Cost of Living

Stephen Timms Excerpts

Tuesday 5th July 2022 Commons Chamber

[Sir Stephen Timms (East Ham) (Lab)]

I am grateful that we have been granted this debate to discuss the spending of the Department for Work and Pensions. We are all familiar with the facts of the cost of living crisis: price rises are accelerating and inflation in May was the highest since 1982—the highest for 40 years—at 9.1%. In France, inflation was 5.8% and in the eurozone, it was 8.1% on average, so we have a particularly acute problem in the UK. The Bank of England Monetary Policy Committee said last month that it expects inflation to rise to slightly above 11% in October.

In the light of those rapidly increasing costs, the Chancellor announced measures to support households in February, March and May. I warmly welcome that support, which is valued at £37 billion. Two of the support measures that he announced are funded by the DWP and are therefore a focus of this debate: first, the £650 payment for households receiving means-tested benefits, and secondly, the £150 payment for people receiving disability benefits.

I understand that the DWP will pay the first £326 instalment of the £650 payment in the second half of this month. The qualifying day for that—the day on which someone had to have been claiming means-tested benefits—was 25 May. The qualifying day for the second instalment has not yet been announced, but I gather that it will be no later than 31 October. Those payments will be tax free and will not affect other benefit awards. I particularly welcome the fact that, as the Secretary of State confirmed to me in the debate on the recent legislation to enable the payments, they will not be constrained by the benefit cap.

The other measures that the Chancellor announced in May, which are not legislated for by the Social Security (Additional Payments) Act 2022, include two extensions of existing programmes for which DWP is responsible. First, pensioner households will receive a one-off £300 pensioner cost of living payment as a top-up to their winter fuel payment, which will cost in total £2.5 billion. Secondly, there will be an additional £500 million for the household support fund for local authorities to make discretionary payments to people in need—some £421 million for England and £79 million for the devolved Administrations through the Barnett formula. That will cover the period from October this year to March next year.

The household support fund was originally announced in September 2021 with £500 million for local authorities for the six months from October 2021 to March 2022. It was extended with another £500 million for the following six months from April to September this year. I will say more about that later as a relatively new feature of the estimates.

It is worth pausing to reflect on the fact that, although the Chancellor’s announcements are welcome, there are still some concerns. The Resolution Foundation estimates that the

“measures announced this year to support households will in effect offset 82 per cent of the rise in households’ energy costs in 2022-23, rising to over 90 per cent for poorer households.”

It is a substantial response to a substantial problem. The Treasury says that households with incomes among the lowest 10% of all households in England will gain just under £1,200 a year on average as a result of the package, while those among the top 10% will gain around £700 a year on average—significantly less. That strikes me as a broadly appropriate distributional impact.

There are some caveats—for example, the payments are per household. As Save the Children and others have pointed out, larger families will not get any more support than smaller ones, even though children in larger families are at much greater risk of being in poverty. Nearly half—47%—of all UK children in a family with three or more children were in poverty in 2020, so that has a big impact.

The Joseph Rowntree Foundation made the point that:

“One key group who has lost out are unpaid carers”.

We have just debated kinship carers. Only 59% of the 1 million people who claim carer’s allowance also claim means-tested benefits, so the other 41% will not get any additional support through the package. I applaud the Welsh Government’s initiative to provide an additional £500 payment for carers in Wales, and I think consideration should be given to comparable additional support elsewhere in the UK.

People waiting to be assessed for a personal independence payment cannot access the £150 payment. People wait on average five months to be assessed and receive a decision, and some 300,000 people are waiting at the moment. We might think that they ought to be getting some help, but they will not. People waiting for a work capability assessment will not get the payment either. The backlog for work capability assessments for universal credit is not published, so we do not know the size of it, but we know that there is one.

In April, as we all know, inflation-linked benefits were increased by 3.1% in line with the increase in the consumer prices index last September. When the uprating took effect, however, inflation was already over 7% and, as we have been reminded, it is now expected to rise to 11% this year. The Secretary of State previously told the Work and Pensions Committee that she does not favour one-off payments of the kind that the Chancellor announced in May. She is right: welcome though the Chancellor’s announcements are, I agree that it would be far better to have an uprating system that works properly, rather than having to resort to these stopgap measures to deal with the emergency.

Universal credit can be updated quickly, as we saw when lockdown hit, but the legacy benefits cannot be. The permanent secretary told the Select Committee last week that the problem is that uprating programs can only be run at weekends, when the computer systems are not doing other jobs, and that is apparently why it takes such a long time to implement the uprating of the legacy benefits. We have already called for those older systems to be improved urgently, and for the gap between assessing inflation and uprating benefits to be reduced. The need for that to happen is now even clearer, given the problems that we have run into this year.

The crisis is also exposing a much bigger and longer-term problem, which is the continued failure to keep the level of benefits in line with inflation. That is a consequence of successive policy decisions over the last 12 years. The chief executive of the Resolution Foundation said yesterday that the headline rate of benefit for someone who is unemployed is now 13% of average earnings, and that that is the lowest level it has ever been. That is lower, I think, than when Lloyd George introduced unemployment benefit for the first time in 1911.

Nobody should be surprised that so many are having such a hard time; there is no resilience in the support that is being provided, because the level is now so low. We have asked Ministers to explain the reason or thinking behind setting the benefits so low, and all we have been told is, “Well, we uprated it that year, we did not uprate it that year, and this is where we’ve ended up.” There is no rationale for the situation that we have found ourselves in where, in real terms, the level of benefits is at its lowest for more than 30 years.

Citizens Advice North Lancashire, one of the organisations that contacted the Select Committee, told us that

“one-off payments are not a solution to inadequate benefit levels.”

It is right about that. It went on:

“Our detailed research…on Universal Credit from across Lancashire…shows that Universal Credit is not enough to live on in Lancashire. Benefit payments urgently need uprating so that people who cannot work can afford to live off them.”

The Select Committee has agreed to look at the longer-term issue of benefit levels in an inquiry in the coming months, and we will be considering these issues carefully.

I want to comment today on two specific features of these estimates. The first is the household support fund. As I have said, the Chancellor’s package included an additional £500 million for the household support fund, bringing the total amount in that fund to £1.5 billion since October 2021. It is administered by local councils in England, and each council sets its own eligibility criteria.

The grant conditions set by the Government are, frankly, pretty vague. They specify that assistance can be issued by the authority itself or through a third party. One third of the grant is to support households that include a child, another third is to support households that include somebody of state pension age and the balance is for everybody else. It is for support with food, energy and other essential living needs. In a so-called exceptional circumstance, the household support fund can be used to support housing costs.

Local authorities have to submit a statement of grant usage to the Department with plans of how they are going to spend the money, and they are supposed to maintain an adequate audit trail for how they do in fact spend it. We asked the Secretary of State about that at the Select Committee last week, and she told us that local authorities have to make two returns a year to the Department about what happens to that money. I think that information is supposed to be published, but as far as I can see, no information has been published about how the household support fund has been used. The truth is that we know very little about what has happened to that £1.5 billion.

One thing that money could be used for is supporting families with no recourse to public funds, some of whom have been in a desperate situation in the last two years. When asked if the household support fund can he used for that, given that it is a public fund, Ministers—absurdly—say that local authorities should take their own legal advice to find out. At the very least, there must surely be clarity about what councils are allowed to do with this funding.

It may well be that the household support fund is playing a valuable role—I imagine it very likely is—but we just do not know, and we should. If there is to be continued use of discretionary funds such as this, instead of uprating benefits properly, the Department must at least work with councils and develop a clear reporting framework for the household support fund to provide assurance that it is being used effectively and that the support is getting to where it is most needed, because at the moment we just do not know. It would be far better to have an effective and reliable system for uprating the level of social security benefits, so that we do not have to resort to these stopgap measures in situations such as the one we are in at the moment.

The second point I want to pick out is about the benefit cap. The cap has not been changed since 2016, and in 2016 it was lowered. It continues to limit overall annual benefit support for a family to £23,000 in London and £20,000 across the rest of the UK, with comparable figures for a single person of £15,410 and £13,410 respectively. The new cost of living payments will not be constrained by the benefit cap, and I warmly welcome that. I think this sets an important and welcome precedent. It recognises that families up against the cap—and there are over 100,000 of them at the moment—are seeing their costs rising like everybody else.

Given the uprating expected next April, based on the rate of inflation expected in September, the Child Poverty Action Group has estimated that

“an additional 35,000 households will become capped overnight, resulting in a total of around 150,000 households capped in April 2023”.

