Jonathan Reynolds debates involving the Department for Work and Pensions during the 2019 Parliament

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Social Security (Up-rating of Benefits) Bill

(2nd reading)
Jonathan Reynolds Excerpts
Monday 20th September 2021

(1 month ago)

Commons Chamber

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Department for Work and Pensions
Jim Shannon Portrait Jim Shannon
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I wholeheartedly endorse that. It is always good to have these debates to which others bring their knowledge and information, and the hon. Lady highlights something that clearly needs to be addressed. Perhaps the Minister can give us an indication on that when he concludes the debate.

We should be cementing, investing and encouraging business growth that pays into the Treasury in a natural manner. The hon. Member for North East Fife (Wendy Chamberlain) referred to her reasoned amendment, which I think shows what those of us on the Opposition Benches are thinking. This is a difficult topic, and I am aware of the pressure of covid-19 on the economy and how my grandchildren—and perhaps their children—may be paying for it throughout their lifetimes. However, I am concerned about how we recoup the money. It cannot be through overly taxing those who have paid all their lives and seeing them shoulder the burden more than those who can afford to pay more. We need—this seems to be a slogan—to stop squeezing the middle class. We should be investing in and encouraging business growth.

Others have referred to pension credit. When I am on the doorstep or at a social occasion, there is not an occasion when I do not speak to someone in that bracket and ask them, “Are you getting all your benefits? Are you getting your tenant’s allowance? Are you getting your pension credit?” Unfortunately, more often than not, many of those people are not getting their benefits. The Government have a role to play in ensuring that those who are not aware of a benefit know that they should be getting it. Will the Minister remind us of where we stand on that?

The figures for Northern Ireland are quite scary: 15% of pensioners—some 43,000 people—are in fuel poverty and overall poverty. That concerns me. Perhaps the Minister can address that. The right hon. Member for East Ham (Stephen Timms) when referring to universal credit mentioned in passing his reasoned amendment, which was not selected. He also said that, whenever furlough ends, many families will find themselves in a difficult position. I subscribe to that view, as does probably everyone on the Opposition Benches. In Northern Ireland, we are facing gas bill rises of some 35% as winter comes in hard, and those who live in Housing Executive or housing association accommodation that has been converted to gas heating face the double whammy of not just how their pensions are affected but by the cut to universal credit, and they will be squeezed more than ever. Pensioners will therefore be impacted unfairly. This winter will see increasing pressure on pensioners and many more than the 15% will fall into that category.

The right hon. Member for East Ham also referred to those in work, and I will give one quick example from a constituent. This lady said:

“You make a third of your money when you do overtime for the benefit you lose, so I am paid £3 an hour in real terms. While I do take the overtime offered to me if I am able to do it, I can also understand why others don’t. Making up £20 a week is not as easy as many would have us believe today.”

I have long opposed the cut to universal credit, especially as we are coming into winter, when there are additional costs. For the sake of working families in my constituency, I must add my voice to those calling for the money saved by this uprating change and other methods to be factored into the ability of families to afford the gas price increase. We are thinking of capping the pension increase for the most vulnerable sector of people without a real review of how their living costs will increase this year. I do not feel that we can comfortably do that with the limited information provided. Given the increase in the cost of living, as I think the right hon. Member for East Ham said, many will face the stark choice of whether they have a meal or turn the heat on. Those are cold realities for many people.

As we see rises in the cost of living in Northern Ireland, with 20% rises in the cost of food and fuel in the next few weeks, I say with great respect to the Minister and the Government that I must support my pensioners and stand with them. I will support the reasoned amendment and oppose the Bill. The Bill is not right, so I cannot support it.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
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Thank you, Madam Deputy Speaker, for calling me to close the Bill’s Second Reading for the Opposition. We have heard many good speeches, but, before I turn to them, I want first to deal with the central case that the Government have made for the legislation.

As my hon. Friend the Member for Reading East (Matt Rodda) set out in opening for Labour, Opposition Members accept that there has been an anomaly in the earnings data due to the pandemic, and we recognise that a solution is required. I have listened carefully to passionate speeches from colleagues across the House, but I simply do not believe that anyone in the UK believes that wages are rising at 8.3% in real terms across the board. If I were to put that case to my constituents, I think they would very much question my judgment. However, as we said since the announcement was made, the duty is on the Government to explain why their preferred solution—a move to uprating by inflation or 2.5%—is the right one. That duty is particularly important because the triple lock was a Conservative manifesto commitment and, as many hon. Members pointed out, the announcement to break it has come after a series of decisions to break other Conservative manifesto commitments. It is therefore reasonable that the burden of proof lies on the Government and that the threshold for support should be high.

We have had some valuable contributions. The hon. Member for Glasgow East (David Linden) was right to highlight the trust in the Government stemming from the decisions of the last few months. He was also right to point out figures that show that the number of pensioners living in poverty taken by the measurement that he indicated—those living with an income below 60% of the median after their housing costs—is rising. Given that we know overall spending on pensions is going up every year by quite considerable numbers, why are we also seeing that rise in poverty? That is a question for us all and one on which we may need more time in future.

The hon. Member favours auto-enrolment, and I very much agree. The question is about how to do that in a post-pandemic environment. He will understand, however, that I cannot agree when he posits that Scottish independence might be the solution to some of those problems, because an independent Scotland would clearly face some difficult economic decisions in its own right. I do not think it is necessarily helpful to put that across.

David Linden Portrait David Linden
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Yes, an independent Scotland would face difficult economic decisions, but does the hon. Member accept that the central point of independence is about people in Scotland—the people who live and work there—making those economic decisions?

Jonathan Reynolds Portrait Jonathan Reynolds
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I understand the basis of any nationalist claim for any sense of self-determination, but—this debate may be taking us a little away from the pensions uprating discussion, Madam Deputy Speaker—we all live on these islands together and, when we look at difficult economic decisions, the strength that we have by being a Union is of benefit to us all. [Interruption.] I will come to the speech by the hon. Member for North Ayrshire and Arran (Patricia Gibson), but I do not think there is time for a debate on Scottish independence as part of our discussion of pension upratings.

The hon. Member for Runnymede and Weybridge (Dr Spencer) made a brave case that the Government might actually lose trust if they held to their manifesto commitments, and I admired the style in which he did it. He wanted a wider debate on the earnings lock, but I would respectfully have to disagree with him on that. I do believe there is a need to maintain the value of the state pension and the objectives of the triple lock are ones we should keep to—many of the reforms in Parliament since I have been here have been based on a provision for the triple lock to take place—but I did appreciate his speech.

The hon. Member for Amber Valley (Nigel Mills) made, as ever, a thoughtful contribution. He questioned the ability—my hon. Friend the Member for Reading East raised this in his opening remarks—to analyse the underlying wage trend taking away the impact of the pandemic. The hon. Member for Amber Valley will know that that has been an open question, and several organisations have tried to do a piece of work on it. Ultimately, I do agree that it is challenging to do so in a way that is unchallengeable, and that is a fair point to make when looking at possible alternatives.

My right hon. Friend the Member for East Ham (Stephen Timms), the Chair of the Select Committee, pointed out that pensioner poverty is rising, as the hon. Member for Glasgow East did, and I think that has to be central to our discussions. My right hon. Friend the Member for East Ham made the point repeatedly that the question must be how we can increase the take-up of pension credit. He has raised this point consistently, and I know there has been some engagement with the Government Front Bench on it, but I think there is strong support for his words from all sides whenever he raises it. Of course, I believe he was absolutely right to raise the juxtaposition of the decision today with the cut to universal credit, and I believe the case is getting stronger every single day not to proceed with the Government’s cut.

The hon. Member for Wantage (David Johnston) raised pension upratings in the past. He will not, I think, mind my saying that if we look at the position say in 1997, when the Labour Government came to power, we see that a third of all pensioners back then lived in poverty. There was a very strong correlation in those days between growing old and being in poverty, and that was reduced to record low levels by the end of that Labour Government, so the record has to be considered in the round. However, I do agree with him, and I have said this myself, that I reject discussion of pension uprating as an issue of intergenerational conflict. I think it is very much about the value of the state pension when today’s workers do retire, and we should never forget that.

The hon. Member for North Ayrshire and Arran also highlighted the lack of trust stemming from recent Government decisions to break successive manifesto commitments. She obviously strongly opposes this measure. I think what is required is more engagement with the issue of whether the data we have before us is a true and accurate reflection of what we believe is happening in our constituencies. I have said very clearly to her that I do not believe that level of wage growth is the real picture, certainly in a constituency such as mine. Where I do agree with her is that coming, as this decision has, after other manifesto commitments have been broken, that is the context in which our constituents will look at what is happening.

My hon. Friend the Member for Birkenhead (Mick Whitley) also reflected on the run of broken promises and how this has come across to the public. He is absolutely right on pensioner poverty and absolutely right to demand transparency from the Government on this decision and commitments to reassure his constituents.

The hon. Member for Paisley and Renfrewshire North (Gavin Newlands) raised the cost of living, and I think that case is getting stronger every day. Again, we will not dwell on it, but I do not believe his analysis of independence as the answer to that is the right way forward.

The hon. Member for Strangford (Jim Shannon) was not convinced of the Government’s case either. He was also right to raise particular issues in Northern Ireland about the post-Brexit trading situation and the impact on his people as a result—something about which I think all the House shares concerns. Of course, he is again absolutely right about the impact of the universal credit cut.

However, there is no doubt that the most valuable contribution and perhaps the one of most interest was from the former Secretary of State for Work and Pensions the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith). Again, we have heard in the debate, and it is something I have said myself, that the triple lock is not a straightforward question of an intergenerational clash, and I know some people have concerns about linking the two issues together. However, I do believe he was right to raise—and to attempt to have his own amendment on—the impact of that universal credit cut, which we discussed in depth last week. I believe that the case against it gets stronger with every single day, and I would appeal to noble Lords in the other place to give this matter the due consideration that has not quite been possible today, but is still very valid.

On the reasoned amendment moved by the hon. Member for North East Fife (Wendy Chamberlain), this is an opportunity to discuss the wider context in which this decision has been taken and it makes reference to the universal credit cut that is imminent. However, while the amendment makes passing reference to that, its main argument is that there has been no anomaly, which is not the position of the Labour Front Bench. I can tell the House that I have had my own discussions with the Office for National Statistics, and I am very satisfied that the case for the 8.3% figure is, frankly, unsound.

I know there is an argument for simply insisting on a rise of 8.3%, but I do not believe that that is a responsible course of action. We make the case for the Government to change course on the universal credit cut, but that is because the Government can do so, it is the right decision and it is very much in the national interest, but I do not think, frankly, that the same factors apply to the decision before us today. Again, it goes back to whether we ultimately believe that that is the correct rate of wage growth or earnings growth across the economy as a whole.

For that reason, I will not be supporting the reasoned amendment, and I do not see much merit in dividing the House on Second Reading. However, we will be seeking to interrogate the Minister during future stages of the Bill, and we will be looking for the reassurances and that transparency we have sought since the original decision and announcement were made. Therefore, we look forward to the remaining stages of the Bill.

Guy Opperman Portrait The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
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I thank the 13 colleagues who have contributed to a wide-ranging debate. The Bill makes technical changes to set aside the earnings link for 2022-23. We will instead increase the relevant pensions and benefits by at least the higher of inflation or 2.5%. This approach will ensure that pensioners’ spending power is preserved and that they are protected from the higher cost of living, but it will also take into account the difficult decisions elsewhere across public spending.

The practical reality is that many issues were raised tonight, not least pensioner poverty. I would respectfully remind the House that pensioner poverty is going down, not up. As a result of the triple lock since 2010, the full yearly basic state pension has increased by £2,050 in cash terms. There are 200,000 fewer pensioners in absolute poverty, both before and after housing costs, as compared with 2009-10, and material deprivation—an alternative way of measuring poverty—is at an all-time low of 6% of pensioners.

Universal Credit and Working Tax Credits

Jonathan Reynolds Excerpts
Wednesday 15th September 2021

(1 month, 1 week ago)

Commons Chamber

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Department for Work and Pensions
Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
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I beg to move,

That this House calls on the Government to cancel its planned cut to Universal Credit and Working Tax Credit which from the end of September 2021 will reduce support for many hard-working families by £1,040 a year.

I reiterate what I said when we had this debate in January: while, understandably, strength of feeling is high when talking about something that affects so many families and households across the country, this should not be a debate with personal abuse or accusations of bad motive. I ask everyone following the debate at home to consider that, too. If we instead took a moment to assess the matter properly and considered not just the impact on the 6 million affected families but what is in the best interests of our economy as we recover from the pandemic and, crucially, what we need as a country to be able to face the inevitable shocks and economic problems that will come our way in the future, we would decide that it would be unconscionable to take this money away.

Angela Eagle Portrait Dame Angela Eagle (Wallasey) (Lab)
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In my constituency, £10.5 million will disappear from the spending capacity in our local economy when more than 10,000 people and working families lose access to this benefit. Does my hon. Friend agree that that will have a tremendously bad effect on local spending power?

Jonathan Reynolds Portrait Jonathan Reynolds
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My hon. Friend is exactly right. The reduction of £20 a week for 6 million low-income families will be the single biggest overnight cut in the history of the welfare state—bigger even than the cut to unemployment benefit in 1931 that caused the Government of the day to collapse. The scope of the cut, affecting one in 14 British workers, is also unprecedented. For those reasons alone, it is right that we are having this debate and that our constituents know where we stand.

James Cartlidge Portrait James Cartlidge (South Suffolk) (Con)
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The hon. Member is courteous in giving way, but his proposal would cost £6 billion. Which tax would he raise to pay for that?

Jonathan Reynolds Portrait Jonathan Reynolds
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Will the hon. Member tell me how many households in his constituency are in receipt of universal credit? I am giving him a chance to put on the record how many of his constituents are affected. There is a whole section of my speech in which I will tell him how the Government can afford to pay for this.

I did not know that the hon. Member did not know the figure for his constituency—I promise that I was not trying to catch him out. I was simply trying to make the point that the recovery of his local economy would be adversely affected by taking that spending power away, as my hon. Friend the Member for Wallasey (Dame Angela Eagle) made clear for her constituency.

Jim Shannon Portrait Jim Shannon (Strangford) (DUP)
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I thank the shadow Secretary of State for introducing this important debate. Northern Ireland has the highest levels of child poverty in United Kingdom of Great Britain and Northern Ireland. My mailbag, like everyone’s, is full of real-life stories of people worried sick about how they will be affected. Does he agree that the removal of the £20 universal credit payment will plunge even more people into food poverty and have a detrimental effect not just on their pockets financially but on their health? It is a double whammy, and they just cannot take it.

Jonathan Reynolds Portrait Jonathan Reynolds
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I agree with the hon. Member. Opposition to the cut is truly universal, for those reasons. It includes MPs, charities, unions and six former Conservative Secretaries of State for Work and Pensions. If we are being honest, I think several serving Conservative Ministers also share that view. In this debate, I want to knock down the fiction that there is somehow a choice to be made between cancelling the cut and getting people back into work. I want to talk about what the cut will mean for the families affected and the impact that it will have on all our local economies and the national resilience necessary to meet future challenges. I also want to talk about how the Government could easily fund universal credit at its current rate without making this counterproductive and harsh cut.

Desmond Swayne Portrait Sir Desmond Swayne (New Forest West) (Con)
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I am inundated every week by employers who simply cannot get workers. Should we not be seeking to raise the sights of many working people to get another, better-paid job? They are out there.

Jonathan Reynolds Portrait Jonathan Reynolds
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In the right hon. Member’s constituency, 4,000 households are in receipt of universal credit. I want to ensure that, at the beginning of the debate, we knock down the argument, which we have also heard from the Prime Minister, that a focus on jobs will somehow mean that we do not need to keep universal credit at its current level. Of course we should get people back into jobs, but it is simply false to say that the choice is between keeping the uplift and doing that.

Let me remind the House again that universal credit is an in-work benefit. Almost half of the incomes that Government Members wish to cut are of people in work. Either the Prime Minister, the Cabinet and several Conservative MPs do not know how universal credit works or they are being wilfully misleading. I do not know which is worse. Let us have a real debate rather than this ignorant rhetoric about work or welfare, because—this is the crucial point—if as a country we could get the people affected into better-paying jobs, the cost of keeping universal credit at its current level would go down automatically. That is exactly how the system is designed to work. Anyone saying that the cut needs to happen to get people back into work, or to get them working more hours, does not know what they are talking about.

Jonathan Reynolds Portrait Jonathan Reynolds
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I will give way to the hon. Member one more time.

James Cartlidge Portrait James Cartlidge
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The hon. Member is kind. I hope he will answer my intervention rather than re-intervene on me; I found that very odd earlier. Is it better in principle that people receive £20 through the benefits system or through going into longer hours, with more progress in work and building up a career where there is no limit on what they achieve?

Jonathan Reynolds Portrait Jonathan Reynolds
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Of course it is better that people are in work, but the whole point of reform in this area over the last decade and a half has been to try to create a system that integrates with the world of work. I cannot see how the hon. Member does not understand that. I cannot see the logic in his argument that a cliff edge is necessary for the outcome that he wishes to see.

Ellie Reeves Portrait Ellie Reeves (Lewisham West and Penge) (Lab)
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My hon. Friend makes a compelling argument about universal credit being an in-work benefit for many people. I have been inundated with calls from constituents who are supermarket workers, teaching assistants and carers. They are already working long hours and they have gone above and beyond during the pandemic. Does he agree that this is not the way to thank those hard-working key workers for everything that they have done for this country?

Jonathan Reynolds Portrait Jonathan Reynolds
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I agree absolutely; that is the point. We saw in the exchanges between the Secretary of State and me on Monday, as well as in Prime Minister’s questions, that the Government’s proposition is that somehow people working full time will be able to work 50 or 55 hours a week, on top of what they are already doing. The Opposition are more than happy to have a discussion about raising pay—we have plenty of ideas. Let us discuss raising the minimum wage to at least £10 an hour now or reducing the universal credit taper rate so that people keep more of what they earn. To dress up this devastating cut as a choice between supporting jobs and supporting families is an insult to the millions of working people who will see their incomes drop. Hon. Members who support the cut should at least have the decency to stand up and say so rather than hide behind straw men.

Alex Cunningham Portrait Alex Cunningham (Stockton North) (Lab)
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I will give my hon. Friend some statistics from my constituency, where 37% of all children—that is 6,802—are living in poverty, a figure that has increased considerably under the Tories. Thousands of them and their families rely on universal credit to put food on their tables. With the latest figures showing inflation rocketing, and that is very much on food, does my hon. Friend agree that adults and children will go hungry if the Government do not do the right thing?

Jonathan Reynolds Portrait Jonathan Reynolds
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My hon. Friend is absolutely right. However, it is also important to say that there are 1.7 million people this will affect who cannot work, owing to disability, illness or caring responsibilities. I have not heard a single mention of them from the Government, or the offer of any help coming their way to mitigate this cut.

Chris Stephens Portrait Chris Stephens (Glasgow South West) (SNP)
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The Government said at the time they increased the universal credit payment that it was to pay for essentials during the pandemic. I take that to be food and fuel. Does the shadow Secretary of State believe that food and fuel prices have fallen since the pandemic, and if not, does that not just do away with the Government’s argument altogether?

Jonathan Reynolds Portrait Jonathan Reynolds
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I am grateful to the hon. Member, who makes two points: first, if the Government believed this level of need was evident during the pandemic, the crisis that people face—whether that is illness or redundancy—does not change whether or not there is a global pandemic; and crucially, yes, he is right that fuel costs are going up. We had the announcement this morning that inflation is over 3%. Anyone who has been to a British supermarket in the last few months knows how much food is going up, so the need is absolutely there. Frankly, the Government’s case that somehow this support was needed in the pandemic and can be taken away has absolutely nothing to it.

That brings me to one more point I want to raise before I talk about the impact on people. I want to highlight again the situation for people on legacy benefits, such as employment and support allowance and jobseeker’s allowance, who never had this uplift to begin with. I believe, and I have said so many times, that these people are the victims of discrimination. Universal credit is the clear successor benefit to these benefits, and the decision to not uprate them was initially presented to this House as a technical problem, rather than a policy choice. The situation they have been put in is grossly unfair, and we will continue to keep raising this. The only reason I did not include those benefits in the wording of this motion today is that I did not want any Conservative MP to be able to cite that as a reason to refuse to back this motion.

It is the impact on people that should be paramount in our minds. I am sure all hon. Members, whichever side they are on, have been inundated with people getting in touch to tell them exactly how much this money means to them. The leaked internal analysis from the Government that appeared in the Financial Times last week described the cut, in the Government’s own term, as “catastrophic”. The human cost of taking this money away cannot be overstated: £20 may not seem like much to some people, but it is makes the difference of having food in the fridge and still being able to put the heating on, or being able to get the kids new school shoes without worrying how to pay for them.

Debbie Abrahams Portrait Debbie Abrahams (Oldham East and Saddleworth) (Lab)
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My hon. Friend is making a very powerful speech. In Oldham, there are over 11,000 people in work reliant on universal credit with 22,000 children. Is he as concerned as I am that the long-lasting impacts of driving these children into further poverty—as we saw, for example, in the Nuffield Foundation report yesterday—are going to be detrimental not just for those families, but for society as a whole?

Jonathan Reynolds Portrait Jonathan Reynolds
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My hon. Friend is my constituency neighbour, and she knows that her constituency is very much like mine. We have seen the impact of the austerity years and what that has meant, not just in terms of the impact on people, but with how much need that has pushed on to other services—the NHS, the police force—and, frankly, with how so many of the preventive services that were once there have had to go from local authorities. The position people are in, as things stand today, is not one in which anyone could reasonably say that there is capacity to further reduce support and take so much money out of local economies.

Margaret Greenwood Portrait Margaret Greenwood (Wirral West) (Lab)
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According to the Resolution Foundation, over 40% of people on universal credit were food-insecure before the Government introduced the £20 uplift, so does my hon. Friend agree that by cancelling the uplift and cutting universal credit by £20 a week, the Government are taking the money from people that they need to put food on their tables and to support their families?

Jonathan Reynolds Portrait Jonathan Reynolds
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Again, no one could dispute that case. Last week I went on a visit to Peterborough, which is the Conservative constituency most affected by this cut, and I went to volunteer in a local food bank. Anyone volunteering in that situation and simply observing the level of need coming through the front door could not in any good conscience say that the people going there could sustain themselves if this cut were to take place. Some of the volunteers there are people who work for the NHS, who in their spare time are volunteering on the vaccine programme and, in their spare time from that, are volunteering at the local food bank. That is what the people of this country are doing, and if only they had a Government who were willing to give the same level of commitment, how much better things would be.

Clive Efford Portrait Clive Efford (Eltham) (Lab)
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My hon. Friend is making an extremely powerful speech. We have been through a period when communities have come together, and he has just talked about volunteering and the way that communities have come together to deal with food poverty in particular. Children have been involved in that, and this is the Government who failed to feed our children during holiday time, so it is no surprise that they are bringing in this cut. Even in a constituency such as mine in London, over 5,000 children live in households that receive universal credit and are going to face a cut on top of what we have all been through over the last 18 months. It really is time that this Government started to think about the consequences of what they do to the poorest people in our communities.

Jonathan Reynolds Portrait Jonathan Reynolds
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Again, I think the case my hon. Friend has made is self-evident. I would also say that if we look at the moments of national crisis in British history and at how the country has responded to those, we see that we have always sought to learn from those crises and to take the best bits of our response to them. This announcement from the Government—the debate today—is their saying, “There’s nothing to take from this; there is nothing to keep that sense of solidarity or that action to try to improve things for people, and we are walking away from it.” I think that that, perhaps more than anything else, is what makes so many people frustrated with the tin ear the Government are showing.

Jack Dromey Portrait Jack Dromey (Birmingham, Erdington) (Lab)
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Erdington may be rich in talent, but it is one of the poorest constituencies in the country. Some 63% of working age families with children in my constituency face a £1,040 cut in the biggest overnight cut to social security in the history of the welfare state. Does my hon. Friend agree with me that the Government seem to be oblivious to the despair of mums and dads who are wondering how they are going to be able to feed their kids as a consequence of soaring bills—electricity, gas—and prices in supermarkets, and that at a time like this this cut is truly the cruellest cut of all?

Jonathan Reynolds Portrait Jonathan Reynolds
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Again, I am pleased my hon. Friend has been able to place this on the record for his constituency, because that is how everybody sees it.

Last week I met some of the families who gave evidence at the Work and Pensions Committee—great people, real people—and they told it exactly how it is. On Monday, the Under-Secretary of State for Work and Pensions, the hon. Member for Colchester (Will Quince), tried to say this actually is not a cut because the Treasury never budgeted to keep the uplift in place. Let me tell him that it is a cut to those families who came here to give evidence in the session last Wednesday, and it is a cut, as hon. Members have said, at a time when other things—the cost of heating, the cost of food, the rate of inflation—are already going up in real terms. Let us in this debate deal with the reality of people’s lives, not with Treasury fictions.

Andy Carter Portrait Andy Carter (Warrington South) (Con)
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I took a moment to look back at some of the calls the hon. Gentleman has made over the last couple of weeks to increase benefits. When I added them all up, I found that there is not just the £6 billion for this benefit, but a total of about £15 billion that the Labour Front Bench has called for. Can he tell us how we are going to pay for that, because it is real people who will be paying for those benefits?

