Welfare Cap

Jeremy Corbyn Excerpts

Wednesday 29th January 2025 Commons Chamber

[Alison McGovern]

The NHS is the bedrock that ensures people can thrive and contribute to society, economically and in every other way. We also need to ensure that the health support people get is the right support. At the moment, we are not doing enough on occupational therapies and other things that provide health support tailored to people’s work. We will have more to say about that in the near future, I am sure.

A huge number of people are turning to a social security system that is not geared up to meet the huge employment challenge. At the moment, social security cannot cope. Hon. Members may ask themselves how on earth we got to this place, after 14 years of so-called benefits crackdowns by the Conservatives. Well, I invite everybody to look at their record. When universal credit was introduced 12 years ago, the Government of the day made all sorts of promises. They said it would

“break the cycle of benefit dependency”

and offer

“greater incentives to find a job”.

The former Secretary of State for Work and Pensions, the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), said that universal credit

“will ensure that work always pays and is seen to pay”,

but what have we seen since? A disastrous series of wrong-headed choices that have achieved precisely the opposite effect.

New data, which we are publishing today for the first time, shows the extent of the effects of universal credit on incapacity benefits. There has been increase of 800,000 people receiving incapacity benefits between 2018 and 2023. Around 10% of that increase is because of the rising state pension age and another 10% because of the way changes were made in the move from employment support allowance and other benefits to universal credit, a situation that should have been foreseen and planned for by the previous Government. That leaves an increase of over 500,000 people, to which I will now turn. The Conservatives need to take a long hard look at the changes they made to universal credit.

We must consider how people transitioned between the “looking for work” group in the universal credit health journey, where they are told that they have limited capacity to do any work or work-related activity, to “actively looking for work”. How did people move between being told they cannot work and being told to actively look for work? People moving between those two groups used to receive a top-up to their benefits, but that was removed in 2017, creating a hard barrier between those categorised as incapable for work and those looking for work. In addition, there was a four-year freeze to the rates of universal credit in the late 2010s, except the highest tier of health-related benefits. As a result, the income of those trying to find work was squeezed, and the barrier between those on universal credit actively looking for work and those who had been told that they were unable to work was hardened.

We have seen a steady rise in the number of people on the highest tier of health benefits, where there are no requirements to look for work or to get any help to make the steps on that journey, and no support to find jobs when many people actually want to work. All the while, there have been more and more conditions and box ticking in a system that has failed.

Social security was designed to smooth people’s incomes over time and to take account of life events that could happen to any of us, but the result of all the changes is that either by design or mismanagement—probably both—the previous Government created a social security system that segregated people away from work and forgot about them. There was no helping back to work, and only the promise that they would be left alone.

The Office for Budget Responsibility has said that

“the wider benefits system—in particular the conditionality and generosity associated with incapacity benefits relative to other parts of the system—has affected incapacity benefits flows over time”.

Unfortunately, that situation, created by the last Government, is far from the only problem, because social security will only ever function where the Government take their wider duties seriously.

[Jeremy Corbyn (Islington North) (Ind)]

On the point of support for people who are on benefits, the Social Security Act 1986 ended the requirement on the now Department for Work and Pensions to provide advice and welfare support to people. Will it now be the policy of the DWP to automatically offer advice and support to people on the benefits they are entitled to claim, or to give more support to voluntary advice agencies so that people get what they are entitled to?

[Alison McGovern]

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

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

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

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

in social security.

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

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

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

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

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

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

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

[Alison McGovern]

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

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

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

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

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

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

[Jeremy Corbyn]

If next year’s report recommends an increase in welfare spending, would that be impossible within this cap, or will she come back to Parliament to ask for a change in the cap well ahead of its 2029 expiration?

[Alison McGovern]

In the specifics of our proposal, we will publish a Green Paper on health and disability in the coming months. With regards to the financial controls, we will do all that the Chief Secretary to the Treasury set out some moments ago on allowing the Office for Budget Responsibility to perform its function. That is the best way to ensure that we take fiscal decisions within the guardrails that he set out.

