Social Security (Additional Payments) (No. 2) Bill

Hywel Williams Excerpts

Committee stage
Monday 6th March 2023 Commons Chamber

[Sir Robert Neill (Bromley and Chislehurst) (Con)]

I am delighted, as I am sure everyone is, to see you back in the Chair, Dame Eleanor.

I also do not seek to delay the Bill’s progress. New clause 14 is a probing amendment that raises an issue to which the shadow Minister alluded: the failure of the system, however good its intentions, to deal adequately with people who have fluctuating incomes, particularly those who are self-employed.

The way in which the system interacts with self-employed people has always led me to believe that, with all due respect, the vast majority of people advising Ministers, and the government machine as a whole, do not understand the self-employed or how they work. All too often, I am afraid, those who work for the Government in full-time, regular jobs seem to think that self-employment is something to be wary of, and that it can lead to a risk of fraud or a lack of seriousness. There is a fundamental culture gap in the system of government.

[Hywel Williams (Arfon) (PC)]

Of course, this leads to a differential effect in communities, such as mine, that have a high incidence of self-employment. The disadvantage to my community is quite clear.

[Sir Robert Neill]

I am sure the hon. Gentleman is right. This can apply to particular communities and to particular sectors. I suspect it is not deliberate, as I do not believe Ministers are looking to treat people unfairly, but I genuinely think there is a lack of understanding in how the system works for the self-employed and the degree to which fluctuating incomes are not captured by the scheme, as currently devised. That is why I urge the Government to review the position.

I particularly ask the Government to review how the minimum income floor interacts with self-employed people on varying incomes. I will explain it as briefly and as swiftly as possible. Eligibility for each of the three cost of living payments depends on receiving a universal credit payment of at least 1p during the corresponding qualifying month, as set out in the Bill. The position was the same for the original cost of living payments set out in the Social Security (Additional Payments) Act 2022.

Equity, which represents self-employed people working in the creative industries and the theatre, challenged the 2022 Act as unfair and detrimental to the entertainment industry, and it seems to me that it presented good evidence. I refer to my interest as chair of the all-party parliamentary group on opera and as a member of the all-party parliamentary group on theatre. I regret to say that Ministers did not make any changes, and I ask them to look into this in more detail and to think again as more evidence emerges.

When the minimum income floor is applied to self-employed universal credit claimants, their universal credit payments are, of course, reduced. For some claimants, the MIF reduces their payments to zero. The MIF is assumed earnings for UC claimants who are deemed gainfully self-employed, irrespective of whether those earnings are being received in a particular month. It is a calculation based on the national minimum wage and in a typical case the assumption is 35 times the hourly national minimum wage per week. On 2022-23 figures, that equates to £311.85 a week or £1,351.35 over a UC monthly assessment period.

The effects of that are unduly harsh for the self-employed with variable and unpredictable incomes, because it removes UC payments during periods of low earnings. The difficulty for people in the theatre is that, although they may well have periods when they are busy and above the threshold for any benefits, there may be weeks and months when they are not getting paid and the system does not pick that up. During those months when they are not qualifying they are likely to fall into debt, needing to borrow, and into arrears. That cannot be a fair way to deal with this. At a time when the entertainment industry and the theatre have been particularly hard hit during covid and the lockdowns and are still, in some respects recovering, the position seems to me and to many others to be unjust. It particularly hurts those who are starting out in their careers in the industry. I have been self-employed in the past and I know that at least one of the Ministers on the Bench has, but there is a difference between being in an established set of barristers’ chambers with a significant workflow coming through and being a young actor, musician or creative starting out. The inability to draw such distinctions and to be more nuanced in approach needs to be looked at, and I ask Ministers to do that.

