Social Security and Pensions

John McDonnell Excerpts

Monday 6th February 2023 Commons Chamber

[Sir Stephen Timms]

I absolutely agree. That was the one point at which food bank demand fell, and of course it went straight back up once the £20 uplift was removed.

The level of the safety net is now too low for it to do its job properly from the standpoint of economic efficiency. People are being forced to accept unsuitable jobs, with no prospect of training or advancement, simply in order to subsist. That is one reason why the UK’s productivity record is so poor, and we will not deliver economic growth until we tackle that productivity failing. Interesting cross-party thinking on the matter is under way, for example in the work of the Poverty Strategy Commission set up and chaired by the noble Baroness, Lady Stroud. Our Committee’s inquiry will be able to draw on that and other work.

It is clear that the immediately preceding Administration —the interim Government, as the hon. Member for Blackpool North and Cleveleys described it—would not have honoured those obligations. The right hon. Member for South West Norfolk (Elizabeth Truss) told us yesterday that her Administration was brought down by a left-wing conspiracy in the financial markets. It is not clear whether she regards my right hon. Friend the Member for Hayes and Harlington (John McDonnell) as having been responsible for organising that.

[John McDonnell (Hayes and Harlington) (Lab)]

I knew I’d get the blame somehow.

[Sir Stephen Timms]

Actually, of course, it was brought down by economic reality. But I do not think that that Administration would have delivered an inflation uprating, so it is to the credit of the current Administration that they have done so.

I also welcome the increase in the benefit cap. The cap was introduced in 2013 and then reduced in 2016; it has never been increased at all. At the beginning of April it finally will be, thank goodness, but only by the overall rate of benefit uprating, which means that in effect it is a standstill increase. The impact of the benefit cap will not get worse in the coming year, but that will not affect the worsening impact of the cap’s falling in real terms every year since it was introduced.

--- Later in debate ---

[Wendy Chamberlain]

I am happy to support any improvements to the process, but what the hon. Member has done is to point out just how complex these processes are and how difficult they can be for people to navigate. It is only when there is a proactive approach that we start to get things right.

[John McDonnell]

Part of the problem is the run-down in recent years of advice centres and other agencies that can assist people to get the paperwork right, and to ensure representation at the appropriate stage.

[Wendy Chamberlain]

I agree with the right hon. Gentleman. Scotland is not immune from that: with more and more ringfenced spending for Scottish Government priorities, local authorities have less and less discretionary spend to put into areas such as advice and support.

I want to touch on carer’s allowance. It will not surprise Members that I want to talk about carers; I am pleased to say that my private Member’s Bill, the Carer’s Leave Bill, passed its remaining stages in the Commons on Friday and is off to the other place. According to the Government, carer’s allowance aims to help carers keep a link with the workplace, but one challenge I had with my Bill was finding constituents who would benefit from carer’s leave, because so many of them had been forced to leave the workplace due to their caring responsibilities. Simply put, carer’s allowance does not work. Carers need to be allowed to work more before they lose that allowance—that would not cost the Government more, but it would get more people back into work. I would be very interested to hear the Minister’s response to the hon. Member for North East Bedfordshire (Richard Fuller): he is no longer in his place, but he raised that very point. At Prime Minister’s questions in December, I asked the Prime Minister how the Government can believe that £132 per week in earnings is sufficient to live on such that people lose their carer’s allowance, especially when the caring never stops.

The state pension was the subject of a general debate last week. I do not necessarily want to reiterate the points I made on that occasion, but we do know that pensioners face real challenges. In the past year, I have probably done about three letters—articles—to my local paper to encourage people to take up pension credit. As other Members have mentioned, I wish the Government would pledge to follow the ombudsman’s recommendations on compensation for WASPI women, which, as we move into stage 3, would provide some degree of comfort to those campaigners. I refer Members to my early-day motion 814 on that.

When we talk about the pension increases, we need also to talk about errors that mean people do not necessarily get what they are entitled to. The LEAP—legal entitlements and administrative practices—exercise is looking at historical underpayments, and it seems to be forever increasing its remit and timescales. Perhaps one day it will finally look at underpayments to divorced women. Dividing pensions on divorce is incredibly complicated, and the Government have been deliberately blinded by not including that group. I know that the former Pensions Minister in the coalition, Steve Webb, has spoken out about this issue before. I urge the Government to listen to him, if not to me.