Jonathan Reynolds Portrait Jonathan Reynolds
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I will tell the hon. Member about the real people. There are 7,700 families in his constituency whom this cut will affect, and the decisions the Government will make—[Interruption.] I am not going along with Conservative Back Benchers trying to tot things up and coming out with them in the middle of a debate. No, let us talk about the real impact on the 7,700 families in his constituency. The message he should be considering is: what will happen to his local economy and what will happen to national finances by taking that money away from them? This is a very important point.

Rachael Maskell Portrait Rachael Maskell (York Central) (Lab/Co-op)
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Some 7,850 of my constituents will in three weeks’ time also lose £20 a week. Does my hon. Friend agree that the real cost will be the impact on people’s lives—the lost opportunities for those children’s futures and the hopes we all carry? Is it not right that we invest in people, not see this as a cut in itself?

Jonathan Reynolds Portrait Jonathan Reynolds
- Hansard - -

Absolutely. That investment in people is essential, and this uplift that we are talking about today cannot be considered without remembering the benefits freeze that lasted for four years prior to 2020. As the former Secretary of State, the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), has said, the uplift only really restored what the value of UC would and should have been.

The pandemic exposed what many of us already knew: that social security in this country had become so threadbare it simply would not have got us through the pandemic. Since 2010 there has been unprecedented growth in in-work poverty in the UK, and food banks have become the norm in every town and city. No constituency has been exempt from that, and, most of all, one in eight working people in the UK is currently living in poverty. So the Government should not be seeking to congratulate themselves on making this uplift during the pandemic; they should ask themselves why they let things get so bad to begin with.

There was another laughable moment in Question Time on Monday when the Secretary of State compared the Government’s response to that of the Labour Government after the global financial crisis. Back in 2008 there was a functioning and supportive welfare state: tax credits acted as a superb automatic stabiliser; Jobcentre Plus had already been created, bringing together the old social security offices with the jobcentres, which all Governments since have recognised as a huge strength; unemployment did not hit 3 million, as initially predicted; and initiatives such as the future jobs fund played their role. So that Government had already done the hard work back then, and that is the lesson this Government need to learn.

As many Members have said, great as the impact on families is, we also have a responsibility to consider the impact of this on the country as a whole. The money we are talking about is spent in local shops and on local services, the very businesses that have had such a tough time because of the necessary public health restrictions most of us here backed for good reasons.

The recovery is promising, but it is not a done deal and there is a lot of ground to make up. This is the wrong decision for the economy and it also fails to learn the lessons from the pandemic and build the resilience we need as a country to face future challenges.

Catherine McKinnell Portrait Catherine McKinnell (Newcastle upon Tyne North) (Lab)
- Hansard - - - Excerpts

I absolutely support everything my hon. Friend is saying in his speech, and the Government should listen hard, because we have all lived through a very difficult 18 months and there are increasingly difficult times ahead as well. We have learned many lessons during this period, such as that we should invest more in the things we value most. This money is targeted at families; 40% of families with children in my constituency will lose out as a result of this decision, and that will have an impact on those children. We have one of the most expensive childcare systems in the world and we know that working families are struggling. The Government can do something simple to support those families by changing their direction on this cut today.

Jonathan Reynolds Portrait Jonathan Reynolds
- Hansard - -

My hon. Friend is right. The lever the Government have to alleviate this basket of problems—childcare costs, fuel costs, food costs—is to not go ahead with this decision.

My hon. Friend’s intervention brings me to my next point. If it really is the Government’s ambition to level up the UK, it is hard to see how that can mean anything when this cut disproportionately affects the places the Government say they want to boost. Despite all the rhetoric, this cut will take £2.5 billon out of local economies in the north and the midlands, including Stoke-on-Trent which would lose over £32 million and Blackpool which would see £23 million cut.

We all know this money is not being invested or hidden away; it is being spent. It is being spent in shops and restaurants in local high streets that desperately need a boost after last year. After the last week, it seems that the Government are keener on taxes up than levelling up.

Gagan Mohindra Portrait Mr Gagan Mohindra (South West Hertfordshire) (Con)
- Hansard - - - Excerpts

On the hon. Gentleman’s comments about the last Labour Government and the 2008 financial crisis, what support did that last Labour Government give to those families?

Jonathan Reynolds Portrait Jonathan Reynolds
- Hansard - -

I addressed that in an entire section of the speech so I refer the hon. Gentleman to Hansard.

Stephen Crabb Portrait Stephen Crabb (Preseli Pembrokeshire) (Con)
- Hansard - - - Excerpts

Actually, that is a really important point because the hon. Gentleman was guilty in his comments on the previous welfare system of looking at it through rose-tinted lenses. There were huge problems with the previous welfare system. It caught hundreds of thousands of families in poverty traps, and at every opportunity since 2010 the Labour party resisted our efforts to reform welfare, to make work pay and to provide better financial support for families in Britain.

Jonathan Reynolds Portrait Jonathan Reynolds
- Hansard - -

I have a lot of time for the right hon. Gentleman, as he knows, and he has been vocal in opposing the Government and we all have respect for that, but I must put a few things on the record in response to his intervention. The reductions in poverty under the last Labour Government were tremendous, and we did not even know how good they were until we got the evaluation, sadly a few years later when already so much of that had been taken apart. Of course there were problems with the previous system, but no one should try to claim that the last Labour Government were not a reforming Labour Government. As the right hon. Gentleman knows, after that Labour Government came to power a single parent did not have to go out and look for work until their eldest child was 16—there was no regime in the world like that—and Jobcentre Plus did not exist. So there was a lot of reform and the system was improved, but crucially—this is the big difference from the reforms of this Government—our reforms brought poverty down, brought more people into the workplace, and made this country stronger, more resilient and a better place for everyone. That is why, sadly, our record is overwhelmingly better than this Government’s.

John Stevenson Portrait John Stevenson (Carlisle) (Con)
- Hansard - - - Excerpts

Everybody acknowledges that the way out of poverty is employment; why when a Labour Government leave office is unemployment always higher than when they first went into office?

Jonathan Reynolds Portrait Jonathan Reynolds
- Hansard - -

I have dealt with this intervention before—being involved in so many Finance Bills does give that experience—and that is false; a quick Google search will put the record straight for the hon. Gentleman.

The great Labour Government after the second world war who created the welfare state, built 1 million council houses and created the national parks while having to deal with demobilisation after the war are not hugely relevant to people who want to cut £20 a week from 6 million families today. But I will always defend the post-war Labour Government, the greatest Government in the history of this country.

James Cartlidge Portrait James Cartlidge
- Hansard - - - Excerpts

Will the hon. Gentleman give way?

Jonathan Reynolds Portrait Jonathan Reynolds
- Hansard - -

No, we have had enough history and the hon. Gentleman has intervened twice; we can look forward to his speech.

In relation to the tax rises announced last week, the combination of this cut and the rise in national insurance is absolutely outrageous. As many as 2.5 million families will lose £1,300 a year. This Government are already a high tax Government, and due to that and the decision to freeze personal allowances and hike council tax combined with the much lower than expected Government borrowing costs, projections are already coming in for the October spending review suggesting that there is far more room for manoeuvre than anyone previously thought.

The Resolution Foundation, the most respected analyst of the labour market and welfare state in the country, said last week that the Chancellor

“will be significantly boosted by the good news the Office for Budget Responsibility (OBR) will deliver within its updated forecasts on 27 October. Borrowing this year is likely to come in several tens of billions lower than expected, having already borrowed £26 billion less than previously forecast in the first four months of 2021-22. More importantly, if the OBR moves its forecast for the long-term scarring effect of the pandemic on the British economy (currently 3 per cent of GDP) into line with the more optimistic consensus (the Bank of England now expects scarring of just 1 per cent) he will have a windfall that lasts, possibly to the tune of around £25 billion a year.”

I believe the final forecast might be slightly less generous than that, but the point remains that a decision to keep UC and working tax credit at the current levels could be made within the fiscal headroom the Chancellor already has when the spending review takes place.

As the Resolution Foundation made clear,

“To govern is to choose”,

and the question for hon. Members today is do they really believe that those on the lowest incomes, in some of the hardest jobs in the country, who got us through the pandemic, should take a disproportionate share of the burden going forward? Is that fair, is that a recipe for national success and is that ensuring our country is as resilient as it needs to be to meet future challenges? No, no, and no again.

Looking to the future, I want to replace UC with a better system because I recognise that the argument we are having today over the core amount is not the only problem: the five-week wait is a huge issue for people; the level the taper rate is set at is wholly wrong; and people should be able to keep more of the money they earn. Fundamentally, the Treasury caused a huge problem by causing UC to be associated for many of our constituents with austerity, cuts and sanctions, but that is an argument for another day. The choice we have to make right now is whether to proceed with this cut and, whichever way we look at it, we should not. I hear there are rumours that a reshuffle is under way. As Members will know, if a Cabinet Minister were to lose their job today and return to the Back Benches, they would receive a pay-off of £15,000. Will anyone in this debate say that that is unaffordable? It always seems to be a different rule for the people we are talking about than for everyone else in the country.

I implore Members to think about the wide-ranging effects of their decision in this place today. Charities say that the cut will cut a lifeline to millions. Economists say it will suck spending from our local high streets. Even the Government’s own internal analysis makes it clear that it will be catastrophic. No one in this House can say they did not know. No one will be able to say they were not warned. The effects of this cut are clear as day. It is wrong for our constituents, wrong for the British economy; quite simply, it is wrong for Britain. Conservative Members have a choice to make. I, and the millions this cut will hit, implore them to see sense, back the families who sent them here, and cancel the cut.

Thérèse Coffey Portrait The Secretary of State for Work and Pensions (Dr Thérèse Coffey)
- Hansard - - - Excerpts

Just this week, the official jobs statistics showed that more people are getting back into work and there is a record number of vacancies. That is a tribute to the British people and businesses. It shows that our plan for jobs is working. It shows that our comprehensive and unprecedented support for citizens and corporations as well as the NHS, in trying to protect lives and livelihoods, has worked. After the terrible personal and economic impact of covid, boosted by the successful vaccination roll-out, Britain is now rebounding.

It was right that we took prompt and decisive action to support our nation during this challenging time. We had the job retention scheme, the self-employment grants, the VAT changes, the business rates relief, the suspension of evictions for people and businesses who were renting—I could go on. We could only do that, though, because we went into the global pandemic with strong economic foundations built as a result of 10 years of Conservative measures to restore the nation’s finances after the financial crisis on Labour’s watch, when, memorably, there was no money left. Those measures included a sustained focus on supporting people to move into and progress in work through universal credit, with the highest level of employment ever seen in this country just before covid hit.

--- Later in debate ---
Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

I will not, because I am conscious that we are nearly an hour into this debate and many hon. Members will want to speak about this important matter.

Right across Government, we are investing to help people to get better-paid jobs, whether that is through digital boot camps, the lifetime skills guarantee, the £650 billion infrastructure programme that will generate 425,000 jobs, the £8.7 billion affordable homes programme expected to support up to 370,000 jobs, and the green jobs taskforce, which goes from strength to strength as we work our way towards net zero. I have referred to the extra funding through the health and social care levy, which will include support for care workers, but we will not stop as we help people to progress in work. This Conservative Government and Conservative party want people to prosper as we build back better and level up opportunity across the country.

Tackling poverty through boosting income is one element and we will continue to support people with the cost of living. We have kept the uplift in housing support through the local housing allowance rates, as I mentioned to the hon. Member for York Central (Rachael Maskell), maintaining it in cash terms this financial year. We spend over £6 billion on supporting childcare, which is equivalent overall to about £5,000 per family. As I said to the House, that can be up to £13,000 per family for people on universal credit.

We have increased the automation of matching benefit recipients with energy suppliers to make it easier for the warm home discount to be awarded almost automatically. I was very pleased to see that more mobile and broadband suppliers stepped forward with social tariffs for people, which is why I am delighted to let the House know that we are working with those suppliers to make it easier for them to verify the identity of people seeking those special discounts. I am also leading cross-Government action to do more on tackling poverty and the cost of living, which will help many families with their day-to-day costs.

We have heard that universal credit is flexible and that people are treated individually. I am very aware of the challenges on food insecurity. That is why we included the questions we did in the family resources survey so that we can start to think about how we can direct our policies specifically to those people. As my hon. Friend the Member for South West Hertfordshire (Mr Mohindra) was trying to get out of the shadow Secretary of State, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), what is accurate—I am pretty sure to say—is that, in 2008, tax credits may have changed, but that was effectively for people in work. What we did not see was a boost in the unemployment benefits, so when the shadow Secretary of State criticises us for putting an extra £20 a week in the pockets of people who were newly unemployed, I do not think that his assertion is defensible.

One thing that the House may see in a couple of years is that, although in the last year of the last Labour Government we saw a reduction in relative poverty, that was largely driven by the fact that higher-paid people were unemployed—we saw a shrink in relative poverty simply because of a statistical anomaly. We have to deal with real-world facts and make sure that the provision of cash, by helping people with their income, is really the way to help them to get on in work but also to help them with the cost of living.

Jonathan Reynolds Portrait Jonathan Reynolds
- Hansard - -

It is incredibly generous of the Secretary of State to take an intervention from me on the Front Bench, but if relative poverty is what we are measuring—although Conservative MPs have broadly run away from that measure since saying that they would accept it—I have to say that child poverty in the UK is heading towards 5 million under this Government.

If the Secretary of State wants a discussion about the legacy of 2008, rather than about what is happening today, let me say first that benefits had not been frozen for four years under the Labour Government, so they kept their real-terms value. Secondly, the Secretary of State says that she has put more money into the system, but take the money for housing that she mentioned on Monday. That was not more generosity; it was not a boost; it was funding the level of policy that the Government already had with the 30th percentile. They were not improving on it; they were simply putting in the money that should have been there from the beginning. That is the crucial difference.

Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

The last Labour Government—admittedly that was quite a long time ago and many Members of this House will not have been serving here then—did not build enough homes. Prices were not tackled, money was not well spent and we were left with no money.

The shadow Secretary of State will be aware that I am not a fan of talking about relative poverty, because it is simply a statistical element. However, since 2010, there have been 60,000 fewer children in absolute poverty before housing costs. Children living in workless households were around five times more likely to be in absolute poverty last year than those in households in which all adults worked. We know that full-time work reduces the chance of being in poverty. Overall, there are also 220,000 fewer pensioners in absolute poverty.

Oral Answers to Questions

Jonathan Reynolds Excerpts
Monday 13th September 2021

(1 month, 1 week ago)

Commons Chamber

Read Full debate Read Hansard Text
Department for Work and Pensions
Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

My hon. Friend is right to praise his local jobcentres. One thing we have done as part of the plan for jobs is increase the number of work coaches, and indeed the number of jobcentres, thus demonstrating to people—particularly those who have been out of work already but are coming off furlough—that we are ready to support them so that they can get back into work as quickly as possible.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
- Hansard - -

This morning, during her television appearance, the Secretary of State said that a person could make up for the Government’s £20 a week cut in universal credit by working just two extra hours a week. I am sure she is aware by now that she got that completely wrong: the taper rate would of course remove a proportion of those additional earnings, so the net earnings for those extra two hours would be far less than £20. May I therefore ask her if she now knows how many more hours a single parent working full time would have to work to make up for the money the Government is cutting?

Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

Every single universal credit payment depends on the individual, so I cannot articulate that, but it is fair to say that a number of different levers appear when people work more hours, and that includes the lifting of the benefit cap. There are a number of ways in which people can earn more and keep more of their money when they are working more hours.

Jonathan Reynolds Portrait Jonathan Reynolds
- Hansard - -

The figure is 10 extra hours a week, so the cut would force that person to work 50 hours a week in total to get what he or she is receiving now. That is why I have said that reducing the taper rate will be our absolute priority in our replacement for universal credit, but it is also why we oppose the cut. It is why six former Conservative Secretaries of State for Work and Pensions oppose the cut. It is why every Labour Mayor, and even Conservative Mayors such as Andy Street, have spoken out against it. It is why the Government’s own analysis, leaked last week, says that the cut will be “catastrophic”.

This is a Government who half the time do not know what they are doing, and the rest of the time they just do not care. Is not the truth that the only way to get the Government to see sense will be the House of Commons voting to defeat them this Wednesday?

Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

I do not know the basis of the hon. Gentleman’s calculation and his suggestion, but what I do know is that the Labour Government did nothing to help people in the midst of the financial crisis of 2008, whereas we have injected more than an extra £7.5 billion. We recognised the need for the temporary uplift, particularly for those who were newly unemployed and coming on to benefit for the first time. That is why we made the temporary uplift similar to that of the minimum paid through statutory sick pay. We will continue to do what we have been doing: investing in our plan for jobs, helping people back into work and helping them to make progress in work.

Pensions Update

Jonathan Reynolds Excerpts
Tuesday 7th September 2021

(1 month, 2 weeks ago)

Commons Chamber

Read Full debate Read Hansard Text
Department for Work and Pensions
Thérèse Coffey Portrait The Secretary of State for Work and Pensions (Dr Thérèse Coffey)
- Hansard - - - Excerpts

With permission, Madam Deputy Speaker, I will make a statement on the annual uprating of state pensions and survivors’ benefits in industrial death benefit.

Each year, as the Secretary of State for Work and Pensions, I am required to undertake a review of certain benefit and pension rates in relation to the general level of earnings. Just as last year, this year I anticipate an unusual change in earnings due to the effects of the covid pandemic. The unprecedented but necessary covid restrictions we introduced last year protected lives, especially the most vulnerable, many of whom are pensioners, and protected the NHS, but those restrictions caused disruption to the economy, including preventing many people from working, wages falling and, sadly, many people being made redundant.

As we sought to protect lives, so we sought to protect livelihoods. To mitigate the worst impacts, we introduced a £407 billion package of support, including the furlough and self-employment schemes, to support incomes. Nevertheless, last year we saw earnings fall by one percentage point. In response, we legislated to set aside the earnings link, allowing me to award an uprating of 2.5%, as that was higher than inflation. If we had not done that, state pension would have been frozen.

Thanks to our vaccination programme, which started with the eldest and most vulnerable in our society, we have seen that as the economy and businesses have reopened and millions have moved off furlough and returned to work, the labour market has shown strong signs of recovery and earnings have risen at an unprecedented rate. We face a distorted reflection of earnings growth. The latest Office for National Statistics figures from August show an increase in average weekly earnings of 8.8%, compared to the same time last year. Confirmed figures will be published next month, but we expect growth of 8% or more for May to July 2021. The relevant period earnings are taken into account as part of my uprating review.

This year, as restrictions have lifted and we experienced an irregular statistical spike in earnings over the uprating review period, I am clear that another one year adjustment is needed. So tomorrow, I will introduce the social security (uprating of benefits) Bill. For 2022-23 only, it will ensure that basic and new state pensions increase by 2.5% or in line with inflation, which is expected to be the higher figure this year. As happened last year, it will again set aside the earnings element for 2022-23, before being restored for the remainder of this Parliament. That will ensure pensioners’ spending power is preserved and protected from higher costs of living, but also ensure that as we are having to make difficult decisions elsewhere across public spending, including freezing public sector pay, pensioners are not unfairly benefiting from a statistical anomaly. At a time when we have made tough decisions to restore the public finances which have impacted working people, such as freezing income tax personal thresholds at current levels, that would not be fair. Setting aside the earnings element is temporary and only for one year. This means we can and will apply the triple lock as usual from next year for the remainder of this Parliament, in line with our manifesto commitment.

While the earnings growth is a welcome sign of the country’s overall economic recovery given the unique and exceptional events of the past 18 months, this year’s measure is being skewed and distorted, reflecting a technical and temporary period of reverting or rebounding earnings—the differing cohorts of people who were retained or made redundant. As a result, the earnings measure is a statistical anomaly and is not a real-life basis for considering this year’s uprating of state pensions. As other commentators have said, for example the Institute for Government:

“The figure for earnings growth is distorted...the increase is artificially high because so many workers were furloughed last year”.

The Social Market Foundation also endorses my proposal, stating:

“The triple lock should be replaced with a double lock...pensions would still rise, but less quickly, reducing the fiscal burden on the working-age population”.

In addition to those receiving basic and new state pensions, this adjustment will apply to those receiving standard minimum guarantee in pension credit, and widows’ and widowers’ benefits in industrial death benefit. The Bill will not extend to other benefits that are linked to prices, which I will review under the existing legislation, as I did last year.

The Government are committed to ensuring that older people can enjoy their retirement with security, dignity and respect, and that those who have worked hard and put in for decades can be confident that the state will be there to support them when they need it. Since 2010, the full yearly basic state pension has increased by over £2,050 in cash terms. There are also 200,000 fewer pensioners in absolute poverty, both before and after housing costs, than in 2009-10.

I am proud of our record on support for pensioners and of the action we took last year to ensure that pensioners’ incomes continue to increase despite falling earnings among working-age taxpayers. Our recovery is based on the principles of fairness and sustainability as we level up opportunities across the country, invest in jobs, skills and public services while repairing the public finances. This is the fair and reasonable course of action, given the temporary statistical anomalies in earnings we have seen this year as a result of unprecedented interventions in the economy and the labour market. I commend this statement to the House.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
- Hansard - -

I thank the Secretary of State for advance sight of her statement and for our telephone conversation this morning after the Cabinet meeting informing me that it would occur.

I believe Governments should keep their manifesto promises. It may be out of fashion—it may even seem old-fashioned—but that is what I believe and that is what is right. Before I address this announcement, I want to make some observations about the triple lock policy itself. The UK state pension is low by international comparison. It compares better when pension credit and the NHS are folded in, and a lot better when occupational pensions are considered, but the core state pension itself is still very important for millions of pensioners. The last Labour Government drastically reduced the link between old age and living in poverty, but there can be no room for complacency. The triple lock and the issue of indexation of the state pension is fundamentally about what the value of the state pension will be in future for working people today when they retire. I reject the presentation of this issue as a source of intergenerational tension or unfairness, because we all have an interest in ensuring that there is a decent state pension in future.

We should never present increased longevity as a problem. The fact that people are living longer is a good thing and it has come about because we have an NHS, because the school leaving age is no longer 14, and because pioneering Ministers of the past, such as Barbara Castle, were prepared to fight for a decent pension and retirement system. There is no doubt that the triple lock has made a significant contribution to restoring the value of the state pension following the Thatcher Government’s decision to break the link with earnings in 1980.

Turning to the Secretary of State’s proposals, the Government’s case, which is that the furlough data and the pandemic have produced a statistical aberration, has to be considered by us alongside the other decision made today, which also breaks the promises in the Conservative manifesto. Of course, we know that the promise on international aid was also broken before the recess. It is more a triple let-down than a triple lock. This decision is not a one-off but a significant repudiation of the basis on which the Government were elected and it would be naive to say otherwise.

I say to the Secretary of State that we simply cannot take the Government on their word alone. Will they show us their analysis that has led to this decision? Will they explain why they could not assess the underlying levels of wage growth with the impact of furlough discounted? Will they publish the legal advice cited as the basis for this decision? Only then could any Opposition or any MP make a decision on what is being proposed.

Finally, while the Prime Minister is well known for making and breaking promises at will, and for frequently being economical with the facts, that does come at a cost. That cost is a lack of trust, so I hope the Secretary of State appreciates that pensioners and workers, as well as the Opposition, need fuller reassurance before any decision can be made on prospective legislation.

Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

I thank the hon. Gentleman for having read the statement and for recognising some of the challenges that we face. I accept that it is his role and that of the Opposition to suggest that the Government are not taking the right course of action. However, this is where I disagree with him. He referred to the earnings link that was dropped in, I think, the late ’70s or early ’80s. It was not reinstated by the Labour party until the late noughties and was not commenced until the coalition Government were in place. That is why we have followed the triple lock policy for the last decade, recognising that we wanted to restore the earnings link and to see an increase in pensions overall. We have made good progress on that, as I set out, with the £2,050 cash-terms increase in just over a decade.

We have used the earnings link since the policy came into effect a decade ago, and we have done this on the same basis. As for trying to mess about with different bits of earnings, the Office for National Statistics produced some data but we did not find it necessarily reliable, in terms of what could be considered as a substantiated basis to make the change. I have made the recommendation to the Government—that has been endorsed today and I hope that the House will endorse it in the forthcoming legislation—to set aside the earnings link, as we did last year, recognising the challenges of covid and the implications that that would have had last year directly on pensioners. There is the same fairness of approach here.

I do not intend, as is usual, to publish legal advice. That legal advice is quite straightforward. I would summarise it as “The best way to introduce this temporary set-aside is through legislation, just as we did last year.” I intend to take this forward on that basis.

As for making comparisons with other countries, I am conscious that we have a substantial amount of occupational pension here. We also have a whole fringe of pensioner benefits alongside it that are not necessarily available in many other countries. Just this year alone, which is about to come to an end, while the pension cost is about £105 billion, we are spending about £129 billion directly on pensioners. We have genuinely shown a measured approach to supporting pensioners during our time in office. We think this is a sensible thing that will be broadly welcomed by the public, recognising the balancing act that we continue to face.

