Commons motion to approve the draft Social Security Benefits Up-rating Order 2020 - Feb 10

The Parliamentary Under-Secretary of State for Work and Pensions (Will Quince)

I beg to move,

That the draft Social Security Benefits Up-rating Order 2020, which was laid before this House on 30 January, be approved.

In my view, the provisions in these orders are compatible with the European convention on human rights. This order reflects the Government’s continuing commitment to support working families and pensioners across the nation. It will increase the basic state pension and the new state pension in line with the triple lock. The basic state pension will increase by 3.9% and we have committed to increase the new state pension by the triple lock. The state earnings-related pension schemes and the other state second pensions, as well as protected payments in the new state pension will rise by 1.7% in line with prices. It will increase the pension credit standard minimum guarantee by 3.9% in line with earnings. It will increase working age benefits by 1.7% in line with prices. Universal credit work allowances will also rise in line with prices. It will increase carers benefits and benefits intended to meet additional disability needs by 1.7% in line with prices. In addition, the carer and disability-related premiums paid with pension credit and working-age benefits will increase by 1.7%.

The Government are committed to supporting the most vulnerable in our society. In this order, the Government propose to spend an extra £5 billion in 2020-21 on increasing benefit and pension rates. With this spending, we are upholding our commitment to the country’s pensioners by maintaining the triple lock and helping the poorest pensioners who count on pension credit; spending an additional £1 billion on working-age benefits and ensuring that we continue to support working people; and providing essential support to disabled people and carers. I commend the order to the House.

8.11 pm

Mike Amesbury (Weaver Vale) (Lab)

This uprating order will increase a range of social security entitlements and pensions. As a result of the Government’s Welfare Reform and Work Act 2016, most working-age benefits and tax credit elements have been subject to a four-year freeze, covering the period 2016-17 to 2019-20. It is a basic human right to have security and stability in our lives, secure housing, reliable income, and support when things get difficult. Society’s choices about benefit levels help to determine the levels of inequality and living standards, sometimes for the most vulnerable in our society.

Kate Green (Stretford and Urmston) (Lab)

I am grateful to my hon. Friend for giving way, especially as I did not have the opportunity to intervene on the Minister. Does my hon. Friend agree that one of the fairnesses that we have to consider is intergenerational fairness? We are seeing a widening discrepancy between the protection for pensioners—rightly—through the rise in the basic state pension, and what is provided for those on working-age benefits. If people on working age benefits are kept in very difficult financial circumstances, they cannot save for their old age. Is not this really politically motivated, rather than a genuine policy to achieve better equality and protect the most vulnerable?

Mike Amesbury

My hon. Friend makes a very valid and powerful point.

For too many of our citizens, there is no such security. The responsibility for this situation lies firmly at the door of the Government, whose lack of compassion and cruel social security policies have afflicted those who are most in need.

Anneliese Dodds (Oxford East) (Lab/Co-op)

Does my hon. Friend agree that many of the cuts have been self-defeating, and current decisions are self-defeating as well? Research by Alma Economics shows that if the Government decided to restore the local housing allowance rates for the cheapest 30% of rents, that would save local authorities, the health system and many others billions of pounds in the long run. Surely the Government need to look at that.

Mike Amesbury

I agree with my hon. Friend, and I will come on to that later in my speech.

Mr Steve Baker (Wycombe) (Con)

I am listening very closely to the hon. Gentleman, and, having skim-read the order, I concede of course that some of the increases are very modest, but my hon. Friend the Minister set out the overall cost of even those increases. What would the Labour party do? How big would its increases be and what would the overall cost be to the taxpayer?

Mike Amesbury

Unfortunately, the Labour party is not in government, but I will say to the hon. Gentleman that the cuts have amounted to £4.7 billion per year, so the so-called investment that the Government propose pales into insignificance against that.

As we have heard from the Minister today, the Government intend to end their four-year freeze on benefits by proposing to uprate working-age benefits in line with the CPI rate as of September 2019, which was 1.7%. We welcome that slight step forward. Remarkably, for a range of benefits and not just universal credit, this will be the first cash increase in basic entitlements since April 2015. It is important to point out that there has not been any recent change in policy from the Government: the freeze was always due to come to an end in April this year, as announced by the previous Chancellor.

