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The Minister for Employment (Alok Sharma)
It is a pleasure to serve under your chairmanship, Sir David, in this important debate—my first as Minister for Employment—and I congratulate the hon. Member for Liverpool, West Derby (Stephen Twigg) on securing it.
The Prime Minister is absolutely clear: the Government are committed to building a country that works for everyone, where no one and no community is left behind. I would like to think that all Members of the House share that ambition. I completely agree that we need to provide appropriate support for the least well-off and most disadvantaged people in our society, and we must do all we can to improve their lives and the lives of their children. Part of that is making sure that people get help with the cost of living.
Several hon. Members rose—
Alok Sharma
Perhaps I may make a little progress—there will be plenty of time to intervene.
The introduction of the national living wage has given the UK’s lowest earners their fastest pay rise in 20 years. With the increase in personal allowances, the Government have cut income tax for more than 30 million people and taken 4 million low earners out of income tax altogether.
Ms Angela Eagle
The Minister speaks about the income tax threshold, but does he realise that most of the people we are talking about are on zero-hours contracts and really low pay, and they do not pay income tax? None of those tax giveaways have any effect on their weekly income.
Alok Sharma
Four million of the lowest earners have been taken out of income tax altogether, which I hope the hon. Lady will welcome. A typical basic rate taxpayer will now pay over £1,000 less in income tax than they would have done seven years ago.
Maria Eagle
If what the Minister describes is supposedly helping the situation, how does he explain the fact that year on year in Liverpool, the number of people who have to go to food banks to get help with feeding themselves and their families is increasing?
Alok Sharma
Perhaps I may make a little progress, and hopefully I will provide some of the answers that the hon. Lady is looking for.
We plan to further increase the tax-free personal allowance to £12,500 by the end of this Parliament. Working parents are now entitled to up to 30 hours of free childcare, saving them around £5,000 a year. I hope that, whatever our political differences, all Members of the House will welcome those measures. We have also frozen fuel duty, saving the average car driver £850 over the last eight years, compared with the pre-2010 fuel duty escalator.
Mrs Ellman
The information the Minister provides is, of course, welcome, and we are familiar with those announcements. Does he agree that the people in Liverpool, and Merseyside generally, who are going hungry—the people to whom Labour Members are referring today—are those who are, in the words of the Prime Minister, “left out”? What is he going to do about it?
Alok Sharma
Let me come on to that—there is plenty of time left in the debate.
The basic state pension is now at one of its highest rates relative to earnings for over two decades, reversing the trend of decline that we saw between 1997 and 2010. Ultimately, however, work is the best route out of poverty.
Alok Sharma
I thought that the hon. Lady would react as she did, but she should not take my word for it. Let me quote from a recent report by the Joseph Rowntree Foundation:
“People who live in workless households have much higher rates of poverty than those who live in households where at least one person is in work… Rising employment, skills and pay contributed greatly to reductions in poverty over the last 20 years.”
Maria Eagle
The biggest reason now for food bank use in Liverpool—apart from benefit delays and the things that the Minister’s Department does to people—is low income. It is people who are in work, so his point is simply not accurate.
Alok Sharma
I am not sure that I completely understood the hon. Lady, but I was quoting from a report by the Joseph Rowntree Foundation. If she feels that it is inaccurate, she should talk to someone there.
Maria Eagle
Perhaps the Minister will allow me to try again. One of the main reasons that people go to food banks in Liverpool is low income. The income they get comes from work—they are working-age people who are working but do not have enough money to feed their families. The Joseph Rowntree Foundation report is about a countrywide situation. I am talking about what is happening in Liverpool and to my constituents. A lot of people are in work but cannot afford to feed their families on the income they receive. It is simply not good enough for the Minister to say that that is not a problem.
Alok Sharma
I did not say that it is not a problem, and of course I want to ensure that everyone, both in Liverpool and across the country, gets the help they need.
Adults in workless families are four times more likely to be in poverty than those in working families, and children who live in workless households are five times more likely to be in poverty than those in a house where all adults work. We want to see more people in work, and we want to support more people into work. In recent years, the Government have undertaken the most ambitious reform to the welfare system in decades to ensure that work always pays. This reform is already delivering real and lasting change to the lives of many of the most disadvantaged people in our society. Nationally, there are almost 1 million fewer workless households than in 2010. Indeed, workless households are now at an all-time low. In the north-west, the region that many Opposition Members represent, there are around 87,000 fewer workless households than there were seven years ago.
Stephen Twigg
I am grateful to the Minister for giving way. In a sense, he is answering the earlier question, because if the numbers of workless households are going down, yet food bank usage is going up, surely we have a real challenge about families where people are in work still having to access food banks, because of low pay and insecure work.