The figures that have been demonstrated by Equity in looking at the DCMS workforce estimates show, for example, that between 2019 and 2021 the number of young people aged 16 to 24 working in music and performing and visual arts fell by 19%, which compares with a 14% drop among people aged 55 to 64. That was probably largely due to people leaving because of the impacts of the lockdown on that sector, but it is happening more among the youngsters, for the reasons I have set out. The number of black, African, Caribbean, black British people—those with minority ethnic backgrounds —in music, and performing and visual arts has fallen by 39%, which compares with a fall of some 9% among people with white ethnic backgrounds. Again, the people who find it harder to access careers in the arts sector to start with are the ones being most hard hit, because their incomes are more precarious, as it often takes them longer, by the nature of the business, to establish themselves. I am sure that is not an outcome Ministers wish to see, but that is the way the system, without any reform, is currently operating.

That situation is likely to get worse. In the first round of cost of living payments some 80,600 UC claimants were subject to the MIF, of whom 4,860 earned below their MIF and received a nil payment—that is about 6% of them. We are likely to be talking about a lot more people in 2023-24, because more claimants are now subject to the MIF than they were in the previous regime. That is simply because some 219,000 claimants were in a 12-month start-up period and therefore exempt during the qualifying period for the first payment. That of course has now ended for that cohort, so they will be subject to the MIF. If we were looking at the same percentages, we would be talking about another 13,000 people. That leaves us with the figure that Equity suggests of about 17,000 being affected.

This issue has been raised before, including by the right hon. Member for East Ham (Sir Stephen Timms), the Chair of the Select Committee on Work and Pensions. He raised it with Ministers back in November 2022, and I am grateful to him for doing so. He asked the Secretary of State to consider a way to rectify the position of claimants who had had a nil payment during that period, but I regret to say that the Secretary of State rejected that request. He said that, among other things, simplicity of processing in the timeframe required and an inability to readily identify people affected were the reasons. I am not sure that simplicity of processing is, of itself, a good justification for causing unfairness to people. I thought that the Government were about fairness, more importantly, than they were about administrative simplicity. The suggestion that having the three qualifying periods reduces the risk of someone missing out completely does not work for every sector. It may work in some industries, but it does not work for the theatre and other sectors. The lack of flexibility and the rigidity need to be addressed.

Against that background, I hope that the Government will reflect on this matter. We want to encourage people into our creative industries, which is a thriving sector that does a great deal for this country. They work well for us economically, in social matters and for our cultural heritage, but it is hard for young people, in particular, to start out and this is a precarious life. We ought to have a system that more readily recognises that. It is not, as has been suggested, that the MIF is dealing with cases of fraud here; these are not fraudulent people, and we can sometimes worry so much about fraud that we exclude the honest from the system. We ought to get a balance on that. It has also been suggested that this was to weed out hobbyists who cannot sustain themselves in self-employment. I know lots of people in the creative industries who are not hobbyists. They work immensely hard to sustain themselves in self-employment but their incomes fluctuate to such a degree that they lose out on supplements and benefits that others who happen to be in slightly different forms of work with a slightly different pay structure get. That does not seem to be fair, which is why I tabled my new clause. I hope that the Government will reflect on it and undertake at the very least to review the matter again, look again at the evidence and meet people in the sector. I am not sure how often Ministers have face-to-face meetings. They should meet the people affected. Let us try to find a fairer way of making the Government’s objectives work for those people.

--- Later in debate ---

I want to speak up for one more group. I congratulated the Government on introducing the triple lock on pensions, but nevertheless 20% of single pensioners live in poverty; 1.7 million pensioners live in relative poverty. The Joseph Rowntree Foundation has advised the House that pensioner poverty is forecast to rise again. I supported the triple-lock legislation, but it has not had maximum impact. That is why new clause 7 is important. It would enable us to stand back, see where we are, recognise the problems, and recognise that we have significantly failed, and need to move forward with a new strategy, on a new basis.

