[Relevant documents: Oral evidence taken before the Treasury Committee on 31 January, 6 June and 8 June, on The cost of living, HC 343; Oral evidence taken before the Work and Pensions Committee on 29 June, on The cost of living and The work of the Secretary of State for Work and Pensions, HC 549.]
Motion made, and Question proposed,
That, for the year ending with 31 March 2023, for expenditure by the Department for Work and Pensions:
(1) further resources, not exceeding £70,686,826,000, be authorised for use for current purposes as set out in HC 396 of Session 2022–23,
(2) further resources, not exceeding £590,758,000, be authorised for use for capital purposes as so set out, and
(3) a further sum, not exceeding £71,733,460,000, be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.—(Miss Dines.)
I am grateful that we have been granted this debate to discuss the spending of the Department for Work and Pensions. We are all familiar with the facts of the cost of living crisis: price rises are accelerating and inflation in May was the highest since 1982—the highest for 40 years—at 9.1%. In France, inflation was 5.8% and in the eurozone, it was 8.1% on average, so we have a particularly acute problem in the UK. The Bank of England Monetary Policy Committee said last month that it expects inflation to rise to slightly above 11% in October.
In the light of those rapidly increasing costs, the Chancellor announced measures to support households in February, March and May. I warmly welcome that support, which is valued at £37 billion. Two of the support measures that he announced are funded by the DWP and are therefore a focus of this debate: first, the £650 payment for households receiving means-tested benefits, and secondly, the £150 payment for people receiving disability benefits.
I understand that the DWP will pay the first £326 instalment of the £650 payment in the second half of this month. The qualifying day for that—the day on which someone had to have been claiming means-tested benefits—was 25 May. The qualifying day for the second instalment has not yet been announced, but I gather that it will be no later than 31 October. Those payments will be tax free and will not affect other benefit awards. I particularly welcome the fact that, as the Secretary of State confirmed to me in the debate on the recent legislation to enable the payments, they will not be constrained by the benefit cap.
The other measures that the Chancellor announced in May, which are not legislated for by the Social Security (Additional Payments) Act 2022, include two extensions of existing programmes for which DWP is responsible. First, pensioner households will receive a one-off £300 pensioner cost of living payment as a top-up to their winter fuel payment, which will cost in total £2.5 billion. Secondly, there will be an additional £500 million for the household support fund for local authorities to make discretionary payments to people in need—some £421 million for England and £79 million for the devolved Administrations through the Barnett formula. That will cover the period from October this year to March next year.
The household support fund was originally announced in September 2021 with £500 million for local authorities for the six months from October 2021 to March 2022. It was extended with another £500 million for the following six months from April to September this year. I will say more about that later as a relatively new feature of the estimates.
It is worth pausing to reflect on the fact that, although the Chancellor’s announcements are welcome, there are still some concerns. The Resolution Foundation estimates that the
“measures announced this year to support households will in effect offset 82 per cent of the rise in households’ energy costs in 2022-23, rising to over 90 per cent for poorer households.”
It is a substantial response to a substantial problem. The Treasury says that households with incomes among the lowest 10% of all households in England will gain just under £1,200 a year on average as a result of the package, while those among the top 10% will gain around £700 a year on average—significantly less. That strikes me as a broadly appropriate distributional impact.
There are some caveats—for example, the payments are per household. As Save the Children and others have pointed out, larger families will not get any more support than smaller ones, even though children in larger families are at much greater risk of being in poverty. Nearly half—47%—of all UK children in a family with three or more children were in poverty in 2020, so that has a big impact.
The Joseph Rowntree Foundation made the point that:
“One key group who has lost out are unpaid carers”.
We have just debated kinship carers. Only 59% of the 1 million people who claim carer’s allowance also claim means-tested benefits, so the other 41% will not get any additional support through the package. I applaud the Welsh Government’s initiative to provide an additional £500 payment for carers in Wales, and I think consideration should be given to comparable additional support elsewhere in the UK.
People waiting to be assessed for a personal independence payment cannot access the £150 payment. People wait on average five months to be assessed and receive a decision, and some 300,000 people are waiting at the moment. We might think that they ought to be getting some help, but they will not. People waiting for a work capability assessment will not get the payment either. The backlog for work capability assessments for universal credit is not published, so we do not know the size of it, but we know that there is one.
In April, as we all know, inflation-linked benefits were increased by 3.1% in line with the increase in the consumer prices index last September. When the uprating took effect, however, inflation was already over 7% and, as we have been reminded, it is now expected to rise to 11% this year. The Secretary of State previously told the Work and Pensions Committee that she does not favour one-off payments of the kind that the Chancellor announced in May. She is right: welcome though the Chancellor’s announcements are, I agree that it would be far better to have an uprating system that works properly, rather than having to resort to these stopgap measures to deal with the emergency.
Universal credit can be updated quickly, as we saw when lockdown hit, but the legacy benefits cannot be. The permanent secretary told the Select Committee last week that the problem is that uprating programs can only be run at weekends, when the computer systems are not doing other jobs, and that is apparently why it takes such a long time to implement the uprating of the legacy benefits. We have already called for those older systems to be improved urgently, and for the gap between assessing inflation and uprating benefits to be reduced. The need for that to happen is now even clearer, given the problems that we have run into this year.
The crisis is also exposing a much bigger and longer-term problem, which is the continued failure to keep the level of benefits in line with inflation. That is a consequence of successive policy decisions over the last 12 years. The chief executive of the Resolution Foundation said yesterday that the headline rate of benefit for someone who is unemployed is now 13% of average earnings, and that that is the lowest level it has ever been. That is lower, I think, than when Lloyd George introduced unemployment benefit for the first time in 1911.
Nobody should be surprised that so many are having such a hard time; there is no resilience in the support that is being provided, because the level is now so low. We have asked Ministers to explain the reason or thinking behind setting the benefits so low, and all we have been told is, “Well, we uprated it that year, we did not uprate it that year, and this is where we’ve ended up.” There is no rationale for the situation that we have found ourselves in where, in real terms, the level of benefits is at its lowest for more than 30 years.
Citizens Advice North Lancashire, one of the organisations that contacted the Select Committee, told us that
“one-off payments are not a solution to inadequate benefit levels.”