If we scratch beneath the surface of the increase, we find that, after adjustment for price increases, the four-year benefit freeze has actually meant a cut in the real level of benefits by 6%. In many cases, that has come on top of earlier cuts. The 2015-16 benefits freeze followed uprating by only 1% each year in the three years prior to its introduction. There is, therefore, now a yawning gap between the level of benefits offered and essential living costs. Those political choices have consequences, with child poverty, homelessness and in-work poverty at alarming levels, as evidenced in the recently published Joseph Rowntree Foundation UK Poverty report.

Indeed, under this Prime Minister, children will receive a miserly increase of 75p per week in child benefit, and the second child just 55p per week.

Debbie Abrahams (Oldham East and Saddleworth) (Lab)

My hon. Friend is making a lengthy and well thought-out speech, unfortunately not reflected by the Government. He mentioned the increase in child poverty and the concerns that so many charities, including the Joseph Rowntree Foundation, have. Their conclusion is that the cuts in social security are driving not only child poverty but disability poverty. Does he agree?

Mike Amesbury

I do agree with my hon. Friend. Social security has become a vehicle for cuts and children have borne the brunt, with over 4 million now in poverty.

The 75p per week for the first child will not even buy a loaf of bread in many shops. As a result of the four-year freeze, families living in poverty are now a total of £560 worse off a year on average, equivalent to three months of food shopping for low-income families. Harsh and punitive Conservative policies such as the benefits freeze, the two-child limit and the five-week wait have created a society in which people are forced to turn to food banks in ever-increasing numbers just to get by.

The flagship social security reform of universal credit is not working. The full roll-out will now be delayed yet again until 2024, seven years behind the original plan. It is driving far too many people into poverty, debt and rent arrears. One of its key defects is the in-built and unrealistic five-week wait. At what stage will the Minister apply common sense and change that to fortnightly payments?

According to latest figures available, in 2018-19 the Trussell Trust distributed just short of 1.6 million emergency food parcels, of which 578,000 went to children—the highest level since the charity opened and up nearly 20% on the previous year. In some parts of the UK—Scotland and London and the north-east—the percentage increase year on year was even higher. That represents a depressing 73% increase in food bank use over the past five years, and the Trussell Trust identifies the failing benefits system as one of the main reasons behind that. Behind these devastating statistics are real people, families and children up and down the country, many of them in the constituencies that the new Tory MPs in the north represent.

I turn to the freeze in the local housing allowance. Evidence suggests that it has been a particular source of hardship because of the increasing number of people forced into private rented accommodation by the shortage of social housing. The charity Shelter has calculated that as a result of the benefit freeze, 94% of areas in the UK are unaffordable for people claiming LHA. Recent research by the charity Crisis and the Chartered Institute of Housing found that almost 93% of areas were still unaffordable. There are huge discrepancies throughout the country. For example, an average of £87 a month would be needed to make the bottom 30% of the rental market available in the UK. However, in London a claimant would need an extra £1,398, so the uprate of £10 per month is totally unrealistic.

Kate Green

As my hon. Friend knows, Trafford in Greater Manchester, where I am a Member of Parliament, has relatively high housing costs. I frequently see people who are driven into rent arrears because of the lack of generosity in local housing allowance. That means that they have to seek advice to avoid penalties or eviction, but that advice is not available. Eventually, the cost piles up and they arrive at the door of the local authority saying that they are now in housing need because they have been evicted from their private rented accommodation. How can that be sensible?

Mike Amesbury

My hon. Friend is totally correct. It is not sensible at all.

The devastating repercussions of 10 years of Tory austerity and the impacts of the benefit freeze will remain for a long time to come. The 1.7% uprate is a token mild thaw at the tip of the iceberg of systematic and pernicious cuts to the benefit system. It is too little, too late, and it does nothing to repair the damage done to people’s lives by this Government’s failed social security policies. It has served to further entrench poverty in society. For those reasons, it is Labour’s intention to abstain from voting on this statutory instrument.

8.22 pm

Chris Stephens (Glasgow South West) (SNP)

There is, of course, nothing to celebrate here. The Conservative Government are trying to clean up the mess they created, and they are not even getting the job done properly. We have repeatedly called on the Government to scrap the benefit freeze. This uprating is of course welcome, but it appears to be too little, too late. The brutal cuts imposed by the Government have entrenched, and continue to entrench, poverty across these islands. A 1.7% increase in working-age benefits does not make up for the damage caused by the four-year freeze. If austerity was really over, the Government would be making up the shortfall.

