I beg to move,
That the draft Social Security Benefits Up-rating Order 2021, which was laid before this House on
There is no question but that this has been a challenging time, and the coronavirus outbreak has caused financial hardship and disruption for many across our country. That is why, since the start of the pandemic, we have mobilised our welfare system like never before to provide a comprehensive package of support worth over £7 billion, providing an essential safety net for those who need it.
My Department has risen to the challenge, utilising the speed and agility of the universal credit system to deal with the huge increase in people needing our support. There is little doubt that had we relied on the legacy benefit system, we would have seen queues down the streets outside our jobcentres and long delays, leaving families facing financial disruption without support. Crucially, through our universal credit system, we have managed to pay over 90% of new claimants on time and in full.
That has meant that universal credit and the Government’s investment in the welfare safety net have been there to help catch many of those affected by the pandemic. That has been hugely important for the 3 million more people who have made a benefit claim since March last year. I think it is right once again to publicly thank the thousands of work coaches in jobcentres up and down our country, who have responded at speed and scale to ensure that we have supported people in their hour of need. Now they are working tirelessly to deliver our plan for jobs.
As the House knows, the Chancellor introduced the £20 per week uplift to universal credit and working tax credit as a temporary measure in March 2020 to support those facing the most financial disruption. That additional support increased the universal credit and working tax credit standard allowances by up to £1,040 for a year.
I understand that that subject is the elephant in the room; I know that the House is eager to know about the future of the £20 uplift to universal credit. The uplift sat, and continues to sit, outside today’s annual uprating order and is therefore not directly relevant to today’s proceedings, but I have to say that the Labour party is simply wrong in its use of emotive language that the Government plan to cut universal credit in April. In fact, the only talk of cutting universal credit in April has come from the Opposition parties. I gently say to them that they should be very careful with their use of emotive language and what they say in this House, because scaremongering in this House has real-world consequences, which the Department sees every day in claimant behaviour.
The Minister will be aware of the cross-party Select Committee on Work and Pensions report published this morning, which speaks of the need to extend and make permanent the universal credit payment. Does he think that his Conservative colleagues on the Committee who authored that report are scaremongering when they talk about the damage that would happen as a result of not continuing that past April?
I will of course study in detail the report from the Select Committee, chaired by Stephen Timms, and look closely at the recommendations made, but when there is emotive language about things such as cuts to universal credit in April that are frankly not true, that drives adverse claimant behaviour, which we as a Department see day in, day out. For example, we see people who would be eligible for universal credit delaying their claim, so they claim not at the point at which they are eligible but when their money has run out and they have hit crisis. And for example, there are hundreds of thousands of people on legacy benefits who we know would be better off on universal credit, but they do not make a claim. Why? Because of the scaremongering and scares from the Labour party.
I do not quite understand the point that the Minister is making. As it stands, Government policy is to reduce universal credit by £20 a week from April. Surely it is perfectly legitimate for Members of this House to draw attention to that.
I thank the right hon. Gentleman for that intervention, but it was absolutely clear that the uplift of £20 per week was a temporary measure for one year, and we have also been clear that the Chancellor has yet to make a decision and that all options are on the table.
I have said this before, but it is important to stress the point: discussions remain ongoing with Her Majesty’s Treasury and a decision on the future of the £20 universal credit uplift will be taken by the Chancellor of the Exchequer in due course. The Chancellor has been clear that all options are on the table and that he will take into account the assessment of the economic and health situation as the best way to build on the successful support that the Government have put in place and provided for those on low incomes and in need throughout this year, through our plan for jobs and winter support package. My right hon. Friend Chancellor of the Exchequer has an unenviable task—there is no question about that—but I point out to the House that he has a proven track record of stepping up to support the poorest, most vulnerable and most disadvantaged in our country throughout this pandemic. I have no doubt that he will continue to do so. The scaremongering is not helpful.
We must not forget that the more than £7 billion of additional funding to strengthen our welfare safety net was just one part of a much larger package of support measures for individuals, which has dovetailed with DWP-led support. Those measures include the coronavirus job retention scheme; the self-employment income support scheme; increases to the local housing allowance; local council tax assistance; the local welfare assistance scheme; the covid winter grant scheme; the protection for renters; and the support and protection for homeowners. Despite our delivering an unprecedented package of support since March and the crucial support that we continue to roll out through our jobcentre network throughout the country, we know we must continue to maintain the strength of our welfare safety net, particularly to protect those experiencing financial hardship for the months to come.
The Government propose, in the draft order, to spend an extra £2.7 billion in 2021-22 on increasing benefit and pension rates. With this spending we are upholding our commitment to the country’s pensioners by maintaining the triple lock, increasing pensions by 2.5% and therefore spending on pensioner benefits by £2.2 billion; helping the poorest pensioners who rely on pension credit; and ensuring that working-age benefits, including essential support for disabled people and carers, maintain their value in relation to prices by increasing them by 0.5%. That is in addition to the comprehensive support package already in place to support those affected by the pandemic.
The Government remain committed to providing families and pensioners throughout our nation with a helping hand, should they need it. We will do so by once again increasing the levels of benefits for the next financial year. I commend this order to the House.
I speak today on behalf of my hon. Friend Ms Buck, who is unable to be with us.
This country has been tested over the past year and our communities have seen struggle in many ways. The pandemic has also held up a mirror to our country’s resilience and to household resilience. I join the Minister in thanking the work coaches and other civil servants across the country for all that has been done in the DWP to support those in need.
It is right that the uprating order will increase working-age benefits, disability support and the state pension this year, but the Minister will know that the Conservatives froze working-age benefits between 2016 and 2020, and finally increased them by 1.7% last year. However, unemployment support was still at its lowest level in real terms since 1992 prior to the emergency uplift, a policy that has left families struggling to make ends meet.
