Social Security (Additional Payments) Bill

Karen Buck Excerpts

2nd reading
Wednesday 22nd June 2022 Commons Chamber

[Ms Karen Buck (Westminster North) (Lab)]

This has been a short but useful debate. The Opposition will not oppose or seek to delay these payments, because any measure that puts money into the pockets of people on low incomes is to be welcomed, but it is important that we put on record some concerns about how the situation has come about.

The cost of living crisis hammering millions across the country comes on top of 12 years of a squeeze in living standards for people who have needed to draw on social security at various points to support their income. We went into the pandemic with child poverty rising for larger families, by the relative poverty measure; even by the absolute measure that the Government prefer, larger families are deeper in poverty. That is a consequence of years and years in which parts of the social security system such as tax credits and universal credit were either frozen or uprated by only 1%, even before we take into account the impact of the various caps and deductions.

As a result of the poor state of the social security system in 2020, the Government felt that they had to respond by introducing the £20 uplift, the impact of which can be seen from this spring’s poverty statistics. Of course, we want as many people as possible to do well in employment and receive a rise in real wages so that they do not have to draw on means-tested benefits, but many people need support, particularly families with children. When it is adequate, that support has a real and profound impact on child poverty.

Having lost the £20 uplift last autumn, we are in the midst of a sudden and dramatic surge in inflation: the CPI rate is now at 10 times the level of spring 2021. That has left a large proportion of the population struggling with their bills. In particular, those on the lowest incomes face the lived choice between eating, putting food on the table for their children, heating their homes when it is cold, covering their rent, putting school uniforms on their children’s back, and other essential costs. It remains true that if someone is on a low income, their costs are higher. We know, although it is not built into Government policy, that the poorest pay a premium for their goods and services, and they face the highest inflation. As a consequence of the changes in Government policy and the loss of the £20 uplift last year, the number of children living in poverty will be even higher when we measure it next year.

At every stage, the Government have been on the back foot and running to catch up—a point that my right hon. Friend the Member for East Ham (Sir Stephen Timms), who chairs the Work and Pensions Committee, and the hon. Member for Amber Valley (Nigel Mills) both made powerfully. When we debated the uprating, it was already in the context of rising inflation; we discussed the possibility of uprating benefits at a more up-to-date level that reflected real-world price rises, but it was found that that could not happen. There were a set of measures, including assistance with council tax, that were poorly targeted and difficult to administer. Weeks later, the Government had to come back with a larger package of measures than would otherwise have been required.

If the Government had been able to update social security this spring to be more in line with inflation, additional assistance would undoubtedly have been needed, but we would not have required the same level of emergency package. Importantly—this is the central point—pensioners and families would have had an income in their pocket, week by week, so that they could plan and manage their finances. That would undoubtedly have been a better way for households to cope with the rising crisis than having to manage one-off emergency payments from different sources. Many of those families, because they did not get that assistance in April, even though it is only a few months later when the first of these payments will be made, will have found themselves in debt—in financial difficulty—in the interim. The debt that families get into is itself expensive. There cannot be many Members who have not been dealing with constituents who have come to them because they are facing bailiffs at their door, or are caught in payments schemes that have left them struggling with very high repayments, because of the difficulties that they have got into.

It is simply not the case that one-off payments were the only way of delivering timely support to families on means-tested benefits. While welcoming, as I said, any support—and it is a large package of support that we are considering today—it is clear that this approach is still going to lead to a lot of rough justice that would have been mitigated had a broader package of support been put in place, when there was time, through the mainstream social security system.

Entitlement to the one-off payments is triggered by receipt of one of the means-tested benefits in the month leading up to one of the qualifying days. This means that people’s circumstances in just two months of the year are taken into account, so families who have the same income and face the same cost of living pressures over the course of the year could wind up being treated very differently depending on the point of the year at which they are dipping into an application for a means-tested benefit. Some will receive the initial support and some will not. The problem is that people’s circumstances change all the time, not just in two months of the year, and the numbers involved are very large. For example, every three months about 1 million people of working age leave employment, becoming unemployed or economically inactive. At the moment, an even larger number move into new employment. However, it is the scale of the churn rather than the net outcome that is important. Similarly, there are about 150,000 starts on universal credit every month, the great majority due to changes in family circumstances. With families moving on and off benefits the whole time, a one-off payment that is tied to just two dates in the year is inevitably a crude approach to matching funding to need.

