Social Security (Up-rating of Benefits) Bill

Stephen Timms Excerpts

2nd reading & 2nd reading: House of Commons & Money resolution & Money resolution: House of Commons
Thursday 1st October 2020 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

I agree with the case that the Secretary of State has made: that the Bill is needed because in all likelihood there will be no growth in earnings this year. In those circumstances, it is right for the Government to take the action needed, as we are doing this afternoon, to increase the state pension and linked benefits, including the standard minimum guarantee in pension credit.

Like other Members, I want to say a few words about pension credit, because it has proved a very effective tool for reducing pensioner poverty since it was introduced in October 2003. The hon. Members for Glasgow South West (Chris Stephens) and for Delyn (Rob Roberts) were quite right to ask about the take-up of pension credit. I heard the answer that the Secretary of State gave the hon. Member for Glasgow South West, and I would be interested to know what the outcome of those efforts has been. She made an interesting point about what the BBC has done. Does the Minister have any information on whether those changes have led to increased take-up of pension credit? The most recent figures, for 2017-18, show that only six in 10 of those eligible were claiming it, and only 70% of the total amount of pension credit that could have been claimed was in fact being claimed.

Beyond the measures in the Bill, it would be helpful to hear a little more about what further plans the Government have to tackle pensioner poverty. The Social Metrics Commission, chaired by the noble Baroness Stroud in the other place, estimated in its 2020 report that 1.3 million pension-age adults are living in poverty, and the Government’s own figures for pensioners living in relative poverty after housing costs is higher still, at 1.9 million.

The number of pensioners living in poverty had fallen substantially, thanks largely to the introduction of pension credit. However, as others have rightly reminded us, over the past five years or so those numbers have started to go in the wrong direction. That is reflected in the Social Metrics Commission’s measurements. The Joseph Rowntree Foundation—the hon. Member for Delyn drew attention to its “UK Poverty 2019-20” report—makes the point that:

“For years, pensioner poverty decreased across the UK, but now those that are single, have non-white ethnicity or have a landlord, are seeing increases.”

The hon. Member for Delyn quoted the troubling rate of pensioner poverty that we are seeing at the moment, with about 2 million UK pensioners living in poverty, with the highest rate of pensioner poverty in London, at 23%. The Bill will ensure that pensioners’ incomes rise during a period of no increase in earnings, or possibly even a fall in the value of earnings.

I welcome the fact that the Government are taking these steps, but it is not only pensioners we need to be concerned about, as other Members have mentioned already. What will the Government be doing for people of working age who are facing rising unemployment and loss of income? Is there a risk that, on its own, the Bill will exacerbate existing intergenerational unfairness? We are debating the Second Reading of the Social Security (Up-rating of Benefits) Bill, but there are some benefits up-rating matters that the Bill does not address. The Social Metrics Commission’s 2020 report estimated that 8.5 million people of working age are living in families in poverty, and concluded:

“The older you are, the less likely you are to be in poverty. 33% of children aged four and under are in poverty, compared to 23% of those aged between 40 and 44 and 10% of those aged 75 and over.”

The Select Committee, in its first report in this Parliament—on the DWP’s response to the coronavirus outbreak—welcomed the £20 a week increase in the rate of universal credit at the start of the pandemic. The Secretary of State has already referred to that increase, which was introduced to last for a year. The Committee recommended:

“now that the initial surge of Universal Credit claims has mostly been handled, the Department should immediately seek to increase the rates of relevant legacy benefits by the equivalent amount. This increase should be backdated to April 2020, as recommended by the independent Social Security Advisory Committee.”

Sadly, that recommendation on a unanimous basis by the Select Committee, and the recommendation by the Social Security Advisory Committee, have not been adopted by the Government. It is quite unusual for the Government to ignore a recommendation, which is largely technical in character, brought forward by the Social Security Advisory Committee. In their response to the Select Committee, the Government simply made the point that those other benefits

“were increased by 1.7% in April 2020 as part of the annual up-rating exercise”.

They went on to say that the Department has

“no plans to increase these benefits further at this stage.”

The Secretary of State does have the power to uprate those benefits at her discretion and I very much hope that she will.

I welcome the provisions in the Bill, but pensioners must not be the only people we are concerned about. We need to consider the interests of working age people as well. After such a long freeze in working-age benefits, there is a very strong case for making the £20 a week increase permanent, as was pointed out by over 50 organisations brought together by the Joseph Rowntree Foundation yesterday. The Select Committee has been reflecting on that in its current inquiry on the five-week wait for universal credit, on which we will be publishing a report in the coming weeks.

Whatever the Government’s conclusions on that, I put it to the Secretary of State at the Select Committee yesterday that it would surely be inconceivable for Ministers to cut everybody’s benefit by £20 a week in April before the pandemic was even over. The Secretary of State told me that she is still in “active discussions” with the Treasury over this subject. I suspect that everyone in the Chamber wishes her well in those discussions. We will certainly all be eager to learn the outcome.

Let me reiterate the call made unanimously by the Select Committee that the £20 a week increase should also apply to legacy benefits such as jobseeker’s allowance, and employment and support allowance. In our view, it is wrong to have a big discrepancy between the incomes of two people in otherwise identical circumstances based merely on the historical accident of which benefit they happen to be claiming. The rates were the same at the start of the pandemic; they should be the same now.

The main argument at the time for not increasing the legacy benefits was that it would take some time to implement on the rather creaking computer systems through which those benefits are administered. I understand the difficulty, but if work to do that had started in April, the increase could have been implemented around about now. There should certainly be no delay in getting on with implementing it now.

I welcome the measures in the Bill to address the uprating of benefits, but there are some other benefit uprating matters not in the Bill that also require urgent attention.