It is right about that. It went on:
“Our detailed research…on Universal Credit from across Lancashire…shows that Universal Credit is not enough to live on in Lancashire. Benefit payments urgently need uprating so that people who cannot work can afford to live off them.”
The Select Committee has agreed to look at the longer-term issue of benefit levels in an inquiry in the coming months, and we will be considering these issues carefully.
I want to comment today on two specific features of these estimates. The first is the household support fund. As I have said, the Chancellor’s package included an additional £500 million for the household support fund, bringing the total amount in that fund to £1.5 billion since October 2021. It is administered by local councils in England, and each council sets its own eligibility criteria.
The grant conditions set by the Government are, frankly, pretty vague. They specify that assistance can be issued by the authority itself or through a third party. One third of the grant is to support households that include a child, another third is to support households that include somebody of state pension age and the balance is for everybody else. It is for support with food, energy and other essential living needs. In a so-called exceptional circumstance, the household support fund can be used to support housing costs.
Local authorities have to submit a statement of grant usage to the Department with plans of how they are going to spend the money, and they are supposed to maintain an adequate audit trail for how they do in fact spend it. We asked the Secretary of State about that at the Select Committee last week, and she told us that local authorities have to make two returns a year to the Department about what happens to that money. I think that information is supposed to be published, but as far as I can see, no information has been published about how the household support fund has been used. The truth is that we know very little about what has happened to that £1.5 billion.
One thing that money could be used for is supporting families with no recourse to public funds, some of whom have been in a desperate situation in the last two years. When asked if the household support fund can he used for that, given that it is a public fund, Ministers—absurdly—say that local authorities should take their own legal advice to find out. At the very least, there must surely be clarity about what councils are allowed to do with this funding.
It may well be that the household support fund is playing a valuable role—I imagine it very likely is—but we just do not know, and we should. If there is to be continued use of discretionary funds such as this, instead of uprating benefits properly, the Department must at least work with councils and develop a clear reporting framework for the household support fund to provide assurance that it is being used effectively and that the support is getting to where it is most needed, because at the moment we just do not know. It would be far better to have an effective and reliable system for uprating the level of social security benefits, so that we do not have to resort to these stopgap measures in situations such as the one we are in at the moment.
The second point I want to pick out is about the benefit cap. The cap has not been changed since 2016, and in 2016 it was lowered. It continues to limit overall annual benefit support for a family to £23,000 in London and £20,000 across the rest of the UK, with comparable figures for a single person of £15,410 and £13,410 respectively. The new cost of living payments will not be constrained by the benefit cap, and I warmly welcome that. I think this sets an important and welcome precedent. It recognises that families up against the cap—and there are over 100,000 of them at the moment—are seeing their costs rising like everybody else.
Given the uprating expected next April, based on the rate of inflation expected in September, the Child Poverty Action Group has estimated that
“an additional 35,000 households will become capped overnight, resulting in a total of around 150,000 households capped in April 2023”.
The North East Child Poverty Commission also contacted the Select Committee, and it told us:
“The benefit cap impacts a relatively small number of households in the North East (fewer than 5,000)…almost all…are families with children…but they are being prevented by the cap from receiving all the support they have been assessed as needing. We urge the Government to lift the benefit cap.” The Government have a statutory duty to review the level of the benefit cap every five years. Until March this year, the obligation was to review it in every Parliament. The last published review of the benefit cap was in 2014, which was eight years ago. The cap was lowered in 2016. The Secretary of State, when we asked her about this last week, could not tell us when it was last reviewed. If it has been reviewed within the last five years, the review certainly has not been published, despite promises to the Select Committee that it would be—and of course it should be. The Government should be open about their thinking in this area.
When the benefit cap was introduced in 2013—my hon. Friend the Member for Westminster North (Ms Buck), who is on the Front Bench, and I were in the Committee that debated this before it took effect—the income threshold was set at median full-time earnings, which at that time was £26,000 a year. Since then, it has been reduced, and of course median full-time earnings are very different now from what they were in 2013 anyway. The level of the cap now bears no relation at all to any particular earnings level.
I warmly welcome that the cap will not apply to the additional payments announced by the Chancellor. That is an important precedent, recognising that families at the benefit cap will be hard hit too. However, with inflation at over 10%, it is imperative that the cap is reviewed ahead of next April’s uprating. It needs at least to reflect average household incomes, as it initially did—it needs to bear some relation to them, surely—and take account of increasing rent, energy and food costs. I urge the Minister to be open with the public and to publish the outcome of that review. The Chancellor’s package means relief from the benefit cap for tens of thousands of families this year, but next year the cap will be back and presumably there will not be any further additional payments from the Chancellor. The level of the cap must be raised before next April because if it is not, the consequences will be dire.
I am very grateful for this opportunity to debate the very important estimates that the Government have provided for us. They make such a big impact on millions of our fellow citizens, and it is vital that such decisions about them are the right ones.
It is a pleasure to follow my good friend, the Chair of the Work and Pensions Committee, the right hon. Member for East Ham (Sir Stephen Timms), and it is a pleasure to be a member of that Committee in holding the Government to account. I of course refer to my entry in the Register of Members’ Financial Interests, particularly my role as chair of the PCS parliamentary group, as I will have some things to say about the office closures issue.
I want to start with the Secretary of State’s appearance at the Work and Pensions Committee last week, when she said that, on Thursday, she was going to meet her officials to discuss a second remedial order on bereavement support benefits for cohabiting couples. This is a very important issue, and we have had many great campaigners, including my Glasgow South West constituent Ailsa MacKenzie, who has been in the vanguard of pushing this issue. I hope the Minister will update the House on that issue, because it affects many thousands of people. The quicker we get the remedial order laid down, the quicker people can start receiving those bereavement support payments, which will no doubt help them deal with the cost of living crisis.
Let me touch on what I think lies at the heart of the problems in the Department for Work and Pensions: the start of the claim, the five-week wait and the deductions that come with that. The Minister responded to a written question from me, and the figures are becoming increasingly alarming. Ever since, I have periodically tabled such questions, and the number of deductions and the amount deducted have increased over the past 18 months. A total of £11 million a month is now being taken off claimants as a result of deductions. In my view, that has become a poverty tax.