The results of 14 years of failure are unfortunately only too obvious, as I said earlier. Everywhere we look in this country, we can see the impact of what the previous Government did. Too many people in far too many places were neglected and failed, starved of opportunity, and left to turn to a social security system that just is not working. Everybody in this country suffers the consequences.

--- Later in debate ---

[Jeremy Corbyn (Islington North) (Ind)]

I am pleased we are having this debate, although I am sorry that it is relatively short. My concern about the proposal before us is that it recognises an overspend on the welfare cap—I support the idea that we should be allowed to overshoot the cap—but hardwires decisions on welfare spending for the next five years. It therefore restricts any future changes to any element of welfare spending.

The cap does not include pensions and work-related benefits. What it does include, in particular, is disability living allowance, housing benefit and personal independence payments. Those benefits relate to the areas in which, it seems to me, there are often the greatest levels of poverty and people face the greatest problems in simply trying to survive. The Government have already removed the winter fuel allowance, which is included in the estimates for the next five years, and are maintaining the two-child benefit cap, which restricts the amount of money paid on benefits to families. I understand all the points the hon. Member for Loughborough (Dr Sandher) made and the passion with which he made them, but the reality of not removing this ridiculous cap, put in place by the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) when he was Secretary of State for Work and Pensions, is that we have a lot of children living in desperate poverty.

Any Member who goes to a food bank—we all have food banks in our constituencies—and talks to the parents picking up food will find a wholly disproportionate number of, usually, mothers of children in very large families who cannot make ends meet because their benefits apply only to the first two children. We need to get rid of the two-child benefit cap, but what we are being invited to support today will ensure that we keep it, while maintaining the removal of the winter fuel payment and boxing us in when it comes to what we can do to improve both the take-up and the availability of disability benefits as a whole. I must therefore caution the Minister and question her optimism. I recognise the need to overshoot the cap today because I understand why it has come about, but we need to look at the levels of poverty in our society.

I also understand all the points that have been made about the role of the Department for Work and Pensions in relation to people seeking work. In 1986, I was a member of the Bill Committee that took a sledgehammer to the then Department of Health and Social Security’s methods of supporting people who were out of work and helping them into work. We have suffered ever since as a result, and I am pleased that the DWP is reforming its ways of doing things and will help people into work by providing more advice and support. The reality is, however, that many people in this country suffer because of the mental health crisis that we are in, have suffered industrial injuries or are living in great poverty, and they need support. Surely we should be measuring the levels of poverty, the increased levels of child poverty and the educational underachievement of children living in poverty, rather than saying that the most important thing to do is limit the level of welfare spending.

There is a reason for that. I meet many people, in my constituency and in other places, who are receiving DWP benefits. Some are in work, some are unemployed and some have sickness problems and cannot work. They are not shirkers. They are not skivers. They are people who need help within our society. For too long we have had a culture of blaming anyone who seeks help within the law through our benefits system. I hope that we will hear a reply from the Government in which they accept the need for a re-examination of the levels of poverty in society and demonstrate a preparedness to change the welfare cap in the future to accommodate any increased needs that result from it. The thinking behind the cap was not about eliminating poverty from our society; it was all about limiting the level of welfare payments and the benefit that people gain from them.

In an intervention in the earlier debate, I pointed out to the Chief Secretary to the Treasury that huge infrastructure projects had gone massively over budget and had been financed. I support the Elizabeth line—it is a wonderful thing—but it was way over budget, like plenty of other projects. There seems to be one approach to investment in major infrastructure projects that run way over budget, and another when it comes to a welfare budget: anything that might go over will be prevented from going over by the Treasury. We cannot predict who will be injured next year, what illnesses will come or what needs will arise. Surely the principle of the welfare state must be that we help and support people when they need that help and support—and yes, help them to be available for work and get back into work, and say to employers, “You need more flexible working arrangements so that people can work part time.” We must look at the levels of unemployment among people with disabilities who simply cannot get work because the employment laws are not strong enough to require employers to provide work for people who, despite having disabilities, are well able to work.

I think we should be more cautious, rather than adopting a gung-ho approach and saying, “We are cracking down on welfare.” I want to crack down on poverty, I want to crack down on unemployment, and I want to crack down on those who prevent people from achieving the best that they can in their lives and in our society.