Labour supports the Government’s decision to honour the triple-lock state pension commitment this year, which will see the basic state pension and the new state pension rise by 2.5%. The Secretary of State has decided to uprate the personal or standard allowances of universal credit, income support, housing benefit, jobseeker’s allowance, employment and support allowance, and disability carer and other working-age benefits in line with prices, but that comes after this decade of cuts. Excluding coronavirus-related increases, the majority of working-age benefits were between 9% and 17% lower last year than they would have been if benefits had been updated by CPI since 2010; that is according to the House of Commons Library.
I want to highlight in my remarks three important omissions from the order. The Minister has referred to the first of them; I think he spent so much time talking about the withdrawal of the uplift because it is a matter of concern to colleagues on both sides of the House—and I do mean both sides of the House. It is disingenuous of him to say that we are scaremongering when all we are doing is highlighting the concern felt by families up and down the country and by many groups that I will also mention in my comments today. He and his Government have yet to say what is happening to this lifeline for families in need—a lifeline through lockdown and as lockdown starts to be lifted. Indeed, there are reports today of the Chancellor and the Prime Minister arguing about what should be happening to the uplift.
The Minister will know of the extra costs that families are facing, including from increased food costs for children at home, the use of small local shops, the need for home schooling materials and increased utility bills. The 0.5% increase on last year’s universal credit level that he has proposed will be academic for those who are set to see a cut—and it is a cut—to their universal credit of £20 a week from April. If the Government are seriously thinking about economic recovery, cutting universal credit is like pulling the rug from under the economy’s feet. This £20 a week is not saved by families; it is spent in shops and businesses across the country, stimulating the economy. And we all agree that this pandemic and the unemployment crisis will not be over by April this year. The reason people want to know about what is happening with the uplift is so that families can plan ahead for what is to come.
The Resolution Foundation has also highlighted the income shock that comes with a move to universal credit, with a third of new claimants reporting a drop in their income of at least 40% compared with a year ago. Citizens Advice has told us that three quarters of the people it is helping who are on uplifted benefits would have a negative budget if the £20 uplift was cut. Trussell Trust research shows that one in five UK claimants reported it very likely that they would be forced to turn to a food bank. The Child Poverty Action Group warned that this move could see another 200,000 children pushed into poverty.
Older people are paying the price, too. The number of those aged 50 to 64 who are out of work has risen by more than 175,000 since the start of the pandemic. This age group is at particular risk of long-term unemployment, and many will be forced to take early retirement before they can afford to do so. Angela in Sunderland told me that she was made redundant four weeks before her partner suffered a life-threatening illness. She became his carer, but the couple, in their 50s, have run out of savings. She is having great difficulty finding work and has drawn on her private pension to cover bills. The cut to universal credit would push Angela and her husband into further financial difficulty, at the worst time. So the Minister and his Government should do the right thing and secure our economy by cancelling the cut to universal credit from April, not least because when Labour forced a vote on the issue he abstained; almost 11,000 people in his constituency as well are on universal credit.
I also want to talk about legacy benefits, because it is discriminatory and unfair that the £20 a week uplift was never extended to those on legacy benefits, many of whom are carers or disabled. There is simply no excuse for it. This injustice has been raised repeatedly by Labour and other parties, and action has been called for by the Chair of the cross-party Work and Pensions Committee, my right hon. Friend Stephen Timms, who is in the Chamber today. Indeed, a Committee report today highlights a recent survey by the Disability Benefits Consortium of disabled people claiming legacy benefits. It found that two thirds of disabled claimants have had to go without essential items at some point during the pandemic, and almost half report being unable to pay rent and household bills.
The Joseph Rowntree Foundation, along with 50 other organisations, has called on the Government to match the increase in legacy benefits, as part of their “Keep the lifeline” campaign. The Government claim that the legacy systems would take too long to update, but that is not a reason; it is an excuse. We are now nearly 11 months into the pandemic, so what excuse do the Government have now for that blatant unfairness?
The order also fails to uprate the benefits cap, which remains at the same cash level since November 2016. That means that families will not see any inflation-linked increase to underlying benefits that they are entitled to. The Minister knows what that means. December’s figures show that 170,000 families are seeing their benefits reduced by £246 per month on average, and 85% of those families include children. Ending the cap would put much-needed cash in the pockets of Britain’s poorest families, helping them through the crisis without a devastating increase in household debt.
Similar also applies to the local housing allowance, which has been frozen in cash terms for 2021-22, and for which the intention is to carry the freeze forward into subsequent years, as hinted by the Secretary of State in a written statement in December. It means that the Government are refusing to make even the bottom 30% of local rents affordable to private tenants.
In a compassionate society, we need a fair and supportive social security system that helps build resilience, supports people seeking work and helps families through difficult times. A quarter of UK families had less than £100 in savings when the crisis began, and the pandemic has hit families’ incomes hard.
Labour is supporting today’s increase to working-age benefits, disability support and the state pension, but the Minister has heard our views today on the major omissions, and if he will not act today, he must act soon and heed the warnings from those on the frontline. They are working with families who are doing the right thing in very hard times and asking simply that their Government be on their side.
I thank my hon. Friend the Minister for the measured way in which he introduced the order, and I join him in thanking the staff of the Department for Work and Pensions and the jobcentres for the extraordinary way in which they have managed to handle a very difficult situation. I am particularly grateful to those working in the jobcentre in Margate, with whom I am in regular contact, and the regional DWP centre in Chatham. I have found myself working most weekends and sending emails on Sunday, only, to my surprise, to find them responded to almost immediately, which means that those staff have been working all the hours that God sends as well. I am sure that all hon. Members on both sides of the House would like to pay tribute to those people, who have worked so hard on behalf of our constituents.