The North East Child Poverty Commission also contacted the Select Committee, and it told us:

“The benefit cap impacts a relatively small number of households in the North East (fewer than 5,000)…almost all…are families with children…but they are being prevented by the cap from receiving all the support they have been assessed as needing. We urge the Government to lift the benefit cap.” The Government have a statutory duty to review the level of the benefit cap every five years. Until March this year, the obligation was to review it in every Parliament. The last published review of the benefit cap was in 2014, which was eight years ago. The cap was lowered in 2016. The Secretary of State, when we asked her about this last week, could not tell us when it was last reviewed. If it has been reviewed within the last five years, the review certainly has not been published, despite promises to the Select Committee that it would be—and of course it should be. The Government should be open about their thinking in this area.

When the benefit cap was introduced in 2013—my hon. Friend the Member for Westminster North (Ms Buck), who is on the Front Bench, and I were in the Committee that debated this before it took effect—the income threshold was set at median full-time earnings, which at that time was £26,000 a year. Since then, it has been reduced, and of course median full-time earnings are very different now from what they were in 2013 anyway. The level of the cap now bears no relation at all to any particular earnings level.

I warmly welcome that the cap will not apply to the additional payments announced by the Chancellor. That is an important precedent, recognising that families at the benefit cap will be hard hit too. However, with inflation at over 10%, it is imperative that the cap is reviewed ahead of next April’s uprating. It needs at least to reflect average household incomes, as it initially did—it needs to bear some relation to them, surely—and take account of increasing rent, energy and food costs. I urge the Minister to be open with the public and to publish the outcome of that review. The Chancellor’s package means relief from the benefit cap for tens of thousands of families this year, but next year the cap will be back and presumably there will not be any further additional payments from the Chancellor. The level of the cap must be raised before next April because if it is not, the consequences will be dire.

I am very grateful for this opportunity to debate the very important estimates that the Government have provided for us. They make such a big impact on millions of our fellow citizens, and it is vital that such decisions about them are the right ones.

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[David Rutley]

We are having to deal with some challenging headwinds, as a result of the pandemic and now these inflationary pressures, but we have sought to take targeted measures. During the pandemic, especially the early stages, we focused particularly on those who were feeling the impact of changes in the employment market, which were immediate. Now we are focusing our efforts on targeted support for the people and households who will be most affected by inflationary pressures. The means of dealing with those are complex, and we are having to develop systems and processes to get the payments out quickly. Because of their nature they will never be 100% perfect, but we have taken other steps to support those who may not previously have been eligible for support. I shall say more about that shortly.

Our labour market policies are part of our plan to manage inflation, and that is a further reason for us to redouble our efforts to encourage more people to get into work and take advantage of the current buoyant labour market, with a record 1.3 million vacancies. Our multimillion-pound plan for jobs is helping many people into work with the kickstart scheme and the restart programme. Opposition Members do not always talk about the importance of work and the achievements that have been made in the labour market, so let me point out that last week our Way to Work campaign met its ambition of moving more than half a million people into work in under six months. That is an important achievement, not necessarily for the Government —although we welcome it—but in terms of the difference it will make to households throughout the country.

Moving into work and making work pay are core tenets of our strategy to build long-term growth and prosperity up and down the country, which is why we have introduced a number of work incentives. In particular, we have cut the universal credit taper rate from 63% to 55%, and have increased work allowances by £500 a year. Tomorrow, 6 July, we are cutting the national insurance threshold, a move that will be worth up to £330 a year for nearly 30 million working people.

Some Members have mentioned uprating, including the Select Committee Chair, the right hon. Member for East Ham. As part of the Department’s long-term approach, the Secretary of State completed her annual review of benefit and pension rates last year in the usual way, using well-worn, well-proven methods and processes. The state pension and the pension credit standard minimum guarantee were increased by 3.1%, the rate of inflation for the year to September 2021 as measured by the consumer prices index. As I think the right hon. Gentleman will know, we remain committed to implementing the state pension triple lock for the remainder of this Parliament, and on 26 May the Chancellor confirmed that it would be reinstated next year. All other benefits have also been increased this year in line with the consumer prices index of 3.1%. That approach has formed part of a long-standing convention. Since April 1987, all benefit uprating has been based on the increase in the relevant price inflation index in the 12 months to the previous September, helping claimants through the inflationary cycles.

[Sir Stephen Timms]

I am grateful to the Minister for setting out the commitment to uprating in line with inflation, but does he accept my earlier point about the need, in this very inflationary environment, to uprate the level of the benefit cap? Is he able to tell us whether it will be reviewed between now and next April?

[David Rutley]

I was going to come to that later, but as it is an important point, I will address it now.

As has been acknowledged today, none of the new one-off payments will be taken into account in the benefit cap, but there is a statutory duty to review the levels of the cap at least once every five years, and that will happen at the appropriate time. The current unusual economic period, with potentially counterintuitive and shifting trends, will need to be considered in the context of any decision about a review. The benefit cap provides a strong incentive and fairness for hard-working taxpayers and households, and encourages people to move into work. Last week, the Secretary of State told the Select Committee that she was taking advice on the exact timing and the approach. The statutory obligation to review the cap levels at least once a year in each Parliament changed on 24 March 2022, when the Fixed-term Parliaments Act 2011 was repealed, and the new obligation requiring the Secretary of State to review the levels at least once every five years means that the DWP now has until 2027 to complete a review. As I have said, however, she is seeking advice on that.

The annual review of benefits and pensions for the next tax year will begin in the autumn. To measure inflation, the Secretary of State will use the consumer prices index in the year to September. To measure earnings related to the pensions side of the equation, she will use average weekly earnings for the period from May to July. The uprated benefits and pensions will come into effect in April 2023.

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[Sir Stephen Timms]

I am grateful that we have been able to discuss these important issues, and I want to thank everyone who has contributed to the debate. I commend the hon. Member for Glasgow South West (Chris Stephens) for his long-standing campaign on bereavement benefits, and I hope we are reaching a successful conclusion on that. I am grateful to him for all his work on the Select Committee as well. He made an important point in his speech, which I had not thought of before: now that we have a new Government system for paying one-off grants, surely we could use it to make starter payments for universal credit, as the Select Committee recommended in its report on the five-week wait. As things stand, universal credit is not fit for purpose because of that five-week wait for the first regular benefit payment, and I am grateful to the hon. Member for his suggestion. I hope that we can take that up.

My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) made some important points, and I thank her for her work on the Select Committee as well, not least her dogged advocacy for vulnerable claimants of disability benefits. We have heard far too many reports of tragic disasters and errors on the part of the DWP, and we are not yet convinced that those problems have been entirely overcome. She gave us some sobering figures on the extent to which social security has been cut over the last 12 years, and we need to do much better. The hon. Member for North East Fife (Wendy Chamberlain) was right to draw our attention to the position of carers and the need for us to do better on supporting them, as we are now doing in Wales and Scotland. I am grateful to everybody who has spoken today, including my hon. Friend the Member for Westminster North (Ms Buck) on the Front Bench and the hon. Member for Aberdeen North (Kirsty Blackman), who spoke for the SNP.

I think the Minister said, in answer to my intervention, that the Government were not required to review the benefit cap until 2027 because the five-year clock had gone back to square one. I do not think it was reviewed in the last Parliament and I have no information about it being reviewed in the Parliament before that, but whatever the statutory obligation, surely when inflation is 10%-plus the Government need to recognise that families on the benefit cap—there are now more than 100,000 of them—are facing rising prices like everybody else and that the benefit cap must be raised in time for next April.

Question deferred until tomorrow at Seven o’clock (Standing Order No. 54).

Office of the Secretary of State for Wales

Social Security (Additional Payments) Bill

Stephen Timms Excerpts

2nd reading
Wednesday 22nd June 2022 Commons Chamber

[Dr Coffey]

My understanding is that the Secretary of State for Business, Energy and Industrial Strategy, my right hon. Friend the Member for Spelthorne (Kwasi Kwarteng), is aware of that particular channel. I am led to believe that a solution is being developed so that people will benefit from that cost even if they do not receive the money directly, because a lot of park home owners do not pay their energy bills directly. I know that my right hon. Friend is aware.

Returning to what we are doing to help people, we are providing a direct cost of living payment of £650—split into two payments of £326 and £324—to over 8 million families who already get help through means-tested benefits. This includes people on universal credit, income-based jobseeker’s allowance, income-related employment and support allowance, income support, working tax credit, child tax credit and pension credit—both guarantee and savings credit recipients. On top of that, we are providing a £150 payment for approximately 6 million people with disabilities who are on qualifying benefits, and giving 8 million pensioner households an additional £300 alongside their winter fuel payment. Combined, that is extra support of at least £1,200 this year for the majority of households that are least able to absorb rising costs, which takes our total support package to £37 billion.