Let us look at some of the effects. Overall, benefits and tax credits affected by the four-year freeze will be around 6% lower in 2020-21 than they would have been if CPI indexation had been applied during the four years of the freeze. Taking account of all uprating restrictions across the decade, affected benefits are around 9% lower in 2020-21 than they would have been if CPI indexation had applied since 2010. Child benefit and working tax credit elements are between 13% and 17% lower in 2020-21 than would have been the case if CPI indexation had applied throughout the decade.

The Resolution Foundation estimated that the four-year freeze saved the Government £4.7 billion a year by 2019-20, of which £1.8 billion was attributable to the final year of the freeze, and yet the Treasury forecast at the 2016 Budget that the four-year freeze would achieve an annual saving of £3.5 billion by 2019-20. Just last week, the Joseph Rowntree Foundation reported:

“The benefit freeze has seen the value of many benefits fall. The same benefit received in 2019 and 2013 is worth around 6% less”.

We have to wonder about that. If austerity was really over, as we are continually told it is, the Government would make up that shortfall.

I am sad to say that there are 1 million people living in poverty in Scotland, and almost one in four of them are children. In 2019, 250,000 children living in one of the world’s richest nations are growing up in poverty. That is nothing short of scandalous. Poverty is not inevitable. People not having enough money to feed and clothe their children is not something that happens by accident. The existence of poverty in a country as rich as ours is a direct consequence of political choices. The decade of austerity was a political choice. Massive long-term cuts to the social security budget were a political choice. The widening of the holes in the social security safety net so that more families and children would fall through was a political choice. The ill-conceived and hopelessly financed introduction of universal credit was a political choice. Making the poorest, weakest and most vulnerable in our society carry the can and bear the brunt of a financial crisis that had nothing to do with them was, of course, a political choice.

There can be no doubt that one of the main drivers of child poverty in these islands has been the Government’s package of welfare reforms, which by any measure has been an abject failure. How else could one describe a package of reforms the result of which is that 65% of all the children who live in poverty come from households in which at least one adult is working? There is no need to take my word for it; the United Nations special rapporteur on extreme poverty said:

“Changes to benefits, and sanctions against parents…are driving the increase in child poverty.”

Some would still have us believe that it will take decades to turn things around and lift children out of poverty, but I do not believe that that is true. There are measures that the UK Government could take right now that would immediately stop children and their families falling into poverty. One of those would be for the Government immediately to stop the roll-out of universal credit, take their time and find the money to fix the major problems in the system, which they are only too well aware of but choose to ignore. There is no doubt that poverty in childhood leads to poverty of hope, aspiration and opportunity. Most movingly, we hear too often of the deep scars that people have in adulthood as a result of child poverty.

Debbie Abrahams

On that point, I wonder what the hon. Member thinks of the Citizens Advice proposal that all frozen benefits be uprated not just by CPI, but by CPI plus 2% for the next four years. That would go some way to addressing the appalling imbalance, and the poverty that so many of our children and our disabled people have found themselves in.

Chris Stephens

The hon. Lady—my good friend—is right that Citizens Advice has produced an excellent report on this. My local citizens advice bureau bears the brunt of trying to help people fill out forms and navigate their way through the social security system, and I am sure she knows all about that. I hope that the Government will take cognisance of the Citizens Advice report to which she refers.

There is an inescapable and undeniable link between the paucity of affordable rented property in the private rented sector, as we have heard from the shadow Minister, and the increased risk of people becoming homeless simply because they cannot afford to meet the cost of living in private rented accommodation. There is a chasm of difference between what people are expected to pay and what they can afford to pay.

Let us be absolutely clear: this housing crisis—particularly in England—and the rising levels of homelessness and rough sleeping did not happen by accident. There has not been some unforeseen set of circumstances that has led to the number of households living in temporary accommodation in England rising by 60% between 2012 and 2018. No unexpected or unforeseen quirk has led to the number of rough sleepers in England nearly doubling over the past five years. This housing crisis was all too predictable, because just about every stakeholder warned the Government right from the start about the inevitable consequences of pursuing their austerity agenda. When they froze local housing allowance and failed to meet their targets for building social housing, what did they expect to happen other than a rise in homelessness and the number of people sleeping rough on our streets? That is exactly what has happened, so let us call this what it is: a crisis entirely of the Government’s own making.

