Social Security (Additional Payments) Bill

Sarah Olney Excerpts

2nd reading
Wednesday 22nd June 2022 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

It is vital that we provide additional support to those in receipt of disability and means-tested benefits who are covered under this Bill, but in itself it is not an adequate response to the depth and breadth of the cost of living crisis we are currently experiencing. The Chancellor is already hammering families with an £800 tax hike this year, more than wiping out measures in this Bill for those who will benefit from it. The national insurance rise and the freezing of income tax thresholds are unfair tax rises, making the cost of living crisis worse for millions of families across the UK by decreasing employees’ take-home pay. Households are facing the highest tax burden in 70 years; the typical family will see a hit of £1,200 a year through a combination of Conservative party tax rises and soaring energy prices, according to the Resolution Foundation. We welcome the Bill’s provision creating the £650 payment, but call for it to be paid in full in July instead of being paid in two instalments in July and October, because people need that support right now—although more support might still be required in the autumn.

The simplest way for the Government to help people right now would be to scrap the tax hikes to which I have referred. What we most want is an emergency VAT cut. Cutting VAT from 20% to 17.5% for one year would save families an average of £600; it would put money back into people’s pockets right now, boosting the economy and supporting struggling businesses. The Office for Budget Responsibility forecasts that the Treasury is due to take in an extra £8.6 billion in VAT due to inflation, which is £430 per family, so we think the Government could afford to fund that.

Cutting VAT would help to address spiralling inflation as well as keeping costs down for families. A similar VAT cut in 2008 boosted retail sales by about 1% and aggregate expenditure by 0.4%; that shows the difference it could make to struggling businesses right now. At the time of that same VAT cut in December 2008 inflation fell from 4.1% to 3.1%, and a similar saving right now could make a huge difference to struggling families.

In addition to the welcome targeted support announced in this Bill we would like the £20 uplift to universal credit restored. We accept all the arguments that that was an emergency measure, but this is also an emergency. The Government said at the time that higher wages are a better option than benefit increases, but we have seen just this week the tension caused between the historically high rate of inflation and the downward pressure the Government would like to maintain on employee wages, and this debate will be played out in many different circumstances across the summer and into the autumn. The Government’s argument that wage increases are the route to restoring household finances will come under considerable pressure, so I encourage them to think about that £20 a week uplift once more, because it would provide some of the poorest households on UC with an additional £1,000 a year, and we all know from our postbags what a difference that would make to the very poorest in our constituencies.

Much as we welcome the measures in the Bill, some of the most vulnerable groups in our society are not going to receive any additional support in facing the cost of living crisis thanks to these measures. The Government must look at that again. Several Members across the House have mentioned unpaid carers, and I want to add our contribution on that. They have once again been forgotten by the Government, who have provided no additional support despite the invaluable role unpaid carers play; it is difficult to calculate the additional pressures there would be on our care system if they did not play that role. As has been said, unpaid carers face additional costs as a result of their caring responsibilities. Those claiming carer’s allowance are being excluded from the list of eligible benefit recipients, leaving hundreds of thousands of unpaid carers, including 40% of working-age carers in receipt of carer’s allowance, without any additional support as a result of this Bill.

Millions of vulnerable adults and children depend upon the efforts of our country’s carers, yet as we see time and again, their voices are not being heard by the Government and again they are being excluded from support; they are being abandoned by the Government. The Liberal Democrats will keep championing the cause of unpaid carers, and I really impress on the Government the need to do more for those families.

Another issue that has been raised by a number of right hon. and hon. Members is families with multiple children in poverty. A flat-rate payment does not take into account the number of people in a household, which means that larger households, particularly those with more children, will face the squeeze much more severely. Of course, it is much more likely that a larger household will be made up of more children, so it is children who will suffer the most from having a flat-rate payment. Families in the bottom half of the income distribution with two or more children spend twice as much as equivalent families without children on food, essential household goods and services, clothing, footwear and transport, which leaves larger families in an especially vulnerable position when it comes to the level of inflation that we are seeing. The presence of younger children in a family exacerbates the prevalence of poverty due to the increased financial pressures that come with caring for a young child. Families with under-fives are therefore especially vulnerable.

