DWP Risk Review Team

Stephen Timms Excerpts

Wednesday 26th January 2022 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Twigg. I have had an opportunity to work with you in the House, but also on various hills—with mixed results, but it is always a pleasure to be in your company.

I congratulate the hon. Member for Edmonton (Kate Osamor) on securing this important debate. My Department faces a huge responsibility, day in and day out, to pay benefits to millions of households, ensuring they have the help and support they need and wherever possible helping them into sustainable employment. We do everything we can to make sure that happens in a timely way. That was proven when covid-19 hit. We paid out to over 3 million more households at a time of global crisis. Universal credit in particular is a very resilient system, because it has been stress-tested in such an environment. Our latest public statistics show that around 90% of new universal credit claims are paid in full and on time.

Alongside that, we have another responsibility: to ensure that we are using taxpayer money properly and that funding is going to those who need it. Unfortunately, there are those who think it is acceptable to commit fraud against the welfare system. Those people cost the taxpayer—in fact, stole from them—an estimated £6.3 billion last year. That is £6.3 billion of taxpayer’s money—an absolutely staggering sum. I can just imagine what any Member in this House would want to do with that money to help not only their constituents but thousands of others. It is money that could be going to fund other vital Government services. Those who fraudulently claim that money clearly have no right to it.

I believe it is right that my Department makes every effort to find and crack down on fraud, and to ensure that we have the fullest range of tools at our disposal to achieve that. Those committing fraud are clever, committed and constantly thinking of new ways to get around the systems that we have in place, and to turn new technological advances to their advantage. The job of the DWP is not just to keep up with that, but to try and get ahead of it. It is our job to keep innovating and finding new ways to identify fraud where it happens and to put a stop to it. It is our job to keep fraudsters guessing at how we might find them, so that they do not find new ways to evade us. The risk review team is one of those innovations, established as a direct response to new threats. Its role is to provide an operational response to threats that have been identified. It does this by suspending suspect cases, where specific intelligence provides evidence of fraud.

I would like to stress that we are talking about a relatively small number of claims. Of the 3.7 million claims made to universal credit since May 2020, less than 4%, approximately 149,000, have been suspended under the risk review process. Those are not run-of-the-mill cases, but ones where, based on our analysis, we believe there is a high level of risk. It is because of that level of risk that claims have been legitimately suspended. It is an approach that provides much needed capability to disrupt and respond to new and emerging threats at pace.

To give an example of one of the challenges that the DWP has faced, in May 2020 the cyber-resilience centre, working as part of the integrated risk and intelligence service—we are pretty good at coming up with snappy titles for teams—prevented an attack by organised criminals. That led to the suspension of thousands of universal credit claims and prevented £1.9 billion in benefits from being paid to people trying to scam the system in 2020 and 2021. That is just one example; those attacks continued and more cases had to be suspended to safeguard public funds.

[Stephen Timms (East Ham) (Lab)]

I am grateful to the Minister for giving way, and I congratulate my hon. Friend the Member for Edmonton (Kate Osamor) on securing this debate. I agree with the points that the Minister is making about the importance of tackling fraud, particularly as universal credit has the highest level of fraud of any DWP benefit in history. Does he agree that it is not acceptable to take somebody’s benefits away for 11 months, as in one of the cases that my hon. Friend mentioned, with no support available? That potentially completely ruins someone’s life.

[David Rutley]

I understand the point that the Chair of the Work and Pensions Committee makes, but the key thing is that claimants need to prove eligibility. We want to help them to prove eligibility for a benefit. The challenge, and the reason these cases take time, is often that claimants are not able or willing to provide that evidence. I will come on to that later.

Underpayment of Benefits: Compensation

Stephen Timms Excerpts

Thursday 13th January 2022 Commons Chamber

[Mr Speaker]

Order. May I just say to Members who were not present at the outset that they should not expect to be called, and ask them please not to try to take advantage? I call the Chair of the Work and Pensions Committee, Stephen Timms.

[Stephen Timms (East Ham) (Lab)]

I welcome this important report, and I thank you, Mr Speaker, for granting the urgent question.

What is the position relating to the payment of interest in cases such as this? The ombudsman found that these failings had had a severe effect on Ms U’s existing mental and physical health problems, and no doubt the same is true for quite a number of the other 118,000 people affected. Will the Department work out, proactively, who should be receiving compensation? One of the ombudsman’s recommendations is that the Department should report to the Select Committee on its progress in considering his report and the decisions that it makes on how to remedy its own failings. Will the Department accept the recommendation and report to the Committee, and if so, when can we expect that to happen?

[David Rutley]

Obviously the primary responsibility is to respond to the report, and we will do that, but I—and, no doubt, the Secretary of State—will note the right hon. Member’s point, and will make appropriate responses to his Committee. I have mentioned the 118,000 people who have received the arrears, and, as I said earlier to the Opposition spokesman, the right hon. Member for Leicester South (Jonathan Ashworth)—I am sorry, I should have said “the shadow Secretary of State”: I do not want to understate his importance—there are mechanisms for those who feel they have grounds for further compensation to get in touch with the Department and explore that further.

