Social Security

Jim Cunningham Excerpts

Monday 5th February 2018 Commons Chamber

[Debbie Abrahams]

My hon. Friend makes an excellent point. There are many different aspects to the Government’s still inadequate response on how they will fix universal credit. She has highlighted one, and we heard earlier in oral questions about the debacle of free school meals and how more children will be deprived of free school meals.

What is the Minister’s assessment of the impact of the social security uprating cap on poverty levels? Does he accept the Child Poverty Action Group’s analysis that 1 million more children will be pushed into poverty as a direct result of the cuts to universal credit? Does he accept the Equality and Human Rights Commission’s report on the cumulative impact on disabled people, which estimates that a disabled adult will have lost on average £2,500 a year since 2010?

Despite announcing a small amount of additional investment in the autumn Budget to prop up universal credit, in reality, the Chancellor has only reintroduced £1 for every £10 cut by his predecessor. Why are the Government choosing not to uprate social security payments in a way that reflects the economic reality for those in most need? I remind hon. Members that the Child Poverty Action Group estimates that cuts to universal credit will force 1 million additional children into poverty by 2020. The social security system should prevent people from getting into debt and poverty, not make things worse.

By continuing the freeze on social security payments not included in this order, the Government are subjecting 10.5 million households to an average cut of £450 a year up to 2020. The order was a chance for the Government to recognise the desperate reality for many of the poorest and most vulnerable people in our society, but they have failed to do so. As charities across the sector have been asking, will the Minister ensure the end of the freeze on other social security payments in next month’s Budget statement?

The order allows for discretionary upratings to be made by the Minister where he deems it necessary and appropriate. I want to be clear that we welcome the Minister’s decision to include a 3% uprating to the work allowance element of universal credit in the list of discretionary upratings in these measures, but the reality of people’s lives demands more. This again raises questions about the consistency of the Government’s argument to uprate some social security payments and not others. If he believes that the work allowance element of universal credit should be uprated, as the Opposition do, will he explain why tax credits are not also being uprated by the same amount? Why the disparity?

The Government cut the work allowance element of universal credit in 2015, yet subsequently have recognised the need to uprate it through the discretionary element in the order—although not to a level that reflects the reality of the rising costs of living and previous cuts. Is that an admission that they were wrong to cut work allowances in 2015?

Moving on to the pensions element of this uprating, I welcome the uprating of the state pension via the triple lock. I am glad to see that has survived, given the Government’s indifference to it last year, but I want to put on the record concerns about the public’s levels of understanding of the new single-tier pension and the paucity of information the Government have made available. As we know, there are both winners and losers as a result of the Government’s changes and most new pensioners will not receive the full single-tier pension. Before its introduction, it was estimated that only around 22% of women and half of men reaching state pension age would be entitled to the full single-tier pension. Will the Minister update the House on that?

In addition to the numerous social security payments subject to the Government’s benefits freeze and not uprated in this order, there are some very significant further omissions. Although the state pension is being uprated, people who have frozen pensions are excluded from the uprating and will not see an increase in their state pension in line with inflation. Pensioners living abroad face very different circumstances depending on whether their country of residence has a reciprocal agreement with the UK for the uprating of state pensions. Pensioners in countries without this arrangement see their pensions frozen at their initial retirement level, which means that the value of their pension falls in real terms every single year.

More than half a million people currently have their pensions frozen, mostly in Commonwealth countries such as India, Australia, Canada, parts of the Caribbean and New Zealand, and in countries with strong family and historical links to the UK such as Pakistan and parts of Africa. The Opposition believe that their pensions should be protected in the same way that the pensions of other UK citizens living abroad are in the future, yet the Government are choosing to withhold the pension uprating in this order from 550,000 recipients living outside the UK. This is a chance for the Government to make an historic change to our pension system and support our policy to end future arbitrary discrimination against some British pensioners living overseas by uprating in line with inflation from this point. Will the Minister look again at that issue and take action to address that inequality?

Not only have the Government failed to support pensioners living abroad; they have failed to address the current injustice faced by many millions of women born in the 1950s. It is important that the Government not only recognise the real injustice that women born in the 1950s have been dealt as a result of Government changes to pensions policy, but take action to remedy this injustice.