It is incontestable that the Government’s austerity agenda has had a hugely negative impact on people’s ability to rent private sector accommodation. Research from the Chartered Institute of Housing shows that many LHA rates now fail to cover even the cheapest third of rents, as they were designed to. A survey carried out by the National Housing Federation and the Scottish Federation of Housing Associations found that tenants on universal credit were more than twice as likely as other tenants to be in debt.

There is much more to be done to ensure that we help our fellow citizens escape poverty. I hope that Ministers have seen the two Bills that I presented today, the first of which aims to ensure that people who give up a zero-hours contract job are not subjected to sanctions under universal credit, and the second of which would ensure that the Government would step in to ensure that no one in rent arrears is evicted from their home.

8.30 pm

Stephen Timms (East Ham) (Lab)

I welcome the fact that, for the first time for many years, benefits are being uprated in line with inflation. It is a welcome change and one that is long overdue. But I think we do need to look a little bit at the history of what has happened since 2010, as the shadow Minister has done in part.

In the 2012 autumn statement the then Chancellor, George Osborne, limited increases in most working-age benefits—including those for people in work—to 1% for three years from 2013-14. That was due to end in 2015-16. But then, as we have been reminded, we had the benefits freeze, which froze most working-age benefits at cash levels for a further four years. Thank goodness that freeze is ending, but we have now had seven years without inflation uprating, and the inflation uprating that we are getting through this order is at the lower CPI rate, rather than at the RPI rate that was always used prior to 2010.

The Government have chosen to cut the incomes of those who are assessed as being the poorest, and we all know the consequences. We have been reminded of some of them already in this debate: enormous numbers resorting to food banks; people sleeping rough in Westminster tube station; and child poverty going through the roof.

Social security spending on working-age adults and children amounted to 5.7% of GDP in 2010. It is now down to 4.3%. A single adult’s jobseeker’s allowance will be £74.35 a week from April under this order. It would have been £86.72—one sixth more than it is actually going to be—if RPI uprating had been in place since 2010. Child benefit for the first or oldest child is going to be £21.05 a week after the modest increase that the shadow Minister drew attention to in his speech. If it had been uprated by RPI since 2010, it would have been £26.90 a week—over 25% more than it is actually going to be because, of course, child benefit was frozen in cash terms from 2010, not just from 2015.

This morning Citizens Advice published research entitled “The impact of the benefits freeze on people in debt”, which states:

“Since the benefits freeze began, we’ve seen an increase in the proportion of people we help with debt who have no money left at the end of the month once they’ve covered their living costs. In 2016/17, 32% of all people we helped with debt had no money left after covering their costs, but by 2019/20 this had risen to 38%.”

It argues that the Government should adopt the recommendation of the Work and Pensions Committee to which my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) has already drawn attention. I think the Committee first made this proposal last July under the chairmanship of Frank Field, to whom I pay tribute and who will be greatly missed in the House. The recommendation was:

“From 2020/21, the Government should increase the rates of frozen benefits by CPI plus 2%. That would mean that benefit rates would, after four years, reach the level at which they would have been set if they had not been frozen.”

The Joseph Rowntree Foundation calculates a minimum income standard for a minimum acceptable standard of living for different household types. In 2009, the benefits system provided 70% of that standard for a lone parent with two young children. By last year, that was down to 58%. In 2009, the system provided a childless working-age couple with 42% of the standard. Hon. Members might think that that is low enough, but last year it was down to 30%. The household benefit cap is not being uprated at all, when it certainly should be, and there is no change at all to the harshness of the two-child limit.

Debbie Abrahams

I am grateful to my right hon. Friend—the new Chair of the Work and Pensions Committee—for giving way. Many of us are concerned that the Government’s proposed increase is not at all going to rectify the dreadful social security situation that exists at the moment. Is he as concerned as I am about this?

Stephen Timms

I am very concerned. My hon. Friend is absolutely right. I think that the Government are making sure that the situation is not going to get worse, or at least not much worse, but they are certainly in no way putting right the damage that has been done over the last few years—indeed, over the past 10 years.

