Social Security (Additional Payments) Bill

Earl of Clancarty Excerpts

3rd reading & 2nd reading & Committee negatived
Monday 27th June 2022 Lords Chamber

[The Earl of Clancarty (CB)]

My Lords, this Bill is clearly welcome. It is a good thing that cost of living payments can be made to those who most need them, so the policy is a good one. There are obviously a number of ways that this could be addressed—some potentially more effective than others—but anything that helps is to be welcomed.

However, there is a “but”—like the noble Baroness, Lady Lister, I have a “but”, and it is one that she has already mentioned. My concern is how the Bill will affect those self-employed whose earnings fluctuate from month to month, including many creative professionals; I am grateful to Equity for its briefing on this. The particular concern here is for those who did not receive a universal credit payment in the qualifying month and therefore will not be eligible for the cost of living payment because of low and irregular incomes. Can the Government ensure that the £650 cost of living payment be made to those whose entitlement to universal credit has been reduced to zero because of the minimum income floor?

There has been concern from the self-employed sector about the reintroduction of the minimum income floor after its welcome suspension during the pandemic. Of course, I am not trying to address that in relation to the Bill, but I ask the Government to acknowledge the effect of the MIF on the cost of living payment and reassess how fairly some self-employed—and, indeed, employed—workers will be treated. Despite the recent fall in the number of self-employed, the Government should acknowledge better the trend towards increasing self-employment in the longer term: currently, 15% of the workforce and 35% of the creative industries, which, pre-pandemic, were the fastest-growing sector of the economy and second in importance only to the financial sector.

The Government’s qualifying rules ignore the very nature of payment to creative professionals, which is often irregular and cannot be equated directly with salaried work. To ask people to change their behaviour work-wise to accommodate benefits such as these does not take into consideration the fundamental character of much creative work. There should instead be an acknowledgement by the Government of the need to be both realistic and fair in their rule-making. They should accept the validity of the self-employment work structure for creative professionals and others. This is on top of the fact that claimants are in any case being assessed on a past period—that is, the month until 25 May—so it is not something they can do anything about even if they had been able to; I believe that they should not be asked to.

The key issue is that payments such as these are intended to go to those in need. Self-employed people in the hospitality and entertainment sectors are among those who are poorly paid, at least partly down to the fact that they are among the last to come out of the pandemic and are now being hit by another crisis: the cost of living crisis. As Equity points out, missing out on these payments will have a devastating impact on many entertainment professionals. Young people just starting out—for example, those coming to the end of a start-up period—and those from diverse backgrounds will be among the significant number who may be affected in this way.

I appreciate that this is a money Bill and that it would have been frowned on to have introduced an amendment to the Bill in Committee and disrupted proceedings for the day, but I ask the Government to do everything they can to address this concern and provide a solution to a problem that is ultimately one of fairness.

--- Later in debate ---

[The Earl of Clancarty (CB)]

I thank the Minister for giving way. On the concern I raised about the minimum income floor and fluctuating incomes, can the Government keep an eye on this? It would be very helpful if the noble Baroness could promise to do that. She says that it is very simple, but maybe it is too simple for this particular problem. If the Government could keep a close eye on that, it would be helpful.

[Baroness Stedman-Scott (Con)]

I am very happy to go back to the department and request that. I am not in a position to commit to doing it, but I will go back and write to the noble Earl with the outcome of those discussions.

Another important point that the noble Baroness, Lady Lister, raised was about how we are making customers aware of these payments. We are working on an extensive communications plan. There will be digital advertising, social media and display materials such as posters and leaflets for jobcentres and stakeholder premises.

The noble Baronesses, Lady Lister and Lady Sherlock, raised the issue as to whether the household support fund is sufficient. Local authorities in England have ties and local knowledge to best determine how this support should be provided to their local communities. They have the discretion to design their own local schemes within the parameters of the grant determination and guidance to the fund. We are going to publish new guidance for local authorities for this latest extension of the household support fund ahead of the fund going live at the start of October.

The noble Earl, Lord Clancarty, asked about low-income and self-employed people. We accept that earning patterns can vary substantially and it would be impossible to choose qualifying dates that work for every person on UC. However, a second qualifying date certainly reduces the risk that those with non-standard pay periods on UC miss out on a cost of living payment altogether.

The noble Lord, Lord Fox, raised the point about whether the Government are putting up taxes during the cost of living crisis and whether taxes should actually be reduced. The actions the Government have taken to return the public finances to a sustainable path post Covid mean that we are in a strong position to respond to the cost of living challenge. The Government’s goal is to reform and reduce taxes. The Chancellor’s Spring Statement set out the Government’s tax plan, which includes reducing the tax burden on working families by increasing the threshold at which people start paying NI contributions—a tax cut worth over £330 for a typical employee—and by cutting fuel duty by 5p for 12 months. The tax plan also shares the proceeds of higher growth with working people across the country by cutting the basic rate of income tax by one percentage point to 19% from April 2024, saving more than 30 million people £175 per year on average.

The noble Lord, Lord Fox, asked whether the cost of living payments are a sticking plaster. In total, the measures the Chancellor announced in May provide support worth £15 billion. Combined with other plans, as I have already said, this raises the money to support people during this cost of living crisis to £37 billion. This is more than or similar to the support in countries such as France, Germany, Japan and Italy. Importantly, around three-quarters of that total support will go to vulnerable households.

The noble Lord, Lord Fox, asked whether the Government were wrong to reduce the £20 uplift to universal credit. It was always to be a temporary measure, and it was a temporary measure. I do not think there is anything else I can say to noble Lords about that.

The noble Lord, Lord Fox, asked what we are doing to help people in rural areas. The boiler upgrade scheme has a budget of £450 million to support households in England and Wales to make the switch from fossil fuels to low-carbon heating. This helps people in rural areas transfer from fossil-based fuels to low-carbon heating with grants of £5,000 towards the cost of installing an air source heat pump, £6,000 toward the cost of a ground source heat pump and £5,000 for biomass boilers for properties not suitable for a heat pump, provided they are in a rural location and not connected to the gas grid. The home upgrade grant will provide upgrades to low-income rural households living off the gas grid in England to tackle fuel poverty and meet net zero. The Government have allocated £1.1 billion to the home upgrade grant over the next three years.

Again, the noble Lord, Lord Fox, asked why we are delaying half of the £650 to later in the year. Cost of living payments for those on means-tested benefits are deliberately being delivered in two payments to help support budgeting. This approach will also ensure that any newly eligible claimants can be paid the £324 payment even if they did not get the £326 payment and that all recipients of the second payment receive this closer to winter.

The noble Lord, Lord Fox, asked whether we were being more generous to those on means-tested benefits and said that £650 is not going to scratch the surface. The Government are providing over £15 billion in further support, as I have said. Three-quarters of it will go to low-income households. Each cost of living payment will be paid to 8 million people on a means-tested benefit. Millions of the lowest income households will get £1,200 of one-off support. I have said that the Secretary of State will use the CPI in September to decide on the uprating of benefits.

The noble Baroness, Lady Sherlock, asked what impact the cost-of-living crisis is having on poverty. The latest available—