As my hon. Friend said, some three quarters of a million people have been added to the register since last March. It must be the case that many of those will be ladies and gentlemen who have never found it necessary to claim benefit in their lives before. A lot of those will be small business people—the self-employed, or people who have lost their job because a firm has gone under and they could not be furloughed. Those people have found themselves claiming universal credit and depending on every penny of that money, which in almost all cases, probably, is far less than the amount that they and their family have ever in their lifetime received to live on.
My hon. Friend referred to something that, although it is not strictly speaking part of the social uprating order, is the elephant in the room—or rather, the elephant that is not in the room. When the Chancellor introduced the uplift of £20 last April, he made it very clear that it was temporary and that it was for a year. We can all do the maths; we understand that a year from last April means this April. I agree with my hon. Friend the Minister that it is scaremongering to suggest that somehow that assistance is going to disappear overnight at the end of April, because we all know perfectly well that that is not the intention. As the Minister said, the Chancellor has gone out of his way to throw lifeline after lifeline to people who have been facing serious financial difficulties as a result of the pandemic.
What I am looking for now is further assistance. Many of the three quarters of a million people and others who are currently having to rely on benefits will fairly swiftly drop out of the system because they will rebuild their businesses, get back into employment and back to earning the kinds of income that they need to support their families, and very often to support other families through employment as well, but I am afraid that that is going to take time. The idea that this can be done in three or six months has to be cloud cuckoo land.
I obviously do not expect an answer from the Minister this afternoon, as this is a discussion that will have to be held in Cabinet with the Chancellor of the Exchequer as well as the Department for Work and Pensions, but I believe that, at the very least, we need another year’s extension to the £20 uplift to make it absolutely certain that those who have momentarily lost their feet can find their feet again, get back on those feet, get back into employment and start to rebuild not only their lives but the economic life of the nation. I hope very much that the Minister will take that message away, discuss it with his hon. Friends and seek to ensure that the absolute minimum further period for the uplift will be one year. Thank you very much indeed.
Before I get to the substance of my remarks on the order before us, I want to take a moment to pay tribute to my hon. Friend Neil Gray, who previously served as Scottish National party work and pensions spokesperson. More than just an exceptional five-a-side football player, he was a passionate advocate of social justice long before he entered this House, and although I am sad that he will soon be leaving this Parliament, I very much hope that Westminster’s loss will be Holyrood’s gain as he seeks to represent the finest town and football club in our national Parliament.
In taking on this role of shadowing the DWP, there are many things on which I will disagree with the United Kingdom Government in terms of policy and ideology, but I am very much on the same page as the Minister in paying tribute to our work coaches and DWP staff, who are the finest in the land, as I see at Shettleston jobcentre in my constituency.
Let me turn to the order before us. To be blunt, after a decade of Tory cuts to social security spending and with millions facing hardship, current social security provision simply does not go far enough to support people in a decent and caring society. These policies are part of a wider austerity agenda that continually attacks the most vulnerable in society. We see it time and again: the two-child limit, and the associated rape clause; and the benefit cap. The list gets bigger, yet the Union dividend for Scotland gets smaller. The structure and support of our social security system says a lot about us as a society and how we treat the most vulnerable when they need that safety net the most. Right now, this Tory Government are failing enormously to guarantee the future certainty of social security payments in the coming months. Ministers must therefore listen to the widespread calls to make the £20 uplift to universal credit and working tax credit permanent, and indeed extend this to the legacy benefits.
The crux of this issue for us in Scotland is that 85% of welfare expenditure and income replacement benefits remain reserved to the United Kingdom Government here in London. As we find ourselves in the middle of a pandemic facing not only a public health crisis but an economic crisis, Scotland should not have to wait and merely hope for the UK Government to reject austerity and help the poorest in our communities. The Joseph Rowntree Foundation highlighted the devastating effect of years of Tory austerity and welfare cuts on many families across Scotland, with levels of destitution rising by 35% between 2017 and 2019. Today’s uprating does not make up for four long years of benefit freezing prior to the pandemic. The proposed uplift also fails to account of the financial hardship that many families are facing as a result of the pandemic. Research by the Trussell Trust found that nearly a quarter of a million parents worry that they will not be will be able to properly feed their children if the £20-a-week boost to universal credit is whipped away in April. I do not think that the Minister would be suggesting that the Trussell Trust is scaremongering.
A case from our citizens advice bureau in the west of Scotland reports a client with a young baby facing financial difficulties as a result of unexplained deductions to her benefits. That client’s deductions are around £50 a month, meaning that any removal of the uplift will push her into more severe hardship. I do not think that the Minister would be suggesting that the citizens advice bureau in the west of Scotland is scaremongering. Indeed, at a national level, Citizens Advice Scotland reports that, without the universal credit uplift, more than seven in 10 people receiving complex debt advice from citizens advice bureaux will be unable to meet their basic living costs. I do not think that the Minister is suggesting that Citizens Advice Scotland is scare- mongering.
Throughout the pandemic, we in the SNP have urged the UK Government to make permanent the £20 uplift to universal credit. However, it is not only the SNP demanding urgent action; these calls are coming from right across the political spectrum. In its report published only this morning, the Work and Pensions Committee said:
“We stand by our recommendation—made in October 2020—that the increase in Universal Credit should be maintained, with annual inflation-based increases.”
It went on to say that
“if the Chancellor cannot yet commit to making the increase permanent, he should at the very least extend it for a further 12 months.”
A cross-party report published last week by the all-party group on poverty urged the Government to retain the uplift and to suspend the benefit cap. I do not think the all-party group on poverty, co-chaired by Kevin Hollinrake, is scaremongering.
