Carer’s Allowance Overpayments
Rushanara Ali Excerpts(2 weeks, 6 days ago)
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Anna Dixon
I absolutely agree with the hon. Gentleman that the impact of the overpayments on carers is terrible, and I am going to share the story of someone who was affected. I am sure others have heard similar shocking stories. As many as one in five unpaid carers who claim carer’s allowance and work part time were hit with overpayments. Thousands of carers have been left with huge debts and the fear of financial ruin.
Helen cares for her son Robin. He was born with a heart condition, respiratory vulnerabilities, developmental delay, mobility issues and Down’s syndrome. Helen gave up work as a teacher to support Robin and she relied on carer’s allowance. She also received some royalties for online resources that she had created as an education provider. She was paid those every six months, but the Department for Work and Pensions considered them as monthly earnings. It stopped her carer’s allowance and informed her that she had incurred overpayments going back over four years. She was charged more than £2,000 and told to pay back £50 a week. In her words,
“there was no care of how we would live or survive. It took me three very long years to repay the debt. It hung over like a great shadow, the letters, the fear of what could come. We were devastated by the department’s actions. Carers just don’t have bank balances that can stretch and withstand such pressures…you are so vulnerable…it shouldn’t be this difficult”.
As I have said, Helen’s is not an isolated case; thousands of carers are in this position, not as a result of failure on their part to report to and notify the DWP, but owing to a failure of Government. This scandal is a stain on the record of the British state.
I therefore commend this Labour Government for asking Liz Sayce to conduct an independent review of carer’s allowance overpayments. She made it clear that overpayments were caused
“not by widespread individual error by carers in reporting their earnings but by systemic issues preventing them from fulfilling their responsibility to report.”
I welcome the fact that the Government have accepted the vast majority of her recommendations and set aside £75 million to implement them.
Among other things, the review called on the Government to reform the earnings averaging processes and guidance, as well as that for allowable expenses, so that there is clarity, transparency and predictability, and it called for a thorough reassessment of cases to right the wrongs and deliver redress. It called for creative short-term solutions to address the cliff-edge crisis, while the DWP works on a longer-term plan. That is vital. If someone earns one penny over the earnings limit, they have to pay back the whole weekly carer’s allowance. The Sayce review found that although the earnings limit cliff edge does not itself cause overpayments, it dramatically increases their scale and impact, negatively affecting people’s health, finances, wellbeing and opportunities to work. Will the Minister update us on progress on the introduction of a taper system?
Liz Sayce recommended a whole range of other reforms, from upgrading computer systems to using more empathetic language, improving the join-up between types of benefits and simplifying the system. I thank her and her team for completing this crucial task. I urge the Minister to implement the recommendations with urgency and to set out the timeline for doing so.
Turning to those affected, I welcome yesterday’s announcement that the Government have launched an audit of more than 200,000 carer’s allowance cases affected by unclear Government guidance that was in place between 2015 and 2025. The cases will be reviewed, and debts potentially reduced, cancelled or refunded for some 25,000 unpaid carers. That is excellent news and I am sure the Minister will say more. However, I believe that there are several categories of people who have been adversely affected whose cases remain outstanding. The DWP appears to be accepting responsibility only for those affected by the unlawful guidance on average earnings and not for the lack of clear guidance on expenses deductions.
Will the Minister ensure, as the audit begins, that the DWP fully addresses all aspects of maladministration? First, there should be consideration of cases in which the DWP held information regarding expenses but did not act on it or make corrections for many years. Secondly, I urge him to ensure that cases in which data has been “lost” by the DWP are dealt with as Liz Sayce recommended, and treated as cases of official error unless the DWP can prove otherwise. Thirdly, in the cases of those affected by the failure to adjust universal credit correctly, Sayce recommended that the DWP should pay UC arrears. I would be grateful if the Minister addressed whether the audit will include reviews for those missing groups.
Rushanara Ali (Bethnal Green and Stepney) (Lab)
I congratulate my hon. Friend on securing this important debate. She rightly highlights the important contribution that carers make to our country and the savings of £184 billion a year. The carer’s allowance scandal that this Government have had to deal with, which has taken place over a number of years, has parallels with the Post Office scandal in the way that individuals have been treated. Does she agree that the Department for Work and Pensions, which rejected a recommendation by the Work and Pensions Committee to undertake a regular audit of its progress on carers, should do that, so that we can see the progress the Department is making?
Anna Dixon
I am a member of the Public Accounts Committee, and we have requested that the DWP reports every six months on its progress on implementing the Sayce review. As a member of that Committee, I will certainly be keeping a close eye on progress.
My final point is about the culture in the DWP. I have had the opportunity to challenge its senior officials in the Public Accounts Committee, and I was shocked by the culture on display, which clearly regarded the victims of Government incompetence as benefit fraudsters. It disturbs me that that culture has been prevalent for so long and that, despite knowing about carer’s allowance overpayments for many years, the Department did little or nothing. As a Committee, we are clear that the lack of integrated and concerted leadership from the Department exacerbated the crisis. I ask the Minister for reassurance that he is confident that the senior team at DWP understand the nature of the harm done to carers, are fully committed to putting this right and do not adopt a defensive culture.
On the 50th anniversary of carer’s allowance, I call on this Labour Government to right the wrongs caused by the state, which have parallels with the Post Office Horizon scandal, as my hon. Friend the Member for Bethnal Green and Stepney (Rushanara Ali) said, and to put right the scandal of carer’s allowance overpayments so that our carers are paid what they deserve and not punished for the dedication and care they provide.
