Social Security (Additional Payments) Bill

Lord Fox Excerpts

3rd reading & 2nd reading & Committee negatived
Monday 27th June 2022 Lords Chamber

[Lord Fox (LD)]

My Lords, I should first explain that my noble friends Lady Kramer and Lady Janke, who normally speak on these issues, are unable to attend today so your Lordships have me instead.

This is a small and, in a sense, relatively modest Bill that we do not oppose—indeed, we cannot oppose it due to its nature as a money Bill. We have heard some really knowledgeable input from the noble Baroness, Lady Lister, and the noble Earl, Lord Clancarty, who made important points on the subject of children and families with children and about the self-employed, particularly those working in the creative sector. I hope that the Minister will take those on board.

As we heard from the Minister, the Bill implements some of the cost of living support that was announced by the Chancellor in his emergency Statement—specifically, the £650 support for households in receipt of means-tested benefits, which comes in two instalments, as the Minister set out, and the £150 for recipients of non-means-tested disability benefits.

The Bill does not include the other support mentioned by the Minister, presumably because it is not needed from a legislative perspective. As I intend to suggest later, it also does not include many of the measures that the Chancellor should have announced in the light of the situation that the country finds itself in today. Even as we debate here today, the economy is the major concern on everyone’s radar, especially with the official rate of inflation predicted to reach double digits very soon. Then, as well as the worry of inflation, households are facing the highest tax burden in 70 years. The typical family will see a hit of £1,200 a year thanks to the Conservative Party’s tax rises. I hardly need to remind the Minister that the UK is in very difficult territory.

At the heart of all this is a much wider endemic issue that needs to be at the front of our minds when we debate an issue such as this. I am going to presume that the Minister would describe herself as a capitalist; I describe myself as a capitalist as well. However, for the UK to be a successful capitalist country, its citizens need either to have capital or to have a reasonable expectation that they will obtain it. Yet, in Conservative Britain today, it is quite clear that the gap between those with capital, and therefore a stake in the economy, and those who stand little or no chance of ever acquiring it is getting wider every day.

Worse than that—never mind savings and capital—while the top 10% of the country’s earners tighten their grasp on our economy, an increasing number of citizens are slipping below the subsistence line. It is not just global shocks that have caused that to happen, as the Minister put it. The slide was already happening, then Covid came and made it worse, and now inflation is rapidly increasing the number of people in economic peril and the pace with which, in some cases, they are traveling towards destitution. Proud families who never dreamed that they would find themselves in trouble are now struggling to pay the bills.

At the last election, the Conservative Party successfully campaigned on the idea that there are specific geographic areas that have been economically left behind. Although that is undeniably true, the party’s careful selection of particular towns and cities skirts over the underlying issue: the ever-widening income gap across the whole of our country. Although that gap is somewhat defined by geography, it is far more complex than that, being caused by demographics, educational opportunities and—let us face it—who your parents are.

That ever-widening gap is the real challenge at the heart of many issues that we are seeing in the UK today. So what is the modern Conservative take on it? While one part of the Government is signalling for the EU cap on already huge banker bonuses to be lifted, another department is seeking to limit public sector pay increases to one-third or one-quarter of the rate of inflation. Clearly this Government are not even trying to address the gulf between the richest and the rest of our country; in fact, it seems to look like the opposite.

When it comes to acknowledging the need to arrest the pain inflicted on the poorest in society, the Bill takes a few small steps in the right direction. However, as the noble Baroness, Lady Lister, eloquently expressed, it is a completely inadequate response to the cost of living crisis. It fails to reinstate the £20-per-week universal credit cut, which would have provided households on universal credit with an additional £1,000 a year. It fails to cut the main rate of VAT to 17.5% for one year, which would have put an average of £600 in the pocket of every UK household while lowering inflation and, importantly, helping our high streets, giving them a much-needed boost and increasing economic growth. A similar VAT cut in 2008 was found to increase retail sales by 1% and increase aggregate expenditure by nearly one-quarter of 1%.

The Bill also fails to consider repealing the national insurance rise and freezing the income tax thresholds. These are unfair tax rises that are making the cost of living crisis worse for millions of families across the UK. It fails to support rural communities concerned with rising fuel prices through the rural fuel duty relief scheme, which was promoted today by the newly elected MP for Tiverton and Honiton. It also fails to include those claiming the carer’s allowance from the list of benefit recipients qualifying for additional support.

Furthermore, provisions in the Bill allow for payments to be made in two instalments. By paying all the support on 14 July, the day of the first instalment, the Government could have supported people who need assistance more immediately. Perhaps the Minister would concede that, given the increase in the rate of inflation, the second payment should be accelerated as well.

It has been a pleasure to speak, briefly, in this short debate. I am looking forward to the Minister’s explanation of how the ever-widening income gap will be addressed in the second half of this Parliament. Most of all, I am looking forward to the Minister explaining how the Bill even scratches the surface when, across the country, thousands of honest, hard-working families are slipping ever deeper into poverty.