Oral Answers to Questions

Jonathan Reynolds Excerpts
Monday 28th June 2021

(3 months, 4 weeks ago)

Commons Chamber

Read Full debate Read Hansard Text
Department for Work and Pensions
Will Quince Portrait Will Quince
- Hansard - - - Excerpts

Recent statistics show that before the covid-19 pandemic, we were in a strong position, with rising incomes and 1.3 million fewer people, including 300,000 fewer children, in absolute poverty, after housing costs, compared with 2010. There were also over 600,000 fewer children in workless households. Our long-term ambition is to support economic recovery across our United Kingdom, and our new plan for jobs is already supporting people to move into and to progress in work.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
- Hansard - -

In-work poverty has hit a record high and the vast majority of the millions of children in poverty have working parents, but the Government’s response is to cut universal credit this September. There is no sign of an employment Bill to improve conditions at work, and they have also frozen help with housing costs. What is the Government’s plan to tackle in-work poverty? A good way to start would be to cancel that cut to universal credit this September.

Will Quince Portrait Will Quince
- Hansard - - - Excerpts

I thank the hon. Gentleman for that question. As our economy improves, we will increasingly focus our support on in-work progression to improve opportunities for those in low-paid work and support them towards financial independence. As part of our comprehensive £30 billion plan for jobs, there is an extra 13,500 work coaches, the kickstart scheme, the restart scheme, SWAP—the sector-based work academy programme—and our in-work progression commission, which will report shortly on the barriers to progression for those on persistent low pay and recommend a strategy for overcoming them.

Jonathan Reynolds Portrait Jonathan Reynolds
- Hansard - -

I would remind the Minister that universal credit is an in-work benefit and it is means-tested. If people do progress, they will not be eligible for that support, so it is not an argument for proceeding with that cut in September.

Can I ask the Minister about a significant barrier to work, which is childcare? He will know that soaring childcare costs have to be paid up front, but universal credit is paid in arrears, leaving parents in debt. I recently met the campaign Mums on a Mission, which has been forced to bring legal action to try to make the system work for parents. More people would be able to work the hours they wanted if we got this right, but do Ministers understand just how significant a problem this is?

Will Quince Portrait Will Quince
- Hansard - - - Excerpts

The hon. Gentleman knows that I will not be able to comment on live litigation, but what I would say is that we do have a comprehensive childcare offer, both as a Government and specifically as a Department. I would also say that, unlike the previous benefit system, in which childcare costs could be up to 70% recoverable, in universal credit the figure is 85%, so it is a far more generous system.

Oral Answers to Questions

Jonathan Reynolds Excerpts
Monday 17th May 2021

(5 months, 1 week ago)

Commons Chamber

Read Full debate Read Hansard Text
Department for Work and Pensions
Will Quince Portrait Will Quince
- Hansard - - - Excerpts

No one in this House wants to see anyone in this country reliant on a food bank, and the Secretary of State and I are working across Government to identify and tackle the root causes of food insecurity and poverty. In the meantime, we continue to spend over £100 billion a year on benefits for working-age people, and during the pandemic we have pumped an additional £7.4 billion into our welfare system to support those facing the most financial disruption. But I hope the hon. Gentleman will agree that it is right that we now shift our focus to supporting people back into work, because all evidence suggests that work is the best route out of poverty, and we have a comprehensive plan to do this via our £30 billion plan for jobs.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
- Hansard - -

Since 2010 poverty has risen significantly in all parts of the UK, so much so that, despite having a job, one in eight workers are living in poverty under this Conservative Government. Given that the Government are adamant that they will make this cut to universal credit, which will affect people in work, should we understand that despite the Prime Minister’s levelling-up agenda, in-work poverty will continue to rise?

Will Quince Portrait Will Quince
- Hansard - - - Excerpts

We take this issue incredibly seriously, which is why we have the In-Work Progression Commission, which is due to report back soon, and why we spend over £100 billion a year supporting people of working age through the benefit system and put an £7.4 billion into the welfare system over the course of the pandemic to support those facing the most financial disruption. But I have to say to the hon. Gentleman that he knows that the best route out of poverty is work. All the evidence suggests that that is the case; that is why all the efforts of this Government will be about, yes, ensuring that we have a strong, robust welfare safety net but also that the focus is on jobs, jobs, jobs—and through our £30 billion plan for jobs we will achieve that.

Jonathan Reynolds Portrait Jonathan Reynolds
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I say to the Minister that work is the best route out of poverty but it has not been working for the last 11 years, and the evidence is there for all to see.

Many disabled people are worse off on universal credit than under the old legacy systems. Ministers know this because they were forced to introduce transitional protections and, when speaking in this Chamber, always urge people to use a benefits calculator when applying in case moving to universal credit would cost them money. Keeping the universal credit uplift would go some of the way, although not all the way, towards mitigating this unfairness, so if the universal credit cut goes ahead what is the Government’s proposed solution for these disabled people—or is this yet another area where the Government actually plan to level down?

Will Quince Portrait Will Quince
- Hansard - - - Excerpts

The opposite is in fact the case. Many of those with a disability will be better off on universal credit, and it is important, as the hon. Gentleman suggests, that they go on a benefits calculator—one of the independent benefits calculators on gov.uk—and check their eligibility. Labour Members—and the hon. Gentleman is no exception —regularly come to this House and ask for many billions of pounds more to be spent on benefits after the pandemic. Let us be clear: that is exactly what the hon. Gentleman is asking for when he refers to the universal credit uplift. I have to say that we fundamentally disagree with Labour’s approach. It is an approach that under the last Labour Government left a generation trapped on benefits and in poverty, incentivised not to work, and left children growing up in workless households, and we know what that meant for their life chances. Work is the best route out of poverty, and that is why we have put jobs and supporting people into work at the heart of everything we do. The difference could not be clearer: Labour’s focus is on billions of pounds more on benefits and the Government’s focus is on jobs, jobs, jobs.

Oral Answers to Questions

Jonathan Reynolds Excerpts
Monday 8th March 2021

(7 months, 2 weeks ago)

Commons Chamber

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Department for Work and Pensions
Thérèse Coffey Portrait Dr Coffey
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Indeed, I will. I commend my hon. Friend for his advocacy for young people and making sure that they get into a growth sector.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
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The economic forecasts that accompanied last week’s Budget painted a challenging picture for the Department for Work and Pensions over the next few years. Forecasts are not always correct but, if those are, we face a period of low growth and high unemployment. Based on what the Chancellor said about unemployment peaking at 6.5%, what would be the shortfall between the total number of young people out of work for more than six months and the maximum number of places available on the kickstart scheme?

Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

I do not have that assessment to hand. The hon. Gentleman will be aware that the Office for Budget Responsibility significantly reduced its forecast in respect of the impact on unemployment, in recognition of the excellent provisions already made by the Government in the past few months and the ongoing measures set out in the Budget. We made a commitment to aim for a quarter of a million kickstart jobs to be in place by the end of this calendar year; we are well on track to doing that. We should recognise that kickstart is designed for those people who are furthest from the labour market. We will continue to use our excellent jobs army of work coaches, of whom we will have nearly 13,500 extra by the end this month, to help young people to get into work.

Jonathan Reynolds Portrait Jonathan Reynolds
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I am grateful to the Secretary of State for her reply. I appreciate that that might not be information that she has to hand. Perhaps she could write to me with the specific figure because matching the scale of the challenge is surely what we all want to see.

In the Budget, the Government also chose to align the end of furlough, the end of the self-employment support scheme and the end of the universal credit uplift, so they all now come to an end on 1 October. She knows that we believe that the uplift should stay in place until we can replace universal credit with a better, fairer system, which, by the way, would be one where people are not worse off if they move on to it from the legacy system. Given that we all expect the end of furlough to at least have some impact on unemployment, would it not have made sense even to this Government to keep the uplift in place to at least help absorb the end of the furlough scheme? As it stands, just when people will again really need it, out-of-work support will be reduced to the lowest level in 30 years.

Thérèse Coffey Portrait Dr Coffey
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The hon. Gentleman asks a fair question about why these have all been taken in parallel. I think that it is to give certainty and direction to the country and to employers, particularly when it comes to the operation of the furlough scheme. As I have said before, this is really the time for those employers to get their workers ready again to go back into work, ideally sooner than before the end of September. Thinking about the temporary £20 uplift that was applied to universal credit, I think it is also fair to say that that is not the only way that we have supported people on benefits in the last year. There are also things such as the increase in the local housing allowance rate, which is on a permanent setting in cash terms. Those are the sort of other measures that we have taken, including to help some people on low incomes with the cost of living.

Income Tax (Charge)

Jonathan Reynolds Excerpts
Thursday 4th March 2021

(7 months, 3 weeks ago)

Commons Chamber

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Department for Work and Pensions
Rachel Hopkins Portrait Rachel Hopkins (Luton South) (Lab) [V]
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Yesterday’s Budget needed to do two things: first, support communities and businesses through the economic crisis created by the pandemic; and secondly, outline a comprehensive strategy to kick-start the UK’s recovery. However, the Chancellor failed to deliver on both counts.

All I can draw out from the Chancellor’s Budget speech is that, rather than meaning redistributing wealth and investment and giving working class people a real stake in their economy, “levelling up” seems to mean moving part of the Treasury to Darlington, creating a few freeports and rehashing old funding. It is smoke and mirrors to cement the status quo—policies that fail to provide a vision for a more prosperous, fairer society and that will not improve people’s day-to-day lives.

There is nothing for the NHS, social care, schools or local council services, and no meaningful plan to tackle the housing crisis. Rather than levelling up living standards, the Budget has downgraded them, with a public sector pay freeze, forcing councils to increase council tax, and announcing a £20-a-week cut to universal credit in six months’ time.

My Luton South constituents needed to see plans for a more secure, equal and sustainable future, with the Chancellor committing to a new green economy based on full employment and a strong public sector. By choosing to adopt a half-baked, unambitious version of Labour’s commitment to a green investment bank, the Chancellor failed fully to comprehend the scale of the climate emergency we face. The funding made available to the bank offers only a fraction of that recommended by the National Infrastructure Commission, and no new investment has been announced for green recoveries in key industries such as automotive and aerospace.

The free market is incapable of addressing the climate crisis—in fact, I would say that it was market failure that created the crisis—so policies that weaken the state’s role in the market, such as the super deduction tax, only reduce the Government’s ability to incentivise and direct investment towards a green transition. Instead, the UK needs an innovative, Government-led industrial strategy that stimulates green growth and job creation, ensuring that the transition is equitable and that everyone has the opportunity to have a well-paid, skilled job—something that the market is incapable of delivering.

Last week, Unite the union highlighted seven shovel-ready projects that would help the UK to develop as a modern manufacturing nation. Investing in those projects would have wide-ranging benefits. For example, building gigafactories and rapid charging infrastructure would help Vauxhall in Luton South transition to manufacturing electric vehicles. Labour has repeatedly called for a £30 billion green economic recovery to create 400,000 secure, unionised jobs in clean industries. We must not return to the same insecure, unequal, unsustainable economy that preceded the pandemic.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
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I am grateful to be called to close the second day of the Budget debate. Budget debates are, in my view, one of the very best parts of our parliamentary process. They are a chance to talk about the big picture—a chance to raise the things that must be said—and nearly 50 Members of Parliament have done so in this debate today. To be able to speak and vote on the measures in any Budget is a great privilege and responsibility for us all, and in closing the debate, I will talk about what I believe the Chancellor needed to do and reference the many good speeches we have heard.

However, we need to start with the big picture. What the Chancellor presented yesterday was a Budget of high taxes, high unemployment and low growth. I do not think that is in dispute. In fact, if the forecasts are right, the historically low levels of growth we saw going into this crisis are now the norm. That, combined with our serious productivity and business investment problem and the challenges caused by our leaving the single market, shows that the scale of the challenge is very significant indeed.

That means that there were two things I wanted most of all from this Budget. First, I wanted to see a clear road map to economic recovery, with a relentless focus on jobs, jobs and jobs again; and secondly, I wanted to see some recognition from the Chancellor that the terrible impact of the pandemic on the UK has been partly due to the state the country was in going into the crisis. Whether on NHS capacity, insecure work or child poverty, this crisis has taken the fraying social fabric of the UK and torn it apart. My hon. Friend the Member for Coventry North East (Colleen Fletcher) made that point very well.

The objective for us all should be to promise not to return to the country we had going into the pandemic, but to do better than that—to promise opportunity, prosperity and resilience far greater than we had in the decade leading into covid. After all, is that not what previous generations who sat on these Benches did after the crises that they faced? They turned their crises into a better future.

The starting point in any debate about protecting the British people in this crisis has to be a recognition of the inequality in how the pandemic has been felt. Yes, we have all been affected by covid in some way, but a person who, for instance, has been able to work from home on full pay, perhaps with a study and a garden, has been in a fundamentally easier position than those who have had no income for over a year. Men and women have been affected differently, with the majority of home schooling falling on women, and different parts of the country have been hit worse than others. That is why I was genuinely disappointed with the ambition, the scope and the policies of the Chancellor yesterday. The Budget did not have that big vision that we needed. I will address that and say what I would have preferred to see.

I will start with jobs. At least the Chancellor saw sense, listened to Labour and the unions and business, and did the right thing by extending the furlough scheme. It is remarkable to me that the Chancellor originally thought it could end last year. But even with furlough mitigating the rise in unemployment, a forecast of unemployment at 6.5% is very high. That means over 2 million people out of work. While furlough protects those in work, we need to do more for the 1.7 million already unemployed. We have lost 700,000 jobs in this crisis. We have lost 700,000 jobs in this crisis. Long-term unemployment is nearly half a million. Half of all disabled people are out of work. Kickstart is not delivering, and restart has not started. Crucially, even if kickstart worked as well as Ministers hope, the scale of the challenge is already greater than the full capacity of the scheme.

I wanted the Government to live up to their rhetoric and offer young people a real guarantee. Young people have suffered so much in the crisis, so let us take the action needed and make sure that no young person is out of work or education for longer than six months. We should promise young people an offer of education, employment or training and link those jobs and training to the challenges the country faces on social care, the NHS, schools and climate change. Time spent on furlough should count towards that limit, so that we do not see the long-term scarring that we know comes from periods of sustained economic inactivity. We could use the money already allocated to employment programmes. We could reform the apprenticeship levy to complement that and spend the money this year and next, when it will be most needed.

That brings me on to universal credit, which many Members have understandably mentioned. Cutting universal credit and working tax credit by £1,000 this year would have been unthinkable and unforgivable, and I make no apologies for how hard we have fought the Government on this issue. The Chancellor could and should have done the right thing and the responsible thing many months ago, yet, as with free school meals, the Government have once again been dragged kicking and screaming to do the right thing. But what we heard yesterday was a half-measure—a £500 cut this year, with £1,000 cut the year after that.

Because of the way that Ministers have behaved, 6 million families have faced months of uncertainty about whether they would continue to get the support they need to cover the costs of the pandemic. These people deserve certainty, and all the Chancellor has done is inflict another cliff edge. On 1 October this year, furlough will end, the self-employment income support scheme will end and universal credit will go down to its lowest level in real terms in 30 years. How can that be right?

What is going on with working tax credit, which the Government are instead offering as a £500 lump sum? The Secretary of State for Work and Pensions was absolutely right when she said to the Work and Pensions Committee earlier this year,

“Previous experience would be that a steady sum of money would probably be more beneficial to claimants”

than one-off lump sums. I believe she reiterated that position in her introductory speech. She is right, but the Chancellor was not listening.

I have to raise again the plight of those people on legacy benefits such as jobseeker’s allowance and employment and support allowance, which my right hon. Friend the Member for East Ham (Stephen Timms), the Chair of the Work and Pensions Committee, did so very well in his speech. These people never had the uplift to begin with. The Government said that it was because it would take too long to do, and as the crisis has gone on, the Government have chosen to ignore them. They know it is not possible for many of those people to transfer on to universal credit because they might be worse off due to the design of universal credit. That is appalling.

What we needed was for the Chancellor to take his own advice on honesty, because the honest take on this situation is that we do not have a social security system that is fit for purpose. That is why keeping the uplift is so contentious. It is why those people on legacy benefits feel so strongly. It is why the excluded exist, and it is why the Government had to make so many changes to the system at the beginning of the crisis.

Although, hopefully, we will not have another pandemic, the impact of technology and trade adjustments on the labour market will become only more acute, and the sooner the Government recognise that, the better. The decision to lift the rate of universal credit was an admission that the level of support was not good enough to help families through this crisis. The uplift should remain until it is finally replaced with a system that provides genuine security for all. The Secretary of State said in opening that she is frustrated by that position. If the Government have been able to accept our arguments on corporation tax, a national investment bank and the minimum wage, perhaps in time they will accept this argument too.

This was a Budget that did not address the challenges facing our country today and offered very little for the future. That focus on the future should have run through the whole Budget, but it simply was not there. There was nothing on schools or education at all, even though, like so many, I have sleepless nights worrying about my children and how they will ever catch up from what they have lost. There was nothing serious for town centres, which are already grappling with changes and facing huge challenges as retail moves more and more online. There was nothing on the future of work and how we harness the change in working patterns to spread prosperity across the country. There was nothing even for our incredible NHS except a £30 billion cut from April this year and no mention of how we will get through the huge backlog of surgeries and check-ups or deal with the impending mental health crisis.

It is not enough. It is not good enough, and it is not the future that British people deserve as the reward for their sacrifice and hard work. I put it to the Government that they cannot fix the problem that the country faces, because they are the ones responsible for creating so many of those problems in the first place. That is why this Budget fails to protect the jobs, the livelihoods and the wellbeing of the British people to the degree that they deserve.

Jesse Norman Portrait The Financial Secretary to the Treasury (Jesse Norman)
- Hansard - - - Excerpts

The hon. Member for Stalybridge and Hyde (Jonathan Reynolds) was absolutely right to highlight the second day of a Budget debate as a moment when we can discuss these bigger issues. I join him in thanking nearly 50 colleagues for their contributions, but I am afraid I disagree with him on some of his diagnosis; perhaps, in the course of my remarks, I can explain why.

The hon. Gentleman claimed that the Budget had no ambition. You do not have to listen to me or the Chancellor, Madam Deputy Speaker, if you want to know whether the Chancellor’s Budget had ambition; you can simply listen to the Resolution Foundation, which said:

“This was a big, policy focused, budget. It rightly sought to boost the recovery before turning to fix the public finances, in both cases with a large (potentially too large) focus on Britain’s firms.”

That, I think, is pretty clear. It also said:

“Continuing furlough to September will reduce the rise in unemployment ahead, with the Office for Budget Responsibility (OBR) expecting it to peak at just 6.5 per cent (down from 7.5 per cent). If realised, this would be”—

I am quoting—

“by far the lowest unemployment peak in any recent recession, despite this being the deepest downturn for 300 years.”

That would include the Labour recession of 2008. So we can only hope and pray that these measures may have something like that effect, but to suggest that they are short of ambition is quite wrong.

If I may, let me just remind the House of the scale of what we are attempting. There are three great themes to the Budget. The first is the need to support people and businesses through this crisis; the second is the need to begin to fix the public finances; and the third is the need to lay the foundations of our future economy. Those are all big issues. As the hon. Member for Stalybridge and Hyde rightly pointed out, those are big matters which we are grappling with, and gripping, from the Dispatch Box and from the Chancellor’s own Budget.

Let us just touch on those. Supporting businesses and people—that would be extending furlough to the end of September. It would be the further grants we have made to the self-employed: the restart grants, a new set of grants designed to help the retail, hospitality, leisure and personal care businesses—I emphasise personal care businesses, such is the very important role they play in our economy—to get going again. The business rates holiday, which has been extended for three months before tapering for another nine months. Extending the VAT cut to 5% for a further six months before tapering it for another six. Continuing our stamp duty cut. Extending universal credit and working tax credits by six months. More money for apprenticeships. New recovery loans. A large package for the arts, culture and sports.

That is one component of this Budget, but of course, as the Chancellor has rightly emphasised, we must engage with the work of fixing the public finances, and that is why we are asking the largest and most profitable firms to pay more in two years’ time by increasing corporation tax. But of course we are giving at the same time, in the shorter run, a super-deduction. I think that is a very thoughtful policy. What that essentially says to those businesses—something like £100 billion is held on corporate balance sheets at the moment in the UK—is that we need to get away from the patterns of underinvestment by business, and this is a way of attempting to move corporate Britain in that direction. It may succeed, it may fail, but it is a very worthwhile attempt to kick-start that business investment that will be foundational, not just to recovery from the pandemic but to our long-term prosperity. Of course we have taken a variety of other measures to support the public finances and then to build the future economy.

The suggestion was made by some colleagues across this Chamber that the Budget was a piecemeal effort; that could not be further from the truth. Forty-five new town deals. The £150 million community ownership fund. The freeports in England. The infrastructure bank. I have been very closely involved with the infrastructure bank, and I can tell you that it will potentially be a very significant institution. It has, of course, its starting capital, but it also has firepower of up to £40 billion. That is not a trivial amount of money, and placing it in Leeds could not be a more emphatic demonstration of the Government’s commitment to levelling up, as the move by not just the Treasury but other Government Departments—the Department for International Trade, BEIS and the MHCLG—to join in a new campus in Darlington has been. As my hon. Friend the Member for Darlington (Peter Gibson) said, that will transform that town, but it also sends a much wider signal: “By their fruits shall ye know them.”

It is all very well talking about these things. Those towns and areas could have been supported by the Labour party over decades and they were not. This Government are stepping forward to make that difference. Of course, the difference will not be just in the investment—the pounds, shillings and pence that are spent there. It will be in the lifting of expectations, the career opportunities, and the possibility of framing a new narrative based on different assumptions about how the world works than just those to be found in London. That is profoundly exciting and important.

Of course, we are talking also about the levelling-up fund, Help to Grow, and a very important development on future breakthrough. I love the fact that we will support not just levelling up but our green investment through the UK infrastructure bank. That will be a very important part of the picture. Let me turn to some of the comments made by colleagues, because they were very well taken. There are many areas where I am not sure that I always agree with my right hon. Friend the Member for Wokingham (John Redwood), but when he said, “Go for growth,” he was absolutely right to emphasise the growth aspects of the Budget.

My hon. Friend the Member for East Devon (Simon Jupp) pointed out, rightly, that the Budget delivered for Devon. He was absolutely spot on about that. I disagreed with my hon. Friend the Member for Christchurch (Sir Christopher Chope) about corporation tax. He needs to understand, if I may say so, that the rise in corporation tax was the result of many aspects of things. What is noticeable about it, though, is that it did not trigger an enormous increase in business investment. That is one of the reasons why we have adopted this slightly different approach.

I agree very much with the words of my hon. Friend the Member for Bolsover (Mark Fletcher), who pointed out the importance of the start-up grants that will support beauty and personal care businesses. He was absolutely right about that. He mentioned the town deal and the east midlands freeport, and rightly so. I agree with the hon. Member for Leeds North East (Fabian Hamilton), who said he was pro our UK infrastructure bank being located in Leeds. He was right to say that. That was not by any means the picture taken by the hon. Member for Leeds East (Richard Burgon), who also spoke, but I think that the hon. Member for Leeds North East was right in saying that.

The point that my hon. Friend the Member for South West Hertfordshire (Mr Mohindra) made in praising the Chancellor’s honesty and directness when engaging with us struck a chord with me. I think it strikes a chord with many people across the House and in the wider public. My hon. Friend the Member for Loughborough (Jane Hunt) pointed out the importance of skills—absolutely right. My hon. Friend the Member for Sedgefield (Paul Howell) pointed out the value of the super-deduction plan. Again, I thoroughly agree with him.

It was nice to hear my great friend, my hon. Friend the Member for Thurrock (Jackie Doyle-Price), talk about the importance of her Thames freeport. That is right. I was surprised that the hon. Member for Liverpool, Wavertree (Paula Barker) did not welcome the Liverpool city region freeport, which I think will be a tremendous boost to that area. I think she was wrong to say that. I think it will be widely welcomed, particularly as it gets up and running. I share the view of my hon. Friend the Member for Thurrock on that.

I respected very much the hon. Member for Croydon Central (Sarah Jones) as she sang the glories of Croydon. That was a beautiful moment in our debate. I very much liked the possibility that you, Madam Deputy Speaker, might, as my hon. Friend the Member for Watford (Dean Russell) invited you, teach the world to sing. I look forward to that very much. Perhaps in a future debate we can be treated to a yodelling intro in the style of the late New Seekers—or am I betraying my age?

My hon. Friend the Member for Ipswich (Tom Hunt) was absolutely right. He pointed to the town deal that existed for Ipswich. He pointed to Freeport East, and said, or implied—I am sure he would say—that this is a Government who do what they say. I am very pleased that, in that regard at least, we have been able to deliver for him in a way that we have delivered for many other places across the country that historically have been ignored.

Let me end by thanking hon. Members for their comments. We are trying to do something big here. We are trying to respond to the big issues that the hon. Member for Stalybridge and Hyde rightly flagged. He is wrong about what he claims are cliff edges. There is, in each of the cases I have described, a tapering effect in the major reliefs, which is designed to return us to something akin to normality if we can follow the road map and get out of the position we are in. The fact of the matter is that, as the Resolution Foundation pointed out, we are in the worst crisis, the deepest downturn, for 300 years. That is not a fact we can ignore, and it is a fact that it is incumbent on us, across the House and in this Government, to address.

