect.

We respect the hard work that the Work and Pensions Committee has put into producing its report. We broadly agree with its analysis, but we believe that there should be a different emphasis and different policy solutions to address the intergenerational inequalities that exist.

Social Security and Pensions

Debbie Abrahams Excerpts

Tuesday 21st February 2017 Commons Chamber

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I will start with some general comments on the Guaranteed Minimum Pensions Increase Order 2017 before turning to the Social Security Benefits Up-rating Order 2017.

Clearly we support the uprating of the guaranteed minimum pension in line with prices. However, I wish to touch on issues raised in last year’s National Audit Office report on the guaranteed minimum pension and the new state pension arrangements that came into effect last year. As we have heard, the Guaranteed Minimum Pensions Increase Order provides an annual increase in the guaranteed minimum pension where there has been an increase in the general level of prices during the period under review.

When the additional state pension was introduced in 1978, an option was created under which an individual could contract out into another pension scheme on the basis that that other scheme met certain criteria. In that instance, both the employee and their employer paid a reduced national insurance contribution given that they were forgoing the state pension entitlements. Between 1978 and 1997, schemes that took on such new members were required to provide a guaranteed minimum pension—a new test was applied after 1997. Nevertheless, contracted-out schemes still had to provide a guaranteed minimum pension to scheme members for rights accrued between 1978 and 1997.

In 2016, the introduction of the new state pension ended contracting out by replacing the additional state pension with a single tier. Working-age people will now have their existing state pension entitlement adjusted for previous periods of contracting out and transferred to the new state pension scheme. Occupational pension scheme providers will continue to revalue any guaranteed minimum pensions that people have built up.

For people retiring after 6 April 2016, the Government will no longer take account of inflation increases to guaranteed minimum pensions when uprating people’s new state pension. The changes mean any guaranteed minimum pensions accrued between 1978 and 1988 will not be uprated, and the scheme provider will uprate guaranteed minimum pensions built up between 1988 and 1997 only to a maximum of 3% each year.

The National Audit Office was contacted by people approaching retirement age who had concerns that the new arrangements for a single-tier state pension will leave them worse off than they would have been under the guaranteed minimum pension. People also raised concerns about the lack of notice. Where have we heard that before? The NAO investigated and concluded that there would be some winners and some losers under the new arrangements, depending on the amount of time that people were contracted into a scheme. The NAO also commented that, again, there had been a dearth of information for those new retirees.

The NAO suggested that those who lose under the new rules may be able to build up additional entitlement to the state pension. The report recommended that the Government, via the Department for Work and Pensions, improve their evidence and analysis of the impact of these reforms, and provide much clearer, targeted information to the public about how they will be affected. I would be very grateful if the Minister updated us on how her Department is responding to the findings of the NAO report.

The Social Security Benefits Up-rating Order 2017 provides for the annual uprating of social security entitlements excluded from the Government’s freeze to levels of social security enacted in the Welfare Reform and Work Act 2016. This year, the Secretary of State has decided to uprate social security entitlements by inflation under the consumer prices index measure, which is at 1%. As the Minister explained, that covers attendance allowance, carer’s allowance, disability living allowance, the personal independence payment, industrial injuries disablement benefit, bereavement benefits, incapacity benefit and severe disablement allowance, to name but a few. The Secretary of State has also decided to uprate the new state pension in accordance with the triple lock, and pension credit in line with earnings, at 2.4%.

We would not stand in the way of measures to increase the adequacy of the social security safety net provided by those benefits, especially not after seven years in which the system has been under considerable attack. We will therefore support the uprating order, but I must take this opportunity to expand on my real concerns about the inadequate uprating, particularly in the context of the freezing of many social security payments under last year’s Welfare Reform and Work Act, and the real cuts to some kinds of social security support, such as the employment and support allowance, the support for those in the work-related activity group, the universal credit work allowances, and the widow’s pension allowance, which we discussed yesterday, again to name just a few. This is an erosion of the adequacy of social protection for those who are often the most vulnerable in society.

[Justin Tomlinson (North Swindon) (Con)]

Surely the shadow Minister recognises that our support for those with long-term health conditions and disabilities has increased by £3 billion a year, to a record amount. That shows that we are directing money to the most vulnerable in society—rightly so.

[Debbie Abrahams]

I am grateful to the former Parliamentary Under-Secretary of State for Disabled People. Actually, we know that social security support will have declined by 2020.

[Justin Tomlinson]

indicated dissent.

[Debbie Abrahams]

The former Minister shakes his head, but these are the Government’s own figures. If we look at spending across Europe as a percentage of GDP, we see that we are below the EU average when it comes to social security spending, just as we are on health spending.

Let us start with rising costs. Traditionally, the link between social security and inflation has ensured that some of the most vulnerable households in our country are not made worse off, year on year, by inflation in the cost of basic goods and services. The adequacy of social security has been heavily eroded over the past seven years. Research by the Joseph Rowntree Foundation demonstrates that the price of essentials has risen three times faster than wages over the past 10 years. When that is combined with the coalition’s initial 1% freeze on uprating, introduced in the Welfare Reform Act 2012, and the complete social security freeze put in place in last year’s Act, it means that low-income households have seen a significant deterioration in the adequacy of social security support since 2010.

Clearly, the historic drop in oil prices and subsequent slow-down in inflation of the price of household goods provided some respite to low-income households, but we know that the impact of the EU referendum on, for example, food and fuel prices is only just starting. People on low incomes spend a much larger proportion of their household budgets on the essential goods and services that have been so prone to inflation, so they are likely to have felt the effects of spiralling prices long after they have slowed down.

The costs of basic household items are beginning to rise again, with last month’s official figures showing inflation at a two-year high of 1.8%. I understand that the actual increase in food prices has been approximately 20%, but that has only just started to be passed on to consumers, so it is going to get worse. That puts real pressure on households that are trying to provide for their basic needs. Indeed, last week the Joseph Rowntree Foundation published a report showing that 19 million people are now struggling to make ends meet and get the basics required for a socially acceptable standard of living.

In the context I have set out, a 1% uprating to some social security entitlements is unlikely to do much for those who are struggling to get by. If the Prime Minister is really serious about helping those people, I urge that there be some reconsideration. As a matter of principle, it seems only fair that social security should rise in line with inflation and should apply to all entitlements, not just the ones that the Government have cherry-picked. Although the economic arguments for a freeze may once have been founded on the slow-down in the prices of the basics that every household needs, now that prices are predicted to rise by 10% by 2020 even that weak economic justification no longer stands up. That is before we even get to the social argument for protecting the incomes of the poorest people in our society, whom this Government have set out to punish over the past seven years.