Sir Stephen Timms
My hon. Friend makes a very good point. I will come on to that, because there is some progress in that area.
As my hon. Friend said, having made the change to the earnings limit, we commissioned the independent review led by Liz Sayce, the former chief executive of Disability Rights UK and a well-respected and widely recognised expert in disability benefits. Her review was published in November and, in my view, she did a brilliant job. She really got to grips with what had gone wrong, and I echo my hon. Friend’s thanks to her. The report found that many carers had faced unexpected debts because of errors in the way that the DWP had applied averaging rules on fluctuating earnings. The guidance used by DWP staff since 2015 had not properly reflected the law, which permits averaging over a period when assessing whether earnings are above or below the earnings limit.
The case that my hon. Friend mentioned of somebody who was receiving income once every six months is a clear example of the problem. I do not know what the figures were in that case, but it may well be that if Helen’s earnings had been averaged over six months instead of being taken into account in one month, they would have been below the limit. That is exactly the sort of instance that we will examine in the reassessment exercise, which I will say more about in a moment.
We accepted 38 of Liz Sayce’s 40 recommendations in full or in part, and we have already made progress on more than half of them. I will set out those recommendations and what we have done in response, and I will pick up on a couple of my hon. Friend’s questions. The review recommended putting right historical overpayments caused by flawed guidance on the averaging of earnings. I am pleased to say that new and correct guidance has now been in place since the start of September 2025, but it was wrong from 2015 for 10 years.
We are now delivering the reassessment exercise that Liz Sayce recommended: reclassifying affected overpayments as “not recoverable”, refunding carers where appropriate, and applying a fair approach where records are no longer held by the Department. The reassessment exercise began yesterday, so this debate is particularly well timed, and I am grateful to my hon. Friend for having secured it.
As my hon. Friend said, the Government have set aside £75 million of funding for refunds under the exercise in the financial years 2026-27 to 2028-29. That is a three-year period; we are hoping we can complete the exercise in two, but just to be sure, we have allowed three years to ensure we can complete it properly. We are expecting to review more than 200,000 cases, so it is a major undertaking. As she said, we estimate that we will be reducing, cancelling or refunding debts for perhaps some 25,000 carers in the course of the exercise.
Rushanara Ali
I draw the Minister’s attention to a point about reassessment made in yesterday’s Guardian:
“the government has admitted its existing ‘business as usual’ overpayment recovery policies will be maintained while a full overhaul of the benefit is completed, in effect ensuring that carer’s allowance penalties will continue to be imposed.”
Can the Minister assure us that that is not the case and that these penalties will not continue to be imposed?
Sir Stephen Timms
Let me come to that point in a moment. I saw the article that my hon. Friend refers to. It is an important point, and I will address it in a couple of minutes.
My hon. Friends have quite rightly raised questions about accountability for the review’s delivery. We have appointed a senior responsible officer, and we have committed to update both the Public Accounts Committee and the Work and Pensions Committee on progress every six months. The review highlighted the need for clearer guidance and better communication with carers, particularly on earnings averaging, overpayments and reporting responsibilities, so we have revised the decision letters so that carers are clearer on how their earnings have been averaged and on exactly what changes they need to report and when.
We have also redesigned the overpayment communications to be clearer and to show more empathy, I hope, than was shown in communications previously. We have strengthened the signposting to independent advice and debt support, including to charities and free money guidance, and we have made it clearer how carers can ask questions, challenge decisions or agree affordable repayment plans. We are continuing to test and develop the letters and the guidance, and there has been recent user research to assess clarity, understanding and impact.
We are planning further improvements. I want to express my appreciation for the carers organisations, particularly Carers UK and the Carers Trust, that we have been working with. They have put a good deal of work into this, together with the Department, to try to ensure we get these communications right. I hope that is going to be a significant improvement.
The Sayce review pointed to the lack of awareness and take-up of carers’ national insurance credits. We want to make sure that carers understand what they are entitled to, so we have been reviewing our letters and guidance to increase awareness. The review recommended reducing the impact of the earnings cliff edge while longer-term reform is developed. As my hon. Friend the Member for Shipley quite rightly pointed out, if someone is a penny over the earnings limit, they are not entitled to any carer’s allowance; that has been the case ever since 1976.
We have commissioned research on the impact of the higher earnings limit, which is now being regularly updated, unlike in the past, and commissioned behavioural research to inform future policy decisions, including changes to regulations, short-term mitigations and longer-term reform, including a taper. In the end, I think that will be the answer: instead of an earnings cliff edge or cut-off limit, there should be an arrangement so that the carer’s allowance reduces in a tapered way. It will take some time to develop that and put the IT in place and so on, so we are looking at what we can do in the meantime.
As my hon. Friend touched on, the review recommended better join-up between carer’s allowance, universal credit and other benefits. We are aware that a considerable burden is placed on carers, requiring them to resolve offsetting issues themselves. We have accepted Liz Sayce’s recommendation, and we will put in place an automated solution. While we develop that—again, that will take a while—we will put in place a manual workaround.