Ordered, That the debate be now adjourned.—(Tom Pursglove.)

Debate to be resumed on Monday 8 March.

Oral Answers to Questions

Jonathan Reynolds Excerpts
Monday 25th January 2021

(9 months ago)

Commons Chamber

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Department for Work and Pensions
Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

We have provided an unprecedented economic support package to protect and create jobs through the pandemic. For people who need to change careers, our sector-based work academy programmes—SWAPs—offer training, work experience and a guaranteed job interview to get those people ready to start a job, allowing them to learn the skills that employers in that particular industry look for. Alongside that, our flexible support fund has been boosted by an extra £150 million so that work coaches can help to support individuals facing redundancy through retraining and overcoming barriers to work.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op) [V]
- Hansard - -

As we have heard, last week this House voted that the Government should not proceed with the £1,000 cut to universal credit set to take place in April. That position is now supported by 280 MPs, more than 60 charities and campaign groups, and the majority of the British public. I have listened to the Government today, as ever, but, as it stands, that cut is formally written into official Treasury documents, and the Prime Minister has indicated that he thinks the cut should happen, but last week the Under-Secretary, the hon. Member for Colchester (Will Quince), said that it was too early to make the decision. Will the Secretary of State clarify what is Government policy on reducing universal credit in April, what criteria will affect the decision, and who in Government will ultimately make that decision?

Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

As has been explained several times to the House today, and previously by my hon. Friend the Member for Colchester (Will Quince), the Government introduced a raft of temporary measures to support those most impacted by the covid pandemic. The hon. Member is aware of the statement I made to the House, where I said that the situation would be reviewed in the new year, and that is exactly what I am doing. I am working closely with my right hon. Friend the Chancellor as we consider the options on how best to support people through the pandemic.

Jonathan Reynolds Portrait Jonathan Reynolds
- Hansard - -

I put it to the Secretary of State that she must give clarity to the millions of families this cut will affect. If she wished, she could give that reassurance now. I also ask for clarity on reports that the Chancellor is planning on giving a one-off payment to universal credit claimants, ignoring those on other benefits, and leaving the hundreds of thousands of likely new claimants expected this year with lower levels of support. Does the Secretary of State agree that it would be not only unfair, but a very poor use of public money to pay a lump sum to people on universal credit now, while cutting unemployment support to its lowest level for 20 years, just as unemployment is set to peak?

Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

I can only more or less repeat what I said before. My right hon. Friend the Chancellor and I are actively working on proposals on how we can continue to make sure that we support people most badly affected by the pandemic. This is part of the discussions that are still ongoing, and I can assure the House that we are actively considering it and hope to make an announcement when we can, in order to give that certainty, as the hon. Member points out, to a number of people.

Universal Credit and Working Tax Credit

Jonathan Reynolds Excerpts
Monday 18th January 2021

(9 months, 1 week ago)

Commons Chamber

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Department for Work and Pensions
Nigel Evans Portrait Mr Deputy Speaker (Mr Nigel Evans)
- Hansard - - - Excerpts

I advise the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
- Hansard - -

I beg to move,

That this House believes that the Government should stop the planned cut in Universal Credit and Working Tax Credit in April and give certainty today to the six million families for whom it is worth an extra £1,000 a year.

I am not here to claim that Conservative MPs are heartless, lack compassion, or have insufficient regard for the poorest people in this country. I know that after the vote on free school meals, many Conservative MPs, mainly after comments made by other Conservative MPs, received a high degree of personal abuse, and I want to make it clear unequivocally that that is wrong. I am here to put forward a clear and, I believe, compelling case that reducing universal credit and working tax credit this April would be fundamentally the wrong decision. It would be a profound mistake for families, for the economy and for our ability to effectively tackle and recover from the covid pandemic.

Before putting forward that case, I wish to address the Prime Minister’s suggestion that Parliament is somehow not the right place to have this discussion. Opposition days have been a feature of our parliamentary system for many decades. They were used very successfully by the Conservative party when it was in opposition—for example, when the Labour Government were defeated over resettlement rights for Gurkhas in 2009, or over post office closures. All majority Governments, except this one, have accepted that if they cannot win a vote in Parliament on one of their policies, then they have to change that policy. This decision cannot be deferred until a Budget, because the Government cancelled the November Budget and have not brought forward a Finance Bill since March.

I put it to all Members that Parliament is exactly the right place to have a discussion of such consequence to the country. The Government cannot expect to preach parliamentary sovereignty one week, and run away from parliamentary scrutiny the next. Too often, the Prime Minister seems unwilling to abide by basic democratic norms and to accept proper scrutiny and accountability. We have seen in the US where that can end.

Let me also say at the outset that, throughout the pandemic, the Opposition have always sought to be constructive. The official Opposition want the national strategy to succeed. In that spirit, we welcomed the changes that the Government made to universal credit at the beginning of the crisis. The £20-a-week weekly increase, and the suspension of conditionality and the minimum income floor, were necessary steps to support people. Recognition must also go to frontline Department for Work and Pensions staff, who kept our social security system going through the early stages of the crisis, making sure that hundreds of thousands of new claimants received the support they needed. All those staff deserve our praise, from the civil servants working in the Department to the security guards I met recently, who face difficult working conditions keeping Jobcentre Plus offices open.

However, the fact that such urgent changes were required to provide a basic safety net is a telling assessment of where the social security system was when we went into the crisis. If we cannot properly support people in a time of need without emergency surgery to the system, it is not fit for purpose. The fact is that support for people in this country when they lose their job or cannot work is significantly lower than in comparable European countries.

I will address three points: how we got here; the case for reversing this cut to secure our economy; and, finally, the human impact if the Government refuse to change course.

Sammy Wilson Portrait Sammy Wilson (East Antrim) (DUP)
- Hansard - - - Excerpts

Does the hon. Gentleman accept that a pressing reason to have a debate and vote on this issue today is the fact that all the evidence suggests that the restrictions resulting from the measures taken to deal with covid have hit the poorest in society hardest? Poverty is up, and those people who most depend on this kind of support are the ones who are most damaged at the moment.

Jonathan Reynolds Portrait Jonathan Reynolds
- Hansard - -

I agree. Inequality, and the differential impact on people, has been one of the defining features of this crisis. I do not think anyone can avoid that. It is relevant to make that point in this debate.

We have to be honest about the state of our social security system going into the crisis. Since 2010, poverty has increased significantly in the UK. In addition, people who were in poverty in 2010 are now so much deeper in poverty than they were. This is not an argument about definitions. Conservatives themselves were the driving influences behind bodies such as the Social Metrics Commission, which came up with a new definition of poverty that was actually very similar to the one that has traditionally been used. The Government’s own estimate is that 4.2 million British children live in poverty. That is shameful, wrong and unnecessary.

The UK, along with Ireland, is an outlier compared with the rest of Europe when it comes to inequality. That means that the reality for millions of families is that they went into this crisis already under significant pressure. As the Resolution Foundation said in 2019, the 1.7% increase to universal credit that year was the first working-age benefit increase for five years. Last year, the real value of basic out-of-work support was lower than when John Major was Prime Minister, so anyone claiming that the system is too generous, or who is trying to resurrect the stigmatising rhetoric of George Osborne, simply has no case to make.

Steve Brine Portrait Steve Brine (Winchester) (Con)
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The hon. Gentleman is a reasonable man—I like him. He is making a sensible speech. While we are being honest about social security systems, is it still the Opposition’s policy to abolish universal credit, as it would have been had they won the general election in December 2019, although it is widely accepted to have been successful in flexing to expand in the current crisis? Is it still Her Majesty’s Opposition’s policy to abolish the entire system, and what do they propose putting in its place?

Jonathan Reynolds Portrait Jonathan Reynolds
- Hansard - -

Yes, it is our policy to replace universal credit—not to abolish the welfare state, as some of those videos from Conservative central office have tried to make out today. After I address the causes and the question before us today, I will be happy to talk about some other problems that go beyond the core amount of universal credit, and about why replacing universal credit is the right policy. But before we get to that point, I have to stress that, if this cut goes ahead, it will leave unemployment support at its lowest level ever relative to average earnings. That is not just morally unjustifiable; it is economically incompetent. Cutting unemployment support in the middle of a recession is always the wrong choice, which is why no Government have done so since the great depression.

Laura Trott Portrait Laura Trott (Sevenoaks) (Con)
- Hansard - - - Excerpts

I am grateful to the hon. Gentleman for his tone at the beginning of the debate. Just for our understanding, will he tell us whether the Opposition propose making this increase permanent? If so, how do they propose to pay for it?

Jonathan Reynolds Portrait Jonathan Reynolds
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We believe that this uplift should stay in place during the crisis, and I do not think anyone believes that the crisis will end in April. I will make some points about long-term proposals near the end of my speech, as well as about why the whole system requires much more considerable reform than just tinkering around with the core amount.

The cost of paying for all this is significant: around £6 billion. That would vary depending on the levels of unemployment throughout the year, but any measure right now that cuts public spending or raises taxes in the middle of the biggest economic downturn for 300 years would be the wrong policy. Decisions will have to be made as we get into the middle of this decade to address the levels of debt that have been accrued by the Government during this crisis, but that is not the right choice now.

I want to focus on the point raised by the hon. Member for Sevenoaks (Laura Trott), because if the Government are seriously thinking about economic recovery, cutting universal credit is like pulling the rug from under the economy’s feet. This £20 a week is not saved by families; it is spent in shops and businesses across the country, stimulating the economy. We all agree that this pandemic and the unemployment crisis will not be over by April this year, and whatever protestations we have heard on social media or in the press—and, frankly, however people vote today—I know that there are many people on the Government Benches who agree with this case. The former Secretary of State for Work and Pensions, the right hon. Member for Preseli Pembrokeshire (Stephen Crabb), recently said:

“Withdrawing the uplift would reduce the spending power of people on lowest incomes. This will likely reduce consumption, meaning families going without essentials and household debts rising. It would also see a reduction in spending just when the economy needs it most.”

I could not agree more with that assessment. He is also right to draw attention to the levels of personal debt for some households.

As well as the real value of benefits being historically low as we went into this crisis, the pandemic has meant very real additional costs for most families. There are more meals for people to cook at home, and more days to heat their house. People have devices and lights on at times they would not normally, and have to buy what they need to teach their children at home. The clinically vulnerable have been forced to buy food locally, at a higher cost than in larger supermarkets. Everyone has experienced the pandemic differently, but for some the costs have piled on.

Citizens Advice told me this week that three quarters of the people it helps with debt who currently receive universal credit and working tax credit would have a negative budget if the £20 was cut. That means that they will have less money coming in than going out, and will not be able to cover basic essentials such as food or heating—and it will come at a time when one in three households has lost income because of covid, and 7.3 million people are behind on their bills.

The proposed cut to universal credit and working tax credit is not the only issue causing consternation in the country right now. I would particularly highlight the continuing injustice for those people on employment and support allowance and jobseeker’s allowance, who did not even get the uplift to begin with. That is unjustifiable and discriminatory, and I ask the Minister if he would mind specifically referencing that point in his speech. Reversing the April cut to universal credit is a specific, clear and unavoidable decision that needs to be taken, which is why it is right that we are bringing it to Parliament today.

Some of the speeches that we will hear today will no doubt say that we should focus on jobs and getting people back to work, and not on social security. The Prime Minister said something along these lines at the Liaison Committee last week, but Members will know that universal credit is an in-work as well as an out-of-work benefit—40% of universal credit claimants are in work—so that argument does not work at all. To be frank, it would be helpful if someone told the Prime Minister that. Universal credit is also means-tested, so if people go back to work and do not qualify for it, they will not receive it at all. If we want to have a serious discussion about boosting employment and making work pay, let us discuss work allowances, the taper rate and deductions, but let not the Government try to use that as an excuse to do the wrong thing on this cut.

Others might say that support should be more targeted and the basic allowance is the wrong element to target. In that case, the Government would, logically, scrap the two-child limit or the benefit cap, which disproportionately affect people in the most difficulty—larger families in areas with higher housing costs. However, when we put that forward, it, too, was rejected.

Finally, there has been a proposal for a one-off payment to compensate people affected by this cut. That is an awful idea. It does not address the real-terms reduction in support, just as unemployment is expected to peak. More than that, although 6 million families are affected by this now, that cohort will change in composition throughout the year. A one-off payment based on who is eligible now will fail to support some of the people who need that help the most. So please, Minister, ask the Chancellor to think that one through again.

I know it sometimes frustrates Conservative Members that we are still determined to replace UC altogether—I was asked that question earlier—but I say to them that, if they will not listen to those on the Opposition Front Bench, they should read the work of the cross-party Select Committee on Work and Pensions and read the report of the cross-party House of Lords Economic Affairs Committee, which is chaired by Lord Forsyth. They are clear and robust in highlighting the fundamental problems that currently exist: the five-week wait; the two-child limit; the erratic assessment period; the problems with paying for childcare in arrears; and the shocking design that means that many disabled people are worse off on UC. The last one of those is very personal to me and it simply is not right not to replicate how the severe disability premium worked under the previous arrangements. All this means that UC’s brand is severely tarnished. If everything was working as well as Ministers sometimes say, would we really be a country where food banks have gone from being a niche form of support, mainly for those without recourse to public funds, to a mainstream and essential method of keeping people fed? Would we have had the fundamental increase in child poverty, which is getting bigger with every year of Conservative government? Those questions deserve answers.

Throughout the crisis, the Government have often been behind the curve, never out in front, and they have left some decisions, such as on furlough extension, to the very last minute, in a reckless game of brinkmanship. That is heavily why we have, tragically, the highest death toll in Europe and the biggest economic downturn of any major economy. Let us not repeat that with this decision. We all know that families are looking at us, wondering what we will do to help make getting through this crisis just that bit easier. What they do not expect is the Government making it even harder. I hope that one thing we can all agree on is that the crisis has shone a light on some of the problems in the UK, problems that have made tackling the pandemic harder and provoked a discussion about what kind of society we want to rebuild when the pandemic is over.

If the ambition of Conservatives really is to level up the UK, it is hard to see how they can support a cut that would be so regressive to low-income families and which disproportionately affects the places the Government say they want to help. I am talking about families such Bethany and her child in Blackpool. She said to me, “I was made redundant due to coronavirus. As a single parent to a one-year-old, universal credit is now the only income I receive. If the Government does cut £20 a week, I will become one of the statistics needing to use a food bank. It devastates me to think that I will not be able to provide for my child should this decision be finalised.” Margaret, who has been volunteering at a food bank in Luton, says, “A young man came in for a food parcel. He looked thin and his face was grey. He sat down and he said that he thought he could last with no food until the universal credit came through, but he found that he couldn’t. He’d come in on a Wednesday and his universal credit was due on the Friday.” That is the reality before the cut has gone ahead. My inbox is full of personal accounts such as those. I urge every Member to look at what is in their inbox, read about the human cost of what it will be like for people if this cut goes ahead, address the worries people have about not being able to put food on the table, and think long and hard about the uncertainty and fear that all families face after 10 long, hard months of this pandemic.

I want to make a special appeal to the new MPs on the Conservative Benches whose constituents elected them in good faith for the first time in 2019. Many of those people are the first Conservative to ever be elected to those places. They have already made history and their success is a significant personal achievement. They will be remembered, but so will their votes. Most of all, when thinking about how to cast their vote today, I urge everyone to take a moment to reflect on what this cut will mean to the people who send us here: the uncertainty it will add in an already uncertain time; the loss it will bring when we have already lost so much; the fear it will cause when what people need is hope. So, for our constituents, for the economy and for the national interest, we need to cancel this cut and I ask every Member of the House today to support our motion to do so.

Nigel Evans Portrait Mr Deputy Speaker (Mr Nigel Evans)
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Before I call the Minister, I have three points to make. As people in the Chamber can see on the annunciator—I am not sure whether people can see it at home—there is a three-minute limit on Back-Bench contributions. For those who are contributing outside the Chamber, there is a timing clock, which you should be able to see on the bottom right hand corner of whatever device you are using. It would be a lot cleaner if Members could bring their contributions to a close before the three-minute limit is up, otherwise you will be interrupted by the Chair. For the convenience of everyone as well, the question will be put at 7.15 before we move on to the next business.

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Will Quince Portrait Will Quince
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I thank the Chairman of the Work and Pensions Committee for that intervention. I would be very happy to meet him, alongside the Minister for Disabled People, Health and Work, to discuss, in particular, those in receipt of the severe disability premium. Yes, it is the position of Her Majesty’s Government that we want more people to move over from legacy benefits, including working tax credits, on to universal credit, because it is a modern, more dynamic benefits system; it is the future. However—this is a very important caveat—I would encourage anybody looking to move over from legacy benefits to universal credit to first go on to gov.uk and check their eligibility, because it is important to note, as I know the Chairman of the Select Committee knows well, that on application for universal credit, the entitlement to legacy benefits will cease, so it is very important that people do check.

As I said, we have a modern, dynamic, agile, fairer welfare safety net that, in the face of unprecedented demand, ensured that millions of people were paid in full and on time. Therefore, it is quite astonishing that the position of Her Majesty’s Opposition is to scrap it—a system that, by any measure, has passed the most challenging of tests. This weekend they briefed to the papers with a press released entitled, “Cut to universal credit to hammer families in marginal Conservative seats”, playing politics with the lives of nearly 6 million vulnerable people rather than focusing on helping them through this pandemic. We will take no lectures whatsoever from Labour on universal credit. There is little doubt that had we relied on the legacy benefits system, we would have seen queues down the streets outside jobcentres and long delays leaving families facing financial disruption without support.

Jonathan Reynolds Portrait Jonathan Reynolds
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As the Minister has raised press speculation, will he comment on the news in the papers at the weekend that the reason he is here and not the Secretary of State is that the Secretary of State agrees with us and it is the Treasury that is behind the cut of £20 a week from April?

Will Quince Portrait Will Quince
- Hansard - - - Excerpts

The reason I am here today responding to this debate is that I am the Minister responsible for universal credit and this is a debate about the £20 per week uplift to universal credit. The Secretary of State is in active discussions with Her Majesty’s Treasury, the Chancellor of the Exchequer, and, of course, the Prime Minister about how best to continue to support the most vulnerable, disadvantaged, lowest-paid and poorest in our society, as the Chancellor has consistently done throughout this pandemic.

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Laura Trott Portrait Laura Trott (Sevenoaks) (Con)
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I am grateful to the Opposition for bringing forward this debate, because it gives Conservative Members an opportunity to talk about the wide-ranging and comprehensive support that we provided to the lowest-income and most vulnerable families in this country. We did so not just through the £20 universal credit uplift, but through the furlough scheme, which we know is critical to keeping that vital link to work—the sustainable route out of poverty—through the hardship fund, through the winter support grant and through the catch-up schemes. This support has been provided to the families who most need it—and in a timely fashion.

It is worth dwelling on a point that the Minister and others have made: at points during this crisis, we had 100,000 people a day applying for universal credit, yet nine out of 10 applicants were paid on time—a fact that I hope to see recognised by more Opposition Members. In that context, it is inexplicable that we would now seek to scrap universal credit, and it is worth dwelling for a second on what we inherited from the Labour Government. It can be summed up in two simple words: welfare trap. We had a welfare system that was inexplicable, with six interacting benefits. If a person went into work, they actually lost money. There was an effective tax rate of 90%.

Jonathan Reynolds Portrait Jonathan Reynolds
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I am grateful to the hon. Lady for raising that matter. The politics of the taper rate is one of the fundamental points in any welfare system. Under universal credit, the taper rate is 63%, but that does not account for income tax or national insurance, so the withdrawal rate is effectively 75p in the pound. She did not give the full picture. Universal credit, according to the Joseph Rowntree Foundation, reduces the deduction rate from over 80% for some families, but it increases the deduction rate for other families. There are more families facing a deduction rate of between 60% and 80% than before, so the situation is more complicated. It depends on a person’s circumstances, including the hours they work and whether they rent. Putting this in binary terms is not, I am afraid, correct. We should look at the detail, because that is what the debate deserves.

Laura Trott Portrait Laura Trott
- Hansard - - - Excerpts

The hon. Gentleman is quite right that there is a debate to be had about the right level of the taper rate, but I think we can all agree that it is better that people should want to earn more by working, and that the previous situation was worse. We have moved forward, but there is always more progress to be made, and it is important that we make progress. I think the new system is better than the last. We have a welfare system in which it pays, for the most part, to go to work. We are trying to provide a safety net, not a trap; that is the difference between now and what we had.

Today, we are discussing a complex question. The hon. Gentleman and other Labour Members will know that getting people out of poverty is more complicated than just giving them money. That is necessary, but not sufficient in and of itself. We need to provide re-training, help to get into work, and support for the whole family in the numerous challenges that they may face. It is absolutely right that this decision be taken in the round at a fiscal event, when we can think about how to look at all these things, and, crucially, how we pay for them.

The Opposition said this was not the time to think about fiscal events. We have shown that we will throw the kitchen sink at protecting the most vulnerable during this crisis, but that does not mean that we can make uncosted spending pledges. We need to think very carefully about how we deploy our money. That is not to say that a debate should not take place, but we should think about this in the context of our wider spending pledges, and in the context of making sure that we target support at the most vulnerable in society. I am very glad that, at the outset, all of us, wherever we sit in this House, recognised that we are all here to do that.

Oral Answers to Questions

Jonathan Reynolds Excerpts
Monday 30th November 2020

(10 months, 4 weeks ago)

Commons Chamber

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Department for Work and Pensions
Thérèse Coffey Portrait Dr Coffey
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My hon. Friend rightly draws attention to this important point. As a result of actions by this Government the UK is the first major economy to put climate risk and disclosure into statute for pension schemes, leading the way on this issue, having already legislated for net zero by 2050 and introduced ESG—environment, social and governance—legislation through 2018 amendments to the occupational pension schemes investment regulations. I genuinely look forward to when we manage to complete the Pension Schemes Bill to bring all that into effect.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
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Last week the Chancellor described the scale of the unemployment crisis in the UK when he said that we could be facing 2.6 million people out of work next year. The Government’s major announcement to tackle that was the restart programme, but analysis of the spending review document shows that restart will not get up to scale until 2022, a full year after unemployment has peaked, so what will the Government be doing next year, as unemployment peaks, to help people get through the crisis?

Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

The hon. Gentleman is right to draw attention to our plan for jobs. He will be aware that there are a number of schemes already under way, including kickstart, JETS and the sector-based work academy programme. It will take a little time to contract for the long-term unemployment programme, but I assure him that, compared with the last financial crisis just over a decade ago under the Labour Government, we have acted far more quickly in getting these employment contracts in place, because we need to make sure that people do what they can to try to remain connected to the labour market.

Jonathan Reynolds Portrait Jonathan Reynolds
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I am grateful to the Secretary of State for that answer, but last week the Chancellor said that this is the biggest economic crisis for 300 years, and he is right, so I cannot understand how those same spending review documents show the Government cutting universal credit next April—a £1,000-a-year cut, taken from 6 million families just when they need it most. No Government since the great depression have cut unemployment benefits during a crisis, so how can the biggest economic crisis for 300 years be the time to do so?

Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

As the hon. Gentleman knows, the Government introduced a raft of temporary measures to support those hardest hit, including the furlough scheme, the self-employment income support scheme and the £20 UC uplift. The Chancellor has confirmed the UC uplift until March ’21, and it is right that we wait for more clarity on the national economic and social picture before assessing the best way to support low-income families moving forward. That is exactly what I put in the written ministerial statement last week.

Pension Schemes Bill [Lords]

(Report stage)
Jonathan Reynolds Excerpts
Monday 16th November 2020

(11 months, 1 week ago)

Commons Chamber

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Department for Work and Pensions
Nigel Mills Portrait Nigel Mills
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I agree, and I was coming on to that argument. I am not sure that achieving net zero can be pushed down to individual pension schemes and individual investment advisers. I suspect we will have to accept that between now and 2050, there will be some businesses out there that are bad for the environment but we are still going to need their products and services. We will need some of those even after 2050. We will achieve net zero by having other businesses that are more positive for the environment, with some still being bad for it. I am not sure that we can require every individual pension scheme to be a net zero investor. Otherwise, there will be a load of things that they just cannot invest in, as they cannot achieve that strategy.

I fully agree with the sentiment and agree that the industry needs to do more. I said on Second Reading that what we do not need are posh written documents that sit there with nice-sounding promises that never get implemented. We need pension schemes and their investment managers to be much more—

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
- Parliament Live - Hansard - -

I will not address this in detail because I will have my own opportunity to do so, but I make it very clear that the amendment does not enforce or mandate pension funds to be net zero. It would ensure that they have an investment strategy, including a stewardship strategy, that is consistent with those objectives. It is drafted specifically to address those concerns and hon. Members have nothing to worry about in that regard.

