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Benefit Cap

Volume 709: debated on Tuesday 1 March 2022

Motion made, and Question proposed, That this House do now adjourn.—(Michael Tomlinson.)

It is a honour to follow my hon. Friend the Member for Lancaster and Fleetwood (Cat Smith). In opening this debate, I place on record my sincere thanks to Mr Speaker and his team for granting tonight’s debate and particularly for being so kind as to reschedule it after I contracted covid-19.

The Minister and I, by virtue of he being a Tory and me not, will disagree on virtually everything about social security policy. However, there is a serious point: in the light of what is happening in Ukraine at the moment, we should reflect on the fact that as much as we can disagree on things, we live in a democracy. I know that he will join me tonight in paying tribute to all our friends in Ukraine and in standing very much in solidarity with them.

I rise tonight to make the case for scrapping the cap, and in particular to pay tribute to the Poverty Alliance for the campaign it has been leading on this. Its campaign has emphasised the impact of the benefit cap as it pushes families into poverty and hardship, having a disproportionate effect on single mothers and ethnic minority families in particular. In speaking tonight, I want to set out why the SNP, as well as countless others in civic society, want to see an end to the unfair and disastrous benefit cap.

Motion lapsed (Standing Order No. 9(3)).

Motion made, and Question proposed, That this House do now adjourn.—(Michael Tomlinson.)

Ever since its introduction in 2013, the benefit cap has limited the support that some of the most vulnerable people in our constituencies receive. Based on the latest figures from the Department for Work and Pensions, as of August 2021, 180,000 households have had their benefits capped, including over 6,400 households in Scotland, and are receiving on average £54 per week less in support than they would if the cap was not in place.

Perhaps the most counterproductive aspect of the cap is the fact that the people who require the highest level of support are the most likely to be affected, which is not only unjust but simply does not make sense. Why reduce the amount of support that the most vulnerable people in our society require? On top of that, the vast majority of households affected by the cap are exempt from working to increase their income, either because they have a disability or because they have childcare responsibilities. It is a Catch-22 situation for so many people on benefits: they are unable to work to increase their income and they have their benefits cut regardless.

Is my hon Friend, my good friend, as concerned as I am that having the benefit cap in place is leading to—he has outlined the figures—an increase in food insecurity across these islands, and that the pressures on food banks, pantries and citizen supermarkets will be immense because of the actions of the Government?

Absolutely. I pay tribute to my hon. Friend, who I know is a trustee of Feeding Britain and has the Threehills Community trust in his constituency. He is right, and he sees at first hand the food poverty that exists in our communities needlessly as a result of the poor social security policy emanating from Whitehall. The Feeding Britain charity, which he is on, and local organisations in his constituency are very much at the sharp end of that, and I hope that the Minister will reflect on that.

It should be noted that benefit capped households in receipt of universal credit have also largely not benefited from the £20 increase to universal credit during the pandemic. The benefit cap remained in place, which meant that universal credit claimants who had already reached the cap saw no increase in the support they received, and even more households were affected by the cap as the universal credit increase pushed them to the cap’s limit. On top of all that, and very much to add insult to injury, the cap does not increase to reflect increasing costs of living.

First, I congratulate the hon. Gentleman on securing the debate. I fully support what he has been saying. Does he not agree that in the current economic climate the power of the pound is so massively reduced that, while benefits may once have helped pay substantially for additional costs, the same amount goes nowhere near to meeting needs today? If that is the case, the hon. Gentleman is correct that there is clearly a need to reassess the cap entirely, and for that reason I fully support what he is proposing.

I am very grateful to the hon. Member for his intervention. It is almost as though he had seen my speech, but that may not be the case. I like to think that he is the Mystic Meg of Strangford. But he is absolutely right and makes a serious point, which, in the context of the cost of living crisis, is a massive issue. He has very much put that on record for his constituents in Strangford, who I know will be incredibly proud of him.

The problem with the benefit cap is that it is in effect a cut in real terms each year. As we face the cost of living crisis that the hon. Member spoke about, benefit claimants will see their costs go up while their incomes continue to be capped. The benefit cap has profound impacts on the people affected by it. For many families it means insecurity and anxiety, poor mental health, an inability to afford essentials such as food and heating, and reliance on food banks. It has also forced many of the constituents of SNP Members into problem debt.

I congratulate my hon. Friend on securing the debate. Is it not exactly the point that if people cannot afford basic necessities—food, heating their homes—because of the benefit cap, that stores up greater costs for the state in the longer term because of the health costs and the other social difficulties that may arise, even later in life, such as for the 173 children in the Glasgow North constituency who are hit by the benefit cap?

