I beg to move,
That the draft Social Security Benefits Up-rating Order 2022, which was laid before this House on 17 January, be approved.
The Social Security Benefits Up-rating Order reflects the Government’s continuing commitment to support working families and pensioners across the nation. The order will increase state pensions, benefits and statutory payments by 3.1%, in line with the consumer prices index in September 2021. With support from the House, when the order is passed, the new rates will come into force from April this year. With the approval of this order, in 2022-23 the total Government expenditure on benefits for pensioners in real terms will be £131.1 billion and the total expenditure on benefits for people below state pension age will be £108.7 billion. The pandemic has been a very difficult time for many. Our welfare system, particularly universal credit, has proved agile.
Before the Minister rushes on from that part of his speech, will he confirm that by uprating in line with inflation last September, given that inflation is likely to be 6% over the year and could be more than 6% by April, according to the Bank of England, what he is proposing is in fact a real-terms cut for those on benefits and the pension?
We are following the policy that Governments have followed for many years, by increasing in line with CPI over a year to September 2021. On the point he makes, I will come on in more detail to explain the smoothing effect, which he is well aware of, given his experience in the House. We will come to that point and see what he has to say at the end.
We are well aware that over the weekend the chief executive of Tesco was on the TV, and has been in the papers today, saying that the price of food will increase by another 5%. We are in incredibly difficult times that we have not been in before, at least not that I can remember in my lifetime. Given that and what the right hon. Member for Leicester South (Jonathan Ashworth) is referring to, can consideration be given in this legislation to these abnormal price increases?
I thank the hon. Gentleman for his question. He will have seen the Chancellor set out last week a three-part plan to deal with rising energy prices. Of course the Government are watching the situation, but, as we will discuss, there is more than just the uprating legislation being put in place to help people through these challenging times.
Does the Minister accept that, for people with the least who have to get through next winter, it is hard to defend using an inflation rate from before this winter? Before we get to that point next year, will he have a look at why we must use the September base point? We must have the three weeks of December data showing a 4.8% rise in inflation, which would at least help get the systems working in time for April.
That is a thoughtful point from my hon. Friend who is an expert on these matters, but he will be aware that there are practical reasons, as well as data-driven reasons, why we use the September data; we are then able to put these uprated changes through the system in time for April. The pandemic has been a very difficult time for many. The welfare system, particularly universal credit, has proved incredibly agile in response to the pandemic, and we have made unprecedented changes to the system to help people when they need it most. Indeed, since the start of the pandemic—[Interruption.] I am hearing a lot of chuntering from the shadow Secretary of State, but what I am trying to say is that DWP staff have done a fantastic job in response to a huge uplift in the number of people who need universal credit. Those are the people I am keen to praise in this debate, so I hope the right hon. Gentleman was talking about them with his colleague.
No, I will make some progress. I am sure the hon. Gentleman will chunter later, and I will look forward to that.
Since the start of the pandemic, the Government have assisted the country, its people and its businesses with more than £400 billion in support. Since 2011, the Secretary of State has used the consumer prices index for the year to September as the measure for price inflation in her annual statutory review of benefit rates. The Bank of England forecasts that CPI will reach 7% in spring, before falling to 5.2% in quarter 1 next year and returning to a more historically normal level of 2.1% by the beginning of 2024. CPI will be the measure used in the Secretary of State’s application of the triple lock, which will mean that the new and basic state pensions increase by the highest of earnings growth in the year to May and July 2022, CPI in the year to September 2022 or 2.5%.
Using the same period for CPI each year—I think this is the point that the right hon. Member for Leicester South (Jonathan Ashworth) was making, and I am keen to get to his point—means that the peaks and troughs are evened out over time. Around half the time, CPI in the year to April is lower than it is in the year to the preceding September, and around half the time it is higher, so there is a smoothing effect. I understand the point that he makes.
The Minister is making an interesting point. He talks about peaks and troughs and smoothing, but inflation is going in only one direction. At the end of this process, will people who are dependent on benefits be worse off or better off? It looks to me as though they are going to have a tough time on top of an already tough time.
We recognise that these are challenging times, and that is why, as I said to the hon. Member for Strangford (Jim Shannon), the Chancellor set out last week what we are doing to support vulnerable people with the rising costs of energy. We are taking steps to recognise and lean into the peaks in the inflationary pressures that we are seeing not just in the UK, but globally. We recognise the impact that global increases in energy prices are having on household finances. As the Chancellor announced recently, from 1 April the energy price cap will rise from £1,277 to £1,971—an increase of almost £700 in energy bills for the average household. We are introducing crucial and timely measures to help with the increased costs, as part of a comprehensive package of support worth £9.1 billion in 2022-23.
More than 30 leading anti-poverty groups, including the Child Poverty Action Group, the Joseph Rowntree Foundation and the Trussell Trust, have warned that this motion will drive the most vulnerable deeper into poverty and misery, and they call on the Government instead to uplift benefits by 6%. Does the Minister accept that that needs to happen?
As I have been setting out in my opening remarks, we are taking forward this step in combination with a raft of other measures to help residents in this country face the challenges ahead. In fact, as part of the three-point plan, we have a £200 discount on energy bills this autumn for domestic electricity customers in Great Britain that will be repaid automatically over the next five years. There is a £150 non-repayable rebate on council tax bills for households in bands A to D in England; that is 80% of households. Of course, there is £144 million of discretionary funding for local authorities to support households who need support but are not eligible for the council tax rebate.
I have given way enough for now—[Interruption.] I am about to make a point. The devolved Administrations are receiving around £715 million in funding through the Barnett formula in the usual way. That support is on top of an existing package of measures. The winter fuel payments will be made to 11 million pensioners this winter, ensuring that older people have the security and dignity that they deserve. Cold weather payments of £25 a week help people in receipt of certain income related benefits to meet the additional costs of heating during periods of unseasonable severe cold weather, and we plan to extend the warm home discount until 2026 and, from 2022-23 onwards, expand that scheme, increasing the value of the rebates from £140 to £150 to help an extra 780,000 pensioners and low-income families with their energy bills.
The Minister has spoken about the Barnett consequentials. Is it correct that the Scottish Government are getting only £220 million in Barnett consequentials from the new measures announced—the £150 rebate—which does not compare very well with the £3 billion in additional oil and gas revenues that this Government are getting over this year and next year, or the £6 billion over the lifetime of the Parliament? Surely, much more could be done to help people right across the UK with the increased money the Treasury is bringing in.
On a point of order, Madam Deputy Speaker. The Minister may have inadvertently misled the House in saying that that sum was for the Scottish Government, rather than the devolved Administrations. I am sure he will want to correct that at the Dispatch Box.
Let me deal with the point of order. I do not really like points of order in the middle of debates, because the hon. Gentleman would have had the chance to respond. However, the Minister has heard what he has said, and I am sure that if there is anything further he wants to add, he will do so.
I thank you, Madam Deputy Speaker. I will lean into the point that the hon. Member has made. To be clear, the devolved Administrations are receiving £715 million in funding through the Barnett formula as usual, so I think we are all clear, and I will proceed. I was just moving on to the state pension age.
For people who are in work and who are parents, or who are below the state pension age and are looking for work or unable to work, this order increases the personal standard allowances—jobseeker’s allowance, employment support allowance, income support and universal credit—by 3.1%. Certain elements linked to tax credits and child benefit will be increased in line with those payments. The order also increases statutory payments by 3.1%: these include statutory adoption pay, statutory maternity pay, statutory paternity pay, statutory shared parental pay and statutory sick pay. The monthly amounts of universal credit work allowances will increase in April to £344 and £573.
As we begin our recovery and the global economy rebounds, consumer demand is surging at the same time as global supply chains are being disrupted. We recognise and understand the pressures that those rising costs are putting on household finances. Our long-term ambition is to support economic recovery across the UK, including through our multi-billion-pound plan for jobs, which has been expanded by £500 million and will help people across the UK find work and boost their wages and prospects, particularly at a time of record vacancies, which now stand at around 1.25 million. To help that effort, we have introduced the Way to Work, which is a concerted drive across the UK to help half a million people who are currently out of work into jobs over the next five months by engaging with employers and with claimants. This will help reduce the time that claimants spend out of work, thus preventing them from moving further away from the labour market, a factor that makes it increasingly difficult to get a job. To help working people further, as well as raising the national living wage to £9.50 from April—a pay rise for the lowest earners—we have reduced the universal credit taper from 63% to 55% and increased work allowances, with the result that nearly 2 million households will, on average, keep around an extra £1,000 on an annual basis.
The Government recognise the vital role that unpaid carers play each day and the additional challenges they have faced during the pandemic. From April, carer’s allowance will increase to £69.70 a week. Unpaid carers also have access to support through universal credit, pension credit and housing benefit, all of which include additional amounts for carers. For a single person, the carer’s element in universal credit will increase to £168.81 a month from April, and the carer’s amount in pension credit and housing benefit will increase to £38.85 a week. These amounts recognise the additional contribution and responsibilities associated with caring for those on lower incomes. Benefits for those who have additional costs as a result of disability or health conditions will also increase by 3.1%. These include disability living allowance, attendance allowance, incapacity benefit, personal independent payment and other means-tested benefits, the employment support allowance support group component and the limited capability for work and work-related activity element of universal credit.
Since the start of the pandemic, this Government have introduced measures to support the most vulnerable when needed. For example, since last November we have provided a £500 million support fund to help eligible households with essentials. The household support fund provides £421 million to help people in England with the cost of food, utilities and wider essentials, and we will continue to keep policies under review this year, basing interventions on the latest economic picture.
No, I have given away enough on these points, and I want to get on to pensioners more generally, if the hon. Gentleman does not mind.
The UK Government increased funding for the devolved Administrations on the household support elements accordingly, with an extra £41 million for the Scottish Government, £25 million for the Welsh Government and £14 million for the Northern Ireland Executive.
The state pension is the foundation of support for older people. With this order, the basic state pension will rise to £141.85 per week for a single person. This means that the full yearly basic state pension will increase to £2,300 a year higher in cash terms than in April 2010. The full rate of the new state pension will increase to £185.15 a week. Additional state pensions, as well as protected payments in the new state pension, will rise by 3.1%. This increase means that over the two years of the pandemic the basic and new state pensions will have increased by 5.6%, while CPI, in the two years to September 2021, was 3.6%. Finally, the pension credit standard minimum guarantee for a single pensioner will increase to £182.60 a week, and the rate for a couple will rise to £278.70 a week.