In last year’s inquiry by the all-party group on health into the effect of the Welfare Reform and Work Act 2016 on child poverty and child health, the freeze on social security support payments was singled out as the most damaging. I remind Members that the Institute for Fiscal Studies estimates that child poverty will increase by around 1 million as a direct result of social security and tax changes, and that will impact on those children’s health and futures. I make an impassioned plea to the Government and the Minister: we are approaching April, when several other disability benefits will be cut; I urge the Government to reconsider.

I shall not detain the House any longer. I urge the Government to review the cap before price inflation begins to pick up again. If they really cared about those struggling to make ends meet, that is exactly what they would do. In the meantime, although we regret the limit on the groups who will benefit from the uprating, we will support the order.

Oral Answers to Questions

Debbie Abrahams Excerpts

Monday 20th February 2017 Commons Chamber

[Penny Mordaunt]

We are looking at the assessment process. A huge amount has already been done to ensure that assessors and those in our Jobcentre Plus networks have been trained to recognise the needs of people with a mental health condition and to ensure that what they are doing is fit for purpose. The Green Paper on work and health will provide us with the opportunity to re-evaluate entirely those assessment processes primarily for ESA, but it will also reveal some opportunities for PIP.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

People with mental health conditions and autism whom I met recently in Bristol told me of the difficulties they face getting into work. They also told me about the issues relating to PIP, work capability assessments and sanctions. Those in the ESA support group fear that the Green Paper spells out that they will be targeted next after cuts to people on the ESA work-related activity group in April. How does the Minister justify ESA WRAG cuts, cuts to employment support, jobcentre closures and the liberal use of sanctions as helping disabled people into work when there is overwhelming evidence to the contrary?

[Penny Mordaunt]

We are doing more for that group of people, which is why, despite the hon. Lady’s request, I will not be pulling the personalised support package that will take effect in April.

--- Later in debate ---

[The Minister for Disabled People, Health and Work (Penny Mordaunt)]

May I first praise the work of the all-party group on motor neurone disease, and the work of my hon. Friend as its vice-chair? Following the announcement, we are working to develop a set of criteria to switch off reassessments for people with the most severe health conditions or disabilities. We have sought feedback from stakeholders, including many motor neurone disease organisations. They will not be about a specific list of medical conditions; they will be based on a number of other factors, in particular how conditions are impacting on people.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

In April, the Government’s two-child policy will mean that a woman who has a third child after being raped will have to prove that fact if they are to get child tax support. At the same time, the Government are cutting widowed parent’s allowance by an average of £17,000 for each bereaved family. In 2015, that benefited 40,000 children who had lost at least one parent. Will the Secretary of State please think again about these punitive measures?

[Damian Green]

I do not agree with the hon. Lady that the measures are punitive. To take just one of the two that she brought up—bereavement payments—as she knows, this measure is bringing three payments into one. The original system was devised for a world in which women often would not work at all and so needed lifelong support, rather than the extra support that they will be offered after such a tragic event. I think she will find that the new system is much fairer and more effective at providing support when it is most wanted.

Pension Schemes Bill [Lords]

Debbie Abrahams Excerpts

2nd reading: House of Commons
Monday 30th January 2017 Commons Chamber

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I thank the Secretary of State for outlining the content of the Bill. In addition, I pay tribute to my colleagues in the other place who have already scrutinised the Bill.

The Opposition recognise and support the need to ensure that there is adequate regulation for master trusts as they have developed since the introduction of auto-enrolment, but the point made about the missed opportunity was right.

As the Secretary of State set out, the Bill focuses on defined contribution occupational pension schemes alone, defining regulation of master trust schemes which provide centralised workplace pension funds for several companies at the same time and have largely emerged as a result of the development of auto-enrolment in pensions. It gives the Pensions Regulator responsibility to authorise those schemes that meet certain criteria. It also provides for a funder of last resort in cases where a master trust fails. Sadly, this is something we hear too much about with too many other pension schemes. Finally, the Bill gives the Pensions Regulator the ability to withdraw authorisation from a master trust and sets out the criteria for triggering such events should a master trust face difficulty.

As I said, the measures in the Bill are slightly overdue. In April 2014, it was estimated that master trusts accounted for two-thirds of people who had been auto-enrolled. Master trusts operate on a scale that is unprecedented in occupational pensions and most are run on a profit basis. Currently, however, they are not subject to the same regulation as contract-based workplace pensions. There is no requirement for a licence to operate and limited barriers to entry. There is also little guidance on who can become a trustee and no infrastructure in place to support the wind-up of a failed trust.

Given that the savings and pensions of millions of employees and their employer contributions are at risk, we cannot allow this to continue. We support the Bill, which is vital to putting the auto-enrolment system on the strongest possible footing, but we will look to strengthen it where we can, for example by building on our amendment on the funder of last resort. By protecting members from suffering financial detriment, while promoting good governance and a level playing field for those in the sector, the Bill should ensure that the system is a secure and trusted means of saving in the future.

Before I come on to specific elements of the Bill, I would like to expand on how disappointed I am, and how millions of others will be, with how limited the Bill is. Perhaps the Secretary of State will surprise us, but I think this is likely to be the only pensions Bill in this Parliament. Significant issues are already arising relating to both state and occupational pension provision. It is therefore disappointing, if we are to see no other Bill, that those issues are not being addressed.

One key issue is that of the WASPI women: the Women Against State Pension Inequality Campaign. These women, and some men, have been left behind by the Government’s poorly managed accelerated equalisation of the state pension age. Over 2.5 million women born in the 1950s made their plans for retirement only to find that their retirement age had been quietly pushed back by the coalition Government.

[Madam Deputy Speaker (Natascha Engel)]

Order. I gently remind the hon. Lady that we are discussing what is in the Bill, and not what is not in the Bill. It is quite a narrow Bill.

[Debbie Abrahams]

I am grateful to you for reminding me, Madam Deputy Speaker. It was a debating point in the House of Lords. As I said, it is not likely that there will be another pensions Bill in this Parliament, so I hope you will give me some latitude.

[Frank Field]

There was a hope among some of us on either side of the House that the Bill might be blocked tonight, temporarily, until we got justice for the WASPI women. Unfortunately, as I understand it, Labour was not willing to do that and the Scottish National party in particular was not willing to do that, as they are pleased with the Bill and want it to go through. May I make a plea to my hon. Friend that, should the next pensions Bill come, as it assuredly will, and before all the WASPI women are taken up to the new state retirement age, Labour thinks tactically about trying to get them justice, rather than merely talking about it, as I have to?