[Sir Stephen Timms (East Ham) (Lab)]

I just want to check one point. At the moment, about 150,000 working-age people who receive universal credit have their benefits limited by the benefit cap. Am I right to say that these additional payments are not constrained at all by the level of the benefit cap?

[Dr Coffey]

Yes, that is the case. I was planning to cover that later. For the record, I will still make that point.

Our household support fund administered through local authorities in England and the money given to devolved Administrations are further avenues for people to seek help with the cost of essentials. From October, the Government are adding an additional £500 million to the fund, extending support through the winter. That equates to an additional £421 million in England and £79 million for the devolved Administrations, and that will take total funding for this UK-wide household support to £1.5 billion.

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[Sir Stephen Timms (East Ham) (Lab)]

I am very pleased that the Bill is in front of us. The Select Committee has been clear in the past few weeks that, without a big measure on this kind of scale, low-income families would be in very serious trouble indeed in the coming months. I echo the tribute that has just been paid by the hon. Member for Aberdeen North (Kirsty Blackman) to Jack Monroe and her campaigning on this. She gave very compelling evidence to the Select Committee at our meeting on 9 March.

The package that has come forward has been widely welcomed. We put out a call for evidence on the cost of living in May. In response, the Joseph Rowntree Foundation said that,

“the package provided much-needed support for households, which will protect many of them against rising costs over the coming year.”

Citizens Advice welcomes the targeted support to low-income households and hoped that it would

“start to reverse the worrying trends we have seen in our data, including record-breaking food bank referrals.”

Unlike the previous announcements, this May package is properly targeted on low-income families, as it needed to be. The Resolution Foundation described it as offsetting

“the poor targeting of previous announcements.”

It also described it as “serious redistribution”. It is, I think, a serious response to a serious problem. I also welcome the Chancellor’s change of heart over the windfall tax to fund some of the help that is needed.

However, we need to be clear: the reason the Bill is needed is that the system for social security uprating has failed. It is a long-standing system. There is nothing new about the way it is done, but the unforeseen burst in inflation means that it simply has not worked this year. On this occasion, the decision has been taken to replace adequate uprating with ad hoc payments from the Treasury, which will certainly help us through the next few months. We need now to rethink the uprating system to make sure that it does not let us down again.

[Jonathan Ashworth]

I have a question for my right hon. Friend, the Chair of the Select Committee. Is he aware that, in 1976, the then Social Services Secretary, Barbara Castle, came to the House and uprated benefits and pensions for a second time in a year—there was a cost of living crisis then as well. The policy of the then shadow Secretary of State, Norman Fowler, was that uprating should take place twice a year. I wonder whether the Select Committee will consider the arguments that were made in the 1970s.

[Sir Stephen Timms]

My right hon. Friend makes a very important point. The Select Committee will certainly be looking at that. We are conducting an inquiry later this year on the question of the level of benefits, and the issue of how benefits should be uprated will certainly feature. I am intrigued to learn that the Secretary of State was able to do that in the 1970s given that we have been told that the IT systems in the 2020s cannot cope with it. I am certainly interested in seeing more on that.

[Stephen Crabb]

The right hon. Gentleman is making an interesting and important point about how we do upratings. I urge him not to get drawn too far down the path of looking at the system in the 1970s, which was in very different circumstances. There is an issue about the timing of uprating and the figures that are used to calculate it, but the bigger practical issue is the different IT systems and the plethora of different benefits that are still in play. Does he agree that we need to find a way to rationalise and simplify them?

[Sir Stephen Timms]

That would help—just modernising the old systems would help, and I will say something about that in a moment.

We are getting ad hoc payments from the Treasury to tide us over. The Secretary of State rightly spelled out to the Committee the downsides of one-off ad hoc payments such as those that the Bill enables. In oral evidence in February last year, she told the Committee that there were higher risks of fraud attached to one-off payments and that they can make it difficult for claimants to budget effectively—both quite telling points. She said that one-off payments were not

“one of the Department’s preferred approaches”

for providing that financial support. She noted:

“There are some challenges about fraud”

and that there would be difficulties if people claiming tax credits received a one-off payment and then moved to universal credit shortly afterwards. On the question of what might work best for claimants, she told us:

“Previous experience would be that a steady sum of money would probably be more beneficial to claimants and customers, to help with that budgeting process.”

I think she is right; it is not ideal for the Treasury to provide lump sums instead.

Why was proper uprating not done in this case? The Chancellor pointed out that legacy benefits cannot be quickly uprated because they are run on antiquated IT systems, as the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) referred to, so uprating takes several months. The Chancellor told us that that was why he was unwilling simply to uprate benefits: it could have been done quickly for universal credit, as we discovered in the pandemic, but not for legacy benefits.

In an earlier debate, I recall the shadow Secretary of State, my right hon. Friend the Member for Leicester South (Jonathan Ashworth) brandishing a document from an IT company, perhaps Oracle, about the front end that it had built for the Department’s legacy systems, which it said enabled changes to be made to them more quickly. I wonder whether the Minister, in closing, could tell us the truth behind that claim about the front end that had been provided. I know that the Department has certainly commissioned such front ends for the legacy systems over a long time, so I am interested to know why, notwithstanding what that brandished document said, it is apparently still the case that uprating takes four or five months. Are front ends in place? Why have they apparently not made faster changes possible?

In our June 2020 report on the Department’s response to coronavirus, the Select Committee recommended an increase in the speed with which changes could be made to legacy benefits. We said:

“People will be claiming legacy benefits until at least September 2024, the Government’s most recent estimate for completing the rollout of Universal Credit. It is simply not tenable for the Department to continue to operate antiquated systems that prevent Ministers from making timely changes to the rates at which legacy benefits are paid. We recommend that the Department work to increase the speed with which changes can be made to legacy benefit rates.”

In its response in September that year, the Department said that it

“recognises the need to be able to respond to events flexibly which is why we are investing in Universal Credit which is more agile than the systems that support legacy benefits.”

While substantial numbers of people depend on legacy benefits, the Government surely need to keep the systems that support those benefits fit for purpose. They are clearly not fit for purpose at the moment, and that ought to be addressed.

[Kirsty Blackman]

On that note, the new systems that we have created in Scotland under Social Security Scotland are doing exactly what the right hon. Gentleman asks. It has the ability to make those extra payments, because we set up the systems. Does he agree that the Government need to just invest to sort that out for many thousands of people?

[Sir Stephen Timms]

It certainly does need to be done. I am pleased to tell the hon. Lady that on Monday the Select Committee will visit Social Security Scotland and that our vice-chair, the hon. Member for Amber Valley (Nigel Mills), who is in his place, will be part of that group. We look forward to that visit.

The reason why benefit uprating has not worked this year is, of course, the six-month gap between September, when the inflation figure forms the basis of uprating for the following year, and April, when increases take effect. In response to our call for evidence on the cost of living, the Joseph Rowntree Foundation called on the Government to

“commit to a much shorter timeframe for annual uprating between measuring inflation and uprating accordingly, to ensure benefit uprating genuinely reflects inflation for the year in question.”

Lloyds Bank Foundation told us that the Government should

“consider uprating benefits in line with inflation in the autumn to ensure they more accurately reflect the true cost of living.”

That sounds like what was done in the 1970s. The Legatum Institute also suggested reducing the delay between CPI measurement and the application of uprating as well as introducing a mid-year uprating review. Citizens Advice called for a more sustainable, responsive uprating approach, which means

“addressing the lag between benefit uprating decision-making and implementation and the exclusion of the benefit cap from wider uprating.”

It says that while the one-off payments to be made under the Bill

“are more generous…for some households than if uprating had been brought forward”,

there are problems. For example, as we were reminded by my right hon. Friend the shadow Secretary of State, the one-off payments are the same amount regardless of family size. They also have cut-off dates, which risks arbitrarily excluding people from support.

Flat-rate payments being irrespective of family size appears to be pretty unfair to larger families. Overall, the package is somewhat more generous than early benefit uprating would have been, but it is less generous for larger families. The justification for that is not clear.

The North East Child Poverty Committee told us that

“a flat-rate £650 payment for all households on means-tested benefits, regardless of household size, additionally fails to recognise the clear link between family size and essential outgoings, with many larger families (already at much greater risk of poverty, a situation compounded by the two-child limit) facing intolerable financial pressures as a result of rising household bills.”

