With this it will be convenient to discuss the following:
Clauses 2 to 11 stand part.
New clause 1— Assessment of bringing forward the second qualifying day—
‘The Treasury must publish, no later than six weeks after the day in which this Act is passed, an illustrative analysis of the impact of this Act on household incomes if the second qualifying date was no later than
New clause 2—Assessment of cost of living support package—
‘(1) The Treasury must publish, no later than the next fiscal event after the day on which this Act is passed, a full and detailed analysis of the impact of this Act on households.
(2) The Treasury may include in the analysis the effect of support for households announced in February 2022 in response to recent energy price rises.
(3) The analysis must include an estimate, based on the latest available reliable data, of the impact on household incomes of—
(a) payments made under this Act to households on mean-tested benefits,
(b) payments made under this Act to recipients of disability benefits.
(4) The analysis must show impacts across all deciles of household income distribution—
(a) in cash terms, and
(b) as proportion of net household income.
(5) The analysis must take into account where relevant differing policy contexts in Northern Ireland, Scotland and Wales.
(6) The analysis must include an assessment of the impact of this Act on households of different types, including singleparent families, larger families, and pensioner households.’
New clause 3—Payment date—
New clause 4—Review of distributional effects—
‘The Secretary of State and the Treasury must make a joint assessment of the distributional effects of this Act on—
(a) rural communities;
(b) families eligible for free school meals;
(c) unpaid carers; and
(d) households in each income decile no later than six weeks after this Act is passed and must lay a copy of the assessment before both Houses of Parliament.’
We have had a useful debate on Second Reading and I welcome the chance for more detailed examination of the Bill in Committee of the whole House. We had an extensive debate, with some probing questions, so I will endeavour—with the support of the Opposition Front Bench and your permission, Mr Evans —to move as fast we can through the Committee stage.
Clause 1 will ensure that the £326 and £324 cost of living payments totalling £650 will be made to an individual or couple who have a qualifying entitlement to a social security benefit or tax credit. The clause also sets out the qualifying benefits and tax credits. Where a claimant is entitled to both a qualifying social security benefit and a tax credit, the social security benefit will be the qualifying benefit for the purpose of receiving a cost of living payment.
Clause 2 sets out who is eligible for the two payments that make up the £650 cost of living payment. It ensures that only those with the entitlement to a positive payment or award in respect of the passporting social security benefit or tax credit will receive a cost of living payment. The aim is to ensure that we target payments to those on the lowest incomes. The clause also defines the relevant eligibility period in relation to the qualifying days set out in clause 1.
The Minister will be aware that there are some situations in which an employer pays a month’s wages late, wages are paid on a four-weekly cycle and two payments are made in a month, rather than one, or a one-off bonus is paid in a certain month. Those situations could mean that someone who ordinarily gets a UC payment in a month has a month in which they are entitled to nothing. If that happened to be the month that was used for the qualifying payment in this situation, the person would miss out on the whole £326. Would the Minister be tempted to use a two-month period, so if someone gets at least 1p in either month they would get the £326, rather than risk the strange one-offs that could wipe out someone’s monthly payment?
I understand the point that my hon. Friend makes. We have already talked about fluctuating earnings. The important thing here is that we have had to define these eligibility periods to be able to get the payments out speedily, and we have also made sure that there is a protection mechanism. There is a wider package of support that is available other than just the £650 cost of living means-tested benefit. There is also the further funding of the household support fund, which will help these individuals.
Clause 3 addresses the situation in which a person has a qualifying entitlement to a social security benefit or a tax credit more than once. It ensures that, where the person is entitled to both universal credit and another social security benefit, they will receive the cost of living payment as a result of their entitlement to universal credit only.
Where a claimant is entitled to both a qualifying social security benefit and a tax credit, the social security benefit will be the qualifying benefit for the purpose of receiving a cost of living payment. Where a person is entitled to both child tax credit and working tax credit, but not a qualifying social security benefit, they will receive the cost of living payment as a result of their entitlement to child tax credit only. That will ensure that a person does not receive duplicate cost of living payments irrespective of whether they have a qualifying entitlement to more than one passported social security benefit or tax credit.
Clause 4 places a duty on Her Majesty’s Revenue and Customs to make a cost of living payment to people whose entitlement to qualifying tax credits only becomes apparent at a later date. The clause will ensure that those people will not miss out, which is a point that has been raised by others in this debate.