My hon. Friend is absolutely right to put that on record, because he is right to identify the point that destitution ultimately comes at a cost to the state. I am incredibly proud that the Scottish Government have a focus on a preventive spending agenda. The Government should realise that if we push people into debt and financial insecurity, we end up with a situation, as my hon. Friend will have seen in Glasgow, where people are essentially made homeless because they do not have enough money, and that then results in a section 5 referral to the local authority and the state still has to pick up the costs as a result. My hon. Friend is exactly right to make that point, and I am sure that my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) will be just as eloquent.

My hon. Friend has been talking about the impact that people face from the benefit cap across the piece, but there is an even greater impact for those who live in rural areas—particularly those off the gas grid—where, for example, petrol costs are higher, travel costs are higher and incomes are often lower across the piece, so families will struggle together. The benefit cap is punishing those people even more than those in cities with lower costs.

Absolutely, and I pay tribute to my hon. Friend on that, because he presented a 10-minute rule Bill on this issue in the Chamber last week. I know it affects his constituents and those of my hon. Friend the Member for Argyll and Bute (Brendan O'Hara). In a lot of these rural constituencies, people are off-grid, and it means they will have increased energy costs. Having some sort of arbitrary benefit cap in place will not help them, so I ask those on the Treasury Bench to reflect on the Bill of my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey and to bring forward the opportunity for it to get its Second Reading and for him to give his constituents a voice.

The hon. Member is making a very strong case. He is absolutely right to focus on the benefit cap and the impact that has on 180,000-odd households. Does he agree that it needs to be looked at in the context of the £34 billion a year that has been taken out of support for working-age families? Do we also need to be considering the adequacy overall of social security support?

Yes, my fundamental position is that we need a root-and-branch review of the social security system. That safety net that is supposed to exist for some of the most marginalised and vulnerable people in our communities is a safety net that has more holes than a clarinet at the moment. I gently make a point to the hon. Member and her party. Yes, we need that real reform of social security—not the reform that we have from the Government, where basically the lion is in charge of the abattoir—where we look at ensuring that we give as much support to people as possible. That is why I would like to see the next Labour manifesto commit to abolishing the welfare cap. I was disappointed that Labour MPs were not able to join us in the Lobby on that, but I am sure that the hon. Member will be making that point to the right hon. and learned Member for Holborn and St Pancras (Keir Starmer).

With the cost of living crisis already impacting on thousands of families in Glasgow East, alongside the continuing financial effect of the pandemic, Brexit and now the regressive hike in national insurance, I have to ask the Minister: when will this Tory Government realise that all they are doing is pushing more and more people into poverty? The benefit cap disproportionately impacts single parents, placing an additional burden on families who already face challenges. Based on the latest Department for Work and Pensions figures for August 2021, across the UK six in 10 households that have had their benefit capped are single-parent families.

My hon. Friend is making an excellent speech. Does he agree that the disproportionate impact of the benefit cap on larger families is also particularly problematic, given the comments he has just made about the cost of living crisis and the increasingly difficult situations that many families are facing?

Absolutely. That is an issue I will perhaps touch on a little later in my speech. My hon. Friend is absolutely right to challenge the Government on that point, because I sometimes wonder how a policy like this could have got through the Government’s so-called family test. I am sure she will not hesitate in challenging her constituency MSP, the Conservative MSP Jackson Carlaw, to stand up for his constituents, many of whom have larger families.

On that point, is it not key that we are talking about families and children? Whatever the Tories’ ideological views on people having too many children, the reality is that the benefit cap is affecting children who have no say in the matter, and it is evil.

Absolutely; my hon. Friend makes that point eloquently. The issue is that the Government are making policy in their ivory towers in Whitehall without any understanding of the real-life impact that it has on many families, including in Kilmarnock.

Some nine out of 10 single parents with children are women, which adds another layer of discrimination to an already incredibly cruel policy. We have heard testimonies from women who have left relationships due to domestic abuse only to find their benefits capped and the threat of financial hardship looming. That is the reality of the policy. Every effort should be made to ensure that those women, who are often fleeing desperate situations, are supported. Instead, the heartless British Government have capped the benefits that they can receive.

