Social Security Benefits Up-rating Order 2021
(3 years, 2 months ago)
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Baroness Stedman-Scott
That the Grand Committee do consider the Social Security Benefits Up-rating Order 2021.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)
My Lords, the draft Social Security Benefits Up-rating Order 2021 and the Guaranteed Minimum Pensions Increase Order 2021 were laid before this House on 18 January. In my view, the provisions in these orders are compatible with the European Convention on Human Rights.
The Guaranteed Minimum Pensions Increase Order is an entirely technical matter that we attend to each year. It provides for formerly contracted-out defined benefit occupational pension schemes to increase their members’ guaranteed minimum pension which built up from April 1988 to April 1997 by 0.5%. This is in line with the increase in the general level of prices as at September 2020.
The Social Security Benefits Up-rating Order reflects the Government’s continuing commitment to support working families and pensioners across the nation, especially during a particularly challenging time for many. It will increase the basic state pension and the new state pension in line with the triple lock; increase the pension credit standard minimum guarantee in line with the cash increase to the basic state pension; increase working-age benefits in line with prices; and increase carer’s benefits and benefits intended to meet additional disability needs in line with prices.
In November, Parliament passed the Social Security (Up-rating of Benefits) Act. Without this legislation, state pensions would have remained at 2020-21 levels, because under the existing legislation there is no power to bring forward an uprating order to increase these rates in the absence of an increase in the level of earnings. The legislation allows for state pension, pension credit and widows’ and widowers’ benefit in industrial death benefit rates to be uprated for the 2021-22 financial year, benefiting millions of pensioners.
Under the Government’s triple lock commitment, the basic state pension will continue to be uprated by the highest out of earnings, prices or 2.5%. This year, the Government will draw on the power in the Social Security (Up-rating of Benefits) Act to maintain this commitment to the triple lock. The triple lock has been an invaluable tool in combating pensioner poverty and demonstrates this Government’s commitment to pensioners. This year, the basic state pension will increase by 2.5%, which is the highest of the triple lock figures. The basic state pension will rise to £137.60 a week for a single person. From April this year, the basic state pension will be over £2,050 a year higher in cash terms than in April 2010.
Five years ago, the Government introduced the new state pension, which provides a transparent and sustainable foundation for private saving and retirement planning for people reaching state pension age from 6 April 2016 onwards. We have also committed to increasing the new state pension by the triple lock. From April 2021 the full rate of the new state pension will increase to £179.60 per week.
Turning to the additional state pension, from April state earnings-related pension schemes and the other state second pensions, as well as protected payments in the new state pension, will rise by 0.5% in line with prices.
We are continuing to take steps to protect the poorest pensioners. This includes the pension credit standard minimum guarantee, the means-tested threshold below which pensioner income should not fall. The pension credit standard minimum guarantee will rise by 1.9% to match the cash increase in the basic state pension. Therefore, from April 2021, the single-person rate of this benefit will rise to £177.10, providing a valuable safety net to pensioners.
Working-age benefits will increase in line with prices—or 0.5%. This includes people receiving jobseeker’s allowance, employment and support allowance, income support, housing benefit and universal credit. Those benefits linked to child tax and working tax credits will also be uprated in line with those benefits. This increase to working-age benefits is in addition to the unprecedented support that this Government have provided to those affected by Covid-19. To support individuals through this challenging time, we have mobilised our welfare system with a wide-ranging package of measures worth more than £7 billion, benefiting millions.
The uprating review did not include a decision on the £20 per week uplift to universal credit and working tax credits, announced by the Chancellor as a temporary measure in March 2020. The uplift was enacted for one year under different legislation to support those facing the most financial disruption as a result of the Covid-19 public health emergency, so it is not referenced in the order. This is still being kept under review in light of the ever changing situation we find ourselves in.
Universal credit work allowances will also rise in line with prices. This means that an individual is able to earn more before their universal credit payment is reduced and directs additional support to some of the most vulnerable low-paid working families.