Nigel Mills Portrait Nigel Mills
- Hansard - - - Excerpts

I am grateful to the hon. Member, but I am not sure what the amendment would achieve then. If we say to a pension scheme, “You need to make sure that your overall investments are consistent with the nationwide net zero strategy”, they can just say, “Of course we are because there is a nationwide net zero strategy and we are just investing in legal businesses”, which we would presumably put taxes or carbon levies on to make sure we push this. It becomes a circle that would presumably mean only that the trustees have to produce a strategy and occasionally review it. It would not actually drive a great deal of different behaviour. I think I would want to see much more activist investment from pension schemes and their investment advisers to ensure that the businesses that they are investing in are sticking to their obligations and strategies on how they can reduce their impact on the environment, making sure that those promises are being kept on a management level rather than setting trustees an impossible target, which I am not sure would even mean what hon. Members seek to make it mean.

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Neil Gray Portrait Neil Gray
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16 Nov 2020, 12:02 a.m.

I was—I have it right here. We took some comfort from that statement from the Minister, but I have to emphasise the word “inappropriate” in respect of that de-risking journey. For the avoidance of doubt, will the Minister confirm that unless schemes started to move towards significant maturity, there would not be any appropriate de-risking journey? Will the Minister further confirm that he has no intention of insisting that all open schemes progressively de-risk their investments if any remain sufficiently far from significant maturity, and that he will ensure that the regulations do not have that effect? If so, how will they ensure that? We also ask the Minister to accept amendment 7, but if that does not happen, we will support the Liberal Democrat amendment 1.

On amendments 9 and 10, we return to the treatment of vulnerable customers and the need to better define the difference between guidance, advice and information. We touched on this in Committee and the Minister accepted the principle of where we were coming from with our amendments but could not accept them into the Bill. I ask him to look at that again. The SNP have tabled amendments to require that specially trained advisers and guidance are made available to people in vulnerable circumstances, including but not limited to persons who suffer long-term sickness or disability, carers, persons on low incomes and recipients of benefits. Circumstances of those types can have a significant impact on people’s finances and long-term savings plans. It is also the case that people in difficult financial circumstances may be more likely to utilise new pension freedoms, but at a cost to their long-term savings.

It is clear that the UK Government had not put in place adequate safeguards to ensure that older people who opt to free up their funds would not end up in a desperate financial situation later. Those with less money are more vulnerable to economic shocks in their personal finances, as well as being potentially more vulnerable to scammers who give misleading or false advice for free. That is why we have re-tabled amendment 10 to ensure that customers who use the pensions dashboard are made more aware of the difference between information, guidance and advice, which are very different things. People who expect advice as to what route they may be able to take may be disappointed to receive only various pieces of information. Likewise, there may be issues with exactly what the body is allowed to advise and to what extent it is able to advise on the options available. It is a simple amendment but would be extremely helpful in taking the issue forward.

As on all these issues, we have tabled amendments in good faith to try to improve the legislation. We look forward to hearing what the Minister has to say in his response to the debate.

Jonathan Reynolds Portrait Jonathan Reynolds
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16 Nov 2020, midnight

I place on record my thanks to all Members who participated today and in Committee. In particular, I thank my shadow Work and Pensions team for their diligence and hard work. I also place on record our thanks to the Minister and our colleagues from the SNP for the open dialogue that has been maintained throughout the Bill’s passage.

The Opposition did not vote against the Bill on Second Reading, and it is not our intention to vote against Third Reading later. We agree with the broad aims of the Bill and believe that it adds a series of worthwhile improvements to our pension system. However, we have continually sought, as is the role of the Opposition, to improve the Bill further to make it the best legislation that it can possibly be. On Second Reading, I laid out how we wanted to achieve this, with additional measures to protect pensions, people and the planet. Although there was thoughtful debate in Committee, it is disappointing that the Government removed some critical parts of the improvements that were made in the Lords. That is why we have brought back two groups of amendments today, as well as seeking a new amendment, which is an opportunity to make a historic step forward in tackling climate change. I will address each in turn.

First, on protecting pensions, a well-regulated pensions system is vital to give people confidence that it will be there for them in their retirement. Pension funds are not just any financial product. They are usually the sole means of looking after someone in old age, and are responsible for their financial security for an entire phase of their life. Today’s retirement landscape is challenging. The Labour party does not oppose the pensions industry in finding new ways to meet those challenges, but we strongly believe that any innovation must be well regulated, which is why we have introduced new clause 6. We introduced that provision in Committee, to ask the Government to introduce proper regulation of so-called pensions superfunds, which are profit-making consolidation vehicles for defined-benefit pension schemes. At present, they are subject only to an interim regulatory regime announced by the Pensions Regulator in the summer.

That is a substantial change, as these funds currently advertise high rates of return to pension investors. We believe that, as a minimum, those products need a proper and robust regulatory regime, underpinned by legislation, that is on a level playing field with the rest of the industry. We are not a lone voice on that. The Governor of the Bank of England has written to the Secretary of State to raise concerns about the potential risk to financial stability and to scheme members. The Opposition would like to hear a commitment today from the Minister that legislation for a full regulatory regime will be forthcoming before the market begins to develop seriously.

Moving on to other matters, the adequate funding of defined-benefit schemes is critical to their future. We were disappointed by the removal in Committee of clause 123, which related to the funding requirements of open and closed defined-benefit schemes. That point has just been made, and I shall not quote the Minister directly again. However, we understand that he has relied frequently on the regulator’s bespoke option in the draft defined-benefit funding code to provide reassurance for open schemes that they will not be required to follow the funding and investment strategies of closed schemes. However, there is a long list of people who have expressed doubt about that option, and who believe that it risks the premature closure of otherwise healthy schemes, including the Pensions and Lifetime Savings Association, the Institute and Faculty of Actuaries, Lane Clark & Peacock, the Trades Union Congress, the Confederation of British Industry, and even one of the Minister’s predecessors as pensions Minister, Baroness Altmann. I recognise that there is no disagreement between the Minister and Opposition parties on the desired outcome, but we still believe that there is virtue in reintroducing the clause. If amendment 7 or amendment 1 is pressed to a vote, that will be done with our support.

Protecting people in schemes is vital, which is why we have introduced three changes, to try to strengthen the consumer protections in the Bill, with amendments 11 to 15. We all agree that the pensions dashboard, when it arrives, will be an incredible opportunity for people to see all their pensions information in one place for the first time, but safeguards must be built in to prevent hasty decision making and consumer exploitation. The last thing we want is for people to make bad choices, prompted, for example, by market disruptions or unscrupulous operators, until they are more accustomed to that level of access. We believe that we can tackle both those things by giving the public dashboard a protected head start and keeping commercial transactions off the dashboard until further legislation is introduced in line with our amendments.

We also believe that there must be accessible and transparent fee information on the dashboard. For too long, it has been possible to rely on the opacity and complexity of pensions to obscure the real lifetime cost of transactions. Greater transparency would surely be welcome.

I spoke on Second Reading about the scourge of pension scams. People can become particularly vulnerable to scams in the years immediately before retirement. We have heard throughout the debates on the Bill terrible stories, such as the one articulated by my right hon. Friend the Member for East Ham (Stephen Timms), about people falling victim to fraudsters who rely on confusion about pension freedoms, and not only take people’s lifetime savings but leave them with a huge tax liability. No punishment is severe enough for those who commit those crimes. We all agree that further action is needed, so we support the amendments tabled by my right hon. Friend, who chairs the Work and Pensions Committee, as they would create an opt-out system for speaking with Pension Wise in the five years before retirement.

Finally, I have spoken about protecting pensions and protecting people, and now I want to talk about protecting the planet. Our colleagues in the Lords worked hard with the Government to bring in requirements in the Bill on the assessment and disclosure of climate risk in pension investments. This is a historic step: the first time it has ever been included in UK pensions legislation, and we all should and do celebrate that fact. However, we know that, with the climate emergency getting even more serious, it is possible to go even further. Amendment 16 would allow regulators to mandate occupational schemes to develop a clear investment strategy that is aligned with net zero greenhouse gas emissions at the pace the science demands.

The Paris agreement of 2016, which committed to efforts to limit global warming to 1.5° was a groundbreaking and critical step forward in global co-operation to beat climate change, but I believe we do not do enough to explain to the public and our constituents that the changes we need will only be delivered by starting to influence how vast amounts of private capital are allocated, alongside direct Government decisions on, for instance, decarbonising power and transport. I have to say that I would have thought that argument would garner more sympathy with Conservative Members of Parliament.

UK pension funds represent trillions of pounds, and steering more of that towards our climate goals, yes, would be radical, but this amendment is not just about where capital is allocated. It is about the stewardship that we need to see from all asset managers over the companies they have investments in. This is not a divestment amendment, nor does it limit the choices available to fund managers. The hon. Member for Grantham and Stamford (Gareth Davies) said that the ESG data is patchy, and he is right, but he will appreciate that asset managers demanding better data have been a fundamentally important driver in making that better, and the E—environmental—is actually the most robust part of ESG data. It does not make sense to me to say that the data exists for the Government to issue a green bond, but not for a pension fund to formulate a Paris investment strategy.

We, as the Opposition, ask the Government to deliver a green economic recovery from the pandemic by investing to support the creation of at least 400,000 new jobs, but achieving progress on climate change demands change in every part of our economy, and despite what we have heard from Government Members today, the industry is already showing us what is possible. Aviva, one of the UK’s biggest pension providers—it supports this amendment —has recently announced that its auto-enrolment default funds will aim to achieve net zero by 2050. That is £32 billion of capital, which is actually going beyond the scope of this amendment. In October this year, the BT Pension Scheme set a goal of net zero by 2035 for its entire portfolio, worth £55 billion. There is also a great deal of good practice in public sector DB schemes, such as the Local Government Pension Scheme.

What is more, today’s amendment was developed and backed by a whole host of organisations across the public and private sectors, with dozens reiterating their support in a letter to the Prime Minister last week. These include ClientEarth, Make My Money Matter, ShareAction, E3G, Christian Aid, West Yorkshire Pension Fund, Good Energy, Ecotricity, the Aldersgate Group, the Climate Coalition, the Carbon Tracker Initiative, Friends of the Earth, Greenpeace, Business in the Community and the TUC. I would like to thank all those organisations for the work they have done in getting us to this point. However, I will also say to the Minister that this is not a top-down initiative. The evidence shows that Members themselves want their funds to start taking this seriously.

In addition, the investment case makes this simply the right thing to do. The Department for Work and Pensions has itself acknowledged that considering the financial impacts of climate change is consistent with fiduciary duty. Pension funds are long-term stewards of capital. What could be more long term than the sustainability of our environment and our economy? These two objectives simply do not conflict. As is said in an excellent comment piece in The Daily Telegraph today—that in itself is a sign of the times—it

“now looks irrefutable that environmental and social factors are a clear guide to company quality and future investment returns.”

I reiterate that this is not about the Government dictating to pension funds about when and who to invest their money in, and we are not seeking to compromise trustee independence. It is simply about putting a strategy in place that considers their role in meeting our climate objectives. Trustees can maintain their total discretion over what strategy they choose to achieve that goal. Furthermore, this proposal is designed to allow the Government the flexibility to guide schemes via regulations to ensure that trustees have a strategic plan to become Paris aligned over a period of time. Any measures resulting from this amendment would be subject to extensive consultation with market participants, so that their design could take into account what works best for schemes of different types and sizes. This is written to be as accommodating as possible. The Chancellor of the Exchequer came to the House last week and outlined his ambitions to make the UK a leader in green finance. It is true that we have been lagging behind our European counterparts for many years when it comes to green bonds. As the shadow Economic Secretary in the last Parliament, I made that point frequently, and I was often given reasons why we could not do that similar to those we have heard today against amendment 16. I am tempted to say that if we wait until the end of this Parliament, even this amendment may well become Government policy.

With the new US Administration poised to rejoin the Paris agreement in 2021 under the new leadership of President-elect Joe Biden, I put it to the House that we can make this an even more historic week for tackling climate change by passing amendment 16 today. That is why we seek to include it in the Bill.

Guy Opperman Portrait Guy Opperman
- Hansard - - - Excerpts

This is a hugely important piece of legislation. It is a landmark Bill. It will impact the lives of millions of people across this country and it will make our pensions safer, better and greener. I genuinely believe that the work we are doing on CDCs and the pensions dashboard, the fact that we are giving real powers to the regulator and taking the opportunity to crack down on the callous crooks who take our constituents’ pensions, the work we are doing on scams, and the fact that we have for the first time put climate change at the heart of pensions means that this will be groundbreaking legislation that we should all be proud of. I welcome the cross-party support that we have heard.

I may not be able to address all 30 amendments or the 17 separate requests for clarification, so I refer all colleagues—and those in the other place, when they consider this matter—to the two days of debate in Committee, where I expanded in great detail on many of these issues. I will happily write to individuals who asked me to address particular points. I will of course meet the ASW, as the hon. Member for Cardiff South and Penarth (Stephen Doughty) requested, and write on the Roadchef issue, but I cannot promise anything more than previous Ministers have done.

Regretfully, I will not engage with the WASPI debate, as the hon. Member for Strangford (Jim Shannon) made clear that he would. I continue to defend this Government’s position, as I defend the Government of the two former Labour Pensions Ministers sitting on the Back Benches, who supported the exact same policy during the Labour Government. I very much take forward all the work that is done on a cross-party basis. I put on the record my thanks to the Clerks, to all colleagues who have spoken in this debate and to colleagues from across the House for their work in Committee, which was of great assistance to the House.

I turn first to clause 123 and the various amendments on open DB that were raised by a variety of colleagues. We have made it entirely clear that we do not want to see good schemes close. We support DB and we are not proposing a one-size-fits-all regime that forces immature schemes with strong sponsors into an inappropriate de-risking journey. We have also made it clear that we will use secondary legislation to ensure that the requirement for all schemes to have a funding and investment strategy works appropriately for open schemes and ensures that immature open schemes are not prevented from taking appropriate investment risks where that is supportable.

As we have explained, it would be wrong for all schemes that are expected to stay open to be treated differently from other schemes. Not all open schemes in this category share the same characteristics. Some will be maturing just like closed schemes, and it would be wrong to treat such schemes for all purposes as if they were the same as immature schemes.

We hope that we have provided reassurance that open schemes will be able to adopt funding and investment strategies that are appropriate to their individual circumstances. The regime will remain scheme specific and will continue to apply flexibly to the individual circumstances of each scheme, including those that remain open to new members.

We have made it entirely clear that we will frame our secondary legislation in such a way that schemes that are and are expected to remain immature, and have a strong employer covenant, continue to be able to invest in a substantial proportion of return-seeking assets, which will help to keep costs down. I have engaged with a range of parties—I met a number of them in detail on 2 October, and I have subsequently had discussions with a number of organisations—and we are trying to reassure them of the way ahead.

The Pensions Regulator is a regulator, not a legislator. It must regulate in accordance with the legislation made by Parliament, but we believe that the right way forward is a combination of primary legislation, regulations and the defined-benefit funding code, whereby we will seek to effectively balance employer affordability and member security, taking into account the circumstances of different types of schemes as is appropriate.

--- Later in debate ---
Guy Opperman Portrait Guy Opperman
- Hansard - - - Excerpts

16 Nov 2020, 12:04 a.m.

I congratulate my hon. Friend on making her point so eloquently and intervening speedily in this short Third Reading speech. I can confirm that the law stays as per the Supreme Court decision, even after we leave the EU. I stand by what I wrote to her in the detailed letter that I drafted to her in October, a copy of which I will place in the House of Commons Library to set the matter firmly on the record.

Before I was so generously interrupted, I was saying that this is a hugely important piece of legislation with cross-party support, for which I thank colleagues from all parties, including the hon. Member for Birmingham, Erdington (Jack Dromey), who cannot be with us tonight. The Bill will affect the lives of millions of our constituents throughout the country; make pensions safer, better and greener; stop scams; introduce CDCs; create pension dashboards; and crack down on callous crooks who take away our constituents’ pensions. It also legislates for a new type of pension scheme, establishing the dashboard and making pensions fundamentally greener. I commend the Bill to the House.

Jonathan Reynolds Portrait Jonathan Reynolds
- Hansard - -

I thank all colleagues for their participation in today’s proceedings and throughout the passage of the Bill. In particular, I thank the Minister; my hon. Friends the Members for Feltham and Heston (Seema Malhotra) and for Westminster North (Ms Buck), who led for the Opposition in Committee; and Sophia Morrell and Lily Lewis from our staff teams. I pay tribute to the shadow Pensions Minister, my hon. Friend the Member for Birmingham, Erdington (Jack Dromey). He is a peerless source of knowledge, wisdom and advice, and he has played a significant role in this legislation. Unfortunately, he could not participate in Committee or today’s proceedings because the House does not have in place the measures required to allow all MPs to participate safely on an equal basis during the pandemic. This is clearly not a satisfactory situation, and I know that many Government Members concur with that. I welcome the moves today to finally get this resolved.

On the whole, this has been a positive experience. Perhaps the most significant change made in the Bill is the introduction of the new collective defined-contribution schemes, which we will have to monitor carefully, as well as more substantive measures of benefit to our constituents. This legislation deserves to pass its Third Reading, and it will do so with the support of the Opposition.

Neil Gray Portrait Neil Gray
- Hansard - - - Excerpts

Like others, I wish to put on record my thanks to the Clerks, Huw Yardley and Kenneth Fox, and to Djuna Thurley in the Library, for their support. I also thank our SNP researchers Zoe Carre and Linda Nagy for their fantastic assistance, as well as my hon. Friend the Member for Gordon (Richard Thomson) for his considerable and informed support in Committee.

This Bill takes matters forward in the pensions world. It could have gone further, and I regret that it does not, but we thank the Minister and the other parties for working together constructively on such an important piece of legislation. We look with interest to its further stages in the other place.

Supporting Disadvantaged Families

Jonathan Reynolds Excerpts
Monday 9th November 2020

(11 months, 2 weeks ago)

Commons Chamber

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Department for Work and Pensions
Thérèse Coffey Portrait The Secretary of State for Work and Pensions (Dr Thérèse Coffey)
- Hansard - - - Excerpts

Throughout the coronavirus pandemic, this Government have put an unprecedented package of support in place to strengthen the safety net for individuals, families, communities and businesses who need help at this critical time. We recognise that this has been a challenging year for everyone, especially for those who have lost their jobs and those families who are feeling the extra strain, worrying about putting food on the table or money in the meter. The Prime Minister has been clear that this Government will use all their efforts to make sure that no child should go hungry this winter. This Government also want to ensure that every child reaches their full potential. That is why I am announcing a comprehensive package of support to see these families through the winter months and beyond, through the new covid winter grant scheme, increasing the value of Healthy Start vouchers, and the national roll-out of the holiday activities and food programme for the longer holidays in 2021.

With Christmas coming, we want to give disadvantaged families peace of mind and help those who need it to have food on the table and other essentials so that every child will be warm and well fed this winter. Through the covid winter grant scheme, we are delivering £170 million to local authorities in England, starting next month, to cover the period until the end of March. That fund builds on the £63 million already distributed earlier this year and, as then, funding will be disbursed according to an authority’s population, weighted by a function of the English index of multiple deprivation. Any Barnett consequentials are already included in the guaranteed £16 billion funding for the devolved Administrations, so there is funding available for every child in the UK, and I hope that the devolved Administrations will play their part in this mission.

Local councils have the local ties and knowledge, making them best placed to identify and help those children and families most in need, and it is important to stress that the scheme covers children of pre-school age, too. Targeting this money effectively will ease the burden faced by those families across the country worrying about the next bill coming through the letterbox or the next food shop. Grants will be made under section 31 of the Local Government Act 2003, and different from earlier in the year, they will carry conditions and reporting requirements to ensure that the scheme is focused on providing support with food and utility costs to vulnerable families with children who are affected by the pandemic. We will require that at least 80% of the grant is spent on children with their families, providing some flexibility for councils to help other vulnerable people. We will also require councils to spend at least 80% on food and key utilities, again providing some flexibility for other essentials.

In trying to give children the best start in life, it is important that food for young children and expectant mothers should be nutritious, as that will help in their future health and educational attainment. That is why we are increasing the value of Healthy Start vouchers by more than a third, helping low-income families to buy fresh milk and fruit and vegetables, and helping to boost their health and readiness for school. From April 2021, the value of vouchers will rise from £3.10 to £4.25.

The third part of our comprehensive package is the extra support we will be giving children and families during the longer school holidays. After successful pilots of our holiday activities and food programme, I am pleased to let the House know that it will be expanded and rolled out across the country starting from Easter next year, through the summer and the Christmas holidays, supported by £220 million of funding.

Our manifesto set out our commitment to flexible childcare, and the expansion of the holiday activities and food programme has always been part of that commitment. We are building on the learning from the successful delivery of the programme over the past three years to expand it across England, as we had set out to do. The programme, which is being extended to all disadvantaged children, offers that vital connection for children during the longer school holidays to enriching activities such as arts and sport which will help them perform better in school, as well as a free, nutritious meal while they are there.

In May, the Government provided £16 million to charities to provide food for those struggling due to the immediate impacts of the pandemic. I announce today that we will match that figure again, making a further £16 million available to fund local charities through well-established networks and provide immediate support to frontline food aid charities, who have a vital role to play in supporting people of all ages. The package taken as a whole will make a big difference to families and children throughout the country as we continue to fight the virus.

We are taking a long-term, holistic approach, looking at health, education and hunger in the round, not just over the Christmas period but throughout the winter and beyond. This is not just about responding to the pressures of winter and covid but about further rolling out the holiday activities fund, which is an established part of the Government’s approach to helping children reach their full potential. With this announcement, we are ensuring that as well as taking unprecedented action to protect jobs and livelihoods, we are protecting younger generations.

We are living under extraordinary circumstances, which require an extraordinary response, but I am steadfast in taking action to support all children to fulfil their potential long after we have beaten the pandemic. Social justice has been at the heart of every decision this compassionate Conservative Government have made, whether that be protecting over 12 million jobs through our income support schemes, injecting over £9 billion into the welfare system or providing over 4 million food boxes to those shielding. This is yet another example of how the Government have supported people throughout the pandemic.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
- Parliament Live - Hansard - -

9 Nov 2020, 5:25 p.m.

I thank the Secretary of State for advance sight of her statement. The Opposition welcome any move that will stop children from going hungry over the tough months that lie ahead. I would hope that that is true of everyone elected to this Parliament, so I still cannot believe that the Government have had to be dragged kicking and screaming to the right place and to acknowledge that, in this country, in this day and age, no child should be going hungry. I am astonished that the Government can somehow pretend that we did not all hear hours and hours of justification from them, in this House just a fortnight ago, for why they thought the absolute opposite of what has been announced today.

In my 10 years in Parliament, I have never been so depressed as I was when I listened to the comments made on the Conservative Benches during the holiday hunger debate and on social media afterwards. That was not because of the disagreement on policy; debate and disagreement are what Parliament is all about. What I could not stand was the toxic commentary and the stigmatising of good people in hardship due to the economic mess this Government are themselves responsible for. I am talking about the unacceptable insinuations about money for children’s food being spent on brothels and drugs, with no evidence to back that up. I am talking about Tory MPs attacking businesses in their own constituencies that had stepped up when the Government would not do so, and using that compassion as evidence that financial support was no longer required for those businesses. I am talking about the same tired old clichés about state dependency at a time when it is the state itself that has had to close businesses and workplaces to deal with the virus. People who themselves have only ever known privilege were showing us that they did not even know how poverty was measured in this country, and in one case did not know the difference between the calculation of a median wage and an average wage. It was unedifying, it was ignorant and it was insulting to British families, so I ask the Secretary of State to start with an apology for that debate and that vote, because the tone of her statement today does not match the tenor of the debate.

Welcome as this statement is, the Government have, as at every stage of the pandemic, acted too late. Half term has been and gone, so let me thank the real hero of the hour: Marcus Rashford. I think the Secretary of State might have forgotten to mention him, but Marcus deserves immense credit for his campaign and for what he has achieved in such a short space of time. The depression that I and many others felt when we listened to the debate here in Parliament turned to joy when his activism unleashed the most incredible response from UK businesses over the half-term holiday. Even though they are facing extremely tough times themselves, they stepped up. That is because in a compassionate society it is a given that children should not go hungry, but why did it take that extraordinary outpouring of community support to make the Government see that?

Let us get to the heart of the issue. All of this is so important because the social security system in this country does not give people the support they need when they hit hard times. That is why this announcement matters so much. That is why furlough had to be invented. That is why the self-employed and contractors are in such a precarious position. In her announcement today, the Secretary of State once again referenced the £9.3 billion that the Government have put into social security since the beginning of the crisis. I ask the Government and all Conservative MPs to reflect on this question: if, after they have spent an additional £10 billion, there is still so much incredible hardship and unmet need out there, what does that say about the system that they have created over the 10 years preceding the crisis? I note, by the way, that there is still no sign of the Department for Work and Pensions’ review of food bank use, which was due out on 19 October, but we all know what it will say.

At the beginning of this crisis, the Opposition asked for five urgent measures to stop families falling into significant hardship: sharing the £20 increase in universal credit across legacy benefits; scrapping the savings threshold so that savers would not be punished; ending the punitive two-child limit; ending the benefit cap so that people could receive what the Government had already announced; and turning the universal credit advance into a grant, rather than a loan. Those five measures would have been a big step towards alleviating child poverty and giving people the support they need, and they are still required. Yet, unbelievably, instead of acting, the Government are still on course to cut universal credit by £20 in April next year, when we know the pandemic will still be affecting people’s livelihoods. That will be a cut for 6 million families. I ask the Secretary of State to spare Britain’s families that brinkmanship and spare us the inevitable U-turn after the event. On top of the announcement today, will the Government commit to not cutting universal credit in six months’ time? For once, will they make the right decision before it is too late?