On top of that clear discrimination against single parents, specifically single mothers, a 2018 report by the excellent charities One Parent Families Scotland and CPAG in Scotland revealed that most families whose benefits had been capped were unable to seek or undertake work. The report highlighted that almost four in five lone parent households affected by the cap were claiming income support because they had young children and were not expected to seek work. Some one in six were claiming employment and support allowance, which suggests that they had been assessed as not fit for work. Families across Scotland are being pushed into financial hardship when they are not expected, and indeed are not deemed fit, to find work.

The Joseph Rowntree Foundation found that the benefit cap also disproportionately affects minority ethnic households. In England, eight in 20 households affected by the cap are minority ethnic, while minority ethnic households represent only three in 20 of the total. The Poverty Alliance has shown that the benefit cap discriminates against larger families as well, as my hon. Friend the Member for East Renfrewshire (Kirsten Oswald) said. In Scotland, 96% of capped households have children and of that number, 75% have three or more children.

According to a recent Resolution Foundation report, the low level of core social security benefits, which were affected by the various real-terms cuts to benefit levels in the 2010s, has been exacerbated in the past decade by policy changes such as the benefit cap and the two-child limit and associated rape clause that have undermined the idea that those with extra needs should be supported. That has resulted in rising poverty, particularly among families with three or more children.

The SNP has put forward clear policies to tackle poverty across Scotland. For example, my colleagues, SNP Ministers in Holyrood, have doubled the game-changing Scottish child payment, rolled out 11 new benefits and extended free school meals, and are working to actively reduce poverty and inequality. All the while, this place—Westminster—undermines those efforts.

With limited tax-raising powers, no serious borrowing powers and 85% of welfare spending still controlled in London, however, those policies can only go so far. They are being continually undermined by a Tory Government that Scotland did not elect; indeed, we have not elected a Tory Government since the 1950s. The benefit cap is just another cruel policy implemented by the Tories that leads to the extreme austerity and poverty that blight the lives of far too many of our constituents.

In addition to the benefit cap, the British Government must also scrap other poverty-inducing Tory policies such as the two-child limit and the bedroom tax. We face a perverse situation where the Scottish Government have to use between £60 million and £80 million of their budget every year to mitigate the bedroom tax. Again, devolution is almost being used as a sticking plaster for bad social security policy. Quite simply, I am sick and tired of standing up in this Chamber and making endless pleas to intransigent Tory Ministers while trying to demonstrate how my constituents in Wellhouse, Easthall and Cranhill are suffering from their cruel social security squeeze.

My hon. Friend is being generous with his time. He is about to make a point about people suffering. Does he agree that either there is no recognition from the Government Benches of the hardship and suffering that people are going through and facing more of, or they are willing to let it happen by not taking the actions that they need to take?

It is a question on which I find myself reflecting an awful lot. We all come into politics for different reasons. As I outlined at the beginning of this debate, the Minister and I have very different ideological views on the merits of the social security system and perhaps, even in his case, on what role the state should have in people’s lives. We are all constituency MPs, and on Friday morning we will go back to our constituencies and sit in those cold, draughty community centres and talk to people who are impacted by these policies. I find it very difficult to believe that the Minister, who represents Macclesfield, does not have constituents coming to him and saying that the benefit cap is putting them in a very difficult position. This may be a case of Ministers focusing too much on policy, but in this instance I think it is a case of Ministers, and indeed the Government, not focusing enough on their day job or on the correspondence that they receive from their constituents, which overwhelmingly says that the benefit cap must go.

My hon. Friend is making a very powerful case as to why the benefit cap must go. One thing that we have not discussed is the pandemic, which has affected so many families in Scotland and right across the UK. I think that it is 88% of households in Renfrewshire that have been affected by the benefit cap. Does that very fact not highlight the callousness of this policy and the fact that it needs to go?

Absolutely. My hon. Friend is a doughty champion of the children of Renfrewshire. This is a topic that we discuss regularly in our policy teams. He is right to place on record the extreme challenges that that poses to his constituents. I am sure that his constituents will reflect on the fact that the only way of ensuring that we do not have things like the benefit cap is to secure the powers of Scottish independence.

I was saying how often it feels like groundhog day in Westminster. While we on these Benches are focused on the people of Scotland, the Tories are far too focused on naval gazing and internal party politics. Indeed, the Chancellor seems more interested in preparing his suite of Instagram graphics for his next leadership bid than resourcing appropriately our social security system.

The fact of the matter is that the entire system is in desperate need of reform—reform that the Tories will not implement because it does not fit their political game of pitting people against each other in our community. While 85% of welfare policy remains reserved to the Westminster Government, we should only expect further policies that encourage poverty and austerity. From where I am standing, it is clearer than ever that the only way to protect Scotland’s interests and to build that fair and equal society that we all want to see is for Scotland to become a normal independent country. I am absolutely clear that we are on that path and that we will get there, but there is recognition, even on these Benches, that it will not happen overnight. That is why Ministers must act now, and that is why Ministers must scrap the cap.