The Government are committed to ensuring that people have security and dignity in retirement. In 2020, when average earnings declined, the new and basic state pensions would have frozen, had the Government not introduced the Social Security (Up-rating of Benefits) Act 2020. Instead, those pensions increased by 2.5%, despite CPI being 0.5%. This provided extra financial stability for pensioners during a difficult time. After two unique years of troughs and peaks in earnings growth due to the pandemic, the Government took action to protect pensioners and taxpayers by smoothing the increases to these pensions. The Government remain committed to implementing the triple lock in the usual way for the remainder of the Parliament.
The Guaranteed Minimum Pensions Increase Order is an annual provision that affords a degree of inflation protection for the guaranteed minimum pension part of the occupational pension that was built up between 1988 and 1997. The guaranteed minimum pension that is in payment must be increased in line with the general level of prices or 3%, whichever is less. The relevant comparator is the consumer prices index for the year to September 2021, which was 3.1%. This order therefore specifies that the rate of guaranteed minimum pensions is to be increased by 3%, in line with primary legislation. These orders provide protection for pensioners and people in receipt of state benefits, and I commend them to the House.
I join the Minister in thanking all the staff in the Department for Work and Pensions who, year in and year out, do so much to serve people on lower incomes. I can certainly speak from experience of my own caseload, as I know that individual staff in jobcentres and in the various call centres go out of their way to be of as much assistance as possible, particularly over the past two years. That needs to be recognised.
With each passing day we see more evidence of real hardship as the cost of living rises, and that hardship is experienced most by those on the lowest incomes. At the sharpest end, our food banks operated by the Trussell Trust and the Independent Food Aid Network are a stark measure of destitution, but all those on lower incomes are struggling—whether pensioners, working families, working people, carers or those permanently or temporarily unable to work due to sickness or disability—and the prospect of the coming months is filling people with fear.
All the organisations that work with those pensioners and working-age people, from Citizens Advice to the Child Poverty Action Group and many others, will report what is happening at the sharp end of their services as people are increasingly seeking assistance for help with debt and being driven into physical and mental hardship as a result of the financial situation that they find themselves in. This is not an abstract or statistical phenomenon; it is a reality of people in desperation.
The Secretary of State’s statement announcing a 3.1% rise in pensions and most but not all benefits for April 2022 was originally laid on 25 November, when the severity of the cost of living crisis that we are now facing was not fully apparent. We now know that by December annual inflation had already risen to 5.4%, and the Bank of England is forecasting inflation to peak at 7.25% in April this year. We have not seen a cost of living rise of this scale for over 30 years. The result is that in April pensions and benefits will be uprated by less than half of the annual increase in inflation. This shortfall between benefits uprating and actual inflation reflects the traditional lag between the data used for uprating and its coming into effect, as we have already heard.
However, what I do not understand is that in a system that is increasingly, in the digital age, being billed as flexible and responsive, we are unable to ensure that in the exceptional circumstances that we now face there is not greater responsiveness to the kind of shift that has left people exposed to rising bills. The Minister referred to there being a practical problem in being able to respond to the sharp change in circumstances we have seen over recent months, but he did not spell out what those practical limitations are and why, 12 years into a Conservative Government, it has been impossible to be more responsive to them.
The measures that the Government have put forward, as outlined by the Minister, fall far short in addressing the inflationary shock that households are now facing. The Government have opted for a “Buy now, pay later” scheme which means that, in order to avoid taxing the super-profits of the energy companies, customers will have to pay a forced levy for the next four years, while at the same time allocating targeted support according to 30-year-old property values.
The latter scheme means that some of the poorest households, pensioners and families with children are excluded from help if, for example, they happen to live in a housing association property built 20 years ago which, by virtue simply of being slightly newer, falls within a higher council tax band. We are allocating assistance on the basis of decades-old estimates of property values while ignoring the reality of data we happen to hold on the locations and identities of those in the lowest income bands. This also continues the recent trend of funding schemes through local councils that are not only much more unwieldy to administer but replace entitlement with discretion and easily risk missing out those most in need. That is true of the hardship fund, it has been true of discretionary housing payments, and it is now also true of the council tax scheme that the Government are seeking to adopt.
In contrast, we have put forward plans that will offset the energy price shock for low to middle-income families without requiring them to pay the energy companies back. This would be worth £600 to households on lower incomes, with a cut in VAT and an extended and increased warm home discount would be sufficient to provide a £400 warm home discount to 9.3 million households who would be entitled to receive it. Households that would be newly eligible include all working families with children that are claiming universal credit—currently, only those with incomes below £16,000 are entitled. In addition, our plan would extend eligibility to nearly a quarter of a million pensioners in the savings credit group.
We must also recognise the permanent impact of decisions on benefit uprating over the years, which are a contributing factor to the cost of living crisis. The crisis did not emerge fully formed in the last three or four months. My hon. Friend the Member for Reading East (Matt Rodda) will say more about the specific issue of pensions later, which was debated in the legislation that suspended the triple lock, but I will talk about working-age benefits.
Apart from the benefits for which inflation uprating is fixed in statute, the uprating of working-age benefits, how they are uprated and whether they are uprated at all has been subject to an anarchic approach over recent years, driven by short-term political calculations of Ministers and Chancellors that have long-term consequences. Since 2010, the only consistency we have seen is that the departure from normal annual uprating with inflation has been in one direction only: downward, with rises capped at arbitrary rates or simply frozen.
To fully catalogue all the freezes and caps that have been introduced since 2010 would keep us here all evening. Fortunately, the Department’s recently published abstract of benefit rate statistics summarises the impact of the main DWP benefits. Between April 2010 and last April, the real-terms value in 2021 prices of child benefit fell by 16% and the real-terms value of jobseeker’s allowance and employment and support allowance fell by 8%. Remarkably, looking at the data for jobseeker’s allowance and its predecessor, the real-terms value is now 10% lower than it was in 1965. Meanwhile, the real value of the universal credit standard allowance for a single person over 25 fell from £348 per month in 2013 to £324 per month in 2021 after the removal of the £20 uplift—a fall of 7%.
Those uprating choices have had permanent effects on benefit adequacy that are not reversed when benefit freezes come to an end. Policy choices since 2010 have ensured that families today are in a much weaker position to deal with a period of rapidly rising inflation than they would have been otherwise. We have come into the crisis with child and pensioner poverty rising, families already experiencing fuel stress and destitution rising. As last month’s Joseph Rowntree Charitable Trust report stated:
“Broadly speaking, there seems little prospect of reversing the trends since around 2012/13 of rising child poverty (which rose by four percentage points to almost a third of children by 2019/20) and rising pensioner poverty (which has risen by five percentage points to almost a fifth of pensioners by 2019/20)”.
The cost of living crisis for low to middle-income households did not start with a surge in energy prices; it has been building for years.
Apart from the permanent effect of the policies enforced between 2010 and 2020, the order also enshrines a continuation of the freeze of local housing allowance rates. The uprating statement made a rather pathetic attempt to claim that the Government had decided to maintain LHA levels at the elevated cash rates agreed for 2020-21, as if the default position would have been to reduce them in cash terms. Let us be clear: the Government have decided to freeze housing allowance rates for the second year in a row. That is a policy choice, so Ministers should own up to it.
What the Secretary of State refers to as the elevated cash terms of 2021 was simply the policy of setting the housing allowance at the 30th percentile of the rental market. We know what happens when the local housing allowance is allowed to fall away from rent inflation, because we have been here before. Before the pandemic forced the Government’s hand, the housing allowance, like other benefits, had been frozen for four years following years of below-inflation uprating. But of course, rents were not frozen.
By 2019, the average shortfall between the housing allowance and rent for a two-bedroom house was £1,250—equivalent to 7% of the total income of a typical renting universal credit family. According to the Office for National Statistics’ experimental data on rental prices, rents rose by 3% just between February 2020 and December 2021. For many households, that rise alone is enough to cancel out the effect of the Government’s much-vaunted £150 council tax rebate.
I have, then, another question for the Minister to answer when he responds to the debate: what is the Government’s policy on the setting of housing allowances? Is it to give the lowest-income families access to the bottom 30% of the local private rented sector? Is it that housing allowances should fall in cash terms every year unless the Government decide otherwise? Or is it simply down to the whim of whatever the Chancellor of the Exchequer happens to decide? Housing allowances have real-world impacts: they affect people’s ability to secure somewhere to live and to face a shortfall between the rent they actually pay and the income available to them, and, as in so many aspects of benefits policy, they feed into the work of other Government Departments, particularly in respect of rising homelessness.
Finally, it is important not to forget the effect of the limits and caps on benefits that hit living standards in unpredictable and arbitrary ways. Those limits and caps include the bedroom tax, the two-child limit and the benefit cap, the latter of which has not been uprated since 2016. The rationale for the cap was purportedly to limit benefits to the same amount as the average incomes of working families. That rationale was always a sleight of hand, but surely even those who accept it have to ask why its value should be fixed at 2016 levels.
We see again the same pattern that has been a hallmark of uprating decisions since 2010: anarchic policy making and indifference to the living-cost pressures faced by people in ordinary households who need to rely on social security benefits. Working people, retired people and people with families are all categories of people on lower incomes. The cost of living crisis is upon us now; the time to act is now. We need to supplement this year’s uprating with a targeted package of support that offers real help to people who are struggling. That is what the Government should do and that is what Labour would do.
Although it is necessary to approve the orders before the House, this debate also provides the opportunity for us to highlight the serious challenges that currently face the most vulnerable in society as a result of inflation rising to levels we have not seen for decades.
Back in September, there was a recognition that the consumer prices index would probably rise above 3.1%, but not that it would rise to 5.4% in three months or to the 7% currently predicted and that may be reached in the next few months. At that time, there was probably a consensus view that the significant rise in earnings, of the order of 8%, was an anomaly resulting from the reopening of the economy and the relaxing of covid restrictions. Set in that context, one could understand why it was financially prudent to suspend the triple lock for one year. Five months on, it appears not to be an anomaly and not to be a one-off.
I recognise the measures in place to support the poorest pensioners that my hon. Friend the Minister outlined, but the Government must be prepared to provide more targeted assistance. Back in September, I supported the retention of the £20 universal credit uplift. I feared that covid would have a long and vicious tail and was concerned that the withdrawal of the uplift would hit a lot of people very hard. Subsequent events have shown that the uplift should have been retained. Universal credit has the advantage that its infrastructure is in place and up and running, and that it is targeted at the poorest and helps people to stay afloat and not spiral into destitution.
In the context of the annual uprating of universal credit having been frozen for four years prior to the pandemic, the increase before us is helpful, but it neither makes up for the ground lost in the past nor provides adequate support for the most vulnerable in the immediate future. Again, I recognise the other support measures that the Government have introduced—including the increase in the UC taper rate, the increase in the work allowance and the household support fund—but the cost of living crisis is currently the most serious challenge the UK faces and the Government must do more in terms of targeted assistance to protect those for whom the most immediate outlook is bleak. In that context, I welcome the Minister’s assurance that the Government are keeping the situation under close review. Last week’s announcements were welcome, but I sense that they were too broad and too shallow, and that more deep and carefully directed support will be required.