The review recommended tackling backlogs and identifying overpayments earlier. We have reduced the backlog of automated earnings notifications from HMRC. We now process those alerts much faster, allowing issues to be identified more quickly—another point raised by my hon. Friend. In future, we want to follow up on all those alerts, not just about half of them as we did in the past, so that we can draw people’s attention to problems as they arise. Taken together, those actions are about listening to carers, fixing what went wrong, supporting people better and modernising carer’s allowance in the future.
In response to the review’s recommendations on faulty averaging guidance, we will reassess carer’s allowance cases that might have been affected. A number of people, including my hon. Friend the Member for Bethnal Green and Stepney, have raised the question of why we did not pause all carer’s allowance earnings overpayments action pending the review’s outcome. My answer is that we have been clear about our approach all along: we have to balance fairness for carers with our duty to taxpayers. If money has been paid out incorrectly, it needs to be recovered. We have retained that position as the review was under way.
In most cases, the Department already holds enough information to carry out the reassessment, and affected carers will not need to take action unless the DWP asks for additional details. For older overpayment cases, dating back to 2015 or perhaps a few years after that, the DWP may no longer hold the relevant data and information: we are required to retain data only as long as it is needed for the purpose for which it was collected. The Department will open a simple online form to allow people to submit the relevant information. We are aiming to do that in November this year.
The Department will work closely with organisations supporting carers who think they may have been affected to register for reassessment on gov.uk. Everybody whose case is reviewed will be notified of the outcome, including whether their overpayment has been confirmed or changed. Advice and support for anyone whose carer’s allowance case is, or might be, involved in the reassessment exercise will be available, at no cost, from the Department or trusted partner organisations such as Carers UK and the Carers Trust—I thank them again.
Hon. Members have asked how progress will be tracked. The reassessment exercise is part of our broader response to the independent review and, as I have said, we have committed to updating the Public Accounts Committee and the Work and Pensions Committee on our progress every six months. Those updates will include statistics on progress, and they will enable the Committees to scrutinise progress and hold the Department to account. We will also put some information in our annual report and accounts.
Rebuilding trust requires honesty, accountability and action, and that is the approach we have aimed to take throughout this process. We have to fix the problems and correct the mistakes; the work of unpaid carers is too important and too valuable not to do so. More broadly, we want to improve and modernise carer’s allowance to make it easier for unpaid carers to combine their caring responsibilities with paid work where they are able to, and better reward them for doing so. We will also ensure that those receiving carer’s allowance and universal credit receive a more joined-up service than they have in the past. We owe that to those who provide such a vital service to our fellow citizens.
I know that my hon. Friend the Member for Shipley, the all-party parliamentary group and the Committees represented in the debate will scrutinise how we deliver on those aims very closely. They are absolutely right to do so.
Motion lapsed (Standing Order No. 10(6)).
Youth Unemployment
Rushanara Ali Excerpts(1 month, 2 weeks ago)
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Pat McFadden
The hon. Gentleman opposes the changes that we made to national insurance, but he neglects to mention that employer national insurance contributions are not required for employees under the age of 21, unless they are earning more than £50,000 a year. He opposes those changes while supporting extra expenditure on the NHS. As I have said to him a few times, if his party supports extra expenditure, it really has to support revenue-raising measures to fund it.
Young people will have heard the hon. Gentleman dismiss the changes that I have set out today; in fact, they will have heard him say that if he was asked to choose between management courses and young people, he would choose management courses—that is now the established position of the Liberal Democrats. I think that many people would be surprised to hear that in some years, most apprenticeship expenditure has gone on those over the age of 25 who are already in work. We have made a choice; we have chosen young people, and for good reasons. We have chosen them because of the scarring effects of youth unemployment, which I mentioned in my statement, and we now have on record that both the Conservative party and the Liberal Democrats are opposed to our prioritisation of young people.
Rushanara Ali (Bethnal Green and Stepney) (Lab)
I welcome this excellent initiative, with the backing of £2.5 billion of investment, and I commend the Secretary of State on trying to get a grip on the scourge of youth unemployment. We saw a generation lost during the previous Government because of the failure to support young people. What will the Secretary of State do to support disabled young people? The backlog and delays in the Access to Work programme are a real issue. Will he say more about what charities and social enterprises can do, and how they will be supported, in addition to the public sector, to get more young people who are NEET into work?
Pat McFadden
My hon. Friend asks about disabled young people. It is really important that we get more help and support to disabled people who, in the past, were too often signed off, written off and forgotten about. That is not good enough for them or for the country as a whole. The Connect to Work programme, which is devolved to elected mayors and local authorities, is helping disabled people, and the WorkWell programme seeks to get over the divide between health advice and employment advice. She is right that there are issues with the Access to Work programme. It is a really good programme, but there is a backlog that I want to see reduced because it is an important programme that helps disabled people to get into work and stay in work.
Budget Resolutions
Rushanara Ali Excerpts(2 years, 1 month ago)
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Rushanara Ali (Bethnal Green and Bow) (Lab)
Does my right hon. Friend agree that the Prime Minister’s tax plans will leave households on average £870 worse off under the Conservatives?
Rachel Reeves
My hon. Friend has done the maths and is absolutely right. Taking into account the changes to the tax threshold, the announcements yesterday and in November, and council tax, by the end of the forecast period the average family will be £870 worse off.
As the Resolution Foundation highlighted just this morning, the 8 million tax-paying pensioners will see their taxes increase by an average of £1,000. That is a collective £8 billion tax grab from our nation’s pensioners. As Paul Johnson, the director of the Institute for Fiscal Studies, said yesterday:
“This remains a parliament of record tax rises.”
