Social Security

Seema Malhotra Excerpts

Tuesday 9th February 2021 Commons Chamber

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

I speak today on behalf of my hon. Friend the Member for Westminster North (Ms Buck), who is unable to be with us.

This country has been tested over the past year and our communities have seen struggle in many ways. The pandemic has also held up a mirror to our country’s resilience and to household resilience. I join the Minister in thanking the work coaches and other civil servants across the country for all that has been done in the DWP to support those in need.

It is right that the uprating order will increase working-age benefits, disability support and the state pension this year, but the Minister will know that the Conservatives froze working-age benefits between 2016 and 2020, and finally increased them by 1.7% last year. However, unemployment support was still at its lowest level in real terms since 1992 prior to the emergency uplift, a policy that has left families struggling to make ends meet.

Labour supports the Government’s decision to honour the triple-lock state pension commitment this year, which will see the basic state pension and the new state pension rise by 2.5%. The Secretary of State has decided to uprate the personal or standard allowances of universal credit, income support, housing benefit, jobseeker’s allowance, employment and support allowance, and disability carer and other working-age benefits in line with prices, but that comes after this decade of cuts. Excluding coronavirus-related increases, the majority of working-age benefits were between 9% and 17% lower last year than they would have been if benefits had been updated by CPI since 2010; that is according to the House of Commons Library.

I want to highlight in my remarks three important omissions from the order. The Minister has referred to the first of them; I think he spent so much time talking about the withdrawal of the uplift because it is a matter of concern to colleagues on both sides of the House—and I do mean both sides of the House. It is disingenuous of him to say that we are scaremongering when all we are doing is highlighting the concern felt by families up and down the country and by many groups that I will also mention in my comments today. He and his Government have yet to say what is happening to this lifeline for families in need—a lifeline through lockdown and as lockdown starts to be lifted. Indeed, there are reports today of the Chancellor and the Prime Minister arguing about what should be happening to the uplift.

The Minister will know of the extra costs that families are facing, including from increased food costs for children at home, the use of small local shops, the need for home schooling materials and increased utility bills. The 0.5% increase on last year’s universal credit level that he has proposed will be academic for those who are set to see a cut—and it is a cut—to their universal credit of £20 a week from April. If the Government are seriously thinking about economic recovery, cutting universal credit is like pulling the rug from under the economy’s feet. This £20 a week is not saved by families; it is spent in shops and businesses across the country, stimulating the economy. And we all agree that this pandemic and the unemployment crisis will not be over by April this year. The reason people want to know about what is happening with the uplift is so that families can plan ahead for what is to come.

The Resolution Foundation has also highlighted the income shock that comes with a move to universal credit, with a third of new claimants reporting a drop in their income of at least 40% compared with a year ago. Citizens Advice has told us that three quarters of the people it is helping who are on uplifted benefits would have a negative budget if the £20 uplift was cut. Trussell Trust research shows that one in five UK claimants reported it very likely that they would be forced to turn to a food bank. The Child Poverty Action Group warned that this move could see another 200,000 children pushed into poverty.

Older people are paying the price, too. The number of those aged 50 to 64 who are out of work has risen by more than 175,000 since the start of the pandemic. This age group is at particular risk of long-term unemployment, and many will be forced to take early retirement before they can afford to do so. Angela in Sunderland told me that she was made redundant four weeks before her partner suffered a life-threatening illness. She became his carer, but the couple, in their 50s, have run out of savings. She is having great difficulty finding work and has drawn on her private pension to cover bills. The cut to universal credit would push Angela and her husband into further financial difficulty, at the worst time. So the Minister and his Government should do the right thing and secure our economy by cancelling the cut to universal credit from April, not least because when Labour forced a vote on the issue he abstained; almost 11,000 people in his constituency as well are on universal credit.

I also want to talk about legacy benefits, because it is discriminatory and unfair that the £20 a week uplift was never extended to those on legacy benefits, many of whom are carers or disabled. There is simply no excuse for it. This injustice has been raised repeatedly by Labour and other parties, and action has been called for by the Chair of the cross-party Work and Pensions Committee, my right hon. Friend the Member for East Ham (Stephen Timms), who is in the Chamber today. Indeed, a Committee report today highlights a recent survey by the Disability Benefits Consortium of disabled people claiming legacy benefits. It found that two thirds of disabled claimants have had to go without essential items at some point during the pandemic, and almost half report being unable to pay rent and household bills.

