Department for Work and Pensions

Debate between Stephen Timms and David Linden

Tuesday 4th July 2023 Commons Chamber

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

I am very grateful to have been granted today’s debate about DWP spending.

I will focus in particular on universal credit, whose roll-out started 10 years ago in 2013. The DWP is forecast to have, by some considerable margin, the highest expenditure of any Government Department, at £279.3 billion in this financial year, followed by the Department of Health and Social Care, at £201 billion. DWP spending is the largest by a considerable distance.

Of course, the DWP forecast is uncertain. Almost all its funding counts as annually managed expenditure; it is hard to forecast demand-led spending. DWP’s admin spending—departmental expenditure limits—is 27% lower in real terms this year than in 2010-11. Universal credit spending is forecast to be £50.8 billion this financial year, which is £8.8 billion higher than forecast in these estimates last year, reflecting the recent much-needed uprating and a higher case load. In February, 4.5 million households were receiving universal credit payments.

A key argument in the business case for universal credit was the prospect of reducing fraud and error. Nearly a quarter of the £34 billion net present value gain expected over 10 years from introducing universal credit was due to come from lower fraud and error. In fact, fraud and error have been much worse than they were for legacy benefits. The Department’s statistics show that the universal credit overpayment rate decreased, but from an astronomical 14.7% in May 2021 to 12.8% last year. I know that the Department is setting out to address that problem, and that it has obtained resources from the Treasury to do so. Underpayments were at their highest-ever recorded rate last year, at 1.6%. I hope the Minister will be able to tell us about plans for tackling those problems.

An additional reason that it is so important to get decisions right at the moment is that universal credit is a passport to cost of living support payments. There was a strong case for merging the various benefits into universal credit, and the success of the system in getting urgently needed support out effectively during the pandemic was very important and very impressive. However, there are some big problems—above all, the problem of the five-week wait between applying for the benefit and receiving the first payment. With legacy benefits, the first payment would usually arrive a week and a half or so after applying. With universal credit, having spent hundreds of millions of pounds on what we were always assured was agile technology, the same thing now takes five weeks. That is a fundamental and unnecessary flaw; the security is absent from social security.

In January 2021, the Government rejected the Select Committee’s recommendations to eliminate the wait and instead pay all first-time claimants of universal credit a starter payment equivalent to three weeks of the standard allowance, just to tide people over. The Government response pointed out that claimants can access advances, but of course, those are loans. Repayments reduce the already low monthly awards, and repaying advances is a major driver of the explosive growth in food bank demand that we have seen. Our colleagues in the other place, those on the Lords Economic Affairs Committee—with its Conservative Chair—succinctly highlighted the consequences of the five-week wait in July last year:

“the five-week wait for the first payment…drives many people into rent arrears, reliance on foodbanks and debt.”

As such, I ask the Minister once again whether the Government will reconsider our recommendations, or whether we have to wait for a different Government for that fundamental flaw to be addressed.

I am very pleased to say that one area in which the Government have listened to the Committee is reimbursement of childcare costs for people claiming universal credit. I warmly welcome the lifting of the cap and up-front payments for childcare announced in the Budget, and I hope that our future reports will have comparable levels of success. Those changes will support people to be in work in future.

Last week, the Child Poverty Action Group published a fascinating report called “You reap what you code”, highlighting areas where the universal credit computer system does not deliver what it should. It gave the example that legislation and guidance allow some groups to submit a universal credit claim up to a month in advance, but the system does not allow that, nor is there an adequate workaround outside the digital system. As such, some care leavers and prisoners expecting release can miss out on an entitlement that they are due. For all its success in the pandemic—I am unstinting in my recognition of that success—the rigidity of the digital system is a problem. Can the Minister tell us whether a fix is planned for that problem of early claims, which the Child Poverty Action Group highlighted last week?

Does the level of benefits meet need in the way it is supposed to? Do benefits represent value for the taxpayer? The Committee is conducting an important inquiry into benefit levels in the UK, and will report in the first half of next year. Benefit levels are very low. The Joseph Rowntree Foundation and the Trussell Trust told the Committee that

“the basic rate of Universal Credit—its standard allowance (or equivalents in previous systems)—is now at its lowest level in real terms in almost 40 years (CPI-adjusted) and its lowest ever level as a proportion of average earnings.”