The Prime Minister’s assurance that the £20 uplift will remain in place until at least April is simply not good enough. People are now facing a cliff edge in April, because the UK Government have failed to act and, as usual, have let the issue run on until the 11th hour. Analysis by the Scottish Government has made it clear that removing the £20 uplift will have a devastating impact, forcing a further 60,000 people in Scotland, including 20,000 children, into poverty.
This £20 uplift has helped 2.5 million households across the UK during the pandemic, but the effects of the pandemic will be long lasting, with many industries suffering and countless people facing redundancies, so it is clear that this uplift needs to remain. The British Government have a moral duty to ensure that people have enough money to get by, so I argue that making this small increase permanent would be a big step towards doing that.
I congratulate my hon. Friend on his appointment to his new post. Is it not the case that lots of families are, for the first time, experiencing what it is like to be on universal credit? There will be a double whammy for those who have come on to universal credit over the course of the past year and then face this cliff edge of the further reduction. It is actually increasing the long-term cost to the Government, society and the economy if people are not properly helped back on their feet from the pandemic.
My hon. Friend hits the nail on the head. Far too often during this pandemic—whether in response to the public health aspects of the pandemic or, indeed, to the economic aspects of it—everything the Government have done has been about trying to get to the next day. It has been about trying to get a quick win and just get through the day, but unless we see a strategic thought-through process from the Government, we will continue to see these problems reinvent themselves.
Alongside increasing universal credit at the outset of the pandemic, the UK Government enhanced local housing allowance to cover the lowest 30th percentile of market rents. Both these actions effectively reversed the effect of George Osborne’s freeze on the benefit introduced in 2016. The benefits freeze is a prime example of what the Tories believe to be acceptable social security policy, but the Joseph Rowntree Foundation has made it very clear that the benefits freeze has been the biggest contributory factor in exacerbating poverty levels among working families.
Although there was a welcome increase to universal credit during the pandemic, there was sadly no increase to legacy benefits such as employment and support allowance and income support. Without this increase, those who are claiming legacy benefits face unprecedented financial challenges related to the pandemic, and this further risks worsening the financial situation for those claimants who are already facing difficulties. That specifically includes those with disabilities who cannot and should not be left behind by this Government who already have a pretty woeful record when it comes to penalising those with a disability. Increasing the value of the legacy benefits would also protect people from having to make complex and very difficult decisions about whether they would be better off moving to universal credit. The Government should ease pressure on households receiving legacy benefits by applying an uplift to mirror increases to the standard allowance within universal credit.
Before I conclude, I want to make reference to the two-child policy and rape clause. The Minister is probably wincing at the reference to the rape clause—indeed, he recently wrote to my hon. Friend Alison Thewliss, pleading with her not to call it that. Presumably, Ministers would prefer it to be given its Sunday name: the non-consensual-sex exemption. If the Minister is embarrassed by the reference to the rape clause, I suggest that it is not the wording that should embarrass him, but the very essence of a policy that is surely the most barbaric ever to come out of Whitehall.
The Westminster austerity agenda continues to punish some of the most vulnerable people in our communities and make their lives a misery. The order before the House today is a mere formality; for as long as Scotland remains chained to Westminster, my party and I will always speak up for the most vulnerable and make the case for a decent, generous and robust social security system. But there is no escaping the fact that until Scotland is independent we are forced to accept the majority of social security policy from a Westminster Government we did not vote for—whose support, at best, could only be described as meagre.
I am pleased to follow David Linden and I congratulate him on his appointment.
This order is an annual routine, but this year is different: the number claiming universal credit has more or less doubled since last March; we are still in a global pandemic; and the order would dramatically cut the universal credit standard allowance. We have already been reminded by my hon. Friend Seema Malhotra that for four years, from 2016 to 2020, people claiming around half the benefits covered by this order had their incomes frozen: they were no longer connected at all to the cost of living.
In 2018, the House of Commons Library estimated that, this year, working-age social security spending would be £37 billion less than in 2010 in real-terms 2018-19 prices. The Resolution Foundation says much the same, coming up with a figure for social security spending that is around £34 billion lower in 2023-24 than if the 2010 system had remained in place. People claiming universal credit and working tax credit had a temporary increase of £20 a week. That costs about one sixth of the real-terms cut in annual working-age benefits since 2010—less than 3% of overall pandemic support.
The Minister was right to say that people are scared at the prospect of losing the £20-a-week increase. I think he was kind of hinting—saying, “Well, don’t worry; it is not really going to happen.” But the answer to that problem is not to suggest that other Members of the House should not be talking about the issue; it is for the Government to make a clear statement that they are not going to go ahead with their current policy, which is to cut the benefit in April. I hope we do not have to wait until the Budget, which is still another three weeks away, before we have an announcement about what exactly the Government’s policy is.
The Joseph Rowntree Foundation says that withdrawing the temporary increase will risk sweeping half a million more people, including 200,000 more children, into poverty. In its report this morning, which has been referred to, the Work and Pensions Committee unanimously, on a cross-party basis, called on the Chancellor, as others already have in this debate, to extend the increase for at least a year. We are joined in that call by lots of organisations, as well as by Sir Iain Duncan Smith, who I see in the Chamber, and Stephen Crabb, both former Secretaries of State; by many other Government Members —we have just heard from Sir Roger Gale; and by the House of Lords Economic Affairs Committee, chaired by the noble Lord Forsyth.
The Joseph Rowntree Foundation quotes a woman in London saying:
“That £20 is often the difference between light and heat or no light and heat. If you don’t have gas, you can’t cook.”
That is what many people have been up against during the pandemic. That support must not be withdrawn next month.
The report also looked at the idea that has been floated of removing the increase but giving instead a lump sum—perhaps £1,000, equivalent to a year’s worth of the increase. The Committee is strongly opposed. It is a very bad idea, and the Secretary of State for Work and Pensions made it clear to the Committee last week that she rightly opposes it. Citizens Advice told us that
“having a stable regular income is the best way to support people to budget and manage their money.”