Clause 5 places a duty on the Secretary of State to make a disability cost of living payment of £150 to 6 million people who receive eligibility benefit in respect of
Clause 6 confirms that the administration rules used for each cost of living payment are the same as the benefit or payment that conferred the eligibility. Clause 7 provides for co-operation between the Secretary of State, the Department for Work and Pensions and HMRC in the delivery of cost of living payments. The scale and scope of the measure also require collaboration with other colleagues across government. Together, the bodies set out in the clause ensure that the intended recipients of the cost of living support are paid. There is a need to have data sharing to minimise the risk of duplicate payments and to support operational delivery.
On clause 8, some important points have been raised on this already on Second Reading. It ensures that the cost of living payments are disregarded for the purposes of tax and social security. I can confirm that the cost of living and the disability cost of living payments are exempt from tax. Payments will not affect a person’s entitlement to social security benefits or tax credits, either as capital or as income. I can also confirm that the payments will not be subject to the benefit cap.
When my hon. Friend says that they will be disregarded as capital, does that mean that, if somebody quite prudently puts the money in the bank and saves for their high energy bills in the winter, that would not take them over the £16,000 savings limit for universal credit? Effectively, they could ignore not just the receipt of the income, but that part of their savings as well if they were to treat them in that way.
Just to clarify, yes. That is the important thing. The clause ensures that every person who is entitled to a cost of living payment receives every penny, as all Members across the Chamber will want to see.
Clause 9 sets out the definition and interpretation of certain terms used in the Bill. Clause 10 explains the procedures for laying the regulations, previously referred to under the powers contained in clause 1(4), to specify the qualifying day for the second cost of living payment, which will be no later than
With your permission, Mr Evans, I will now deal with the new clauses. New clauses 1 to 4 have been tabled by, respectively, Jonathan Ashworth and Christine Jardine. New clause 1 requires the Government to publish an analysis of the impact on household incomes of an earlier backstop date
“if the second qualifying date was no later than
Let me, for the purpose of clarity, assure Members that the Bill does not set out the qualifying date for the second payment. Instead, it states that the Secretary of State will lay further regulations to specify the eligibility dates for the second cost of living payment, worth £324, and that the date selected for this will be earlier than
New clauses 2 and 4 require the Government to publish an analysis evaluating the impacts on households of the payments provided under the Bill. The Treasury has already published detailed analysis of the impact of the main February support packages. Its distributional analysis document shows that the support packages are “highly progressive”—a point that has been made today by Members on both sides of the Committee—with lower-income households benefiting significantly more than those with higher incomes, both in cash terms and in terms of a share of income. As a result, further publications are not necessary. The Institute for Fiscal Studies has said that the Government support means that, on average, the poorest households will be approximately compensated for the rising cost of living this year, and the Resolution Foundation has said that the May 2022 support package is—again—"highly progressive”, with households in the bottom quintile seeing an average cash gain of £1,195.
New clause 3 requires the Secretary of State and HMRC to attempt to make all payments covered by the Bill before
Given that a published distributional analysis of the impact of the announcements already exists, and that new clause 3 would threaten successful delivery of the payments, I hope that Members will not press their new clauses.
As the Minister said, the Bill as drafted states that the second qualifying date is to be no later than the 31st of October, which allows for a span of several weeks during which the date could be set. In her introductory remarks, the Secretary of State talked about the need to keep that open because of the potential behavioural impact. It would be helpful if the Minister told us a little about why the Department reached that conclusion.
As we know, families and household are looking for clarity. We expect the energy cap to rise significantly again in the autumn, and there is real fear and anxiety in the country about what energy price inflation, and general inflation, are doing to household incomes. People are looking for certainty, and the sooner they are able to know exactly when their qualifying period will be and when the payment will be made, the better it will be for those families. It would also be helpful for us to know what the implications are of a qualifying date that could be one month early, so as to cover the span of options for that date. Although, we will not be seeking to press these amendments to a vote, can the Minister advise on whether he will be able to pick up that point and come back to us with answers?
New clause 2 would address the distribution and the equality impact assessment. We have indeed had some analysis from the Treasury, and we have had some looks at the economic distributional impact and the decile impact. As we would expect from measures heavily directed towards means-tested benefits, they are indeed progressive, and that is absolutely right, but the single most important topic that we discussed in the short Second Reading was the downside of single payments that are household unit payments and therefore do not reflect differences in household composition. The impact assessment does not give us that information, and it is critical that we have it, so I will press the Minister on the point. We need a much fuller assessment of what the Treasury expects to be the impact of a reliance on single payments, rather than an accurate updating within the benefits system. We also need, as soon as possible after the first payments have been made, an assessment of the actual impact in terms of the distribution.