Finally, I turn to disability benefits. Carers and those who face additional costs as a result of their disability will see their benefits increase in line with prices from April 2021 to ensure that they continue to get the support they need. These benefits are: disability living allowance, attendance allowance, carer’s allowance, incapacity benefit and personal independence payment. In addition, the carer and disability-related premiums paid with pension credit and working-age benefits, the employment and support allowance support group component, and the limited capability for work and work-related activity element of universal credit will also increase by 0.5%. The Government remain committed to protecting the most vulnerable.
To conclude, in this order the Government propose to spend an extra £2.7 billion in 2021-22 on increasing benefit and pension rates. With this spending, we are maintaining the triple lock, increasing spending on pensioner benefits by £2.2 billion and upholding our commitment to the country’s pensioners; helping the poorest pensioners who count on pension credit; and ensuring that working-age benefits maintain their value in relation to prices. This is in addition to the comprehensive support package already put in place to support those affected by the pandemic, providing essential support to disabled people and carers. On this basis, I beg to move.
Baroness Drake (Lab) [V]
My Lords, I thank the Minister and welcome the decision to increase the guaranteed pension credit by the value of the cash increase in the basic state pension. Pension credit is targeted at the poorest pensioners, and it has always surprised me that the Government, given their manifesto commitment to the triple lock for the basic and new state pensions, never committed to a protective underpin for our poorest pensioners. Some 1.5 million people receive pension credit, but over a million eligible pensioners do not claim. Now, by not claiming, many will see their annual income reduce by £157.50 when they get their TV licence demand. The BBC, by targeting pensioners in receipt of the pension credit for exemption from the licence fee, perversely excluded over 1 million eligible people for not claiming that credit. Recently there has been radio silence from the Government about how they are progressing and protecting this million, so can the Minister reassure the Committee that they are not walking away from the problem, having handed over policy on pensioners and the licence fee to the BBC?
In the UK, declining levels of household financial resilience were a growing problem before the pandemic and increasingly evident during it, contributing to the easements necessary to create a functioning welfare system. Factors that increase household resilience, such as employment benefits, state benefits, insurance savings and affordable credit, were all weakening. Indeed, only 28% of employers, for example, now provide more than statutory sick pay of £94.25 per week—a reality quickly evident when the virus started to spread. Did the Government give any consideration to increasing the rate of statutory sick pay by more than the 50p in this SI and, if they did, could the Minister share it with us?
Baroness Bowles of Berkhamsted (LD) [V]
I thank the Minister for her introduction and for the letter circulated previously. As far as I can tell, as a non-specialist, the increases are either as required in statute or as promised, with additional discretionary increases that can apply for one year only. That leaves me slightly confused as to what happens after that one year. Perhaps the Minister could explain, as I have not been part of the teams and meetings with her.
Broadly, I do not quarrel with the SIs. Where there are issues, it is with the underlying structures that, notably through the triple lock, reward at a higher rate than those benefits that apply to the harder up. I appreciate that the increase in the basic state pension in cash terms has been transposed over to pension credit but, given that there are other thresholds in play, are there pensioners who will lose out due to the increase in thresholds being less than the 1.9% cash increase?
Regarding the triple lock, can the Minister advise on where we are with the original catch-up idea, which came about because pensions had fallen behind earnings? We have had unexpectedly low earnings rises, and now again through Covid, and there has been low inflation. Originally it was projected that it would take until 2038 for the state pension to reach 26% of national earnings. Is there a new projected date by which that will be reached?
Once again, it is still unfair that the over-70s get the triple lock on only part of their pension and not the whole of it.
Baroness Altmann (Con)
My Lords, I congratulate my noble friend on introducing these SIs and her very clear explanation. Of course, I welcome the Government’s commitment to protecting the vulnerable and the poorest pensioners. Indeed, it is really important for us to make sure that we protect pensioners properly.
As my noble friend knows, I find it difficult to reconcile the statements and the commitment to the triple lock when the triple lock does not apply properly to either the oldest pensioners or the poorest. The basic state pension is £42 less per week than the new state pension, which is available only to those pensioners not over 70. Pension credit increasing in line with the cash increase in the basic state pension is welcome, and is certainly better than prescribed in legislation, which would see an increase in line with earnings, which could be a fall or no increase at all. However, this still leaves the oldest and poorest pensioners at a disadvantage relative to the youngest pensioners, who have much better protection from the triple lock.