It is a pleasure, as always, to follow the hon. Member for Waveney (Peter Aldous) who, unlike most of his colleagues, makes quite a thoughtful contribution that is perhaps just slightly more in touch with what is happening on the ground in our constituencies.
Not to diverge from that moment of conciliation, I too pay tribute to our work coaches, as the shadow Minister—the hon. Member for Westminster North (Ms Buck)—and the Minister did. I am looking forward to yet another visit to Shettleston jobcentre in my constituency—I actually used to have more jobcentres in my constituency, but the UK Government in their infinite wisdom decided to shut three out of four jobcentres in Glasgow a few years ago. Although I have massive ideological differences with the Department for Work and Pensions, I have nothing but respect for the work coaches at the jobcentres, who do a phenomenal job, albeit implementing policy from Whitehall with which I profoundly disagree.
If a chain is only as strong as its weakest link, it is fair to say that our social security safety net is our society’s weakest link. We are debating the annual uprating orders against the unique backdrop of an ever-worsening cost of living crisis, with the very poorest in our constituencies consistently left behind by a Tory Government who are not focused on doing their day job. The cost of living crisis comes on the back of universal credit being slashed by £20 a week, which was the single biggest cut to social security since the formation of the modern welfare state. Those of us who do not sit in Caxton House’s ivory towers can see that millions of our fellow citizens are facing real hardship right now. The British Government must urgently reverse their universal credit cut and instead introduce an emergency package to support families and boost incomes.
Our economy has not recovered to where it was pre pandemic, yet we have soaring inflation on a scale not seen for decades, which shows no sign of going away any time soon. Consumer prices were 5.4% higher in December 2021 than they were a year before—the highest inflation rate in almost 30 years. In mid-December the Bank of England forecast that the CPI inflation rate would remain at around 5% over winter, before rising to 6% in April 2022. However, based on last week’s forecasts from the Bank of England, we can now safely expect inflation to rise to over 7% in just a couple of months. The rise in CPI inflation coincides with the perfect storm of a significant rise in energy bills, by 54%, to an average of £1,971 from April. Then we have to add to the mix the Tories’ regressive and deeply unpopular national insurance hike, which will clobber the very youngest and the lowest earners in the country.
It is not just the Opposition, and indeed the SNP, that are raising the alarm about the cost of living crisis. New analysis from Citizens Advice Scotland found that an estimated 640,000 people—around one and seven—are finding their household energy bills unaffordable due to low incomes, with the figure set to increase due to the energy price hike. Yes, I acknowledge that the autumn Budget made some modest adjustments to the taper rate for universal credit, but only for those who are in work. For context, that actually impacts only four in every 10 universal credit claimants.
Analysis from the House of Commons Library shows that over 340,000 households in Scotland are directly affected by the £20 a week cut to universal credit, with incomes slashed by £1,040 per year. To help the Minister understand, that is £1,040 a year less for people to spend in our communities on gas, electricity and the weekly food shop. I can tell the Minister that my low-income constituents in Parkhead, as I suspect is also the case for his in Macclesfield, will not be finding that extra £1,000 in their savings, because many of our constituents live month to month and hand to mouth. Instead, the Minister’s constituents, like mine, will be going without food or heat just to try to keep their heads above water this winter. That is why charities such as the respected Trussell Trust, whose food banks are in increased demand, want the Government to reinstate that £20 cut from universal credit. They want to stop families “spiralling into destitution” with steeply rising costs for heating and food.
Besides reversing cuts to universal credit, the British Government must urgently deliver a financial package to help families by delivering a low-income energy payment, matching the Scottish child payment UK-wide, introducing a real living wage and increasing statutory sick pay in line with a real living wage.
The hon. Gentleman is making an excellent contribution. Universal credit was uplifted in response to the covid crisis. The situation for the poorest in our society has not improved over this period, and in fact, going into this cost of living crisis, it is getting worse and worse. Does he therefore agree that it is a completely unsustainable position to remove that £20 uplift in universal credit, and that the correct response, among the many responses, should be to restore that with immediate effect?
I am grateful to the hon. Gentleman for that intervention. I think we all welcomed the increase to universal credit at the beginning of the pandemic, but it was a clear admission by the UK Government that social security was inadequate in its current form. A lot of people were plunged into using universal credit, perhaps for the first time, and it was their only interaction with the social security system. Lo and behold, many of those people using the social security system for the first time ever realised that a lot of the stereotypes and nonsense that comes out of Whitehall about a life on benefits somehow being luxurious and about lying around watching “The Jeremy Kyle Show” were not actually the case, and that the social security system was so poor. It is only a suspicion of mine, but I think that is why Ministers at the time decided to put that £20 in place. I say to the hon. Gentleman and the Minister that if the Government could concede in March 2020 that universal credit was inadequate, surely they have to understand that it is inadequate now.
The other point that I am sure the hon. Member for Middlesbrough (Andy McDonald) would have made is that the uplift was not extended to those on legacy benefits. People in receipt of legacy benefits had increased costs as a result of the pandemic and having a disability. Some 2.5 million people in these islands were denied that £20 uplift by the Government. That is subject to action in the High Court, and the Government would have done well to realise that they should not have had to be taken to a legal court on that, and that the policy was morally wrong in the court of public opinion.
The orders before the House do not do any of the things I have suggested need to be done in reforming social security, and it cannot always be left to the devolved Governments of these islands to try to alleviate bad social security policy from a heartless and callous Westminster Government for which Scotland did not vote. Indeed, we have not voted for a Conservative Government since the 1950s. While the SNP is doubling the Scottish child payment in April, the Tories at Westminster have cut £20 a week in universal credit from some of the very same families, knowingly pushing thousands of families into poverty.
Scotland’s SNP Government are already spending £71 million to mitigate in full the bedroom tax and an additional £10.9 million to mitigate other welfare cuts, including the benefit cap and changes to local housing allowance rates. As the former UN special rapporteur on extreme poverty and human rights, Philip Alston, pointed out,
“mitigation comes at a price and is not sustainable.”
I guess the question I would pose not just to the Government, but to all parties in the House, is this: is the sum total of their ambition for devolution simply to be a sticking plaster for Westminster’s ever-weakening social security net?
Far too many households have been left behind and will not benefit from this uprating, because the Tories are refusing to fix known policy failures. It is not just universal credit that needs fixing. When it comes to the benefit cap, thousands of households have seen their incomes hit hard because the Government have refused to extend the grace period that gives claimants nine months’ exemption from the benefit cap. As the Poverty Alliance points out, how the benefit cap is designed means that those who require the highest level of support from the benefit system are the most likely to be affected. That is simply unjust and it is having a brutal and real impact on low-income families.
Based on the DWP’s latest figures, 180,000 households have had their benefits capped, including more than 6,400 households in Scotland. The benefit cap disproportionately impacts lone-parent families—the majority of whom are women—as well as larger families and black and minority ethnic families.
While we are at it, we need to address the two-child limit and the associated rape clause. Quite simply, thousands of families with children are being pushed into poverty because the British Government refuse to scrap the two-child limit on child tax credit and universal credit. I do not know how the two-child limit and the associated rape clause ever got past the Government’s family test, but I am sure the Minister will reflect on that in his winding-up speech.
Research by the Child Poverty Action Group shows that the majority of those affected by the two-child limit are families with three children and, indeed, the majority are working families. In April last year, 1.1 million children were affected by the two-child limit—237,000 more than the previous year. That number will continue to grow, as nearly all low-income families with three or more children eventually become subject to the limit.
The five-week wait for the first payment is also needlessly pushing people into hardship. That could be easily fixed by implementing our proposal to turn advance payment loans into non-repayable grants after the claimant is deemed eligible.
I will turn to sanctions, because far too many households face destitution because DWP rules push them into debt through sanctions and deductions. The Minister will recall that last week I tagged him in a tweet about the fact that it took his Department 151 days to reply to my letter about a constituency case. If the DWP can sanction my constituents for failure to attend a jobcentre or for turning up late, I wonder whether we would do well to sanction the Minister for not keeping up with his correspondence pile or for failing to reply to Members of this House. I am reminded of the old saying that what is sauce for the goose is sauce for the gander.
The SNP has long called for the UK Government to fix these utterly fundamental flaws in the UK’s social security system. We need to deliver a system that actively tackles poverty and inequality, and that empowers people. Put bluntly, Scotland’s Government, though they wish to, cannot change these policies, as 85% of welfare expenditure and income replacement benefits remain reserved to this place and to UK Ministers. That includes universal credit, which is a reserved benefit.
My hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) will touch on the pensions aspects of the orders, so I will draw my remarks to a close with what is becoming an annual comment from me on uprating. The Westminster austerity agenda continues to punish and to make life a misery for some of the most vulnerable people in all our constituencies. I know that the orders we are debating tonight are an annual formality for the House, but so long as Scotland remains bound to Westminster, I and my party will always speak up for the most vulnerable and make the case for a decent, robust and generous social security system. There is no escaping the fact that, until Scotland is independent, we are forced to accept the majority of social security policy from a Westminster Government we did not vote for and whose support can, at best, be described as meagre.
I think the Minister will find that he has managed to unite the whole House and every speaker in this debate. Sadly for him, he will find that every speaker, including me, thinks that the rise we will vote through tonight is not sufficient for the situation we find ourselves in. We will all ask the Government to go away and try to find some more.
We should be aware of the logic behind what we are doing. We are trying to give the people on the least—those who are out of work, those who cannot work, and those who have retired and therefore no longer work—sufficient money to pay all their bills. Unless we believe that people’s benefits are way higher than what they need, if we do not give them an inflationary increase every year, by definition they cannot possibly pay next year for all the things they had last year.
In this pretty unique situation of the rising cost of living, we are asking those with the least to get themselves not only through this winter, but through all of next year and all of next winter, based on an inflation measure that was taken before this winter. What they have to pay their energy bills in March 2023 will be based on a calculation of what was needed in September 2021. That surely cannot be right or logical. When bills are rising as sharply as they are, I cannot see how it is physically possible for people to do that.
Sadly, it does not look likely that we will be sat here in a year’s time with it all having reversed and with the gas price back to where it was a year ago. It does not look like a temporary blip; it looks like some of these prices will be baked in for a long time. There is sufficient uncertainty out there that there could be further challenges to come. I urge the Government to have a long, hard look at whether we really ought to have this system and whether we cannot do better than using September inflation figure to set the benefits and pension rise six months later.
