Universal Credit and Working Tax Credit

Debate between Neil Gray and Nigel Evans

Monday 18th January 2021 Commons Chamber

[Neil Gray (Airdrie and Shotts) (SNP) [V]]

I am pleased to have the opportunity to go into detail about why the SNP has been at the forefront of the campaign, led by the likes of the Joseph Rowntree Foundation, Save the Children and others, to keep the £20-per-week uplift to universal credit and extend it to legacy benefits.

I commend the UK Government for taking the action that they did to uplift universal credit by £20 per week. It has undoubtedly been an important step in protecting some—but not all—social security recipients, who otherwise would have fallen either into poverty or deeper into poverty during this pandemic. It was the right thing to do and it is right that it is now kept. Indeed:

“The universal credit uplift should continue for the foreseeable future. I would encourage the UK Government to make that commitment now and provide the reassurance many people are looking for.”

Those are not my words, but those of the hon. Member for Moray (Douglas Ross), leader of the Tories in Scotland, back in October.

What has changed since October? Both the health and the economic aspects of the pandemic have got worse. The need is still there, and I will tell the House part of the reason why. This is where I have to take slight exception to the Labour Opposition motion. It says that they want the UK Government to

“give certainty today to the six million families for whom it is worth an extra £1,000 a year.”

Although I support the motion, the uplift is worth a thousand pounds per year extra only if taken in isolation; actually, the Joseph Rowntree Foundation has calculated that, if we look at cuts to social security since 2010, even with the £20 uplift, families unable to find work will receive, on average, £1,600 less per year in social security support than they would have done in 2011. That is even with the uplift. Those with children will receive £2,900 less. The contrast is even more stark for larger families with three or more children, who will lose £5,500 each year. That is part of the reason why this initiative is so important.

The UK Government seem intent on cutting the temporary uplift at the end of March, meaning that families will be a further £1,000 per year worse off. That would give the UK Government an unenviable record: if they go ahead with this cut, they will be responsible for cutting out-of-work support to its lowest level since 1992 and its lowest ever level relative to average earnings.Social security spending is normally counter-cyclical, so expenditure automatically rises during an economic downturn while revenue from taxation falls. This Government are trying to cut support during an economic downturn, when more people need greater support.

Let us remember what that means to the people who need the support: the 6 million households, in every constituency in the UK, but also the millions more on legacy benefits—disproportionately sick and disabled people—who have been cruelly denied the uplift. Last week I chaired an evidence session of the all-party parliamentary group on poverty, which I co-chair with the hon. Member for Thirsk and Malton (Kevin Hollinrake). We heard powerful testimony from two women on legacy benefits who have not benefited from the uplift. I want to read some of what Michelle told us, because it should be heard today by colleagues across the House and Ministers on the Treasury Bench, especially the Chancellor. It should be heard because when she spoke, Michelle had millions of others behind her in the same position.

“My name is Michelle and I am currently a single parent to 2 children aged 12 and 7. I have been in receipt of legacy benefits for 7 years. Prior to this I was a working woman with a career in finance, a tax payer. Due to my health issues I currently receive the legacy benefits of income-based employment and support allowance, child tax credit and of course child benefit. April 2020 saw a rise of 1.7% to legacy benefits.

Living on social security is incredibly challenging for families; it provides less than minimum expectations of living. During the pandemic those challenges have been magnified with social restrictions and home schooling. £20 sounds so little but it means so very much. I became interested in why we had not received it.

In November of 2020 I emailed my...MP about the £20 uplift and legacy benefits, she in turn enquired with the Department of Work and Pensions about the situation. I was pleased to have received a response from both, but still somewhat downhearted at how little they understood the situation.

The main recommendation from my MP and the DWP was to consider applying for Universal Credit at this time to obtain the £20 uplift. Is the suggestion that people on legacy benefits request to be migrated to Universal Credit a feasible option you might ask? For me, to risk weeks of zero income for my family would be totally impossible and have knock-on effects of missed bills and potentially surviving on whatever charity we have not already exhausted. I cannot, as a responsible mother, take that risk.