[Debbie Abrahams]

I am grateful to my right hon. Friend for his remarks. We recognise the importance of the Bill in tightening the regulation—or lack of it—on master trusts and the vulnerability that that lack places on the millions of people who are being auto-enrolled. It is therefore important that the Bill goes through. My point is that if it is the only pensions Bill in this Parliament, it has serious omissions. Those omissions should be on the record, as should our objection to the fact them. If I could just have a few moments to mention—

[Madam Deputy Speaker]

Order. The hon. Lady has made the point that she feels those issues have been omitted, but they are not in the Bill. If she could now move on, I would be very grateful.

[Debbie Abrahams]

I am grateful for that ruling, Madam Deputy Speaker. Although we have made significant improvements in terms of pensioner poverty, I have to say it is a disappointment that there are still outstanding problems. Under our pension system, of which we should be guardians, one in seven pensioners still unfortunately lives in poverty. We are the fifth richest country in the world, so we should be able to ensure that our pension system provides dignity and security in retirement. Currently, it does not. For me, this a significant failure of our pension system and highlights a particular failure in the Bill.

I could also talk about the missed opportunities surrounding the Cridland review of the state pension age, which has not been brought to this place, and there are lost opportunities when it comes to the defined benefit Green Paper. It was due later this year, but it has now been decided that it will not be brought to this place for scrutiny in connection with this Bill.

I will move on, Madam Deputy Speaker, because I know I am testing your patience. [Interruption.] That is a bit unkind. Closer to home and in relation to the Bill, it does very little to build—[Interruption.] Do any Conservative Members want to intervene? Okay, I will carry on.

The Bill does very little to build on the success of Labour’s auto-enrolment policy by ensuring that saving into master trusts is accessible and encouraged for a number of groups currently excluded from auto-enrolment provision. I recognise that the Government have announced a review of auto-enrolment, but again, why is this not in the Bill?

Let me speak briefly about the issue of low-income savers’ access to saving in master trusts. Under the policy of auto-enrolment developed by my party, working people would be automatically enrolled in a master trust scheme once their earnings hit the trigger of just over £5,000. The logic of this proposal was that people would begin to save towards an occupational pension at the same earnings level at which they began to pay national insurance contributions. The coalition Government increased this earnings threshold to £10,000, denying millions of low earners the automatic right to save towards a relatively low-cost occupational pension through a master trust. Given the generational crisis developing in our pension system, we believe that more needs to be done to include low earners in savings provision and encourage retirement planning.

That is also true for the self-employed. Self-employed people currently make up to 15% of the workforce, and since 2008 have accounted for over 80% of the increase in employment. There is much evidence to suggest that the self-employed are not saving as much as other sectors of the workforce. Research by the Association of Independent Professionals and the Self-Employed found that four in 10 self-employed people did not have a pension. Despite that worrying evidence, there is little obvious means by which a self-employed person could begin to develop a savings pot within a master trust. Once again, this is not sorted out in the Bill. There are other examples, such as people with multiple jobs and carers, of those who do not have access to, and the benefit of, an occupational pension scheme.

The Secretary of State has just announced that there are gaps in the Bill, relating to its failure on a number of different issues. We are shocked by the vast amount of detail missing from the Bill, when that detail is necessary to achieve what the Government have set out to do. The Secretary of State mentioned that secondary regulations will not be laid before the end of the year. Once again, the Government are, in respect of some important protections, presenting a skeleton Bill, with much of the detail left to secondary legislation.

Although we generally support the Bill, despite its narrow scope, there are a few aspects that we will look to strengthen and a few gaps that we believe need to be plugged. These can be considered broadly under three themes: improved governance, strengthened member engagement and greater transparency. The Bill includes a number of clauses that provide a framework for the effective governance of master trusts. We welcome, in particular, the authorisation criteria set out in the Bill. However, it does not address a number of core principles, the first being scheme member representation.

Unlike defined benefit schemes, defined contribution schemes provide for the risk of saving and investment to be borne by the scheme member. On that basis, we believe that scheme members should be represented among the trustees of master trust pension funds. It is, after all, their money, and they have a direct interest in ensuring that a sound and sustainable investment strategy is delivered at good value. That surely stems from the basic democratic principle that those on whose behalf decisions are being made should have a say in those decisions. It would also be a necessary step towards greater transparency in the pensions system, which the Under-Secretary of State for Pensions himself confirmed that the Government would pursue following Labour’s campaign.

Furthermore, providing for a certain number of member-nominated trustees would not be a particularly new or unique arrangement. Mandated member representation already exists in the pensions system: trust-based pension schemes are required to ensure that at least a third of the board of trustees is member-nominated. Why should master trusts not be subject to the same requirement, especially in the light of the increased risk borne by scheme members?

Let me say something about transparency. For too long, people have been encouraged to put their faith—and, perhaps more important, their money—in a distant savings pot, and have been given very little information about where the money is invested, the performance of their savings, and, importantly, how much the investment is costing, in terms of the costs and charges that they will incur. Neither the scheme trustees nor the scheme members have been able to ascertain adequately whether they are getting value for money. I remember that in 2015, the former Financial Secretary to the Treasury promised the Work and Pensions Committee that if there was not openness about costs and charges, the Government would introduce legislation. Well, it has come a little bit late. Why has it taken so long?

In almost any other market, people wishing to purchase goods or services are given basic information about performance and costs before they do so. That basic principle is a necessary requirement to ensure that they receive value for money, but it is not operating in our pensions system. The Financial Conduct Authority has therefore published an interim report, which recognises a number of significant failings in the competitiveness of the asset management market. Its recommendations have important implications for the transparency of pension funds, especially in relation to the costs and charges being extracted from pension savings by investment managers.

We are pleased to see that part 2 of the Bill attempts to prevent excessive fees from being applied should a scheme member wish to take advantage of the Government’s pensions freedom reforms. However, the Bill does not refer to transaction costs, the charges applied by asset managers when they are making new investment decisions. There is a great deal of work to be done to tackle the problem of opaque and excessive costs and charges being extracted from workers’ savings by investment managers. Currently, the Bill merely scratches the surface. It must become a stronger vehicle for change in this regard.

We believe that, alongside member-nominated trustees, a member engagement strategy is required to ensure that master trusts are communicating properly with those whose money they are investing, and that they play their part in driving informed saver choices on a bedrock of transparent information. The Pensions Regulator’s voluntary code of practice for defined contribution schemes asks trustees to provide “accurate, clear and relevant” communications for scheme members as good practice. We believe that proper member engagement should not merely be a voluntary requirement placed upon trustees, but should form part of the regulatory framework. That would help to ensure that scheme members can make rational and informed choices about their pension savings, creating a more sustainable system.