At the start of the pandemic, the Government rightly chose to introduce the £20 uplift in universal credit. We managed to get that done in a matter of days. Last November, at the Chancellor’s financial statement, the reduction in the taper rate was announced and the Government managed to get that into force in a matter of days—on 1 December. Yet now we are told that they have to use the September inflation figure and cannot use a later one, even though we had the December figure in the middle of January, about three weeks ago, and three whole months before the rise comes into force.
I accept that some of the older, clunkier benefits—those whose systems are based on steam-driven 1980s IT that seems to work by shoving KitKat wrappers into the fuse box to patch it—may take a bit longer to programme. However, I would hope that for universal credit and the state pension—the two largest ones and the ones that affect the most people—we could take a more up-to-date figure. That would not fix the situation and wholly resolve the fact that inflation will be at 6% or 7%, but at least people would have got a 4.8% rise based on the December CPI rate rather than 3.1%. That would have been of help.
The hon. Gentleman speaks with great authority on all these issues. I have been in the House for over a decade, and it is always a pleasure to listen to him on economic matters. In his view, is anything stopping the Chancellor from making a statement in his March Budget to reflect the cost of living and address some of the issues raised in the debate?
No, I think the Chancellor could do that at any point and, as I said, he can make changes to the biggest benefit system quite quickly if he sees the need to.
The case that I am trying to make to the Minister is that, at times, the Government can act much faster. I accept that huge investment in IT for legacy benefits that we are phasing out may not be effective, but I would have thought that, in the modern world, with the more modern systems, we could move on from basing the April rise on the inflation position six months earlier. I hope that the Government can find a way to base the rise at least on the December measure, so it is only three months out of date. I accept that for most years that would not make much difference, and for some years it could actually mean a slightly lower rise than using the September figure, but at least that would give us the best possible protection against this awful situation. Inflation is already much higher than it was at the reference point, and it will be even higher still by the time these amounts are paid.
I fear that the position is even worse than that at which I started—that of believing that benefits are in the right place and therefore an inflationary rise is needed. I genuinely fear that many of the benefits we have are now lower than people need, so a lower than inflation rise for benefits that are already too low leaves people in an impossible position. That is why I supported retaining the £20 uplift in universal credit.
I have told the Government many times that, if they believe that all these benefits are sufficient for the standard of living that we want people to have, they should do and publish an assessment of the basket of things that people have to buy and prove they can afford to buy them all. I would then happily support them. If such an assessment showed that benefits were too high, we could have a debate, but it is incredibly unlikely that it would show that. It is overwhelmingly likely that it would show that the measures that were necessary over the last 10 years have ended up going too far and that we are not giving people enough for the decent standard of living they ought to have. If that is so, we need to fix them. I challenge the Government to publish that assessment over the next year and prove their case that benefits are okay. Let us then get the inflationary increase done right. We cannot keep having this same debate in which many of us think that benefits are not in the right place and yet we cannot prove it because that is for the Government to do and, for some reason, they do not want to.
The hon. Member is making an excellent point about the assessment that would be needed. Does he think that, in an assessment of adequacy, it would be relevant to factor in the consequences of underpayment in terms of monetising demand on other services that people go to? There is a cost to poverty and usually it is extraordinarily expensive not just for the person suffering from it but in regard to the demand on other governmental services.
I absolutely agree that asking people to live without enough money to heat their houses and to eat creates all manner of knock-on consequences that will inevitably end up costing the taxpayer money in the long run. It should not be a big challenge or a contentious point of debate to want to ensure that the benefits we are giving the poorest in society are enough for them to live on, so I cannot see why we would not publish periodic analysis just to check that everything is in working order.
We should remember that many millions of people cannot go and get a different job or work a few extra hours to make up the difference. They cannot work, they are retired or they are not in work—they have no chance to earn an income, so what we give them is what they get, and we need to make sure that it is sufficient.
The hon. Gentleman is making an excellent speech and a very good point. Ministers sometimes concentrate too much on the number of job vacancies across the country, as if somehow they can all magically be filled, but the point is that not everybody can fill those jobs. There are demographics and geography at play—it is not as if people can just uproot themselves and move to get another low-paid job somewhere else. The Government really need a better understanding of where the vacancies are, with skills and training programmes targeted at filling vacancies in the long term.
The hon. Gentleman is absolutely right: we cannot expect somebody to move hundreds of miles in that situation. Equally, anybody who can work should work, and should be supported and given the training to do that when it is in their best interests. I do not meet many people who can work but do not want to; I think most people who can work with the right support are very keen to.
I will vote for the draft orders tonight. I think our choice is a 3% rise or nothing, so it seems slightly self-defeating to vote against them, but I ask the Government not to take the House’s approval as a sign that it agrees with the position we are in. The Government could use their discretion and make the increase higher than inflation if they wanted to, just as they have chosen many times to make it lower than inflation. We knew that this problem was coming; it has not turned up in the last fortnight and got us chasing around.
I am not even asking for something that would be a long-term cost. All we would be doing is bringing forward to this year the rise we would give people next year, so that they have it in time to pay their higher bills, rather than six months after getting them. That is the impact of the calculation that we do, and if we do not get it right, we will be putting people in an impossible situation.
The idea of having a welfare system that we can control so we can give people transparency and up-front certainty is that it is there to give them the support they need. We cannot keep filling holes with discretionary, complicated schemes that people may or may not find about, that are done differently by councils all around the country, and that may or may not exist in the long term. The whole idea of a universal credit system was that it would be a benefit that rolls everything into one and gives people the support they need. By doing all these occasional one-off top-up schemes, we are admitting that the main benefit is not in the right place.
I urge the Government to take a step back, to remember our core purpose of giving people enough to live on—not luxuriously or hugely generously, but with a decent standard of living—and to be absolutely sure that they have achieved that and are still achieving it. If they have any doubts, they must do the work to publish it and prove it, and if we need to fix it, let us get on with fixing it.
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.”
I must be completely frank: I find it astonishing that these regulations will implement a whopping real-terms cut in some benefits and pensions, given that inflation is already 5.4% and the Bank of England forecast is for 7.25% in April 2022. Let me put it simply: the Government are knowingly—yes, knowingly—going to drive more and more families, children, pensioners, and some of the most vulnerable people in our society into desperation and poverty. A letter signed by the Child Poverty Action Group, the Joseph Rowntree Foundation, the Trussell Trust and the End Child Poverty coalition, among others, states:
“There has long been a profound mismatch between what those with a low income have, and what they need to get by .”
In my constituency, which suffers from one of the highest rates of child poverty in the entire country, this mismatch comes as too many are already struggling to heat their homes or put food on the table. For example, 7,300 children in Poplar and Limehouse were in absolute poverty in 2019-20, which is 973 more than in 2014-15.
Astonishingly, these orders come just as we had last Thursday’s announcement of an increase in the energy price cap, signalling that a quarter of UK households will be pushed into fuel poverty. The impact of the cost of living crisis on people across the country is truly harrowing and it is a shameful indictment on any civilised society. Of course, this is set against the brutal backdrop of a decade of Conservative austerity. Across the UK there is a real sense of despair in workplaces, fuelled by desperate situations. As we speak, porters, security staff, catering, and reception staff, are on strike outside St Barts Hospital, and the Royal London and Whipps Cross, fighting for the simple right to having a wage they can actually live on. This strike is a part of a growing wave of pay struggles, from bus drivers, airport ground crew, drivers, railway cleaners, warehouse workers and so on. These people worked hard during the pandemic to keep everything going and were placed at the greatest risk. They do not need lectures on exercising pay restraint, because they understand what pay restraint means, as they live it and breathe it. They are forced to see their families go without, despite their working long hours and in difficult situations. We must not stand by and watch people go under while this Government continue to both foster and scapegoat hardship, by continuing to pursue measures to arbitrarily limit welfare spending, as per the welfare cap, which was re-affirmed earlier this year.
A comprehensive rescue package is needed: winter fuel payments could be doubled; the £20 cut in universal credit be reinstated immediately; VAT on household bills could be scrapped; and energy companies could be taken into public ownership to ensure that rather than profits being siphoned off, money is spent on reducing bills for consumers. We must be very clear that those with the broadest shoulders and the deepest pockets must pay their fair share. Why should working people have to pay for the failures of the energy market and the total shambles of Government policy? The challenges we face today do not come out of the blue. There is a reason that a key component of Labour’s 2019 manifesto was its green new deal, driven by public ownership of the energy sector and making sure we have value for money for the taxpayer. We have long needed systemic change. Clearly, the energy market does not work; it is not able or willing to deliver clean green energy at low prices for households. Public ownership of energy is common sense and evidence-based policy making. In the long run, it is the only way out of being held hostage by the oil and gas industry’s profiteering and destruction of our planet.
It has long been time that people should be put first, ahead of ideological commitments to the market and a dogmatic opposition to public ownership. These orders are an attack on my constituents and their way of life, and I will oppose them with all my breath and strength, because, ultimately, cutting benefits and pensions today is a political choice. Fuel poverty is a political choice and hunger is a political choice, just as austerity has been, and is always going to be, a political choice. They are all choices to prioritise profit over people, made by a callous Government and inflicted brutally on our communities. They are all choices we must resist.
It is a pleasure to follow some excellent speeches, and to join colleagues from the Work and Pensions Committee in their sincere request that the Minister really looks in detail at the issues we have been describing. [Interruption.] I want to keep my mask on, if that is okay. As a former public health consultant, I want to practise the precautionary principle. When we take a mask off, we increase the risk of spreading what may be behind our masks. In the time I have, I want to focus on the context of why this issue is so important and why I urge the Minister to respond to those several requests to think in more detail not just about today’s uprating order, but how we move forward in future.
The Office for Budget Responsibility estimated that over the last 12 years, 9% to 17% of working-age support for claimants has been cut. The Resolution Foundation put a figure on that of £34 billion a year. Although the Welfare Reform Act 2012 and the Welfare Reform and Work Act 2016 had a number of different policy aspects, the arbitrary reduction and freezing of social security payments accounted for 6% to 8% of the cut in that support.
Several highly reputable think-tanks and the Equality and Human Rights Commission have identified the disproportional loss of income to low-income households, and the skewing and exacerbating of inequalities. The poorest 10% have lost 11% of their income, about £1,200 a year, and those with children about 20%, £4,000 a year. The EHRC showed that disabled people would be most disadvantaged, with a household with one disabled adult and a disabled child losing £3 in every £10, or £6,500 a year. The Disability Benefits Consortium is another organisation that has analysed the impact of social security cuts over the last 12 years, particularly on disabled people. The EHRC estimated the increase in poverty for children by 2021, as did the Joseph Rowntree Foundation. We are seeing their figures come true: six out of 10 households in poverty are working households.