I will make one final point. One great advantage of the Chancellor’s package for low-income families, compared with a straightforward benefit uprating—I was grateful to the Secretary of State for confirming this—is that the benefit cap does not apply. It is striking that when it appears that the headline rate of social security benefits is likely to be raised by perhaps 10-plus per cent. next year, there is no indication at all about the benefit cap being lifted at all. That means that the growing number of families whose benefit has been capped will receive no increase in their income at all at a time when inflation is likely to be over 10%.

In evidence to the Select Committee, the Child Poverty Action Group Told us that

“the Government has made a welcome commitment to increase benefits in April 2023 in line with prices. However, not all price-related elements of the system are included in the annual uprating exercise and the benefit cap means a substantial minority of claimants—an estimated 150,000—will see no increase at all and face another real terms cut to their benefits.”

At a time when inflation is so high, surely at least the level of the benefit cap must be reviewed. Will the Minister give us any encouragement that it will be, ahead of April next year? For now, and in the context of the Bill, it is welcome, and quite a significant precedent, that the benefit cap will not apply to these additional payments.

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[The Parliamentary Under-Secretary of State for Work and Pensions (David Rutley)]

I thank those who have contributed to this debate. I echo the points made by my right hon. Friend the Secretary of State to stress the importance of this urgent legislation to support people up and down the country. The sharp increase in the cost of living is a challenge shared across the globe due to the aftershocks of covid on global supply, amplified by Russia’s unacceptable invasion of Ukraine. This Bill is the flagship component of our bold package of cost of living additional payments which have been designed to help people to cope with increased costs.

We are grateful for the support of Opposition Front Benchers in facilitating the speedy progress of the legislation. It is vital that these payments get to the people who need them. I am also very grateful for the contributions that have highlighted that these are a serious response to serious challenges, such as those made by the Chair of the Select Committee, the right hon. Member for East Ham (Sir Stephen Timms), as well as by my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) and my hon. Friend the Member for Amber Valley (Nigel Mills).

The support provided through this Bill is timely and comprehensive, and we are taking significant steps and targeting resource to support those in greatest need. The spirit of this Bill is in line with the approach that the Government have taken since the start of the pandemic, which has been shown to deliver for the people of this country in challenging times. We will continue to work hard to help people on low incomes get the support that they need.

We have worked hard through the vaccine roll-out, through the dedication of amazing people, to reopen society, and our economy has responded positively. There are record numbers of people in payroll employment, unemployment is just 3.8%, which is around the lowest level since the 1970s, and there are 1.3 million vacancies, which we are working diligently with employers and communities to fill. My hon. Friend the Member for Ashfield (Lee Anderson) will be pleased to know that, given his focus on work.

With all the work going on to help get people into work and progress in work, we recognise that people do need additional support in dealing with the cost of living challenges. That is why the Chancellor has set out his generous package, with another £15 billion of targeted support, which brings our total package to £35 billion this year alone. Of these additional payments, a particularly important one is the means-tested benefit that will provide a £650 one-off cost of living payment. It will be paid in two instalments to recipients entitled to qualifying means-tested benefits or tax credit. The first starts on 14 July and the second, of £324, later in the year. The hon. Member for Richmond Park (Sarah Olney) asked if there could be one payment. I understand the point she made, but we have consciously staggered the payments to help people on low incomes with their budgeting, which I hope she will welcome. The other important element of the Bill is providing disability cost of living payments of £150, which will go to 6 million people in the United Kingdom and will be paid in September.

We have deliberately kept the rules of the additional cost of living payments as simple as possible, because that is the way we can ensure that we develop the systems and processes required to make the payments at pace. I pay tribute to the hard work of officials across the Government to make that possible.

There are a number of contributions in the debate to which I need to respond. The benefit cap was raised by the right hon. Members for East Ham and for Leicester South (Jonathan Ashworth) and also by my hon. Friend the Member for Amber Valley. We have kept the payments very simple both for those receiving them and for Government systems. They are tax-free, they will not impact on benefit entitlement or the benefit cap, and they will be paid to people without the need for paperwork. They will be paid into people’s bank accounts.

The hon. Member for Aberdeen North (Kirsty Blackman) made points about uprating. Of course, as the Secretary of State said in her speech at the start of the debate, there will be an annual review of benefits and pensions for the tax year 2023-24, which will commence in the autumn as per convention.

Some hon. Members have highlighted the legacy systems and pensions, and asked why we cannot do uprating more frequently. I think we know that the legacy systems are not that agile. Of course, what we are trying to do and working very hard to do—recognising how flexible universal credit is and how resilient it has proven through the pandemic—is to move people through to universal credit by the end of 2024.

[Sir Stephen Timms]

I want to go back to what the Minister said about the benefit cap, and I welcome the point he made. Does he recognise that, in a very high inflation environment, there really is quite a compelling case for looking again at the level of the benefit cap for next year alongside the other benefit uprating matters?

[David Rutley]

There is a statutory duty to review benefit cap levels at least once every five years, and this will happen at the appropriate time. When the Secretary of State decides to undertake the review, she will consider the national economic situation and any other matters she considers relevant at that moment in time.

I reiterate that carer’s allowance is not a means-tested benefit. Nearly 60% of working-age people on carer’s allowance will get the cost of living payment as they are on means-tested benefits or disability benefits. Carer’s allowance recipients will benefit from the £400 per household universal support being provided to help with the cost of energy bills.

People who receive carer’s allowance may live in a household that will benefit from the Government’s support package. For example, they may live with someone who receives a means-tested benefit, a disability benefit or tax credits. If so, the household will benefit from the cost of living payment.

The hon. Member for Westminster North (Ms Buck) has asked me in a number of debates why this measure does not more fully reflect different family sizes and formations. The challenge is trying to get these payments out as fast as possible. To do that, we need to get the payments out to “single benefit units,” as they are described, and households. The important thing to highlight is that most low-income families will be able to receive the £150 council tax support and the energy bill support, on top of the work allowance taper and the increase in the national living wage.

It is not possible to distinguish between those who have a permanent increase in their earnings and those whose earnings are temporarily fluctuating. If a UC claimant’s income subsequently falls, they will return to having a positive award after the cut-off date, and they may be eligible for the second payment.

The right hon. Member for Leicester South talked about the minimum income floor, which ensures we do not prop up unproductive employment or self-employment indefinitely. There is a start-up period to protect newly self-employed people. Beyond that, having a minimum income floor is the right policy. If it means there is a nil UC payment, the claimant would not be entitled to the means-tested payment. However, they would get the £400 energy payment and the £150 council tax rebate, and they would potentially be eligible for the household support fund. It is worth recognising that there are paid employment opportunities out there, given the high level of vacancies.

We have heard about the take-up of pension credit, and I am sitting next to the expert, the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham (Guy Opperman).

Oral Answers to Questions

Stephen Timms Excerpts

Monday 6th June 2022 Commons Chamber

[Mr Speaker]

I call Sir Stephen Timms, Chairman of the Select Committee, whom I congratulate on his knighthood.

[Sir Stephen Timms (East Ham) (Lab)]

Thank you very much, Mr Speaker. I welcome the efforts on pension credit take-up. The Chancellor’s additional payments are very welcome, but the need for them highlights the failings of the current pensions and benefits uprating system. The Select Committee will be looking at this, but does the Minister agree that now is the time to review how we uprate pensions and benefits each year and the level at which they are set?

[Guy Opperman]

You got there first, Mr Speaker, but I also congratulate the former Pensions Minister, the Chair of the Select Committee, on his knighthood, which is genuinely deserved. The whole House wishes him well when he goes to meet the Queen for his investiture.

The right hon. Gentleman is a former Pensions Minister and will recall that the present uprating policy started in April 1987 and has continued under successive Governments, including the 13 years of Labour Government. I will, of course, come to the Select Committee to listen to its suggestions, but the same process has been in place for the best part of 35 years. The level is set between September and November, and the uprating takes place thereafter.

--- Later in debate ---

[Mr Speaker]

I call the Chair of the Work and Pensions Committee, Sir Stephen Timms.

[Sir Stephen Timms (East Ham) (Lab)]

The household support fund now accounts for billions in public spending. What information is the Department collecting about how that fund is being used, who is benefiting from it, what their circumstances are and how much support they receive? What plans does the Department have to publish that information?

[Dr Coffey]

We issue funding based on grant conditions. We undertake a very light-touch approach with councils to make sure that they satisfy those conditions. We do not collect extensive information, but it is important that we allow councils to get on. They are close to the community, so they are well placed to make sure that that discretionary funding can go to the right people.