There are other elements in the Bill whose purposes we want to strengthen or clarify: for instance, the definition of the scope of a master trust, what happens to non-money purchase benefits under this Bill, a number of issues relating to the pause clause, and the status of the scheme funder as a separate entity.

We welcome the Bill, but we see it as a wasted opportunity. So much is being introduced after the event. There will be no opportunity for another pensions Bill; the provisions will be delegated to statutory instruments.

[The Economic Secretary to the Treasury (Simon Kirby)]

How do you know?

[Debbie Abrahams]

That is what we have been told. That is what we have been led to believe by the Government. Given how long overdue this Bill is, this is likely to be the only opportunity that we have to raise this, and it should have been brought to this House.

We need to develop a sustainable and secure pension system that drives down pensioner poverty and delivers dignity in retirement for all, and I am afraid that this Bill falls well short of that.

DWP Policies and Low-income Households

Debbie Abrahams Excerpts

Tuesday 17th January 2017 Commons Chamber

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

The Minister paints such a rosy picture, yet the SNP spokesman, the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), gave examples of cases that he has experienced. I could also give examples, and I am sure that Government Members have examples of cases they have dealt with regarding the work capability assessment or other cuts. It is absolutely right that we debate this very important matter.

The Minister started by expressing the Prime Minister’s commitment about having

“a country that works for everyone.”

We need to scrutinise those words and, more to the point, work out whether they are actually true, particularly in relation to social security policies and their impact on low-income households.

To understand why the Government’s attacks on the poor are so damaging not just to the people who experience those attacks, but to the whole country, we need to understand the situation in the context of inequalities. I worked on this for more than 20 years before I entered this House six years ago, and I focused on the effects of inequalities in income and wealth on our health. Overwhelming evidence over the past 30 years shows that the risk of poorer health and lower life expectancy increases from high-income to low-income groups. My dear friend, the former Health Secretary, Frank Dobson, said:

“There is no more serious inequality than knowing that you’ll die sooner because you’re badly off.”

This pattern of illness and disease is systemic, socially produced and universal. It is not about the individual or biological factors. It is about inherent, systemic, socially reproduced inequalities. They are not inevitable. They can be changed, so we should all have hope.

The pioneering work of Professors Richard Wilkinson and Kate Pickett published in “The Spirit Level” a few years ago showed that socioeconomic inequalities do not affect just life expectancy, but educational attainment, social mobility, crime levels, mental health, happiness, and even trust within and between communities. The simple truth is that the smaller the gap between rich and poor, the better we all do.

When the Prime Minister claims she wants to tackle these burning injustices, I have to ask her where she has been. These injustices were burning while she was a senior member of the Government. Now that she is Prime Minister, what is she doing to address them? Again, I am going to go on to show that it is not a lot.

This week, as the World Economic Forum gets under way in Davos, we hear the same warning we heard from the IMF in 2015—that widening inequality is the most defining challenge of our time. Last week, we heard yet again about obscene pay ratios, with top executives now earning 130 times more than the average employee. Yesterday, Oxfam published the breathtaking figure that eight individuals have the same combined wealth as half the world’s population—just eight people.

Last Friday, the Institute for Fiscal Studies published its analysis of inequality in the UK, which showed that the inequality in pre-tax pay between high and low earners has risen. Since 2010, working people on low incomes—particularly families with children—have lost proportionately more of their income than any other group, as the net result of tax and social security changes.

The Government have glossed over this problem with divisive rhetoric. Repeatedly, they have said that poverty and inequality are a pathology of the individual rather than the result of the structural flaws of their economic and public policies—particularly their social security policies.

We have just heard from the Minister that work is the route out of poverty, but why is it that, contrary to the Government’s divisive narrative, more people in work— 7.4 million people—are in poverty than ever before? Three million children of the 4 million living in poverty are living in families where someone is working. How can that be a success story of the Government? When will they start to look at the structural issues in the labour market and at the productivity crisis rather than victimising the poorest? Four out of five people on low incomes now will still be on low incomes in 10 years. What have the Government done about that?

The motion raises some of the important questions hanging over the Government’s flagship programme, universal credit. We supported the original principles of universal credit—to make sure that work always pays, by allowing people to work more hours without the fear of being made worse off. Universal credit had the potential to address inequality, by targeting employment support to those on low pay, reducing the cliff edge associated with other support, such as tax credits, as the Minister said.

However, we are a world away from the project initially lauded by the Government. We have been through seven delays in implementation, a reset by the Major Projects Authority, criticism from the National Audit Office and costs spiralling out of control. The many practical issues with the programme have yet to be sorted out, and a full working delivery is still a distant prospect. Fundamentally, there are key flaws in the design of UC.

Take, for example, the issue of four-weekly payments, with people being paid twice during one universal credit assessment period and expected to re-apply for support the following month. As hon. Members can imagine, many people do not know they have to reapply, so it comes as a rather unpleasant surprise when the Department refuses them support. Will the Minister please update us on progress in dealing with four-weekly payments?

Or perhaps we should look at the impact of universal credit’s so-called long hello. Last year, a report by The Guardian showed that the shocking 42-day wait to receive the first payment had sent claimants’ food bank use and rent arrears spiralling. One survey of landlords responsible for 3,000 households on universal credit found that eight out of 10 tenants were in arrears. Will the Minister commit to immediately reducing that waiting time and to providing immediate access to hardship funds so that people do not have the current two-week delay?

On sanctions, I am pleased that the Government are finally seeing the evidence of how damaging the system is and its impact on getting people off flow. We cannot underestimate the impact of sanctions when it comes to the rosy picture of falling claimant counts. Under the UC regulations of 2014, the Government are able to sanction people who are in work on low pay. We are now starting to see more people who are already working—doing the right thing—being sanctioned because they are not working hard enough. One million people on zero-hours contracts are potentially under threat from this Government.

[James Berry (Kingston and Surbiton) (Con)]

Will the hon. Lady give way?

[Debbie Abrahams]

I am sorry but I will not; otherwise, people are going to miss out. [Interruption.] I am happy to take it outside, gentlemen.

Most important for low-income families has been this Government’s slashing of the programme’s budgets, significantly undermining the principle that work will always pay under the scheme. Cuts to the work allowances of universal credit will mean that, on average, claimants receive £2,100 a year less than if they were on UC. The autumn statement had no impact on this.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey mentioned the impact of this Government’s horrendous cuts on disabled people. With nearly £30 billion of cuts to 3.7 million people, we are definitely going to see more than 5 million disabled people pushed into poverty. We also heard about the jobcentre closures. It seems that the universal credit programme will no longer make work pay. It was built by a Government who believe that the best way to help people into work is by shutting jobcentres. We believe that, like our NHS, the social security system should be based on principles of dignity, inclusion and support, and Labour will do this.