That is the legacy of this Conservative Government.
The Tory Government’s pickpocketing has meant higher taxes on working people, leaving them with less money at a time when their daily lives are getting more expensive. Yesterday, the Chancellor said that a person on average earnings is £900 better off, but let us take a look at that claim. He has ignored not only his own stealth tax rises, with the tax thresholds and council tax, but the rising costs of energy bills, food, mortgages and rent. In fact, rather than being better off, as he claimed, household disposable income is set to fall by £200 per person over the course of this Parliament.
The Secretary of State for Work and Pensions (Mel Stride)
Thank you, Madam Deputy Speaker. The right hon. Lady commenced her remarks by saying much about where Labour is on tax. She criticised the aspiration that the Government rightly have to abolish national insurance at some point in the future. She rather disingenuously repositioned that as a firm commitment, rather than an aspiration, but let us set that to one side.
The right hon. Lady knows all about firm commitments, because we had a firm commitment from her to £28 billion- worth of spending every year over the forecast period. That did not survive contact with reality. Indeed, she has little to say that is original. When she writes about economics, she has to cut and paste from Wikipedia. When she trumpeted her ruinous £28 billion spending plan, she ultimately had to U-turn and run for the hills. For this shadow Chancellor, when it is not cut and paste, it is cut and run. [Interruption.] I thought the right hon. Lady would like that.
The right hon. Lady has also accepted our tax measures as set out in yesterday’s Budget, including the abolition of non-dom status and the windfall tax on oil and gas. She has hypothecated the money raised from those two measures many times over—for the NHS, dentistry, breakfast clubs and so on. Now that she has accepted all the tax measures in the Budget, I invite her to come back to the Dispatch Box; I will give way to her if she will let us know whether she will U-turn again on her spending commitments on the NHS and dentistry, or whether she will put up taxes and borrowing. I would be very happy to hear from her—all right, perhaps not.
Rushanara Ali
When the Secretary of State was Chair of the Treasury Committee, he was keen on Office for Budget Responsibility assessments and forecasts. Indeed, he argued for them, but his then Prime Minister and Chancellor failed to listen to him and crashed the economy. He and his Government want to pursue the aspiration, as he now calls it, of scrapping national insurance contributions altogether, which would cost £48 billion a year. Will he commit to seeking an OBR forecast and assessment of that, and showing how the Government would pay for that?
Mel Stride
Let me talk about the general point that the right hon. Member for Leeds West (Rachel Reeves) made about the tax burden. It is as if history has been erased from her mind. The fact is that the covid pandemic shrank the economy overnight by 10%, and this Government stepped in, supported jobs, and saved 10 million jobs as a result of the intervention that we came forward with. It is as if it has been erased from her memory that a war is going on between Russia and Ukraine, and that that has led to an increase in energy prices and inflation. This Government have stepped in to support the most vulnerable in society, including families, pensioners, and the disabled up and down this country. The Government provided £400 billion of support across that period, and in all candour, I do not believe that there was a single occasion on which she opposed any of our interventions. She was up for spending the money to support people, but not up for recognising that it has to be repaid. That is why the tax burden is indeed increasing.
To go back to the point about the OBR’s economic and fiscal outlook raised by the hon. Member for Bethnal Green and Bow (Rushanara Ali), the OBR makes it clear that the measures taken yesterday in the Budget mean that the tax burden will be lower than was forecast in the autumn, as a result of the management of the economy and the reduction in taxes that my right hon. Friend the Chancellor brought forward.
Rushanara Ali
I am incredibly grateful to the Minister for giving way a second time. I remind him that the tax burden has gone up by £27 billion in the last year, and it will go up by £19 billion after the election because of decisions his party made. People who earn less than £19,000 will be worse off because of the Budget. Two decades of lost pay growth—that is the record of his Government over the last 14 years.
Mel Stride
I thought I had already covered this point, but the reality is that the tax burden has had to go up to pay for all the support we provided around covid, and because of the inflationary pressures created by a war on European soil. The hon. Lady cannot get away from the fact that through this fiscal event, and the previous one, 27 million hard-working people, employed in businesses up and down the country, will be better off to the extent of £900 per year. Some 2 million self-employed people will be £650 per year better off. She talks about those earning less than £19,000, but those many millions of people who earn above £19,000 will have a lower tax burden than before, when we take into account the interplay of the freezing of thresholds and the cuts in national insurance.
Rushanara Ali (Bethnal Green and Bow) (Lab)
After 14 years, we needed a sober and serious plan to revive our economy, boost productivity, and encourage entrepreneurship and investment to power serious economic growth. We needed a Budget for growth. Instead, what did we get? We got reckless gimmicks and political trickery.
When the country is crying out for renewal and investment in public services, this Budget puts party before nation. After 14 years of Conservative rule, our economy has been wrecked and vandalised. Before yesterday’s tinkering around the edges, we knew that public debt as a share of national output was at its highest since the 1960s. Debt interest payments are at their highest level since the second world war. The economy is smaller per capita than when the Prime Minister took over after the mini Budget fiasco, when his predecessor and the then Chancellor crashed the economy. This will be the first ever Parliament in which living standards, as a measure of real household disposable income, have fallen.