Household composition is probably the single most important of the areas of analysis that we need to track. It is the one that is worrying people the most and where the disparity between a direct payment through the social security system and a one-off payment is most marked. We want to see analysis that looks at different recipient groups and at the impact on pensioners, on people with disabilities, on families, on single people and on working people of the distribution of the payments as they go out. It would be helpful also to look at how different working groups are affected, such as the self-employed, who we have discussed, and working households as opposed to households on out-of-work benefits.
The other area on which I will spend a couple of minutes in the context of analysis is the various payments that have been distributed through local government and how we can look at their impact. The Minister has repeated that his principal aim was to try and get benefit payments out as quickly as possible to those who need them most. In fact, the February announcement of the distribution of income through local authorities, through council tax, does the exact opposite. As I am sure he is aware, local authorities have had to go to the considerable length of writing to every household that pays council tax other than through direct debit, wait for them to respond, wait for them to provide information confirming who they are and their entitlement, and then to send the payment out. That of course means that large numbers of people reliant on that £150 have not yet had it, and it is likely to be weeks and weeks still before those families actually get the payment.
The payment requires people to deal with official correspondence, and I do not know whether Ministers have seen some of the letters that have gone out from local authorities, but I certainly have, and I struggle to understand them. A number of those forms have gone out without any reference to people on council tax support, for example, so people do not know that they are likely to be covered by the scheme. It is important therefore that we understand a distributional impact of the household support funds and of the distribution of funds by local authorities.
The Government have been keen to stress the value of those schemes, that they are locally sensitive and that local government has an important role to play in delivering them. That may be the case, but as the Opposition have said all along, it is undoubtedly a more complex and bureaucratic system for delivering help into people’s hands than uprating and delivering that directly through the social security system. Given what we know about inflation and energy costs soaring and the likelihood that we will have to return to this place to consider more emergency support later in the year, it is critical that we understand exactly how the delivery of the Government’s support package affects people, who it affects and whether it is the best way to provide help to people in need.
I have a few things to say about the specifics of the Bill and the points that have been raised in the debate. I understand the Minister’s point about the second qualifying date and the Secretary of State’s earlier point about not wanting to make clear what that is. I will not argue with that, but I have a question about the timelines for the payment.
We had a qualifying date of
The other issue for people relates to the other payments that they may be able to receive. We have heard from Ms Buck that people have not necessarily received a council tax payment and do not know when they might receive that money. For people who are struggling now, it would help to have some certainty about when the payments will come. I do not think the legislation has even been brought forward for the £400 for energy bills; I am not aware when that will happen or when those dates will be. The Government are saying that there will be £1,200 for some families, and it would be really helpful for people to know when they are likely to receive that potential income so that they can plan.
On the negative resolution that will be brought forward to set the second qualifying date, I assume that we are not likely to see that until after the summer recess. If the Minister can confirm that that is the case, it would be helpful for us to understand that. If he cannot do that, that is fine.
Nigel Mills talked about people who get two payments in a month, because they are paid on a four-weekly basis or because they receive bonuses or anything of that sort. It would be helpful if the Minister, when he sets the second qualifying date, tries to ensure that it is not in a cycle that will disadvantage the same people twice. If the date means that people whose universal credit is paid on a cyclical basis—for a significant number of people, it is clear that there is a regular cycle every three months—lose out on the £324 and the £326, even though they are regular universal credit claimants over the year, I would be concerned that the Government were not doing that in the right way. The hon. Gentleman’s suggestion of doing it over a two-month period would probably have been a better way to do it than the way that the Government are proposing. As was stated, if further additional cost of living payments need to be made to people in future, perhaps it would be helpful for the Minister to consider that.
In the context of making payments too quickly, the Minister mentioned the recovery of incorrect payments and how that might work, or need to work. He said that if payments are made too quickly, people might receive a payment that they are not entitled to and then it would need to be clawed back. Given how he phrased that, I am slightly concerned that we might end up with people through no fault of their own receiving payments in error that they think they are entitled to, who then have them clawed back from future payments from the DWP. We have seen that over the years with tax credits and how people are still paying back legacy benefit overpayments that they received, and we have seen the pain and suffering that that can cause people.
Obviously, the Government will make some errors in these payments, right? We cannot have a 100% error-free system, and I would be concerned if they were to claw back money from people who genuinely thought that they were entitled to it. That could have an even worse impact on their cost of living than the current crisis. Will the Minister explain, if he can at this point, what is likely to happen should someone receive a payment in error, through no fault of their own, had they expected to receive it and not known that it was an accident? Will that be clawed back by the Government, or will they write it off and say, “Look, we made a mistake. You can keep it because it was our error, not yours, and we don’t want to put you through additional pain”?