[Several hon. Members rose—]

Oral Answers to Questions

Debbie Abrahams Excerpts

Monday 9th January 2017 Commons Chamber

[Damian Green]

If the right hon. Lady is saying that it is disproportionately men who take the allowance up, I would urge more potential women entrepreneurs to take it up. We are improving the new enterprise allowance later this year to make sure that the mentoring and advice goes on for longer so that more people—men and women—will be able to benefit from the freedom of being able to start, set up and run their own business, which millions of people want to do.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

A happy new year to you, Mr Speaker, and to everyone.

Resolution Foundation data show that self-employment accounts for 81% of the net change in employment since 2008. The Government’s plans to abolish class 2 national insurance contributions could leave low-income, self-employed women paying five times as much to access maternity allowance. Given that nearly 2 million self-employed workers earn less than the national living wage, why have the Government decided to make social security support harder to access for so many of Britain’s entrepreneurs?

[Damian Green]

They have not. Let me update the hon. Lady’s figures, which I know she has quoted before. Since 2010, 29% of the increase has been in self-employment, and in the last 12 months—

[Debbie Abrahams]

Since 2008.

[Damian Green]

I know about 2008; I am giving more up-to-date figures, as I said.

Over the past year, 38% of the increase in employment has been in self-employment, so the figures are not as the hon. Lady suggests. As I said in answer to the hon. Member for Torfaen (Nick Thomas-Symonds), the whole point of universal credit is that people, whether it be through self-employment or employment, are able to keep their income. We have reduced the taper so that less of their income is lost when they go up the earnings scale and get into work. I am afraid that the hon. Lady simply misunderstands what is happening in the welfare system.

--- Later in debate ---

[Penny Mordaunt]

My hon. Friend the Minister for Employment has met all the MPs who are concerned about those locations across Glasgow, and my hon. Friend the Minister for Welfare Reform has met Scottish Ministers to discuss the issue. We are aware of the concerns that Members have raised. If the hon. Lady has any subsequent comments to make, she is more than welcome to have meetings with either me or my colleagues.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

People with mental health conditions are more likely to fail the work capability assessment and more likely to be sanctioned. At the same time, we know from independent research how damaging work capability assessments and sanctions are for people’s mental health. The Prime Minister made her announcements today, but when will the Government take responsibility for the impact of their policies on mental health and ensure that timely, evidence-based support from trained mental health professionals is available for claimants with mental health conditions? Will the Secretary of State commit to scrapping the work capability assessment and punitive sanctions, as Labour has?

[Penny Mordaunt]

I refer the hon. Lady to three things: the Secretary of State’s reform speech in which he announced that his focus was on the particular issue of sanctions for people with mental health conditions; obviously, the Prime Minister’s statement today; and the Green Paper, a major tenet of which is that we are consulting on the work capability assessment—a Labour policy that is not delivering. I am very pleased that enormous numbers of Labour MPs came to our drop-in on this and will be helping us with the consultation. This is an important issue, and we should get it right.

Welfare Cap

Debbie Abrahams Excerpts

Monday 12th December 2016 Commons Chamber

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

It is always a pleasure to be here when you are in the Chair, Madam Deputy Speaker.

As Members will probably gather, I take a slightly different view from the Minister, and I will go on to the details in a moment. However, as the Minister acknowledged, this is the second year the Government have been forced to come to the House to explain their failure not just in breaching their own social security cap but on the economy.

As a quick point of clarification, the Government spent £130 billion more between 2010 and 2015 than the previous Labour Government spent between 2005 and 2010. So this Government have spent more. That is absolutely—[Interruption.] It is very interesting that Government Members should take that approach, but I will go on. It turns out that the long-term economic plan is really nothing more than a slogan, and that probably “long-term economic failure” would have been slightly more apt.

[The Lord Commissioner of Her Majesty’s Treasury (Guy Opperman)]

More jobs.

[Debbie Abrahams]

I will come on to the record number of jobs. The hon. Gentleman is trying to—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. We cannot have sedentary interventions from the Whips’ Bench. [Interruption.] We just cannot, even when there is nobody else here.

[Debbie Abrahams]

That is fine, Madam Deputy Speaker —I have no problem with answering the hon. Gentleman. He said, “More jobs”, but 80% of the increase in employment is in self-employment, and half—[Interruption.] These are the facts. Half of those in self-employment are earning less than the living wage.

As we saw in the autumn statement, growth is down, borrowing is up—again—inflation is on the rise, deficit targets are hopelessly missed, and productivity is flatlining. The Office for National Statistics has described this as “unprecedented”, with the worst levels of productivity since the second world war. Of course, productivity is the driver of wage growth, so we are seeing stagnant wage growth as well as precarious levels of employment.

The Government have failed on every single one of their fiscal targets, so much so that at the autumn statement they had to define a new set. They promised us an economy based on high wages and lower social security spending where work always pays, but in over six years they have done nothing to deliver the high-skill, high-wage, productive economy that this country desperately needs to compete in the global market. As a result of their failures, the Government have once again breached their own welfare cap—not just last year, not just this year, but every year for a full five-year term. For the remaining years of this Parliament, the Government will miss their cap by £5 billion, £6 billion, £7 billion and £8 billion respectively—a record of the complete and utter failure of their economic strategy.

Instead of reforming the social security system to reflect the reality of today’s flexible labour market, the Government have sought to cover up their economic incompetence and take it out on the working poor, the sick and the disabled, raining down austerity on the most vulnerable in our society. We have had six wasted years while the poorest have picked up the bill, with a full four years of failure yet to come. This is a far cry from the former Chancellor’s proclamation in 2014 that

“The welfare cap marks an important moment in the development of the British welfare state”

and

“ensures that never again can the costs spiral out of control”.—[Official Report, 26 March 2014; Vol. 578, c. 374-381.]

All the evidence is to the contrary. This debate is further testament to the Government’s complete failure to manage the economy or—and this is the most important point—to tackle any of the drivers of social security spending. It is incredible to watch the Government as they bound aimlessly from one broken promise to the next. Whatever their favourite slogan—“We’re all in it together”, “Fighting against burning injustices”, or “A Britain for everyone”—it is clear that gimmicks and grandstanding are all the Government are capable of.

