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.