I raised this issue at business questions on Thursday: will the Government please tell the truth to the House about what is happening on universal credit national insurance credits? That is another issue where pensioners could go without because of internal DWP failures. Without honesty and openness, we cannot know the extent of the problem or how it will be fixed.

Every Member here knows—simply because of the number of constituents our caseworkers help every day —that there are fundamental problems with how the DWP functions. Sometimes it seems as though it has become a routine part of the process for DWP staff to send people to their MP, and that is simply not good enough. I welcome the uprating orders, but I hope that the Minister will give us some answers on everything else.

[John McDonnell (Hayes and Harlington) (Lab)]

I want to raise three issues briefly; some of this has been covered already but I want to reiterate some of it and go into more detail. The first is the benefit cap. The second is the triple lock. The third is the carer’s allowance, where I follow on from the hon. Member for North East Fife (Wendy Chamberlain).

This debate is primarily about the increase, but in the past these debates have been used to try to shape the debate on social security for the future. Much of what I say, therefore, may be aimed at the Government, but now that the Select Committee has announced its inquiry, part of it is aimed at the agenda for that inquiry.

Those of us who were in the House when the benefit cap was introduced will know that it was born in an era when the debate on poverty had descended into definitions of “skivers” and “strivers”; it was almost a reversion to the language of the Poor Law. We knew what impact it would have and we knew the numbers affected would increase rapidly. Just over 70,000 were being impacted at the start but, as my right hon. Friend the Member for East Ham (Sir Stephen Timms) said, this rose to 120,000 and above. The cap hit some areas in particular, including London constituencies. I am a London MP and I know that 44% of those affected are in London. It hit the black, Asian and minority ethnic community in particular; it has hit eight out of 20 from the BAME community, yet they represent three out of 20 in the population overall, so this was discriminatory.

[Jeremy Corbyn]

My right hon. Friend is making a strong point. Does he agree that the cap has also been a major driver in forcing working-class communities out of inner-city areas, where there are now huge levels of private landlord speculations going on?

[John McDonnell]

I hope that Conservative Members and others who may not have had the experience of this recognise how it has affected our communities. I do not use the word lightly, but some of us have experienced what are almost forms of social “apartheid” within our communities, where certain sections of housing are no longer available to working-class people. In some instances, fenced communities have developed as a result. I highlight reports of what happened in my constituency as regards the Ballymore housing development.

I come back to the point that my right hon. Friend the Member for East Ham made, which is that the cap has had an impact on a large number of children, with the last calculation being 308,000; 70% of the people affected are single parents. As he said, this pushes people into deep poverty. I was looking at the figures and they show that the average capped household with two children is now £150 a week below the Government’s own poverty line. Scrapping the cap would increase benefits to them by an average of £65 a week; the cost would be £500 million, which is 0.2% of the total spending on social security. A marginal increase in the efficiency of tackling tax avoidance, an increase in national insurance beyond getting rid of some of the limits at the higher levels—that would easily pay for this marginal improvement but would have a dramatic effect on the living standards of so many people.

I campaigned against the breaking of the link between pensions and earnings when Mrs Thatcher introduced it, so I wholeheartedly welcomed the triple lock when it was introduced by a Conservative Government and I made that point in this House. I regretted bitterly, however, that the Government broke their pledge last year, because once the link was broken, a debate was opened up among some Members about the triple lock being no longer necessary. I am hoping that the statement about social security and pensions today reaffirms the message across the House that the triple lock is here to stay.

When we look at the figures, we see that one in five pensioners is in poverty; 2.1 million older people are in poverty; they get £40 a week less than the Government’s own poverty threshold; 1.3 million older people are now categorised as suffering forms of malnutrition; and we have always had a high level of excess deaths in winter among older people, with on average between 25,000 and 30,000 dying unnecessarily. I looked at the figures showing what has happened since the break with earnings. The proportion of those people living in severe poverty is five times higher than it was in 1986—we have had the largest increase in western European countries. So I make an appeal to Members from across the House. The triple lock was a major reform, and I thought we had built consensus on it. It should not be in any way undermined in the future.

I think the triple lock should apply to all benefits, and I hope the Select Committee will have that debate. I asked the House of Commons Library to give me the figures on what would have happened to carer’s allowance if the link had been kept since the 1980s. It is now at £76.75 but it would have been £146.42. Invalidity benefit is now £130.20, but it would have been £233.55. If we look at unemployment, we see that jobseeker’s allowance is now £84.80 but it would have been £185.49. There is a moral argument for maintaining the protection of benefits over time and trying to build consensus across the House on that, in the same way in which it was eventually built on the triple lock for pensions.