I will have more comments to make and questions to ask on Third Reading, but those are my questions and comments on the substance of the clauses in the Bill. One last thing: I thank the Government for including the Scottish payments for disability in the eligibility criteria. In Scotland, we are doing our best to have an excellent social security system on the basis of dignity and respect, and I appreciate the UK Government working with the Scottish Government to ensure that people in receipt of Scottish disability payments will also get the additional £150.
I am grateful for the contributions made; I will respond to them briefly. On Scottish qualifying benefits, yes, individuals will be able to receive the £150. As for the second payment, we are having to be careful in setting out the details definitively because of fraudulent behaviour. We certainly saw that with other payments made during the pandemic, so, now that we know the levels of fraud going on around benefits, we cannot be as explicit as perhaps we might have been. However, I assure hon. Members that consideration of the regulations on the second payment will take place after recess.
The other point made was about the timing of cycles. That is important, and we will do everything that we can to ensure that the cycles do not align, so that people who may not have been able to qualify for the first payment will be able to qualify. It will be difficult, because we are moving at extreme pace and with huge volumes of claimants, but we will do everything we can to assist those individuals.
It is not often that Kirsty Blackman says things that I completely support and agree with, but she did on this occasion. All of us, and particularly the Government, need to do a lot more on communication about these payments. There are lots of them, and they are targeted, so there is a duty on us to communicate clearly when these things are going to happen. However, there are reasons why we cannot be as clear on the timing of the second payment.
I understand the point made by Ms Buck on household composition. Sometimes, it would be great to have more data in these situations, but we have produced an impact analysis—that is not always the case in these situations—to ensure that colleagues can understand what is available for their constituents at constituency level. We have also seen the distribution analysis that looks at comparator groups. That is really important data, and I think that it helps to paint a pretty broad picture of how these payments will help vulnerable and low-income families across the United Kingdom.
The household support fund will indeed ensure that we can provide support to people with the cost of essentials. It is vital that local authorities do the work and report back to Government on the work that they have been doing. I hope that, with those points, I have made the case for hon. Members not to press their new clauses.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clauses 2 to 11 ordered to stand part of the Bill.
The Deputy Speaker resumed the Chair.
Bill reported, without amendment.
I beg to move, That the Bill be now read the Third time.
I thank the DWP Bill team and the cross-Government officials who have stood up to deliver this legislation and the payment mechanisms at pace. I also thank the House authorities, parliamentary staff, Clerks, Doorkeepers and Members across the House who have participated in today’s debates.
The Bill reflects the Government’s commitment to supporting low-income households and disabled people across the United Kingdom. Due to the current economic circumstances, many people need additional support to alleviate the financial pressures caused by the cost of living challenge. That is why this Government are providing a significant package of support worth £37 billion this year alone. It includes a £150 council tax rebate in England, £400 of support through the energy bills support scheme, a £650 cost of living payment for people entitled to qualifying means-tested benefits, a £150 disability cost of living payment for people entitled to a qualifying disability payment, and £300 in additional support for pensioners through a top-up to winter fuel payments. In practice this means people in receipt of UC or another qualifying means-tested benefit could receive £1,200 in additional support, which could increase to £1,350 if an individual also receives a qualifying disability benefit.
The Bill provides the Government with the necessary powers to administer the £650 cost of living payment and the £150 disability cost of living payment. These payments will provide targeted support to 8 million people including some pensioners and 6 million disabled people. We want to ensure these payments are in people’s bank accounts as soon as possible. We intend to begin phasing in payments from
This Bill is a further demonstration of the action this Government are taking to support people across the country and I commend it to the House.
I join the Minister in thanking the Clerks, the Bill team and Members across the House who have spoken, and I thank you, Mr Deputy Speaker, for guiding us to what looks like an early finish with skill, as always. I also thank the Minister for the courtesy with which he has responded to the queries Members have raised; I did not always agree or get the answer I wanted, but I appreciate the way in which he engaged, with great detail and politely endeavouring to answer all points.
As I said on Second Reading, we do not intend to stand in the way of this Bill at all; we totally understand the need for the Secretary of State to make arrangements for these payments to be delivered swiftly, although we believe that the Government should have acted sooner. The result of not acting sooner has been considerable anxiety and hardship for many of our constituents, many of whom have already had to grapple with the £20 cut to universal credit and other measures such as the pernicious two-child policy over many years.
Many Members have raised the various hard edges still in place because of the flat-payment nature of the legislation. One way of dealing with that would have been by bringing forward a benefit uprating, and it is curious that Ministers told us that that was not possible, given that it was done in 1975 by the then Secretary of State for Health and Social Services, Barbara Castle, who said that two upratings in a year would be introduced because of exceptionally high rates of inflation. If they could do it in 1975, it is curious that we cannot do it 40-odd years later. The position of the Conservative party in those days was that uprating should happen twice a year. That was Norman Fowler’s position.
