Social Security and Pensions

Jonathan Edwards Excerpts

Monday 7th February 2022 Commons Chamber

[Nigel Mills (Amber Valley) (Con)]

I think the Minister will find that he has managed to unite the whole House and every speaker in this debate. Sadly for him, he will find that every speaker, including me, thinks that the rise we will vote through tonight is not sufficient for the situation we find ourselves in. We will all ask the Government to go away and try to find some more.

We should be aware of the logic behind what we are doing. We are trying to give the people on the least—those who are out of work, those who cannot work, and those who have retired and therefore no longer work—sufficient money to pay all their bills. Unless we believe that people’s benefits are way higher than what they need, if we do not give them an inflationary increase every year, by definition they cannot possibly pay next year for all the things they had last year.

In this pretty unique situation of the rising cost of living, we are asking those with the least to get themselves not only through this winter, but through all of next year and all of next winter, based on an inflation measure that was taken before this winter. What they have to pay their energy bills in March 2023 will be based on a calculation of what was needed in September 2021. That surely cannot be right or logical. When bills are rising as sharply as they are, I cannot see how it is physically possible for people to do that.

Sadly, it does not look likely that we will be sat here in a year’s time with it all having reversed and with the gas price back to where it was a year ago. It does not look like a temporary blip; it looks like some of these prices will be baked in for a long time. There is sufficient uncertainty out there that there could be further challenges to come. I urge the Government to have a long, hard look at whether we really ought to have this system and whether we cannot do better than using September inflation figure to set the benefits and pension rise six months later.

At the start of the pandemic, the Government rightly chose to introduce the £20 uplift in universal credit. We managed to get that done in a matter of days. Last November, at the Chancellor’s financial statement, the reduction in the taper rate was announced and the Government managed to get that into force in a matter of days—on 1 December. Yet now we are told that they have to use the September inflation figure and cannot use a later one, even though we had the December figure in the middle of January, about three weeks ago, and three whole months before the rise comes into force.

I accept that some of the older, clunkier benefits—those whose systems are based on steam-driven 1980s IT that seems to work by shoving KitKat wrappers into the fuse box to patch it—may take a bit longer to programme. However, I would hope that for universal credit and the state pension—the two largest ones and the ones that affect the most people—we could take a more up-to-date figure. That would not fix the situation and wholly resolve the fact that inflation will be at 6% or 7%, but at least people would have got a 4.8% rise based on the December CPI rate rather than 3.1%. That would have been of help.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

The hon. Gentleman speaks with great authority on all these issues. I have been in the House for over a decade, and it is always a pleasure to listen to him on economic matters. In his view, is anything stopping the Chancellor from making a statement in his March Budget to reflect the cost of living and address some of the issues raised in the debate?

[Nigel Mills]

No, I think the Chancellor could do that at any point and, as I said, he can make changes to the biggest benefit system quite quickly if he sees the need to.

The case that I am trying to make to the Minister is that, at times, the Government can act much faster. I accept that huge investment in IT for legacy benefits that we are phasing out may not be effective, but I would have thought that, in the modern world, with the more modern systems, we could move on from basing the April rise on the inflation position six months earlier. I hope that the Government can find a way to base the rise at least on the December measure, so it is only three months out of date. I accept that for most years that would not make much difference, and for some years it could actually mean a slightly lower rise than using the September figure, but at least that would give us the best possible protection against this awful situation. Inflation is already much higher than it was at the reference point, and it will be even higher still by the time these amounts are paid.

I fear that the position is even worse than that at which I started—that of believing that benefits are in the right place and therefore an inflationary rise is needed. I genuinely fear that many of the benefits we have are now lower than people need, so a lower than inflation rise for benefits that are already too low leaves people in an impossible position. That is why I supported retaining the £20 uplift in universal credit.

I have told the Government many times that, if they believe that all these benefits are sufficient for the standard of living that we want people to have, they should do and publish an assessment of the basket of things that people have to buy and prove they can afford to buy them all. I would then happily support them. If such an assessment showed that benefits were too high, we could have a debate, but it is incredibly unlikely that it would show that. It is overwhelmingly likely that it would show that the measures that were necessary over the last 10 years have ended up going too far and that we are not giving people enough for the decent standard of living they ought to have. If that is so, we need to fix them. I challenge the Government to publish that assessment over the next year and prove their case that benefits are okay. Let us then get the inflationary increase done right. We cannot keep having this same debate in which many of us think that benefits are not in the right place and yet we cannot prove it because that is for the Government to do and, for some reason, they do not want to.