The Joseph Rowntree Foundation, along with 50 other organisations, has called on the Government to match the increase in legacy benefits, as part of their “Keep the lifeline” campaign. The Government claim that the legacy systems would take too long to update, but that is not a reason; it is an excuse. We are now nearly 11 months into the pandemic, so what excuse do the Government have now for that blatant unfairness?

The order also fails to uprate the benefits cap, which remains at the same cash level since November 2016. That means that families will not see any inflation-linked increase to underlying benefits that they are entitled to. The Minister knows what that means. December’s figures show that 170,000 families are seeing their benefits reduced by £246 per month on average, and 85% of those families include children. Ending the cap would put much-needed cash in the pockets of Britain’s poorest families, helping them through the crisis without a devastating increase in household debt.

Similar also applies to the local housing allowance, which has been frozen in cash terms for 2021-22, and for which the intention is to carry the freeze forward into subsequent years, as hinted by the Secretary of State in a written statement in December. It means that the Government are refusing to make even the bottom 30% of local rents affordable to private tenants.

In a compassionate society, we need a fair and supportive social security system that helps build resilience, supports people seeking work and helps families through difficult times. A quarter of UK families had less than £100 in savings when the crisis began, and the pandemic has hit families’ incomes hard.

Labour is supporting today’s increase to working-age benefits, disability support and the state pension, but the Minister has heard our views today on the major omissions, and if he will not act today, he must act soon and heed the warnings from those on the frontline. They are working with families who are doing the right thing in very hard times and asking simply that their Government be on their side.

--- Later in debate ---

[Will Quince]

I understand the point that the right hon. Gentleman has made. I know that his report goes into some detail on this issue. I gently remind the Chair of the Select Committee that universal credit is about £2 billion more generous than the legacy benefits system it replaced and is part of a broad package of support. Over and above the £20 uplift available for those on universal credit, those in receipt of legacy benefits may be entitled to other measures. It is important that they go on to the gov.uk benefit eligibility checker to check their eligibility before applying, because as the right hon. Gentleman knows, there is no path back to legacy benefits once someone has made a universal credit application. It is important to stress that universal credit is part of that broader package of measures worth more than £280 billion throughout the course of this pandemic. Yes, of course we recognise that people across the country have faced additional costs throughout this pandemic. That is exactly why the Chancellor stepped up with that £280 billion package, including an extra £7 billion in welfare support.

The Opposition spokesman, the hon. Member for Feltham and Heston (Seema Malhotra), said that we should heed the words of those on the frontline. I totally agree and encourage her to visit her local jobcentre at the earliest available opportunity to speak to work coaches, because then she will hear what they think about universal credit and how they believe it has been the tool that not only has enabled us to support an extra 3 million people throughout this pandemic but has allowed them to incentivise, support and empower people into work.

[Seema Malhotra]

I have visited my local jobcentre and keep in close touch with it. I hope that the Minister also listens to what I said about what the Trussell Trust, Citizens Advice and the Child Poverty Action Group have been saying, because that is important, and they will probably want a response from the Minister on those points.

[Will Quince]

I work very closely and meet with all the organisations that the hon. Lady references, but work coaches are an important reference point. They all say without hesitation, when I visit jobcentres across the country, that universal credit is an incredible tool—a powerful tool—to help support and empower people back into work. That is why it is so absurd that the Labour party wants to scrap it.

Several Members raised pension credit and its uptake. I have no doubt that the Pensions Minister will be willing to meet hon. Members to discuss that further, because I know that he has done a considerable amount of work in that area.

The uprating order will ensure that working-age benefits increase in line with inflation, which represents a cash increase of £500 million for working-age benefits. That includes those benefits that contribute towards extra costs arising as a result of disability or a health condition, and pensioner premiums in income-related benefits.

To conclude, I will summarise the benefit increases that the Government are implementing to support those most in need. We are increasing the basic state pension and the new state pension by 2.5%. That will deliver on our manifesto commitment for the state pension triple lock. We are increasing the pension credit standard minimum guarantee in line with the cash increase in the basic state pension to support the poorest pensioners. We are increasing working-age benefits in line with prices; we are increasing the universal credit work allowances so that claimants can earn more before their payments are reduced; and we are increasing benefits to meet additional disability needs and carer benefits in line with prices. I commend the order to the House.

Question put and agreed to.

Resolved,

That the draft Social Security Benefits Up-rating Order 2021, which was laid before this House on 18 January, be approved.