Social Security (Additional Payments) Bill

Nigel Mills Excerpts

2nd reading
Wednesday 22nd June 2022 Commons Chamber

[Nigel Mills (Amber Valley) (Con)]

I am grateful, Mr Deputy Speaker. I was not planning to speak, but I have been tempted to say a few words.

There is a danger, in a debate where we have a quite a small audience, that we think that despite spending billions and billions of pounds, this is a small insignificant thing and not one of the biggest spending items the Government have tried to put through in rushed legislation in history. We should recognise that the Government have responded to a probably unprecedented crisis in a very generous and creative way. Those of us who have been wrestling with this issue for the last few months—almost the same crowd were here for the benefits uprating debate in February, pleading for more help and for a more generous uprating—would never have believed that we would see this level of support and ingenuity, given all the financial turmoil the country has been through in recent years. We must give the Government credit for what they have tried to do to help people through what we all hope is a relatively short-term blip, rather than a long-term, sustained problem.

With the £150 through council tax and the £200 loan via energy companies, that certainly seemed to be the original plan: we were hoping we could get people over a few months of a spike, and then things would get back to normal. We have to recognise now that that is not likely to be the case. We will have to have a much higher rise and one that is perhaps sustained for a longer period, unless some very happy events happen around the world and the situation starts to reverse more quickly than everybody seems to think.

For the next few months, the Government need to think about what they are trying to do and where they are trying to get to. The strategy may be to pass this money out on a one-off basis until next year’s upratings, which we hope will have taken into account inflation so that people with income from benefits and pensions will be able to match the raised outgoings and we will have solved the problem. However, I am not convinced that that will be the case if inflation remains at 9% or 10% for a long period. In April, we will be giving people inflation based on the year to September 2022. There could be another 5% of inflation before we get to March and we may well be back in this position in a year’s time.

Some clarity from the Government on the long-term plan would be helpful. We—the Select Committee and others—have been calling for a while for the Government to do some work to rebase benefits and ensure that key household compositions are provided with enough to meet the cost of living so that the increases will maintain that situation. Otherwise, there is a danger that in the next financial year, even with the uprating, people will get less than they had with this year’s benefits plus the one-offs. In that case, people would be worse off in a year’s time, even though their benefits would have gone up, because they would not have gone up by quite enough. We would be back in a similar crisis, needing more one-off payments in the next financial year—repeating those made in this financial year. That does not strike me as a long-term, sustainable way of running a welfare system.

Huge congratulations to the Government for what they have done in the legislation to get us—I hope—through this problem, but they now need to step back and work out the long-term, sustainable way of delivering welfare at a level that meets the essential living standards that we expect it to. I do not think we can get there through haphazard one-offs and increases that are not based on real-terms inflation at the time such provisions are made. A second uprating in a year may be one way of mitigating that. In fact, it would probably help the Government, because when benefits are uprated, there is often a taper, meaning that not everybody gets the full amount, which could result in a bit of cost saving. The Government could also make use of the taper to be more generous at the lower end of the earnings spectrum, with a higher base amount, and less generous at the higher end, accepting that some people would not get the full amount. We are asking not necessarily for huge amounts of extra spending, but for more targeted and better use of the systems that are in place.

It is interesting that in February we were told that the Government could not possibly use any inflation number that was less than six months old because the systems could not cope, yet we now appear to have managed to come up with some ideas in late May and will make the first payment to people about seven weeks later, in the middle of July. That suggests that when there is a will and desire, things can be done at less than six months’ notice. I hope that that will be built on when we get to next year’s uprating, when we could at least try to creep the inflation number from September to December, so that it is only three months out of date by the time we get there.

On ingenuity, the Government’s one-off help payments now involve: a payment by councils, reverse-engineering the council tax system; effectively a payment by energy companies for what was the loan and is now the gift; a payment through the welfare system; a payment through the tax credit system; and a payment that I think is the winter fuel allowance being increased for the year. That is quite a creative way of spreading the workload to make all those payments, but it produces a complicated system, whereby people do not really understand what help they have from who and why, and when they should have had it and if they have received the right amount.

Now that we have some more time to plan, if there are any future rounds—I hope we do not need them, but if we need them, we ought to have them—I would hope that we could find a way of such payments being made through one mechanism, or at least one for benefits and one for pensions. Having a multitude of mechanisms risks people missing out, because they just do not know who they should be checking with, or what they should be claiming and chasing.

It will be far more beneficial to my constituents if they get the first of these payments in the middle of July, as sadly many still have not had the £150 through the reverse running of the council tax system because the council still does not have the approved form to put on its website for people to fill in. That means it cannot make the payment to those who do not pay by direct debit; people still are not receiving the support we wanted them to have in April, and it will probably be a good few weeks before they get it.

There is much to welcome in the legislation. We should not be mealy-mouthed in our praise for the Government, as this is exceptional support at an exceptional time. I hope that we can do what we did through the pandemic: rush things out at the start, and then think them through and develop better systems if we have to do a re-run as the crisis continues.