[Hywel Williams]

May I state my delight at seeing you back in the Chair, Madam Deputy Speaker? I support new clause 14. My constituency has a very high level of self-employment, as I indicated in my intervention on the hon. Member for Bromley and Chislehurst (Sir Robert Neill), but it also has a large and active television industry, surprisingly to some people, considering that it is at the far end of Welsh-speaking Wales. Most of the TV is in Welsh. The new clause is on an issue that has an impact on us.

I mainly want to speak in favour of new clause 2, which is in the name of my hon. Friends in the Scottish National party, and in favour of the amendments that they have proposed. I support the requirement for an assessment of the latest cost of living support package that the Government have announced. The hon. Member for North East Fife (Wendy Chamberlain) said that the cost of living payments, although necessary, are a sticking-plaster, and I would repeat that. The payments are inferior to ensuring that benefits keep up with the real cost of living. The Institute for Fiscal Studies has shown that almost half of all families with three or more children on means-tested benefits would have been better off if the Government had not introduced cost of living payments, but had instead just ensured that benefits kept pace with inflation.

Benefit-receiving households where people were in receipt of disability benefits, or were in paid work, were less likely to have been properly compensated for the failure to uprate flat-rate cost of living payments in good time. That is another matter that needs to be looked at. I understand that the cost of living payments will result in the Government spending around £2 billion more on recipients of means-tested or disability benefits in 2023-24 than would have been needed simply to raise ordinary benefits in line with inflation. We really do need a full, detailed analysis by the Government, showing why they think that these ad-hoc payments are an appropriate way to distribute support fairly.

When it comes to living standards and social security, it is important that we recognise the differential effect across the nations of the UK—a point I referred to earlier. The Bevan Foundation’s latest research shows that even before the pandemic, around one in eight people lived in deep poverty in Wales. Around one in 30 has such low income that they live in destitution. New clause 2, proposed by my hon. Friends in the SNP, would require an analysis of the cost of living payments that considered the differing policy contexts in Wales, Scotland and Northern Ireland.

In Wales, we have the shameful record of having the highest proportion of children living in poverty of any nation in the UK. An analysis of how the cost of living payments will play out in Wales might reveal significant differences between the system in my country and the partially devolved benefits systems in Scotland and Northern Ireland. For instance, the Scottish child payment of £25 was a bold step towards tackling child poverty. It was one of the wider reforms that the IFS said was part of a trend in which the Scottish Government are using their devolved income tax and benefits powers to increase the progressivity of the tax and benefit system. That is something that we dearly need in Wales. Had we a similar payment in Wales, our tragically high levels of child poverty would surely be reduced. We also have a higher proportion of disabled people in Wales. An analysis by the disability equality charity Scope estimates that the extra costs faced by disabled people average £583 a month.

These are just a few examples showing why we need a Wales-specific analysis of the cost of living payments and how they interact with wider social security policy. Such an analysis would most certainly strengthen the argument for devolution of social security to Wales, I believe—understandably so, as that is my party’s policy. I am told that new clause 2 will not be pushed to a vote tonight, but I hope that the Government accept its logic, and provide for a proper analysis of changes to social security—an analysis that specifically takes into account the impact in Wales.

[Mims Davies]

It is a pleasure to respond to points made this evening. I thank all hon. Members for their contributions and discussions. I take this opportunity to fully, strongly assure all Members that policy officials in my team at DWP and I have looked roundly at the cliff edges and the challenges in getting these payments out swiftly. This will very much link to the household support fund, and the learnings from that. I can reassure the Chair of the Select Committee, the right hon. Member for East Ham (Sir Stephen Timms), that there will be strong communications and engagement with local authorities for anybody who may be missing out. I hope that reassures my hon. Friends and colleagues.

Clause 2 sets out in more detail the eligibility criteria and the means test for the cost of living payments. I have covered much of clause 1, but I will come back to that briefly, if I may. The eligibility criteria, as we have heard, are similar to those in the Social Security (Additional Payments) Act 2022. We know from making those tens of millions of payments last year that keeping the policy simple is essential to delivering the payments successfully and to those most in need.