The Conservatives now expect us to rejoice in their planned expenditure of £9 billion on tax cuts, which will be funded by increased borrowing. This will be dwarfed by the £27 billion of tax rises that came into effect last year, and the further £19 billion that is due to come into effect after the election, because of the choices and the decisions that they have made.
Let us look at the impact of these measures on different groups. Research by the Women’s Budget Group shows that single men will gain, on average, close to £500 more a year than lone mothers from the combined national insurance cuts in the autumn statement and spring Budget. The Institute for Public Policy Research estimates that half the tax cuts will go to the wealthiest households, and just 3% to the poorest.
We also heard the Chancellor boast yesterday of the Conservative party’s intentions to scrap national insurance altogether. Without any plans to fund this, we would see a £46 billion black hole in the country’s finances every year. That is deeply irresponsible. The Conservative party should have learned its lesson, having crashed the economy with the omnishambles of its mini Budget and its £45 billion of unfunded tax cuts, which came at a very high price, particularly in relation to costs and mortgage hikes. And people are still living through that crisis, while the former Prime Minister remains in denial, as she goes off and earns huge amounts of money, dining out on having crashed the economy. This is why my right hon. Friend, the shadow Chancellor, has committed to upholding and strengthening the role of the Office for Budget Responsibility. Only Labour can deliver the economic stability that this country desperately needs and put an end to the Conservative party’s fantasy of unfunded and unsustainable tax cuts.
Steve McCabe
I just wonder whether there is any scope for a special “crash the economy” tax, so that we can claw back some of the money that the former Prime Minister has earned from her speaking tour.
Rushanara Ali
For a start, the former Prime Minister could certainly donate her earnings to the millions of children now living in poverty—poverty that was worsened by her crashing the economy. The parents of children in my constituency are having to work even more to make ends meet, particularly to pay their mortgages, which in some cases have doubled. That is the consequence of the rot that she and her Chancellor caused by crashing the economy.
Matt Western
On a more serious note, reports allege that, ahead of that mini-Budget, the then Chancellor briefed certain hedge fund managers and they made significant financial gains off the back of it. Surely there should be some comeback on that
Rushanara Ali
My hon. Friend makes an important point. Those reports were well publicised at the time, and it is shocking that there has not been an investigation or an inquiry into what happened. Shockingly, the then Chancellor and Prime Minister continued to behave as if they had done nothing wrong, as if we should be grateful that they were in charge at the time. They continue to go on speaking circuits, gaslighting the British public, having crashed the economy and ruined their lives. We are still paying for that. The time cannot come soon enough for this episode to be over, for a fresh start with a new Labour Government.
Of the current Chancellor and his Budget, the former Treasury Minister David Gauke said in an article in the New Statesman that the Budget was a “work of fiction”. He said:
“He wants to be prudent and responsible, and he wants to cut taxes. The reality is that he cannot do both.”
I have a lot of time for the current Chancellor, who inherited an awful situation, but he has not faced up to the reality of needing to be responsible. His former colleague set that out in the article. It is not Labour that is attacking the decisions of the current Chancellor; it is his own former colleague, who was a respected Treasury Minister.
When it comes to growth, one does not need to be an economist to know that the Government’s economic policy is failing. Wages have fallen behind and, according to the Resolution Foundation, real wages will only return to 2008 levels by 2026. That is nearly two decades of lost pay growth, nearly two decades of people not seeing an improvement in their living standards, and nearly two decades of people having to face real-terms wage cuts. By contrast, real wage growth across the OECD as a whole has risen by almost 9%, on average, over the same period. This is costing British workers an average of £3,600 per year. It means that they have had less to spend and, on top of that, they have had to live through the mini-Budget crisis, made in Downing Street, and the cost of living crisis that came after that.
The House of Commons Library shows that UK food and alcoholic drink prices were nearly 7% higher in January 2024 than the previous year, based on the CPI measure of inflation. What does that mean in practice? In constituencies such as mine, and up and down the country, it means millions more children living in poverty during the last 14 years, children in this country going hungry because of the failures of this Government, and parents having to work more hours just to keep their head above water. That is the consequence of what the Conservatives have done to people’s lives in this country.
The Budget leaves those who earn £19,000 or less worse off. That cannot be right. The Office for Budget Responsibility’s forecasts show that GDP will grow by just 0.8% in 2024 and 1.8% in 2025. What about productivity? The Government have talked about the productivity puzzle for a very long time, but they have not managed to address it. In the last quarter of 2023, productivity was estimated to be 0.3% lower compared with the year before, according to the Office for National Statistics. What we have, and have had, is sluggish productivity, flatlining growth, stagnant wages and rising prices. No wonder our country is in recession.
As a consequence, the Government have presided over declining investment in our public services. We have seen the spectre of queues for dentist appointments; people stuck in hospitals because of the failure to invest in local government and social care; the police struggling to cope because of underfunding and cuts in police numbers; the criminal justice system facing massive cuts and, as a result, people not getting justice; major infrastructure projects cancelled, such as HS2, which means that investors have lost confidence; and so much more. I could go on, but I appreciate that others want to speak.
The question is whether people feel better off than they did in 2010 when the Conservative party came into government. The answer is no, because they are working longer hours and working harder. After austerity, which damaged our public services, and after the mini-Budget crisis, which crashed our economy and cost £60 billion to begin with, along with mortgage increases, food price hikes and much else, people are not better off. Of course, we have not mentioned partygate, the abuse of power, the billions wasted in personal protective equipment contracts, and the money wasted in fraud. The billions that we could have used to support people instead went to waste, and in particular cases went into corruption, which has not been addressed.