I welcome the fact that these benefits are increasing but urge my noble friend, in line with the comments of the noble Baronesses, Lady Drake and Lady Bowles, to look at whether there is an appetite in the department to ensure that pension credit for the poorest pensioners is covered by the triple lock.
On the subject of pension credit, I acknowledge the point made by the noble Baroness, Lady Drake, about the problem of low take-up and the poorest pensioners not necessarily receiving the free TV licence intended for them because they do not take it up. Does my noble friend agree that there might be merit in encouraging the BBC itself to make sure that there are promotions for increasing take-up of the pension credit?
Lord Empey (UUP) [V]
My Lords, I want to comment on work-related benefits. I served on your Lordships’ Select Committee on Food, Poverty, Health and Environment. As we have seen in the past 12 months, one of the growing factors in front of us every day is more children being in poverty and unable to get proper food. UNICEF was even prepared to come into the United Kingdom for the first time. In these circumstances this year, while I fully support the principle that work must pay, I believe that there is an appetite in the community generally to tolerate a modest increase in tax and to target any revenue to eradicate what is a stain across our entire community.
Obviously, there are things I welcome in these instruments, but I must point out that we face the challenge of a whole generation losing out, and not only on school. At least two academic years have been disrupted and who is to say that there will not be a third? On top of that, we have the growth in food banks and people such as Marcus Rashford trying to target children’s needs in recent weeks. In the difficult economic circumstances that they face, I urge the Government to consider that there is, I believe, a preparedness in the community to tolerate a modest increase in tax, even for a couple of years in this Parliament, to ensure that that stain is removed from the United Kingdom.
Lord Foulkes of Cumnock (Lab Co-op) [V]
My Lords, in my two minutes, I have only one issue to raise: the take-up of pension credit. The Minister will recall that many of us were concerned about the loss of free TV licences for those aged over 75, which broke a Conservative manifesto promise. Now only those on pension credit get free TV licences but, as my noble friend Lady Drake said, about 1 million people are eligible but do not claim, so they also lose their right to a free TV licence.
The Minister will also recall that some of us suggested to her a new take-up campaign—a much more vigorous and innovative one than any we have had previously. She kindly arranged for some of us to meet her and the Pensions Minister, Guy Opperman, in November, when they promised action. But more than two months later, apparently nothing has happened. Will the Minister now agree to get together urgently with those representing the interests of older people—Age UK, Age Scotland, Independent Age and all such organisations—and their media representatives to discuss how to launch a new, innovative, exciting, forceful and participatory campaign to get more people who are eligible to take up pension credit? The Minister may also notice that I have, I hope helpfully, tabled an Oral Question for answer on 8 March. That will give her an opportunity to report back on the success of such a meeting and the introduction of this campaign.
Lord Naseby (Con) [V]
My Lords, I declare an interest as a trustee of the parliamentary contributory pension scheme. Looking at the detail of the Guaranteed Minimum Pensions Increase Order 2021, one has to remember that it applies only to those who retired before 6 April 2016. I looked at what would have happened if I had retired on that date and at life expectancy data. It would mean that I got 29 years: that is not a small financial commitment for Her Majesty’s Government.
I want to talk about the triple lock. If one thinks about the challenge to the Treasury—in effect, the taxpayer—it is almost a triple whammy. There is the basic state pension, based on national insurance contributions; the additional state pension, which is partly earnings-related; and all final salary schemes for public sector workers. The financial cost in the past three years has gone up by 21%, which is over £1 trillion in real money. Has not the time come for the Government to review the employee’s contribution through national insurance, and for the public sector as well? This seems fair, not least because a pension—one that is pretty old—is a really good deal. Of course, the cost of that state pension is forecast—admittedly over 50 years—to rise from 4.9% of national income to 6.9%. We need a clear positioning paper, produced by the interested parties in the Government and the pension industry, to look at the financial options for the national pension and state employee pensions.
I offer one saving: the £10 Christmas bonus. This year, after the pandemic, the Chancellor can say, “Father Christmas has run out of money and there will be no Christmas bonus for this coming year.”