Thérèse Coffey Portrait Dr Coffey
- Parliament Live - Hansard - - - Excerpts

9 Nov 2020, 5:29 p.m.

I welcome the hon. Gentleman’s support for these measures, but I am somewhat disappointed by his approach. It is quite simply false to label this as anything other than a significant expansion of existing support measures and delivering on our manifesto commitments to support disadvantaged children and families. This summer alone, 50,000 children benefited from the holidays and activities fund and, as we have said, next Easter, summer and Christmas, that will be open to all eligible children who want to take part in it. Also, I think that an additional 2,500 breakfast clubs have been started during covid.

I would remind Labour Members that their proposal simply to extend vouchers for free school meals recipients over Christmas would have cost £40 million for the two-week period, and that only school-age children would have been eligible. By contrast, our new package of support, building on the £63 million earlier in the year for the local welfare assistance fund, is £170 million. It will last 12 weeks and support thousands more disadvantaged children and families. That is not to mention the commitment to extend the holiday activities and food programme, the Healthy Start vouchers and food redistribution charities. Recognising the Barnett consequentials, this represents more than half a billion pounds of support for children and families. That is happening in a much more targeted way, trusting our local councils, which can draw on the variety of information they have to ensure that we help the most disadvantaged and vulnerable people at this time.

It is that targeted approach that really sets this policy apart. We will work with councils up and down the country to ensure that every child is warm and well fed this winter.

Oral Answers to Questions

Jonathan Reynolds Excerpts
Monday 19th October 2020

(1 year ago)

Commons Chamber

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Department for Work and Pensions
Thérèse Coffey Portrait Dr Coffey
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My hon. Friend is absolutely correct, and I praise him for raising this issue on behalf of the many people he represents. This Government are committed to tackling fuel poverty, particularly among pensioners, and will continue to deliver winter fuel payments this year. I was pleased by the work done by my Department to make sure that those on pension credit, including in your constituency, Mr Speaker, received the £140 from the warm home discount scheme, without lifting a finger.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
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19 Oct 2020, 12:06 a.m.

As the Government place millions of people across the country under new covid restrictions, they will be asking many people to undergo significant cuts to their income. Last week, the Prime Minister said that due to the job support scheme and universal credit

“nobody gets less than 93% of their current income.”—[Official Report, 14 October 2020; Vol. 682, c. 368.]

Unfortunately, that is just completely wrong. The reality is that a person employed by a business that the Government are ordering to close could still lose a third of their income, and for an unspecified length of time. Their rent, mortgages and food bills will not be any lower, so how does the Secretary of State expect those people to get by?

Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

The Government have taken unprecedented action in the design of their new schemes, recognising that some businesses right around the country are still experiencing a loss in demand. As a consequence, we have developed two different schemes, one of which is “a third, a third, a third” in terms of helping people with their cost of living. Where we believe, in conjunction with local leadership, that it is the right thing for certain sectors to be closed in areas, the two-thirds support of wages is important. Of course if people do come under a certain threshold, they may well be eligible for UC, which would help top up their ongoing income during these difficult times.

Jonathan Reynolds Portrait Jonathan Reynolds
- Hansard - -

Secretary of State, this is important, because it is the barrier to additional restrictions being introduced. As the Government know, people who are eligible for the job support scheme and may be losing only a third of their income are, comparatively, the lucky ones, as people in receipt of UC or jobseeker’s allowance will be left on just a fraction of their current income. With that in mind, I have a straightforward question for her: it is clear that we are not going to be out of this crisis by April next year, so will the Government do the right thing and scrap their plans to cut UC to an even lower amount next April?

Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

What is different from the regime we had earlier in the year is that then the strong message was very much for people to stay at home and retail was closed, along with a number of different sectors. That is not the case anymore: we have now had to intervene in a much more limited number of sectors, often in conjunction with the local leadership. As a consequence, we will continue to review the best ways to support people through the welfare system, as well as through the plan for jobs and the measures that the Chancellor has introduced.

Pension Schemes Bill [Lords]

(2nd reading)
Jonathan Reynolds Excerpts
Wednesday 7th October 2020

(1 year ago)

Commons Chamber

Read Full debate Read Hansard Text Bill Main Page
Department for Work and Pensions
Thérèse Coffey Portrait Dr Coffey
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7 Oct 2020, 12:01 a.m.

My hon. Friend the Under-Secretary of State for Work and Pensions has just told me he will share with the hon. Gentleman the letter that he sent to the Chair of the Select Committee. Generally, pensions legislation has broad support across the House, in recognition of the fact that these are long-term decisions, so of course the Government will look carefully at any amendments in Committee and any points made by the hon. Gentleman. We want to make sure that, going forward, we have conference in the long-term objectives of the changes that the Bill will bring in.

In conclusion, I pay tribute to my hon. Friend the Under-Secretary who is passionate about pensions, exceptionally assiduous and, in my humble opinion, the best Pensions Minister we have had in a very considerable period of time. I hope the House will agree that having safer, greener and better pension schemes is good for our constituents, as we encourage people to invest in themselves today to prepare for a comfortable retirement, and help to make them better informed about how their money is growing and being used for them and the planet. I commend the Bill to the House.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
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7 Oct 2020, 12:02 a.m.

I am grateful to be called to speak in this Second Reading debate. Since I became the shadow Secretary of State earlier in the year, I have been carefully following the progress of the Bill in the other place and am pleased that it has finally reached this House.

First, I record my sincere admiration for and thanks to my colleagues in the other place—noticeably Baroness Sherlock, Baroness Drake and Baron MacKenzie—for their laudable work in carefully and thoughtfully amending the Bill.

In opening the debate for the Opposition, I shall outline our perspective on the Bill as it stands, as well as addressing the three areas—protecting people, protecting pension schemes and protecting the planet—in which Labour would like to see further amendments made as the Bill progresses. However, let me say clearly at the outset that my colleagues and I broadly welcome the Bill. We have been in dialogue with the Government for some time about its contents and the issues that it covers, and I am grateful to the Pensions Minister for his time this week on a number of matters. We will therefore not oppose the Bill today.

My message to the UK’s pensions industry is that it should have confidence in the strong commitment that exists across the House of Commons to a pension system that is sustainable, sufficient and able to meet the challenges of an ageing population. Although we broadly support the measures in the Bill, we believe there is more to be done to create the robust system that we want. As the Bill progresses, we will seek to make those arguments in the usual way.

A new piece of pensions legislation is always an important step. Personally, I am fascinated by pensions, but I appreciate that not all people feel the same way. For many people, retirement feels like a distant concept. The understandable financial pressures that many families experience—especially at the moment—make longer-term considerations harder to contemplate. Even in better times, talk of defined contributions or lifetime allowances can cause some eyes to mist over. I feel strongly, though, that we will not be able to address the major public policy questions we face without getting people of all ages to make a genuine connection between their future prosperity and happiness and the pension plans that they are making today.

The connection I mention is essential because the outlook for today’s young people is drastically different from that in years gone by, and that has become even more critical in the light of this year’s events. We already know that the combination of student debt, higher house prices and—most of all—the impact of the 2008 global financial crisis and the austerity that came after it has meant that for the first time there is a generation of British people who might not be better off than their parents. That is why in last week’s debate on the Social Security (Up-rating of Benefits) Bill I made the point that the triple lock is not just about the level of the state pension for existing pensioners but about how we index the state pension so that it keeps its value for future generations who are not yet retired. We also have to make sure that we have a complementary system of occupational provision in which people have knowledge and control of their savings, with strong regulations to protect consumers’ interests, and in which people can easily comprehend how the decisions they make will affect their retirement plans.

All that brings me to the contents of the Bill. First, I want people to know that their pension savings—their assets—will directly contribute to the future they want for themselves and their family. I am immensely proud of the work that my Labour colleagues did in the other place—much of it behind the scenes—to put climate commitments for pension funds into UK legislation for the first time ever. This is not just lip service, but genuine commitments, formalising the requirements of the Task Force on Climate-related Financial Disclosures and enshrining a commitment towards the Paris agreement for trustees and managers of occupational pension schemes. That is fundamental to tackling the climate emergency and it is a vital contributor to the health of pension funds. The long-term prospects of fossil fuel companies have implicit risks and it is only right that those risks are taken into consideration as part of the financial responsibility that schemes have towards their members.

The UK should be leading the way on green finance, but we have been slipping behind internationally in recent years. I want to explore ways that we can go even further to achieve that goal. The connection between people, really thinking about where their money is invested, is a key component of helping them to become more involved and more informed about their financial future overall.

The Bill also contains the blueprint for the pensions dashboard, one of the most long-awaited policy initiatives in history. We want to future-proof that dashboard, so that one day people can see in black and white an easily understandable measure that tells them how exposed to climate risk their retirement portfolio is. I know that the industry wants to make sure that we learn to walk before we start to run, and that the creation of the dashboard in itself is no small proposal, but I want us to be as ambitious as we can. Frankly, there is no time to waste when it comes to the climate emergency.

That takes me to my second point, on protecting people. For too long, there have been cases of unscrupulous people using the complexity of the pensions industry to exploit those using it. The dashboard, in particular, has a vital role in making information transparent and easily accessible. That includes making sure that it has the capacity to clearly spell out to people what their fees are and who they are really paying, and for what. One of the very good amendments in the other place was to protect the dashboard from private transactions for a fixed period, and I am disappointed that the Government seem not inclined to keep that.

When consumers are presented with the new information that the dashboard will provide, we would prefer to have a moratorium on how products and new services are sold and marketed until people get used to having ready access to this information. In the wake of, for instance, volatile markets brought about by the coronavirus pandemic, it would be very easy for people to panic and make decisions that might not be in their long-term interests. We want to look at how we use the Money and Pensions Service to best mitigate this, especially when it comes to transfers.

Small pension pots, as has been mentioned, continue to be a major problem. How we can use the dashboard to easily consolidate those pots with minimum hassle and cost has to be on our minds. The dashboard will bring a sense of immediacy and transparency to that, but we need to make sure that people make their decisions when they are fully informed.

The other element of this, sadly, is pension scams. Regrettably, George Osborne’s pension freedoms, exactly as was warned of, have been a watershed moment for fraudsters, who have taken advantage of such a significant change in the rules. As the shadow City Minister and now as the shadow Secretary of State for Work and Pensions, I have been made aware of some truly dreadful stories. I remember one especially bad case where the victim not only lost their pension to the scam, but was then pursued by Her Majesty’s Revenue and Customs for many years for the tax payable on that money, because they had accessed it under the age of 55, even though they had been under the impression that they were moving it to a legitimate investment for nowt. That is the kind of scam that absolutely ruins lives, and the penalties and action taken against fraudsters should be severe.

We should also take pride in the fact that there have been several substantial successes in pensions policy in the last few years. Auto-enrolment is a prime example of that—a hugely successful policy begun by the last Labour Government. Thanks to auto-enrolment, by March 2019 more than 10 million people had been auto-enrolled in a pension scheme, according to figures from the Pensions Regulator. Of course we want people to be more engaged in their pensions, but default options that are easy to set up and straightforward to contribute to are essential.

That brings me to my final point, on protecting pension schemes. What that means is ensuring a strong infrastructure so that we have a well-protected and well-functioning system. First, we will urge the Government to retain the cross-party Bowles amendment inserted in the other place. We do not want the regulation to work in a way that unnecessarily closes defined-benefit schemes that would otherwise be open for new members, and that is what we are worried will happen if open and closed schemes have to meet the same investment and maturity profiles. That is why we believe it is wrong to treat open and closed schemes in the same way, but that is another issue we intend to explore further in Committee.

Big challenges demand big answers, and that is why Labour supports the introduction of collective defined-contribution schemes as a potential way to get a better deal for workers than traditional DC schemes might offer. In doing so, we are mindful of the arguments from other countries about the need to ensure intergenerational fairness in those schemes, but we believe that those safeguards can be built in.

However, one area where we feel the Bill is silent is the creation of pension superfunds. These are very large funds of capital intended to consolidate several smaller DB schemes and run them as one large fund on a for-profit basis. Many are advertising substantial returns to potential investors. That is potentially an extremely significant development, and we do not believe it is appropriate for the Government to leave it in the hands of the Pensions Regulator to rule on this matter. The Government know the concerns that we have raised, and concerns have also been expressed by the Governor of the Bank of England and many people in the industry. I do not understand why these measures are not in the Bill, and the Opposition plan to push the Government again for more answers on this in Committee.

We believe that the measures in this Bill are important and worth while. We want well-managed, sufficient and sustainable pension provision that addresses long-term needs and is intergenerationally fair, and we want to begin the process of allowing savers to be much more engaged and in control of their assets. While the Bill does not give us everything we want, it makes solid steps towards that goal, and it is our belief that it deserves to have its Second Reading today.

Andrea Leadsom Portrait Andrea Leadsom (South Northamptonshire) (Con)
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7 Oct 2020, 12:06 a.m.

First, I congratulate my right hon. Friend the Secretary of State and, in particular, the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham (Guy Opperman), on their long-standing commitment to improving security for all our people in older age. My hon. Friend the Member for Hexham has shown over a lengthy period his commitment to securing older age for all in our country.

I would like to make four brief points, which I hope my hon. Friend will take into account as this excellent Bill continues its passage through both Houses. First, I would like to talk about the safety of pensions. There is no doubt that auto-enrolment has been a huge success for many, but Ministers will be aware that some people—particularly those on low pay—have been auto-enrolled into a pension scheme and found, when they tried to get information on their investment, that the company handling their pension is, in fact, a bogus firm.

I vividly recall a constituent coming to see me at my surgery. He was a delivery worker on fairly low pay. He was concerned about his auto-enrolled pension and wanted to know what was happening to his assets. He was trying to get an answer from the administrator for that firm and was simply told that the assets had decreased in value. When he tried to find out more, the firm would not engage with him. It was incredibly difficult for me, as someone who is quite familiar with the asset management sector, to get on to the ombudsman on his behalf. It was very difficult to get answers out of anyone. I urge my hon. Friend to ensure that we have the ability to clamp down hard on scams of all sorts, including by those who provide auto-enrolment schemes, and to enable people who may not be at all familiar with managing assets and their own investments to seek redress where necessary.

My second point is about the structure of pensions. I completely agree that the dashboard concept is a great idea. There is no doubt that it will transform people’s ability to hang on to all their small pension pots from the various jobs they have had. Most people these days have several jobs during their career, not just one or two, and it can be a case of people looking in the back of a drawer and trying desperately to remember the name of the company where they worked for six months. That is why we end up in a situation where lots of people have lots of little pots that they never manage to lay their hands on. I ask my hon. Friend, as he considers the next steps for pensions, to consider properly the potential for creating a lifetime pot that follows the worker. Obviously, that would be a radically different approach to the pensions dashboard that enables people to keep track of all those pots, but, actually, when individuals try to consolidate a pension, quite often the transfer value of that pension is considerably less than the pay-out value if they hang on to it. That is often why one pension pot will try to hang on to a person as one of its members and stop them going somewhere else. In my view, it would be worth while looking at a pot that follows the individual that they then keep paying into wherever they work throughout their career.

In 2014, which seems like light years ago now, I was City Minister and I was very proud to be working with George Osborne, who was Chancellor at the time, to introduce the pensions freedoms. I heard what the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) said about that being an opportunity for scammers. I completely agree that some of the measures that have been put in place have really helped with that, and that, indeed, there have been some major problems. However, I do not agree that we should not have brought in those measures, because the ability of many people to then get a decent amount of money on retirement was quite life-changing for them. It enabled some to have a great holiday. It enabled others to help their children buy their first home, or to pay off their own mortgage to give them greater security as they went into a lower income in a later stage of their life.

At that time, back in 2014, we also upgraded the Pensions Advisory Service, so that people could get good advice on how best to manage their own pension assets. In my view, this has been a positive change, but there is still a very low level of understanding of pensions among members of the public, so for many, making decisions about what to do with their pension freedom or with any kind of investing is a really worrying time. That leaves them open to crooks and scammers. I ask my hon. Friend the Minister what conversations he has had with the Secretary of State for Education about adding an applied practical element to the maths GCSE that would educate young people on issues such as pensions, mortgages, car finance schemes, and, yes, student loans. What more can be done to enable people to familiarise themselves better at a younger age, so that it is not such a mystery to them as they reach the shockingly old age of people like me—

Social Security (Up-rating of Benefits) Bill

(2nd reading)
Jonathan Reynolds Excerpts
Thursday 1st October 2020

(1 year ago)

Commons Chamber

Read Full debate Read Hansard Text Bill Main Page
Department for Work and Pensions
Thérèse Coffey Portrait Dr Coffey
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1 Oct 2020, 12:08 a.m.

The hon. Gentleman raises an important point. We always want to encourage people to take up benefits to which they are entitled. There was an extensive amount of advertising earlier in the year, which was linked into GP surgeries and other public places, in order to encourage that uptake. The changes that the BBC has made in regard to the TV licence has also encouraged some people to take that up. We will continue to try to encourage people to access the benefits to which they are entitled.

If the Bill does not receive Royal Assent ahead of the deadline, the current legislation will apply and it is almost certain that state pensions will remain frozen. The prompt passage of the Bill is essential, which is why I am grateful to the usual channels and the House for expediting this important legislation. In our discussions with the shadow Front-Bench team, we were able to highlight that there has been similar legislation, with a clause in the Welfare Reform Act 2009, to give similar flexibility to the then Secretary of State in consideration of uplifting benefits.

I have set out that this is a technical but important Bill. The Government have worked hard to protect people of all ages during the pandemic by strengthening the welfare safety net, introducing furlough and income protection schemes, as well as supporting those who have lost their jobs to try to help them get back into work. It is right that we also provide protection to our pensioners. Provided the Bill has passed into law by the time I conduct my annual review next month, those pensions and benefits need not remain frozen next year and we will provide our pensioners with important peace of mind.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
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1 Oct 2020, midnight

Thank you very much, Madam Deputy Speaker, for calling me to speak on Second Reading of the Bill today. I would like to express my thanks to the Secretary of State and to the hon. Member for Glasgow South West (Chris Stephens) for the discussions the three Front Benchers have had in relation to this legislation.

As with so many things during the coronavirus pandemic, we find ourselves in an unusual situation that calls for an unusual course of action. It is an extremely sad and regrettable consequence of the pandemic that we expect that national earnings will be negative this year. That statistic tells its own story about the hardship many families are facing at the moment. However, the added complication this brings, as the Secretary of State explained, is that when earnings are negative, there is no legal power to increase state pensions at all, and this also affects the standard minimum guarantee in pension credit and some survivors’ benefits in industrial death benefit.

This is due to the drafting of the Social Security Administration Act 1992, and we need to correct that with the legislation before us today. As the Secretary of State said, there is a precedent for this. The previous Labour Government encountered a similar problem following the global financial crisis and brought forward similar legislation. I therefore believe that the correct and constructive course of action today is to ensure the passage of these powers through the House of Commons. It is clearly in the national interest and in the interests of Britain’s pensioners to address this problem.

The Bill is extremely limited in length and in scope, applying only to this financial year. However, I believe this is an appropriate opportunity to seek some information regarding the Department’s intentions in this area. I was pleased to see in the explanatory notes to the Bill that the Government stated they wanted the Bill passed

“to meet its commitment to the Triple Lock.”

In the comments the Secretary of State has made, she has reiterated that commitment, which I very much welcome. Labour believes that everyone deserves financial security in retirement, and we believe the cornerstone of that is a decent state pension, properly indexed to ensure it keeps its value for future generations of pensioners. That is why we will hold the Government to account to ensure that they keep their manifesto promises.

One of the things I find so frustrating in the national conversation about pensions is the way that rising longevity is sometimes presented as a public policy problem, rather than something to be celebrated. For many of us in the Chamber today, our grandparents worked very hard lives, yet had very little by way of retirement. My grandfather, for instance, worked 51 years down the same coalmine, yet never owned his own home or was able to travel abroad. So we should celebrate, as a country, that in a relatively short space of time our expectations of retirement have been transformed, and we should thank those who came before us who founded the national health service, raised the school leaving age and improved health and safety in the workplace, because that increased longevity. It is their legacy, and it is an achievement, rather than a problem.

We know and appreciate that the pandemic poses additional problems for the way in which we calculate how we should uprate pensions. The volatility of earnings in the crisis means that we are likely to be faced by the opposite problem when we are discussing this in future years—when it comes to the calculation, for instance, for 2022. Distortion in the earnings statistics as wages bounce back from their 2020 fall due to furlough and unemployment could create a significant one-off jump in earnings in 2021. I would like to know from the Secretary of State how her Department is planning for this eventuality when calculating the triple lock.

One suggestion, as outlined in a recent report by Lane Clark & Peacock, is that the disruption in earnings statistics could be smoothed by applying the principles of the triple lock over two years instead of one. Its conclusion is that, if this is applied, the most likely outcome would be that the triple lock could be delivered over two years by subsequent increases of 2.5% in both April 2021 and April 2022. I know many people are anxious to know what the Government are planning to do in this scenario. I wonder if the Government could elaborate on what options are being considered, and if there is an intention to continue the triple lock across future years of this Parliament in line with the manifesto commitment from the Government in December last year.

Finally, I would appreciate it if the Minister, when summing up, confirmed the Government’s intentions on the timeline for bringing forward proposals for the annual uprating of all social security benefits. At a time of such significant national economic insecurity, there is understandable anxiety about this. That is the point at which we will be able to have a full and involved debate on the Floor of the House on what is being proposed.

I would say, on behalf of myself and my hon. Friends, that when the Government themselves admit that a further 4 million jobs could be lost, any suggestion that benefits for unemployed people could be cut in April would be met with the strongest opposition from these Benches. Today, however, I welcome this Bill to ensure that the Government can fulfil their promise to pensioners. We want to make Britain the best country in the world for people to grow up and a place where retirement is a time of leisure, dignity and fulfilment, however that may come. There is no doubt that this legislation is a requirement of a pension system that can deliver that.

Rob Roberts Portrait Rob Roberts (Delyn) (Con)
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1 Oct 2020, 12:01 a.m.

As I recover from my nosebleed from being so high up the call list today, I should say that I do enjoy these sparsely attended debates, which give us all an opportunity to expound a little.

Covid has obviously had a huge impact on all our lives and arguably led to the elderly in our communities having to make some of the biggest sacrifices. During the worst of the pandemic, they rightly shielded to protect themselves and their families. As restrictions have eased, many have provided vital childcare to their children and grandchildren, allowing younger generations to get back to work. As the Government have already provided extensive financial support to many young people in our communities through schemes such as kickstart, it is right that the elderly are not forgotten during this pandemic and that their support mechanisms are reinforced.

I am glad to support the Bill and pleased to hear the Opposition’s keenness to pass it swiftly, as it will provide pensioners with much-needed financial security and stability. It is right that those who have spent much of their life working hard and contributing to the UK economy continue to receive the support they deserve. As other welfare benefits have been strengthened and increased over the past few months, it is only fair that the same principle is applied to state pensions. With nearly a quarter of my constituents in Delyn aged over 65, I know that they will be thankful for the Government’s efforts to ensure with this Bill that pensioners are properly supported, especially after the potentially devastating financial impact of covid.

The Bill rightly allows the Secretary of State to uprate the basic state pension, new state pensions and other benefits for the next tax year. Pensioners should not have to make further sacrifices because of the impacts of covid by seeing their state pension remain at a stagnant level. Instead, we should protect our pensioners and their incomes by ensuring that state pension increases are safeguarded, even if earnings do not increase.

As we have heard from my right hon. Friend the Secretary of State, without this Bill the existing legislation could prevent any state pension increases next year, just when financial support will be needed most, partly to tackle the economic consequences of covid. I commend the foresight of the Department for Work and Pensions in bringing forward the Bill, as many would have simply assumed, as I did, that the triple lock would persist, without realising that the wording in the 1992 Act may preclude that, leaving many pensioners surprised at not receiving their normal annual increase.

The Bill is another good example of the Government following through on their promises to the people of the United Kingdom. The triple lock on pensions, introduced in 2010, is structurally more generous than its predecessor process. It is important to bear in mind that the generosity in the benefit is locked in once supplied, as its effects compound over time. For example, the full basic state pension for an individual this year is almost 9% higher than it would have been had it been CPI indexed in the past decade, and almost 8% higher than if it had been earnings linked. It is therefore a policy that has been of real benefit to pensioners over the past 10 years.

Sadly, however, pensioner poverty is a real and pressing problem facing many of our communities across the whole United Kingdom. The Joseph Rowntree Foundation’s report last year on UK poverty revealed that more than 2 million pensioners are living in poverty or on a low income. That is often due to low benefit take-up. One of the key benefits, mentioned by the hon. Member for Glasgow South West in his intervention, is pension credit, which currently has one of the lowest take-up rates of any income-related benefit, with more than 1 million people missing out. I mentioned that to my right hon. Friend the Leader of the House during last week’s business questions. Statistics provided by Independent Age’s campaign to increase pension credit take-up estimate that more than 1,500 pensioner households in my constituency of Delyn are missing out on a total of £3.2 million.