Cost of Living Increases: Pensioners

Stephen Timms Excerpts

Monday 21st March 2022 Commons Chamber

[Jonathan Ashworth]

My hon. Friend makes a good point. The Pensions Minister, who will sum up the debate later, promised—these are his words—that the Government would preserve pensioners’ spending power and protect them from the higher cost of living. On the same day that the Government broke the triple lock, they introduced the national insurance increase, a proportion of which, for the first time, will be paid by working pensioners. Indeed, a working pensioner on average earnings will lose out by £1,400 over two years. That is not protecting pensioners’ spending power or protecting them from the higher cost of living.

Have pensioners been protected from the higher cost of living through energy bills? Next month, we will see energy bills rise by 54%—£700 on average. In October, there is likely to be another 25% rise. All the Government are offering is a £150 rebate this April—although it is not clear whether they will guarantee that for pensioners who do not pay council tax or who get council tax benefit—followed by a loan that has to be paid back through a £40 levy. That £350, £200 of which has to be paid back, will be totally wiped out by the £388 real-terms cut to the basic state pension. That is not protecting older people from the higher cost of living or preserving their spending power; I suggest it is more like daylight robbery.

We have already said that pensioners are going to be paying more in tax, but what about pension credit, which featured in the exchanges earlier? About 850,000 pensioners eligible for pension credit are going without it. That is £1.7 billion unclaimed—something like £1,900 for every qualifying household that is losing out. As Members across the House have pointed out, pension credit often unlocks other benefits, such as free TV licences—obviously, the Government cut those and changed their financing—council tax benefit and so on. Now Ministers are praying in aid the pension credit guarantee as justification for their real-terms cut in the value of the state pension. They do not mention very often that pension credit was a Labour policy, which they criticised when we introduced it. Indeed, if my memory serves me correctly, they also opposed its precursor, the minimum income guarantee, and even voted against it. They do not mention that, but given that pension credit uptake is so poor, if they drove it up they could lift 440,000 older people out of poverty.

[Stephen Timms (East Ham) (Lab)]

I very much agree with the point that my right hon. Friend is making. Pension credit, introduced in 2003, has been a powerful lever for tackling pensioner poverty. Does he agree that the Government should set an ambitious target for increasing the take-up of pension credit so that the number of people who benefit substantially increases?

[Jonathan Ashworth]

Yes, I do. My right hon. Friend, who was a first-class Pensions Minister and Chief Secretary to the Treasury, will remember being at the Government Dispatch Box when shadow Secretaries of State for Work and Pensions from the Tory party criticised pension credit and opposed the minimum income guarantee, saying that it was an extension of means-testing and undermined the universal basic state pension. Now, today, they are using pension credit to justify a £388 real-terms cut in the value of the basic state pension. I hope that the very sensible recommendation by my right hon. Friend, the Chair of the Work and Pensions Committee, is taken up by the Secretary of State, and that she responds to him when she speaks.

Of course, Ministers should be moving heaven and earth to drive up take-up, but the Pensions Minister revealed earlier this afternoon that, instead, we have a letter writing campaign. Writing to local newspapers—that is his plan to drive up uptake of pension credit. When pensioners cannot afford their heating bills and cannot afford to eat—when pensioners cannot afford the basic necessities of life—rather than taking action, all he does is write to local newspapers. What is he doing? Is he expecting pensioners to burn the papers to keep themselves warm? I am told he has written to the Leicester Mercury. Well, I have been looking at his local paper, the Hexham Courant. I cannot actually see his letter in it, but I can see that it is warning that

“Thousands in the North East to miss out on automatic £150 rebate…MORE than 320,000 households across the North-East will not automatically receive a £150 council tax rebate…and 40,000 in Northumberland”.

Many of them will be pensioners. May I suggest that he sorts out his own backyard before gracing the pages of my paper, the Leicester Mercury?

There is one other area where I think the Minister needs to show greater urgency in supporting the United Kingdom’s pensioners and I would be grateful if the Secretary of State responded in detail to the points I have made. She will know that the underpayment of the basic state pension to around 135,000 pensioners, the vast majority of whom are women, has been a scandal. I pay tribute to the former Liberal Democrat Pensions Minister, Sir Steve Webb, the Chair of the Work and Pensions Committee, my right hon. Friend the Member for East Ham (Stephen Timms) and the Chair of the Public Accounts Committee, my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier), who have all shone a light on that.

The Department has allocated £1 billion and estimates that approximately 118,000 pensioners will be traced and could receive around £8,900 by the time the payments are made. So far, so good. But the last time Ministers provided updated figures, in autumn, they had paid out just £60 million to just under 10,000 people, so £900 million is outstanding. When we are in a cost of living crisis, should not the Department be showing greater urgency? When will the other £900 million be paid? The Secretary of State will know that there are stories of the DWP helpline giving inaccurate information and false assurances, forcing pensioners to keep living on less. There is no information available as far as I can see on how lump sums will impact on capital limits and the consequent impact on other entitlements, such as to social care. Divorced women have been excluded from the whole exercise on the basis that it does not think there are enough errors to be worth doing, even though there are cases of divorced women where errors have been made and it has had to pay out thousands in back payments.

--- Later in debate ---

[Dr Coffey]

Any uplift in the national living wage is welcome to anybody still working. Our normal practice on standard national insurance for employees is that once someone reaches pension age, their take-home pay will be automatically higher than somebody else under the age of retirement, if they are doing the same job on the same salary. However, this levy is important to make sure that we get the funding for the NHS backlogs and for the future stability of the social care system.

Let me turn to pension credit. We have heard about the success of the private pensions sector and some of the uplift for people who are still working. It is good for those still saving for their futures, but understandably, the House wants to know what we are doing for the poorest pensioners now. We had a bit of a history lesson about how pension credit was introduced under the Labour Government in 2003, as the right hon. Member for Leicester South said. Let us go back a bit earlier in history: it was only a few years beforehand that the Labour Administration raised pensions by 75p. I think the House will probably recognise that pension credit was introduced directly as a consequence of the impact of what happened with that very modest increase in pensions.

Various funds have been open to pensioners in the past year, including the household support fund, and I encourage people to approach their local council for support.

[Stephen Timms]

As the Secretary of State knows, about a third of those who are eligible for pension credit do not receive it at the moment. She told us earlier that there is an action plan to improve that. Will she publish that action plan and include in it an ambitious target for increasing the take-up of pension credit?

[Dr Coffey]

The Chair of the Work and Pensions Committee slightly pre-empts where I am heading with pension credit in my speech.

On the household support fund, within the lifetime of the Government, we have introduced a higher basic state pension so that, increasingly, pensioners are not required to resort to applying for pension credit. However, pension credit, the pension financial safety net, is helping to support those with the lowest retirement incomes. Worth on average over £3,000 a year, some 1.4 million pensioners already claim it, receiving collectively an extra £5 billion in support. As I mentioned, given that pension credit is a passport to other financial help, we want to make sure that everyone who is entitled to it claims it.

Our estimate of pension credit take-up is based on a combination of what information we have on pensioner income and analysis from the family resources survey. That suggests that more people can claim than is the case now, particularly for those eligible for the savings credit element, where we have the lowest take-up. The Minister responsible for pensions, the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham (Guy Opperman), and my noble Friend the Minister in the Lords—Baroness Stedman-Scott—have been striving to increase take-up. They undertook a big awareness day last year and they are continuing that work. This is the plan, I say to hon. Gentlemen.

We will continue to promote the take-up of pension credit. As has been highlighted, the Minister responsible for pensions, my hon. Friend the Member for Hexham, has raised awareness through local newspapers. We will send 11 million leaflets to pensioners with their annual state pension uprating letter and we will continue to work with the BBC, financial institutions, Age UK and many other organisations to raise awareness. The latest estimates show that uptake is increasing. We know from internal management information that the number of new applications last year is estimated to have been 30% higher than in 2019, so our efforts are working. I hope that this latest effort will also bear fruit.

Oral Answers to Questions

Stephen Timms Excerpts

Monday 21st March 2022 Commons Chamber

[Mr Speaker]

We now come to the Chair of the Select Committee Stephen Timms.

[Stephen Timms (East Ham) (Lab)]

The Minister could have a busy summer ahead. Take-up of pension credit remains low: an estimated 850,000 pensioner households across the country are not receiving the help that they are entitled to. The Department could feasibly work out who those households are and simply make them an award of pension credit. Given the scale of the current cost of living crisis, will the Department commit to an ambitious target for increasing the take-up of pension credit across the country and to a much more ambitious campaign to promote it?