Oral Answers to Questions

Stephen Timms Excerpts

Monday 13th December 2021 Commons Chamber

[Rachel Hopkins (Luton South) (Lab)]

4. What steps her Department is taking to support benefit claimants in meeting increased living costs.

[Stephen Timms (East Ham) (Lab)]

6. What steps her Department is taking to support benefit claimants in meeting increased living costs.

[Kate Hollern (Blackburn) (Lab)]

7. What steps her Department is taking to support benefit claimants in meeting increased living costs.

--- Later in debate ---

[David Rutley]

I think the hon. Member will welcome the fact that the vast majority of the nearly 6,000 claimants in work will gain from the reduction in the taper rate and the increase in work allowances in the Budget, which is terrific. For those who are vulnerable, £1.8 million has been made available to local authorities to help them through the household support fund.

[Stephen Timms]

A single father who is unable to work on health grounds told the Select Committee in September that removing the £20 a week uplift would force him to skip meals so that his children did not have to. Christians Against Poverty, which supports him, says that he now cannot afford the absolute basics: food, heating and bus fares to take his children to school. He certainly cannot afford to buy his children Christmas presents. With prices rising so fast, is not the social security safety net just too low?

[David Rutley]

As I just set out to the hon. Member for Luton South (Rachel Hopkins), we have introduced the household support fund. In Newham, £3.3 million is available to help people exactly like the right hon. Gentleman’s constituent with the challenges they are facing this winter.

Social Security (Up-rating of Benefits) Bill

Stephen Timms Excerpts

Consideration of Lords amendments
Monday 15th November 2021 Commons Chamber

[Guy Opperman]

The Social Security (Up-rating of Benefits) Bill is a one-year Bill by reason of the pandemic. Last year, as you will be aware, Madam Deputy Speaker, we changed the law for one year to increase state pensions by 2.5% at a time when average earnings had fallen and consumer price inflation had increased by half a percentage point. If we had not taken this action, state pensions would have been frozen.

This year, average earnings growth is estimated to be unusually high, distorted by the cumulative effects of a natural economic reaction to the coronavirus pandemic and the response to the supportive measures introduced by the Government to protect livelihoods. The figure for average weekly earnings from May to July—the measure used for uprating earnings-linked benefits—has grown at 8.3%, which is over two percentage points higher than at any time over the past two decades. Recognising this covid-related distortion, the Government are setting aside the earnings link for one more year, 2022-23, and continuing the double lock of at least inflation or 2.5%. The triple lock will be applied again in the usual way for the basic and new state pensions from the following year.

[Stephen Timms (East Ham) (Lab)]

Of course I understand why the Government have decided not to increase the state pension by 8%, but is it still their intention that the value of the state pension should, over time, at least keep track with earnings?

[Guy Opperman]

The right hon. Gentleman will be aware that we remain committed to the triple lock. This is a one-year-only Bill. This will be a continuation of the policy that the Government introduced as part of the coalition in 2010 and have continued to pursue on an ongoing basis since then. There is no intention to change that.

[Stephen Timms]

rose—

[Guy Opperman]

I will make some progress.

It is right that I address these Lords amendments, Madam Deputy Speaker, because, as you rightly outlined, they engage financial privilege in that they interfere with the financial arrangements made by the elected House of Commons. That alone, I respectfully submit, is sufficient reason to disagree with the Lords amendments. However, it is also right that I address directly the point that was made by the House of Lords that invites the Secretary of State to measure earnings as if they were not actually growing by 8.3%. I assure the House that there is no robust way of calculating them as if they were not.

The independent Office for National Statistics has responsibility for producing economic statistics to the highest possible standards. ONS experts investigated whether it was possible to produce a single robust figure for underlying earnings growth that stripped out impacts from the pandemic, and concluded that it was not possible. Alongside the actual earnings growth figures, the ONS suggested a possible indicative range of 3.6% to 5.1%. These figures do not have national statistics status. Indeed, the ONS itself includes heavy caveats on the issue and advises caution in approaching it. The Bank of England also cast doubt on identifying a figure that could be relied on. The ONS said:

“There are a number of ways you can try to strip out these base effects, but no single method everyone would agree on. We have tried a couple of simple approaches…Neither approach is perfect…Our calculations of an underlying rate are there to help users understand base and compositional effects, but…there remains a lot of uncertainty about how best to control for these effects.”

It said that the statistics therefore “need to be” treated “with caution”.