The Joseph Rowntree Foundation also identified that although physical disability rates have stayed the same over the last five years, the number of people with mental health conditions, while not receiving the same recognition, has increased. By 2017, an additional 1.6 million people with a severe mental health condition or learning disability were being plunged into poverty.
Importantly, the EHRC and the JRF also concluded that social security cuts are the key determinant of the increase in poverty and that our social security system no longer plays a part in protecting people from poverty and destitution. What a thing to say in the fifth-richest country in the world. From 2018 data, the UK’s social security spending as a percentage of GDP was below both the EU27 and OECD average. On out-of-work support, even with the pandemic universal credit uplift of £20 a week, the UK still had the least generous support of the OECD. According to the IFS, unemployment support is 14% of average earnings, compared with 25% after the second world war. Many have spoken about the impact that is having on debt, fuel poverty, food poverty and so on. We must not forgot that there has also been an impact on homelessness.
The increase in poverty and inequality has had an impact not only on levelling up but on our life expectancy and our healthy life expectancy. I read the White Paper somewhat in dismay when it was published last week, as it tried to say that it would make all the difference. Clearly, the Government have not grasped what has been going on over the last 12 years. As Professor Sir Michael Marmot said, it is an order of magnitude less than what needs to be considered to make a difference and address the inequalities our country is experiencing.
The estimated mortality rate of vulnerable social security claimants is three times that of the general population; that also needs to be considered. There is also evidence of the devastating causal impact of child poverty on infant mortality. A very good article in The BMJ a year or so ago managed to quantify that each 1% increase in child poverty was associated with an extra six infant deaths per 100,000 live births, with about a third of the increase in infant mortality between 2014 and 2017 being attributed to the rise in child poverty.
There is also evidence that the unprecedented increase in infant mortality in England was not experienced evenly across the population. In the most deprived local authorities, the previously declining trend in infant mortality reversed and mortality rose, leading to an additional 24 infant deaths per 100,000 live births. I have been bandying about a lot of statistics; it is all sourced data, and I invite anybody who is interested to please contact me.
In February 2020, Michael Marmot published his 10-year review showing the declining value of social security and the lack of protection provided to the most financially vulnerable, which contributed to the decline in life expectancy. Rolling on to the pandemic, his review at the end of 2020 showed the UK’s high and unequal covid death toll; in the first wave we had one of the worst death rates in Europe and the world. He showed that that was related to our structural inequality, to which social security cuts had contributed.
Other Members have mentioned the inflation rates we now face, and the 54% increase in the energy price cap coming in April; frankly, the measures that are proposed to combat that are ridiculous. I urge the Minister to take back the views from this House, including from his own Benches. Clearly, the measures are inadequate, and I urge him to think again.
It is important that the debate covers both orders—social security and pensions—because the issues, and the circumstances facing our constituents, are the same. As the hon. Member for Waveney (Peter Aldous) said, if the orders are not approved, there will be no increase at all, but it is telling that he and the hon. Member for Amber Valley (Nigel Mills) are the only Conservative Back Benchers to have spoken in this debate and they agree with Opposition Members that the Government’s proposals in relation to the 3.1% increase are insufficient. It is interesting that no Back Bencher is willing to say that they support the Government; I can only assume that they are dealing with the same casework as I and other Opposition Members have received about the circumstances that people face. Inflation is exceeding all expectations, outstripping wages for those in work and impacting on the price of the essentials that we all need in our daily lives.
Earlier today I attended the Scottish Affairs Committee where we heard about access to cash, which is very important for rural communities such as mine and for vulnerable constituents. I visited virtually the access-to-cash hub pilot, whose staff described to me how people budget in pennies—pennies and pence. That is what we are talking about. The decisions that the Government are making in these orders will mean that those people will no longer be able to survive and will fall over a cliff edge.
Benefits are not keeping pace with the cost of living; let us look at disabled people. Much has been said of the universal credit cuts and failure to provide additional support for those on legacy benefits, who are, disproportionately, disabled people. As I said in last week’s disability Green Paper Westminster Hall debate, living costs are simply more expensive for those who are disabled or have a disabled child. Scope’s data from 2019, before the pandemic, suggest that those costs equate to nearly £600 per month, and I would be interested to learn what that figure is now. Put simply, disabled people are more likely to be in energy poverty. They may need electronic devices to cope with their disability, they need increased heating if they have mobility issues, and specialist food plays a part as well. The Minister mentioned the extension of the warm home discount, but the consultation on that closed four months ago and I would be interested to hear when the result will be published.
On pensions, the position is straightforward. The Conservatives have chosen to break a 2019 manifesto commitment by scrapping the triple lock. Choosing to use the September CPI figure only, despite the fact that we knew at the time what inflation was going to look like—in fact, it is even worse than we were told it would be—is a retrograde step, and it means a £1 billion real-terms cut. A 1.1% uptick in just one month means that pensioners on the basic state pension will miss out on £80.60 next year, and those on the new state pension will miss out on £104. The total cost of uprating pensions and benefits by 6%—the Bank of England’s previous estimate of the peak of inflation—would be £4.5 billion. Interestingly, a similar amount was recently written off to covid fraud.
Nobody is saying that the Government are totally responsible for the variety of systemic factors contributing to the increasing cost of living that we are experiencing, particularly those related to the pandemic. What Opposition Members—and indeed some Conservative Members—are saying is that the Government are failing to provide the support that is required. Given that we know what to expect, why are we not taking steps to ensure that benefits and pensions meet the increase in living costs? Anything else is a cut, which will impact on the most vulnerable the hardest. We will see this in our inboxes again. In order to get the Prime Minister out of his current hole, the Government will spend in excess of £10 million setting up an Office of the Prime Minister. People see those decisions and actions, and they will judge accordingly.
I rise to express my grave concern at the likely impact of these orders on the living standards of millions of people up and down the country. The draft Social Security Benefits Up-rating Order 2022 sets the increase in social security payments at September’s CPI rate of 3.1%, and the draft Guaranteed Minimum Pensions Increase Order 2022 sets the guaranteed minimum pensions increase around 3%. Yet the Bank of England warned last week that households faced the worst squeeze on disposable incomes for 30 years, and predicted that CPI inflation for April 2022, when the uprating will come into effect, is likely to be 7.25%.
That squeeze on incomes has come about because decisions by successive Tory Governments, including this one, have driven more and more people into poverty and hardship—policies such as the introduction of the household benefit cap in 2013 and the overall welfare cap in 2014. We have had freezes on child benefit and jobseeker’s allowance, and more recently the appalling decision to cut back the £20-a-week universal credit uplift. We have also had many, many public sector pay freezes.
The cost of living crisis facing our country means that things are about to get much worse, with petrol, food and energy bills skyrocketing. New figures from the Office for National Statistics show that the poorest households are spending a third of their budgets on food and household bills, while the richest spend only a fifth of their money on those items. Research by the Joseph Rowntree Foundation has found that for single adult households on low incomes, their energy bills after April will rise a shocking 54%, which is an increase of 21 percentage points since 2019-20.
The reality for so many people, including my constituents, is far removed from the rhetoric of this Government, and the impact on people in my constituency of Cynon Valley will be devastating. I have spoken about this many times. Over a third of people in Cynon Valley are living in poverty, and in some areas 50%—yes, 50%—of children are living in poverty. That is well above the UK national average. Unemployment rates are very high, and we have the highest rate of economic inactivity in the whole country.
Before coming into this place, I worked for many years for Shelter Cymru, for Citizens Advice and with food banks, so I know the real cost of what lies behind these statistics and what families and pensioners face day in, day out.
We cannot forget the human stories behind these figures. I want to give one example that has stayed with me for many years. I will refer to them as Mr and Mrs Davies. They had been extremely well-off and had owned their own business, but they had hit hard times. They came to me for advice when I worked for the homelessness charity Shelter Cymru. They could not make ends meet and were at serious risk of losing their home. Finding themselves in this situation was a devastating shock for them and the paltry level of benefits meant that they could not make ends meet or pay their bills. This could happen to any one of us, including many on the Conservative Benches.
It is not as though the country cannot afford to provide for everyone. We are the fifth richest nation in the world. For instance, it has been estimated that reforming capital gains tax and taxing dividends regimes could raise an additional £19 billion a year, while a wealth tax could raise in excess of £260 billion a year. There has been £350 billion in tax avoidance since 2010. A one-off windfall tax on oil and gas profits, which we talked about last week, would put an extra £600 in the pockets of households on the lowest incomes, compared with the Conservatives’ paltry £350.
But instead the Government continue to choose to punish the most vulnerable and those in need in our society. As others have said, this is a political choice. As usual with the Conservatives, their policies ensure that it is the poorest who pay the most while the gap between the poorest and the wealthiest continues to grow. These are families, pensioners and households who cannot afford to have their benefits cut again, but that is what is being proposed today—a 3% increase when costs are going up by 5%, 6% or 7%. This order is therefore a proposal to increase the level of poverty in this country.
That is why I am backing the JRF and other organisations such as CPAG and the Trussell Trust in calling for a larger increase of 6%. The Government must withdraw this order and come back urgently with a new offer that ensures that social security recipients are no longer scapegoated and exploited as they have been over the past 10 years by this Conservative Government.
I resent the premise of this debate. I resent the Government bringing forward an unamendable order on such a significant issue, because that leads to the conclusion, as the hon. Members for Amber Valley (Nigel Mills) and for North East Fife (Wendy Chamberlain) said, that if we reject the order there will be no increase whatsoever. We should not allow Parliament to be blackmailed in that way. The response is fairly straightforward: on the issue of poverty in this country, there has to come a time when this House rises up. We have heard example after example. We can all give examples from our own constituencies—the heartbreaking stories of how people are suffering at the moment. So we should not accept the Government bringing forward an unamendable order and expecting us either to go through the Lobby like sheep and vote for it, or to abstain.
Does my right hon. Friend agree that this country is facing a crisis that is being visited on the poor, and that to put this House in the position of simply having to accept it is absolutely reprehensible? We should be demanding that this order be taken away and that we get a proper settlement and a proper increase for the people most in need. Surely that is the duty of this Parliament.
I completely concur. I understand those who say that if we vote against this tonight we will be accused of voting against an increase, but far from it—if we vote against it we will be instructing the Government to come back immediately with an alternative that meets the cost of living challenge that working people now face.