Lord Dodds of Duncairn (DUP) [V]
My Lords, I want to highlight three issues. First, on pensions policy, I welcome the Government’s proposal to increase pensions by 2.5%, in line with the triple-lock policy. Despite criticism, that triple lock helps to redress intergenerational unfairness and keeps pensioners’ incomes higher than they would otherwise be, given the relatively low basic level of state pension in the United Kingdom compared to other countries.
Secondly, regarding the Guaranteed Minimum Pensions Increase Order, I want to highlight the unjust frozen pension policy that affects some 500,000 pensioners who, despite paying into the system—and in many cases serving their country—have had their pensions frozen since they moved to places such as Canada, Australia, South Africa and so on. This is a wrong that needs to be put right. Will the Government explain whether action will be taken at long last to pay these pensioners what they are entitled to?
Thirdly, I refer to the £20 a week uplift to universal credit and the working tax credit given last year. Of course, legacy benefits should also have seen the same uplift and the Government should explain why people on legacy benefits have not seen a similar increase. The extra £1,000 and more in universal credit has been very important in helping to support people facing terrible financial disruption from increased unemployment, as well as from increased food, utility and other unavoidable costs as a result of living and working from home. It is clear that the disruption and financial hardship due to Covid will continue beyond April. I urge the Government—I know that this is not a part of today’s instrument, but it is a very relevant issue when we are talking about the uprating of benefits—to announce as soon as possible that the uplift will be extended, rather than waiting nearly until April, when we are approaching a cliff edge.
Lord Davies of Brixton (Lab) [V]
My Lords, I associate myself totally with the remarks of the noble Lord, Lord Dodds, about universal credit and legacy benefits, but I want to say a bit more about the triple lock. I welcome the Government’s continued commitment to the triple lock and, without trying to pre-empt what will be in the Budget, it would be good to have an assurance that the triple lock will work again in the coming year. Can we have a firm commitment?
It is worth pointing out, as always when we talk about the triple lock, that it applies only to the basic state pension and the new state pension. It does not apply to the additional pensions, which some of us still think of as SERPS, it does not apply to deferred retirement additions and it does not apply to the graduated state pension. It would be interesting to have some idea of what proportion of the state pension actually gets the full triple lock and what proportion has had to make do with the very low figure of the CPI this year.
I have a further question about the TV licence. The Government’s approach on this has, of course, been shameful. However, I have heard some suggestion that what has happened to the TV licence has had the perverse effect, as some of us have said, of increasing government expenditure because it has encouraged a noticeable uptake of pension credit. Perhaps the Minister could indicate what net effect it is now having. I am very much in favour of anyone entitled to pension credit claiming it, but if the Government’s idea was to restrain expenditure, how successful have they been?
Lord Truscott (Ind Lab) [V]
My Lords, I will try to be brief, as many issues have been raised by other noble Lords. In these challenging times for pensioners struggling with the pandemic, and with the over-75s faced with paying the BBC licence—in effect a tax imposed by the BBC—many pensioners will receive very little support from the Government. They cannot go on furlough; they are not self-employed; they cannot take out business loans. Many are not on benefits: they either will not or do not claim them. I am glad that the Minister has at least confirmed that the Government remain committed to the triple lock for pensions, but as a number of noble Lords have mentioned the triple lock, can the Minister confirm that this remains government policy, up to and including the next Parliament?
The Deputy Chairman of Committees (Baroness Healy of Primrose Hill) (Lab)
The noble Lord, Lord Randall of Uxbridge, has withdrawn, so I now call the next speaker, the noble Baroness, Lady Ritchie of Downpatrick.
Baroness Ritchie of Downpatrick (Non-Afl) [V]
My Lords, I thank the Minister for her explanation of the regulations. I accept that the Government have a statutory duty to review the rates of social security benefits annually. However, given the ongoing consequences of the pandemic, the rise in the levels of people unemployed and the growing number of people accessing food banks, there is a need for a root-and-branch review of social security and welfare policy.