We believe it would be reckless in procedure and in law for this or any other Government to set a precedent for uprating benefits or pensions using a methodology that is not robust and for which there is no consensus. That is why the Government have decided to suspend the earnings link in this year of exceptional and anomalous earnings growth. Instead, we decided to apply a double lock underpinned by the established consumer prices index published and approved by the ONS. This approach was also recommended by the Social Market Foundation and other commentators, and very strongly by this House on Second Reading, Report and Third Reading. That is the legislation that this House passed to the Lords, and that is the legislation I would urge this House to send back to the Lords.

I remind the House that over the two years of the pandemic the Government will have ensured that the pensions covered by this Bill will have increased by much more than prices, by reason of the 2.5% increase last year and the link to CPI this year. In those circumstances, I commend this House to reject the House of Lords amendments and agree that we proceed with this one-year Bill by reason of the pandemic.

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[David Linden]

I will avoid going into energy policy in Northern Ireland, given previous actions, but the hon. Member is right to place that on the record. His constituents in Strangford should be grateful to him not just for making that point but for backing the Lords amendments when we come to the Division.

The Red Book suggests that, by scrapping the triple lock, the Treasury will save £5.4 billion in 2022-23, £5.8 billion in 2023-24 and £6.1 billion in 2024-25. The Chancellor is clearly balancing the books on the backs of pensioners who continue to get a raw deal from a pensions system that they have paid into their whole lives. I caution the Minister that that is an electorally courageous move for a party that has generally enjoyed higher levels of support among pensioners. Indeed, I will be particularly interested to see how our Scottish Conservative colleagues try to sell this latest broken promise to the electorate north of Coldstream.

The SNP wholeheartedly opposes the British Government’s triple lock betrayal and urges the House to support the Lords amendments. There may be a couple of hundred extra MPs in the Division Lobby with us tonight compared with the last time the House looked at this in September, but we know that the Tory Government will use their majority to plough ahead and vote down their lordships’ amendments regardless. My constituents in Glasgow East will therefore conclude once again that the House does not work for pensioners and it certainly does not work for Scotland. The only way to do things differently is with the normal powers of independence, and I suspect that this tawdry Bill will only hasten that cause further.

[Stephen Timms]

In my intervention on the Minister, I asked if it remained the Government’s intention that the value of the state pension should, over time, at least keep track with earnings. He declined to confirm that it did, so it may be that the Government’s policy has changed. Ever since Adair Turner’s pensions report was published in 2006, Government policy has been that the state pension should keep track with earnings, not just with prices as was previously the case. I suppose we must conclude that there has been a change in approach.

[Guy Opperman]

rose—

[Stephen Timms]

I will gladly give way to the Minister. Hopefully he will clarify the position.

[Guy Opperman]

I think the right hon. Member misheard or misunderstood me. This is a one-year-only Bill; after that, we revert to the current legislation and state pensions will increase at least in line with earnings. That is what I thought I made clear.

[Stephen Timms]

The Minister did indeed say that in response to my intervention, but that does not answer the question. The question was: do the Government intend the value of the state pension, over time, at least to keep track with earnings? I was hoping that he would reaffirm that. I do not think that is controversial—it is a policy long held by the Labour Government, the coalition Government and this Government—and I hoped that he would say that that was still their intention, even though in the current year, for reasons that we all understand, the value of the state pension will fall significantly behind the increase in earnings.

As I hope I made clear in my intervention, I think it is entirely reasonable not to increase the state pension by 8% this year; I completely understand the case for not doing that. It looks as though we will get an increase of around 3%, in line with CPI. The hon. Member for Glasgow East (David Linden), who spoke for the SNP, talked about the likely rates of inflation, and, depending on increases in prices and earnings next year, it is quite likely that the state pension will never catch up with earnings unless there is a catch-up initiative of some kind. The Lords amendments would provide such a mechanism. If there is not a catch-up at some point, that would be contrary to the Government’s long-held intention that the state pension should at least keep track with earnings. The fact that—as the Minister has now told the House twice—it will get back in line with the triple lock next year does not solve the problem, because there is a significant backwards move this year. Will there be a catch-up initiative at some point? It looks and sounds as though there will not.

Keeping the value of the state pension going up in line with earnings was a key pillar of the new pensions framework set out in the report by Adair Turner and his fellow commissioners John Hills and Jeannie Drake, published in 2005 and 2006. The settlement’s key elements were that the state pension should keep track with the increase in earnings over time, and auto-enrolment. It was accepted by the Government then and by every Government since.

The importance of that needs to be spelled out. It is not just about being more generous to pensioners and helpful to older people. It is important because it ensures a sound foundation for pension saving, so that people auto-enrolled into pension saving through that successful initiative, which we have all celebrated, are not being encouraged by the state into a bad deal. If the value of the state pension will no longer at least keep track over time with earnings, some people will be better off spending their money now, rather than saving into the pension pot that they are being auto-enrolled into, and later relying on the means-tested safety net of pension credit.

