Social Security Payments: Uprating

Lord Davies of Gower Excerpts

Monday 10th October 2022 Lords Chamber

[Baroness Sherlock]

To ask His Majesty’s Government what plans they have for uprating social security payments.

[Lord Davies of Gower (Con)]

My Lords, the Secretary of State is required to review the rates of the state pension and benefits every year. The Secretary of State will announce the outcome of her review to this House by 25 November in the normal way. The Government have committed to the triple lock for the remainder of this Parliament. It would not be right for me to prejudge the outcome of that review when the ONS is yet to publish the relevant indices.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister and welcome him to the Dispatch Box and his new brief—a great place to start. Last April, when inflation was 9%, benefits were raised by just 3.1%, because that had been the CPI rate the previous September and them’s the rules. At the time, despite big pressure, Thérèse Coffey—then at DWP—said no; we must stick with the system year on year. Ministers promised that benefits would rise again by inflation next year, so it would all come out in the wash.

Now we hear that the Prime Minister is threatening to abandon that promise and is even suggesting that linking to earnings might be fairer to workers, as though we are saying to millions of workers, “Your wages are going up by less than inflation; we will fix that by cutting your universal credit and child benefit.” As well as low-paid workers, these benefits support children, sick and disabled people, the unemployed and poor pensioners. I simply do not believe that most people in this House or this country think that those people ought to be paying for the fallout from the Government’s disastrous Budget. Will the Minister please tell the House that the Government are not seriously proposing to do that?

[Lord Davies of Gower (Con)]

I am very grateful for the noble Baroness’s welcome to the Front Bench. My right honourable friend the Secretary of State for Work and Pensions has a legal duty to review the rates of benefit increases once a year. She will be doing this on the same timeframe as previous years, with the latest available data. It is right that, when this review takes place, she looks at up-to-date information for the whole economy and acts accordingly, within the terms of the Social Security Administration Act 1992.

[Baroness Boycott (CB)]

My Lords, as the chair of Feeding Britain, I wonder whether the Government could give us some advice. Over the last few weeks, we have been running out of food in our food banks and social supermarkets in 20 minutes. People who come in on later shifts do not get any food. What should we say to them when they ask why even this charity is in short supply, with so many people using it?

[Lord Davies of Gower (Con)]

I take the noble Baroness’s point but can only repeat that we have to wait to see what the CPI is. The Government will make an announcement at the appropriate time.

[Baroness Janke (LD)]

My Lords, does the Minister agree that failure to uprate benefits in line with inflation will hit people with disabilities particularly hard? What does he have to say to the one in four disabled people who cannot afford to heat their home and to the 600,000 disabled people who have £10 a week or less to pay for food and essentials?

[Lord Davies of Gower (Con)]

I am grateful for that question. We are committed to supporting disabled people, which is why we recently paid £150 to 6 million disabled people. For additional needs disability benefits and carers’ benefits, the Secretary of State conducts a review once the relevant CPI figure is published and makes a decision in accordance with the requirements of the Social Security Administration Act 1992.

[Lord Howell of Guildford (Con)]

My Lords, who actually knows what the inflation rate will be in the immediate future, over the next 12 months? Many people believe that the price of oil and gas, and energy generally, may fall quite sharply. They do not really know, but many believe that. Is it not wise to pause to see more clearly what is coming, before we rush into judgment on this issue?

[Lord Davies of Gower (Con)]

The noble Lord makes a good point, but we will have to wait to see what the indices indicate at a future date before 25 November.

[Baroness Lister of Burtersett (Lab)]

My Lords, my noble friend has already pointed out that benefits were uprated by less than inflation this year, so we do not have to wait to know any more about that. Could the Minister explain what assessment the Government are making on the impact on poverty—both its extent and depth—if they renege on their promise to uprate benefits in line with inflation?

[Lord Davies of Gower (Con)]

We have targeted additional support directly at those most in need, with a £650 cost of living payment coming in two instalments this year, in addition to the £400 energy rebate and our energy price guarantee. This will save the typical household approximately £1,000 a year, based on the current October prices.

[Lord Farmer (Con)]

My Lords, I recognise that benefits claimants have been coping with higher inflation than 2022’s uprating, but it is not unreasonable to ask how the Government will maintain the vital work incentive aspects of universal credit’s design if benefits uprating exceeds wage rises so markedly. How will they ensure that the more than 1.25 million vacancies are filled when the risks of moving into work must appear particularly high at this time?

[Lord Davies of Gower (Con)]

I thank the noble Lord for his question. The Government have made a commitment in principle to the triple lock for new and basic state pensions. It is therefore a matter of fact that these will rise in line with whichever is highest: earnings, prices growth or 2.5%. For other benefits, as I said, the Secretary of State conducts a review once the relevant indices are published and makes a decision in accordance with the Social Security Administration Act 1992.

[Baroness Butler-Sloss (CB)]

My Lords, there was a disturbing discussion on the “Today” programme today about the parents of disabled children. What are the Government doing about that? It sounds as though they are in deep trouble.

[Lord Davies of Gower (Con)]

As I said—I am sorry, I have to repeat it—we are committed to supporting disabled people, which is why we have recently paid £150 to 6 million disabled people. As I said, for additional needs disability benefits and carers’ benefits, the Secretary of State conducts a review once the relevant CPI figure is published. I am afraid we will have to wait for that.

[Baroness Browning (Con)]

I welcome my noble friend to his new post. Could he undertake an initiative within his department to arrange to publish the much-delayed statistics that I believe the department has had for some time on the suicide rate among benefit claimants?