For example, figures show that in February this year, 189,000 households in Scotland—an increase of 9,000 in just three months—had an average of £60 deducted from their social security payments. That is mainly to pay back the loans issued by the Department to cover the five-week wait at the beginning of a new claim, but some of it is due to overpayments, which include the Department’s errors. I hope the Department will look at that issue, because there is already case law when it comes to pay. By law, if there has been a mistake and someone has been overpaid, the employer cannot take that back. I suggest that if the Department has made a genuine error, it should not be deducting payments from future claims. I hope the Government will look at that, because a number of organisations have said that a deduction should not be made if the Department for Work and Pensions is to blame.
Does my hon. Friend share my concern about the lack of reassurance regarding top-up payments, as announced by the Chancellor last week? We may end up in the same situation, because if DWP accidentally gives that money to someone, it might try to claw it back, putting people in an even worse state of poverty than they are in already.
I share that concern, and I hope the Department will respond positively to the concerns that hon. Members, including my hon. Friend the Member for Aberdeen North (Kirsty Blackman), have raised.
On departmental error, taking £60 a month from people who require state support can be the difference between whether they can buy food or not, or whether they can heat their homes. I am sometimes a bit concerned about the phrase “heat or eat”, because some people will now not be able to do either. That is the desperate situation that far too many people face across these islands, particularly with the cost of living being so high.
On the one-off payments, the Department appears to have conceded the point that grants are better than loans. I welcome that, but I hope it will now look seriously at the report by the Work and Pensions Committee about the five-week wait and introduce a non-repayable grant—a starter payment, as we call it—within two weeks of the claim. That would stop people getting into debt as a result of deductions, and I suggest that it would save money on administration, compared with paying people after five weeks and then deducting £60 a month from them. It seems a false economy to insist on continuing the five-week wait, and then going back and deducting money from people’s claims.
A good friend of mine, Andrew Forsey, director of the charity Feeding Britain, which is involved with Threehills community supermarket in Glasgow South West, recently said:
“Last year, figures like these prompted the DWP to lower the cap on deductions and double the length of time people had to repay those upfront loans. What these latest figures show is that there remains a lot more work to be done, to bring these deductions down still further, if people are to have the money they need each month to put food on the table.”
The Chair of the Work and Pensions Committee mentioned no recourse to public funds, and I agree with what he said. I hope the Department will look seriously, once again, at the Committee’s report that recommends extending child benefit to all children, irrespective of their parents’ immigration status. The right hon. Gentleman laid that out well, and, as someone who represents a city that has signed up to the Home Office’s asylum seeker dispersal scheme, I know this is a very real issue. In areas where asylum seekers have become refugees, it was certainly an issue during covid. I hope the Department will go back and look at that.
We need more resources to go into ensuring that those who are entitled to pension credit receive it. It is reckoned that between 65% and 70% of people who are entitled to pension credit receive it. I would like the Department to do more work on that, and I would like more resources to go into working with pensioners’ groups and various third-sector organisations to ensure that those who are entitled to pension credit get it. It seems to be a very real issue, and some of the statistics from the independent charity Age UK about the amount of unpaid claims for pension credit suggest that the figure is far too high; it is in the millions. Frankly, that pension credit could do a lot of good for pensioners who are dealing with increasing food and fuel costs.
Finally, let me raise my concern about office closures by the Department for Work and Pensions; I know that you also have a constituency interest in this subject, Madam Deputy Speaker. We have Government offices in areas of high economic deprivation, and the Department is one of the largest employers in some constituencies, but it wants to close those offices. That will not just impact on people employed by the Department, although of course it will do that, but have a wider effect on the economy. Many small businesses round and about those offices rely on custom from people who work in the Department, and I refer the Minister to my hon. Friend the Member for Glasgow North East (Anne McLaughlin), who has done a survey on this issue in relation to the proposed closure of the Springburn office.
The Department seems to want to take out far too many of the 91,000 jobs that the Government want to cut. The Department responsible for employment and helping people get into work really should not be laying off its own workers and throwing people into unemployment; that would send completely the wrong message and make no sense whatsoever. I will leave it there, Madam Deputy Speaker, and I hope—indeed, I am sure—that I will get a positive response from the Minister to all the points I have raised.
It is a pleasure to follow the hon. Member for Glasgow South West (Chris Stephens), and I agree with all the points he made, as I did with those raised by the Chair of the Work and Pensions Committee, my right hon. Friend the Member for East Ham (Sir Stephen Timms). I want to focus on a few key things and pick up on the point that my right hon. Friend made about the context of the revised estimates for the Department for Work and Pensions.
We need to recognise—many Opposition Members certainly do—that the cuts associated with the two major reforms to the social security system in the last 12 years have shrunk the contributions that are being made, particularly to working-age people. We know from the Resolution Foundation’s work that by 2022, the spending cuts in the Department for Work and Pensions had reduced support to working-age people by up to 17%, compared with 2010. That is the equivalent of £33 billion.
We know from the data that by 2018, UK social security spending as a percentage of GDP was below both the EU27 and OECD averages. I think my right hon. Friend mentioned that out-of-work support in 1948 was about 25% of average earnings; it is currently less than half that. Even during the pandemic, with the £20-a-week uplift to universal credit, our support was the least generous in the OECD. We like to think that we are a generous country that looks after those who need support, but our support has been the least generous, and that shames us all. The amount of support available to somebody who is out of work is only slightly more than what is recognised as destitution.
In other analysis, the Institute for Fiscal Studies has confirmed that social security and tax changes mean that the poorest 10% of households have lost 11% of their income, equivalent to £1,200 a year. For families with children, it is even worse, with a 20% loss of income amounting to £4,000 a year. The Equality and Human Rights Commission confirmed the IFS’s analysis and exposed the impact of the reforms and cuts on disabled people. For households with at least one disabled adult and a disabled child, average annual cash losses since 2010 are just over £6,500, which is more than 13% of average net income. Disabled lone parents with at least one disabled child have fared even worse, losing almost £3 out of every £10 of income. In cash terms, their average losses are almost £10,000 a year.
The all-party parliamentary group on health in all policies, which I chair, looked at the impact of the Welfare Reform and Work Act 2016 on children and disabled people and found strong evidence of an association with poverty, inequality, homelessness, food security, poor health and premature death directly as a consequence of those welfare reforms and cuts.