Kate Green

Does my right hon. Friend agree that there is a cruel lack of logic in the household benefit cap because it is a blunt instrument that takes no account of different family structures and different forms of need in different households?

Stephen Timms

My hon. Friend is quite right. We were given a rationale when the cap was introduced—it was an extremely blunt one, but it was a rationale—but the benefit was reduced arbitrarily after that.

I have several questions for the Minister. Does he recognise that the freeze has made life much harder for those who depend on benefits, and that they are due a better offer than simply maintaining the current diminished level of income in line with inflation in the years ahead? Does he recognise the force of the case made by the Select Committee under its previous Chair and by Citizens Advice, which is of course drawing in part on its observations from the work it does for the Department, running the help to claim service for universal credit? Does he recognise that benefits need to catch up on ground lost over the past 10 years?

I have one specific technical question. The definition of RPI is to be revised. The Treasury is going to consult on the future definition, which will replace the current definition in a few years’ time. Is it the Government’s intention to make the new RPI the default uprating amount for each year, rather than the CPI figure that is being used this year? I would be grateful if the Minister said a little about the Government’s intentions in that regard.

As has been mentioned already in this debate, there is one part of the system where inflation uprating makes no sense at all, and that is local housing allowance—determining how much housing support claimants in the private rented sector in each locality can receive. Local housing allowance was introduced in 2008 to limit the amount of housing benefit that could be paid. It was set initially at the 50th percentile of rents in a locality, so the effect was to cap housing support at the median rent locally. In 2011, it was then reduced to the 30th percentile, so housing support would cover only the cheapest 30% of accommodation in the area. Since 2016, local housing allowance has been frozen completely in cash terms, while rents have increase by leaps and bounds. That is why, as the shadow Minister, the hon. Member for Glasgow South West (Chris Stephens) and others have pointed out, Shelter and others have drawn attention to the fact that there is now hardly anywhere in the country where people can rent accommodation for the amount set by the local housing allowance. The shortfall therefore has to be made up from people’s other income, and if that is benefit income that has been has been frozen since 2015-16, so people have to pay their increasing rent by somehow reducing what they spend on everything else.

What does that mean in practice? Well, it is a very big part of the reason why so many people are sleeping rough in London this winter. I can remember—I imagine that many of us can—when nobody slept in Westminster tube station overnight. We have all seen the large numbers who seem at times to be camping out there at the moment. That is the consequence, to quite a large extent, of the extraordinary unwillingness to allow the local housing allowance to reflect what is actually going on in housing costs in London.

Last summer, I hosted a visit to my constituency by members of the Archbishop of Canterbury’s Commission on Housing. We called on one of my constituents who lived with his wife and child in a single small, squalid room above a shop on East Ham High Street. Both those parents work in the NHS part-time, but this room was all they could afford. Their four-year-old son was running around when we visited—a very lively youngster. His mother had given birth to a younger sister, but she had died. It was clear that the housing conditions in that room had contributed in no small part to her death.

That is the impact of the grinding down of housing support since 2010. Surely we can do better than that. In its report last July, the Select Committee recommended

“that the Department unfreeze Local Housing Allowance as planned in 2020/21, and restore rates to at least the 30th percentile of local market rates. Thereafter, the Department should commit to uprating Local Housing Allowance in line with rental prices.”

I want to urge that view from the all-party Select Committee on the Minister this evening.

8.41 pm

Will Quince

Let me start by thanking all hon. Members for their contributions. Very many issues have been raised. As much as I much hold back the temptation to hold a second DWP oral Questions session, which I easily could, given the varied range of questions raised, I stress to hon. Members across the Chamber—the Chairman of the Select Committee knows this—that my door is always open. We may not always agree, but there is always a listening ear, and they are very welcome to come to see me or, indeed, write to me.

This order reflects the Government’s continuing commitment to support those in work while protecting the most vulnerable in our society. To reiterate, this Government are increasing the basic state pension and the new state pension in line with the triple lock. We are increasing the pension credit standard minimum guarantee by earnings 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. We are increasing benefits to meet additional disability needs and carer benefits in line with prices. I commend this order to the House.

Question put and agreed to.

Resolved,

That the draft Social Security Benefits Up-rating Order 2020, which was laid before this House on 30 January, be approved.