I congratulate the hon. Member for Glasgow East (David Linden) on securing the debate. I know that he has strong views on this issue— that is very clear from the debate. This was second time lucky for him in terms of having this debate, which is thanks to the Chair and the Speaker. I am really pleased that he was able to get through his coronavirus unscathed, hopefully, and is now able to participate. I am also grateful to him for mentioning how important these democratic processes are, however much we might disagree—as he and I do on a lot. None the less, this is the way to express our differences—through debate and through the democratic processes. This stands in marked contrast to the unacceptable and abhorrent actions of President Putin, which both he and I roundly condemn, along with the whole House. Our thoughts and prayers are with the people of Ukraine and for peace.

The Government remain committed to providing a financial safety net for those who need it, with support available for those on low incomes or who are unable to work at all. We will, this year, spend more than £250 billion through the welfare system, including £41 billion on universal credit and more than £110 billion on working age benefits. The Government have focused on making sure that more money gets to those vulnerable people who need it most, with over £58 billion of welfare support going to people with disabilities and health conditions this year alone.

The pandemic has been a very challenging time for many, and universal credit has stood up to the challenge of covid-19, providing a vital safety net for 6 million people. I know that the hon. Gentleman has concerns about universal credit, but the system stood up well; it was resilient and it was able to pay people on time.

I am grateful to the Minister for giving way. Yes, like everybody on these Benches, I welcome the fact that the universal credit payment was uplifted by £20 a week, but does he not accept that that was a clear concession and recognition that social security in its current form was inadequate before the pandemic, and if it was inadequate then, what has changed since?

As the Chancellor spelled out clearly during the pandemic, this was a response to the worst parts of the pandemic and the shock it would provide to people. The hard-working staff in the Department for Work and Pensions, including thousands of work coaches, worked tirelessly to ensure that the benefits system did its job.

Since the start of the pandemic, we have spent more than £400 billion protecting people’s lives and livelihoods, and supporting businesses and public services. As well as providing support where it is needed, the Government have a responsibility to taxpayers. We must ensure that we use our resources in the most effective and efficient way possible, and the benefit cap is a vital part of that.

The hon. Gentleman and I probably disagree on this, but let me set it out and we will see how it takes the debate further forward.

It is a few years since the National Audit Office said that there was no system in place to measure the outcomes associated with universal credit. For years the Government have continued to say that UC helps people into work. So what changes in the assessment process for measuring outcomes have the Government made since that NAO report?

The internal assessments we have produced—and we have produced several—showed that UC does help more people get into work. At the moment, in an economic environment where there are record vacancies, which I will touch on later, we are helping more people get into work.

The benefit cap was introduced as part of a strategy to reform the system of benefits for people of working age. The cap limits the combined sum of prescribed welfare benefits that households may be entitled to. The aims of the benefit cap policy are: to incentivise behaviours; to encourage people to work and to reduce long-term dependency on benefits; and to introduce greater fairness in the welfare system between those receiving out-of-work benefits and those in work, by putting in place a reasonable limit on the amount a household can receive in welfare benefits. For context, let me say that about four in 10 households earn less than the annual benefit cap’s limits of £23,000 in London and about £20,000 in the rest of Great Britain. The final aim is to make the system more affordable, better balancing the burden on taxpayers. Let us not forget that households can still receive benefits up to the equivalent salary of £24,000—or £28,000 in London.

We continue to protect vulnerable claimants for whom work may not currently be a viable option. In recognition of the additional costs related to a disability, households are exempt from the cap if someone is receiving disability living allowance or a personal independence payment. UC claimants who receive the limited capability for work-related activity element—that phrase is a bit of a mouthful—or employment and support allowance claimants in receipt of the support component are also exempt from the cap.

The Government recognise and appreciate the vital contribution made by carers, which is why there are exemptions for those entitled to carer’s allowance, the carer’s element in UC and guardian’s allowance. Households in receipt of UC are exempt from the cap if their earnings reach just £617 a month, to help encourage people into work. Those who still receive housing benefit are also exempt if they are entitled to working tax credits. Eligible childcare costs that are repaid through UC payments are exempt from the cap. That also supports people getting into work and progressing in employment.