It is no good relying on statistics from seven months ago when we know the crisis that people are facing. I find it interesting that the Government can arrive at flexibility when they are saving money but not when they want to assist our constituents. I say that because I was here for the debate on the triple lock. At that time, as my right hon. Friend the Member for East Ham (Stephen Timms) has pointed out, we were facing the prospect of an increase of 8% based on the triple lock linked to earnings. Actually, that was pretty damn accurate as to what people would be facing. The Government were fleet of foot. They scrapped the triple lock altogether, suspended its operation and then came forward with this.
Every Member who has spoken so far, on both sides of the House, has said that this will mean a cut in people’s living standards when faced with the prospect of a 7% rate of inflation. The hon. Member for Waveney (Peter Aldous) eloquently set out the rationale for why the Government needed to do more, but I say to him that the Government will not do more unless this House is firm in its view and rejects this order tonight. They will not come back with an emergency package unless we start kicking up a fuss on both sides of the House. That is why they have come to the House with an unamendable order. They were worried that if there was an amendable order, we could have had a majority in this House for doing something better on behalf of our constituents. I find it outrageous that they have tried to put us in this position.
The hon. Member for Amber Valley, who is no longer here, made an extremely interesting speech, as he always does. I do not usually agree with him on much, but he always presents an argument we can understand—or a rationale, anyway. His argument to the Government was that if they are trying to tell us that their social security system is meeting the needs of our people, they should publish the basket of goods, the costings and so on. Well, the Government do not do that, but others do.
Frequent reference has been made tonight to the Joseph Rowntree Foundation’s analysis of poverty and of what the Government’s measures will do. The figures are startling. Over 8 million working households are in poverty, as are 2.1 million pensioners and 4.3 million of our children. My hon. Friend the Member for Cynon Valley (Beth Winter) made the point that, in the fifth richest country in the world, we have over 4 million children living in poverty. The figure for disabled people is now 3.8 million, which has increased dramatically over the last four or five years as a result of benefit cuts.
I am not willing to sit here tonight and be blackmailed into either voting for this motion or abstaining. I want the opportunity to vote against it and to give an instruction to the Government to go away and do better: to come back with a real proposal that will increase benefits, at least so that they match inflation. After 11 years of austerity, I would expect the Government to be coming up with proposals to start making up some of the ground that has been lost over that time, as my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) said.
I will make one final point. Every time we have one of these debates, we get a Government Minister telling us how wonderful they are because they have created all these new jobs that people can go into. I met a group of unpaid carers this morning, and I said that it looked as though their allowance was going to go from 67% to 69%. Given the hours they work as unpaid carers, even if they are doing 35 hours per week—most of them do triple that at times—they will be paid something like £2 an hour for what they do. Unpaid carers save this country about £130 billion in costs that would otherwise fall on the state. They cannot get other jobs because they are looking after their relatives. They are desperately underfunded and most of them, as a result, are living in poverty. This order will do nothing for them whatsoever.
My commitment to that group of carers I met this morning means that I will not vote for this. I will vote against it, and I will demand better action from this Government. I will demand that Ministers go away and come back tomorrow with a realistic proposal that will tackle poverty in this country and lift at least some of those carers out of the hardship and suffering that they are unfortunately experiencing at the moment.
It is a pleasure to follow my right hon. Friend the Member for Hayes and Harlington (John McDonnell), who spoke, as ever, with great moral force. This is a moral question.
It is important to put the issue under consideration into its full context. As long as I live, I will never forget being at one of my constituency advice sessions in Leeds East with a tearful constituent rolling up the sleeve of her jumper to show me the scar on her wrist from where she had attempted to take her own life as a result of her benefits being unfairly reduced. That will stay with me to the grave.
I mention that because it is how people on social security are treated in this country. They are scapegoated and treated as if they are somehow on the make, but we know the truth. We know who the real parasites are—the people who are really taking money from the public purse and not paying their fair share. They are some of those at the very top, who are very good at not paying tax, at not paying their fair share and at getting money out of the Government through corrupt covid contracts and the rest.
I also want to put the debate in the context of the historic cost of living crisis that people are facing. One of the things that brought it home to me, as well as speaking to people at my advice sessions, was a WhatsApp group with some of my friends who never talk politics—and not just because they do not want to hear my political views. We talk about music, but out of nowhere, rather than talking about the latest albums coming out, one of my friends—they are in a pretty well-paid job compared with many of my constituents—messaged, “Is anyone else worried about paying their fuel bill?” That is the reality that people across the country are facing.
We have heard that this is the fifth richest country in the world, and it is true, but there are 4 million people living in poverty. We heard in the House earlier today about half a million children in this country who are not even able to sleep in a bed at night. There are also many disabled people who are being treated like dirt by the system and by the Government, but we are the fifth richest country in the world. Politics is about choices, and those choices are moral choices.
Only last week, Tory MPs turned out in force to let bankers off the hook with yet another tax giveaway, but they are notable tonight by their absence. Those green Benches are deserted. Is that because some Tory MPs have now developed a conscience about the millions of people struggling in our society? The smirk of a Tory MP says maybe not. Maybe they do not want to defend the indefensible. What is being proposed is another kick in the teeth for people struggling in my constituency and around the country.
As we have heard, this so-called increase is a real-terms cut for social security and a real-terms cut for pensions. They are using the figure of 3.1% from last October, but the Bank of England is predicting that by April, when the re-evaluation takes effect, the figure will be closer to 6%. That is a 3% to 4% real-terms cut for people who are already struggling to keep their heads above water.
That is not a one-off; it is part of a pattern of targeting ordinary people and the most vulnerable. The £20 cut to universal credit, which could not have come at a worst time, affected over 14,000 families in my constituency alone, and millions of disabled people did not even get the uplift in the first place. We see the choice to bring in a national insurance hike, which is another kick in the teeth for people across the country, and now we see this real-terms cut to incomes. That is a choice. I say it is a moral choice, but in fact it is an immoral choice to stick the boot into people in our communities.
Let us look at the other side of the coin—at how others are doing. Gas giants and oil giants make an eye-watering £77 million in profits every day. A windfall tax on those megaprofits could mean that not a single person in this country has to face fuel poverty or food poverty. The Government have a choice: they choose to treat the super-rich with kid gloves, to demonise the vulnerable and scapegoat those on social security, and to stick the boot into ordinary people. It is the Conservative party doing what it has done for generations and generations.
The Government are making ordinary people pay for the covid crisis. There are corrupt covid contracts for some, VIP lanes for some, tax breaks for some and a refusal to tax the richest properly. I know it is sometimes unfashionable to talk about class politics, but this is class politics. The greatest practitioners of class politics in mainstream political parties in the history of this country are those in the Conservative party, which has practised class politics throughout its history—class politics on behalf of the 1% against the 99%. That is what the Conservatives are doing today by pretending that the best they can do for people in our country is a real-terms cut to social security and pensions during an historic cost of living crisis. That is what they are doing. It is absolutely heartless and absolutely immoral, which is why I shall vote against these orders.
We cannot just accept this as if it is the best that a Government in the fifth richest country on earth can do. We need better. The Government need to ditch this disgrace and come back with something better. As 33 charities have said, they need to come back with a 6% increase. I ask everyone in the House to find it within themselves to stand up for their constituents. Today, we need to speak up and vote for those who have had to choose between heating and eating; for those who are worried about not being able to afford school uniforms for their children; and for those in our society who have been treated for too long as if they do not matter.
Let us abolish food banks and indignity. In one of the richest countries in the world, let us turn things around. It makes me sick to the stomach to see how people are treated in our society. My constituents deserve better than this Conservative Government are giving them, as do people right across this country. The Government should take a good, hard look at themselves and, if they wish to sleep soundly and with a clean conscience tonight, they should drop this change and come back with 6%.
I thank all right hon. and hon. Members from the Government and Opposition Benches who have made significant contributions. It is worth noting that there has almost been unanimity among all the Members who have contributed, and I suspect that will continue among those who follow me.
I thank my local DWP staff in Newtownards: the manageress, Geraldine, and all her staff do such great work. Every day of their lives they make it easier for my constituents when it comes to any contact they have with the DWP office.
It is not often that our pensioners get good news. Some had hoped that the Government would give them the good news of a substantial pension increase to match the substantial cost of living increase and the recent unbelievable uplift in the cost of heating, which automatically affects our pensioners and the very vulnerable the most.
In his economic statement to the House last Thursday, the Chancellor gave the constituents across Northern Ireland £150 million to help with the cost of energy. The Barnett consequentials brought another £100 million, making £250 million. We welcome that, so I will not be churlish about what has happened. We ought to recognise that. Everybody who has contributed to this debate has recognised the contribution that has been made, but we are saying we do not believe it has gone far enough.
Let me quickly make some comments on the cost of living. Pensioners did not look forward to the increase for very long, with the news that the Social Security (Up-rating of Benefits) Act 2021 suspended the earnings element of the triple lock for the 2022-23 financial year and that state pensions would be increased by CPI inflation of 3.1%—the right hon. Member for Hayes and Harlington (John McDonnell) referred to the triple lock in his contribution. The full rates for 2022-23 will be £185.15 per week for the new state pension for those reaching the state pension age on or after 6 April 2016, up from £179.60 in 2021-22.The figure will be £141.85 per week for the basic state pension—the core amount in the old state pension system—up from £137 in 2021-22.
We welcome the increases, but what is coming forward does not address the full impact of the cost of living, and I want to give some examples. Rents have risen by 5.8% in the last year and have increased at the fastest rate. A house in my constituency that would have been rented for £400 or maybe £450 a month is now £560 or £600. If we add all these increases together, I find it unbelievable that the cost of living is not higher—I might not be the greatest mathematician in the world, but we can figure these things out.
Like me, my hon. Friend must be alarmed at the comments by the head of Tesco, who has indicated that the cost of the average food basket will go up by 4% to 5%. The cost of living is really putting a squeeze on ordinary citizens across the entirety of the kingdom.
I thank my hon. Friend for that intervention. I was going to mention that earlier—I did do so in an intervention on the Minister. I really do have concerns. We have rent increases of £150 or £200 a month for a dwelling, and then we have the other things, with people not even having enough to cover the rise in the cost of heating. These things affect our most vulnerable and those we most respect, and society is always marked by how it treats those in the generation beyond. How long can we rob from the same pot—the same pot of stew—and how long will our consciences allow us so to do?
Those with more than two children cannot get working families tax allowance for more than two children. The Minister might wish to consider allowing people to claim for the children they have and not for how many the Government would mandate them to have. There are large families who cannot get the benefits for where they are, and it is time that we helped them.
I welcome the moneys the Government have set aside and allocated, but I am concerned about inflation. Just this weekend, as my hon. Friend the Member for North Antrim (Ian Paisley) referred to, the CEO of Tesco said that the cost of food will go up by another 5% on top of what is already there—in Northern Ireland the increase is somewhere around 15%. Energy prices continue to rise in Northern Ireland, by 25% to 30%. Here is another example, and it is not 25% to 30%, but more. Oil was advertised in about October last year at £375 for 900 litres. This week it is £529 for 900 litres. That is a 50% increase in my book. Again, I may not be the greatest mathematician, but I can work it out and, what is more, my constituents can work it out.