We should be focused on the principles of the needs of the population. During various debates on social security matters in your Lordships’ House, I have raised this viewpoint. There needs to be a review through the lens of whether people have adequate or inadequate levels of income to live on, taking in poverty levels, the growing need for access to food banks and rising levels of fuel poverty. Like the noble Lord, Lord Dodds, I agree that the uplift in universal credit needs to be retained. It should also have been applied to legacy benefits. The very fact that it was introduced by the Government, albeit temporarily basis, surely pinpointed the need to uplift benefits and to have a complete review. I ask the Minister a simple question: when will the Government undertake this root-and-branch policy review of social security and welfare legislation to bring benefit to people, based solely on income and the needs of each individual in the UK?
Baroness McIntosh of Pickering (Con) [V]
My Lords, I am delighted to follow my friend, the noble Baroness, Lady Ritchie. I congratulate my noble friend the Minister on all that her department has achieved, particularly the new uptake of universal credit claimants, for which she is responsible. This has been a mega-task and it has passed smoothly, so congratulations are in order. An extra £2.3 billion on increasing benefit and pension rates is commendable.
I thank my noble friend for bringing these two orders before the Committee. I am anxious for her to respond to matters that were raised at the end of January, when there was a situation relating to a small but defined cohort of women whose state pension records had not been manually updated. These were women born before 6 April 1953 who were not automatically paid their state pension benefit uplift, which was based on their husband’s national insurance contributions. This has caused a lot of concern to the pension sector and I know that the department will seek to resolve it as quickly as possible.
Like other noble Lords, I would like to comment on the point raised by the noble Lord, Lord Foulkes, that only those on pension credit can claim the free television licence. It is a matter of record that the Government made specific provision with the BBC for the continuation of free television licences for all pensioners over the age of 75, irrespective of whether they were in receipt of pension credit. It behoves the department to go back to the BBC and ask what that money, which was allocated for this purpose, is being used for. If it has gone into the general pot and is being used for productions, that is not a good use of the money; it is not what it was specifically allocated for. I hope that my noble friend will use her good offices to look into that matter. Otherwise, I congratulate her on bringing forward these two orders, which I support.
Baroness Janke (LD) [V]
I thank the noble Baroness for the clarity of her presentation. I agree with the noble Baroness, Lady McIntosh, that thanks are due to DWP staff for their response to the huge uptake of universal credit as a result of the pandemic. I also welcome the £20 a week addition to universal credit and working tax credits and strongly urge the Government to continue this.
There is no doubt that the pandemic has hit the poorest hardest, in terms of both vulnerability to the virus and loss of earnings and employment. A report by the Resolution Foundation, The Debts that Divide Us, is based on the results of surveys of families receiving universal credit. It tells us that more than half of all single parents are now on universal credit. It also shows evidence of the extent to which universal credit claimants are experiencing financial difficulties. One-third of new claimants report that their family income in January was at least 40% lower than pre-pandemic; one in five are behind on essential bills; and three in 10 are more in debt than a year ago.
Looking ahead, the Government must soon make a decision on whether to continue the additional £20 for universal credit and working tax credit. The report tells us that, if this is not continued, basic unemployment benefit will be at its lowest since 1990-91. Stopping the additional payment will contribute to a rise in child poverty of 400,000 by 2021-22. As the noble Lord, Lord Empey, said, this is an absolute crisis, as has been made clear by the fact that many children are now not getting enough to eat.
I am sure that the noble Baroness is familiar with the report by the House of Lords Economic Affairs Committee—chaired by her noble friend, Lord Forsyth of Drumlean—Universal Credit Isn’t Working: Proposals for Reform. It recommends a major review of universal credit in the light of dramatically changed economic circumstances. The noble Baroness, Lady Ritchie of Downpatrick, is right in calling for a root-and-branch review. We need to look at the new circumstances which the current system was not designed for. For example, recommendations in the report suggest that the Government should commit to making the increase in the standard allowance permanent. It also talks about the review of the benefit cap:
“In light of the unfolding economic crisis we recommend that the Government review the level of the benefit cap and its effect on hardship and poverty.”
It also makes clear that the two-child limit is unfair:
“We urge the Government to remove the two-child limit and consider introducing tapered awards for families with more than two children.”
As I said, I very much support a root-and-branch review.