If the state pension slips behind earnings, modest pensions accrued through auto-enrolment will become worthless, because those who claim them in due course will not get above the means-tested threshold and they will still have to depend on pension credit for their income in retirement, and the fact that they have saved into a pension will do them no good at all. That will be a growing problem if the level of the state pension is allowed to slip behind the increase in earnings.

If that does happen, people who are looking forward and saving but are going to end up with fairly modest pensions should instead spend the money at the time they earn it, rather than save it in a pension that, in the end, is not going to take them above the means-tested threshold and so will not give them any additional income. That is why what the Minister is arguing for is such a threat to the success of auto-enrolment. Auto-enrolment will no longer be a sound basis for pension saving if the level of the state pension is allowed to drift below the level of earnings.

People must be able to trust in the state pension under the policies of the Government. They have been able to do so up to now, and now they will not. That raises a pretty fundamental question about the future of the Government’s pensions policy. There is a real danger in allowing, almost by sleight of hand albeit for reasons that we all understand and sympathise with, the state pension to fall permanently behind the increase in earnings and weakening the pension framework that, as far as we all know, is still the basis of the Minister’s policy.

We should not allow that to happen. We need either a measure, and the Minister needs to reassure us that there will be, such as a catch-up initiative to make sure that the state pension over time—not this year, but by next year or the year after—will keep track with the increase in earnings, or the House needs to accept the amendment agreed with a significant majority in the other place, because that keeps the pension framework in place and keeps it effective. There is a real worry if there is a significant falling behind. If there is a 3% increase in the state pension at a time when earnings have gone up by 8%, that will be a one-off 5% fall in the state pension behind the level of earnings. Depending on what happens to earnings growth, which will certainly not carry on at 8%, and on inflation rises next year, that fall could well be locked in for good and the pension framework will have been weakened.

I hope that I have made it clear why this is actually quite important. It is not just about whether we are being generous enough to pensioners. The question is: are we keeping in place a robust and reliable framework for pension saving based on which people can plan with confidence for the future?

[John McDonnell (Hayes and Harlington) (Lab)]

May I say that we in the Opposition, and I think Members on both sides of the House, take pride in the expertise of my right hon. Friend the Member for East Ham (Stephen Timms)? Time and again, as Chair of the Work and Pensions Committee, he has warned the House —both sides of the House, at times—about the approach that needs to be taken if we are to have a stable social security and pensions regime. I pay tribute to the work he does.

I am an ardent advocate of the coalition Government’s policy on the triple lock. That seems somewhat ironic, given the history of this policy, but I am. The historical background is that I was a total opponent of Mrs Thatcher’s breaking of the link between pensions and earnings. To be frank, the state pension still has not recovered from breaking that link. I was elected in 1997, and at the end of Conservative rule in 1997 the basic state pension would have been 50% higher in value if Mrs Thatcher had not broken the earnings link in 1980.

From 1997, I prepared alternative Budgets to the new Labour Budgets. Gordon Brown had a sense of humour about that, and when I was on a platform with him recently—when I was the shadow Chancellor—he said, “Actually, he’s always been the shadow Chancellor,” because I was producing alternatives to his Budgets. In every alternative Budget, I put forward the restoration of the link between earnings and pensions. I did so because the breaking of that link had undermined the progress we had seen until then in improving the state pension and lifting pensioners out of poverty. That is why I was a strong supporter of the triple lock when the coalition Government introduced it. Despite a decade of the triple lock, however, the basic state pension would still be 37% higher if the earnings link had been maintained. That means that today a single pensioner on the basic state pension would be £2,662 a year better off, and a pensioner couple would be £4,277 a year better off, if the link had not been broken by Mrs Thatcher all those years ago.

According to figures on pensioner poverty from Age UK, there are 2.1 million pensioners living in poverty in our country at the moment, up from 1.6 million in 2014—a 30% increase. What is interesting about this, and not shocking to some in this House, is that the majority of pensioners living in poverty are women. In addition, pensioners from black and Asian communities are about twice as likely to be living in poverty.

What I find interesting are some of the individual examples we can bring to the House about what this means. I remember that, the last time energy prices rose, I had a constituent who used her bus pass to stay on the bus all day to keep warm. Such stories about the reasons why people were living in such fuel poverty were not uncommon. I remind the House that this year fuel bills are increasing on average by £139 and they are expected to rise again next year, so I predict that we will have more of our pensioner constituents going cold this winter and, if we are not careful, in future winters as well, especially as, as has been said, inflation is now likely to be 4% and some are even predicting 5%.

I just wonder what this row is all about, because I support the amendments. I would have given the 8%, because I do not believe that people should break the principle of a manifesto commitment in such circumstances and I believe the additional top-up would have worked. However, the Altmann amendment is moving towards a 5% increase and the Government will award a 3% increase, so the difference we are talking about—this is the argument—is about £2.75 a week. Even if we went to the full amount of the 8%, there would only be an additional £7 a week between the 3% and the 8%. Are we really having a row in this House about robbing pensioners of £2.75 a week? I just find it unbelievable that we can even contemplate that.