We have an increase in rent, we have an increase in food prices and we have an increase in energy prices, with electricity, gas and coal prices all going through the roof. If energy prices continue to rise and foodstuffs continue to be unbearably expensive for our constituents, householders and families, will the Government set aside more funding for the next period? I cannot remember which Member said—perhaps it was the Minister present—that we will bring things back in, say, eight or nine months, but we cannot wait nine months. The pain is now. That is what really concerns me.
Pensioners are under more pressure than ever before. I am reminded of TV ads in which competing supermarket chains say, “A weekly shop here costs this, and a weekly shop there costs that.” When we do a weekly shop today, we notice the difference from two or three months ago like never before.
What help can we give pensioners? I am conscious that the Minister and other Members referred to pension credit. Whenever I go round the doors to ask people what their problems are and what help they need—as I do regularly, by the way, not just at election time—I am surprised to find that many pensioners do not know all their rights. I feel that the Government and the DWP need to focus on pensioners, for example when it comes to the accessibility of pension credit. I also suspect that many people do not know that because of illness they can apply for attendance allowance. Those are the sort of things that can make life easier for people, so we need to see a wee bit more focus. Perhaps the Minister will come back to that point.
I found it hard to listen to the comments of the Governor of the Bank of England yesterday urging people not to ask for pay rises in order to keep inflation down. I understand the logic of what he is saying, but people on universal credit are overwhelmed with massive bills—the reality for the people whom I and Members on both sides of the House represent is that their bills will be enormous. I ask the Minister and the Government to step up to the mark and give us some indication of where we will be in three months’ time, if things are getting worse as they seem to be.
The Minister is a decent man and a good man; I know that he wants to see benefits coming to my constituents and to all constituents. The hon. Member for Waveney (Peter Aldous) said that perhaps the Government need to target those who are now panicking, wondering how they will pay their bills and worried about the pressures of life and what will happen in the next three months. I support the thrust of what he says, because that is what we, and perhaps the Minister and the Government, need to focus on.
We are here to help our constituents. That is where the burden in our heart is, that is where our compassion comes from on behalf of our people, and that is why we really feel for them and their future if things are not as helpful as they could be. Those on the minimum wage, those who cannot get any more wages and those who cannot work extra hours face the spectre of debt coming towards them.
I thank all hon. Members for their contributions and look forward to the Minister’s response to all our questions. We really need help—the Minister’s constituents need help, and so do mine and everybody else’s.
It is a pleasure to follow the hon. Member for Strangford (Jim Shannon). Like all hon. Members, he highlighted the fact that the Government need to do more to deal with the cost of living crisis. It was characteristically optimistic of him to look forward to the Minister’s response; I have a funny feeling that we will not get much out of the Minister in that regard.
Of the two draft orders, I will concentrate first on the Guaranteed Minimum Pensions Increase Order. It is relatively straightforward, on one level; it will ensure that those on contracted-out pensions get an uplift in their contributions made between 1988 and 1997. Effectively, that seems to be a formality that happens every year. The percentage increase is capped at 3%, which makes me think that we have to consider whether that 3% rate is valid now. What happens if inflation remains rampant? That needs to be considered.
In preparing for the debate, I was concerned to read that as part of the transition to the single-tier pension in 2016, the DWP estimated that 50,000 people would lose out with guaranteed minimum pensions. In 2019, the Parliamentary and Health Service Ombudsman published a report stating that the DWP had not provided clear and accurate information that some pension holders could face negative long-term impacts on their pensions and their income. The Government responded in 2021 and developed a new factsheet. In developing that factsheet, how much discussion did they have with the PHSO and third-sector organisations? When will we see the review into its usage? As the right hon. Member for East Ham (Stephen Timms) pointed out, people are having difficulty accessing the factsheet. How many people have suffered negative consequences and what are the Government doing to assess that?
It is clear from the failings on the guaranteed minimum pension and the communications around that, the WASPI women and the botched communications with them, the pensions underpayments and the late payment of pensions once people reach state pension age that the pensions system has a long way to go before it is remotely close to being fit for purpose.
With those observations, I will turn to pensions in general, in terms of the social security uprating. I know that the Minister will probably dismiss most contributions from the Opposition, but as others have said, he would do well to listen to the excellent contributions from the hon. Members for Waveney (Peter Aldous) and for Amber Valley (Nigel Mills). They should be a warning to the Government that more needs to be done.
UK pensions are the least generous in north-west Europe when compared with the average wage. That was confirmed by analysis undertaken by the House of Commons Library last year. When that is the case and when we have a cost of living crisis, it defies logic that the Tories think this is the time to break the triple lock guarantee on pensions and to break it in terms of the link with earnings.
As other Members have said, the CPI figure being applied is outdated, but I suspect it was also understated, considering the work done by Jack Monroe and the fact that the Office for National Statistics is saying that it will revise how it calculates CPI and inflation with regard to food. The 3.1% was probably an understatement at the time, and it has since been superseded.
One of the original arguments the Government put forward for not linking pensions to the increase in wages was that wages had increased unusually because of the pandemic, when people were out of work and then went back into work. We now know that it is not just wages that have gone up; prices have gone up as well. That is having a real impact on pensioners and people on low incomes.
Absolutely; food prices have gone up and the energy price cap is now circa £2,000. The Government are not doing enough to mitigate the effect of that price cap. The reality is that earnings are not reflecting the cost of living demands. That is the whole point of earnings increasing. It therefore makes no sense to break that link.
What we have from the Tory Government is a Budget that is based on taking money from the pockets of pensioners, and this week they have not done enough to address the energy cost crisis. They are doing very little. A £200 loan to people is insufficient. It is just another burden for bill payers to pay back. Even if people get the £150 council tax rebate on top of the £200 loan, the energy cap is going up by £700. That is a long way short of meeting people’s requirements. Even when the rebates are taken off the price cap, people will be paying a net cost of £1,600 on their energy bills. That is a 40% increase. For those who have to pay the full cap, it is a 70% increase in energy prices in the last few months.
Pensioners are already struggling to make ends meet, and now they face this further erosion of their pension, while everything else is going up. As other Members have said, inflation is at its highest rate for 30 years and could go as high as 7%. Why oh why, in that context, do the Government think it is right to break their manifesto commitment on pensions? The Pensions Minister argues that pensions are increasing compared with this year, but the Red Book for the October Budget clearly states that breaking the triple lock is costing pensioners £520 a year. The Treasury will save £5.4 billion in financial year 2022-23 and a total of more than £30 billion in this Parliament. So the Chancellor is clearly balancing the books on the backs of pensioners. The concern is: is this a precedent? If the Government do not like any part of the triple lock, will they say, “We’ll ditch that bit of the triple lock, but we’ll return to it in the future. Don’t worry—it’s just a one-off”? A precedent has been set. The reality is, the triple lock is crucial in ensuring that the state pension continues to rise to reflect the increasing cost of living. Removing it deprives pensioners of vital income to ensure dignity and fairness in retirement. Research by the House of Commons Library shows that nearly 1 million pensioners in Scotland will be directly impacted by the cut.
The Government’s own statistics on households below average income show that, under Tory rule, UK pensioner poverty has risen to a 15-year high, with 2.1 million UK pensioners now classed as living in poverty once housing costs are allowed for. That is an increase of 200,000 on 2018-19, yet today the Pensions Minister had the brass neck to stand at the Dispatch Box and say that pension poverty has gone down under their watch. It is the exact opposite. These figures are based on the here and now—before the increase in the energy price cap kicks in—so it is clear that, unfortunately, the 2.1 million figure will dramatically increase. National Energy Action estimates that the increase in the price cap to £2,000 will result in between 5.5 million and 6.5 million households across the UK being fuel-poor.
One way in which the Government can help alleviate pensioner poverty is by ensuring that those eligible for pension credit are receiving it. We know that only about six in 10 of those who are entitled to it actually claim it, so the Government save £4 billion a year in unclaimed pension credit. If we look at the savings they are making through breaking the triple lock and what they hold back in pension credit, that is £10 billion this coming financial year alone, which could easily be in pensioners’ pockets. As my hon. Friend the Member for Glasgow East (David Linden) said, when pensioners have that money in their pockets, it gets recirculated in local businesses because they need to spend that money on household essentials.
Research commissioned by Independent Age estimated that full take-up of pension credit could lift 440,000 older people out of poverty. When will the Government tackle that? I am less concerned about debating the 3.1% uplift in pension credit aspect—it is more important that people who are due pension credit actually get it. The Government must do everything they can to ensure that that happens. They speak about information campaigns, but, if they are serious about increasing pension credit uptake, how much money have they set aside for campaigning, information and working with third-sector organisations to ensure that people access pension credit? How much money have the Government set aside in the Budget as regards the hoped for increase, because they will clearly need to make more money available to pay that out?
Another cohort of pensioners is living in poverty: those who live abroad and are hampered by frozen pensions overseas. Many of them are veterans. It seems absurd that, when the Tories argued for giving lifetime votes to expats living abroad, they always used the brave veteran who fought for the UK and gave service in the armed forces as an example of someone who deserves a vote for life, yet they will not reward those veterans with a pension that allows them to live in dignity.
The Government are not just giving overseas pensioners the right to vote but changing legislation to allow overseas pensioners the right to donate to election campaigns. So the Government are quite happy to take those pensioners’ money, but they are not happy to give those pensioners the money that they paid in.
That is a valid point that highlights the Government’s complete hypocrisy. We can only hope that enough overseas pensioners use their vote the right way and send the Government a message. It is kind of absurd. Not only is it demeaning when people living abroad do not have enough money to live on, potentially after giving service in the armed forces, but some are forced to sell their homes and move back to the UK. The irony is that that brings increased health costs. If the Government are being purely financial about it, not giving people the standard of living that they are due does not even save them the money they think it does.
One other aspect of that, in terms of reciprocal agreements on overseas pensions, is that the Canadian Government have offered to work with the UK Government to get a reciprocal agreement to resolve that issue in Canada. So why are the Government not moving forward on that and working with the Canadian Government?