I welcome the Government’s commitment to retaining the triple lock and support the call by the noble Lord, Lord Davies, for a confirmed commitment from them to provide pensioners with clarity for the future. My noble friend Lady Bowles asked that we should look at what progress has been made in recovering the value of the state pension and I would welcome that. The commitment to the poorest pensioners is of course welcome. They have paid their contributions over many years and should reasonably expect to receive a realistic income in their old age. I welcome the comments of the noble Baroness, Lady Altmann, and the noble Lord, Lord Dodds. As other noble Lords have said, the state pension is the lowest in Europe; we are culpable for having allowed this to happen over recent years. I attended the meeting with the noble Lord, Lord Foulkes, about getting the BBC to run a proper take-up campaign for pension credit. We would welcome the Minister’s response to that.
As we face the economic costs of the pandemic and Brexit, it is also important to keep the triple lock, as future generations are unlikely to benefit from the same generous private pensions as their parents. It will be all the more important for the state pension to provide a realistic income. I support these orders and look forward to the Minister’s response to my questions and those raised by other noble Lords.
Baroness Sherlock (Lab) [V]
My Lords, I thank the Minister for introducing these orders and all noble Lords who have spoken today. The guaranteed minimum pensions order is a routine uprating, but I have one question about it. When the House debated the GMP increase order on 3 March last year, I asked the Minister what guidance the DWP would give to pension schemes in the wake of the High Court decision on the Lloyds pension scheme. At that point, some matters had still not been clarified by the court, particularly in relation to past transfers out. However, on 20 November 2020 the High Court ruled that pension schemes have to proactively revisit individual transfer payments made since 17 May 1990, to check if any additional value is due as a result of GMP equalisation. Members who exercised their statutory right to transfer their benefits will be able to have a top-up payment if there is a shortfall between the original transfer payment and what would have been paid if benefits had been equalised at the time, with interest at 1% per annum.
The judgment clarified trustees’ obligations to revisit past individual transfers out when it comes to equalisation, but it also begged the question of how easy it would be for trustees to trace transfers back to 1990. Some schemes may face difficulties in complying. The data may no longer exist or the cost of checking and contacting members may exceed the benefit to them. There are no time limits on claims. Although the court judgment confirmed that past individual transfers must be equalised, details of implementation were left to schemes to decide. Will the Minister update the Committee and say whether the DWP plans to issue any further guidance and support to pension schemes?
On the social security uprating, Labour supports the Government’s decision to honour the triple-lock commitment that will see the basic and new state pensions rise by 2.5% this year. I am glad that the increase has been passed through to the standard minimum guarantee and pension credit. I will be listening carefully to hear the Minister’s answers to the crucial questions raised by my noble friends Lord Foulkes and Lady Drake and to the information relating to pensions sought by my noble friend Lord Davies of Brixton and other noble Lords.
Can the Minister explain the rationale for uprating the savings credit threshold in pension credit only by CPI? The other main working-age benefits and allowances go up in line with September CPI at 0.5%. I am glad that there is an uprating, but people are still suffering the effects of the Government having frozen benefits between 2016 and 2020. Excluding the Covid-related increases, most working-age benefits were between 9% and 17% lower last year than they would have been if benefits had been uprated by CPI since 2010. Those figures are from the House of Commons Library.
When the Minister mentions £7 billion in pandemic support, has she remembered that the OBR estimated that the 2015 Budget would cut more than £9 billion from social security spending by the end of this financial year? No wonder that, prior to the £20 uplift, unemployment support was at its lowest level in real terms since 1992.
I have four questions for the Minister. First, what is happening to the £20 a week uplift to universal credit, an issue raised by many noble Lords? Is it still being taken away in April? Parliament and, more importantly, those who depend on universal credit need to know. Increasing UC by 0.5% is neither here nor there if the Government are going to take £20 a week off it in April. People need that money. Has the Minister read the latest report from the Resolution Foundation, mentioned by the noble Baroness, Lady Janke? Has she heard Citizens Advice say that of the people it is helping, three-quarters of those on uplifted benefits would have a negative budget if the £20 was cut? Has she read the Trussell Trust research showing that one in five UK claimants reported it very likely that they would be forced to turn to a food bank? Has she heard CPAG warn that we are going to see another 200,000 children pushed into poverty? I concur with the concerns raised by the noble Lord, Lord Empey, about food poverty, but I add that a growing number of poor children are in working families.