We have seen an endless queue of Chancellors and Prime Ministers, one after another, experimenting on our country and letting people down. Political and economic instability is causing huge distress to people in our country. What do they have to show for it? A cost of living crisis, often made in Downing Street, and a sticking- plaster Budget designed to help the Conservative party to remain in power. People can see right through it; they will not be fooled by what has been provided. We need a serious Budget for productivity and growth—no more wasting opportunities and people’s talent. We need a Government focused on national renewal, and an economic strategy for growth, which we did not get yesterday.
We could have had a sustainable programme for supporting the small and medium-sized businesses that power our economy—99% of our businesses are in that sector. They could be supported much more to grow our economy. We could have seen much more support for those in the homebuilding industry by reforming the planning system. We could have had more investment in green industries and generating green jobs; a new national wealth fund to unlock billions in private investment; a skills revolution in the form of setting up new technical excellence colleges; and investment in the younger generation, and their skills, education and early years. We could have seen a shift in making work pay, with a genuine living wage, banning zero-hours contract and ending fire and rehire.
Those are some of the things that the country desperately needs. We have seen none of that. We have seen no vision for the future—for renewing our economy and our society. Those are some of the things that we could, and would, deliver if we had the privilege of getting into Government. It is time for change. It is time to end the misery and destruction being caused by this Government. It is time for a change in Government.
Oral Answers to Questions
Rushanara Ali Excerpts(4 years, 10 months ago)
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Rushanara Ali (Bethnal Green and Bow) (Lab)
Richard Burgon (Leeds East) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Will Quince)
Throughout the pandemic, our priority has been to protect the most vulnerable, which is why we spent an additional £7.4 billion last year to strengthen the welfare safety support for working-age people. Our ambition is to help parents return to work as quickly as possible, as there is clear evidence of the importance of having parents in work for reducing the risk of child poverty. That is why we are spending over £30 billion on a comprehensive plan for jobs.
Rushanara Ali [V]
I thank the Minister for his answer, but 60% of kids in my constituency are living in poverty, and over 4.2 million live in poverty across the country. The numbers have gone up by 700,000 since 2010, and the Government’s limited extension to the local support grants does not make up for the cuts to universal credit, which will mean that families are £1,000 a year worse off from September. Is it not time that the Minister reconsidered that decision and made sure that families do not lose £1,000 from September, so that more children are not forced into poverty?
Will Quince
I thank the hon. Lady for her question. We are wholly committed to supporting families with children. We spent an estimated £111 billion, including £7.4 billion on covid-related measures, on working-age welfare in 2020-21. In addition, as the hon. Lady referenced, we introduced the covid local support grant. We have now extended that grant with an additional £160 million in funding between 21 June and 30 September. That brings the total funding package to £429 million. For the hon. Lady’s constituency—I reference Tower Hamlets London Borough Council—it means an overall funding package of over £3 million.
Oral Answers to Questions
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Justin Tomlinson
I thank the hon. Lady for raising a very important point about disability employment. The Government are very proud that we delivered record disability employment—it is up 1.4 million since 2014 alone. Even during these unprecedented challenging times, over the past 12 months 25,000 more disabled people are in work. But we recognise that there will be challenges going forward, which is why we have made changes to Access to Work so that people can get support working at home; we have increased our support through Disability Confident, sharing best practice and providing resources to employers to be able to make changes, often small ones, to take advantage of the huge talent pool available. This is a key area, and in both the forthcoming national strategy for disabled people and the health and disability Green Paper we will continue to look at ways in which we can support employers to offer more opportunities for disabled people of all ages.
Rushanara Ali (Bethnal Green and Bow) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Mims Davies)
This Government are committed to providing support to help young people move into work and avoid the scarring effects of long-term unemployment as we recover from the pandemic. The £30 billion plan for jobs includes new youth hubs and specific interventions targeted at young people. Our DWP youth offer and the kickstart programme are designed to move young people towards meaningful and sustained employment opportunities.
Rushanara Ali [V]
Happy International Women’s Day, Mr Speaker.
Last year, youth unemployment went up by 420,000, reaching 600,000, and it is set to reach 1 million, yet the Government’s kickstart programme has got only 4,000 young people into work, despite employers providing placements. Will the Minister explain by what date her Department’s own target of 200,000 placements will be met?
Mims Davies
The hon. Lady is absolutely correct: we are converting more than 140,000 job placements into starts and 30,000 jobs are currently being advertised. In her area, the London Borough of Tower Hamlets has approval for more than 500 kickstart opportunities in a variety of sectors across the borough. A virtual youth hub is also operating in Tower Hamlets to support people and we hope it will move to face-to-face contact shortly. There are 119 new work coaches in Hoxton and a new temporary Jobcentre Plus is opening in Leman Street in Tower Hamlets in April. We take youth unemployment incredibly seriously. As we move into recovery, we will make sure that young people take up roles and move into work safely, to get those kickstart opportunities going.
Oral Answers to Questions
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Katherine Fletcher (South Ribble) (Con)
Rushanara Ali (Bethnal Green and Bow) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Mims Davies)
We continue to engage with employers of all sizes to create high-quality placements for our young people to get their start on the employment ladder, and to make it even simpler, from 3 February we will remove the 30-job minimum for job applications, giving new applicants the choice to apply directly or via one of over 600 excellent approved kickstart gateways.