I was grateful to the Secretary of State for what she said in response to my question about the uprating for next year. With respect to the triple lock and the uprating of other pensions, we have heard from the Chancellor that they will be uprated in line with figures in September, but we can see the pressure that is being put on the Government by some voices in the media and so on. The Secretary of State said that those matters would be reviewed, as per the legislation. I hope that does not turn out to be a get-out clause for the Government on the triple lock and benefit uprating later this year. We will be watching these issues like a hawk.
Our big worry, although we will not stand in the way of the Bill, is that the Government still have no serious plan to deal with the ravages of inflation. There has been debate across the Chamber today about the second payment, but with inflation where it is today, that second payment, if paid in November or December, would, by my rough calculation, in real terms lose value from the £324 that the Government are legislating for to about £307 because of the levels of inflation. I fear that, unless the Government get a grip of inflation, they will have to come back to the House with an autumn statement or another emergency Budget, to pursue other measures to help some of the poorest and most vulnerable in our society.
We will not divide the House tonight. We welcome the legislation as far as it goes, but I fear that further help will be needed very soon.
I also join in the thanks, particularly to the Clerks’ team, who have been incredibly helpful, as ever. I expect nothing less, and have never received anything less from the House of Commons staff; they are always excellent. I also echo the Minister’s thanks to all those in DWP and HMRC who will be working so hard; we appreciate the additional work that it will mean, and has already meant, to get these things in place. We are massively supportive of all those staff who will be doing a really difficult job, and potentially working an awful lot, in order to pull this off. That is massively appreciated.
The provisions in the Bill, although welcome, although additional and although they go towards the cost of living, do not cover the cost of living increases that our constituents face. They do not even cover the energy price increases, never mind the inflation on the most basic foods which people just have to buy. You cannot get away without buying pasta, rice or bread. People are stuck with the massive price increases in those foods; they have to buy those things. There has already been a time lag—people are not getting the payments today, although I appreciate that they are getting them quickly—and people will already be feeling the squeeze and struggling. The £326 on the horizon is great; it is helpful, but it is not enough. It does not provide the level of support that uprating benefits in April could have provided, which would have helped with that squeeze resulting from the cost of living.
The one really big thing that the Government could do today to make a massive difference to people’s lives would be to put up the pretendy living wage to a real living wage—a wage that people can actually live on. That is reserved to Westminster—the Scottish Government do not have the powers to do that—and it would make a difference to people. Lee Anderson was talking about the hard work that his constituents do and the amount of money that people get on benefits. The thing is that 40% of the people on universal credit are in work. A huge number of the people going to food banks and their children are in households with at least one parent in work. I get that the Government want to get people into work, but people are in work and still cannot afford to live. They still have to have this top-up from the Government. The Government can help to fix that problem by increasing the minimum wage to a real living wage and giving it to everybody who is over 18, removing the inherent ageism.
The other thing that the Government have missed and failed on in this Bill relates to people who have no recourse to public funds. Those people are, by definition, missed. That is the intention of what the Government are doing, but we can see that the most destitute, desperate people in our society are those who have no recourse to public funds. The Bill fails to provide support to anybody who is not on the gateway benefits or to anybody who is struggling but does not fit into the criteria. This is particularly acute when people have no recourse to public funds. We are seeing children literally starving because their parents have no recourse to public funds. Some of these cases involve people who are fleeing domestic abuse and are not eligible for the destitution domestic violence concession because they are, for example, an EU citizen or because their partner was a student. There are a lot of problems with this.
Another thing that is missing is that we do not know when we are going to get the legislation on the pensioner cost of living payments. If the Minister could let us know when that legislation is coming, that would be very helpful. Could he also let us know when we are going to get the energy bills support scheme legislation? This Bill is only part of the package. We have been discussing the whole package, but this legislation only brings in a bit of it. Stephen Crabb asked me earlier where the money was going to come from to pay for all this, but we do not yet have any legislation on the charges that are going to be made on the energy companies. If we could just have had a timeline for when we could expect that legislation to come in, we would not have been in this situation, with this Bill appearing a week before we go through every single process in the Bill. MPs need longer to look at these other pieces of legislation that are coming through, and if the Government could do anything to ensure that we get even slightly more time to scrutinise the legislation as it comes in, that would be appreciated. As I have said, I thank the Government for bringing forward this package, but it is not enough. They need to go further, and they need to uprate benefits and backdate that to April, but we welcome this package.
Question put and agreed to.
Bill accordingly read the Third time and passed.