I pay tribute to the outstanding work of my right hon. Friend the Secretary of State and, indeed, her whole ministerial team, but I urge Ministers to work with charities such as Independent Age to increase the awareness and take-up of much-needed benefits such as pension credit. Although the Bill will help to address the issue of poverty and ensure that pensioners have greater levels of income, more needs to be done to ensure that no pensioner is left behind and that the needs of our senior citizens are fully considered in the Government’s levelling-up agenda. I am sure that my right hon. Friend, along with Treasury Ministers, will in future ensure that there is a serious discussion to be had with regard to intergenerational fairness in the longer term.

I am glad to be a member of the Conservative and Unionist party, which is a party for all and is supporting individuals throughout the United Kingdom regardless of age, whether that be helping young people into new jobs via the kickstart scheme, providing free access to college courses to increase the skills of the workforce, or, through this Bill, bringing peace of mind to pensioners about their financial security.

--- Later in debate ---
Wendy Chamberlain Portrait Wendy Chamberlain (North East Fife) (LD)
- Parliament Live - Hansard - - - Excerpts

The Secretary of State and other Members have outlined that state pensions rise each year under the triple lock mechanism, which was introduced by the coalition Government and ensures an increase of whichever is the highest of earnings growth, price inflation or 2.5%. As there is expected to be no average growth in earnings between May and July 2019 and May and July 2020, due to the pandemic, the Government have brought forward this welcome Bill to allow a rise to take place. It also allows for an increase in pension credits. However, the Bill does not state a specific rise in the pension; it simply allows the Government to raise it.

The Liberal Democrats welcome provisions in the Bill that mean all retirees— especially the very poorest, who are claiming pension credits—will see a rise in their benefits. The Government have said that they intend to ensure that the triple lock on the state pension is maintained, but as I said, there is no mention of a specific level of increase in the Bill. It is slightly worrying that the Bill gives the Government the power to raise the state pension but fails to say by how much. If the Government were to raise the state pension by less than 2.5%, they would not be maintaining the triple lock as they have pledged to do. I hope the Minister can explain why there is no such provision in the Bill and commit the Government to at least a 2.5% increase, in line with the triple lock.

It is fair to say that concerns may be expressed about the Bill in relation to intergenerational fairness. Things have been very difficult for young people, whether as a result of issues with exams, what they are now experiencing at university or for those looking to enter the job market. Pensions expert Ian Browne has stated:

“There is a danger that guaranteeing a 2.5 per cent boost to the state pension is perceived to be intergenerationally unfair, given it will provide a considerable boost to pensioners’ income when many others are taking a cut in their pay, working less hours or have lost their jobs altogether.”

The Liberal Democrats support the triple lock on pensions, and I hope the Government do not intend to abandon it. I acknowledge the concerns but would argue that guaranteeing a strong state pension is becoming increasingly critical. It is clear that many working-age people—especially younger people—are not, and are simply unable to be, saving enough for their retirement, and final salary pension schemes are largely a thing of the past. That means that the state pension will become an increasingly important source of retirement income. We tend to think of pensions as supporting older people, but if we were to abandon the triple lock and give smaller and smaller increases over the next few decades, that would erode the retirement income of those who are only just beginning to enter the workplace. I hope the Minister agrees that maintaining the triple lock is imperative for ensuring that the next generation of retirees enjoy a comfortable income.

Another reason why the triple lock is welcome is the position of many older women. Many women rely more on the state pension than men do for their retirement income, as women have traditionally found it harder to build up a private pension due to taking a career break to raise children or to care for relatives. Raising the state pension is therefore critical for many women who rely on it and pension credit for the bulk of their income.

As the shadow Secretary of State, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), said, although it is not addressed in the Bill, there is a risk that the Government will have to scrap the triple lock next year due to an artificial rise in wages. In normal times, the state pension could be expected to increase by about 3% to 4%, and by a minimum of 2.5%, as per the triple lock rules. Given the disruption caused by the pandemic this year, it is highly unlikely that this increase will be far higher, for reasons outlined by other Members. People have lost their jobs in lockdown and been furloughed. As the lockdown lifts, furlough ends, and as the economy recovers, average wage growth will jump significantly. That will show up in the statistics as a massive wage rise, which would mean that the state pension shoots up too. I hope the Minister will give some indication of the Department’s plan for this largely predictable situation.

In short, this Bill is largely uncontroversial and to be welcomed, but there are clearly issues ahead. Although it is clearly an expedited Bill that the Government are looking to pass quickly for the next year only, it remains the case that many will not benefit from the uprating being agreed today—for example, overseas pensioners whose pensions have previously been frozen. I note that the hon. Member for Glasgow South West (Chris Stephens) intends to raise those issues in Committee. The pandemic has had a devastating impact on the elderly and most vulnerable in our society. Providing a degree of financial security is vital, but our approach to pensions must also be considered in respect of future generations and addressing historical inequalities.

Jonathan Reynolds Portrait Jonathan Reynolds
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1 Oct 2020, midnight

With the leave of the House, I will briefly respond to the debate on behalf of the Opposition. It is not often that we have more speakers than clauses in the legislation before us, but I very much appreciate Members’ contributions. The hon. Member for Delyn (Rob Roberts) was right to highlight the impact of the pandemic on older people. I do not like the intergenerational aspect that is sometimes put on this crisis. It has affected all groups in society in different ways, and in particular, we all feel strongly about the burden in relation to care homes. Indeed, many of us would quite like to see parents and grandparents when the opportunity hopefully arises again.

The hon. Member for Glasgow South West (Chris Stephens) made many good points. I agree with him on the take-up of pension credit and the issues around that. Longer term, my preference would be that the new state pension apparatus that was set up in the last Parliament becomes such a satisfactory minimum that pension credit becomes a residual benefit and we do not have the issues that we do around pensioner poverty.

I also very much recognise and agree with the hon. Gentleman’s comments on legacy benefits. As my right hon. Friend the Member for East Ham (Stephen Timms), the Chair of the Select Committee, said, the issue was always given as the time it would take to do the uprating. We are now well into the pandemic and beyond the point where that could have come online had the Government chosen to act.

The wider comments from my right hon. Friend were very welcome. He spoke about pension credit, and it is important to say that it was a conscious choice of the Government post-1997 to address the huge issue of pensioner poverty that had built up; that is what the majority of resources at that point went into. There should not be an automatic linkage between retirement and poverty, as was the case at the end of the 1990s. As ever, I very much welcome all the work the Select Committee has done into the impact of the current crisis on the social security system, and the wider points that have been made.

The hon. Member for North East Fife (Wendy Chamberlain) strongly supported the triple lock, which I agree with. She made a crucial point on intergenerational fairness, and it was one I was going to make at Committee stage, but I will make it now. Often, in the media commentary around this issue, the intergenerational point is made without reference to the fact that we are not just talking about the level of increase for pensioners today, although someone who has just entered retirement will hopefully, in a very good way, now experience that uprating for several years. We are really talking about what the level of the state pension will be by the time today’s workers retire. That was very much the modelling behind the changes that were made to the single-tier basic state pension. The increase in the retirement age made the overall package of spending on the state pension a reduction overall in order to make it, in the words of the coalition Government at the time, more sustainable. That is an important point to remember when we are talking about cost and the impact on different generations of the changes we are talking about today.

Overall, however, there is rightly a clear consensus in the Chamber for Second Reading to proceed, and I very much welcome the contributions that have been made.

Guy Opperman Portrait The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
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1 Oct 2020, 12:05 a.m.

I would like to begin by thanking everyone who has spoken in the debate, which has been wide ranging and consensual and has covered a number of topics.

Because this is my first appearance back at the Dispatch Box, Madam Deputy Speaker, I just want to raise a personal matter. This is my first appearance since the demise of my twin boys in late June, and I was genuinely struck by the amazing words of commiseration and support that I received across the House from all colleagues. I am deeply grateful, and I know I speak for my wife on that particular point as well.

Moving on, I was struck by the opening point from the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) on the shadow Front Bench, and it is one I think we should all celebrate in this House: rising longevity is a fantastically good thing, and it is a wonderful problem to have. Clearly, there are policy and fiscal issues that follow it, but it is a genuinely good thing that we are addressing.

Even though the House is not well populated today, I am conscious that before me I have a former Pensions Minister from the Department for Work and Pensions—the right hon. Member for East Ham (Stephen Timms), who now chairs the Select Committee. I also think that the hon. Member for Stalybridge and Hyde was a special adviser—

Guy Opperman Portrait Guy Opperman
- Parliament Live - Hansard - - - Excerpts

1 Oct 2020, 12:04 a.m.

He was an adviser—let’s put it that way—to the previous Labour Government, and he is acutely conscious of the issues that we are dealing with today.

Clearly, there is a delightful sense of a cross-party consensus, but I want to address some of the key points that were raised. People clearly wish to make the case on pensioner poverty, and I will address that. One can trade statistics, but material deprivation for pensioners fell from 10% in 2009-10 to 6% in 2018-19. There are 100,000 fewer pensioners in absolute poverty before and after housing costs than in 2009-10. Average pensioner incomes have grown significantly in real terms over the past two decades. Average weekly income in 1994-95 was £165 a week after housing costs; that compared with £320 a week in 2018-19. For 2020-21, we are forecast to spend £126 billion a year on pensioners, including £102 billion on state pension. Colleagues will know that that is a record sum spent by any Government in this House in respect of pensioners.

I will attempt to answer some of the particular points that were fairly made on pension credit. It is again the case, and I should put this on record, that pension credit increased significantly under the coalition and then under this Government, from £132.60 to £173.75 for a single person and from £202.40 to £265.20 for a couple. The take-up of pension credit is something that all would like to see increased. I echo my hon. Friend the Member for Delyn (Rob Roberts) on that; this is the first chance I have had to respond to him in this House, and it is delightful that he is here. He makes the fair point that it is in all our interests that pension credit be increased.

One of my colleagues asked what had been the impact of the BBC decision. There is no totally granular data on that, but I can assist to a degree: the claims for pension credit, which is what we want to see, were dramatically increased as of July 2020 compared with January 2020. There is definitely a massive increase in claims and clearly a filtering through of the acceptance of said claims. I refer hon. Members to the parliamentary question asked by the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron), PQ 82024. I will ensure that I put a note of the issue on the record in the Library to answer that particular point and expand upon it.

In respect of pension credit, the Secretary of State was right to identify that we had a significant nationwide campaign in the spring of this year, and that the combination of that and the impact of the BBC decision clearly had an impact on greater take-up. The specific causes of the increase in take-up are hard to assess, but there is no doubt that the take-up has been larger.

In respect of the point raised by various hon. Members about working-age benefits, it is right to say that the Government are proud of the fact that they have provided support during the pandemic for those below state pension age, whether through the plan for jobs, with Kickstart now open for bids across Great Britain and doing very well, increasing the standard allowance in universal credit and working tax credit by £1,040 this year, benefiting 4 million families, investing approximately £9 billion of extra support to protect people’s incomes through the pandemic, removing the seven-day waiting requirement for employment and support allowance claims linked to covid-19, or relaxing the universal credit minimum income floor for self-employed people.

As the Secretary of State said to the right hon. Member for East Ham and the Work and Pensions Committee yesterday, that is a matter that is clearly in her mind and that is to be considered by the Secretary of State. I cannot really add or expand upon the answer that she gave, and it would not be appropriate to comment further, because clearly she has to conduct a review and then return to this House to respond to that review.

Having dealt with the specifics, all colleagues have identified that this is an important piece of legislation, without which the state pension would be frozen for a year from April 2021. It makes technical changes to ensure that state pensions can be uprated, providing peace of mind to pensioners regarding their financial health. It is a one-year Bill, so it is not the case that we are considering the matter beyond the first year. Clearly, this arises out of the covid emergency and its impact on earnings, and it would not be appropriate to address the future at this stage. I believe this Bill is a further demonstration of this Government’s action in support of pensioners, and provides them with financial peace of mind in the face of the coronavirus pandemic. I commend it to the House.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Committee of the whole House (Order, this day).

SOCIAL SECURITY (UP-RATING OF BENEFITS) BILL (MONEY)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Social Security (Up-rating of Benefits) Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(David T.C. Davies.)

Question agreed to.

Social Security (Up-rating of Benefits) Bill

(Committee: 1st sitting)
Jonathan Reynolds Excerpts
Thursday 1st October 2020

(1 year ago)

Commons Chamber

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Department for Work and Pensions
Chris Stephens Portrait Chris Stephens
- Hansard - - - Excerpts

1 Oct 2020, 12:09 a.m.

It is good to see that social distancing is being applied at all times. It was remiss of me not to welcome the Pensions Minister back to his place. I did send him a private message, and thoughts of him and his wife and family are very much with us all in this House. I do welcome him back.

These are five non-controversial amendments, which I hope— [Interruption.] We seem to have a laugh already from the Minister. I do not know why. He has obviously not read these non-controversial amendments. We have tabled some probing amendments and look forward to his response.

The first amendment is a theme that was picked up on Second Reading by the hon. Member for North East Fife (Wendy Chamberlain), which is to ensure that the triple lock is applied in legislation. The Government would have to give an explicit commitment to maintain the triple lock for the year ahead. The amendment seems to speak very much for itself.

Amendment 2 asks for an assessment on poverty, which again was picked up on Second Reading. It is certainly our view that the Government are overseeing some brutal benefit cuts, which have exacerbated poverty, and we require a proper impact assessment of the proposed uprating and the impact that has on poverty levels in each of the devolved nations.

Previous UK Budgets have introduced some fairly punitive cuts to social security—certainly the most punitive in recent memory—and we are starting to see an active reversal of reducing and fighting poverty. The Social Metrics Commission report, which was referred to at an earlier stage, notes that prior to the outbreak 14.4 million people in the UK were already living in poverty, including 33% of children, 22% of all working-age adults and 11% of pension-age adults. The largest employment impacts of covid have been felt by those in the deepest poverty, with many at risk of falling deeper into poverty as a result of job losses, reduced hours or reduced pay. We have tabled amendment 2 to provide for that impact assessment.

Amendments 3 and 4 deal with the issue of frozen pensions. UK pensioners deserve a full uprated state pension, wherever they choose to live. Due to the historical arbitrary bilateral agreements between the UK and other countries around the world, some UK pensioners who live overseas do not have their state pension payments uprated every year. That means that their pension is frozen at the level at which they first received it for the rest of their lives abroad. As of August 2019, that affected over 5,110 UK pensioners, who we believe are being adversely affected by the UK Government’s frozen pension policy. Pensioners who have paid the required national insurance contributions during their working lives in expectation of a decent basic pension and retirement find themselves on incomes that fall in real terms year on year. Pensioners will now face ending their days in poverty because they choose to live in the wrong country, in most cases without any knowledge of the implications of their choice for their pension.

In our view the state pension is a right, not a privilege. UK pensioners who have paid their fair share of national insurance contributions should not have to suffer simply because successive Governments have failed to establish bilateral agreements with certain countries. Therefore, we are asking that amendments 3 and 4 be agreed. I also refer hon. Members to the frozen pensions campaign, of which many hon. Members are members.

Amendment 5 relates to 1950s-born women, an issue that I am sure the Pensions Minister would be disappointed if I did not mention. As a previous Speaker of this House advised in 2015, persistence is not a vice. The amendment would require the Government to publish an assessment of the impact of uprating on those whose state pension age was changed by the Pensions Acts 1995 and 2011, including in particular 1950s-born women, or WASPI—Women Against State Pension Inequality Campaign—women, as they are known.

The numbers of ’50s-born women and men claiming working-age benefits has rocketed, and they should have been receiving their state pension. This is a double whammy, with those with occupational defined-contribution pensions to fill the gap being squeezed even further. Those claiming benefits find themselves having lost Government support in many cases, excluded either due to gaps in national insurance contributions, because of low-paid, precarious work, or because of other parts of household income. We are very aware of the history of 1950s-born women and the inequality they have faced throughout many parts of their lives. They now find themselves discriminated against on the basis of so-called equality, while those losing their jobs or seeking work are being further disadvantaged by an unequal playing field and a shrinking job market.

I look forward to hearing the Minister’s response to our amendments.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
- Hansard - -

1 Oct 2020, 2:59 p.m.

I thank the hon. Member for Glasgow South West (Chris Stephens) for tabling these amendments, which I would describe as probing amendments to have a wider conversation—perhaps “uncontroversial” is too dramatic a description of what we are discussing today.

On amendment 1, to be fair, the Government have given a clear indication in the opening remarks to this debate of their direction of travel and their commitment to the triple lock this year. It is perhaps worth putting on record the figures from the Library, because I see so much commentary on social media and in the press about affordability. As the Minister said earlier, rounded to the nearest billion, this year this country will spend £102 billion on the state pension—not benefits for pensioners, but the state pension. If we had not operated triple lock from 2011, but had just a double lock of prices or earnings, that figure would be around £100 billion. No one would describe a couple of billion pounds as an insignificant amount of money, but in the context of the UK pensions bill it is 1.2% less. If we had no lock and had simply increased the state pension by earnings since 2011, the bill would be £96 billion, which is £5.5 billion less. However, the crucial point is that that is in the context of the worst earnings growth over the last decade that this country has really ever seen—certainly the worst in modern times. Crucially, that would have meant pensioners becoming worse off, because pensions would not have kept up with prices—something that I think no one here would have been happy to see.

I think we all have to acknowledge that the UK state pension is relatively low by international standards. I am not taking a cheap political pop, and it is appropriate to say that the system is obviously much better when we consider it alongside the NHS, because in some pension systems people have to cover their healthcare costs, and we also have top-ups such as pension credit. The overall system is also clearly much better when we factor in private pensions. However, our basic state pension is relatively low compared with other countries. For instance, a typical woman retiring today will still look to the state pension for over half her retirement income. That is a significant point to bear in mind.

As we have heard, when the coalition Government introduced the pensions reforms that came into effect in 2016, the triple lock was a fundamental part of the calculations for the system. The deal was that people would have to retire later and that some people would not be able to create a state pension that was as high as they could previously have done, but that everyone would get a proper index-linked pension at 67, 68 or 69.

Oral Answers to Questions

Jonathan Reynolds Excerpts
Monday 14th September 2020

(1 year, 1 month ago)

Commons Chamber

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Department for Work and Pensions
Thérèse Coffey Portrait Dr Coffey
- Parliament Live - Hansard - - - Excerpts

My hon. Friend is right to point out that Scotland was already starting to struggle with unemployment rates compared with other parts of the United Kingdom, but I want to assure him that we will not only work with kickstart, but ensure that we have a Scotland-specific job entry: targeted support—JETS—programme so that we can tackle people who perhaps need either support to pivot into different sectors, or intense support which recognises that they may have been unemployed for some time. We will ensure that the people of Scotland get the full support of the UK Government.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
- Parliament Live - Hansard - -

It is a tragic consequence of the pandemic that some families of NHS key workers have lost their loved ones to covid-19 after they contracted the virus while serving on the frontline. It is absolutely right that they receive compensation for that. May I ask the Secretary of State to justify the news that low-paid relatives who receive the compensation payment are to be stripped of their benefits? That is not the case with comparable payments such as the Grenfell and Windrush compensation schemes, so why are NHS families being treated in that way?

Thérèse Coffey Portrait Dr Coffey
- Parliament Live - Hansard - - - Excerpts

The hon. Gentleman will know that when people have a substantial amount of money—and I recognise the route he indicated on how they have received that—it usually takes them over the £16,000 threshold for support through the welfare system. He specifically referred to some other programmes, where it is absolutely acknowledged that there has been a complete failure within Government in that regard. I suggest to the hon. Gentleman that that is not the case regarding the NHS, but I am sure, as the NHS is a separate employer from the Government, it will continue to work with its employees and the relatives of people who have sadly died.

Jonathan Reynolds Portrait Jonathan Reynolds
- Parliament Live - Hansard - -

I find that answer lacking in reason and compassion. There was news this morning that the country’s largest food bank network has warned that UK destitution rates are set to double by Christmas. We know that the Government believe they deserve praise for the fact that universal credit has not collapsed like the test and trace system, but the real test of a social security system is whether it gives people the support they need. The food bank statistics prove that this is just not happening at the moment. Clearly that will get worse as the furlough scheme ends. We have set out our further suggestions on how to prevent the looming disaster. What are the Government’s plans to prevent it?

Thérèse Coffey Portrait Dr Coffey
- Parliament Live - Hansard - - - Excerpts

We have set out the unprecedented steps we took to ensure that vulnerable people would not go hungry as a result of the pandemic, focusing especially on children. While schools were closed to most children, free school meal vouchers were still in operation if schools could not provide a meal. Further support was given through the summer food fund, money was provided to food charities to help get food to people who were struggling, and 4.5 million food boxes were given to vulnerable people who were shielding. Together with the extra £9.3 billion in welfare support that has been given to households across the country, we believe that this is a strong way to have supported people in these difficult times.

Kick-start Scheme

Jonathan Reynolds Excerpts
Thursday 3rd September 2020

(1 year, 1 month ago)

Commons Chamber

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Department for Work and Pensions
Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op) (Urgent Question)
- Hansard - -

To ask the Secretary of State for Work and Pensions if she will make a statement on the implementation of the kick-start scheme.

Thérèse Coffey Portrait The Secretary of State for Work and Pensions (Dr Thérèse Coffey)
- Hansard - - - Excerpts

Yesterday, the Government launched our new kick-start scheme, as set out in the written ministerial statement and the letter sent to all Members of both Houses. This £2 billion programme will fund the direct creation of thousands of additional jobs for young people at risk of long-term unemployment, to improve their chances of progressing to find long-term, rewarding and sustainable work.

As we build back our economy and return fully to work, a lack of work experience can be a barrier to stepping on to the jobs ladder, which is why, through kick-start, employers will be supported to access a massive recruitment pool of young people who want to work and are bursting with potential. Employers from all industries and across the private, public and voluntary sectors are eligible if they can meet our simple criteria on the provision of roles. Employers will need to show that these are additional jobs which provide the experience and support a young person needs to improve their chances of permanent employment. These need to be new roles that do not simply replace staff recently made redundant.

Funding available for each job covers the relevant national minimum wage rate for 25 hours a week, the associated employer national insurance contributions, and employer minimum automatic enrolment contributions, as well as £1,500 for wraparound support. There is no limit to the number of jobs that can be created, and organisations of all sizes are encouraged to participate.

If a business wants to offer only one or two kick-start jobs, as set out in the online guidance, employers can contact their local employer support managers with an expression of interest, and we will work to link them to an appropriate intermediary. These intermediaries could include local enterprise partnerships, local authorities or business groups, ensuring the necessary support is in place to deliver placements effectively. We will continue to be proactive on involving employers and intermediaries following the scheme’s launch yesterday.

We have already undertaken substantial engagement on our labour market strategy. I want to pay tribute to our civil servants in DWP and the Treasury who have brought this scheme to fruition, and I particularly want to thank and recognise my hon. Friend the Member for Mid Sussex (Mims Davies), the Minister for employment, who has worked tirelessly with her usual passion for helping young people get on in life and who I know will continue to do so.

Kick-start is a key strand of our plan for jobs focused on young people and will be a boost for the British economy. I want to encourage businesses and organisations all to take advantage of the most ambitious youth employment programme in our history and help kick-start to become a flying start for our young people.

Jonathan Reynolds Portrait Jonathan Reynolds
- Hansard - -

3 Sep 2020, 12:02 a.m.

Since the crisis began, we have been urging the Government to introduce a scheme based on the last Labour Government’s hugely successful future jobs fund to get as many young people into work as possible. We therefore welcome the kick-start scheme in principle, but we want assurances that it will be delivered in a way that maximises its impact. On that note, it is disappointing that it has taken until September for the scheme to be launched, and it is disappointing to have to summon Ministers via an urgent question just to ask basic questions on how the scheme will work.

In July of this year, there were already over 1 million young people not in full-time education or full-time employment. This is an urgent problem and we believe that the three key tests of this scheme are: whether the jobs it provides are real, quality jobs; whether it is available to support smaller businesses as well as larger ones; and whether it provides opportunities for long-term employment beyond the initial subsidised placement.

I ask the Secretary of State, first, how the Government will ensure that the jobs provided under this scheme are genuinely new, additional jobs. That is essential for the scheme to be a success, but how will it be evidenced? Secondly, given the existing scale of need, how will the Government ensure that the jobs that are created go to those who need them most? Even if, say, 200,000 new jobs were created, we could reasonably expect over 1 million young people to be eligible for those jobs. We need those jobs to go where they will have the biggest impact.

Thirdly, what feedback have the Government already received on the arrangements the Secretary of State has outlined for small businesses to participate in the scheme, given that the minimum number of jobs that can be created from a bid is 30? I hope she understands the considerable strength of feeling that already exists from small businesses in relation to that point. Fourthly, the jobs will be for a minimum of only 25 hours a week, but the Secretary of State has already brought back conditionality and sanctions, expecting people to look for work for 35 hours a week. If the Government’s expectation is that everyone should be working 35 hours a week, why are the jobs that the Government themselves are creating not for 35 hours a week?

