Social Security

Stephen Lloyd Excerpts

Monday 5th February 2018 Commons Chamber

[Stephen Lloyd (Eastbourne) (LD)]

It is a privilege to respond to the social security benefits uprating order on behalf of the Liberal Democrats. As the Minister knows, the Government have been obliged by law since 1992 to increase the value of certain disability benefits in line with inflation, and I am pleased to see that attendance allowance, carer’s allowance, disability living allowance and the personal independence payment will be going up by 3%. My colleague from the Scottish National party, the hon. Member for Airdrie and Shotts (Neil Gray), also noted that the Government have recognised that they made a tremendous mistake over PIP for people with mental health issues, and I am glad that it is being increased by 3%. However, over the next few months while this absolute shambles is sorted out, I doubt that the many people on PIP who have mental health issues will appreciate that increase as much as they might have done if the Government had not been so foolhardy in the first place.

I value the fact that pension credit is going up by 2.2% and that the widows pension in industrial death benefit is increasing by 3%. To be fair, I also appreciate the fact that the Government have used their discretion to increase working-age benefits for disabled people in line with inflation, particularly around the support group component. As the Minister will be aware, people who are on support group employment and support allowance often have a profundity of disability which means that they cannot work, irrespective of the support they get. I welcome the fact that the Government have increased that by 3%.

It is always good to see the state pension triple lock. The last time I was here, we were in coalition, and I am delighted to see the Government continuing to implement Lib Dem policy by introducing an increase of 3% this year. However, I also want to flag up my disappointment, as other colleagues have done, that the Government have not used this opportunity to give some succour to the many women born in the 1950s and who are part of the Women Against State Pension Inequality campaign. This would have been a good opportunity to send a message that the Government are listening and are prepared to come up with something to salve the frustration and anger of many millions of women across the country. As I have said before in the House, I believe that all the parties are culpable in this regard. The Conservatives originally brought in the changes through the Pensions Act 1995 without telling anyone. Labour did nothing for the 13 years it was in government, and then we had the coalition. As we are all culpable, I hope that we can work together to come up with the kind of transition payment that I profoundly believe the WASPI women deserve. I am disappointed that the Minister has not mentioned this today.

I shall move on to the elements that I am unhappy with. In accordance with the Welfare Reform and Work Act 2016, working-age benefits will be frozen until April 2020. I will not go through the whole list of benefits, but the consequences of this freeze will be absolutely deplorable. I shall give the House an example. The Child Poverty Action Group and the Resolution Foundation have identified that, from this year onwards and for the next four years, single parents stand to lose an average of £2,380 per annum. That is an enormous amount of money for anyone to lose from their annual budget. I am on a very good salary here—we all are—and I would notice if that amount were suddenly taken out of my salary. For single parents to have to suffer that over the next four years is absolutely wrong. I am very disappointed that the Government are continuing with the freeze despite all the evidence from robust, independent and reputable organisations such as the Joseph Rowntree Foundation and the Resolution Foundation. As the hon. Member for Stretford and Urmston (Kate Green) so eloquently said, the impact of the benefits freeze is simply cruel.

[Mr Jim Cunningham]

One of the consequences of this is that people have not been assisted with burials, because nobody ever looks at burial charges, and I wonder whether the hon. Gentleman has noticed that the number of pauper burials is starting to increase in this country. Surely that is quite an indictment.

[Stephen Lloyd]

The hon. Gentleman might know that an additional aspect of the benefits freeze is that the bereavement support payment is frozen. That is just unacceptable, and I will also keep banging on about the cuts affecting single parents.

[Kate Green]

The hon. Gentleman is absolutely right to highlight how particularly unfair these freezes are to single parents. It is obviously extremely difficult for them, as the sole carer of their children, to increase their family income by increasing their working hours. Does he therefore agree that special attention should be paid to their needs in the benefit system?

[Stephen Lloyd]

I heartily agree with the hon. Lady. There are more than 2 million single parent families, which must involve many millions of children, and the effect on them will be devastating if the Government do not address this matter very quickly. If they leave it for another four years, I can barely comprehend the damage that it will do to many of those children.

