Social Security and Pensions

Margaret Greenwood Excerpts

Monday 6th February 2023 Commons Chamber

[Ms Buck]

The Government have decided to refer to the absolute poverty figures only, which we would expect to go down as the years go by. However, under the standard measure of poverty, the relative measure, there is an increase in poverty. Indeed, if we want to get into the details, the Government’s preferred measure also shows an increase in poverty among families, including families with more children. This year’s uprating will at best serve to maintain the value of benefits, which has been severely reduced over the last decades. The resulting inadequacy of the safety net has played out exactly as one might expect; it contributes to increased numbers of children in poverty, to deepening poverty, and to increased need for food banks.

[Margaret Greenwood (Wirral West) (Lab)]

My hon. Friend is making an excellent speech. Does she agree that the last Labour Government took 1 million children out of poverty, and that we could do with having a Labour Government immediately to take further action?

[Ms Buck]

I could not agree more. The Labour Government demonstrated what could be done with will, policy and investment; they brought about a dramatic reduction in pensioner poverty and child poverty. A future Labour Government will do exactly the same. Of course we will support the motion, but the Government deserve no praise—

[Ms Buck]

I have given away enough for the moment. The Government deserve no praise for refraining from a deliberate action that they should never have contemplated taking in the first place.

It is important to recognise the limitations to the uprating order. Although the nominal value of most working-age benefits will increase by 10.1%, there will be no change to the eligible cost limits of two crucial benefits: the childcare element of universal credit and tax credits, and the local housing allowance. Do the Government think that childcare and housing costs are immune to inflation? How does allowing the erosion of the value of childcare support fit with their stated aims of encouraging work progression and helping working parents to increase their hours of work?

Yesterday, the deputy political editor of The Sunday Times reported that:

“Sunak and Hunt want a new benefits crackdown, including”

increasing the

“threshold under which people must attend regular job centre interviews/meet work coaches to be raised to 18 hours”.

If the Government are serious about helping parents to progress, they should ensure that parents are better off working more hours, rather than using the crude and unproven instruments of conditionality. As the IFS has shown, parents in the lower thirds of the earning distribution already stand to lose 58% of their additional earnings when moving from 20 to 40 hours of work a week.

Incentives to progress are already weak, so allowing inflation to erode the value of childcare support makes absolutely no sense. As evidence to the Work and Pensions Committee stated recently,

“The childcare support provided with UC is only sufficient to cover part-time hours, because the cap it is subject to has been frozen for six years”,

and

“A fixed cap amid rising childcare costs means fewer hours are eligible for reimbursement under UC today compared to Working Tax Credit in 2005—potentially restricting parents’ employment options.”

While I am on the subject, we hardly need reminding that the requirement for parents who claim childcare support to pay up front heaps the burden on to low-income parents, and contributes to the nightmare of overpayments and deductions, which contribute to the debt and destitution crisis.

The local housing allowance remains frozen for the third year in a row—at least, that is how everybody apart from the Secretary of State sees it. He said in his written statement of 17 November:

“I can also confirm that the local housing allowance rates for 2023-24 will be maintained in cash terms at the elevated rates agreed for 2020-21.”—[Official Report, 17 November 2022; Vol. 722, c. 24WS.]

Perhaps the Minister can explain how those rates, which are based simply on the 30th percentile of local rents in 2019—since when rents have risen by 8% overall according to the Institute for Fiscal Studies, and vastly more in some parts of the country—can seriously be described as elevated.

[Margaret Greenwood]

I thank my hon. Friend for giving way—she is being very generous. According to the Institute for Fiscal Studies, freezing local housing allowance, as opposed to uprating it to match local rents, will reduce support for nearly 1.1 million households by an average of £50 per month. Does she agree that that is an utterly impossible situation for people to face, and that we need action from the Government on it?

[Ms Buck]

It is absolutely impossible. Rents are such a major component of people’s expenditure. For that shortfall to first be fixed, and then to grow, is inexplicable. It absolutely eats into people’s residual income.

Nearly 1.5 million universal credit households receive the housing allowance. Of those, 844,000, or 58%, have rents above the maximum that local housing allowance will support. On average, they face a shortfall of £100 a month, which has to come out of their residual income.