[Mr Jim Cunningham (Coventry South) (Lab)]

I agree totally with my hon. Friend. Millions of people living in this country have suffered discrimination because of the Government’s policies, particularly the women born in the early 1950s. The Government could do something about it and I can say this to them: as long as they refuse to do something about it, we will keep raising it.

[Debbie Abrahams]

My hon. Friend speaks strongly on behalf of his constituents and women born in the 1950s, given what they are going through, and long may he continue to do so.

There can be no doubt that women have borne the brunt of the Government’s cuts over the past seven years, but that applies particularly to women born in the 1950s, who have been dealt a real injustice through the accelerated increase in their state pension age. The Government have no excuse not to bring forward retirement for women born in the 1950s and early drawdown of their pension, as it is entirely cost-neutral. Alongside our proposals for the extension of pension credit, these additional measures would mean that people affected by the Government’s chaotic mismanagement of state pension equalisation would have the option to retire earlier, and would allow for much-needed financial support. The Government are in a position to implement proposals for early drawdown immediately, but they refuse to do so. I should be grateful if the Minister could explain exactly why that is.

Let me make it clear that the proposals are a “starter”. They do not in any way preclude further action, or even compensation, for this group of women. Will the Minister commit himself to reviewing the Government’s approach to pensions provision for women born in the 1950s, and will he release the original legal opinion contained in the “pink files”?

In the context that I have set out, a 3% uprating of some social security entitlements is unlikely to do much for those who are “just about managing”. As a matter of principle, the uprating should apply to all entitlements, not just the ones that the Government have cherry-picked. In the meantime, although we regret the limit on the groups who will benefit from the uprating, we must support the order, because otherwise those identified will lose out.

Let me now turn to the draft Guaranteed Minimum Pensions Increase Order 2018. We support the uprating of the guaranteed minimum pension in line with inflation, but we believe that some of the issues that were raised last year about the new state pension arrangements that came into effect in April 2016 remain unresolved.

The old state pension had two main components: a basic state pension; and a state earnings-related pension. People who made national insurance contributions at the full rate built up a basic state pension, but an option created in 1978 enabled people to contract out into another pension scheme, either voluntarily or via their employer on their behalf, on the basis that the other scheme met certain criteria. Between 1978 and 1997, schemes that took on such new members were required to provide a “guaranteed minimum pension”. The guaranteed minimum pension system was discontinued by the then Government in 1997.

In 2016, the Government’s introduction of the new state pension ended contracting out by replacing the additional state pension with a single tier. Working-age people now have their existing state pension entitlement adjusted for previous periods of contracting out and transferred to the new state pension scheme. For people who have guaranteed minimum pensions rights under an old pension scheme but who reached retirement age after April 2016, the Government no longer take account of inflation increases in guaranteed minimum pensions when uprating people’s new state pensions. The changes mean that 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.

When the National Audit Office investigated the impact of the changes, it concluded that there would be some winners and some losers under the new arrangements, depending on the time for which people were contracted into a scheme. Those whose state pensions have been pushed back because of the rise in state pension age will lose out on guaranteed minimum pensions inflation-linked increases that would have been received under the old rules. However, those who lose under the new rules may be able to build up additional entitlement to the state pension. The issue here is a lack of clear information, as is too often the case with the Government.

The NAO report stated:

“Some people are likely to lose out and they have not been able to find the information they need.”

Why did the Government fail to provide information that would enable people to make informed decisions? The NAO also said that it was

“concerned that the Department has limited information about who is affected by the impact of pension reforms on Guaranteed Minimum Pensions.”

Will the Minister provide a much-needed update on the number of people who have been affected since the relevant legislation came into effect? What support is available to help people to understand the changes?

I hope that the Minister will address all the issues that I have raised in respect of both orders.

[Neil Gray (Airdrie and Shotts) (SNP)]

It is a pleasure to be able to set out the Scottish National party’s position.