The attraction for the Treasury, of course, would be the hope of withdrawing the increase without people noticing. It would not work.
People claiming benefits other than universal credit and working tax credit have seen, as we have been reminded, no increase at all. In our report in June, as the hon. Member for Glasgow East reminded us, we recommended increasing legacy benefits by the same amount. The report said:
“that does not mean that the Government should simply ignore the needs of those people who are claiming—through no fault of their own—benefits which rely on outdated and complex administrative systems. Those benefits include support for disabled people, people with health conditions, for carers…We recommend that…the Department should immediately seek to increase the rates of relevant legacy benefits by the equivalent amount.”
“want everybody to move on to universal credit.”
However, until two weeks ago, people receiving severe disability premium were prevented by law from doing so.
It has been argued recently, against the increase in legacy benefits, that the universal credit rise was to help people claiming for the first time, rather than those already claiming, but that was not what the Chancellor said in announcing the increase on
“benefit over 4 million of our most vulnerable households”— the 4 million claiming universal credit and working tax credit at the time. All the other equally vulnerable house- holds, and many more vulnerable than those 4 million, have had no extra help at all. This order increased disability-related benefits by 0.5% at most.
“not aware specifically of extra costs that would have been unduly incurred” by disabled people during the pandemic. I spoke to a constituent—a disabled single parent with two daughters, one of whom is disabled. She used to search for bargains in local markets and supermarkets. During the pandemic, she has had to stay safe and not do that. She pays £1.50 or £2 for what used to cost her £1. She feels very hurt that she has had no extra help for those extra costs. Others have to pay supermarket delivery charges of £4 or £5 a time, and another £4 if they buy less than the minimum £40 order. That is a big chunk out of an income of £74.70.
The Select Committee’s coronavirus survey last year showed that people claiming disability benefits have substantial additional costs, such as extra cleaning and carers’ protective equipment. Last week, the Disability Benefits Consortium, in a new survey of disabled people claiming legacy benefits, which my hon. Friend the Member for Feltham and Heston referred to, found that 82% have had to spend more than normal during the pandemic and two thirds have had to go without essentials at some point over the past year. That is the evidence that the Secretary of State said last week that she had not seen. It is very clear, and I hope the Minister will reflect on it.
Unpaid carers have borne an extraordinary burden during the pandemic. Carer’s allowance is going to rise under this order by 35p per week. Carers UK is calling for it to increase by £20, like universal credit.
The standard minimum guarantee in pension credit will be raised, which is welcome, but take-up of pension credit remains much too low. The Minister for Pensions wrote to the Committee last week with an estimate of 63% for pension credit take-up. The charity Independent Age has called today for a new written strategy on pension credit uptake, including trial automatic enrolment. It estimates that the cost to the Government of those eligible for but not receiving pension credit is
“£4 billion a year in increased NHS and social care spending.”
That is a powerful reminder that scrimping on social security imposes large additional costs elsewhere.
The British Association of Social Workers has pointed out that the start of real terms working-age social security cuts in 2010 marked the start of a big surge of children being taken into care, imposing very large new costs on the Exchequer. We need to ensure that the social security system has the resources to do the job that all of us agree it should do. That means maintaining the £20 a week rise in universal credit for at least another year, and ensuring that legacy benefit claimants can, at last, get extra help as well.
I am a regular in social security debates. Over the last 10 years, it has affected me deeply to learn how millions of our citizens are being treated by the state. I thought that our social security system was meant to provide a safety net and support for us if something bad happened in our lives, and many of the 3 million new universal credit claimants, including more than 7,000 in my constituency, will have that thought too. Our social security system should be there for all of us in our time of need, just like the NHS, providing security and dignity in retirement and the support needed should we become sick or disabled, or if we fall out of work, to protect us from poverty whether we are in or out of work.
The reality, as we have been hearing, is somewhat different. In the past, I have talked about the escalating levels of poverty. They are primarily a result of the four-year benefit freeze, but others have mentioned, around the benefit cap, a whole host of cuts that the previous coalition and Conservative Governments introduced. As we heard from my right hon. Friend Stephen Timms, the equivalent of £37 billion has been taken out of working-age social security support since 2010.
I have talked about the 4 million or so children growing up in poverty, which affects not just how hungry or cold they may be on cold days such as today, but their cognitive development, how they will do at school, their very futures and even how long they will live. The free school meals fiasco was just that: a fiasco. Yet still the Government sit on their hands and do the bare minimum, as report after report says that the situation is getting worse.
The Government say that work is the best route out of poverty. I say, “Well, why were more than 8 million families living in poverty before the pandemic, including 3 million children, and why will four out of five of those families still be in poverty 10 years later?” The Government say, “We had to clear up your mess from the financial crisis.” I say, “Well, we’ll have to clear up your mess after the mismanagement of this pandemic, including your failures in adopting recommendations for pandemic preparedness from 2016.”
Poverty and inequality are not inevitable; they are political choices, and we will make very different choices. This is about political ideology. In spite of all the Government’s talk about levelling up, they have studiously ignored every reasonable proposal from charities and others—even from their own Back Benchers.
Take the recent Work and Pensions Committee report on the five-week wait for the first universal credit payment. With approximately 6 million new universal credit claimants —nearly double last March’s figure—we undertook an extensive inquiry into how the debt, rent arrears and psychological distress that new UC claimants face could be avoided. Our recommendations included introducing a starter payment, not a loan, to cover the wait for the first payment. We also recommended that the Department for Work and Pensions work to define and identify vulnerable claimants who may be at risk, and that it work more closely with other agencies in this regard, so that vulnerable people get the right joined-up support. Unfortunately, the Government rejected all our recommendations—every single one. Levelling up should not just be about infrastructure projects.