[Lord Davies of Gower (Con)]

I thank the noble Baroness for that. It is something I will take back to the department.

[Baroness Brinton (LD)]

My Lords, the Minister has now referred twice to the disability energy allowance of £150. The real problem for disabled families, especially those with children, is that their energy costs are double the average, so £150 is a drop in the ocean; it is about 10% of what they need.

[Lord Davies of Gower (Con)]

I thank the noble Baroness, Lady Brinton, for that question. I appreciate her point. Again, it is something I will reiterate when I get back to the department.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, given the 12 years of austerity, a cost of living crisis that is hitting the poorest hardest, particularly in the devolved nations and regions, and the fact that inflation is rising to 10% and beyond, can the Minister give assurances and undertakings that he will discuss directly with devolved Ministers a means of ensuring that benefits will be increased in line with inflation to deal with the cost of living and cost of energy crises?

--- Later in debate ---

[Lord Davies of Gower (Con)]

I thank the noble Baroness. Yes, we engage regularly with the devolved Administrations. She has probably worked out that I come from a devolved Administration. I am very aware of the need to do that.

[Lord Forsyth of Drumlean (Con)]

My Lords, does my noble friend not think that there are some double standards here? On the one hand, the Opposition criticise the Government for committing themselves to helping people with their heating bills and to ending the tax on jobs, which is the increase in national insurance, and argue that the Government should have published their full financial forecast before doing so, but on the other they argue that we should commit ourselves to uprating benefits without doing so. Is this not the ultimate hypocrisy?

[Lord Davies of Gower (Con)]

I thank the noble Lord for making that point. I absolutely agree with him.

[Lord Kerr of Kinlochard (CB)]

The word from Birmingham seemed to be that we should be more concerned with growing the cake than slicing it fairly. Does the Minister agree that sustainable growth requires social stability and, therefore, that to break the Johnson promise on welfare uprating during an acute cost of living crisis would be as bad economics as it would be bad politics?

[Lord Davies of Gower (Con)]

I am afraid I did not quite get all of the question, but perhaps I could come back to the noble Lord later with an answer on that point.

[Lord Sikka (Lab)]

My Lords, first, I ask the Minister to revisit the CPI versus RPI debate. Housing costs, rent, mortgages, repairs and maintenance matter. People experience those costs. Will he consider increasing benefits in line with RPI rather than CPI? Secondly, will he make a Statement to the House to explain what savings the Government have made by linking benefits to CPI rather than RPI?

[Lord Davies of Gower (Con)]

The noble Lord will know that the Government are currently considering that very point. I am sure that we will have an answer for him in due course.

[Baroness Walmsley (LD)]

My Lords, does the Minister accept that when a person on benefits walks into the shop, her ability to put food on the family’s table depends on the price of the goods on the shelf and not the salary of the shop manager? Surely the suggestion is complete nonsense.

[Lord Davies of Gower (Con)]

The noble Baroness has made a very fair point. I cannot say that I disagree with her.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I shall take the Minister back to the question asked by my noble friend Lady Lister. She asked what assessment the department used to understand the impact on poverty of not uprating in line with inflation. Can the Minister explain what that process is and what assessment has been made of the impact on poverty, because I do not think he answered that question first time round?

[Lord Davies of Gower (Con)]

The Government are considering CPI at the moment, so I am going to have to repeat that we will have to wait to see what the figures are. At that point, I will be able to come back to the noble Baroness.

[Lord Davies of Brixton (Lab)]

My Lords, it would be remiss of me not to start by welcoming a fellow Lord Davies to the Front Bench. My question relates to retirement pensioners. I welcome the fact that the commitment to the triple lock has again been made, but the Minister will know that coming down the road in only two or three years is an increase in the state retirement age that is equivalent to a 10% cut in the pensions of people who retire after the increase. Of course, we are waiting for the independent report on the increase in the retirement age. Will the Minister give an indication of when we can expect that independent report?

[Lord Davies of Gower (Con)]

I am afraid that, as I stand here, I cannot give the noble Lord an indication of that. I will go back to the department and will write to him with any information it may have.

[The Lord Bishop of Durham]

My Lords, I take the Minister back again to the question asked by the noble Baroness, Lady Lister. This morning, the Legatum Institute made it very clear that the number of people in poverty will rise if the rates are not increased by the rate of inflation. Will the Minister acknowledge that that is simply the fact if the Government do not do that?

[Lord Davies of Gower (Con)]

I appreciate and acknowledge that. I fully understand the point that the right reverend Prelate is making.

[Baroness Stroud (Con)]

Will the Minister explain what metrics of poverty are used in the department to help navigate these decisions? We know that if benefits are not uprated in line with inflation there will be an increase of 450,000 people in poverty. It would be good to know what measure of poverty is used by the Government.

[Lord Davies of Gower (Con)]

Again, as I stand here, I cannot give my noble friend an exact answer, but I will go back and come back to my noble friend in writing.

[Baroness Berridge (Con)]

My Lords, it seems that there is a bit of confusion about the process. My noble friend Lord Forsyth outlined that there should have been a detailed analysis of the figures, but unfortunately there was previously an announcement by the Chancellor that this would happen and that has created confusion. I welcome my noble friend to the Front Bench. Can he assure the House that this is not a question of metrics for many people but is about their lives, that this confusion of process will have created undue stress for some of the people under the most pressure in our society and that the review will take into account the human cost of not abiding by the process that my noble friend Lord Forsyth outlined?

[Lord Davies of Gower (Con)]

I thank my noble friend for that point, which I appreciate.