The hon. Lady hits the nail on the head. She has rightly put the scale of the cuts into context, and there is a point for the Government to reflect on here. They will think, after making cuts, “Well, that’s no longer a problem for DWP,” but in many respects local authorities such as Glasgow City Council have to pick up the burden of the resulting destitution. My local social work office in Easterhouse has to deal with the homelessness, the debt, and all the other issues that ensue from Government policies.
I recognise what the hon. Member says. I visited Glasgow last week—the constituency of my friend the hon. Member for Glasgow South West is there—and it was interesting to see the reforms being introduced there, particularly those for disabled people.
Many hon. Members will not be aware of yesterday’s report from Deaths by Welfare, which provided even more evidence of the impact of the so-called reforms on premature deaths and suicides. It had a timeline that showed when there had been reforms and further cuts, and what they meant in terms of deaths of vulnerable social security claimants. Another recent report shows a detrimental impact on social cohesion. The University of Newcastle quantified that, between 2013 and 2015, for every £100 lost in income per working age adult, motivated hate crimes increased by about 6%. The effects are much wider than the Government recognise.
My second point is about the pandemic. We know that people on the lowest incomes, and particularly those reliant on social security support, were disproportionately and negatively affected by covid. They were more likely to be exposed to the virus and to be infected, and they were more likely to be seriously ill and die. Within that group are disabled people. After adjusting for a range of factors including health, the Office for National Statistics has estimated that disabled people were between 1.3 and 1.6 times more at risk of death from covid. The reasons for those disproportionate deaths must be investigated in the covid public inquiry, but given the context that I have just described—the inadequacy of our social security system—the contribution of the cuts in social security support cannot be ignored.
On the cost of living package and its impact on the DWP spending estimates, of course I welcome the package, but I have just spent the past few minutes describing the context and, much though the Government congratulate themselves on what they are doing, it just about scratches the surface of the cuts that they have made. I must, as others have done, highlight some of the gaps in the package. As support is on a household basis, larger families will not get the same support as smaller families. As the Resolution Foundation suggested, in the light of inflation, a 9.5% uplift to all social security support would have been more progressive than the 3.1% awarded at the beginning of the year, and would have taken us beyond the Chancellor’s stop-start, ad hoc approach.
My concern is that the cost of living will not just be an issue this year; it will carry on—and what will the Government do then? We need principles that ensure that all social security support is uplifted to account for inflation.
As my friend the hon. Member for Glasgow South West mentioned, there are huge issues with deductions. We asked the Secretary of State about that last week. The Joseph Rowntree Foundation, StepChange and many other charities have pointed out that 4.6 million households are in arrears on at least one bill, so what is handed out with one hand will be clawed back by another. I join those charities and hon. Members in their calls to reduce the amount that can be deducted from the universal credit standard allowance; it is now 25%. I would like it to be less than 15%. When the deductions are for debts to Government—figures indicate that the Government are the largest debt collector—it would only be reasonable to reduce it to 5%.
My final point is that given the cuts in spending and the culture in the Department, our social security system does not provide the safety net that everybody thinks it does. I really like the approach being introduced in Scotland, which is not about people proving that they are entitled to support; there is trust. We should try to make that the basis of the culture in England as well.
I thank the hon. Lady, my good friend, for giving way. She mentions culture; there is also the issue that sanctions are part of that culture. It had seemed that we were persuading the Government to introduce a system in which there were warnings before sanctions, but they seem to have rowed back on that. Does that not add to the concern that she rightly raised about the culture?
We have spoken many times about that. My hon. Friend is absolutely right. We have a system in which there is conditionality, but I believe that there are other ways of recognising that than by taking away somebody’s income and making things even harder for them.
My hon. Friend is absolutely right, as is my friend the hon. Member for Glasgow South West (Chris Stephens). One of my constituents immediately comes to mind: he has been sanctioned for two and a half years, with multiple sanctions building up. It is abundantly clear to me, and to anyone who looks, that the sanctions regime simply does not work, and that other methods should be tried. Does my hon. Friend agree that the system is frankly inhuman, demeaning and completely unimaginative?
Absolutely. In fact, I got involved in trying to shift the sanctions regime when a former soldier, David Clapson, died after he was sanctioned. He missed an appointment, and he died as a result of not being able to have electricity to keep the insulin that he relied on. It is absolutely inhuman.
The cost of living support announced will no doubt help people, as it should, but we need to do far more. The system is not fit for purpose, and needs root-and-branch reform. It needs to be dragged into the 21st century. There is a lot we can learn from the Scottish system. I have said this for a while: for me, the system should, like the NHS, be there for every single one of us in our time of need. It is not, and that must change.
I thank the right hon. Member for East Ham (Sir Stephen Timms) and the Backbench Business Committee for granting this estimates day debate on DWP spending on cost of living measures. It is an important topic for every MP in this place, because DWP matters make up a proportion of our constituency casework, and people come to us at a time of need.
The real elephant in the room is this: the Government talk about spending to help people deal with the cost of living crisis, but we have to acknowledge that they have put some people into the positions in which they find themselves. It is all well and good providing a £650 payment to those on benefits and £300 to pensioners—I welcome that—but many of those receiving those payments have been pushed into crisis as a result of Government policies that have pulled the rug out from under them.
The Government refused to uplift legacy benefits alongside universal credit in the response to the pandemic, as the right hon. Member for East Ham pointed out. The Government told us that it was too complex to do, but given that they seem to have given it very limited consideration, we conclude that that is a political decision. We know that it affected disabled people the most because the High Court said so. Of course, disabled people and the organisations who support them did not need to be told that. They knew that disabled people were disproportionately more likely to be shielding, and as a result relying on expensive services, such as food deliveries.
The reality is that it is generally more expensive to be disabled. When I think about the cost of living crisis and, in particular, the rise in energy costs, I think about disabled people in my constituency and elsewhere who are running electrical equipment, and who need to have the heating on at times of the day when people who do not have a disability and who are mobile do not. As a result, this crisis is hitting them more acutely than others.
On the additional costs faced by disabled people, does the hon. Lady share my concern about the additional costs associated with specialist diets? For those with a gluten-free diet, for example, prices have increased significantly in excess of inflation.