What about the number of older workers, which is growing during this pandemic? They are at particular risk of long-term unemployment. They do not need their income cut by £20 a week. What of the impact on economic recovery? Money given to poor families is not saved: that £20 a week is spent in shops and businesses, stimulating the economy. We all want to know, what are the Government going to do?
Secondly, why has the £20 not been extended to those on legacy benefits, as mentioned by many noble Lords? Many of them are disabled people or carers. The Disability Benefits Consortium surveyed disabled people claiming legacy benefits and found that almost half—44%—report being unable to pay rent and household bills. I have never had a satisfactory answer to this question, so let me try again: how do the Government justify this blatant unfairness?
Thirdly, why has the benefits cap not been uprated? It has been at the same cash level since November 2016, and the growing number of families hit by the cap see no benefit from any increase, but their living costs are going up too. December’s figures show that 170,000 families are seeing their benefits reduced by £246 a month, on average; 85% of them are families with kids. As the nine-month grace period comes to an end, more and more people who fell out of work in this pandemic are going to bang their heads on that cap and will be hit badly.
Finally, why has bereavement support payment once again not been uprated at all? Can the Minister tell us by how much bereavement support payment has fallen in value since the Minister introduced it by abolishing the previous benefits? Why is it not being uprated?
People out there are desperate: they need help, and they, and we, look forward to the Minister’s reply.
Baroness Stedman-Scott (Con)
My Lords, I begin by thanking all noble Lords who have spoken in the debate. They have demonstrated their vast experience of and commitment to the issues we have been talking about. The debate has covered a number of topics and, as ever, I will try to respond to them in the time available. However, I assure noble Lords that if that is not possible, I will write to them with answers to the questions put.
Let me start by answering the question put by the noble Baroness, Lady Bowles, and my noble friend Lady Altmann: whether the Government are committed to the triple lock. We are committed to ensuring that older people are able to live with the dignity and respect they deserve, and the state pension is the foundation of their support. As with all aspects of Government policy, we keep tax rates and spending under review, and any decision on future changes will be taken as part of the annual Budget process in the context of the wider public finances.
The noble Baroness, Lady Drake, and my noble friend Lady Altmann raised the issue of whether the standard minimum guarantee should be uprated by the same percentage as the state pension. It is right that we should protect the incomes of the poorest pensioner households receiving the standard minimum guarantee. That is why this year we are increasing the guarantee by 1.9% to ensure that, as in previous years when the triple lock has applied to the state pension, pensioners see the benefit of the cash increase in the basic state pension.
I come now to the point about pension credit which was raised by virtually all noble Lords. I thank the noble Lord, Lord Foulkes, for his contribution and for his reminder that this is a work in progress. After his Question about pension credit, we did meet, along with the Minister for Pensions, and we agreed on the actions to take away. We have written to the BBC. Officials have had a meeting with its representatives and we are awaiting the outcome of that meeting. As I say, this is a work in progress. At that meeting we also agreed to review advertising in places such as post offices and GP surgeries. That is a commitment, but there is little point in doing that while Covid is in full flow as not many pensioners are going into these places. However, we will revisit that as soon as things change.
The Minister for Pensions, Guy Opperman, also made a commitment to review all the correspondence sent by the DWP to see how we can change the wording in order to encourage people to apply for pension credit. The review has taken place and there are a few things we need to grapple with. When we write to people about attendance allowance and then about pension credit, we do not want the messages to become confused or for one to overtake the other. Again, officials are working on this. I can give an absolute commitment that when all this work has been completed, we will meet with the same noble Lords we met before as well as with stakeholders to advise them of the outcomes and actions arising from our deliberations.
The noble Baroness, Lady Drake, asked whether pension credit take-up had increased as a result of the BBC policy on free TV licences. I am told that it is too early to tell whether the BBC announcement about changes to the licence concession has translated into an increase in take-up. As I have said, the Minister for Pensions has written to the director-general of the BBC about its collaborating on pension credit. The noble Baroness, Lady Drake, and my noble friend Lady Altmann talked about the further campaign; I believe I have answered that question.
