Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.

Donate to our crowdfunder

Budget Statement - Motion to Take Note

Part of the debate – in the House of Lords at 6:04 pm on 18th March 2020.

Alert me about debates like this

Photo of Baroness Lister of Burtersett Baroness Lister of Burtersett Labour 6:04 pm, 18th March 2020

My Lords, in his Budget speech, the Chancellor claimed to be providing security and to be getting levelling up done. But levelling up should not just be about the physical infrastructure of new roads, railways, broadband and homes, as he described it, welcome though all but the first are; it is also about the social infrastructure of public services, such as social care and childcare. These are of great importance to local communities and people’s lives, as is currently being brought home to us. Levelling up should be about people as well as places, wherever they live. The Budget fails to get levelling up done on either count, or to deliver genuine economic security to those whose economic circumstances are most insecure.

Like a barium meal, the current crisis is illuminating painfully the inadequacies of our care services and social security system, depleted of resource after a decade of austerity. The Women’s Budget Group, of which I am a member, argues that the social infrastructure is every bit as important as the physical, and of particular importance to women, who rely more on public caring services. What has happened to the plan we were promised on social care? It is like “Waiting for Godot”. Moreover, the group calculates that investment in care services would create more jobs than the equivalent level of investment in construction. The group calls on the Chancellor to include the social infrastructure in his welcome review of the fiscal framework. Will the Minister confirm that, in this review, investment will be understood to include investment in the nation’s social and human capital, as well as its physical capital?

As I said, levelling up has to be about not just places but the individuals who live in those places and elsewhere. The two are intertwined, as the Resolution Foundation underlined:

“differences in family finances … drive up regional living standards inequalities, and these should form a substantial part of the levelling up agenda in future.”

It points out that this is particularly true of social security cuts, to which what it calls “blue wall seats” gained from Labour were most exposed. It says that the Budget does virtually nothing to offset the cuts imposed in 2015. The households in the second net income decile, for example, will eventually be £2,900 a year worse off on average due to benefit and tax changes since 2015, with £900 of that yet to come from the social security policies still being rolled out, notably the two-child limit. One consequence is

“a risk that child poverty will reach record highs by the time of the 2024 election.”

A key driver has been the four-year freeze, which has cut the value of working-age and children’s benefits by around 6%. Overall, they are now worth about 9% less than if CPI indexation had applied since 2010.

It is all very well that the Budget report cited the end of the benefits freeze under the rubric of supporting the most vulnerable, but it was due to end anyway. What is missing is any commitment to making good the money lost, as called for by the Work and Pensions Committee in the previous Parliament, and by others—not even that which was due to higher than anticipated inflation, so that it is estimated that the Treasury saved roughly an additional £1.2 billion. This is money owed to the most vulnerable, and the Government should acknowledge the debt.

Policy in Practice concludes that the Government have missed an opportunity to show support to households in poverty and halt the reputational damage of universal credit. Noticeable by omission was any provision to alleviate the impact of measures introduced as part of austerity. For these households, austerity is far from over. Unless the value of their benefits is restored, it will be baked into inadequate social security benefit levels in perpetuity.

Inadequate benefit levels are also one reason that the social security system is not now providing the security that its name promises. Other problems caused by a number of aspects of the design of universal credit, in particular the five-week wait, have already been mentioned. While the tweaking of the rules governing the repayment of advance payments is very welcome, I fear it will be now used to resist the growing calls for more fundamental reform of the five-week wait. As Policy in Practice argues, this meant that the Chancellor missed an excellent opportunity to set out an alternative strategy to support households through the five-week wait.

That strategy, recommended in various forms, including by the noble Lord, Lord Freud, is to provide what Nicholas Timmins of the Institute for Government calls a

“non-repayable … ‘welcome grant’ for … new claims for UC and to those transferring … from tax credits” who will not be covered by the run-on of existing benefits. This has particular implications for those hit by Covid-19 who do not qualify for statutory sick pay. Policy in Practice, Citizens Advice and others argue that much more must be done to ensure that everyone can afford to self-isolate and is not discouraged from doing so by the UC rules.

Nor must they be discouraged by the sheer inadequacy of available benefit levels or support with rents. Will the Government heed CPAG’s call for an emergency increase in children’s benefits, especially as free school meals are suspended when schools close? Can the Minister give—or seek on our behalf from DWP—an assurance that all work sanctions and job search requirements will be suspended? Discretion is not good enough to ensure protection. More radically, petitions are circulating, both nationally and internationally, calling for an emergency universal income scheme, as mentioned, to help get us through the crisis. Ireland is showing the way on a temporary basis.

I welcome the fact that the Chancellor is promising a further package of measures. These must be sufficient to meet his promise to every British citizen that this Government will give you the tools you need to get through this. Without financial security, it will be that much harder to get through. This is a public health—as well as an income security—issue.

Two weeks ago, during the debate on the Child Benefit Up-rating Order, the Minister declared:

“I am proud to represent a Government who are focusing attention on those at the very bottom end of income.”—[Official Report, 3/3/20; col. 571.]

Two days later, the Office for National Statistics published a bulletin showing that there had been a 7% fall in the real income of the poorest fifth of people, largely due to the benefits freeze. The Budget does nothing to rectify this. It neither offers genuine security to those with the least security nor levels up the living standards of those at the bottom. In the face of growing poverty and hardship, the Government’s priority should be a source not of pride but of shame. Following the remarks of the noble Lord, Lord Hunt of Wirral, I hope that the Government will now prove me wrong, and prove that they are genuinely a one-nation Government.