Mims Davies
I would very much like to thank my hon. Friend for raising the opportunities for smaller businesses, and the great team at the North and Western Lancashire chamber of commerce for their hard work and the services they provide as a gateway organisation. This is helping many sole traders and employers in her constituency to support our young people to take up these kickstart roles, ensuring that young people have that vital wraparound support, getting them on to the career ladder and, above all, grasping future work opportunities.
Rushanara Ali [V]
With youth unemployment set to reach 1 million and 600,000 already unemployed, can the Minister provide some updates on how her Department will meet the 250,000 kickstart programme target that it stated it would meet? The numbers that the Secretary of State has set out today are worryingly low. Will she also consider removing the six-month requirement, where a young person has to be unemployed for six months before they qualify for the kickstart programme?
Mims Davies
The young person needs to be on universal credit and working with our excellent work coaches. In respect of Hoxton and Poplar, which cover the hon. Lady’s constituency, we are recruiting 27 new work coaches in Hoxton and 67 in Poplar. Since the end of September, we have been working with the new Tower Hamlets youth hub, with local employers and gateways bringing opportunities. I encourage the hon. Lady to visit her local jobcentre to see what has happened there in the past year, because I do not believe she has visited and think that would put her mind at rest.
Oral Answers to Questions
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Justin Tomlinson
I can absolutely reassure my hon. Friend that disabled people will be at the very heart of the consultation on both the Green Paper and the national strategy for disabled people. As soon as it is safe to do so, we will begin the roadshow of consultation across the whole country, making sure that all voices are heard and shape our future priorities.
Rushanara Ali (Bethnal Green and Bow) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Will Quince)
We keep all policy under review. The particular policy change the hon. Lady references would not only cost around £2 billion a year but could not be operationalised now even if we wanted to, because all the focus is rightly on the Department’s response to covid-19. I say to her gently, though, that it is a policy based on fairness; those in receipt of benefits are faced with the same choices in life as those not in receipt of benefits.
Inequality and Social Mobility
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The Secretary of State for Work and Pensions (Amber Rudd)
I am grateful to the Opposition for giving me the opportunity, on behalf of the Government, to talk about our commitment to reducing inequality and to improving social mobility.
I know I came into this House to help people improve their lives. In my experience, so did every single Member of Parliament sitting across this House. We do that every weekend in our surgeries in our constituencies, and we do that on whichever side of the House we sit—addressing different policies and trying to use the levers we have and the financial stability that we hope to have to improve the quality of people’s lives—because supporting social mobility, fighting poverty and giving people a chance is not distributed along party lines. That is why I always want to hear from colleagues who are fighting to improve people’s lives, from the vision of my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), who introduced universal credit, to the tireless work of the right hon. Member for Birkenhead (Frank Field) in championing the most vulnerable in society.
Rushanara Ali (Bethnal Green and Bow) (Lab)
When she came to office, the Secretary of State rightly delayed the two-child policy limit along with the universal credit roll-out, and she deserves credit for that. Does she agree that she should scrap that limit altogether to prevent millions of children from being forced into poverty? That would be one way in which she could honour the commitments that she is making today to tackle child poverty.
Amber Rudd
The hon. Lady must bear in mind the context in which some of those welfare reforms were made. The Government came to office in 2010, in the midst of an economic crisis. Reforms were needed, and if we had not made those reforms, the consequences for the national economy could have been so destabilising that they might have reduced the funds that are now available for us to spend on social security.
Universal Credit
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Alok Sharma
The hon. Gentleman and I have discussed universal credit before and, as I have said, my door is always open. If he has specific cases, I will be happy to review them.
Rushanara Ali (Bethnal Green and Bow) (Lab)
Over 100 MPs supported the cross-party campaign to scrap the two-child limit policy, including the hon. Member for Glasgow Central (Alison Thewliss). However, some 3 million children will still be affected by the policy, even though the Government have decided to relax it somewhat. Will the Minister heed MPs’ advice and scrap the policy altogether?
Alok Sharma
We have listened. In November, I spoke to the hon. Lady and other colleagues about the policy, and we have changed its retrospective nature. However, I point out that the overall policy is about fairness not only to those who receive welfare but, of course, to taxpayers.
Universal Credit and Child Tax Credit: Two-child Limit
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Rushanara Ali (Bethnal Green and Bow) (Lab)
It is always a pleasure to serve under your chairmanship, Mr Streeter. I congratulate the hon. Member for Glasgow Central (Alison Thewliss) on her tireless campaign on this very important subject and on securing today’s debate.
The issue sits in the context of the wider debate about universal credit, which will affect 1 million homeowners, slightly fewer than 750,000 households on disability benefits and 600,000 single parents. On universal credit, two in five households will lose about £52 a week in payments, and across many constituencies entire families will be severely affected—if they are not already. In areas where universal credit has already been rolled out, food bank use has increased by 52%. As the hon. Lady said, as part of the 2015 package, from April 2017 low-income families with a third or subsequent child lost their entitlement to additional support through child tax credits.
Kate Green
Does my hon. Friend agree that contrary to what the hon. Member for Glasgow Central (Alison Thewliss) suggested, Labour did not support the two-child limit? We abstained on the Second Reading of the Welfare Reform and Work Bill but voted against Third Reading. Does she agree that we should place that on the record?