I have seen the range of costings, but I have examined the DWP estimates on the effect of the Altmann amendment. They said it would cost £1.3 billion in ’22-23; that was in comparison with the uprating with prices. I was in the House a few weeks ago. We are arguing about an additional £1.3 billion for pensioners. Actually, a £25 billion corporate tax break was given away by the Chancellor in the Budget. It will be £12.5 billion next year.

--- Later in debate ---

[Guy Opperman]

It is in the Bill that it only lasts for one year. The hon. Gentleman should really read the Bill. It is not that difficult; it only runs to two pages and two clauses.

[Stephen Timms]

Will the Minister give way?

[Guy Opperman]

No. I have given way once already to the right hon. Gentleman, and I have answered his point on two occasions.

The Bill is for one year only. After that, it will revert to the current legislation, and state pension will increase at least in line with earnings. The triple lock will, I confirm, be applied in the usual way for the rest of the Parliament. I would point out to the House that last year, earnings fell by 1% but we still legislated to allow state pensions to be increased by 2.5%. As a result of the triple lock, as I say, the full yearly basic state pension is £875 more than if it had been uprated solely by earnings. The increase is £2,050 in cash terms.

[Stephen Timms]

Will the Minister give way?

[Guy Opperman]

No. This is a two-clause Bill introduced by reason of the pandemic. The law will last for only one year before reverting. I commend the progress made by the Government on this issue, and I invite the House to reject the Lords amendments.

Question put, That this House disagrees with Lords amendment 1.

Oral Answers to Questions

Stephen Timms Excerpts

Monday 8th November 2021 Commons Chamber

[Mr Speaker]

I call the Chair of the Select Committee on Work and Pensions.

[Stephen Timms (East Ham) (Lab)]

Unemployment support is now at the lowest level in real terms for more than 30 years, even though the economy has grown by more than 50% in real terms over that period. As a proportion of average earnings, it is the lowest ever—lower than when Lloyd George introduced unemployment benefit 110 years ago. Why has unemployment support been set at this historically extremely low level?

[David Rutley]

It is always important to have a safety net, but it is also very important to make sure that we get people into the world of work, and that is what our focus is, as I have said repeatedly in my answers today. With 1.1 million vacancies and with a plan for jobs, that has to be our focus.

Social Security (Up-rating of Benefits) Bill

Stephen Timms Excerpts

2nd reading
Monday 20th September 2021 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 Work and Pensions Committee. I echo his words of appreciation and good wishes to the hon. Members for North Swindon (Justin Tomlinson) and for Colchester (Will Quince).

The Bill reduces an increase in the state pension that the Government’s triple lock policy would have delivered. I understand why it has been done, but let us not kid ourselves; we have a growing problem with pensioner poverty, after a quite long-sustained improvement following the introduction of pension credit 18 years ago. The charity Independent Age has analysed the Government’s households below average income statistics. Its analysis shows that pensioner poverty has started to increase again since 2012, with 18% of pensioners—more than 2 million people—in 2020 living in poverty after paying housing costs, of whom more than 1 million are in severe poverty. This is a significant challenge and it is getting worse. Of the English regions, the problem is particularly acute in London. There is no room for complacency about pensioner poverty.

The Bill will increase the standard minimum guarantee of pension credit by 2.5% or inflation—whichever is the greater—next April. When the Minister responds, will he tell us what the Department will do to increase take-up of pension credit so that more people can benefit from the increase? The most recent figures show that only six in 10 of those who are eligible for pension credit are claiming it, and that only 76% of the total amount of pension credit that could have been claimed is claimed. That is quite a significant reason why the problem of pensioner poverty is rising.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

I am extremely grateful to the right hon. Member for making that important point. In preparation for this debate, I read an incredible stat: in Wales alone, about £214 million of pension credit is not claimed. Increasing take-up would be an easy way to deal with the growing tides of pensioner poverty, but the key thing with pension credit is that it is also a gateway to other support.

[Stephen Timms]

The hon. Gentleman is absolutely right. That is why Independent Age has called on the Government properly to research who is not claiming pension credit, and to draw up a plan to increase take-up over five years.

Research by academics at Loughborough University found that maximising pension credit uptake could lift three in 10 pensioners out of poverty and reduce the number living in severe poverty by half. When the Secretary of State came to the Select Committee in July, I asked her whether the Department would bring forward an action plan. She replied that there had been a “media day of action” in June to encourage take-up of pension credit, and told the Committee:

“We will continue to advertise it in a different way but I am not anticipating a big action plan, no.”

That is disappointing. Given that the Bill will deny pensioners an increase that the Government’s policy appeared to promise, I ask the Minister to look again at further steps to increase pension credit take-up.