Alok Sharma
I know that this a very emotive subject and I understand that hon. Members are keen to get answers. I will seek to provide some of those if I may make progress. The latest data shows that the employment rate in the Liverpool city region has seen a 4.1 percentage point increase since 2010 and the comparable national figure shows an increase of 4.2 percentage points.
We have had a discussion about food poverty and more generally about poverty rates. The case is, whichever way you look at poverty rates—relative or absolute; before or after housing costs—none are higher than in 2010. The proportion of people in absolute poverty is at a record low. Across the country, there are 600,000 fewer people in absolute poverty compared with 2010, and in the north-west there are 100,000 fewer people in absolute poverty compared with the three years up to 2010.
Of course, we want to do everything that we can to make sure that those numbers go down further. Let me explain what we are doing in welfare reform to make that happen.
Maria Eagle
The Minister is being very generous with interventions. Given the statistics he has read out, which are trying to show that things are getting better in terms of poverty reduction and more people being in work, can he please explain why the number of people on Merseyside who are having to access food banks in order to eat and to feed their families is still going up?
Alok Sharma
I will come on to that point, but there are complex reasons why people use food banks. I want to go back to the point about work being the best route out of poverty. It is the case that across the country around 75% of children from workless families moved out of poverty when their parents entered full-time work.
Let me come on to universal credit.
Alok Sharma
I will make some progress. I have taken a lot of interventions. Perhaps the hon. Lady will let me continue for a moment.
When it comes to reform, universal credit lies at the heart of transforming the welfare system. Universal credit supports those who can work and cares for those who cannot, while being fair to the taxpayer. [Interruption.] I would just say to the hon. Member for Garston and Halewood (Maria Eagle) that before this role I was the Housing Minister and I had the opportunity to do an engagement tour around the country, meeting social housing tenants with the aim of producing a Green Paper, and I met around 1,200 social housing tenants across the country. There was a discussion around universal credit and I have to tell hon. Members that the vast majority of people I talked to felt that, in principle, universal credit was absolutely right: it is simple, it makes sense and it helps to deliver the benefits that people need on a timely basis. I will come on to talk about the changes that were introduced in the Budget, because we always want to ensure that things can be done better.
Alok Sharma
No. If I may, I will continue for the moment.
There is always a comparison of universal credit with what came before. It is the case that, because of withdrawal rates, tax credits encouraged lone parents to work for 16 hours and couples to work only 24 hours a week between them. Universal credit provides the opportunity for the first time to support people who are in work to progress, so that they can increase their earnings and become financially independent. We have reduced the universal credit taper to 63%, so that people who progress into work can keep more of what they earn. Under universal credit, work always pays.
Alok Sharma
I have to disagree with the hon. Lady’s comment from a sedentary position. It does, because for every extra hour people work, they get to keep more of the money they earn.
Universal credit claimants are able to find work faster and stay in work for longer than those under the system it replaces. Indeed, 86% of people under universal credit are actively looking to increase the hours that they work, compared with only 38% on jobseeker’s allowance.
We have to ensure that help is provided as people seek to find employment. The Government are providing a wide range of support targeted to each individual’s personal circumstances. Under universal credit, people have access to more tools than ever before to underpin their work search and help with budgeting, digital skills, preparing CVs and getting ready for job interviews.
Stephen Twigg
The Minister is obviously ranging somewhat more widely on universal credit. Will he respond to the very specific question that the shadow Minister and I raised about the cliff edge in the rules in universal credit that relate to free school meals? Will he and the Government look again at a very significant negative side of the reform?
Alok Sharma
The hon. Gentleman knows that free school meals are universal for all children from reception to year 2, and currently all children who are the offspring of universal credit claimants are entitled to free school meals. There has been a consultation, which has closed, and the Department for Education will respond.
I am undertaking a programme of visits to jobcentres across the country. It is important for me as the Employment Minister to talk not only to the people who work in those jobcentres, but to those people who are there as customers. Last week, I visited the jobcentre in my local area, Reading, twice, first to talk to the people who run it; and secondly to talk to individual claimants. I sat in on one of the interviews and asked one of these ladies what she made of universal credit. She said:
“Universal credit is amazingly simple.”
Those are not my words, but the words of an individual who went—[Interruption.]
Alok Sharma
That is the word of an individual who actually has made use of the system.
Ensuring that people get the benefits they are entitled to is important. Whether in work or not, jobcentre staff help their customers to ensure they access their full entitlement to benefits and any other support, such as free school meals and free prescriptions. They also have tailored support for those people who face the most complex employment barriers. That can include temporarily lifting requirements where claimants are homeless, in treatment for drug or alcohol dependency, or victims of domestic abuse.