I was also informed by my MP that ‘those on legacy benefits may have benefitted from other support such as mortgage holidays and income protection schemes’. She also mentioned increases to housing allowance. I am eligible for none of these and have no options to move home—I do not qualify for a council house despite being in an overcrowded home in poor repair that I can barely afford. I cannot afford to rent nor would I likely be accepted. These suggestions are not a solution to the problems we face.

As it stands, being prohibited from accessing the £20 uplift pushes me further into using credit for everyday expenses such as the weekly food shop and utilities. Therefore I pay interest on food, heat, water, light, shoes.

So what would £20 a week, equivalent to just under a...month of benefits which I calculate at £1,040 in total (over 10% of my income), mean to my household? It is hard to pick just one thing, there are numerous options. Food is usually one of the few bills parents have the ability to reduce in hard times, so to give more food security and reduce the reliance on cheap processed food would be a big benefit. Being able to keep the house warm would help my arthritis and the asthma suffered by my son and I so that it does not flare up in the damp. I could buy equipment for home schooling, or repair the kitchen tap, or not have to rely on hand-me-down clothes from friends and family who have already a shortened life from being worn. I could afford hair cuts for all of us.

Ultimately the £20 uplift would go directly towards the health and prospects of a generation of children, my children, who have so much potential, resilience, imagination and compassion due to their circumstances and the times we live in. And all we need to do is to support their parents to get those children to a point where they can build a good life for themselves. This will not happen if for the sake of £20 they are hungry, or cold or their needs aren’t met. The £20 uplift is the foundation of hope for children.”

I thank Michelle for being willing to share her experience last week and for agreeing to forward her words for me to read to you today. They speak of what happens to families who are not given adequate support, of the difference that £20 per week could, should and would make to those on legacy benefits, and of what will be ripped away in April from those on universal credit. When the discussion opened up, Michelle went on to say that even if the health effects of the pandemic are back under control by the end of March, which is likely to be a stretch, the economic impact for families on low incomes—like Michelle’s—will be felt for months, possibly years, to come.

Michelle will be paying back credit and interest on credit for months, even years, because she needed to purchase the minimum required to ensure that her children could learn at home and to pay for food and other essentials. That shows the deep holes in the social security safety net, both prior to and during the pandemic, that people are relying on credit cards for food, heating and clothes—basic essentials.

As I have said in this Chamber before, the uplift and social security rates in general should not be determined by the pandemic; that should be determined by what people need to live. The Office for Budget Responsibility expects more than 800,000 people to become unemployed in the second quarter of 2021, after the job retention scheme stops again. Will living costs be any less for those households? Will it be any easier for them than it is now with the uplift in place? Absolutely not.

Social security is supposed to be there for any of us when we need it, insuring us against hard times—like the NHS when we are ill. What Michelle and millions of others are telling us is that social security is not adequate to support families, who are having to rely on credit cards to buy food, heating and clothes. By holding off taking the decision any longer, the Government are letting down those families who have no certainty, no security and no means to plan.

Instead of analysing the needs of recipients and permanently uprating universal credit and legacy benefits by £20 a week, the Government have been flying kites about providing a one-off £500 grant, but only for some. That is the UK Government trying to do as little as they can get away with in an attempt to get through a difficult political situation. That would not in any way replace the long-term security that the uplift provided and will do nothing for those newly unemployed after the grant has been applied. Making the £20 per week uplift permanent and extending it to legacy benefits is the least they should be doing, particularly as it will not even make up for the cuts since 2010.

The UK Government have a choice: make the cuts to social security since 2010 a little less worse by making the uplift permanent and extending it to legacy benefits, in turn saving many families from poverty; or cut that lifeline further, making out-of-work support the least generous that it has ever been, impoverishing millions. Today, it appears that we may not even have a vote, most probably because if we did, there would be a significant rebellion by Government Back Benchers. If Ministers do not plan to oppose the motion, they must honour it as quickly as possible. They owe it to Parliament, but, most importantly, they owe it to Michelle and the millions of families such as hers on universal credit and legacy benefits who need this help as soon as possible.

[Mr Deputy Speaker (Mr Nigel Evans)]

The Opposition wind-ups will begin at 6.55 pm, the Government response at 7.05 pm and the Question put at 7.15 pm. There is a three-minute limit on all Back-Bench contributions.