My name was also on the reasoned amendment tabled by the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), which, as he reminded the House, was not selected. However, I want to comment on the reasoned amendment that was selected, which states that we should reject the Bill because it

“fails to increase key benefits, such as making permanent the uplift to Universal Credit.”

Let me pick up that specific point. As the amendment drafted by the right hon. Member for Chingford and Woodford Green pointed out, the money that the Bill will save the Government next year would almost deliver the £20 a week uplift to universal credit next year. Many Members across the House are deeply worried by the plan to remove the uplift next month. The Select Committee’s call to at least postpone the removal of the uplift was unanimous. There are lots of different kinds of worry, which I will outline.

First, this is not the right time, because the furlough scheme is about to end. We are told that Ministers’ intention in introducing the uplift was to protect people who were becoming newly unemployed, but there will be a surge of newly unemployed people when furlough ends. Ministers told the Select Committee last week that the Government have no estimate of the number of redundancies that will follow the end of the furlough scheme, but the most recent figures showed that 1.6 million people were furloughed at the end of July. Surely the consideration given to people who became unemployed at the start of the first lockdown should be given to those losing their livelihood next week as well. What justification could there be for treating them differently?

Secondly, since the decision to introduce the uplift—especially in the past month—we have seen a surge of price rises. September’s inflation figure was a record, reflecting increased food prices in particular, and earlier this afternoon the House was considering the current steep increases in energy prices. This cannot be the right time to take £20 a week away from everyone receiving universal credit. The Select Committee recently heard evidence of people having to skip meals before the uplift was introduced. Well, their position will be a good deal worse if the uplift is taken away in a couple of weeks, because the prices they now face are so much higher, and have become so much higher in just the last few weeks.

Thirdly, what justification can there be for reducing universal credit to a historically low level? If the uplift is taken away, support for unemployed families will be the lowest in real terms for more than 30 years. The economy has grown by more than 50% in real terms over that period, but we are being asked to agree that support for unemployed families should be no higher at all in real terms than it was 30 years ago. As a proportion of average earnings, support for unemployed families will be the lowest since the modern welfare state was introduced in 1948. The Library tells me that it will be lower as a proportion of average earnings than it was when unemployment benefit was first introduced in 1911.

We are told that the Government’s priority is levelling up. This policy is not levelling up; this is a policy of grinding down. Social security has a job to do—an important job that we all recognise needs to be done. Pushing it inexorably downwards when prices are surging upwards means that it cannot do that job. People cannot focus on getting a job if they are worrying about whether they can afford to eat their next meal.

Speaking to the Committee last week, Ministers from the Department could give no reason at all for the Government choosing to set the rate of universal credit so low, other than as a consequence of historical accidents. They said that the Government had made no assessment of the impact of ending the £20 a week uplift on people claiming, nor of how many people would be pushed into poverty as a result. The Legatum Institute has today published research suggesting that the number of people in poverty will go up by 840,000, including 290,000 children, if the uplift is removed. The Government have also made no new estimate of the annual cost of keeping the uplift.

[Sir Iain Duncan Smith]

Does the right hon. Gentleman agree that often in the briefings used there is a kind of mistake in that they talk about this as being an unemployment benefit? It is not, because it combines tax credits, so putting investment into this is more likely to get people through and into work than taking it out. That is the point I was going to make but was not able to.

[Stephen Timms]

The right hon. Gentleman makes a very important point that I agree with. It is a vital fact, often not understood, that universal credit is an in-work benefit as well as an out-of-work benefit. I think that 40% of universal credit claimants are in work. We have taken evidence in the Select Committee from working parents receiving universal credit who are having quite a hard time at the moment and are going to have a very hard time indeed if they lose the £86 a month that they will if the uplift is removed.

The cost of keeping the uplift, the figure that we are given, is £6 billion a year, but—the hon. Member for Amber Valley drew attention to this in the Select Committee last week—that figure was calculated when lockdown was still in place and job vacancies were much lower, so presumably the cost would be less if the uplift was kept.

The Bill misses the chance—the Liberal Democrats’ reasoned amendment gives us the opportunity to reflect on this—to address this very serious flaw in the Government’s current intentions. We are heading into an extremely difficult period for both working families and unemployed families who depend on universal credit, because of price rises across the board.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I thank the 13 colleagues who have contributed to a wide-ranging debate. The Bill makes technical changes to set aside the earnings link for 2022-23. We will instead increase the relevant pensions and benefits by at least the higher of inflation or 2.5%. This approach will ensure that pensioners’ spending power is preserved and that they are protected from the higher cost of living, but it will also take into account the difficult decisions elsewhere across public spending.

The practical reality is that many issues were raised tonight, not least pensioner poverty. I would respectfully remind the House that pensioner poverty is going down, not up. As a result of the triple lock since 2010, the full yearly basic state pension has increased by £2,050 in cash terms. There are 200,000 fewer pensioners in absolute poverty, both before and after housing costs, as compared with 2009-10, and material deprivation—an alternative way of measuring poverty—is at an all-time low of 6% of pensioners.