They estimate from pretty careful research that a single adult needs £120 per week to cover essentials: food, utilities, vital household items and travel. That is excluding rent and council tax. Universal credit’s standard allowance is £85 per week for a single adult over 25. That is a shortfall of at least £35 per week, and deductions—for advance payments, for example—often pull actual support well below the headline rate.

The Joseph Rowntree Foundation and the Trussell Trust call for an essentials guarantee. They make the point—which has been suggested this week in the press—that we might get a below-inflation uprating of benefits next year, making those problems even worse. I would be grateful if the Minister gave an assurance on that front, because that would be very bad news indeed.

[David Linden (Glasgow East) (SNP)]

Does the Chair of the Select Committee agree that the Government need to resist the temptation to try to plug the gaps with one-off payments? They should actually look at the wider, more structural problems that they have with the social security system, rather than just try to plug gaps when the system is falling apart at the seams.

[Sir Stephen Timms]

The hon. Gentleman makes an important point, and I very much value his contribution to the work of the Select Committee. He is quite right, and I hope that we will be able to look at some of those structural issues over the course of the inquiry.

If universal credit did meet basic needs, other demands—including on food banks—would decrease. When the £20 a week uplift to universal credit was introduced, there was a significant drop in food bank use; when that uplift was removed, food bank use went straight back up again. Universal credit was intended to make work pay, but how can it achieve that aim if people do not have the means to pay a bus fare, for example? In evidence to the Committee, the Trussell Trust, the Joseph Rowntree Foundation and the Public Law Project all highlighted not being able to buy public transport tickets as a significant barrier to work. As far as we can tell, the Government have made no assessment at all of whether benefit levels are adequate. If I am wrong about that, I would very much welcome the Minister telling us, but there is certainly no evidence of such an assessment ever having been made. I hope the Department will look very carefully at the findings of our report when they are published in due course.

One other point was highlighted in a briefing for this debate prepared by the charity Barnardo’s. That charity describes the two-child limit as the single biggest policy driver of child poverty in the UK, and says that ending it would be the most cost-effective way of reducing child poverty, lifting a quarter of a million children out of poverty and easing the poverty of a further 850,000 children. The cost of doing so would be £1.3 billion per year. I must say that I am puzzled about the justification for the two-child limit: it presumably reflects a belief that parents should not have more than two children, but as far as I understand it, that is not the Government’s view. Indeed, Government Members are understandably starting to worry about our falling birth rate, so why do we refuse to provide support for children beyond the first two? Is it not time to just scrap that limit, which does not seem to make any sense?

Another reason for higher DWP expenditure this year is the continuation of cost of living support. Expenditure is forecast to increase by just over £2 billion this year, due to higher payments—£900 in this financial year, compared with £650 last year—and higher take-up. Those payments have been crucial, but they do not fully meet need, particularly the £150 disability support payment. Last month, Maddy Rose of Mencap told the Select Committee that the payment is “clearly not commensurate” with the extra costs that those eligible incur, and we have heard other strong evidence to the Committee along those lines. Helen Barnard of the Trussell Trust told us last month that the cost of living payment

“has certainly helped the families that have got it, but of course, it is a flat payment. It is not calibrated for the number of people you are trying to feed, so it has clearly gone less far if you are a family with children than if you are a single person or a couple.”

That is one of the reasons why the Trussell Trust data shows a faster rise in food bank demand among families with children than among families without.

The lump sum nature of the payment is problematic. Citizens Advice, speaking for many, told the Committee that increments to universal credit would be better than one-off payments. Our colleagues on the Treasury Committee called on the Government last December to provide monthly payments over a six-month period to give more households support at the time of their greatest need and reduce the severity of the disincentives to work. The Government rejected that proposal, essentially due to the limitations of the IT system, but as we know from the pandemic, monthly universal credit can be increased overnight.

The need to meet a specific qualifying period for each payment window has led to what evidence to the Committee has described as

“a cliff edge where receiving a nil UC award one month—maybe due to a sanction or a higher salary due to backpay or a bonus—caused recipients to become ineligible for the entire cost of living support payment in that qualification period.”

I am looking forward to discussing cost of living support further with the Minister responsible for social mobility, youth and progression—the Under-Secretary of State for Work and Pensions, the hon. Member for Mid Sussex (Mims Davies)—at the Committee tomorrow morning.