I am also disappointed about the employment and support allowance work-related activity group benefit—the WRAG—which is for disabled people whom the DWP recognises as having the capacity to work but who need a certain amount of support in order to get back into work as a consequence of their disability. This is an area that I have been supporting for many years before I came into politics, because I totally share the view of many others in the Chamber that work is the best way out of poverty and the best way to boost self-respect. However, after the coalition—the Liberals would never have allowed this—the Government cut the WRAG payment by 30%. I see that that has not changed. In fact, the Government are looking at removing it completely.

I ask hon. Members to imagine that they have a disability, that they have been unemployed for six or seven years, and that they want to get back into work. They will be supported by their local Jobcentre Plus and by the DWP, but because they have been away from work for a long time, they might lack confidence. They will therefore be gently directed, guided, assisted and mentored into work. I now ask them to imagine what would happen if the DWP then said, “Oh, by the way, we are going to reduce your income by 30%.” What would that do to their self-confidence, and to their determination to stay in the work-related activity group? I can tell them that because human nature is what it is, more and more disabled people will try to move into the support group as a result of this cut, and that will cost the state more. This shows the Government’s complete lack of understanding of disability and of human nature. Bad move!

Turning to the work allowance, one of the first things that George Osborne, now editor of the Evening Standard, did after the Liberals were defenestrated in 2015 was to slash £3 billion per annum from the work allowance. When I was on the Work and Pensions Committee, along with the hon. Member for Stretford and Urmston, I was so supportive of universal credit because, despite all its clunky bits, the work allowance meant that work really did pay. By removing £3 billion per annum since then, which will continue for the next four years, work no longer pays, which is completely counterproductive. The Government have kept all the worst elements of universal credit and have dumped the best element: the work allowance.

I pointed out in DWP questions earlier that universal credit is not working for the self-employed due to the minimum income floor. People who are self-employed may earn x amount of money one month and y the next—it could be less or more—but the way that universal credit is designed can mean that, at the end of 12 months, someone who is self-employed and earned £15,000 will have received less in benefits than someone who is employed and earns £15,000 or £20,000. The Conservative party, which always trumpets itself as the aspirational party, is specifically working against the self-employed, which is absolutely daft. As we know, the Government have abolished housing benefit for 18 to 21-year-olds, and housing benefit payments in the private rented sector have been frozen since 2016.

[Alison Thewliss (Glasgow Central) (SNP)]

Does the hon. Gentleman agree that the cancelling of benefits for under-21s leads to a perverse incentive? If young people are in supported accommodation, it does not actually make any sense for them to leave and go back into ordinary rental housing, because they cannot afford it.

[Stephen Lloyd]

I thank the hon. Lady, who makes such a good point. Again, it is a false economy, because the situation just leads to more dysfunction and challenging circumstances for families. It will prevent younger people becoming independent, and it will cost the state more money.

In drawing my remarks to a close, I want to return to the issue of single parents once again. I urge the Minister to take responsibility for his Government and to listen to these figures. There are more than 2 million single parents in this country, who will have x million children, and they stand to lose nearly £2,500 a year in benefits under the benefit freeze. Those people do not have a lot of money; they are just trying to bring up their children. The situation is unacceptable. I urge the Minister not to ignore that important issue when he responds and to say something that we can perhaps take back to those many hundreds of thousands of single parents.

--- Later in debate ---

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

I rise to focus on the pensions aspect of this debate. We would all agree it is the duty of the United Kingdom Government to make sure that pensioners fully understand the impact that pension changes will have on their retirement planning. This is, of course, an extremely complex matter, and we know that many people struggle to understand the impact that changes to their pensions will have on their pension pots. The movement from a basic state pension and a state earnings-related pension scheme—commonly known as SERPS—to a one-off calculation is far from straightforward, and it will have an impact on people’s ability to understand their pension pots. Indeed, some people who have been extensively contracted out will get just the basic state pension figure.

We have heard tonight from my hon. Friend the Member for Airdrie and Shotts (Neil Gray) that it is good that there will be a minimum guarantee linked to the consumer prices index, but there will also be some adverse impacts. We know, for example, that those who were contracted out were not necessarily aware and did not necessarily understand what it meant, and certainly could not and would not have anticipated that their future retirement income would be negatively affected by the Government’s changes to the state pension. Those without savings to fall back on, such as the WASPI women, are hit very hard. They face a significant loss of income and real hardship.

