Social Security and Pensions
Debate between Karen Buck and Luke Evans(1 year, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ms Karen Buck (Westminster North) (Lab)
In a few weeks’ time, we will have the latest figures on households below average income. They are likely to confirm what we already know: that poverty will soar as the measures taken during the covid pandemic fall out of the adjustment. The figures will confirm what we see every day, and what the Trussell Trust and others see at their food banks, which is that the cost of living crisis is hurting millions. For those with the least, soaring inflation means hunger, cold, and the fearful wait for the bailiffs, for debt recovery, or for the forced imposition of a prepayment meter. It has meant families being unable to put a school uniform on their child’s back.
There are 4 million children already in poverty; 700,000 more children were in poverty than in 2010 even before the pandemic, and the Joseph Rowntree Foundation report of a few weeks ago estimated that one in seven families was going without essentials. One fifth of pensioners are in poverty, with older and disabled pensioners being most seriously affected—and there, too, the figures are going up.
In a report published last week, the Institute for Fiscal Studies said:
“Although it never sounds the most exciting part of benefits policy, the default indexation of benefits —what happens to their value each year if the government takes no deliberate action—is a first-order issue over the long term, and even over the short term when inflation is high.”
The IFS is right to make the important point that indexation and uprating are assumed to happen if the Government take no deliberate action. The annual uprating of working-age benefits with prices has long been the default in this country. When Governments fail to uprate benefits, that is a deliberate action, although they like to pretend otherwise.
Over the last couple of years, a new ritual seems to have been established in the run-up to the autumn statement: rumours circulate that the Government have not decided what to do, or whether they will uprate; think-tanks work out the implications of a freeze on rates of poverty and living standards; and charities and civil rights organisations urge the Government not to allow the real-terms value of benefits to fall. Uprating becomes a hot topic in the media speculation that attends any fiscal event. Then, at the last moment, we learn that the Government have decided to uprate after all. The Government expect praise for doing the right thing, and nobody considers for a moment what an extraordinary state of affairs this has become. However, it is an extraordinary state of affairs.
How can a social security system carry out its most basic functions if the value of basic entitlements is being eroded by inflation? Previous Governments did not need to spend weeks deciding whether to uprate; uprating was just what happened if they took no deliberate action. The sorry truth is that since 2010, Governments have increasingly treated the annual uprating of working-age benefits as a policy choice rather than a norm—a policy choice driven by short-term considerations, but with permanent effects that they prefer to ignore.
Dr Luke Evans
The hon. Lady is missing the key point that the universal credit taper was changed from 63p to 55p. That is new, and it makes a huge difference; those who are earning have more money in their pocket.