A very important aim in achieving effective spending is transparency over how the money is being spent and what is being achieved. The Department has had a very poor record in recent years, so I warmly welcome signs of a new commitment to transparency since the appointment of the new Secretary of State. Keeping things hidden, which has been the Department’s practice, has the short-term advantage for Ministers of avoiding having to answer sometimes awkward questions, but over the medium and long term, people depending on the Department form the impression that it is conspiring against them. The result is terrible mistrust, causing the Department very serious problems over time—for example, the very serious lack of confidence in the DWP among disabled people at the moment. It does not have to be like that, but changing things requires deliberate effort on the Department’s behalf.

None of the recently introduced employment support initiatives had regular performance reporting on introduction. I warmly welcome the Minister’s announcement of six-monthly performance reports for the restart scheme. That is one of the signs of welcome change in the Department’s approach, but it should be the norm and part of the arrangements built in at the outset, not something that has to be dragged from the Department kicking and screaming subsequently. Greater openness could deliver a wholly different relationship between the Department and the people depending on its services, with the Department seen to be working with those it serves, rather than conspiring against them.

An interesting suggestion in the Child Poverty Action Group report I mentioned earlier, “You reap what you code”, is that the source code for the universal credit computer system should be published. There would no doubt be some security concerns about doing that, but could not a small team—with experts from disability groups, Citizens Advice and software experts—be charged with reviewing that software and proposing improvements, perhaps in an annual report, a little bit along the lines of what the Social Security Advisory Committee does at the moment?

Let me briefly say a word about a different aspect of the Committee’s work. We have been worried by the cuts to the funding of the Health and Safety Executive, and one result has been drastically fewer inspections of workplace asbestos. We published a report on this last year, and called in particular for two things—a target to remove all workplace asbestos within 40 years together with a plan to deliver it, and a central digital register of all workplace asbestos and of its condition. The Government rejected those recommendations, although I do welcome the agreement of the Under-Secretary of State for Work and Pensions, the hon. Member for Mid Sussex, to meet a group of us, together with three industry groups and the Health and Safety Executive, to discuss further the idea for a register. That meeting will take place later this month.

I very warmly welcome the launch of the campaign by The Sunday Times at the weekend drawing attention to the continuing scale of the tragedy being inflicted by asbestos even now, a quarter of a century after its use was banned. It is still the biggest source of workplace-related deaths. The Sunday Times campaign headlines in particular our two recommendations, and I do hope that Ministers will now recognise the need to act. I welcome the fact that The Sunday Times will be running this campaign on a consistent basis.

I again thank the Backbench Business Committee for recommending today’s debate. I would be very interested to hear from the Minister specifically how Ministers are assessing whether the different cost of living support payments meet needs and whether they are reaching the right people, and also how and when Ministers will decide whether payments along these lines will be needed next year. I look forward to the debate we are about to have.

Social Security and Pensions

Debate between Stephen Timms and David Linden

Monday 6th February 2023 Commons Chamber

[David Linden]

Will the right hon. Gentleman go one step further and join those of us who want the benefit cap not merely raised, but scrapped in its entirety because it is having such a detrimental impact on families across these islands?

[Sir Stephen Timms]

There is a strong case for that. At the time when the benefit cap was introduced, we were told that it was to prevent people from receiving more in benefits than they would if they were working, but any relationship with wage levels has long since disappeared.

In its briefing for this debate, the Child Poverty Action Group makes the point that the increase does not undo the damage of the cap having been frozen since 2016, but

“pushes families who would be in poverty anyway into even deeper poverty.”

It points out that 123,000 households are currently affected by the cap, including 107,000 households with children. That is one reason why, before the pandemic, when the data was most recently updated, 700,000 more children were in poverty than in 2010. The case for the cap needs to be reconsidered.

I want to pick up a point that my hon. Friend the Member for Westminster North (Ms Buck) made about the absence of an uprating to the local housing allowance, which is a very big problem. The LHA will be frozen for the coming year at the level at which it was set in 2020, even though rents are rising fast. When I raised the matter with the Prime Minister at the Liaison Committee in December, he replied that the uprating in 2020 represented

“a very significant cash uplift at the time, which it is appropriate to have maintained”,

echoing the wording of the ministerial statement from which my hon. Friend the Member for Westminster North quoted.

Social Security (Up-rating of Benefits) Bill

Debate between Stephen Timms and David Linden

Consideration of Lords amendments
Monday 15th November 2021 Commons Chamber

[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.