Finally, while welcoming the scheme, I was alarmed by the Prime Minister’s presentation yesterday of kick-start as an alternative to providing continued targeted furlough support. The furlough scheme was there to ensure that people had jobs to return to when the alternative for many people would have been redundancy if their employers did not have the revenue to meet their payroll. Those circumstances still exist in some businesses—not in all, but in some—and that is why countries such as Germany, France and Ireland are continuing their furlough schemes until 2021. Needed as this scheme is, it cannot be a replacement in those sectors that do not have the ability to train and recruit new staff yet, and I strongly urge the Secretary of State to acknowledge that point too.

Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

3 Sep 2020, 12:09 a.m.

I thank the hon. Gentleman for his sort of support for the kick-start scheme. I really think that across the House we should see this as an opportunity for us all to help young people in our constituencies. On the principles of the future jobs fund, we have actually taken some learnings from that, on where it worked and where it did not. He referred to the fact that it had taken so long to get here, but we had the pandemic in March and this approach was announced in July. We have worked tirelessly on it and, as I say, I pay tribute to my civil servants in that regard. This is actually quite a contrast to the financial crisis of the late noughties, because I think I am right in saying that that placement scheme did not get going until October 2009. It was a long time before that happened, so we have worked at pace.

There are other elements from last time that we have learned from. Hardly any private sector businesses were involved, and the criteria were so stringent in different ways that, frankly, that scheme was very limited. I know that it is not about setting targets for these things, but the consequence of that was that the future jobs fund achieved just over 100,000 placements, although the ambition had been higher. So we have simplified the criteria.

The hon. Gentleman points to the threshold for small employers to get involved, but it is exactly the same threshold that applied to the future jobs fund, where businesses could only get involved by going through their local councils. We are opening this up in a different way, and I think we will start to see local enterprise partnerships and chambers of commerce getting involved as intermediary bodies, as well as councils. There is also a lot of support for this from many of the mayoral combined authorities.

The hon. Gentleman mentioned the number of hours per week. The reason for this is that this is not just about rebates like the coronavirus furlough scheme. Young people will be expected, with their employers, to do more to prepare themselves for the world of work, and that may include work search in additional time. So that is another reason why intermediaries are going to be a key element in helping some of our small businesses to provide these placements, as well as the wraparound support that will be required. On the other elements to which he referred, I know that he has tabled several written questions and he will be answered.

Oral Answers to Questions

Jonathan Reynolds Excerpts
Monday 29th June 2020

(1 year, 3 months ago)

Commons Chamber

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Department for Work and Pensions
Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

My hon. Friend is spot on. The Department has acted at incredible pace to bring in measures as quickly as possible to help those most financially disadvantaged as a result of c-19. Through the digital universal credit system, we have enabled those changes while meeting that unprecedented demand. The legacy system, which was heavily paper-based, would simply have been unable to cope.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
- Hansard - -

I also pay tribute to all the frontline staff at the DWP for the way they have processed so many claims for support since the beginning of the crisis. It is important to recognise, however, that the universal credit they have been processing so far in this crisis is a significantly different product from usual. In particular, all sanctions and conditionality have been temporarily suspended. That suspension is due to end tomorrow. At a time when unemployment has risen sharply, the number of vacancies has dropped, people are shielding and schools have not yet gone back, threatening people with reducing their financial support if they do not look for jobs is surely untenable, so will the Secretary of State announce an immediate extension?

Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

It is important that as the jobcentres fully reopen this week we reinstate the need for a claimant commitment. It is an essential part of the contract to help people start to reconsider what vacancies there are, but I know that I can trust the work coaches and jobcentre managers, who are empowered to act proactively with people. There will be some people right now who have not had to look for a job for the last 20 to 30 years, and they will need careful support, tailored to make sure they can start to look for the jobs that are available and which I hope will soon become available.

--- Later in debate ---
Will Quince Portrait Will Quince
- Hansard - - - Excerpts

Over and above the £6.5 billion we have pumped into our welfare system, there is the more than £16 million for food redistribution charities, the £3.5 million for the food charities fund, which offers grants of up to £100,000 to support those charities, the £63 million local welfare assistance fund through local authorities that the Prime Minister announced two weeks ago and, of course, the free school meals voucher scheme. However, the hon. Gentleman raises a good point. We want to better understand food insecurity in this country. That is why we commissioned extra questions for the family resources survey. I look forward to looking at the results of that in great detail.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
- Hansard - -

29 Jun 2020, 12:05 a.m.

I congratulate my hon. Friend the Member for Stretford and Urmston (Kate Green) on her promotion to the shadow Cabinet.

The Government say that the aim of the benefit cap is to make people work more hours or move to cheaper accommodation. Neither of those options has been possible during the covid crisis, so what possible justification have the Government got for persisting with that policy, which prevents families from receiving what the Department for Work and Pensions itself believes to be necessary?

Thérèse Coffey Portrait The Secretary of State for Work and Pensions (Dr Thérèse Coffey)
- Hansard - - - Excerpts

The benefit cap does play an important part, but the hon. Gentleman may not aware of the exemptions to it. New and existing claimants can benefit from a nine-month grace period when their benefit will not be capped if they have a sustained work history. Since 2013, nearly 220,000 households which were subject to the benefit cap are now no longer capped.

--- Later in debate ---
Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

29 Jun 2020, 3:16 p.m.

As I outlined earlier, we want to ensure that we have that ongoing local support between jobcentres and businesses. I know that in Beaconsfield the local jobcentre staff are working with the local enterprise partnership to explore how they can collaboratively support people back into work. I am sure that the company to which my hon. Friend refers will also be looking at the Employer Help website, which provides a range of guidance and advice, including on identifying transferable skills, promoting opportunities to work in different sectors of the economy, and supporting staff.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
- Hansard - -

29 Jun 2020, 3:17 p.m.

Last week, the Pensions Regulator introduced an interim regime to cover so-called superfunds, which are funds that aim to bring together several corporate pension schemes to be run collectively. This is a sensitive area, because breaking the link between an employer and their pension scheme means that the employer cannot in future be called upon to fill any deficits. Given that sensitivity, will the Secretary of State explain, first, why the Government have not legislated for this area in the current Pension Schemes Bill; secondly, why the regulatory requirements for these superfunds are so much lower than they are for a buy-out from an insurance company; and, thirdly, whether the Governor of the Bank of England is right to say that this lack of action by the Government is a potential risk to the UK’s financial stability?

Thérèse Coffey Portrait Dr Coffey
- Hansard - - - Excerpts

The independent Pensions Regulator published guidance on an interim regime for pensions superfunds. I want to stress that this is an interim regime, and that the Government will continue to develop the permanent regime before legislating with full and proper parliamentary scrutiny in the usual way. Market participants are well aware that they should not assume that the interim regime will automatically transfer into the permanent regime.

Universal Credit: Court of Appeal Judgment

Jonathan Reynolds Excerpts
Thursday 25th June 2020

(1 year, 4 months ago)

Commons Chamber

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Department for Work and Pensions
Will Quince Portrait Will Quince
- Hansard - - - Excerpts

25 Jun 2020, 12:02 a.m.

I thank my right hon. Friend for that question. We received the judgment only on Monday, and it is a complex issue, as he rightly recognised and as I believe was recognised by the Court. The fix will not be a simple one, and we are facing unprecedented pressures on the Department at the moment. I will of course continue to keep the House and the Chair of the Select Committee updated as that work progresses.

My right hon. Friend is right absolutely about the universal credit system; it has not been easy over the course of the past six or so weeks. I must say that our people across the DWP have worked incredibly hard, but the system has also worked exactly as it should have done, with around 90% of claimants consistently paid in full and on time—more than 3.2 million people since 16 March.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
- Hansard - -

25 Jun 2020, 12:03 a.m.

I add my thanks to my right hon. Friend the Member for East Ham (Stephen Timms) for securing this important question.

This Government are “irrational” and they are “unlawful”. Those are not my words, but those of Lady Justice Rose, who delivered the verdict in this week’s Court of Appeal decision against the Department of Work and Pensions. Reading that decision, there is really only one question to ask: what on earth were Ministers doing fighting this case for so many years, only to be told by the Court of Appeal something that seems to most people a matter of basic common sense?

If universal credit cannot cope with the date when people are paid and the impact of bank holidays and weekends on that payment date, the solution should always have been to change how the system works, not to persist with something that leaves thousands of people with wildly fluctuating payments from month to month. I have a constituent affected, Mr Speaker, and the first time I saw the problem in my constituency surgery in Stalybridge, I could not believe that the regulations would work the way they do.

This issue goes to the heart of the problems with universal credit. Time and time again we are told by Ministers that universal credit is more flexible, that it is more agile and that it can be adapted to meet new requirements and respond to problems that are identified. Yet when it comes to making seemingly simple changes such as these, claimants are faced with a rigid, unbending, uncaring response.

The Government always seem unwilling to listen to the experiences of the people who actually use the system. I ask the Minister, first, how much public money has the Department has wasted fighting the case? Secondly, I welcome the Minister’s statement that the Government now accept this decision, so how, and how quickly, will the universal credit regulations be changed to accommodate the ruling? Thirdly, do the Government accept that four single mums should not have to go to the Court of Appeal to be listened to by their own Government? Will the Department acknowledge that there is an overwhelming need to recognise the lived experiences of people who are actually in receipt of universal credit and review a whole range of policies, including the five-week wait, the frequency of payments and how the initial assessment period works, so that we can then get a social security system that is fair and effective and works the way that it should?

Will Quince Portrait Will Quince
- Hansard - - - Excerpts

25 Jun 2020, midnight

I thank the hon. Gentleman for his question. Each and every judicial review has its own grounds for being brought and is looked at on a case-by-case basis, and with each JR, the Secretary of State, Ministers and officials look closely at the grounds and respond accordingly. I gently point out to him that the Court of Appeal accepted our interpretation of the UC regulations. However, the point that some people may face budgeting issues is why we are acting.

I am disappointed, if not surprised, that the hon. Gentleman has taken the opportunity to launch yet another attack—a baseless, unwarranted and unfounded attack—on universal credit. We all know, and he knows, the truth: the system has worked incredibly well and Labour’s broken legacy benefits system simply would not have coped with the unprecedented demand that we have seen during covid-19. Universal credit has passed that test with flying colours. There have been over 3 million claims, and I am so proud of our DWP employees and the universal credit system. It is time that Labour got behind this Government and universal credit and worked with us to make the system even better.

Oral Answers to Questions

Jonathan Reynolds Excerpts
Monday 11th May 2020

(1 year, 5 months ago)

Commons Chamber

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Department for Work and Pensions
Will Quince Portrait Will Quince [V]
- Hansard - - - Excerpts

I thank my hon. Friend for his question and for rightly praising DWP staff for the work they are doing. That issue has been raised by a number of colleagues, and I am looking at data and exploring options. We have been working closely with Her Majesty’s Revenue and Customs to encourage people to check their eligibility before making a claim and ensure that tax credit claimants understand that when they have claimed UC, their tax credits will end, and they cannot return to legacy benefits.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op) [V]
- Hansard - -

We believe that people need more support during this crisis, but we acknowledge and welcome the changes that the Government have made. Those include increasing the core amount of universal credit by £1,000 a year, but that rise is only for 12 months. If the Government believe that this level of support is necessary during lockdown, why do they believe that people will need less money when lockdown ends and the normal costs of living will apply? Surely it is inconceivable that anyone still unemployed by March next year could see their benefits being cut.

Will Quince Portrait Will Quince [V]
- Hansard - - - Excerpts

I thank the hon. Gentleman for his question and welcome him to his new position. As he knows, we have announced measures that can be quickly and effectively put in place that will benefit as many disadvantaged families as possible who are currently facing financial disruption. We at the DWP have been under huge increased demand, and we have prioritised the safety and stability of our benefits system overall. All things of this nature will be kept under review, but at the moment, as he rightly points out, the funding has been secured for a 12-month period from Her Majesty’s Treasury.

Covid-19: DWP Update

Jonathan Reynolds Excerpts
Monday 4th May 2020

(1 year, 5 months ago)

Commons Chamber

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Department for Work and Pensions
Thérèse Coffey Portrait The Secretary of State for Work and Pensions (Dr Thérèse Coffey)
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4 May 2020, 12:02 a.m.

With permission, Mr Speaker, I will make a statement updating the House on the work of my Department. First, I want to pay tribute to the civil servants in my Department as well as our contractors and partners, who have been working tirelessly to provide help and support to those in need. They are the hidden heroes for many people in this country, and they should take great pride in their hard work in and dedication to supporting people through these difficult times.

From16 March to the end of April, we received over 1.8 million claims for universal credit, over 250,000 claims for jobseeker’s allowance, and over 20,000 claims for employment and support allowance. Overall, that is six times the volume that we would typically experience, and in one week we had a tenfold increase. The rate for UC claims appears to have stabilised at about 20,000 to 25,000 a day, which is double that of a standard week pre-covid-19. I am pleased that my Department is standing up to the challenge. We have redeployed a significant number of DWP staff—about 8,000 so far—and staff from other Government Departments, about 500 so far, to process these claims. Our payment timeliness for universal credit is running at a record high.

We have also issued almost 700,000 advances to claimants who felt that they could not wait for their first routine payment, and the vast majority of those claimants received money within 72 hours. Where possible, and mindful of risk, we have streamlined our processes. We will consider learnings carefully from this time in the response phase, and whether any of them can be made permanent.

We have also sought to make it possible for people to work from home, and have deployed 10,000 computers. We are now at a level of deploying 750 new devices a day to enable working from home, and have added to the IT capacity for remote users. However, if staff need to continue to work at the office, we are applying social distancing. Making sure that our claimants and civil servants are safe is a key priority. From 17 March we suspended all face-to-face assessments for health and disability benefits. We automatically extended awards for existing claimants that were due to be reassessed by three months, and will only undertake reviews or reassessments when claimants notify us of changes that could lead to a higher payment. Any claim made under the special rules for terminal illness continues to be fast-tracked—it takes an average of six days to process those claims.

Since 24 March, job centres have not been open for regular appointments, but we continue to offer face-to-face appointments in exceptional circumstances if claimants would not otherwise be able to receive support. Claimants can continue to receive support over the phone or through their online journals. All local jobcentres have been turned into virtual processing teams, prioritising advances and the registration and payment of new claims. We have also paired jobcentres across the country to support one another with processing, using fully our network capacity.

That focus on the processing of claims means that we have stopped checking the claimant commitment on looking for and being available for work for three months. We do, however, want claimants to continue to look for work wherever they are able to do so. Ministers are working hard to make sure that existing vacancies can be accessed by people who have become unemployed. We will continue to support those people while they are waiting for the opportunity for work. We have created a new website to guide people—jobhelp.dwp.gov.uk—and we are advertising 58,200 vacancies.

Although our IT systems have worked—thanks to extensive work by the universal credit team, including our contractors—I know that some claimants experienced significant delays in the verification of their identity. Identity checks are crucial to reduce fraud risk, so we worked closely with the Cabinet Office to increase substantially the capacity of the online Verify system, and average wait times are now below five minutes.

Call volumes have been extremely high, with more than 2.2 million calls in one day at the peak. Having recognised the delays that people were experiencing—or, indeed, that they were not able to get through at all—we turned it around with our “Don’t call us—we’ll call you” campaign. A bolstered frontline team now proactively calls claimants when we need to check any information provided as part of a claim. This has been successful in freeing up capacity and reducing the time that customers need to spend on the phone.

In respect of other departmental operations, although we have redeployed staff we have kept critical work ongoing in child maintenance and bereavement. We are monitoring our performance and will return staff to these areas if the response rate is unacceptable. We have cancelled the pension levy increase, supported defined contributions through the job retention scheme, and worked with regulators to assist defined benefit pensions and to combat scams.

It is worth reminding the House of our financial injection of more than £6.5 billion into the welfare system so that it can act as a safety net for the poorest in society. We have focused on changes that could be made quickly and would have significant positive impact. We have increased the standard rate of universal credit and working tax credit for the next 12 months by around £1,000 per year; we increased the local housing allowance rates for universal credit and housing benefit claimants, so they now cover the lowest 30% of local rents; and we increased the national maximum caps, so claimants in inner and central London should also see an increase in their housing support payments. I have been made aware that some councils have not made the adjustment in housing benefit, and my Department is communicating with them all this week. Furthermore, across England we had already increased the discretionary housing payment by an extra £40 million for this financial year.

The 1.7% benefit uplift was implemented in April, ending the benefits freeze, and the state pension rose by 3.9%, as per the triple lock, reflecting last year’s substantial rise in average earnings. We have introduced regulations to ease access to benefits: we legislated to allow access to employment and support allowance from day one of a claim; we relaxed the minimum income floor so that the self-employed can access universal credit more readily; we have made it easier to access ESA by launching an ESA portal for online applications; and we legislated to ensure that statutory sick pay was available for employees from day one of sickness or self-isolation due to covid-19. I remind the House that statutory sick pay is the legal minimum.

We will continue to look at issues that arise—for example, we are ensuring that maternity pay is based on standard pay, not furlough pay levels—and see what we can do quickly and straightforwardly to fix either unintended consequences or unforeseen issues, but it is not my intention to change the fundamental principles or application of universal credit.

We have undertaken a significant project to support the Ministry of Housing, Communities and Local Government and the national shielding service by establishing the outbound contact centre. Furthermore, we use the contact centre to contact proactively our most vulnerable customers who receive their benefits or pensions solely through Post Office card accounts. I thank the Post Office for helping us to support this group of customers. We have been able to provide contact-free cash payments by Royal Mail special delivery, and we were able to signpost people to extra support from their local council.

I can inform to the House today that the DWP will stop any new benefit and pension claimants from using the Post Office card account from 11 May, as we prepare for the end of the contract. The uptake of accounts in the past year has been exceptionally low, but, in any event, given that we believe the vast majority of people using POCA already have a bank account, the cost of the contract is poor value for taxpayers. Existing customers who currently receive payment through a Post Office card account will see no change and will continue to receive payment into their accounts for the remainder of the contract period. We can use the HMG payment exception service for people who cannot access any bank account.

I thank the Health and Safety Executive—an arm’s length body for Great Britain that is sponsored by my Department—for its work on covid-19. It has been doing crucial work with the Department for Business, Energy and Industrial Strategy and Public Health England to provide guidelines for employers to adhere to once restrictions can begin to be eased. The HSE is working hard, along with local authorities, to enable work to continue safely in the sectors for which it is responsible. It has developed practical guidance on the enforcement of the law where workers are being exposed to unnecessary risk.

In conclusion, my Department is standing up to the challenge of unprecedented demand for its services, and we are getting support to those who need it. We will continue to work across Government to help the nation get through this health emergency. I commend this statement to the House.

Jonathan Reynolds Portrait Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op) [V]
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4 May 2020, 3:44 p.m.

I thank the Secretary of State for advance notice of her statement. May I add my thanks to the dedicated frontline staff of the Department for Work and Pensions for everything they have done and are doing during this crisis to ensure that we can process the unprecedented volume of claims that have been made?

I welcome the measures the Secretary of State has announced so far. The social security system we had going into this crisis was a safety net with too many holes in it, and it is good that the Government have recognised that. My questions for the Secretary of State are about how we can widen that net so that everyone who needs support gets it, and about the steps that will need to be taken as we move from response to recovery.

First, the Government have significantly increased universal credit, but people on legacy benefits such as jobseeker’s allowance and employment and support allowance have not seen a corresponding increase in their benefit. More than 100 charities have pointed out that that discriminates against disabled people in particular. When will those benefits be uprated?

Secondly, there are now 100,000 families who will not be able to receive this increase because they are still limited by the benefit cap. The Government say the benefit cap exists to force people to work more hours or move to cheaper housing, both of which are clearly impossible during the crisis. Almost every organisation, from the Institute for Fiscal Studies to the Resolution Foundation and the Child Poverty Action Group, believes it should be temporarily suspended. Does the Secretary of State agree?

Thirdly, anyone who has been saving for a housing deposit, for a rainy day or for a substantial item could find themselves ineligible for universal credit because of those savings. Those people paid into the system when they were in work; should it not be there for them now? I do not believe we should punish those savers, and I believe those saving limits should also be suspended.

Fourthly, the Government say the two-child limit exists so people supported by social security have to make the same family choices as those who are not, but this crisis shows how absurd that claim is. People could not have been expected to make family choices three years ago based on the likelihood of a global pandemic shutting down our economy. The Government have suspended sanctions during the crisis, but the two-child limit is effectively an 18-year sanction on the third and fourth child in a family. Surely it should go too.

Fifthly and finally, those people who are eligible for support from universal credit will still have to wait five weeks for their money or take an advance that will be deducted from future payments. Many people do not appreciate that if they claim universal credit before they receive their final salary payment, their income means they have no entitlement for their first month and could have to wait as long as nine weeks for any payment. Since it was introduced, the five-week wait has been the single biggest driver of housing arrears, short-term debt and food bank use in the country. It should not exist at all, but in this crisis it is particularly egregious, and it simply must go.

May I also raise a very specific issue with the Secretary of State? It has come to light that the universal credit regulations treat maternity allowance, which is received mainly by low-paid women, as unearned income but statutory maternity pay as earnings, which are disregarded by the work allowance. That could result in a low-paid pregnant woman being as much as £4,000 a year worse off. Why is that? Will it change?

I turn to preparations for the recovery. As the Cabinet Minister responsible for the Health and Safety Executive, what conversations has the Secretary of State had with it about the process by which workplaces will be made safe when people are asked to return to work? When the lockdown began, most MPs were inundated with questions from constituents still in work about whether their workplace sounded safe. That simply will not do when lockdown ends. There must be a clear process agreed by the workforce and management, not least because a failure to do so would likely result in significant litigation.

This crisis has confirmed in terms what the UK’s unequal and unfair labour market really means. Although some people have been able to work from home on full pay, others have faced having to go into work and risk their health, or have lost their job through no fault of their own and will receive social security or sick pay set at just a fifth of the UK’s weekly median income. More than 4 million British children grow up in poverty, living in poor accommodation and perhaps without the internet connections many of us take for granted. The lockdown will have a severe impact on their wellbeing. Many have likened our response to coronavirus to fighting a war. If that is true, the aftermath should be equally so, with a renewed national effort to fight the inequality, poverty and insecurity that should have no place in this country at any time.

Thérèse Coffey Portrait Dr Coffey
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4 May 2020, 3:45 p.m.

I thank the hon. Gentleman and welcome him to his position. We are in an unusual place today—literally, as he is appearing virtually for our first exchange in a statement—but we will be seeing each other again next Monday at questions.

On legacy benefits, I should stress that the increase to working tax credits and universal credit is only temporary —until 12 months from when it was applied. There are two things here. First, we have a digital UC system. The working tax credit system is digital. It is far more straightforward and it was quick to change that. It would take quite some time to change the legacy benefits system—I am talking about several months—with the process we have. When we make changes to benefits, they tend to happen four or five months before the actual changes come through, because that is how long it takes our computer systems to work.

Secondly, the statutory sick pay weekly rate is about £95. The change to UC is about £94. We anticipate and hope that people will be on UC for a quite a short time while we go through this significant emergency. It was, as I pointed out, straightforward to change that. There are other things that people will benefit from, including the work we have been doing on mortgage holidays, on stopping renters being evicted due to issues connected to covid-19, and on electricity pre-payment. No utility supplier will restrict supply due to issues at this time.

On the benefit cap, I said in my statement that it is not the intention to change fundamentally the process, principles or application of universal credit. I am conscious of the benefit cap, but we are still talking about a potential yearly income outside London of £20,000, or £23,000 in London, being given to benefits claimants. I am conscious that that could effectively be something like a £25,000 to £30,000 take-home salary after we take into account taxation and similar, so I do not think it is necessary right now to change the benefit cap. What I do want to point out to the hon. Gentleman is that claimants may benefit from a nine-month grace period, where their UC will not be capped if they have a sustained work record.

On the savings threshold, there is no universal credit eligibility where people have savings of £16,000. UC is designed to help the poorest in society. I am conscious that, if any changes were contemplated, they would have taken some time to process. We have decided to focus our efforts on those who are the poorest in society. I should also say that money saved for taxation payments, such as by the self-employed, will effectively be treated as business assets, and so would not be included for consideration or be deemed personal savings.

On the five-week wait, there is no intention to change that. In fact, in terms of the largest number of people who have claimed, this will be our biggest payment week going ahead. I am aware of what the hon. Gentleman says about people who have been paid in the last month. My understanding is that there is a phasing issue in terms of the calculation of universal credit payments that people would be entitled to with regard to the standard allowance. One of the benefits of having the advance is that it is designed to spread an annual income over 13 payments, instead of 12. For people who are going through that right now, my recommendation is that they should consider getting the advance. As I say, the total annual payment will be spread over the year.

On universal credit regulations relating to maternity allowance and statutory maternity pay, I will look into that for the hon. Gentleman and write to him. I know that quite a lot of consideration has been given to the different rates supporting people in maternity, but I will write to him on that.

On people only receiving statutory sick pay, I point out to the House that that is a legal minimum, but one of the purposes of the furlough scheme was that people, instead of being made unemployed, had this opportunity. Of course, if people are sick, an employer is entitled to do statutory sick pay. I should also point out that the furlough scheme can be applied straightaway for people who have been shielded and cannot go to work and cannot work from home, and we are encouraging employers to do so.