This is the first time the House will have heard about the death of such a vulnerable claimant, Philippa Day. Nearly two weeks ago, the coroner reporting on the inquest into Philippa’s death issued a prevention of future deaths notice against the Department for Work and Pensions and Capita after he found 28 failings. This is the fifth prevention of future deaths report to be issued to the DWP since 2013. Philippa was 27 when she died in October 2019 after going into a coma having taken an overdose of insulin. She had known mental health problems as well as having type 1 diabetes, and she had been battling with an application for the personal independence payment after being on disability living allowance. Her money was stopped in January 2019 and, in huge debt, she overdosed in August 2019. The coroner stated:
“Given the sheer number of problems in the handling of Philippa’s claim I am unable to conclude that each of these was attributable to individual human errors. The following deficiencies in the system’s ability to process PIP claims without causing unnecessary distress to claimants were evidenced…Although the decision to take an overdose was doubtless multi-factorial in origin, the combined impact of successive destabilising incidents caused by the problems in the handling of her benefits claim was, in my finding, the predominant factor, and the only acute factor, which led to her decision to take an overdose.”
Philippa’s was not the first death of a vulnerable claimant over the past 10 years, and I fear that it will not be the last. I am afraid that the response of the Work and Pensions Secretary to my questions on this has not been good enough. There has to be an independent inquiry into these deaths.
Not only have the Government hollowed out support for working-age people, making it far from adequate, but all too often the culture is one of disregard and even punishment rather than support, and 2021 will continue to be tough on people. As others have said, at the very least the Chancellor needs to maintain the £20 per week uplift to universal credit and working tax credits for at least a year, and it must be extended to legacy support, which is often used by disabled claimants. As Professor Sir Michael Marmot said recently, we need to recognise the key drivers of the UK’s high and unequal death toll from covid, including the existing levels of poverty and inequality, and address these by building back fairer. When I asked the Prime Minister about this, he said that he would, and I am going to hold him to that commitment.
The number of people claiming universal credit has doubled to around 6 million, while job vacancies remain far below the pre-pandemic levels and unemployment is set to reach a five-year high. It hardly seems a propitious moment to be reducing any benefits. I have to say that, much as I like the Minister, it sounds to me a little like doublespeak for him to claim that calling the reduction of an existing payment a cut is somehow fraudulent and a terribly unacceptable use of emotive language.
The latest Trussell Trust survey of 1,000 people in receipt of universal credit shows that one in five people think it is very likely that they will need support from a food bank if the uplift is removed. Nearly a quarter of a million parents fear not being able to properly feed their children if the uplift is removed, and seven in 10 people on universal credit since early 2020 say that they use the uplift to buy absolute essentials. It is for those reasons that I support the Work and Pensions Committee’s call to maintain the uplift for a further year at the very least.
It has been estimated that keeping the increase could cost around £6.4 billion, but as the Select Committee argues, that should be seen in the context of the Treasury’s own claim that it has spent £280 billion on coronavirus support measures this year. In that context, 2% is hardly outrageous. The expenditure that the Minister announced today needs to be viewed against the 2019 Office for Budget Responsibility report on the impact of the 2015 Budget, which cut £9.1 billion from welfare spending.
It is worth repeating that the £20 a week uplift was never extended to those on legacy benefits, and therefore it excluded many carers and disabled people and those on jobseeker’s allowance. Apparently, the justification is that it would have taken too long to update the legacy systems. I have heard some excuses in my time, but I doubt many people will find that a persuasive reason for excluding quite so many people. It would be helpful to hear how the Minister thinks the Government are helping carers and the disabled to meet the additional costs incurred through no fault of their own, such as the cost of PPE.
There are aspects of today’s announcement that I welcome. I particularly support the decision to honour the triple lock and the increase in the guaranteed minimum pension credit, but it would be so much better if the Minister could address the elephant in the room, rather than risk undermining the positive steps he is attempting to take.
It is hard to believe that more than four months have passed since we considered the Social Security (Up-rating of Benefits) Bill last autumn, and I welcome the annual process used to ensure that social security benefits and pensions are uprated. However, like others who have spoken in the debate, I must put on record my disappointment at the decisions taken. We are just weeks away from the new financial year, and it might seem hard to believe for some Members, but for millions of people across the country, that represents a terrifying reality.
There is still total uncertainty about what will happen to the universal credit uplift of £20 a week. Under the statutory instrument, the Government plan to take away £1,000 a year from the least well-off families in Britain. This is not scaremongering. The uplift may have been for one year, but people’s situations are arguably more precarious than they were a year ago, so this is quite simply the wrong thing to do. It is the wrong thing to do morally, and it is the wrong thing to do economically, because this money will not be stored away; it will be spent and reinvested back into the economy.
The support that the uplift represents is vital, yet the Government have spurned opportunity after opportunity to make it permanent or to at least extend it. They could have done it during the Secretary of State’s publication of uprating totals back in November, and they could have done it when the latest national lockdown was announced at the beginning of the year, but they did not. Then the Government abstained on the Opposition day motion in the name of the Leader of the Opposition, which puts us in a bizarre situation where Parliament has approved a motion calling for the uplift to be made permanent, yet the Government plan to do nothing about it. The idea of non-binding motions may be familiar to those of us who occupy this place, but in terms of communicating the will of the House to our constituents, I find that an abdication of responsibility from those on the Government Benches. During all that time, millions of families have had to live with the uncertainty of not knowing what their income will be come April. The Government need to provide support, but they also need to provide certainty.
I welcome the report published last week by the all-party parliamentary group on poverty, chaired by Kevin Hollinrake, calling for the uplift to be made permanent. As Seema Malhotra said, support for that exists across the House. That is what the Government have to do. Otherwise, they will be letting people down at exactly the time when our safety net is meant to support them.