[Guy Opperman]

I hate to disagree with the Chair of the Select Committee but he is wrong. As he knows, because he did this job in 2007-08, the Department does not know the exact numbers of a means-tested benefit that was set up by Gordon Brown specifically for circumstances where there is not the capability of saying exactly who can apply. The right hon. Gentleman is also wrong, however, that the stats are going up, not down, because they are up on the main income element.

[Stephen Timms]

indicated dissent.

[Guy Opperman]

The right hon. Gentleman is shaking his head, but he is wrong: they have gone up from 70% to 73%.

Huge efforts are also being made by the Department in the form of the work with the BBC and the utility companies, the pension credit taskforce, and all the letters that were written only this morning. I wrote to the right hon. Gentleman’s local paper and to that of the shadow Secretary of State, the right hon. Member for Leicester South (Jonathan Ashworth), to set out what we are doing to try to get people to take up pension credit and why we want everybody to do so.

--- Later in debate ---

[Dr Coffey]

I was in my hon. Friend’s constituency on Thursday night and Friday morning, and was at the jobs fair held at the Pleasure Beach, which was a great success, as has already been referred to. It is important that we continue to have that relationship with claimants through the intensive work search regime. They are expected to look for work and take work that is available that they are capable of doing. We will continue not only to enforce that regime but to bring employers and claimants together to try to make sure that those interviews are successful and we get people into work, because that will always be the best way of getting out of poverty.

[Stephen Timms (East Ham) (Lab)]

The Minister referred earlier to the modest reported percentage increase in take-up of pension credit. Does he recognise that that increase is a consequence of the removal of mixed-age pensioner couples from eligibility for pension credit, rather than of any actual increase in take-up? Is it not high time that the Department set an ambitious take-up target and published an action plan to deliver it?

[Guy Opperman]

With great respect to the right hon. Gentleman, with whom I have repeatedly debated this matter, we already have an action plan. We are already engaging with all the key organisations, whether that is the energy companies, television companies or media in the normal way. I respectfully say to him that pension credit take-up is increasing. It is up by 3%, which is definitely not for the reason he asserts, and we continue to make the case for pension credit to the wider population. We want not just individuals to claim; we want carers or people on behalf of their mum or dad to put in a claim.

DWP Estate: Office Closures

Stephen Timms Excerpts

Thursday 17th March 2022 Commons Chamber

[Mr Speaker]

I call the Chair of the Select Committee, Stephen Timms.

[Stephen Timms (East Ham) (Lab)]

This week’s employment figures show that there are 580,000 fewer people in work now than there were before the pandemic. In particular, there seem to be several hundred thousand older workers now choosing not to work nor to claim benefit. We all want a full labour market recovery. Does the Minister recognise that this is going to require major Government investment rather than the disinvestment that I think he is announcing this morning?

Pensions Guidance and Advice

Stephen Timms Excerpts

Tuesday 1st March 2022 Westminster Hall

[Stephen Timms (East Ham) (Lab)]

I start by congratulating the hon. Member for Amber Valley (Nigel Mills) on securing the debate and on his opening speech.

There was a serious flaw in implementing the pension freedoms. They were announced by George Osborne in his Budget speech in 2014 and implemented the following year. He said in his announcement that

“no one will have to buy an annuity. We are going to introduce a new guarantee, enforced by law, that everyone who retires on these defined contribution schemes will be offered free, impartial, face-to-face advice on how to get the most from the choices they will now have.”—[Official Report, 19 March 2014; Vol. 577, c. 793.]

It was a very clear recognition of the risks involved in people having much more latitude over their pension savings—often the largest sum of money they will ever have access to—and that the Government needed to ensure that everyone had guidance to help them make sound decisions. However, that guarantee has never materialised, and the hon. Member for Amber Valley was absolutely right to say that hundreds of thousands are accessing their pension pots without understanding what they are trying to do.

We do have the Pension Wise service, which is excellent. It is free and impartial, as George Osborne promised, and as the hon. Member for Amber Valley said, it gets very good ratings from those who use it—the problem is that very few people do. As my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy) rightly said—I apologise to her for being absent for some of her speech—one of the reasons why Pension Wise is important is so that people can avoid being scammed. In June 2015, I received from the Treasury the answer to parliamentary written question 2227, which said that

“Pension Wise was launched to help people understand their options when taking advantage of the pension freedoms, including how to spot and avoid scams.”

Over the past seven years, there has been a very big phenomenon of pension scams that it is in everybody’s interest to prevent. So the default should be that people get a Pension Wise appointment.

[Chris Stephens (Glasgow South West) (SNP)]

Is the Chair of the Select Committee as concerned as I am that, despite Pension Wise being an excellent service, the number of Pension Wise appointments is actually falling? There is real concern here, which is why many of us want to see auto-appointments.

[Stephen Timms]

The hon. Gentleman is absolutely right.

The importance of guaranteeing guidance was stressed repeatedly, not just in George Osborne’s announcement but by the Government in the couple of years afterwards. The Treasury’s public financial guidance review, published for consultation in March 2016, said:

“Guidance is vital to ensure that individuals are fully aware of their options before they make a decision on what to do with their retirement savings”.

The hon. Member for West Worcestershire (Harriett Baldwin), who was then Economic Secretary, said in April 2016 that the Government were introducing

“a requirement that, in effect, ensures that consumers with a high-value annuity receive appropriate financial advice before making the decision to sell their annuity”.—[Official Report, 19 April 2016; Vol. 608, c. 876.]

In April 2018, her successor—the current Economic Secretary—the hon. Member for Salisbury (John Glen), said that before proceeding with an access or transfer application,

“subject to any exceptions, schemes must ensure that individuals have either received Pension Wise guidance or have opted out.”—[Official Report, 24 April 2018; Vol. 639, c. 831.]

That commitment, which the Minister appeared to believe he was delivering four years ago, has never been delivered.

The Treasury has very good reason to be concerned that people should make sound decisions in this area, but so does the Minister’s Department. Baroness Buscombe, when she was a Minister at the Department for Work and Pensions, said in May 2018 that

“We all want people to make more informed decisions and to make it the norm to use Pension Wise before accessing their pension.”—[Official Report, House of Lords, 1 May 2018; Vol. 790, c. 1995.]

Let me quote back to the Minister what he said in a debate on the Pension Schemes Act 2021, that Pension Wise should become the norm. He has since distanced himself a bit from that view, but he did express it: on Third Reading, I said that I was sorry he had not followed Baroness Buscombe and expressed the view that Pension Wise should become the norm, and he intervened on me to correct me. He said:

“I do—I said so.”—[Official Report, 16 November 2020; Vol. 684, c. 136.]

I responded to his intervention by welcoming the apparently universal agreement that taking up Pension Wise guidance should be the norm. Everyone agreed, but in October 2020, the Department published the “Stronger Nudge to pensions guidance” statement of policy intent, which said that the new nudges that would be introduced would increase take-up from one in 33 to one in nine. The most recent figures quoted by the Social Market Foundation last week suggest that take-up now stands at about one in seven.

As the hon. Member for Amber Valley said, the expectations at the start were way higher than that. Michelle Cracknell, the then head of the Pensions Advisory Service, which was subsequently absorbed into the Money and Pensions Service, said in evidence in October 2014 that

“ambition is that the take-up rate will be very high, with over 75% of people taking the guidance”,

but that it might only be 25% to start with. In fact, it has never got anywhere near 25%, let alone 75%.

The Committee’s concern about Pension Wise take-up is long-standing and goes back well before I became Chair, to the period years ago when the hon. Member for Amber Valley was a member of the Committee. The Committee’s 2017 report stated:

“Free and impartial Pension Wise guidance, provided by telephone or face-to-face appointment, is greatly valued by those who use it. Take up, however, is not high enough.”

The report went on to point out that

“the existing Pension Wise promotion regime”

had

“proved insufficient.”

It is a very good service: nine out of 10 of those who use it report high or very high satisfaction—that is a pretty impressive—but it is hidden away from most people. The default ought to be that people get an appointment. That is why the Committee has recommended at least trialling automatic Pension Wise appointments.

Sir Hector Sants, the chair of the Money and Pensions Service, told the Committee in March that 72% of people change their mind about what they will do with their pensions savings as a result of talking to Pension Wise. As he pointed out,

“that tells you that the vast majority of people, left to their own devices, will probably make a poor decision.”

As far as I can see, the Government’s current policy will leave the great majority of savers in exactly that position.

