Social Security Benefits Up-rating Order 2022

Debate between Lord Shipley and Baroness Sherlock

Wednesday 9th March 2022 Grand Committee

[Lord Shipley (LD)]

My Lords, I thank the Minister for introducing this uprating order. The problem is that the combination of rising inflation and tax rises is creating a cost-of-living crisis that will affect practically every household in the UK but will be especially difficult for those on low incomes who make use of welfare payments.

Before the crisis in Ukraine, the Resolution Foundation reported that an average family will see household budgets reduced by £1,200 a year through a combination of soaring energy prices, the freezing of the income tax personal allowance and the rises in national insurance and council tax. Those on low incomes will find it hardest to make ends meet, because the major benefits are due to go up in line with a lagged measure of inflation. The September CPI rate had it at 3.1%, whereas the Bank of England expects inflation to peak at 7.25% in April and to average around 6.2% in the course of 2022—and all that is before the impact of the crisis in Ukraine is taken into account. Many commentators are forecasting an inflation rate for the UK of more than 10% later this year.

The Government really must not allow a situation to develop that means a deep cut in benefits year on year for people less able to withstand the impact of the rising cost of living. For example, those who must use meters to pay for their gas and electricity will be put under even greater financial strain because of their high cost compared with other methods of payment.

Even before the impact of the Ukraine crisis on the cost of living, this policy would have led to a £290 real fall in benefit income year on year for the 10 million households in receipt of these benefits. That would be an unacceptable cut in the incomes of millions of people who are already among the most vulnerable. The Spring Statement later this month provides an opportunity for the Chancellor to do something about this crisis, which was unnecessarily deepened by the removal of the £20 per week boost to universal credit.

Paragraph 12.1 of the Explanatory Memorandum on impact is hopelessly out of date. The assertion that the

“impact on business, charities or voluntary bodies is negligible”

is flawed. The impact will be very great, particularly on charities and voluntary bodies, which will see a huge increase in demand for their help as prices rise steeply and real incomes decline for millions of households.

I hope that the Minister will agree that this uprating order is out of date and that the Spring Statement needs to bring proper solutions to the deepening crisis in our cost of living and its impact on those with low incomes.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for introducing these orders and all noble Lords who have spoken. I agree with my noble friend Lord Jones that it would have been preferable had the uprating order been taken in the Chamber. Many of the orders that we deal with are technical; this one affects the incomes of some 20 million people at a time when we have never seen a cost-of-living crisis like this. Had it been taken in the Chamber, we perhaps would not have had a regret Motion, but here we are.

I thank my noble friend for mentioning my late and much-lamented noble friend Lord McKenzie. Every time we gather here, we miss him very much. I just wanted to read his name into the record.

First, a word on the guaranteed minimum pensions order, which is rather more technical. I have raised the question of equalisation in most previous years, but we have had a new development. A new Private Member’s Bill has just arrived in the Lords from the other place that aims to address the legal uncertainty that the current legislative situation can pose when a pension scheme tries to adopt a process for addressing GMP equalisation. The Government smiled on it at the other end. At Second Reading in the Commons, the Pensions Minister, Guy Opperman, accepted that what the Bill does is key because it

“gives the Government the ability to set out in regulations the details of how survivor benefits will work for surviving spouses or civil partners of people with guaranteed minimum pensions.”

He also made the point that the Bill

“gives the Government the ability to set out in regulations details about who must consent to the conversion of guaranteed minimum benefits.”—[Official Report, Commons, 26/11/21; col. 627.]

The Minister confirmed, at col. 628, that the Government backed the Bill. However, when the Commons got to Third Reading on 25 February—a long gap—he said:

“The reality is that there is no real way for my hon. Friend’s Bill to get through this House and the House of Lords in the time allowed”.—[Official Report, Commons, 25/2/22; col. 659.]


The Government have accepted that there are problems to be addressed on the matter of GMP equalisation, so can the Minister assure the Committee that if that Private Member’s Bill fails to get through, the Government will none the less speedily moved to address the outstanding issues?

I turn to the Social Security Benefits Up-rating Order, which we gather to debate every year, except of course during the years of shame, when the Government refused to update social security benefits as they should have done. I cannot remember a year when the context was so worrying for so many people. The cost of living is rising so fast that even those on middle incomes are struggling and it is a catastrophe for those on lower incomes. People are genuinely frightened about how they are going to manage. Demand for help from food banks is already skyrocketing, as it is for financial advice and debt support. The noble Lord, Lord Shipley, made a good point that the Explanatory Memorandum had not taken account of the impact on those organisations.