Yes, I entirely agree. I recommend to anybody who has not read it last Sunday’s article in The Sunday Times about food banks. The journalist took the time to eat a diet of what is provided in the emergency packages. It is not particularly healthy, but it is food, and I am hugely grateful that it is there. I co-chair the all-party parliamentary group on ending the need for food banks, and I am hugely grateful for the work that food banks do, but trying to meet specialist needs and requirements is very difficult for a charity run by volunteers. We should ensure that people have what they need to meet their medical requirements.
I am sure that many Members will refer to this, but the refusal to keep the universal credit uplift has taken away £20 a week from people who were already struggling. No taper, and no additional grants, will make up for that. When the Chancellor introduced the uplift, he said it was to reinforce the safety net. To some extent, that worked. In research by the Trussell Trust, the secretariat for the APPG, 70% of people said the increase in universal credit made it easier for them to afford essentials. Very quickly—this is my last point on the APPG—our call for evidence on the different responses to the need for food closes on 8 July, so if anybody would like to contribute evidence, we would love to hear from them.
The decision to remove the universal credit uplift at the end of lockdown restrictions, when the economy reopened and there was an expectation that people could take on more work, revealed the Government’s true thinking. It was an implicit acknowledgement that it is impossible to live on the current rate of universal credit, and that that would become abundantly clear to voters who started claiming benefits for the first time during the pandemic. The Government’s taking away the uplift clearly shows that they think that poverty payments are acceptable for those who rely on universal credit in the long term, either because they do low-paid but vital work such as caring, or because they cannot work full time for any other reason—there are many other reasons, as we all know from our case loads. I would like to know why the Government think that a reinforced safety net is needed for some people in our society, but not others.
I want to mention, as others have, unpaid carers, who are another left-behind group. Carer’s allowance is £69.70 per week. We do not accept jobs that pay less than £2 per hour, so why do we think it is acceptable to ask unpaid carers to accept that? Earlier, when my hon. Friend the Member for Twickenham (Munira Wilson) spoke in support of her ten-minute rule Bill on kinship care, she talked about the instinct to want to help a family member in need. No matter how much we love our family, anyone who has ever been a carer will tell you that it is work. As a society, we rely on that good will, so we must support our unpaid carers. They are the backbone of our society. Where people can and want to work, they should be supported to do so. Members have mentioned no recourse to public funds, but the other side of the coin is that we do not allow people claiming asylum to work and contribute. We give them neither support nor the opportunity to support themselves.
With its earnings cap of £132, the carer’s allowance policy seems designed to keep carers in poverty. We have been waiting for two years for a report from the Government on the effect that carer’s allowance has on people’s ability to work. I hope the Minister can update the House on when we will receive that report, and will explain how Members are supposed to scrutinise Government policy properly when we do not receive the reports that would enable us to scrutinise them. I am pleased that while we are waiting for the report, there are practical steps we can take to support our unpaid carers with work and into work, and with managing their caring responsibilities. I am delighted to be bringing forward a private Member’s Bill this Session to give unpaid carers the right to take additional leave, which would help them to balance their caring and working commitments. It does not go as far as I would like, but I believe it would be the first stand-alone piece of legislation giving employment rights to carers. It would help millions of people. One thing that the Government have been trumpeting is the current low rates of unemployment, but they are not talking about the increasing numbers of economically inactive people. I argue that some of those will be carers who are unable to combine work with caring responsibilities. I hope that my Bill will give them the opportunity to do that, but—this is a big but—it is only part of the picture of supporting unpaid carers into work. I hope that the DWP will do other things to play its part.
I will briefly turn to two pensions issues, the first of which is a specific constituency matter. My constituent is being denied her full state pension because of a gap in her national insurance record. The gap exists because she worked in intelligence for the armed forces a number of years ago. When she became pregnant, she was immediately discharged from the Army, but she could not return home to Scotland because of the sensitive nature of her work. The gap is purely caused by the pregnancy discrimination that she experienced at the hands of the state. She is being told that, rather than paying her the small extra amount that she would be entitled to each year, the Government would arguably rather give it to lawyers and have us go to court. I really hope that the Government can recognise that she has experienced an injustice. I urge the Minister to meet me so that we can find a way forward for my constituent, who was serving her country.
On a much broader injustice, the WASPI—Women Against State Pension Inequality Campaign—women are still waiting to receive the money that has been denied them. As time ticks by, many will die before they receive what they deserve. Do the Government want that legacy—3.8 million women left to die, with far too many of them in poverty exacerbated by the cost of living? The ombudsman might still be reaching its conclusions on compensation, but it would be a huge comfort for the WASPI women to know that the Government plan to follow its recommendations. Will the Minister join me today in pledging to follow the ombudsman’s recommendations, when they are made, and to provide compensation to women who missed out because of Government error?
We could talk about lots in this estimates debate and Members have referred to other issues that I would want to raise. In conclusion, however, we are feeling the impact of the cost of living crisis more acutely in the UK. It is incumbent on the Government to stand up and help constituents, including those claiming benefits or who interact with the DWP, however they do so.
It is a pleasure to take part in this estimates day debate. I do love estimates day; it is wonderful every time that this rolls around—I am not being sarcastic, I promise.
I will talk briefly about the shortcomings of the estimates process. We are discussing the DWP estimate today—which involves spending of £240 billion—under, I think, Standing Orders 53 and 54, which were written before I was born. We are unable to table meaningful amendments in relation to £240 billion of spending because of the way in which the Standing Orders are written. That is shocking. Has anyone here ever tried to explain the Budget process to people outside the House? Have they ever tried to explain the fact that we have to stand here and discuss hundreds of billions of pounds of expenditure without any meaningful way to amend that? It is absolutely ridiculous, flawed and deeply inadequate.
The DWP’s objectives in the main estimates book are, first,
“Maximising employment and in-work progression”;
“Improving people’s quality of life”;
“Delivering excellent services for citizens and taxpayers”.
Those are the Department’s aims for the next year. I suggest that the Government have failed and continue to fail in what they are doing. I make it clear that that is not, for a second, the fault of DWP staff, who are working incredibly hard to make the social security additional payments.