You will not be surprised, Madam Deputy Speaker, if I am rather critical this evening, because I have been speaking about the matters covered by the social security order since my election nearly three years ago. Like the annual review of social security payments, the order covers everything from pensions to maternity allowances, but for many people, there is no annual review, because a number of social security benefits are automatically frozen, regardless of the impact on people who need that support to get by, regardless of the rise in household costs, and regardless of widespread opposition to the continuation of the freeze. Jobseeker’s allowance, child and working tax credit, local housing allowance, income support, child benefit, and the work-related activity group element of employment and support allowance have all been frozen. That means that people who are desperately seeking work, families with children, parents who are working hard but receiving poverty pay, and sick or disabled people will see their support frozen, although their household costs have risen significantly in the past year.

In December, the consumer prices index hit 3%, which means that families in and out of work who need the support of the social security system to get by will need to find extra money just to stand still. The Resolution Foundation has calculated that working families with two children will lose £315 a year as a result of the benefit freeze, and the Institute for Fiscal Studies has said that as a result of higher CPI rates, benefit entitlements will be reduced by an average of £450 per year by 2019-20. We know that this is the worst decade for wage growth in 210 years, and that as a result people who are in work but also in receipt of social security support have had their chances cut off at both ends. As costs rise, they cannot rely on work or social security to help them to keep up.

[Mr Jim Cunningham]

Another issue—I am sure that the hon. Gentleman will come to it—is that of the third child and the so-called rape clause. Nothing has been done about that.

[Neil Gray]

I entirely concur with the hon. Gentleman. He is right to draw attention to one of the Government’s most iniquitous and disgraceful policies. As he has said, no action has been forthcoming to address it.

The End Child Poverty coalition has said that it is because of the four-year benefit freeze that more than 50% of children in the UK’s poorest areas are growing up in poverty. Earlier today, at Question Time, the Minister defended the freeze, saying that overturning it would require primary legislation. I say, “Bring us that legislation and let us vote on it.” The evidence clearly shows the damage that is being done, and I would challenge any Government Back Bencher to vote for its continuation in the face of such evidence. It is time to end the freeze and lift children out of poverty.

Apart from anything else, the Government do not need to continue this, even by their own reasoning. Figures obtained by the SNP from the House of Commons Library show that while the four-year benefit freeze introduced by the Tory Government in April 2016 was intended to result in £3.5 billion of cuts by 2019-20, that figure could now be £5.2 billion owing to rising inflation. The decision not to uprate the bereavement support payment in line with inflation is completely unacceptable while the cost of funerals continues to rise at an incredible rate. What is worst is that the DWP’s own statistics show that 75% of recipients of the new combined payment who have children will be worse off, and that the figure rises to 88% for those who are bereaved with children and in work. The resignation of the entire board of the Social Mobility Commission in December should have been seen as the climax of the Government-driven poverty crisis, but today we see it being driven on.

There are some welcome elements in the order. I am glad that Ministers have used their discretion to uprate statutory sick pay, statutory maternity and paternity pay, adoption pay and statutory shared parental pay, all of which will rise by 3%. They may have done so in the light of a report from the European Committee of Social Rights. I quizzed Ministers about that report earlier, but they appeared to know little about what I was talking about. It states that social security provisions for the self-employed, the sick and the unemployed in the UK are “manifestly inadequate”. The UK is now “not in conformity” with a number of legal obligations in the European social charter, which is a legally binding economic and social counterpart of the European convention on human rights.

--- Later in debate ---

[Neil Gray]

I think we have heard enough, and I am sure that if the hon. Gentleman wishes to, he can make a speech later.

The order will not do much to make up for the lack of conformity that the European Committee of Social Rights has highlighted, and that Ministers seem so clueless about. Its latest report follows the High Court ruling on the UK Government’s changes to personal independence payments, which said that the system “blatantly discriminates” against people with mental health problems, and a report from the UN saying that Tory benefit cuts “violate human rights”. This Government have another new Secretary of State for Work and Pensions, who has thankfully accepted the High Court ruling on PIP. Perhaps it is time for her to take a fresh look at all the other areas of international criticism as well.