We need to do more. Government and regulators need to end their indifference on this. We need at least a trial of auto-enrolment into a service that enables better outcomes from pensions savings. There will no doubt be difficulties, but let us at least try it out. The Money and Pensions Service has told the Committee that it would be very happy to support a trial.

The Committee recommended that

“the Government sets a goal for the Money and Pensions Service for the combined use of Pension Wise and paid-for advice when accessing pension pots for the first time”

of

“at least 60 per cent”.

The Minister suggested in his intervention that he thinks use might not be far from that level at the moment, so let us use that as a clear goal. The Committee also recommended

“that automatic Pension Wise appointments are trialled.”

We suggested

“two trials: one with an appointment when a person accesses their pension for the first time and another at the age of 50, before they can access their pension savings.”

I commend those proposals and recommendations to the Minister.

Social Security and Pensions

Stephen Timms Excerpts

Monday 7th February 2022 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

I am pleased to follow the hon. Member for Amber Valley (Nigel Mills), who makes an important contribution to the work of the Select Committee. I agree with much of what he says.

May I start by acknowledging—as the shadow Secretary of State, my right hon. Friend the Member for Leicester South (Jonathan Ashworth), did at Question Time—the generous tribute that the Under-Secretary of State for Work and Pensions, the hon. Member for Hexham (Guy Opperman), gave in this House to our late colleague Jack Dromey? I often heard each of them privately singing the praises of the other when Jack was the Pensions Minister’s shadow, perhaps particularly when they were both working on the plans from Royal Mail and the Communication Workers Union for the combined defined contribution pension scheme that I think is due to be launched later this year. Jointly, they have set a great example to the House. I would be grateful if the Minister present communicated that point to his hon. Friend.

This is a very singular year for social security uprating. Households, as we have been reminded, are feeling acutely the pressures of rising food and energy prices. From 2016 to 2020, as my hon. Friend the Member for Westminster North (Ms Buck) pointed out, about half the benefits covered by the draft order were frozen. Benefit incomes became completely disconnected from the real cost of living. Last September, as we have been reminded, the temporary increase of £20 a week to universal credit and working tax credit ended. Last February, a year ago, the Select Committee unanimously called on the Chancellor to extend that increase for at least a year—that view has been expressed this afternoon by the hon. Member for Waveney (Peter Aldous), too—but the call was rejected. For some people in work, the loss was mitigated, in part, by the welcome changes to work allowances and the universal credit taper rate, but others who are struggling with rapidly rising prices and with an income just from universal credit have a much lower income than a year ago.

The chief executive of the Resolution Foundation told the Treasury Committee a week ago that, taking into account the removal of the £20 a week uplift and the improvements to the taper rate and work allowances

“around three quarters of Universal Credit claimants will lose out”.

The other quarter will have a higher income, but they

“will probably have that all taken away from them in higher energy bills and in the national insurance rise… It will be particularly grim for those who did not benefit from the change because they are out of work or on very low earnings”.

Benefits are uprated each April in line with the CPI rate of the previous September, which this year is 3.1%, but, as we have been reminded, the Bank of England expects inflation to be over 7% by April. As the hon. Member for Waveney said, inflation will not be far short of the 8% by which pensions would have risen if the triple lock had been left in place last year.

Robert Joyce, the deputy director of the Institute for Fiscal Studies, argues that increasing benefits each April based on inflation in the previous September—this point was powerfully made by the hon. Member for Amber Valley—is

“not fit for the period of high and rising inflation we now face…the poorest are heading for a 3% year-on-year cut in their real benefit levels and living standards.”

The Government’s protocol on social research requires that commissioned social research should be published within 12 weeks of being received. The DWP refused to publish the NatCen report on disabled people’s experience of the benefits system. Not only did they not publish it within 12 weeks; they did not publish it at all. That is completely in breach of the clear requirement of the Government’s protocol on social research, which was adopted in 2015.

Instead the Work and Pensions Committee had to obtain the report and publish it, as we did last week. The report says that disabled people

“reported that they were often unable to meet essential day to day living costs”.

These include food, rent and heating. This 3% real-terms cut in their income will make it a great deal worse.

The IFS also points out that universal credit, as we saw in the pandemic—again, the hon. Member for Amber Valley made this point—can be changed at short notice and could be uprated at more recent inflation rates. I hope the Department will also reconsider our 2020 recommendation to

“increase the speed with which changes can be made to legacy benefit rates.”

At the start of the pandemic, local housing allowance was reset to the 30th percentile of local rents, but it has now been frozen again, as my hon. Friend the Member for Westminster North said. In our report on the five-week wait for the first payment of universal credit, we recommended keeping it at the 30th percentile, with an annual review to keep rates appropriate for each area. That has not been done, which, as my hon. Friend said, will make things progressively harder for people who depend on the local housing allowance rate.

The standard minimum guarantee in pension credit will be increased by only 3.1%, but pension credit take-up remains low. On the most recent figures: six in 10 of those entitled to pension credit actually claimed it; 76% of the total amount of pension credit that could have been claimed was claimed; and up to £1.8 billion of pension credit was unclaimed. Independent Age, the charity, has called on the Government to research who is not claiming pension credit—I hope the Government will publish the research this time—and to draw up an ambitious plan for much higher take-up over five years. Researchers at Loughborough University found that maximising pension credit take-up could lift three in 10 pensioners out of poverty and reduce the number in severe poverty by half. In July I asked the Secretary of State whether the Department would bring forward an action plan. She replied:

“I am not anticipating a big action plan, no.”

Given that pensioners on low incomes are being particularly hard hit by rising energy costs—as we will be reminded more and more frequently in the next few weeks—will the Minister reconsider?

The Guaranteed Minimum Pensions Increase Order gives pension schemes the percentage by which they need to uprate GMPs built up between 1988 and 1997. This year, as the Minister has explained, it is 3%. Some people with long periods of contracting out—and therefore large GMPs—lost out under the new state pension in 2016. The ombudsman concluded in August 2019 that

“when communicating this change, DWP did not explain that people with long periods of contracting out could be significantly worse off. It instead chose to focus only on the benefits of the new State Pension and other separate pension changes.”

It recommended that the DWP should

“review and report back its learning from our investigations…In particular, it should ensure that its literature clearly and appropriately points out that some individuals who have large GMPs and reach State Pension Age in the early years may be negatively affected by the changes. It should explicitly tell people to check their circumstances and should provide details to the public about how they can do this.”

In response—it responded rather reluctantly, but it did respond in the end—the Department produced a factsheet last August, entitled “Guaranteed Minimum Pension (GMP) and the effect of the new State Pension”. That falls a long way short of the Committee’s call in 2016 for the Government to

“focus on identifying the individuals affected, assessing their potential losses, and communicating with them”,

but at least it was something.

The Department said that it would review the factsheet after six months. The Committee wrote to the permanent secretary recently, setting out points that we would like to be covered in the review, including what steps had been taken to promote the factsheet and how many people had contacted DWP as a result. In a response last month, the permanent secretary said that nobody had so far applied for compensation as a result of reading the factsheet, and that the Department had received only four letters in response to it.

I am puzzled by that, because I received two emails just last week about this very issue. Let me read one of them to the Minister:

“I had personally been searching unsuccessfully for the GMP factsheet for months on gov.uk using a range of search terms since you spoke in parliament about this issue in February 2021…How anyone affected was expected to know it was there I will never know. There was no press release or other publicity to encourage the large numbers of people affected to look at the gov.uk site factsheet.

I was shocked to read the factsheet. It completely failed to properly inform people about the Ombudsman’s ruling that there had been maladministration or that they could claim compensation.”

The other emailer complained that the information on his company pension scheme website was misleading: that it made no reference to the factsheet so he had no way of knowing about it, and it gave him no hint that he could apply for compensation. The fact that few people have referred to the factsheet may well mean that they do not know about it, and I hope that a serious effort will now be made to draw attention to it.

I very much welcome the debate we have had this afternoon about what is the appropriate level for increasing benefits at this very difficult time. Like others, I say to the Government. “You are going to have to go further.”

Oral Answers to Questions

Stephen Timms Excerpts

Monday 7th February 2022 Commons Chamber

[Mims Davies]

I thank my hon. Friend for such warm, generous feedback. That work happens up and down the land in our jobcentres and I hear similar good news stories every day. I invite those on the Opposition Front Bench to actually step into a jobcentre, see what is really going on, meet the kickstarters and see what this has meant to their lives. In fact, at BAE, not far from my hon. Friend’s constituency, one young man has moved into an apprenticeship and is now inspiring people through our youth hubs to do exactly the same by talking about his work journey.