It is, and it is ironic that the DWP is asking staff to step up and deal with its creaking, unfortunate, flawed computer system. It is asking them to do all this additional work to make that happen while failing to make the investment where it should be making it, in the computer system and in the people. I am also seeing a reduction in DWP office staff in Aberdeen. I very much hope that the Government change their mind about the direction in which they are going.
We have heard from Members across these Benches about the issues affecting people’s quality of life as a result of the DWP’s failures and the failures of the Government’s policies. Loads of people have mentioned the safety net. The whole point of a safety net is that it catches people. The point is not to make the holes as big as possible so that as many people as possible fall through. I would rather have a social security system like the one that we are building in Scotland; a social security system that ensures that everybody is caught by the safety net, so that everybody gets what they are entitled to and people do not accidentally fall through. This Government’s policy seems to be to give social security payments to as few people as they possibly can and to try very hard to set the bar as high as possible so that people cannot meet the requirements.
We have heard about the Scottish social security system and its openness compared with the DWP’s system, where the report on food banks and the equalities impact assessment were buried. Audit Scotland recently audited the Scottish social security system. It said:
“The Scottish Government has continued to successfully deliver new and complex social security benefits in challenging circumstances. This is a significant achievement. There is a conscious focus on the needs of service users, building on the principles of dignity, fairness, and respect. People are positive about their experiences of engaging with Social Security Scotland.”
How different that is from the views that we are hearing down here, from what is in our inboxes, from the absolute intransigence and the issues that people face every day when simply trying to get what they are entitled to.
The social security uprating fails to get anything close to inflationary levels this year. We have seen an increase, but it is nothing close to the level of inflation. In fact, the £650 payment that the Chancellor announced does not even cover the £1,000 that was taken off people last year—never mind going any way to cover the increase in the cost of living. The Chancellor, the Minister and the Secretary of State have repeatedly said, “But people are getting more, with the £650, than they would have if we had uprated benefits”. We are asking them to do both. We are asking them to adequately uprate the benefits and backdate that to April as well as to make the additional payments. Only then can we get to a situation that is close to helping with the cost of living.
This is a tale of two Governments. We can see that another country is possible. We can see the failings, with the bedroom tax, the benefit cap and the two-child policy being carried on with. We have heard a lot about no recourse to public funds. When we discussed the Social Security (Additional Payments) Bill last week, I mentioned that children were literally starving and I was scoffed at by Government Members. If we look at reports, we see that junior doctors talk about children presenting with rickets because of the level of malnutrition, because they have no recourse to public funds, because they have been sanctioned, or because they otherwise cannot afford to eat a healthy diet. Comments have been made about the lack of variety and the lack of healthiness in the diets provided by food banks, which try incredibly hard but just cannot meet the requirements. In addition, they cannot provide food for people who cannot afford electricity. If people cannot afford electricity to boil something in a pan, it is difficult for them to cook adequately.
In the main estimates book, the Government talk about providing £5.6 billion—that is the initial spend—under the Social Security (Additional Payments) Bill. However, they mention providing £37 billion for increases in the cost of living. That £37 billion is made up of additional payments, as the Chancellor has stated, but can the Minister confirm that he is including things in it like the freeze on alcohol duty? It cannot be said that the freeze on alcohol duty relates to improving the cost of living for people who cannot afford to eat.
I am pleased to have been able to talk about the DWP estimates today. What is happening is woefully, woefully inadequate. Our constituents are coming to us and we just cannot provide them with the hope that they need and want, because the Conservatives are digging their heels in and refusing to offer adequate support.
This has been a short debate, but a very valuable one. As always, I pay tribute to the Chair of the Work and Pensions Committee, my right hon. Friend the Member for East Ham (Sir Stephen Timms), for framing it for us. In all the contributions, we have heard similar themes.
Notwithstanding the emergency cost of living payments in the Social Security (Additional Payments) Bill, which we debated a couple of weeks ago, and other help, we have to see the situation in the context that it has been 12 years in the making. We are now deep into a cost of living crisis that is fast eroding standards of living for almost everyone in the country, but as always, it is those with the least who are most seriously affected.
Several hon. Members have referred to research that has been brought to our attention over weeks and months. Only yesterday, new analysis by the Institute for Fiscal Studies revealed that poverty among lone parents, who are always most at risk of poverty, has risen spectacularly since 2010, reaching 49%—almost half of lone parent families are in poverty. Some 1.5 million children are being left behind their peers. Two out of three lone parents report skipping meals and going hungry. Even though parents will do anything to protect their children, including from the knowledge of the struggles that the family are going through, the children know. Children see, children understand and children are damaged by that experience. It is no wonder that the experience of living on an inadequate income, coupled as it so often is with all the shame, fear and anxiety of debt and arrears, contributes to poor mental health as well as to physical ill health and educational underachievement.
Poverty places a strain elsewhere on public services. It adds to the homelessness budget, it adds to the pressures on local authorities, it adds to the pressures on schools and it adds to the pressures on the national health service. It is also true, with a bitter irony, that it is almost invariably low-income households that are exposed to the additional costs of living in poverty.
It bears saying once more that none of these struggles is visited only on people who are not in work. Of course, people who are out of work—people who are too sick to work, people who have caring responsibilities, people who have disabilities, pensioners—deserve the support and dignity that society can offer them, but in-work poverty has soared to record levels. Despite the rhetoric, being in work is no guarantee of being out of poverty.
The Government’s response to the cost of living shock of 2022—the one-off payments that we have been debating—cannot be entirely separated from what came before. My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) made that point very well. One-off payments in response to the current inflationary shock simply will not undo the erosion of benefits that has taken place as a matter of deliberate Government policy over the past 12 years.
Child benefit has been left to wither since 2010. The local housing allowance, which was designed to support people with the actual cost of housing, has been allowed to fall away from real-world rents since 2011; it was briefly restored to its normal value in response to the pandemic and has now been frozen again by the Government. More than half of households who need to turn to the Government for help with rent are above the maximum level of local housing allowance support, with an average shortfall of £100 a month. Several hon. Members have mentioned the impact of deductions arising from the five-week wait and from other sources, but the shortfall in rent is one of the principal ways in which people are driven below the minimum level on which families are meant to be able to live.