Following the by-election defeats inflicted on the government party last week, the current Prime Minister, Boris Johnson, said:

“We’re now facing pressures on the cost of living … spikes in fuel prices, energy costs, food costs—that’s hitting people. We’ve got to recognise there is more we’ve got to do.”


What is this “more” and when will it be done? Or, as is usually the case, is the Prime Minister’s statement merely empty words with no substance, no policy and no prospect of implementation?

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

I am very happy to go back to the department and request that. I am not in a position to commit to doing it, but I will go back and write to the noble Earl with the outcome of those discussions.

Another important point that the noble Baroness, Lady Lister, raised was about how we are making customers aware of these payments. We are working on an extensive communications plan. There will be digital advertising, social media and display materials such as posters and leaflets for jobcentres and stakeholder premises.

The noble Baronesses, Lady Lister and Lady Sherlock, raised the issue as to whether the household support fund is sufficient. Local authorities in England have ties and local knowledge to best determine how this support should be provided to their local communities. They have the discretion to design their own local schemes within the parameters of the grant determination and guidance to the fund. We are going to publish new guidance for local authorities for this latest extension of the household support fund ahead of the fund going live at the start of October.

The noble Earl, Lord Clancarty, asked about low-income and self-employed people. We accept that earning patterns can vary substantially and it would be impossible to choose qualifying dates that work for every person on UC. However, a second qualifying date certainly reduces the risk that those with non-standard pay periods on UC miss out on a cost of living payment altogether.

The noble Lord, Lord Fox, raised the point about whether the Government are putting up taxes during the cost of living crisis and whether taxes should actually be reduced. The actions the Government have taken to return the public finances to a sustainable path post Covid mean that we are in a strong position to respond to the cost of living challenge. The Government’s goal is to reform and reduce taxes. The Chancellor’s Spring Statement set out the Government’s tax plan, which includes reducing the tax burden on working families by increasing the threshold at which people start paying NI contributions—a tax cut worth over £330 for a typical employee—and by cutting fuel duty by 5p for 12 months. The tax plan also shares the proceeds of higher growth with working people across the country by cutting the basic rate of income tax by one percentage point to 19% from April 2024, saving more than 30 million people £175 per year on average.

The noble Lord, Lord Fox, asked whether the cost of living payments are a sticking plaster. In total, the measures the Chancellor announced in May provide support worth £15 billion. Combined with other plans, as I have already said, this raises the money to support people during this cost of living crisis to £37 billion. This is more than or similar to the support in countries such as France, Germany, Japan and Italy. Importantly, around three-quarters of that total support will go to vulnerable households.

The noble Lord, Lord Fox, asked whether the Government were wrong to reduce the £20 uplift to universal credit. It was always to be a temporary measure, and it was a temporary measure. I do not think there is anything else I can say to noble Lords about that.

The noble Lord, Lord Fox, asked what we are doing to help people in rural areas. The boiler upgrade scheme has a budget of £450 million to support households in England and Wales to make the switch from fossil fuels to low-carbon heating. This helps people in rural areas transfer from fossil-based fuels to low-carbon heating with grants of £5,000 towards the cost of installing an air source heat pump, £6,000 toward the cost of a ground source heat pump and £5,000 for biomass boilers for properties not suitable for a heat pump, provided they are in a rural location and not connected to the gas grid. The home upgrade grant will provide upgrades to low-income rural households living off the gas grid in England to tackle fuel poverty and meet net zero. The Government have allocated £1.1 billion to the home upgrade grant over the next three years.

Again, the noble Lord, Lord Fox, asked why we are delaying half of the £650 to later in the year. Cost of living payments for those on means-tested benefits are deliberately being delivered in two payments to help support budgeting. This approach will also ensure that any newly eligible claimants can be paid the £324 payment even if they did not get the £326 payment and that all recipients of the second payment receive this closer to winter.

The noble Lord, Lord Fox, asked whether we were being more generous to those on means-tested benefits and said that £650 is not going to scratch the surface. The Government are providing over £15 billion in further support, as I have said. Three-quarters of it will go to low-income households. Each cost of living payment will be paid to 8 million people on a means-tested benefit. Millions of the lowest income households will get £1,200 of one-off support. I have said that the Secretary of State will use the CPI in September to decide on the uprating of benefits.

The noble Baroness, Lady Sherlock, asked what impact the cost-of-living crisis is having on poverty. The latest available—

[Lord Fox (LD)]

I thank the Minister for giving way. I appreciate the spirited defence of the measures that the Minister has just made. I am assuming that the Prime Minister was fully aware of what the Government are planning in terms of support when he spoke on Friday. On Friday, the Prime Minister unequivocally said that we are not doing enough, and we need to do more. Would the noble Baroness therefore agree with her own Prime Minister that the Government are not doing enough and need to do more?

[Baroness Stedman-Scott (Con)]

I agree that the Government have made great strides in providing additional finance. If my Prime Minister said that we need to do more, he was not saying that we are not doing enough. This will probably get me into trouble, but he would be daft to say that we need to do more in the current climate. It has been very nice knowing you all in this job.