I am particularly concerned about how people with fluctuating incomes will fare under this policy. The Bill provides that only people in receipt of a benefit payment of at least 1p in the month leading up to the qualifying day are entitled to the one-off payment, but universal credit is supposed to adjust to fluctuations in income on a monthly basis. Some people will be entitled to no payment in one month and payment in the next month, depending on their earnings. Indeed, one of the selling points of universal credit was that people would not have to make a new claim every time their earnings fluctuated above and below the cut-off level. It therefore seems inevitable that large numbers of people, employed and self-employed, with low and irregular incomes will be denied help under this policy in a completely arbitrary way.

The Government need to clarify what steps they intend to take to mitigate this risk. Is it really necessary to insist that only people who have actually received a payment in the month leading up to the qualifying day should receive help? Should all self-employed people whose universal credit is reduced to zero in one of those periods, solely due to the operation of the minimum income floor, be excluded from support? We have also heard about the limitations of these measures in terms of adjusting to family size. That is one of the critical ways in which delivering directly through universal credit, and indeed legacy benefits, was preferable and more sensitive to the needs of families.

Emergency and one-off measures such as those in this Bill have a place in exceptional circumstances, but they do not give people living desperately precarious lives the security they need. They do not, in many cases, match individual circumstances as the social security system does, however imperfectly. Any and all measures that help us to relieve hardship in these difficult times are welcome, but overall our social security system needs to be more fit for purpose, just as the wider economy needs to be more fit for purpose—more resilient and more productive, with decent and secure employment opportunities and investment in the future.

Social Security (Additional Payments) Bill

Karen Buck Excerpts

Committee stage
Wednesday 22nd June 2022 Commons Chamber

[Ms Buck]

I thank the Minister for that introduction. There is clearly no need for me to cover the points that we discussed on Second Reading, but I will make a few comments about new clauses 1 and 2.

As the Minister said, the Bill as drafted states that the second qualifying date is to be no later than the 31st of October, which allows for a span of several weeks during which the date could be set. In her introductory remarks, the Secretary of State talked about the need to keep that open because of the potential behavioural impact. It would be helpful if the Minister told us a little about why the Department reached that conclusion.

As we know, families and household are looking for clarity. We expect the energy cap to rise significantly again in the autumn, and there is real fear and anxiety in the country about what energy price inflation, and general inflation, are doing to household incomes. People are looking for certainty, and the sooner they are able to know exactly when their qualifying period will be and when the payment will be made, the better it will be for those families. It would also be helpful for us to know what the implications are of a qualifying date that could be one month early, so as to cover the span of options for that date. Although, we will not be seeking to press these amendments to a vote, can the Minister advise on whether he will be able to pick up that point and come back to us with answers?

New clause 2 would address the distribution and the equality impact assessment. We have indeed had some analysis from the Treasury, and we have had some looks at the economic distributional impact and the decile impact. As we would expect from measures heavily directed towards means-tested benefits, they are indeed progressive, and that is absolutely right, but the single most important topic that we discussed in the short Second Reading was the downside of single payments that are household unit payments and therefore do not reflect differences in household composition. The impact assessment does not give us that information, and it is critical that we have it, so I will press the Minister on the point. We need a much fuller assessment of what the Treasury expects to be the impact of a reliance on single payments, rather than an accurate updating within the benefits system. We also need, as soon as possible after the first payments have been made, an assessment of the actual impact in terms of the distribution.

Household composition is probably the single most important of the areas of analysis that we need to track. It is the one that is worrying people the most and where the disparity between a direct payment through the social security system and a one-off payment is most marked. We want to see analysis that looks at different recipient groups and at the impact on pensioners, on people with disabilities, on families, on single people and on working people of the distribution of the payments as they go out. It would be helpful also to look at how different working groups are affected, such as the self-employed, who we have discussed, and working households as opposed to households on out-of-work benefits.