I also want to support those with a strong recent work history who find themselves without work or whose earnings reduce. As a result, the benefit cap is not applied for nine months for those receiving UC where the claimant, their partner or ex-partner has received at least the benefit cap earnings threshold of £617 in each of the previous 12 consecutive months.

I should also remind the House that the proportion of capped households remains low in comparison with the overall working-age benefit case load, at 2.7% across Great Britain. In Scotland, the proportion is even lower, at 1.1%. In the last quarter, to August 2021, on average 710 households every week moved off the cap through increasing their earnings or starting work. There is a statutory duty to review the benefit cap levels once in each Parliament; the country has been through very challenging times, which has delayed that statutory review, but it will happen at the appropriate time in this Parliament, to be determined by the Secretary of State. When the Secretary of State decides to undertake that review, which must currently happen by December 2024, she will consider the national economic situation and any other matters she deems vital at that time.

The Minister is being very generous. Can he tell us then, with the assessments the Department is doing of the benefit cap, whether it will do further assessments alongside its much-awaited review on the drivers of food bank use and food aid provision, which the House has waited 18 months for the Department to place in the Commons Library?

That report will come forward—I think there have been exchanges between the Committee and the Secretary of State’s office—but we are talking here about a statutory requirement, which certainly will happen during the course of this Parliament. As the hon. Gentleman, a well-respected member of the Committee, will be aware, we have gone through very uncertain times; we must ensure that review is done when we have the proper body of evidence and at the right time. I am sure he will seek to hold the Secretary of State to account during that process, as he rightly should as a member of the Select Committee.

There is clear evidence that work, particularly full-time work, substantially reduces the likelihood of being in poverty. Children living in workless households were around six times more likely to be in absolute poverty before housing costs in 2019-20 than those where all adults worked. At a time of record vacancies, we are not only focusing on getting people into jobs, but taking action to boost the take-home pay of lower-income working households by giving nearly 2 million families an extra £1,000 a year through our cut—

Through our cut to the universal credit taper rate, if I may finish, and the increase in work allowances. The hon. Gentleman is being incredibly cheeky, but we will let him get away with it once. In addition, the national living wage will increase to £9.50 from April, meaning an extra £1,000 a year for full-time workers.

Getting claimants back into work remains the primary focus of the Secretary of State and the whole ministerial team, myself included. We know that having a job has many benefits, including a routine, a sense of purpose and increased confidence. We would also like as many people as possible to feel those positive effects—not forgetting, of course, that people on UC securing employment will significantly decrease the likelihood of their household’s being affected by the cap.

There are nearly 1.3 million vacancies across the United Kingdom, 43,000 more than last month and 513,000 more than at the start of the pandemic. Those vacancies provide opportunities for people to move into and progress in work, as well as to increase their earnings. To help people to take advantage of that record number of vacancies, our plan for jobs is supporting people at any age and any stage of their career. People currently affected by the benefit cap can access support provided by the “Plan for Jobs”, and since the start of the pandemic we have recruited 13,500 new work coaches to ensure that, no matter where they live across the country, claimants can access support and opportunities to get a job, to progress and to realise their potential.

The point I want to pick the Minister up on is that, if the Government have put in place all those work coaches—I pay tribute to the work they do—and they all have contracts that go on longer because there is anticipation that the unemployment figures will be higher, why did they cut universal credit when they understood that people were going to be relying on the social security system?

I know the hon. Gentleman likes to put the word “cut” into a sentence, but we withdrew a temporary increase in universal credit that was put in place for a specific reason during the pandemic. We have now got into a stage in the economic cycle where there are more vacancies and we want to get people into work so they can stand on their own two feet and be less dependent on benefits. I know we have different views, but I am sure even he would want to get more people standing on their own two feet and given the opportunity to have their own work.

Another way we are doing that is by working with a specific group of 500,000 benefit claimants, helping them into work by the end of June through the way to work initiative, which will increase communication between employers and claimants to help get people into work faster, so that they can experience the positive benefits associated with it. There is a range of other support available to help those people who may be affected by the cap through the flexible support fund, ensuring they have access to higher support for childcare—up to 85% of the cost of which is available on universal credit—and through the discretionary housing payments and, of course, the household support fund.

It is not just helping people into work; we have also provided support. The Chancellor set out just recently the additional support that would be available to tackle to cost of energy through the three-part plan, involving a £200 rebate for households that is delivered through their energy bill. We have covered at lot in this debate; we are very keen to help people into work and we are providing support for those who face challenges. I thank Mr Speaker for the opportunity to address this debate.

House adjourned without Question put (Standing Order No. 9(7)).