In the motion, the Government claim that they could not meet their own rules due to spending on social security support for disabled people and higher than expected inflation. As ever, they are pointing the finger of blame at the most vulnerable rather than apologising for their own economic mismanagement. Let us examine the facts in a bit more detail. At the autumn statement, the Office for Budget Responsibility predicted that the Government will spend £120.5 billion in 2019-20 and £123.2 billion in 2020-21 on social security considered within the cap. Of this, the OBR estimates that changes in forecasts for CPI—consumer prices index—inflation will increase spending to 2021 by £0.8 billion in total. At less than a percentage point of total spending inside the cap, this can hardly be said to be the major driver of the Government’s failure to keep their promises. The Government have lost control of the economy, if they ever had control of it in the first place, and failed to tackle the key drivers of social security spending other than pensions—low-paid work and high housing costs.

Furthermore, the Government’s claim that increased disability spending will cause a breach of the cap at the end of the Parliament is just another attempt to point the finger at sick and disabled people. I admit—I am pleased about this—that there has been no language from Ministers around the “shirkers and scroungers” narrative that we have seen in recent years. That is a very welcome move. However, I am not clear whether this extends to press releases from Conservative Campaign Headquarters or to some of the coverage in less responsible sections of the media. We must be careful of our language in this respect. Even if derogatory terms such as “shirker” and “scrounger” are not used, what is implied by “incentivising” people who have been found not fit for work? Is the implication that they are at home avoiding work—that it is their choice to stay at home instead of being in productive work? That is offensive to very many people.

Instead of blaming everyone else for their mess, the Government should start taking responsibility. It is not just Labour Members who are making these points. The United Nations Committee on the Rights of Persons with Disabilities has described the approach of the past six years as a “grave and systematic violation” of disabled people’s rights. We have heard similar comments from our own Equality and Human Rights Commission, the Government’s Social Security Advisory Committee, and, indeed, Government Back Benchers. All have raised concerns about the lack of evidence in many of the Government’s social security policies, particularly regarding their punitive effects. I am pleased that the Minister said that the Government had taken the view that because of the implications that changes to tax credits would have for the working poor, they had decided not to proceed with them, but what about work allowances around universal credit? We are talking about the same people. The taper rate will make a difference of a couple of hundred pounds a year instead of the net effect of over £2,000 a year.

I want to explore some of the real reasons the Government have totally failed to meet their promises. They have failed because they have not tackled the drivers of social security spending. Rather than creating a strong economy with high wages, progression in the labour market, affordable housing and accessible childcare, they have starved the economy of much-needed investment, leaving us all worse off after six wasted years of austerity. This is not just our analysis; in every regard, the evidence speaks for itself. On housing, under this Government we are projected to spend more than £20 billion a year, every year, on housing benefit, which, after pensions, is the second largest spending area of social security spending. This amounts to more than £100 billion spent over the course of this Parliament, with nearly half going straight into the pockets of private landlords.

All the while, the Government’s own figures show that the number of affordable homes being built has slumped to a 24-year low. Indeed, research by the Joseph Rowntree Foundation suggests that we need to be building 80,000 affordable homes a year to meet demand and keep the current spend on housing benefit stable. This year, we have managed to build just 30,000. Instead of focusing on reducing the housing benefit bill by building affordable homes, the Government have chosen to force the sale of the remainder of our socially rented stock, worsening the housing crisis and driving up housing benefit spend. This is one of the key reasons they have breached their own cap.

On top of this, there is the squeeze on in-work support for people in low-paid jobs. We will spend over £50 billion on tax credits in the two years covered in this motion. Why? Because the Government have failed to ensure that wages keep up with the cost of living, leaving many working people relying on top-ups to get by. Real wages are now set to remain lower in 2021 than they were in 2008, yet the Tories still turn their backs on working people by trying to cut the amount of tax credit support available under their failed austerity plans.

Likewise, under universal credit the Government have weakened incentives to work by cutting billions—about £10 billion over the life of this Parliament—from the programme’s work allowance under their austerity plans. Their meagre reduction in the taper rate does not touch the average cut of £2,000 a year, as I have just mentioned, which will affect 2.5 million working people. If the Chancellor was serious about reducing the social security spend, he would follow Labour’s lead and implement a real living wage calculated on the basis of what people need. That would ensure that people get a fair and proper wage for a working day, while reducing the expenditure of the state.

Our Chancellor is apparently not capable of making such an obvious decision, despite the fact that the Living Wage Commission has shown that the Government’s national living wage falls well short of providing a decent standard of living. The Chancellor used his autumn statement to chop 1w0p an hour off the previously promised wage increase, at a cost of about £200 a year to the average worker. That is all in the context of flatlining pay, which leads to the average wage being £1,000 lower in 2020 than was predicted at the last Budget. How can we ever expect to reduce social security expenditure when the Government will not act on wages?

High wages alone will not clear up the mess, however. We also need to act on progression in the labour market if we are to tackle the drivers affecting social security spending. The JRF has shown that four out of five low-paid workers are still low paid 10 years later. There is no automatic progression to higher pay. That is further proof of the deep structural problems we face in our labour market.

Finally, we should turn our attention to the disability employment gap, which the Government claimed they would halve by 2020. I am grateful for the intervention from the hon. Member for Airdrie and Shotts (Neil Gray) on that point. The gap narrowed from the end of last year, but it is now back up to the level it was just before the general election last year. Perhaps the Government’s plan to force people into work before they are ready by cutting the employment and support allowance can be added to the mounting examples of the Government’s flawed strategy.

Why have the Government not acted to improve the retention of disabled people in their current jobs? The Resolution Foundation has shown that doing so could reduce the number of people transitioning from employment to health-related inactivity, which was 350,000 in 2015. Keeping disabled people in their jobs would surely be a better strategy to bring down social security spending than slashing support for those who are further away from the labour market. But no; sadly, the Government have not been able to see that far, and their record on supporting retention is very poor.

[Jim Shannon (Strangford) (DUP)]

This is an important issue. The Office for Budget Responsibility has said that the Government will breach their target in each year of its forecast. Does the hon. Lady acknowledge that that means that the welfare cap is not working, because the Government cannot look after those who are genuinely ill and in need of benefits? An example of that is Concentrix, where lots of people were put on benefits and then taken off benefits. The number of such people, when it comes to the cap, is very difficult to forecast, and the Government need to forecast that better.

[Debbie Abrahams]

That is an interesting question, and I would have to look at the figures. I have tried to show that the high cost of housing is a real issue, as is low-paid work. There are a number of factors, but those are the key drivers. The Government really should have been more careful in their impact assessment when they set out their policy in the first place.