Most working-age benefits were frozen from 2016 to 2020. The four-year benefit freeze was a permanent real-terms reduction in the value of benefits, offset only temporarily by the pandemic universal credit uplift, which of course did not apply to legacy benefits. Benefits lost 7% of their real-terms value in those four years alone, and those losses have not been made good. Inflation matters all the time—not just now, when there is a sudden surge.
What does the stop-start history of benefit uprating tell us about the Government’s priorities? It tells us that they have no settled policy on social security and that they regard maintaining the real-terms value of benefits as an optional extra. It tells us that it takes an emergency—a pandemic or a cost of living crisis—before the Government will make any attempt to do what previous Governments have done as a matter of course: take account of inflation in social security policy.
Of course the emergency cost of living payments are welcome—anything that helps to offset this crisis is welcome—but coming after 12 years in which inflation was allowed to erode benefits, they cannot be seen as a comprehensive solution. The Government’s adamant refusal to bring forward next year’s benefit uprating to deal with this year’s cost of living crisis means that benefits face yet another real-terms cut in 2022-23. The Government are having to rely too much on one-off payments, which should be part of the solution but not the whole solution.
We have talked about working-age benefits, but pensioners have also taken a real-terms cut—the biggest in about half a century. There are 2 million pensioners in poverty, and the number is rising. Ministers have been promoting pension credit uprating, which is good, but that momentum needs to be maintained and expanded. With approximately 850,000 pensioners not claiming pension credit, a huge number are set to miss out. Failing to do more to increase pension credit uptake could mean that more than two thirds of the poorest pensioners will not get the additional means-tested benefit.
We need to be clear about the limitations of one-off payments. As we have heard, they do not reflect family size, so families with more than one child will get exactly the same as a single-person household. Entitlement depends on receipt of one of the means-tested benefits in the month leading up to one of the qualifying days, meaning that people’s circumstances in just two months of the year are taken into account. The problem is that people’s circumstances change all the time. The Government simply do not recognise that families and households move on and off benefits all the time. A one-off payment tied to just two dates in the year is inevitably a crude approach to matching funding to need. I am particularly concerned about how people with fluctuating incomes will fare. It seems inevitable that a large number of employed and self-employed people with low and irregular incomes will be arbitrarily denied help under the policy.
Had the Government acted earlier and brought forward next year’s benefit uprating, as the Opposition and so many others called for, they would have been less reliant on one-off payments. Had the Government not deliberately eroded the value of benefits for much of the past 12 years, we would have been in a much better position to weather this year’s inflation surge. The emergency package is welcome—any contribution to relieving the widespread hardship experienced by households across the country will be welcome—but it is deeply regrettable that the Government could not see their way to a more comprehensive, sustainable solution to the crisis of poverty that is now gripping us.
I am learning to share the joy that the hon. Member for Aberdeen North (Kirsty Blackman) takes in estimates day debates. I can feel the love and appreciation, predominantly from Opposition Members. It was good to see many hon. Members at the national prayer breakfast this morning, which I think we can all agree was a truly uplifting experience. I thank the right hon. Member for East Ham (Sir Stephen Timms) for opening this debate on behalf of the Work and Pensions Committee, which holds us regularly to account, as it should, and provides challenge. I thank members of the Committee and other right hon. and hon. Members for their contributions today.
The Government have provided and continue to provide help for households. Throughout the pandemic, the Government acted decisively to protect lives and livelihoods, continually supporting individuals and businesses. Our social security system had a key component—universal credit—which provided a vital safety net for about 6 million people during the pandemic, and stood up to those testing times. We were able to prove, in a real-life environment, how resilient the system was, and I am incredibly proud of the work that the Government did to keep the country going. Our support package was worth a total of £407 billion between 2020 and 2022, and constituted the biggest single fiscal intervention since world war two.[Official Report, 13 July 2022, Vol. 718, c. 3MC.]
We are providing further support to help people with the cost of living. The current cost of living pressures have emerged from a series of economic shocks. We could understand and appreciate some of those shocks as demand increased while the effects of the pandemic receded, but what we clearly could not have anticipated were the sharp increases in energy costs that were driven by Russia’s absolutely unacceptable invasion of Ukraine. These global pressures are making it very difficult for households and businesses to absorb the rising cost of essentials in their budgets, which is why the Government are taking direct action to help the lowest-income households with the cost of living. However, fiscal responsibility is important to the country’s long-term prosperity, and Government intervention must therefore be timely, temporary and targeted to minimise the risk of further inflationary pressures.
I take on board some of the Minister’s points, but I must challenge him in one regard. He seems to have ignored what has been said about the inadequacy of the system before the pandemic and before the cost of living crisis. Would he care to comment on last week’s observation by the Institute for Fiscal Studies that if the Government had provided more targeted support for those in the greatest need, the national inflationary pressures would not have occurred?
We are having to deal with some challenging headwinds, as a result of the pandemic and now these inflationary pressures, but we have sought to take targeted measures. During the pandemic, especially the early stages, we focused particularly on those who were feeling the impact of changes in the employment market, which were immediate. Now we are focusing our efforts on targeted support for the people and households who will be most affected by inflationary pressures. The means of dealing with those are complex, and we are having to develop systems and processes to get the payments out quickly. Because of their nature they will never be 100% perfect, but we have taken other steps to support those who may not previously have been eligible for support. I shall say more about that shortly.
Our labour market policies are part of our plan to manage inflation, and that is a further reason for us to redouble our efforts to encourage more people to get into work and take advantage of the current buoyant labour market, with a record 1.3 million vacancies. Our multimillion-pound plan for jobs is helping many people into work with the kickstart scheme and the restart programme. Opposition Members do not always talk about the importance of work and the achievements that have been made in the labour market, so let me point out that last week our Way to Work campaign met its ambition of moving more than half a million people into work in under six months. That is an important achievement, not necessarily for the Government —although we welcome it—but in terms of the difference it will make to households throughout the country.
Moving into work and making work pay are core tenets of our strategy to build long-term growth and prosperity up and down the country, which is why we have introduced a number of work incentives. In particular, we have cut the universal credit taper rate from 63% to 55%, and have increased work allowances by £500 a year. Tomorrow, 6 July, we are cutting the national insurance threshold, a move that will be worth up to £330 a year for nearly 30 million working people.