My team recently met representatives of Little Village, a baby bank organisation that operates mainly in London. They told me that they are expecting to support an additional 1,000 families this year, and that they helped over 6,000 last year. Families cannot just go along to the baby banks; they have to be referred by education, health and social care professionals. These are only the families that have been identified by authorities as being most in need, so we know that the real impact of the cost of living squeeze on families with young children is likely to be much more widespread. Little Village staff told me that pregnant women are skipping meals in order to feed their toddlers, and that families are cutting toes out of their baby onesies to avoid having to buy new ones. This is what families are already having to do to deal with the cost of living crisis. The total number of children in poverty is predicted to rise to 5.2 million by 2023-24—an increase of 1.1 million children. We really need to do more to recognise the size of the households that are being targeted by some of this help.

I also want to mention rural communities and rising fuel prices. The Liberal Democrats want to see an expansion of the rural fuel duty relief scheme. It is currently available only in a handful of remote areas of the UK, but we know that the huge price rises in petrol across the country are having a disproportionate impact in areas where people cannot switch to public transport, particularly the most rural areas. The Government should immediately think about extending the rural fuel duty relief scheme where public transport options are limited, which would include Devon, Cornwall, Shropshire, Cumbria and some parts of Wales, and they should double the relief to 10p a litre. We are seeing real impacts on the rural economy because people are limiting how much they are driving, which affects not just local businesses and the rural economy, but young people accessing educational and employment opportunities. This is something that the Government really must address as a matter of urgency.

I want to take the opportunity to raise the case of my constituent Edna Price, who lost her right arm in a horrifying industrial accident some 45 years ago. Most of her income since then has come from her industrial injuries compensation fund, but this is not a qualifying benefit. For Edna, it causes a number of practical, everyday problems. The income that she earns from the fund is not large, but because it is income from that particular source, and not from pension credit or a qualifying source, she regularly misses out on some of the other, non-financial benefits that are offered to people who are on qualifying benefits. I have written to the Department about Ms Price’s case and would really welcome the opportunity to speak further to the Minister, because Edna will miss out again on this benefit, even though she already struggles to afford her fuel bills. I would very much welcome the opportunity to talk further to the Minister about how my constituent can potentially qualify for some of the other targeted benefits, to supplement her industrial injuries compensation.

I am pleased that the Chancellor is using the social security system to target this payment to households most at risk of hardship. I make the point again that it is a much more effective method than the use of council tax banding to calculate who is eligible for a rebate. In my constituency I think we have, out of all constituencies in the UK, the sixth-highest average house price, which causes residents who live in social housing in my constituency quite a few issues. They are on very low incomes, but the properties they live in often attract a high council tax band valuation, not least because the valuations were done back in the early ’90s on much narrower value bands than I think we would think about using if they were to be done again today.

Too many of my low-income constituents are living in houses that do not qualify for the council tax rebate, in particular those in a number of socially rented homes in the Kingston Borough part of my constituency. When they were valued back in 1991, they were assigned a market value based on the privately sold homes around them. I am thinking of a particular estate in north Kingston with very small homes that house particularly vulnerable people. Those homes have been valued too highly to qualify for the council tax help with fuel bills. If there is anything the Minister can say in summing up, or that we could hear in due course from the Chancellor, on how that could be addressed, I would be very grateful. I wrote to the Department on this issue back in March and I have not had a response. As I say, in a constituency like mine with high housing values, it is a big issue for my low-income constituents.

I would like to close by saying that we welcome the measure in the Bill, but there is still so much more to do and so much more that the Government can do not just in spending, but in thinking about the way they identify people in need of assistance. I welcome the opportunity to hear more about that in due course.

[Mr Deputy Speaker (Mr Nigel Evans)]

I am sorry you have had to wait, Mr Mills.