To conclude, this breach of the Government’s self-imposed welfare cap every year for five years is further proof of their utter failure on the economy. They have refused to act on the fundamental areas that are driving the cost of social security spending, and they have made bankrupt attempts to meet their targets on the back of the most vulnerable. Only Labour has an economic strategy that will bring the costs of social security down without fraying the safety net that we all rely on. Now is the time to invest in the housing we need, offer a decent wage for a working day and support people to find a job, keep a job and progress in their chosen work. We will transform our social security system to ensure that, like the NHS, it is there for all of us in our time of need, as part of our plan to create a stronger, fairer economic settlement for all in our country.

Benefit Claimants Sanctions (Required Assessment) Bill

Debbie Abrahams Excerpts

2nd reading: House of Commons
Friday 2nd December 2016 Commons Chamber

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

After the previous speech, which I will come on to, I welcome the opportunity to use a slightly different tone in this debate—certainly when it comes to the evidence. I start by offering warm congratulations to the hon. Member for Paisley and Renfrewshire South (Mhairi Black) on bringing the Bill forward. She rightly deserves credit for her work, and her conciliatory tone is to be commended. She is absolutely right that, as the hon. Member for Bournemouth West (Conor Burns) was saying, this debate is about continuing the listening process and trying to improve a flawed system. The Bill does just that.

The hon. Member for Paisley and Renfrewshire South outlined her personal views, but she put them to one side and, like so many Members, spoke about the car crashes that are happening in the sanctions system. I want to provide two examples that I received just last night and this morning—that is how frequently such things are happening. Nearly a million people were sanctioned last year. It is not an insignificant number. The two cases are exactly the same. Both people were due to go in for surgery just days before a work capability assessment and were signed off for eight weeks. When they asked whether they had to go to the assessment, they were told that they did or else they would be sanctioned. It is absolute nonsense. This sort of thing is going on up and down the country, and I will come on to some other examples.

The hon. Lady was right to highlight the unfortunate narrative that was indicative of the Government until fairly recently. The shirker/scrounger language set a tone and tried to shift the public’s perception.

[John Nicolson (East Dunbartonshire) (SNP)]

Does the hon. Lady share my enormous concern—it sounds as though she does—with that scrounger tone? My father was the manager of the largest social security office in Scotland, and he always said that the problem was not people claiming what they were not entitled to; it was all the people who did not claim what they were entitled to because of the sense of shame and the narrative propagated by Government Members.

[Debbie Abrahams]

The hon. Gentleman is absolutely right. Reflecting his father’s experience, many jobcentre advisers have been saying similar things and that they are absolutely horrified by what they are experiencing.

[Helen Whately]

The hon. Lady made an important point about tone. Members from all parts of the House should conduct this debate with a compassionate tone, but she seems to be putting words into the mouths of Government Members—words that have simply not been said. Is there a Government source that she can refer us to that uses the language that she was using a moment ago?

[Debbie Abrahams]

The hon. Lady is absolutely right. We all need to be responsible for the language and the tone that we use. Unfortunately, we have seen some of that in today’s debate. I refer Members to the earlier National Audit Office report that was published this week. A headline in a paper suggested that the one in four claimants who had been sanctioned were somehow fraudulent. That was the disgraceful tone of the headline in a major newspaper, which distorted the evidence.

[Helen Whately]

rose—

[Debbie Abrahams]

I am sorry, but I am going to carry on.

We must ensure that all of us, as leaders, use the appropriate language. I can point to speeches that have been made in the past in which that has not been the case.

The hon. Member for Paisley and Renfrewshire South has outlined the provisions of her Bill, which requires an assessment of social security claimants’ circumstances before a sanction is applied. Measures in the Bill include a code of conduct for those responsible for imposing sanctions and the important principle of just cause, which is applied in defined circumstances. It will be applied, for example, where undertaking a job is in clear conflict with the claimant’s caring responsibility, and where there is just cause for not undertaking particular employment or job-search activity. In such cases, it is proposed that sanctions should not be applied.

The hon. Lady also mentioned the need for assessment for hardship payments after a sanction has been applied. Again, that is absolutely right. It was in fact one recommendation from the Work and Pensions Committee inquiry on this issue last year.

I have been heartened by the slightly different tone taken by the new Secretary of State, particularly in what has been said about work capability assessment and sanctions for homeless people and other vulnerable groups. I see this Bill as an important step forward, as it builds on what we have said should be happening. It would also make the process much fairer. I support this Bill in abolishing the punitive sanctions regime that the Tories and the Liberal Democrats introduced in the Welfare Reform Act 2012.

Let me provide a bit of background to what has been going on over the past four years. We have heard about the exponential rise in sanctions that have been applied to people on JSA, incapacity benefit and employment and support allowance, but we did not really touch on the new application to people on universal credit who are in work. I am referring to the taxpayers whom the hon. Member for Bournemouth West was talking about—the taxpayers who are already contributing to the Exchequer and who are, through the universal credit regulations, likely to be subjected to a sanction. That would be the case if, for example, they are not working full time, or if they have not got a permanent contract and want a few days off. They can be sanctioned and that is happening now.

I have been campaigning on this issue for more than four years. A constituent came to me after he had been sanctioned. He was in the middle of a work capability assessment when he suffered a heart attack. He was told by the nurse undertaking the assessment that he needed to go to hospital. He did that, and two weeks later he had a letter in the post saying that he had been sanctioned.

I mentioned another case to the Minister when we were in an interview recently. John Ruane from my constituency has a brain tumour, which means that he has three to four epileptic fits a week. His clinical team contacted me because he was refusing to have a life-saving operation on the grounds that he feared he would be sanctioned. He had already had his ESA stopped after a work capability assessment—that is another story, which I cannot go into today, but which certainly needs to be looked at again. He was frightened of being sanctioned. Fortunately, I have been able to intervene and his ESA has been re-established, but that fear of being sanctioned is what people are experiencing.

Yet another constituent of mine, who was a Jobcentre Plus adviser for more than 25 years, came to me four years ago, saying how troubled he was about the targets that he was being set—or aspirations as a Member said earlier—to sanction claimants. Targets were being set for sanctions even when people had done nothing wrong. He explained how the system works—that appointments would be made when people were meant to come in for a work-related interview, and the people would then not be told. That was investigated by the Department for Work and Pensions and, shamefully, it did nothing.

[Michael Tomlinson]

Will the hon. Lady give way?

[Debbie Abrahams]

On that point alone.

[Michael Tomlinson]

The hon. Lady mentions sanctions. Does she approve of the sanctions regime overall, or would she also advocate getting rid of it in its totality?

[Debbie Abrahams]

I said, “On that point alone,” and the hon. Gentleman has not asked specifically about the investigation of the fraudulent activity that was going on in the DWP, so I am afraid I am not going to respond to his intervention. [Interruption.] I will come on to putting our position very clearly to the Minister.