Some Members have mentioned uprating, including the Select Committee Chair, the right hon. Member for East Ham. As part of the Department’s long-term approach, the Secretary of State completed her annual review of benefit and pension rates last year in the usual way, using well-worn, well-proven methods and processes. The state pension and the pension credit standard minimum guarantee were increased by 3.1%, the rate of inflation for the year to September 2021 as measured by the consumer prices index. As I think the right hon. Gentleman will know, we remain committed to implementing the state pension triple lock for the remainder of this Parliament, and on 26 May the Chancellor confirmed that it would be reinstated next year. All other benefits have also been increased this year in line with the consumer prices index of 3.1%. That approach has formed part of a long-standing convention. Since April 1987, all benefit uprating has been based on the increase in the relevant price inflation index in the 12 months to the previous September, helping claimants through the inflationary cycles.
I am grateful to the Minister for setting out the commitment to uprating in line with inflation, but does he accept my earlier point about the need, in this very inflationary environment, to uprate the level of the benefit cap? Is he able to tell us whether it will be reviewed between now and next April?
I was going to come to that later, but as it is an important point, I will address it now.
As has been acknowledged today, none of the new one-off payments will be taken into account in the benefit cap, but there is a statutory duty to review the levels of the cap at least once every five years, and that will happen at the appropriate time. The current unusual economic period, with potentially counterintuitive and shifting trends, will need to be considered in the context of any decision about a review. The benefit cap provides a strong incentive and fairness for hard-working taxpayers and households, and encourages people to move into work. Last week, the Secretary of State told the Select Committee that she was taking advice on the exact timing and the approach. The statutory obligation to review the cap levels at least once in each Parliament changed on 24 March 2022, when the Fixed-term Parliaments Act 2011 was repealed, and the new obligation requiring the Secretary of State to review the levels at least once every five years means that the DWP now has until 2027 to complete a review. As I have said, however, she is seeking advice on that.
The annual review of benefits and pensions for the next tax year will begin in the autumn. To measure inflation, the Secretary of State will use the consumer prices index in the year to September. To measure earnings related to the pensions side of the equation, she will use average weekly earnings for the period from May to July. The uprated benefits and pensions will come into effect in April 2023.
As I have said, the Secretary of State will be looking at the wider economic environment when making these decisions.
Let me now pick up some other points that have been made today. The hon. Member for Glasgow South West (Chris Stephens), who is terrier-like in his tenacity, mentioned bereavement orders. The Secretary of State has met officials to discuss the proposed draft order, and they are now working on that as a priority. Others have referred to the five-week wait for universal credit payments. It is not possible to award payments as soon as a claim is made, because the assessment period must run its course before an award can be calculated, and it is not possible to determine accurately what the entitlement will be in the month ahead. Our measures will ensure that the correct entitlement is paid, and will prevent significant overpayments from being made.
I thank the Minister for his generosity in giving way, and also for his generous comments. The Select Committee did not argue that a payment could be made straight away; we argued that within two weeks of a claim, a starter payment could be made. Has the Department considered that as a way of addressing the five-week wait?
I have set out our approach, which is to ensure that advances are made available to help people in those difficult circumstances to get the money that they need.
Another point that has been raised is about deductions. We have systematically reduced the amount that can be deducted from benefits from 40% to 30% and now to 25%. If claimants have issues, they can go to the debt management service for further advice and support. Others have mentioned the carers allowance. I want to highlight, as I did in the recent Second Reading debate on the Social Security (Additional Payments) Bill, that the carers allowance is not a means-tested benefit. Nearly 60% of working-age people who are carers will get the cost of living payments, as they are means-tested benefits, or disability benefits. Carers allowance is paid on an individual basis to people in households across the income scale, so they may live in a household that is able to receive the £650 payment or the disability payment as well, which will help them to pay the bills in their own households. We also talked about how larger families will be getting the same payment as individuals. This is because we needed to get the payment out fast to as many people as possible. We will be making the means-tested benefit-related cost of living payment from 14 July, and that is absolutely critical. We were not able to develop a system that would account for every single eventuality.
I conclude by saying that this Government have worked incredibly hard over recent years to ensure that we help people to get into work, that we make work pay and that we support people with the cost of essentials. The latest cost of living payments that have been made and the additions to the household support fund demonstrate that we are absolutely committed to providing this help for households. I would like once again to thank hon. and right hon. Members for their contributions to this important debate.
I am grateful that we have been able to discuss these important issues, and I want to thank everyone who has contributed to the debate. I commend the hon. Member for Glasgow South West (Chris Stephens) for his long-standing campaign on bereavement benefits, and I hope we are reaching a successful conclusion on that. I am grateful to him for all his work on the Select Committee as well. He made an important point in his speech, which I had not thought of before: now that we have a new Government system for paying one-off grants, surely we could use it to make starter payments for universal credit, as the Select Committee recommended in its report on the five-week wait. As things stand, universal credit is not fit for purpose because of that five-week wait for the first regular benefit payment, and I am grateful to the hon. Member for his suggestion. I hope that we can take that up.
My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) made some important points, and I thank her for her work on the Select Committee as well, not least her dogged advocacy for vulnerable claimants of disability benefits. We have heard far too many reports of tragic disasters and errors on the part of the DWP, and we are not yet convinced that those problems have been entirely overcome. She gave us some sobering figures on the extent to which social security has been cut over the last 12 years, and we need to do much better. The hon. Member for North East Fife (Wendy Chamberlain) was right to draw our attention to the position of carers and the need for us to do better on supporting them, as we are now doing in Wales and Scotland. I am grateful to everybody who has spoken today, including my hon. Friend the Member for Westminster North (Ms Buck) on the Front Bench and the hon. Member for Aberdeen North (Kirsty Blackman), who spoke for the SNP.
I think the Minister said, in answer to my intervention, that the Government were not required to review the benefit cap until 2027 because the five-year clock had gone back to square one. I do not think it was reviewed in the last Parliament and I have no information about it being reviewed in the Parliament before that, but whatever the statutory obligation, surely when inflation is 10%-plus the Government need to recognise that families on the benefit cap—there are now more than 100,000 of them—are facing rising prices like everybody else and that the benefit cap must be raised in time for next April.
Question deferred until tomorrow at Seven o’clock (Standing Order No. 54).
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