Rushanara Ali
I concur. It is really important that the Scottish National party, the Labour party and other parties that oppose the policy continue to work together, so that we can protect families. More families will be affected from February next year, as universal credit is rolled out, and the retrospective element, which the hon. Member for Glasgow Central mentioned, will be devastating. No family could have prepared for a policy that was to be applied retrospectively; nor is it right that children should be retrospectively punished in that way. This, in short, is a punishment of children, and it is totally inhumane. No Government should be standing up for such a policy. Given that the Minister has recently taken on his role and the policy was not his idea, I urge him to reflect carefully on what is being said and on the representation being made to him, to ensure that the policy is reviewed and reformed.
If the Government are concerned about family size and think that families should not be as large as they are, just as with teenage pregnancy, public education exercises can be more successful than punitive measures that punish children. In developing countries, where there is a case for encouraging smaller families because families cannot provide, family sizes have been brought down through education and women’s empowerment, but that is a different debate from what is happening here.
Philip Alston the UN’s special rapporteur on extreme poverty and human rights recently said of the two-child limit that it is “in the same ballpark” as China’s one-child policy, because it punishes people with more than two children. Reports also state:
“The UK government has inflicted ‘great misery’ on its people with ‘punitive, mean-spirited, and often callous’ austerity policies driven by a political desire to undertake social re-engineering rather than economic necessity, the United Nations poverty envoy has found”.
It cannot be right that in one of the wealthiest economies of the world, our children face hunger and punishment.
Mr Gregory Campbell (East Londonderry) (DUP)
In encouraging the Minister to reconsider, does the hon. Lady agree that it is important that he understand that most people—most of those I meet, anyway—are in favour of reform, because of the complexity of what preceded universal credit, and are in favour of encouraging people into work, but are most definitely not in favour of stigmatising or of ensuring that the very vulnerable in society are punished as a result of the first two?
Rushanara Ali
I agree. I do not think that policies that punish vulnerable people are ultimately likely to succeed, which is why the Minister needs to rethink both this aspect of the universal credit policy and the policy more generally. In their attempt to simplify, the Government have found ways to cut funding. People will be worse off under universal credit.
Since implementation, the policy has already affected 400,000 children, and some 3 million children are likely to be affected. That is why I echo the points the hon. Member for Glasgow Central made, calling on the Minister to review the policy and put a stop to it, certainly until the extension of the policy next February, which will be devastating for families.
In my constituency, a large number of children and families will be affected by the policy. We have a large Muslim population and, as has been mentioned, people of other faiths are also affected. I call on the Minister to take into account the unequal impact the policy will have and the fact that the equality impact assessment is flawed.
Rushanara Ali
I will have to conclude, to give others the opportunity to speak. The equality impact assessment does not recognise the negative consequences for certain groups. More than 100 MPs wrote a letter to the Prime Minister, copying in the then Work and Pensions Secretary and the Chancellor, and we have still not had a response, which is really unfortunate. I encourage the Minister to go back to his Secretary of State and ensure that she responds to it and seriously rethinks the policy so that children in our country are protected.
Several hon. Members rose—
The Minister for Employment (Alok Sharma)
It is a pleasure to serve under your chairmanship, Mr Streeter. I thank the hon. Member for Glasgow Central (Alison Thewliss) for securing this debate. I know she has a long-standing interest in the subject, and earlier this year we met at the Department for Work and Pensions to discuss issues relating to this particular policy. Yesterday, as the shadow Minister just pointed out, there was a cross-party roundtable led by the Bishop of Durham to discuss these issues and I took part for some of the time, as did the hon. Lady. I thank all Members who have contributed to today’s debate.
My style is generally not to feed rancour in a debate, because I think it is important that we have a civilised discussion and colleagues have an opportunity to raise issues that are important to them, but the hon. Member for High Peak (Ruth George) talked about the fact that an economic mess has been created over the past eight years. I respectfully say to her that she was not in this House in 2010. A number of us were, and I would say that the economic mess we inherited was from the previous Labour Government. I must point out that 3.3 million jobs have been created since 2010—I see hon. Members shaking their heads in disbelief, but that is a fact—and wages are now outpacing inflation. The vast majority of those jobs are full-time and permanent, at a high level of education. That is not an economic mess.
Rushanara Ali
Will the Minister address the social mess that his Government have created? That includes not only this policy, but welfare and policing—the list goes on. Will he respond to the serious concerns that hon. Members have raised today? That is what we are after: not looking backwards, but addressing the problem at hand.
Alok Sharma
Of course I will address the issues, but it is important to look back and see where we have come from to reach the policies that we are now putting in place.
Several hon. Members mentioned universal credit. I know that this debate is not about universal credit, but I am afraid I must point out that the legacy benefits system is not really fit for purpose. It is incredibly complicated, and as a result 700,000 households are not claiming—or are not able to get hold of—the full amount owed to them. Under universal credit, those households will be £285 better off on average per month. Likewise, 1.4 million people spent the best part of a decade on unemployment benefits under the last Labour Government, but that is changing.
I accept there has been discussion about finances, but I must say to SNP colleagues that, as Labour Members have pointed out, the Scottish Government have the power to create new benefits in devolved areas. They are able to provide assistance to meet short-term risk and they have the ability to top up reserved benefits from their own resources.