[Stephen Timms (East Ham) (Lab)]

8. What steps she is taking to build trust in her Department among disabled people.

[The Minister of State, Department for Work and Pensions (Chloe Smith)]

As we said in our Green Paper, and as I discussed with the right hon. Gentleman last week, we recognise the need to improve disabled people’s experience of our services. In response to feedback, we have already committed to changes for the special rules on terminal illness. In the British Sign Language Bill and its supporting work, we also show that we are listening to disabled people with an advisory board of BSL users.

[Stephen Timms]

DWP’s social security advisory committee highlighted just over a year ago the serious problem that disabled people do not trust the Department. Burying the NatCen report, in breach of the cross-Government social research protocol, has made matters worse. The failure to consult properly on the national disability strategy has also now been found to be in breach of the law. As a first step, should the Minister not accept the social security advisory committee’s recommendation to establish a protocol for engagement to do the job properly with disabled people?

[Chloe Smith]

I do want to engage more with disabled people and continue all the work that is going on to listen to disabled people and disabled people’s organisations. That is a priority across a number of areas of work for all the Ministers on the Front Bench. I take issue with the right hon. Gentleman’s point about the NatCen research and the use of the protocol. As has been the habit of successive Governments, including the one that he served in, protecting a private space for policy development has always been a relevant factor and is a permissible technique for ensuring that we can bring research out at the right time, as we undertook to do in this case.

Disability Benefits Assessments

Stephen Timms Excerpts

Tuesday 1st February 2022 Westminster Hall

[Stephen Timms (East Ham) (Lab)]

I congratulate my hon. Friend the Member for Battersea (Marsha De Cordova) on securing this important debate.

The Green Paper’s commitment to reforming assessments is welcome. Every MP knows of awful problems with them. At the start of the Parliament, the Select Committee on Work and Pensions agreed on an inquiry on the issue. That was put on hold while face-to-face assessments were suspended, but we are now taking evidence. We want disabled people to be at the heart of the inquiry, so we have launched a survey of personal experiences of assessments, to which we have so far had more than 3,500 responses. The survey is on the Committee’s website, including in an easy-read version, and we would welcome further responses.

A key problem is that disabled people just do not trust DWP, and the Department keeps making things worse. As my hon. Friend the Member for Battersea mentioned, last week the Department lost the judicial review brought by disabled people regarding the national disability strategy consultation. The Department’s defence in court was that it had not set out to consult disabled people properly and therefore was not guilty of not having done so. As you have reminded us, Sir Gary, the Department is now, absurdly, appealing against that defeat. The Green Paper consultation was launched after the summer recess began. Calls from disabled people’s organisations to extend the deadline were rejected. The Department also rejected the call of its own social security advisory committee for a protocol for engaging with disabled people to try to overcome the problems.

In September 2020, the Department received from the National Centre for Social Research a report that it had commissioned on the uses of health and disability benefits. Some 120 people were interviewed for that research and were told, in a letter approved by the Department, that the resulting report would be published.

The Government have a protocol on social research, adopted in 2015, which requires the publication of all such research within 12 weeks of receipt. The Secretary of State confirmed to the Select Committee that the protocol applied to that research, but told us that, nevertheless, she was not going to publish it. The Committee agreed, unanimously, that it should be published. We asked the Department again and made it clear that if it was not published, we would use our powers to order NatCen to provide us with a copy.

I am pleased that NatCen has complied with our order; the Committee now has that report. We will meet tomorrow morning, and my view is that we should publish it. Ministers seem to think that their interests are best served by hiding and covering up, but every botched attempt means that disabled people trust them even less. I hope that this Minister will usher in a new openness.

Our inquiry has already heard, extensively, about problems with assessors who lack basic understanding, assessment reports that seem to relate to a different person, and forms that cannot be read by the assistive technology that blind people use. The Department has been very slow to make sensible changes. In 2018, the previous Work and Pensions Committee produced—unanimously, on a cross-party basis—a series of recommendations. Some of those that were accepted have still not been implemented. Dr Paul Litchfield, the former independent assessor of the work capability assessment, told us in December:

“Then you look at things seven years down the road and as far as I can see things have not been taken forward.”

We have already heard many sensible points in our inquiry, and I very much hope that the Department will accept and implement the recommendations that will be made in our report later this year.

--- Later in debate ---

[Chloe Smith]

I do not think that is likely to be in the White Paper. The hon. Gentleman might have heard that it is not our intention to further devolve welfare to the Welsh Government. None the less, I look forward to more conversations on that with him and with colleagues in the Welsh Government. I take a great interest in devolution affairs in the Department and will be able to have those conversations, just as I do with colleagues in the Scottish Government. I note what SNP Members have said today, which I will come to shortly.

Last year we published the health and disability Green Paper—the main subject of today’s debate—and the national disability strategy, which set out a wide-ranging set of practical actions to improve the lives of disabled people and affirmed our commitment to put disabled people at the heart of policy making. Support for the British Sign Language Bill, which was debated last Friday, is the latest example of such action. The health and disability Green Paper explored what changes we can make to the system, for three reasons—so that we better enable independent living, improve employment outcomes and improve the experience of people using the DWP’s services.

Both the national strategy and the Green Paper were informed by the views of disabled people, who told us in enormous numbers about their experiences and their priorities for change. Although it is not the main subject of today’s debate, I can confirm that we are disappointed at the judgment on the UK disability survey and intend to appeal. Of course, the Chamber will be aware that the court dismissed the claimants’ claims that the Secretary of State had been subject to a duty to consult.

We remain focused on delivering the contents of the strategy, which is broad and important. Ensuring that everyone has the same opportunity for a fulfilling working life is a key part of levelling up the country, on which I am sure I agree with the Chair of the Select Committee.

[Stephen Timms]

As was said in the debate, the grounds on which the Government resisted that case was that they were not properly consulting people in the first place. That is surely a hopeless position for the Government to be in. They should consult people properly from the start.

[Chloe Smith]

We certainly do have confidence in our consultation and our listening. I will not go into further detail on the strategy because there is so much else that I want to respond to today.

We have made progress, including significant progress towards our commitment to see an additional 1 million more disabled people in work by 2027. As my hon. Friend the Member for Watford (Dean Russell) explained, supported employment is very significant within that, but there is much more still to do, and I welcome the point made by the hon. Member for Strangford (Jim Shannon) that employers also need to rise and play their part in supporting disabled people or people with ill health in the workplace.

There is also more to do to improve people’s experiences of our services and to build their trust in the system. I have heard the comments made today, and that is why our aim in the Green Paper was to improve the experience of disabled people and people with health conditions by listening, learning and improving. We want to make our services easier to access and our processes simpler where we can. We want to make improvements that will help build people’s trust and explore ways to offer more and better support for the people who need it most.

Turning to the economy, which is important for the context of this debate, the last two years have been really tough. However, because of our focus on getting people into work, we had the highest level of employment that this country had ever seen when covid hit, and we have succeeded in supporting jobs and livelihoods throughout the pandemic. The economy continues to rebound. With around 1.2 million vacancies currently available, including in many sectors vital for our recovery, we want to get people into jobs that they can do right now. The jobs market presents huge opportunities for all jobseekers. I want to ensure that those opportunities and the world of work are accessible and inclusive for disabled people and those with health conditions.

The hon. Member for Motherwell and Wishaw (Marion Fellows) mentioned the Way to Work campaign. I can reassure her that for those who are unable to take up employment due to their health conditions or personal circumstances, we tailor their requirements to their capability and situation to ensure that all that we ask of them is realistic and achievable.

We understand the pressures that people are facing with the cost of living, and we will continue to listen to people’s concerns, as we have done throughout the pandemic. That is why we are providing support of around £12 billion this year and next to help families with the cost of living.

Many important points were made during the debate about the assessment system and the benefits system. The benefits system considers the impact that a health condition or disability has on an individual’s ability to work and carry out day-to-day activities. As all hon. Members know, decisions are based on an assessment of an individual’s functional ability, not their diagnosed health conditions. Claimants are of course encouraged at the outset of their claim to provide all evidence that is relevant to their case, including medical evidence supplied by their GP or other professionals such as support workers, carers or community mental health nurses. We recognise that attending a health assessment can be a stressful experience, which is why, whenever we are able to assess somebody solely on the available paper evidence, we do so.

It is of course important that the benefits system is fair to both benefit recipients and taxpayers. We think that our health assessments are a fair and robust approach to managing the gateway to benefits, with our decisions based on evidence and objective criteria.