Many of us are tired of saying it, but I hope that the Minister is not tired of hearing it—he is hearing it, but he and his Government do not seem to be listening. The UK Government should have better communicated the impact of these changes on those who were contracted out. It is absolutely imperative that the UK Government make sure they adequately inform people of the impact of the new state pension on their pension pots, as they have a duty to do.

That is worth saying because, apart from Government Members, just about everyone agrees that the UK Government have completely failed in this duty with regard to WASPI women. Changes under the Pensions Act 1995 began to be made in 2010, but women were written to only from 2009. Many were simply not told, so they were completely unaware of the changes being made to their pensions. That is an appalling abdication of responsibility, and it shows complete disregard for the impact of such changes on the lives of those affected.

Many WASPI women were simply unaware of the changes, but the Government have not been listening. It is worth remembering that DWP research carried out in 2004 found that less than half the women surveyed were aware of the impact the changes would have on their state pension age, with awareness particularly low among those who would arguably be worst affected—women who were economically inactive.

In addition, the Pensions Commission said in 2005 that

“a policy of significant notice of any increase (e.g. at least 15 years) should be possible”.

In 2008, the Pensions Advisory Service also reported low levels of knowledge about the state pension and said that that “must be addressed” by the Government. The warning signs were all there, despite how much the UK Government insist that they did enough to inform women of changes to their pension age.

This whole episode has undermined the social contract that the state pension represents. If Members do not believe that, perhaps it is worth spending five minutes with a WASPI woman. With the impact of contracting out, it is extremely important that the Government tell the House what provisions are in place now, and have previously been in place, to ensure that people are fully informed of the impact on their pension pots. If some people are unable to make ends meet due to lower pension payments because of contracting out, the Government need to explain what support and advice will be made available to them.

The fact is that pensions are far too important to be kicked about by Governments of different political persuasions. Once again, as we have heard from my hon. Friend the Member for Airdrie and Shotts, we in the SNP are asking for an independent pensions commission, and we will continue to do so. Only then can we properly address the needs of pensioners and prepare for the looming pensions and savings crisis that many fear will come to pass. I draw the Minister’s attention to the spike in pensioner poverty, which shows that many of those in the over-60 age bracket are being failed by the Government.

[Stephen Lloyd]

Does the hon. Lady agree that perhaps one way forward is for the parliamentary ombudsman to look at what was clearly poor-quality communication, from the 1995 Act onwards, and to make a ruling on whether the communication was good enough? We would then find out for sure what I think is true, which is that there was poor communication. We rely on the parliamentary ombudsman to give us that steer.

[Patricia Gibson]

I thank the hon. Gentleman for his insight. That idea is worth pursuing, but, rather sadly, I fear that the WASPI women now feel that the only option left to them is a legal challenge in the courts. If that is where the matter finds itself, that in itself is an indictment of a Government who have let these women down. Either way, the WASPI women are not going to go away, and perhaps through the parliamentary ombudsman and perhaps through the courts, this matter is far from over.

The Joseph Rowntree Foundation has said that 300,000 more pensioners have been driven into poverty over the past four years, which is the first sustained increase in pensioner poverty for more than 20 years. That, on its own, should give us pause for thought. [Interruption.] The Minister shakes his head, but he should take it up with the Joseph Rowntree Foundation, which is a very credible organisation.

There has been a sustained attack on pensioners, and we saw that in the Government’s election campaign with the attack on the triple lock and the threat of a dementia tax. Thankfully those threats have receded, because they cost the Government their majority, but the matter requires the Government’s full attention. The Government should reflect on the electoral consequences, as well as the moral consequences, of these attacks.

According to the European Commission’s 2015 research, the UK has a wider than average gender pensions gap. We are trailing behind the rest of Europe on how we treat our pensioners, which is a matter the Government should take seriously. After the WASPI fiasco, confidence in pensions has been undermined at a time when we are trying to encourage younger generations to plan for their future. Those two situations do not sit side by side very comfortably.

An independent pensions commission would ensure that employees’ savings are protected and that a more progressive approach to fairer savings is considered, as we move towards a period when the new state pensions take effect. An independent pensions commission is needed more than ever. It is time for the Government to consider it seriously in the long-term interest of pension security, and I urge the Minister to do so.