[Stephen Timms]

Will the Minister give way?

[Guy Opperman]

One second.

It is worth reminding ourselves that the spending on state pension used to be £99 per person, and less than £60 billion in total—when in fact the right hon. Gentleman was the Pensions Minister under the Labour Government. Those figures are now up to £137 or to £179, and to £105 billion.

[Stephen Timms]

I am very grateful to the Minister for giving way, and I am delighted he is still in his post. He talked about pensioner poverty, but rather idiosyncratically, he is using the absolute measure. The much more widely used measure is the relative measure of poverty, on which the analysis of Independent Age is based, and on that much more widely used measure, pensioner poverty is of course going up.

[Guy Opperman]

I am not going to repeat the points I have made, but I manifestly disagree with the right hon. Gentleman. I would point out that we could add on the £24 billion of top-ups that this Government put forward over and above the £105 billion of state pension, so with respect we are in disagreement. There is also a significant degree of support for winter fuel, NHS prescriptions, free eye tests, the over-75s free TV licence and a variety of other matters.

Universal Credit and Working Tax Credits

Stephen Timms Excerpts

Wednesday 15th September 2021 Commons Chamber

[The Secretary of State for Work and Pensions (Dr Thérèse Coffey)]

Just this week, the official jobs statistics showed that more people are getting back into work and there is a record number of vacancies. That is a tribute to the British people and businesses. It shows that our plan for jobs is working. It shows that our comprehensive and unprecedented support for citizens and corporations as well as the NHS, in trying to protect lives and livelihoods, has worked. After the terrible personal and economic impact of covid, boosted by the successful vaccination roll-out, Britain is now rebounding.

It was right that we took prompt and decisive action to support our nation during this challenging time. We had the job retention scheme, the self-employment grants, the VAT changes, the business rates relief, the suspension of evictions for people and businesses who were renting—I could go on. We could only do that, though, because we went into the global pandemic with strong economic foundations built as a result of 10 years of Conservative measures to restore the nation’s finances after the financial crisis on Labour’s watch, when, memorably, there was no money left. Those measures included a sustained focus on supporting people to move into and progress in work through universal credit, with the highest level of employment ever seen in this country just before covid hit.

[Stephen Timms (East Ham) (Lab)]

If this cut goes ahead, with £20 a week taken off universal credit, it will reduce the support for an unemployed family to the lowest level as a proportion of average earnings at any time since the welfare state was established after the second world war. How can that possibly be justified?

[Dr Coffey]

As I will probably say a bit later as well, this was indeed a temporary uplift, recognising the financial impact on people newly unemployed and that the uplift would be somewhat of a cushion for their financial circumstances. However, do bear in mind all the other support that we have given to help families get back on their feet, all the other elements that we have used to help people manage the cost of living, as well as the extra welfare grants that we targeted specifically through local councils. They have all been actions to help people, and we are helping people back into work, and better-paid work.

--- Later in debate ---

[Stephen Timms (East Ham) (Lab)]

I very much welcome the argument that the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) has just set out, and I am grateful to him for reaffirming his support for the £20 a week rise. Like him, I want to focus on the question of adequacy.

If this cut goes ahead, it will reduce real-terms support for an out-of-work family to the lowest level since Margaret Thatcher was Prime Minister. The economy has grown by more than 50% in real terms since then, but the Government’s proposal is that support for unemployed families should not have grown at all over those 30 years. That support will be about one seventh of average earnings, which is, as I said in my intervention on the Secretary of State, the lowest proportion of average earnings it has been since 1948. The Secretary of State made no attempt to justify why it was so low. I invited her to do so, but she did not, and of course it cannot be justified. The House of Commons Library tells us that, if we go back to 1911 when unemployment benefit was introduced, it was set at a higher level as a proportion of average earnings than the system will deliver if this cut goes ahead. The cut will take effect just as we are seeing prices surge, including food prices, as we have seen in today’s inflation figures, and energy bills, with the Ofgem price cap lifted.

The Work and Pensions Committee heard last week from a lone father of two children who told us what this was going to mean for him:

“The uplift sent some relief and for that to be removed is going to leave us with that big question again: do I go hungry, do my kids go hungry or do we keep the house warm?”

Somebody worrying about how to buy their next meal is not going to be able to focus on finding a decent job. Taking away £20 a week will leave the level of support below the basic minimum that is needed and that we require the system to provide.

The cut will hit working families hard as well. The Committee heard from working lone parents who will lose £86 a month from their income. One of them told us that

“if one of the children gets a party invite—which some weeks is my worst nightmare because then I have to find the money for them to be able to do that—it is kind of a case of robbing Peter to pay Paul all of the time anyway. There have been months where I have to decide which bill I am not going to pay this month...you are constantly playing catch-up on utilities particularly...The extra £86 a month has allowed for us not to be doing that so much.”