Finally, let me touch on carer’s allowance. I have been chairing meetings of unpaid carers or informal carers, as they describe themselves, over the past 18 months, and I just want to get the stats on this out there. I pay tribute to what the hon. Member for North East Fife has done with her legislation and the campaign she has waged. Some 8% to 10% of the adult population are informal carers; two thirds of carers are in employment—that is the whole point here; six in 10 of those who are caring for 35 hours a week or more are workless, which is three times the rate of those caring for less than 20 hours a week; and about 25% of informal carers are living in poverty, according to the Joseph Rowntree Foundation’s latest figures. Another figure, which I believe she has quoted in the past, is that it is estimated that unpaid carers across the UK provide £135 billion-worth of caring in our society, and that largely falls upon the shoulders of women. It is now time to recognise the significance of the role that these carers play and the fact of the poverty they live in.

As for Northern Ireland, the Carer Poverty Commission was established last month and it is chaired by Helen Barnard of the Joseph Rowntree Foundation. Research from Carers Northern Ireland showed that nearly one in three unpaid carers in Northern Ireland were struggling to make ends meet, with one in four cutting back on essentials such as food or heating just to get by. I believe the situation is exactly the same across the UK for carers.

Let me make this suggestion: the unpaid carers I have met say that, like everybody else who works, they should be paid a living wage. They should at least get the minimum wage so that they can get by. At the very least, let us take the first step in that direction, which would be to recognise that maternity allowance is paid so that people can care for a child. Perhaps carer’s allowance should at least go up to the level of maternity allowance. If we can increase carer’s allowance in that way, it will enable at least some of those informal carers to be lifted out of poverty. I put that suggestion on the table for the Government to debate and for the Select Committee to look at as well.

As the WASPI women have been mentioned, I cannot help but do so too. This is an injustice that needs to be redressed, and it needs to be redressed soon, because many of the women who were affected are now late in life. We have already lost some of them, and many may not live long enough to see the recompense that they deserve. However, I fear that those who are placing their hope in the ombudsman’s assessment will be sorely disappointed by the levels that are recommended. If that is the case, I commit to returning to the matter on the Floor of this House to make sure that the campaign continues and succeeds.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak in this debate and add a Northern Ireland perspective, as I always try to do both here and in Westminster Hall. Right hon. and hon. Members have set out well the state of the country’s finances for many people. I wish to put on record, and I think it is right that I do so, my thanks to the Government, and the Minister in particular, for coming forward with proposals that help.

I want to make four points in my contribution. A Presbyterian sermon is three points, and I will make four; I am not sure whether that makes my speech a sermon, but it is Presbyterian plus one.

[John McDonnell]

I think that makes you a Catholic, Jim!

[Jim Shannon]

You be careful, boy.

I am very pleased to add my contribution to the debate. Inflation and the cost of living are really hurting people in Northern Ireland. The right hon. Member for Hayes and Harlington (John McDonnell) set the scene when he referred to child poverty and adult poverty in Northern Ireland, and he was right. I have a staff member who deals with nothing else but benefits, five days a week, and other staff members fill in. That gives an idea of the poverty and disability issues in Northern Ireland and why it is important for me to sow into this debate.

While I thank the Government, and the Minister in particular, for what they have put forward, and it is good to have that, I must first make the point from a Northern Ireland perspective that—as has probably become accepted in this House after so many debates—the Northern Ireland protocol has increased our outgoings substantially more than those anywhere on the mainland UK. The haulage costs and the prices of covering payroll have lessened the numbers of suppliers who will ship to Northern Ireland. That being the case, it becomes much harder to source competitively priced items. While this debate is about how we can help people on social security and improve their standard of living, we must recognise that costs in Northern Ireland are higher than anywhere else.

I read an interesting report back in October in the Belfast Telegraph that stated:

“Average weekly grocery spend is the third highest in the UK for shoppers in Belfast and Derry, according to new research by financial hub Admirals Group.

Shoppers in Northern Ireland’s two biggest cities are reportedly paying £77.70 on average for their weekly grocery shop in 2022, forecast to rise to £179.06 by 2030”—

well over twice the price. The report added:

“Only shoppers in London and Southampton are said to be paying more for their weekly shopping”.