The hon. Member for Liverpool, West Derby raised a point about people having delays in getting money paid to them. The statistic on universal credit is that 92% of all claimants get all the money they are due paid on time. Of course, no one wants to wait for money if they need it—advances can be claimed on the same day in an emergency.
Margaret Greenwood
The Minister is being generous with his time. He is talking about support for the most vulnerable, so would his Government reverse the cuts to support for disabled people under universal credit?
Alok Sharma
Hopefully I will have enough time to respond to that point—I believe the hon. Lady is talking about the higher rate of disability premium.
A number of other points were raised about food banks. Jobcentre staff also work in partnership with a variety of local agencies and signpost claimants to local services, including food banks, to help them access the full range of support available. The hon. Member for Liverpool, West Derby quoted from a report from 2016 by Taylor and Loopstra based on UN data. There are a number of reports, including one on income and living conditions produced by Eurostat, which found that the UK has a lower percentage of food insecurity than the EU average and a lower percentage than Germany, France and Italy. Ultimately, we need to ensure that we get help to people who need it, and that we help them into work so that they can support themselves.
Alok Sharma
I have given way quite a lot in this debate. If I may, I will continue. If I have time at the end, I will of course take further interventions.
Food inflation has been discussed. Food prices have fallen in three of the past four years, which has a positive impact. Let me address up front the question about the use of food banks. The Government do not propose to record the number of food banks in the UK, or indeed the potential number of people using them or other types of food aid. There is a range of available food aid—from small local provision to regional and national schemes—and the all-party parliamentary group on hunger, which set up an inquiry to thoroughly investigate the use of food banks, said that there were numerous complex reasons why people use food banks.
Jobcentres engage regularly with the Trussell Trust, and are encouraged to foster good relationships with local food banks. In Merseyside, all jobcentres have a food bank single point of contact, and jobcentre staff have been working actively with food banks to ensure that staff are up to speed with the changes resulting from universal credit.
The hon. Member for St Helens South and Whiston (Ms Rimmer) mentioned international comparisons. I refer her to statistics produced by the OECD showing that, since the mid-2000s, the UK has been one of only two major advanced economies with increasing redistribution. It found that, since 2010, growth and income from work for the lowest-income households in the UK is higher than in any other major advanced economy.
The Government have always been clear that universal credit would be introduced in a way that allows us to continue making improvements. That is why, at the autumn Budget, we announced a comprehensive and wide-ranging package of measures worth £1.5 billion to address concerns about the first assessment period and the budgeting issues faced by some claimants at the start of their claim. Since the start of this year, claimants have been able to get 100% of their estimated universal credit payment up front as an advance that they can pay back interest-free over 12 months.
I will address a couple of other points, as I have a few minutes. On the point about disability payments, as the hon. Member for Wirral West (Margaret Greenwood) knows, income-related employment and support allowance and the link to disability premiums, including the severe disability premium, are being replaced by universal credit as part of simplifying the benefit process and to address overlaps. Universal credit has two disability elements for adults, mirroring the design of ESA. The higher rate is set substantially higher than the ESA support component equivalent.
Margaret Greenwood
That being the case, why will some disabled people receive £65 a week less than they would have before universal credit?
Alok Sharma
I am happy to have a dialogue with the hon. Lady, particularly in my new role, but I point out, as I have said, that the rate is set substantially higher than the ESA support component equivalent. However, I am happy to enter into a dialogue with her outside this debate.
Maria Eagle
The Minister has spent most of his time replying to this debate talking about universal credit, but the debate is about food poverty. Is he suggesting that, over the next year, as universal credit is rolled out on Merseyside, the number of people having to visit food banks will go down?
Alok Sharma
I cannot predict the future. The reason why I have talked about universal credit is that it is a matter raised by Opposition Members, and because I think that it is important, if we talk about welfare reform, to talk about the current reforms that the Government are putting in place.
In conclusion, the Government’s track record on helping people into work is clear. Unemployment is at a 42-year low at 4.3%, with nearly 1 million fewer workless households than in 2010. Incomes have been rising. Data published last week by the Office for National Statistics showed that in the year 2016-17, real average incomes of the poorest fifth of households had risen by £1,800 since 2007-08.
However one looks at it, poverty rates in the country—relative or absolute, before or after housing—are no higher than in 2010, and within the working-age population, all headline poverty rates are lower than in 2010. Yes, there is absolutely more to do—we certainly cannot be complacent, and I have no wish to do so—but the Government’s reforms have demonstrated real progress in tackling poverty and disadvantage.