And that is a parent who is in full-time employment. If this cut goes ahead, it will reduce support for working parents and unemployed parents below the basic minimum that we all want people to have to enable them to look for a job, or for a better job, and to care for their children—things we all want them to do. We will instead be imposing grinding hardship on a very large number of people at a time of surging costs and inflation. Taking away the £20 a week now will mean that the level of support provided will be less in real terms, given today’s inflation figures, than the support that was available going into the pandemic.

The Government have lost touch with what people are having to deal with. The Secretary of State’s claim that people could make up the extra £20 a week by working an extra two hours is simply wrong. Governments do lose touch, but this House must not. We must retain a recognition of the realities that people are dealing with. We need to grasp what this will do to families, even though Ministers do not. It is not just about numbers on a spreadsheet. Half of those claiming universal credit only started doing so during the pandemic. They are not returning to their former level of support. Many will have to get used to a lower income than they have ever had to cope with, and that will come as a rude shock to those who were convinced at the 2019 election, maybe for the first time, that the Conservative party understood what they were dealing with. Every former Work and Pensions Secretary since 2010 opposes the cut, as the right hon. Member for Preseli Pembrokeshire reminded us. It will leave the system unable to do the job we need it to do, and the House must reject this cut.

Oral Answers to Questions

Stephen Timms Excerpts

Monday 13th September 2021 Commons Chamber

[Dr Coffey]

The estimated cost for a year of the extension of universal credit is about £5 billion. As my right hon. Friend the Chancellor has set out, and we have updated the plan for jobs today, we want to invest in people to make sure that they can not only get into work, but get into better-paid work as well. That is why with a variety of levers, such as the lifetime skills guarantee, and all the work we are doing for people out of work at the moment, including the sector-based work academy programme, alongside some of our other programmes, we have a really good record of getting people into well-paid work, and that is where our focus has to be.

[Stephen Timms (East Ham) (Lab)]

Single parents who are in work told the Work and Pensions Committee last week how hard they are going to find it to sustain the £87 a month fall in their income that this cut will deliver. One witness told us that he is going to have to skip meals to make sure that his children do not have to. Surely social security must be better than that.

[Dr Coffey]

I hope the right hon. Gentleman will direct that person to go and have a chat with the work coach. I do not know the status of that individual, exactly what paid employment they are in right now or their situation with childcare, but I remind him that 85% of the cost of childcare can be claimed by people on universal credit. One of the directions we want to encourage individuals to go in is to go and talk to their work coaches so that we can help them get on in life and be more prosperous.

Pensions Update

Stephen Timms Excerpts

Tuesday 7th September 2021 Commons Chamber

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the Chair of the Select Committee.

[Stephen Timms (East Ham) (Lab)]

Is it still the Secretary of State’s view that it is important that the level of the basic state pension keeps track with earnings over time, as the coalition pension reforms assumed? If so, will it not require some further adjustment after these two exceptional years? Given that pensioner poverty was starting to increase before the pandemic, after a long period in which, as she said, that did not happen, what will her Department do to increase the currently very low take-up of pension credit?

[Dr Coffey]

In response to the first part of the right hon. Gentleman’s question, the legislation is there regarding the earnings link and we are maintaining that. We will be doing further analysis to understand what proportion of median earnings the pension will be, but I have no plans to change aspects of it. We think it is a sensible approach that we have taken to redress the balance, which had moved away.

Forgive me, but I have forgotten the second part of the right hon. Gentleman’s question. [Hon. Members: “Pension credit.”] Okay. The thing about pension credit is that it is split in two: the income guarantee and the savings credit. As I said to the House, our estimate is that 75% of people we think could be eligible take up the income side of pension credit, but the savings side has a much lower take-up. That is because sometimes when people do the calculation, it may be just 1p or 2p a week and they may not think it worth while to do the whole application. However, even with the savings credit side of pension credit come things like the free TV licence and access to other benefits, so we encourage people to take it up. With the income side, we estimate that three in four eligible pensioners are taking it up.

Oral Answers to Questions

Stephen Timms Excerpts

Monday 28th June 2021 Commons Chamber

[Will Quince]

The hon. Gentleman knows that I will not be able to comment on live litigation, but what I would say is that we do have a comprehensive childcare offer, both as a Government and specifically as a Department. I would also say that, unlike the previous benefit system, in which childcare costs could be up to 70% recoverable, in universal credit the figure is 85%, so it is a far more generous system.

[Stephen Timms (East Ham) (Lab)]

The Joseph Rowntree Foundation has told the Work and Pensions Committee that cutting £20 a week from universal credit in October will reduce unemployment support to the lowest level for over 30 years at exactly the point when unemployment is being increased by the ending of the furlough scheme, and that it will also pull 400,000 people, including many children, below the poverty line. What assessment will the Minister make of the impact of that cut on child poverty before the cut goes ahead?