There is one other key policy that the SNP has long been campaigning for. It is calling on the UK Government to establish an independent savings and pensions commission to ensure that pension policies are fit for purpose and reflect the demographic needs of different parts of the UK. One aspect of pensions that raised its head over the weekend was the Better Together rehash of 2014, and how the UK will not honour its commitments to pensioners in an independent Scotland. It seems extraordinary to me that we are in a so-called Union of equals, yet threats are being made about pensions. It is shameful that Scottish Labour once again want to be all over this. It seems that the UK Government want to argue that they can ignore all those contributions from Scotland in terms of income tax and national insurance, and will withhold pension obligations, yet they expect an independent Scotland to take on a share of the debt that the UK Government have built up—that has never been built up by any Scottish Government. That is a complete paradox and it makes no sense.
I am not giving way to someone who came two hours late into a three-hour debate. [Interruption.] As one of my colleagues says, if a person came in that late to the jobcentre, they would be sanctioned. For me, the examples I have given say it all about the so-called most successful political Union: one where after 315 years, we still hear the mantra about needing to level up. Surely that Union is broken if there is an argument for levelling up.
I will now turn to policies, and the question of where the money to implement paying a much higher pension, for example, could come from. Comparing the November Budget with the March Budget, the Red Book showed that oil and gas revenues are going to bring in £6 billion extra over this Parliament. It is predicted that VAT receipts could increase by £40 billion, and we know that the Treasury is continuing to get extra VAT from energy bills and from petrol, from extra fuel duties, so it is raking in money compared with where it thought it would be. It is high time that it reinvested that money to provide support for people in this cost of living crisis, instead of just continuing to take, take, take. That is why, for me, the reality is that only with the full powers of independence can we protect Scotland’s pensioners, eradicate poverty and finally begin to build a more progressive nation.
I start by thanking all those who have spoken in tonight’s debate. My hon. Friend the Member for Westminster North (Ms Buck) set out the scale of the cost of living crisis and the need for more targeted support. We heard a series of interesting points from a number of hon. Members. I thank my right hon. Friend the Member for East Ham (Stephen Timms), Chair of the Work and Pensions Committee, and my right hon. Friend the Member for Hayes and Harlington (John McDonnell); my hon. Friends the Members for Poplar and Limehouse (Apsana Begum), for Oldham East and Saddleworth (Debbie Abrahams), for Cynon Valley (Beth Winter), and for Leeds East (Richard Burgon); and the hon. Members for Waveney (Peter Aldous), for Glasgow East (David Linden), for Amber Valley (Nigel Mills), for North East Fife (Wendy Chamberlain), who made some interesting points, for Strangford (Jim Shannon), and finally for Kilmarnock and Loudoun (Alan Brown).
There is no doubt that pensioners and families across this country now face a severe cost of living crisis. Food prices are up, gas prices are up, the cost of living is going up. The Bank of England says that households must brace themselves for the biggest drop in living standards in 30 years. Millions of people now face the choice between heating and eating. Pensioners, children and those in greatest need will, sadly, be hit hardest, yet so far, the best this Government can do is offer an inadequate “buy now, pay later” scheme. To make matters worse, the Chancellor and the Prime Minister are insisting on sticking with a national insurance hike that will hit working people and businesses hardest. Today, we have heard how the Government’s failure extends to pensioners and those who rely on essential benefits.
I do not want to repeat the points made by my hon. Friend the Member for Westminster North, and I understand that time is now limited, but in summing up I wish to focus on how Ministers are making this dreadful situation worse. The Chancellor could have raised a windfall tax to reduce energy bills, but instead he has chosen to protect the super-profits of the energy companies over the welfare of the nation’s pensioners and most vulnerable. The Government’s proposed council tax rebate may fail to reach those who need the most help. It is not clear how pensioners who do not pay council tax by direct debit because of their low income or who have other issues will receive this benefit. Dame Clare Moriarty, the chief executive officer of Citizens Advice, has said:
“Energy rebates are a buy now pay later solution which only provide temporary relief later this year. And linking financial assistance to Council Tax will result in a complicated lottery that means support is not targeted at people who really need it.”
The Government have also failed to deliver on their manifesto promise to insulate homes and have failed to support businesses with energy cost rises. In contrast, a Labour Government would have offered real solutions, including a one-off windfall tax on energy company profits that would help all fairly, and provide support for business and long-term investment to improve our energy security and home insulation.
We will not be opposing today’s up-rating order, but I want to make it clear that this is no solution to the wider crisis facing our pensioners. Pensioners were let down when the Government broke their manifesto promise and severed the earnings link component of the triple lock. They were also let down when the Government broke their manifesto promise to keep the TV licence free for over-75s. Almost a fifth of pensioners are living in poverty under this Government, and more than 1 million pensioner households are, sadly, missing out on pensioner tax credit, the take-up of which the Government seem to have done little to improve. I am also afraid that the DWP has underpaid pensions by thousands of pounds and been responsible, in some cases, for severe delays in payments. We know of some newly retired pensioners who have had to wait more than three months to receive their pension, which they have worked hard all their lives for. I am conscious of time, so I just want to sum up by saying that we face a severe cost of living crisis. Pensioners and families face a truly dreadful situation, yet the Government are failing to listen and failing to respond.
I would like to begin by thanking those who have spoken today. These are indeed important matters and the uprating order provides for new rates of benefit from April 2022, as part of long-term provision to maintain their purchasing power. The Guaranteed Minimum Pensions Increase Order provides inflation protection for those in receipt of a guaranteed minimum pension. As set out in the debate, the uprating order increases state pensions and benefits by 3.1% from April 2022, representing an additional £4 billion of expenditure on benefits for pensioners and £2.6 billion on benefits for people below state pension age in 2022-23. Furthermore, the Guaranteed Minimum Pensions Increase Order increases the GMP by 3%, in line with primary legislation.
As the global economy recovers from the pandemic, consumer demand is surging, at the same time as global supply chains are being disrupted. The Government recognise and understand the pressures that is having on household incomes. Since the start of the pandemic the Government have provided more than £400 billion of support, and we have taken decisive steps to ease those pressures by providing a comprehensive package of support worth billions of pounds in this financial year. Hon. Members, including the hon. Member for Westminster North (Ms Buck) and colleagues on my side of the House—the Government Benches—including my hon. Friends the Members for Amber Valley (Nigel Mills) and for Waveney (Peter Aldous), have talked about the £20 uplift in universal credit. It was temporary; it was designed to help claimants through the worst of the pandemic. However, we continue to provide a meaningful and substantial package of support.
The Minister and I have shared many train journeys to and from the north-west, but I want to pick him up on what he has just said. He has said that what is being provided is “substantial”, but all the evidence from all of us, on both sides of the House—including his own side—has shown that it is anything but substantial. It will not cover, for instance, the cost of living crisis and the increase in inflation, and it is not sufficient in the context of the last 12 years. Please can you think again? This is just not adequate for my constituents or for yours.
I think that “you” should apply to the Chair, but I understand the point that the hon. Member has made, and we have indeed shared platforms and train journeys. The point I was making was that in addition to the uprating, a wider package of support is available, and it is substantial. It involves billions of pounds.
The Minister spoke earlier about the vast package of support contained in these measures. Can he name one measure that applies to the 2.5 million disabled people who were so cruelly left behind by this Government during the pandemic, and are still being overlooked by them now?
As we explained during oral questions earlier today, we are providing a package of £58 billion in support for the disabled, and we are working incredibly hard to ensure that more of them who are able to do so can get into work. A huge package is available. We have talked about the three-part plan that the Chancellor set out last week, involving £9 billion of support to tackle the energy challenges facing people across the country, in addition to the normal support that we provide.
I will make some more progress.
The aim over the two years of the pandemic has been to give fairness to pensioners by protecting the value of the state pension in 2021-22, despite the decline in earnings, and to taxpayers in 2022-23 by suspending the earnings limb of the triple lock because of a statistical anomaly, distorted by the cumulative effects of the economic impacts of coronavirus. Although inflation rose by 0.5% last year, pensions rose by 2.5%, and this year they rose by 3.1%. Over two years, pensions have risen by 5.6%.
The right hon. Member for East Ham (Stephen Timms) made an important point about pension credit take-up. I have been speaking to my colleague the Pensions Minister, who says that take-up increased from 71% in 2017-18 to 77% in 2018-19. However, more work is clearly needed, and we are working very hard to increase awareness.
The right hon. Gentleman has had a chance to make his point, and it was not made particularly well. [Interruption.] I was listening, but I did not understand the point that the right hon. Gentleman was making. The point that I am making is that we are taking important steps to tackle the challenges faced by the country.
The hon. Member for Kilmarnock and Loudoun (Alan Brown) made a couple of points about GMP uprating formulas. That is a separate piece of primary legislation. The right hon. Member for East Ham—the Chair of the Select Committee—also made points about GMP, and particularly about communication-related issues. The Department will supply a written review of those issues shortly. The hon. Member for Westminster North made points about local housing allowance rates. We have increased them by about £1 billion, which has given 1.5 million claimants an average of £600 more housing support in 2020-21, and we are maintaining those significant increases.
It is interesting to note that throughout much of this debate, hardly any Opposition Members mentioned that we are now experiencing a record number of vacancies. Our focus needs to be on getting people into work. There has been talk of poverty. Our approach is absolutely to tackle poverty. Since 2020, 700,000 fewer people are in absolute poverty before housing costs, including 100,000 fewer children and 200,000 fewer pensioners. We need to ensure that we fill those vacancies and end those shortages, and that more people take jobs in hospitality, tech, social care and healthcare.
I have already given way once to the right hon. Gentleman.
Employment stands at 32.4 million, up 60,000 in the quarter and up 3.2 million since 2010. The year 2010 is significant, as the right hon. Member for Hayes and Harlington knows, because his party had 13 years in power to change how the uprating legislation works, and it did not do a thing.
The draft Social Security Benefits Up-rating Order increases state pensions and benefits by 3.1% from April 2022. The draft Guaranteed Minimum Pensions Increase Order increases the guaranteed minimum pension by 3%, in line with primary legislation. For those reasons, I commend these orders to the House.
That the draft Social Security Benefits Up-rating Order 2022, which was laid before this House on 17 January, be approved.
That the draft Guaranteed Minimum Pensions Increase Order 2022, which was laid before this House on 17 January, be approved.—(David Rutley.)
Northern Ireland (Ministers, Elections and Petitions of Concern) Bill (Programme) (No.3)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provision shall apply to the Northern Ireland (Ministers, Elections and Petitions of Concern) Bill for the purpose of supplementing the Order of 22 June 2021 (Northern Ireland (Ministers, Elections and Petitions of Concern Bill) (Programme)), as varied by the Order of 26 October 2021 (Northern Ireland (Ministers, Elections and Petitions of Concern Bill) (Programme) (No. 2)):
Consideration of Lords Amendments
(1) Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.
(2) Any further Message from the Lords may be considered forthwith without any Question being put.
(3) The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Craig Whittaker.)
Question agreed to.