This Jobcentre Plus adviser said people were being set up to fail to get them off flow. If claimants are off flow, they are not signing in. Not only do they not count in the JSA claimant statistics, but they are not drawing social security support. Wednesday’s National Audit Office report estimated that, last year alone, £132 million was not paid in social security support, but a significant amount—not quite as much as that—was spent on administering the sanctions process.

What many people are surprised to hear is that sanctions apply immediately and last for a minimum of a month. They are referred to a DWP decision maker, as we have heard, to decide whether they should be upheld, but that in itself can take a month. On top of that, although housing benefit payments are not meant to be stopped, they have been, and that was confirmed during the Select Committee inquiry last year. As has also been said, the ensuing debt builds up, and Sheffield Hallam University has shown the implications for sanctions-related homelessness.

Then I started to hear about the deaths of claimants following a sanction—first Mark Wood, and then David Clapson, and there have been many more. Of the 49 claimants who died between 2012 and 2014, and whose deaths were investigated by the DWP, 10 followed a sanction. By the way, I am still waiting for the Department to get back to me on the peer review details of nine subsequent claimant deaths.

It was after David’s death, and when I had met his sister, Gill Thompson, who is absolutely devastated—I pay tribute to her for the campaign she has launched to try to raise awareness of what is happening—that I managed to persuade the Select Committee to undertake an inquiry into sanctions that would explore the impacts of the Government’s 2012 sanctions regime. We found that, between 2012 and 2014, 3.2 million sanctions were applied. At a peak, in one month in 2014, 90,000 JSA claimants were sanctioned. The sanctions for sick and disabled people increased fivefold. One in five JSA claimants were sanctioned at that time; as we have heard, that has increased to one in four. Single parents and people with mental health conditions were particularly affected. Again, the variation across the country was quite staggering.

We found that 43% of claimants who are sanctioned leave JSA—they move off flow, distorting the JSA claimant count. Over 80%—this is a really important point—of those leaving JSA after a sanction do so for reasons other than work. One would think that the Government wanted to know what was happening to those people and where they were going. If they are not going into work, what exactly is happening to them? One recommendation from the all-party Select Committee inquiry was that we should follow up these cases. As the NAO has shown, that has not happened. We do not know what happens to the nearly half of the JSA claimants who leave and the 80% who do so for reasons other than going into work.

The rise in food bank usage was also linked to the increase in sanctions, and both the physical and the mental health issues of claimants were found to be exacerbated by the punitive sanctions regime. The Select Committee made more than 20 recommendations, including for the pre-sanction process that the Bill also calls for. It also said that all financial sanctions on vulnerable JSA and ESA claimants, as well as those on people who are on universal credit and in work but not full-time work, should be stopped.

Fundamentally, the Select Committee called for an independent inquiry into sanctions as a whole, and the NAO made the same recommendation in its report on Wednesday. Unfortunately, the Government did not accept the majority of the recommendations. They made some moves on hardship payments. We have heard about that already and I look forward to hearing the Minister’s response.

Wednesday’s NAO report was the third in a month reaffirming and adding to the Select Committee inquiry’s findings. There is no evidence that sanctioning someone motivates them or modifies their behaviour in such a way that they move into work. Even the Government’s own behavioural insights team found exactly that in its review. We have discussed the fact that one in four JSA claimants were sanctioned between 2010 and 2015, and I have mentioned the appalling headline that said that they were abusing the system. As I have said, the Jobcentre Plus whistleblower said that claimants are being set up to fail.

We also know that 42% of UC decisions about sanctions took longer than 28 days, and that £132 million was withheld last year. Last month, the University of Oxford and the London School of Economics quantified the association between the increase in sanctioning and food bank usage: for every 10 sanctions, five more adults were referred to food banks.

[Kirsten Oswald]

I echo the hon. Lady’s sentiments and her comments on the correlation between sanctions and food banks. Does she agree that it is a sad situation that Scotland now has not only food banks, but school uniform banks, and that that is directly linked to the inability of families, through no fault of their own, to support their children in going to school?

[Debbie Abrahams]

Absolutely. Last week, the food bank in my own area launched a fuel bank, because people are choosing between heating and eating. That is what is going to happen up and down the country this Christmas.

Where do we go from here? I hope that, given the evidence and the new tone being used by this Government—I was disappointed with the autumn statement, but I am an eternal optimist and hope that the Minister is listening—they will support the Bill and implement it at the earliest opportunity.

I turn to the question asked by the hon. Member for Mid Dorset and North Poole (Michael Tomlinson) about our position. I made it very clear in my conference speech in September.

[Michael Tomlinson]

I wasn’t there, but the hon. Lady can invite me next time!

[Debbie Abrahams]

I will certainly do that. The hon. Gentleman is very welcome to cross the Floor.

I said—and this was widely reported at the time—that we want to scrap the system. We must be driven by evidence, and the evidence shows that it does not work. It does not motivate people or change behaviour. All it does is have a very harmful effect on the most vulnerable in society. It also has some very difficult spin-off effects.

[Michael Tomlinson]

rose—

[Debbie Abrahams]

I am coming to a conclusion. As part of my party’s sanctions review, I want to explore approaches that better reflect the change that I want to see in the culture of our social security system. I want it to be based on support and positive reinforcement, not harassment and punishment. Again, if we look at the evidence from the Netherlands, we see that such an approach is much more effective at moving people into sustainable employment.

Our social security system is, like our NHS, there for all of us in our time of need. It is based on the principles of inclusion, support and security for all, and it should assure all of us of our dignity at all times. I do not think that we can say that about the present system, and we certainly cannot say that about the sanctions system. I hope that the Government are listening, because this is so important. I implore them to implement the Bill.

--- Later in debate ---

[Debbie Abrahams]

Is the hon. and learned Lady aware that Matthew Oakley gave evidence to the Work and Pensions Committee inquiry last year? He said that he was disappointed that the Government had not followed his initial review, which focused only on JSA claimants, and not on the very vulnerable incapacity benefit, ESA and UC claimants. He said that he was surprised and disappointed that the Government had not taken another approach to review those areas, too.

[Lucy Frazer]

I thank the hon. Lady for her intervention, but the Government have accepted a significant number of the Oakley review’s recommendations. Of course we need guidance, but there is already some guidance from the DWP. The guidance lists a number of examples, including:

“The claimant provides a statement that he could not attend the jobcentre because he had to attend a job interview thirty miles…from his home. The DM writes to the claimant asking for details of the interview time... The claimant provides details which clearly show that he could not have attended the jobcentre at the time and day specified in the written notice. The details are provided after the five days, but they merely verify the claimant’s original statement. The claimant has shown good reason within the five days.”