That illustrates clearly that we in Northern Ireland are paying more. When it comes to social security and the benefit cap, we must register our concern that it is more costly to live in Northern Ireland than in other parts of the United Kingdom.

The lowest prices were said to be in Leeds and Sheffield—so at least they will have some benefit—and the same report stated:

“In 2021 the average British household spent £69.20 on groceries each week…If inflation were to remain constant at 11%, by 2030, the average grocery shop for a UK household could cost £177.02 per week, £771.28 per month and £9,204.84 per year.”

Those on benefits in Northern Ireland face a real anomaly. It is dearer to live in Northern Ireland; it is dearer to warm our homes and it is dearer to buy our groceries. That means that someone on benefits in Northern Ireland cannot expect their money to go as far as someone in one of the other constituencies in the UK represented in this House today.

While it is right and proper that benefits are uplifted to enable people to buy the bare necessities, the protocol means that those are not even covered by this uplift. The girls in my office referred almost double the number of people to the food bank coming up to Christmas this year, an indication that for many people any additional pressure on finances, such as to buy a small gift or a special meal, just cannot be managed.

The first Trussell Trust food bank that ever came to Northern Ireland came to Newtownards in my Strangford constituency. It has found a place and it is doing excellent work, and I support it very much, as indeed does the community. I am one of the referral points, so when it comes to understanding why people are going to food banks I can categorically state that it is not just those on the minimum wage, but those in the middle class, who I refer to as the working poor. The extra referrals, and we have had somewhere in the region of 30% or 35% extra just this last Christmas, tell me not only that the work of the food bank is important, but that there are different people going there. Again, that comes down to the cost of living, especially for those on benefits in Northern Ireland.

I am thankful for the food bank and to the social supermarkets, which are also doing fantastic work in seeking to help people make their money stretch further by teaching budgeting and different ways of purchasing. However, money is not elastic—it can only stretch so far. It is clear that the Government must bridge the gap, and by the same token we must lower the threshold to allow more people to access the help they are entitled to.

Having posed my first question to the Minister on behalf of the citizens of Northern Ireland about how they are finding it harder to beat the inflation that makes foodstuffs and heating more expensive there, I have a second question for him. For example, someone who is £5 above the threshold for universal credit will have missed out on the cost of living payment and will need the same help to pay the same amount for groceries as someone who is just below that threshold. We often find people who fall between two stools, and clearly those people do, so I want to make the point, as others in have in this debate, that they need help. I know the Minister always tries to respond, so I look forward to his response.

My third point is that I will hopefully bring a ten-minute rule Bill to the Floor of this House at some stage in the near future to make meaningful change to the child benefit threshold. Those disingenuous thresholds, which bear no relation or relevance to the cost of living and life, must be reviewed, and the same consideration must be given to the benefits threshold. We had a debate in Westminster Hall last Thursday, led by the hon. Member for Linlithgow and East Falkirk (Martyn Day), in which he raised a clear issue: two people in one house can earn £49,000 each, or collectively £98,000, and their child benefit will not change. However, one person in another house who earns £52,000 and whose partner earns £10,000, so that they earn £62,000 collectively, will see their child benefit change. There is clearly an anomaly in the threshold, and there needs to be a change of direction and some clarity to ensure that those who find themselves disadvantaged in that way are taken care of.

I make a special request, as others have done. Last week, we had a Westminster Hall debate on cystic fibrosis and living costs. Those with disabilities, such as those with chronic obstructive pulmonary disease or those who need oxygen 24/7, have higher costs. I quote some figures from that debate:

“People with CF have higher food bills because they need a higher calorie intake to maintain a healthy weight, and higher energy bills because they need to keep their homes warm to stave off lung infections and they may need to power an additional fridge to store sterile medications or essential medical devices such as ventilators.”—[Official Report, 2 February 2023; Vol. 727, c. 169WH.]

While this 10% increase is welcome, I ask the Minister very respectfully what can be done for those people with disabilities who are feeling the pain more than most.

In my opinion, and I believe others agree, a society is always marked by how it looks after those who are less well off. Our job in this House is to ensure that those who are finding these times particularly difficult—there are many of them across the whole United Kingdom of Great Britain and Northern Ireland—are looked after. That is my fourth request of the Minister.

While I welcome the increase, we are missing out those middle-of-the-road working people who are struggling and scraping by, week to week. I ask the Government to make their next priority the squeezed middle class, and those who need help and just cannot get to the level they would expect.