Social Security (Additional Payments) Bill

Nigel Mills Excerpts

Committee stage
Wednesday 22nd June 2022 Commons Chamber

[David Rutley]

We have had a useful debate on Second Reading and I welcome the chance for more detailed examination of the Bill in Committee of the whole House. We had an extensive debate, with some probing questions, so I will endeavour—with the support of the Opposition Front Bench and your permission, Mr Evans —to move as fast we can through the Committee stage.

Clause 1 will ensure that the £326 and £324 cost of living payments totalling £650 will be made to an individual or couple who have a qualifying entitlement to a social security benefit or tax credit. The clause also sets out the qualifying benefits and tax credits. Where a claimant is entitled to both a qualifying social security benefit and a tax credit, the social security benefit will be the qualifying benefit for the purpose of receiving a cost of living payment.

Clause 2 sets out who is eligible for the two payments that make up the £650 cost of living payment. It ensures that only those with the entitlement to a positive payment or award in respect of the passporting social security benefit or tax credit will receive a cost of living payment. The aim is to ensure that we target payments to those on the lowest incomes. The clause also defines the relevant eligibility period in relation to the qualifying days set out in clause 1.

[Nigel Mills]

The Minister will be aware that there are some situations in which an employer pays a month’s wages late, wages are paid on a four-weekly cycle and two payments are made in a month, rather than one, or a one-off bonus is paid in a certain month. Those situations could mean that someone who ordinarily gets a UC payment in a month has a month in which they are entitled to nothing. If that happened to be the month that was used for the qualifying payment in this situation, the person would miss out on the whole £326. Would the Minister be tempted to use a two-month period, so if someone gets at least 1p in either month they would get the £326, rather than risk the strange one-offs that could wipe out someone’s monthly payment?

[David Rutley]

I understand the point that my hon. Friend makes. We have already talked about fluctuating earnings. The important thing here is that we have had to define these eligibility periods to be able to get the payments out speedily, and we have also made sure that there is a protection mechanism. There is a wider package of support that is available other than just the £650 cost of living means-tested benefit. There is also the further funding of the household support fund, which will help these individuals.

Clause 3 addresses the situation in which a person has a qualifying entitlement to a social security benefit or a tax credit more than once. It ensures that, where the person is entitled to both universal credit and another social security benefit, they will receive the cost of living payment as a result of their entitlement to universal credit only.

Where a claimant is entitled to both a qualifying social security benefit and a tax credit, the social security benefit will be the qualifying benefit for the purpose of receiving a cost of living payment. Where a person is entitled to both child tax credit and working tax credit, but not a qualifying social security benefit, they will receive the cost of living payment as a result of their entitlement to child tax credit only. That will ensure that a person does not receive duplicate cost of living payments irrespective of whether they have a qualifying entitlement to more than one passported social security benefit or tax credit.

Clause 4 places a duty on Her Majesty’s Revenue and Customs to make a cost of living payment to people whose entitlement to qualifying tax credits only becomes apparent at a later date. The clause will ensure that those people will not miss out, which is a point that has been raised by others in this debate.

Clause 5 places a duty on the Secretary of State to make a disability cost of living payment of £150 to 6 million people who receive eligibility benefit in respect of 25 May 2022. This disability cost of living payment will support disabled people with the additional costs they may face. The clause also sets out the eligible benefits, or the qualifying benefits, for this particular additional payment. To be eligible, the person must have been entitled to a payment of one of these benefits in respect of 25 May 2022.

Clause 6 confirms that the administration rules used for each cost of living payment are the same as the benefit or payment that conferred the eligibility. Clause 7 provides for co-operation between the Secretary of State, the Department for Work and Pensions and HMRC in the delivery of cost of living payments. The scale and scope of the measure also require collaboration with other colleagues across government. Together, the bodies set out in the clause ensure that the intended recipients of the cost of living support are paid. There is a need to have data sharing to minimise the risk of duplicate payments and to support operational delivery.

On clause 8, some important points have been raised on this already on Second Reading. It ensures that the cost of living payments are disregarded for the purposes of tax and social security. I can confirm that the cost of living and the disability cost of living payments are exempt from tax. Payments will not affect a person’s entitlement to social security benefits or tax credits, either as capital or as income. I can also confirm that the payments will not be subject to the benefit cap.

[Nigel Mills]

When my hon. Friend says that they will be disregarded as capital, does that mean that, if somebody quite prudently puts the money in the bank and saves for their high energy bills in the winter, that would not take them over the £16,000 savings limit for universal credit? Effectively, they could ignore not just the receipt of the income, but that part of their savings as well if they were to treat them in that way.

[David Rutley]

Just to clarify, yes. That is the important thing. The clause ensures that every person who is entitled to a cost of living payment receives every penny, as all Members across the Chamber will want to see.

Clause 9 sets out the definition and interpretation of certain terms used in the Bill. Clause 10 explains the procedures for laying the regulations, previously referred to under the powers contained in clause 1(4), to specify the qualifying day for the second cost of living payment, which will be no later than 31 October, and clause 6(5), to apply and disapply regulations around the administration of payments, including overpayments and recovery, as is required. These provisions ensure that regulations made under the Bill can enable the efficient delivery of the second payment in the autumn. Finally, clause 11 defines the territorial extent of the Bill, whose provisions extend to England and Wales, Scotland and Northern Ireland. This ensures that the payments will be payable throughout the United Kingdom.