Social Security (Additional Payments) Bill

Debate between Stephen Timms and Jonathan Ashworth

2nd reading
Wednesday 22nd June 2022 Commons Chamber

[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.

Cost of Living Increases: Pensioners

Debate between Stephen Timms and Jonathan Ashworth

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.