The other area on which I will spend a couple of minutes in the context of analysis is the various payments that have been distributed through local government and how we can look at their impact. The Minister has repeated that his principal aim was to try and get benefit payments out as quickly as possible to those who need them most. In fact, the February announcement of the distribution of income through local authorities, through council tax, does the exact opposite. As I am sure he is aware, local authorities have had to go to the considerable length of writing to every household that pays council tax other than through direct debit, wait for them to respond, wait for them to provide information confirming who they are and their entitlement, and then to send the payment out. That of course means that large numbers of people reliant on that £150 have not yet had it, and it is likely to be weeks and weeks still before those families actually get the payment.

The payment requires people to deal with official correspondence, and I do not know whether Ministers have seen some of the letters that have gone out from local authorities, but I certainly have, and I struggle to understand them. A number of those forms have gone out without any reference to people on council tax support, for example, so people do not know that they are likely to be covered by the scheme. It is important therefore that we understand a distributional impact of the household support funds and of the distribution of funds by local authorities.

The Government have been keen to stress the value of those schemes, that they are locally sensitive and that local government has an important role to play in delivering them. That may be the case, but as the Opposition have said all along, it is undoubtedly a more complex and bureaucratic system for delivering help into people’s hands than uprating and delivering that directly through the social security system. Given what we know about inflation and energy costs soaring and the likelihood that we will have to return to this place to consider more emergency support later in the year, it is critical that we understand exactly how the delivery of the Government’s support package affects people, who it affects and whether it is the best way to provide help to people in need.

[Kirsty Blackman]

I have a few things to say about the specifics of the Bill and the points that have been raised in the debate. I understand the Minister’s point about the second qualifying date and the Secretary of State’s earlier point about not wanting to make clear what that is. I will not argue with that, but I have a question about the timelines for the payment.

We had a qualifying date of 27 May and we are looking at the payment being made on 14 July, which is a significant lag. If there is a similar length of time between the second qualifying date and that additional payment, people may not get it until nearly Christmas. The Minister was clear that the support is being given in two payments partly to help with budgeting, and people would like some certainty about the dates on which the payments will be made. I will not press him on the qualifying date; as I said, I do not necessarily disagree with the choice to not publish that now and to bring it forward through negative delegated legislation, which makes some sense.

The other issue for people relates to the other payments that they may be able to receive. We have heard from the hon. Member for Westminster North (Ms Buck) that people have not necessarily received a council tax payment and do not know when they might receive that money. For people who are struggling now, it would help to have some certainty about when the payments will come. I do not think the legislation has even been brought forward for the £400 for energy bills; I am not aware when that will happen or when those dates will be. The Government are saying that there will be £1,200 for some families, and it would be really helpful for people to know when they are likely to receive that potential income so that they can plan.

On the negative resolution that will be brought forward to set the second qualifying date, I assume that we are not likely to see that until after the summer recess. If the Minister can confirm that that is the case, it would be helpful for us to understand that. If he cannot do that, that is fine.

The hon. Member for Amber Valley (Nigel Mills) talked about people who get two payments in a month, because they are paid on a four-weekly basis or because they receive bonuses or anything of that sort. It would be helpful if the Minister, when he sets the second qualifying date, tries to ensure that it is not in a cycle that will disadvantage the same people twice. If the date means that people whose universal credit is paid on a cyclical basis—for a significant number of people, it is clear that there is a regular cycle every three months—lose out on the £324 and the £326, even though they are regular universal credit claimants over the year, I would be concerned that the Government were not doing that in the right way. The hon. Gentleman’s suggestion of doing it over a two-month period would probably have been a better way to do it than the way that the Government are proposing. As was stated, if further additional cost of living payments need to be made to people in future, perhaps it would be helpful for the Minister to consider that.

In the context of making payments too quickly, the Minister mentioned the recovery of incorrect payments and how that might work, or need to work. He said that if payments are made too quickly, people might receive a payment that they are not entitled to and then it would need to be clawed back. Given how he phrased that, I am slightly concerned that we might end up with people through no fault of their own receiving payments in error that they think they are entitled to, who then have them clawed back from future payments from the DWP. We have seen that over the years with tax credits and how people are still paying back legacy benefit overpayments that they received, and we have seen the pain and suffering that that can cause people.