The report also calls for an uplift in legacy benefits, which I wholeheartedly echo and which has been recommended by the Work and Pensions Committee, the Joseph Rowntree Foundation and many others. I do not think we in this place have given enough attention to the issue of people in receipt of legacy benefits. Many of my constituents who receive these benefits were very disappointed to see that they had been excluded from any uplift. It is not right. If we accept that universal credit claimants should receive an uplift, there is no reason why that should not have been extended. Instead, the only uplifts offered for legacy benefits are the inflationary ones detailed in the statutory instrument today. That means, for example, that someone who receives ESA and is in a work-related activity group will receive 35p per week extra, and someone who receives carer’s allowance will see a 30p per week increase. Many of my constituents regard these increases, at a time of such hardship for many of them, to be derisory. I urge the Government to consider uplifting legacy benefits. It is a question of fairness. The Minister, in his opening remarks, suggested that Opposition scaremongering is responsible for those on legacy benefits being deterred from making UC claims, but surely at such an uncertain time it is understandable that people choose to stick with what they know and what they have.
I thank the right hon. Gentleman for his intervention and agree absolutely: when people are desperate, they turn to whatever options are available to them and that stores up more difficulties for the future.
I turn now to the uplifting of pensions. It is right that the Government have taken steps, such as in the Social Security (Up-rating of Benefits) Act 2020, to ensure that the commitment to the triple lock is maintained. As I said during the passage of that Act, not only does the triple lock provide an important means to ensure that pensioners are properly supported in retirement, but it is a matter of intergenerational fairness. Small increases year on year now ensure that the generation who are currently just entering the workplace will also receive that support when it is time for them to retire.
This is a timely opportunity to discuss pensions, for important research was published today by the charity Independent Age—this was referred to by the Chair of the Select Committee, Stephen Timms—detailing that older people miss out on £88 million a year from the warm home discount because they do not claim pension credit. Some 650,000 pensioners who are eligible for pension credit do not claim it. I hope the Minister in his winding-up speech will address what the Department for Work and Pensions is doing to promote engagement and increase uptake of this important benefit.
The final area I want to refer to where there is an inherent sense of unfairness is the frozen pensions of overseas pensioners in certain countries. I have recently met people affected by this issue. They have found it hard to survive on a frozen pension and this is especially the case during the coronavirus pandemic. There is a moral case to expand the pensions uplift to overseas pensioners during the pandemic.
I welcome the recent report of the all-party group on frozen British pensions, which is chaired by Sir Roger Gale, who spoke earlier in the debate. The report tells of a British citizen, a 96-year-old veteran called Anne Puckridge, who served in all three branches of the armed forces. She moved to Canada in 2001 so that she could be close to her family. Despite all that, and despite her national insurance contributions, she finds herself receiving a state pension of £72.50 a week. Of course, because of the 15-year rule, she is denied proper representation in this place, and I look forward to the Government bringing forward legislation, as they committed to do in their manifesto, to scrap the 15-year rule. She is in a strange and arbitrary situation where, had she moved a bit further south, over the border, into the United States, she would be eligible for a fully uprated state pension, because we have an agreement with the US. Does the Minister see the unfairness in that?
The all-party group has found that the Canadian Government are willing to engage on this issue and have made a formal request to the UK Government about the potential for reciprocal arrangements. I hope the Minister will be in a position to update us on what discussions he and the Pensions Minister, the Under-Secretary of State for Work and Pensions, Guy Opperman, have had about this. I hope the Minister will address three key questions on this issue. When do the UK Government plan to respond to the Canadian Government? What is the process moving forward on coming to an agreement? What is that response likely to be? I urge them to reach an agreement. It would clearly be transformative for very many. I look forward to hearing from the Minister on this issue during his winding-up speech.
It is always a pleasure to follow right hon. and hon. Members, and indeed learned Members, and I look forward to the Minister’s response. He is very intent on and interested in his portfolio.
Article 6(2) sets out that the full rate of the state pension is to be amended from £175.20 to £179.60. I would be most obliged to understand that consideration has been given to the fact that this additional £4.40 per week would just about cover the cost of the BBC TV licence. I make this point because today a number of constituents have contacted me about the BBC TV licence. We have all got our reminders about it today, as indeed have many pensioners. Pensioners must now pay, never mind the cost of living increases. Surely we would be better placed to increase this before that reaches final approval.
Again, this is not the Minister’s portfolio—it is not his direct responsibility—but I would respectfully and gently ask: has he had any opportunity to talk with a Digital, Culture, Media and Sport Minister about perhaps approving free TV licences for those over 70 years old, because there are many who fall into that category? I am always very mindful at this moment in time that we have had an increase in poverty in all age groups, in particular families and those who are elderly.
I have some concerns about the uplifts in benefits. The most vulnerable in receipt of PIP are seeing uplifts, under article 16, of anywhere from 10p per week to a grand amount of 45p per week. I am not against the increase, but before I could consider voting for the motion I would like an understanding of how the cost of living increase is factored into this. I think it is important that we understand how these increases, while in many cases nominal, have the cost of living factored into them.
In Northern Ireland, the Northern Ireland protocol is seeing individual products increase by more than this—it is something that I would be aware of and my colleagues would be aware of—never mind a whole week’s shop-worth. While these provisions exclude Northern Ireland, perhaps an outline of the rationale can be given as to the uplift amount.
On the state pension uprating, as pertains to part 2, article 10, maternity pay has an uplift of 77p. It is difficult to comprehend, as this would not even pay for a litre of milk. Again, I say respectfully and genuinely to the Minister: is he able to explain the rationale to expectant parents who, when hearing of the uplift, will believe that their life is to be made easier, only to understand that these uplifts will cost more to process than the actual increase to a family?