On pensions, Ministers will not be surprised at my disappointment that another year has gone by without any action on frozen pensions or to sort out the state pension inequalities faced by women. Accompanying the order are regulations—they are brought forward annually under the negative procedure—ensuring that the state pension uprating will not apply to people entitled to the pension living in certain countries around the world. My right hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) and my hon. Friend the Member for Paisley and Renfrewshire South (Mhairi Black) have been pressing the Government on this matter since their election in 2015. It is an injustice that some people, who have earned the right to their pension like everyone else, have their payments frozen at the rate they first received for the rest of their life abroad. It is just not right that the pensions of those who live in some countries continue to rise while those of others are frozen. Some 550,000 British pensioners are affected, who represent 4% of all recipients of the state pension and half of all those drawing their pensions abroad.

[Mr Jim Cunningham]

I agree with the hon. Gentleman about overseas pensions. I am sure he recalls—I think this was last year or the year before—that a number of representatives from different countries came to lobby us about this situation, which has been ongoing for a number of years. I am sure that we have all received many emails on the subject.

--- Later in debate ---

[Stephen Lloyd (Eastbourne) (LD)]

It is a privilege to respond to the social security benefits uprating order on behalf of the Liberal Democrats. As the Minister knows, the Government have been obliged by law since 1992 to increase the value of certain disability benefits in line with inflation, and I am pleased to see that attendance allowance, carer’s allowance, disability living allowance and the personal independence payment will be going up by 3%. My colleague from the Scottish National party, the hon. Member for Airdrie and Shotts (Neil Gray), also noted that the Government have recognised that they made a tremendous mistake over PIP for people with mental health issues, and I am glad that it is being increased by 3%. However, over the next few months while this absolute shambles is sorted out, I doubt that the many people on PIP who have mental health issues will appreciate that increase as much as they might have done if the Government had not been so foolhardy in the first place.

I value the fact that pension credit is going up by 2.2% and that the widows pension in industrial death benefit is increasing by 3%. To be fair, I also appreciate the fact that the Government have used their discretion to increase working-age benefits for disabled people in line with inflation, particularly around the support group component. As the Minister will be aware, people who are on support group employment and support allowance often have a profundity of disability which means that they cannot work, irrespective of the support they get. I welcome the fact that the Government have increased that by 3%.

It is always good to see the state pension triple lock. The last time I was here, we were in coalition, and I am delighted to see the Government continuing to implement Lib Dem policy by introducing an increase of 3% this year. However, I also want to flag up my disappointment, as other colleagues have done, that the Government have not used this opportunity to give some succour to the many women born in the 1950s and who are part of the Women Against State Pension Inequality campaign. This would have been a good opportunity to send a message that the Government are listening and are prepared to come up with something to salve the frustration and anger of many millions of women across the country. As I have said before in the House, I believe that all the parties are culpable in this regard. The Conservatives originally brought in the changes through the Pensions Act 1995 without telling anyone. Labour did nothing for the 13 years it was in government, and then we had the coalition. As we are all culpable, I hope that we can work together to come up with the kind of transition payment that I profoundly believe the WASPI women deserve. I am disappointed that the Minister has not mentioned this today.

I shall move on to the elements that I am unhappy with. In accordance with the Welfare Reform and Work Act 2016, working-age benefits will be frozen until April 2020. I will not go through the whole list of benefits, but the consequences of this freeze will be absolutely deplorable. I shall give the House an example. The Child Poverty Action Group and the Resolution Foundation have identified that, from this year onwards and for the next four years, single parents stand to lose an average of £2,380 per annum. That is an enormous amount of money for anyone to lose from their annual budget. I am on a very good salary here—we all are—and I would notice if that amount were suddenly taken out of my salary. For single parents to have to suffer that over the next four years is absolutely wrong. I am very disappointed that the Government are continuing with the freeze despite all the evidence from robust, independent and reputable organisations such as the Joseph Rowntree Foundation and the Resolution Foundation. As the hon. Member for Stretford and Urmston (Kate Green) so eloquently said, the impact of the benefits freeze is simply cruel.

[Mr Jim Cunningham]

One of the consequences of this is that people have not been assisted with burials, because nobody ever looks at burial charges, and I wonder whether the hon. Gentleman has noticed that the number of pauper burials is starting to increase in this country. Surely that is quite an indictment.

[Stephen Lloyd]

The hon. Gentleman might know that an additional aspect of the benefits freeze is that the bereavement support payment is frozen. That is just unacceptable, and I will also keep banging on about the cuts affecting single parents.