Social Security (Additional Payments) Bill

Debate between Stephen Timms and Kirsty Blackman

2nd reading
Wednesday 22nd June 2022 Commons Chamber

[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.