Every one of us, as elected representatives, is very aware of those in poverty. We have been confronted with a greater number of those who are subjected to poverty in all spheres of life, but more so due to the pandemic, and all the stats and figures indicate that that is the case. So when it comes to increases in pensions and benefits, I think the rationale for how they are considered and how they are agreed is something that we all wish to understand better.
When we take into consideration the difficulty that lockdown babies are facing with their social skills and the need for parents to be able to afford to take them out to baby classes as soon as it safe to do so, it seems that their maternity pay uplift will not help them increase the quality of life for their child. I know that the Minister is keen to ensure that they are helped, affected and assured, but again, my constituents ask me: just how does it work?
Has consideration been given to the effect of the pandemic on maternity leave? I referred to that just a few minutes ago. I think it has been the extra that has pushed people very much to the breadline. I am aware that, in my constituency, among many of the people who are under pressure financially, there are more referrals to the food bank in my constituency. The one in my constituency was the first food bank in the whole of Northern Ireland. Over this last period—the Christmas period—it handed out 870 individual assistances to those people. That again tells me that there is real financial pressure. I would ask: has consideration been given to the effect of the pandemic on maternity leave and is that a consideration that we can make at this stage?
I conclude by saying to the Minister that I ask these questions genuinely and respectfully, but I do feel, on behalf of my constituents, that I need an answer.
I begin by thanking all those who have spoken and taken part in the debate, which covered many important topics. Given the time constraints, I will not be able to cover off all the points raised, but as I said in my opening speech—I will just focus on this for one moment—the statutory annual review of benefits does not include a decision on the £20-per-week uplift to universal credit, which was announced by the Chancellor as a temporary measure in March last year. I repeat, because this is important, that the Chancellor has been clear that all options are on the table. He will take into account the assessment of the economic and health situation when considering the best way to build on the successful support that the Government have provided to those on low incomes throughout this year so far.
I make no apology for using the word “scaremongering”. I understand some of the points that Opposition Members made, but there is a big difference between lobbying for additional Government support going forward and using emotive language and politicising an issue. I gently remind the House that it was this Government who introduced the temporary £20-per-week uplift to universal credit; it was not a measure that Opposition parties were calling for. This Government have not flinched throughout this pandemic in supporting the poorest, the lowest paid and the most vulnerable and disadvantaged, and I have no doubt that the Chancellor and the Government will continue to do so.
Members raised concerns about legacy benefits. First, let me say that I appreciate that many people face financial disruption due to the pandemic. That is why the Government put in place an unprecedented package of support, totalling more than £280 billion, to protect jobs, help families and strengthen our welfare safety net. Just to give a bit of the broader context on welfare spending, in 2021 we will spend more than £100 billion on benefits for working-age people. That is £100,000 million—around £1 in every £9 that the Government spend; double our Defence budget. We spend more on family benefits than any other country in the G7, at more than 3% of GDP. We make no apologies that we will continue to reform our welfare system so that it encourages work while supporting those who need help—an approach based on the clear evidence that work offers families the best route out of poverty.
Does the Minister accept the evidence that disabled people have seen significant cost increases in the course of the pandemic?
I understand the point that the right hon. Gentleman has made. I know that his report goes into some detail on this issue. I gently remind the Chair of the Select Committee that universal credit is about £2 billion more generous than the legacy benefits system it replaced and is part of a broad package of support. Over and above the £20 uplift available for those on universal credit, those in receipt of legacy benefits may be entitled to other measures. It is important that they go on to the gov.uk benefit eligibility checker to check their eligibility before applying, because as the right hon. Gentleman knows, there is no path back to legacy benefits once someone has made a universal credit application. It is important to stress that universal credit is part of that broader package of measures worth more than £280 billion throughout the course of this pandemic. Yes, of course we recognise that people across the country have faced additional costs throughout this pandemic. That is exactly why the Chancellor stepped up with that £280 billion package, including an extra £7 billion in welfare support.
The Opposition spokesman, Seema Malhotra, said that we should heed the words of those on the frontline. I totally agree and encourage her to visit her local jobcentre at the earliest available opportunity to speak to work coaches, because then she will hear what they think about universal credit and how they believe it has been the tool that not only has enabled us to support an extra 3 million people throughout this pandemic but has allowed them to incentivise, support and empower people into work.
I have visited my local jobcentre and keep in close touch with it. I hope that the Minister also listens to what I said about what the Trussell Trust, Citizens Advice and the Child Poverty Action Group have been saying, because that is important, and they will probably want a response from the Minister on those points.
I work very closely and meet with all the organisations that the hon. Lady references, but work coaches are an important reference point. They all say without hesitation, when I visit jobcentres across the country, that universal credit is an incredible tool—a powerful tool—to help support and empower people back into work. That is why it is so absurd that the Labour party wants to scrap it.
Several Members raised pension credit and its uptake. I have no doubt that the Pensions Minister will be willing to meet hon. Members to discuss that further, because I know that he has done a considerable amount of work in that area.
The uprating order will ensure that working-age benefits increase in line with inflation, which represents a cash increase of £500 million for working-age benefits. That includes those benefits that contribute towards extra costs arising as a result of disability or a health condition, and pensioner premiums in income-related benefits.
To conclude, I will summarise the benefit increases that the Government are implementing to support those most in need. We are increasing the basic state pension and the new state pension by 2.5%. That will deliver on our manifesto commitment for the state pension triple lock. We are increasing the pension credit standard minimum guarantee in line with the cash increase in the basic state pension to support the poorest pensioners. We are increasing working-age benefits in line with prices; we are increasing the universal credit work allowances so that claimants can earn more before their payments are reduced; and we are increasing benefits to meet additional disability needs and carer benefits in line with prices. I commend the order to the House.
Question put and agreed to.
That the draft Social Security Benefits Up-rating Order 2021, which was laid before this House on