The noble Baroness, Lady Drake, and the noble Lord, Lord Foulkes, asked what we are doing to tackle the low take-up which means that 1 million pensioners will miss out on the pension credit uprating increase. More than 1.5 million older people across Great Britain already receive extra financial help through the pension credit. We want more eligible people to claim what they are entitled to, so in addition to the campaign we launched last February, we will take the actions that I have already outlined.
The noble Baroness, Lady Drake, made the point that statutory sick pay is not high enough. SSP is increased annually in line with CPI. Any greater increase in the rate of SSP would place an immediate and direct financial burden on employers at a time when we know that many of them are struggling. She also raised the question whether the rate is too low to live on. Statutory sick pay should not be looked at in isolation. Approximately 60% of employees receive more than the rate of statutory sick pay from their employer.
The noble Lord, Lord Empey, made the valid point that there are people who are prepared to accept a tax rise, even if only for a short period. I am sorry to say that I cannot make any further comment, other than to say that it is a matter for the Chancellor to take action on if he so desires.
The noble Baroness, Lady Bowles, asked whether the uprating of pension credit would be negated by changes made to other thresholds. Pension credit is not linked to the national insurance system; it takes into account income and capital according to its own rules. The noble Lord, Lord Dodds, raised the very important issue of uprating overseas pensions and the frozen pension situation. The current policy on this is a long-standing one under successive Governments; it has been in place for 70 years and with all respect to the noble Lord, we have no plans to change it.
We come now to the very topical point about the £20 uplift in universal credit. I understand noble Lords’ detailed interest in this matter, which was discussed yesterday at great length in the other place. Let me make the position absolutely clear. The £20 uplift to universal credit and working tax credit was announced by the Chancellor as a temporary measure in March 2020 to support those facing the greatest financial disruption. The measure remains in place until March 2021 and, as the Government have done throughout this crisis, they will continue to assess how best to support low-income families. That is why the Chancellor is looking at the economic and health contexts before making any decisions.
The noble Baroness, Lady Sherlock, and the noble Lords, Lord Dodds and Lord Davies, asked why the £20 uplift has not been extended to legacy benefits. Claimants on legacy benefits can make a claim for UC if they believe that they would be better off. Claimants need to check their entitlement under universal credit carefully before applying, as the legacy benefits will end when claimants submit their claim and they will not be able to return to them in the future. Again, with all due respect to noble Lords, we have no plans to extend it.
My noble friend Lord Naseby asked why the Government are no longer indexing the guaranteed minimum provision for those reaching state pension age. The additional state pension, and with it the option to contract out, ended with the introduction of the new state pension for people reaching state pension age from 6 April 2016. The calculation that provided, for benefits earned between 1978 and 1988, the effect of having their guaranteed minimum pension price protected ended as well. My noble friend also talked about the increase in national insurance contributions. Again, this is a matter for the Chancellor, but I will draw my noble friend’s points to his attention.
The noble Lord, Lord Truscott, asked whether the triple lock would be in place until the next election. As a result of the order, the Government announced measures to increase most state pension rates by 2.5%, in line with their triple lock manifesto commitment for this Parliament.
My noble friend Lady McIntosh asked about TV licence money and how the BBC has used its funding. I have an answer for my noble friend, but perhaps I may write to her, as I will on her point about ensuring that married women who have been underpaid state pension get what they are owed.
Time is short and I am sorry about that because I like to answer all the questions put to me. The noble Baroness, Lady Janke, asked about the benefit cap level, which, again, has been raised many times. The statutory duty is to review the levels of the cap in Parliament at least once a year. This will happen at the appropriate time. On the UC uplift and the reports of the Resolution Foundation, Joseph Rowntree and others, like the noble Baronesses, Lady Janke and Lady Sherlock, I am aware of them, as indeed is the department. The noble Baroness, Lady Janke, also asked about additional support for UC claimants if the uplift is not extended. We should await the outcome of the decision.
I am afraid that I will have to call time at this point. Having outlined the uprating orders for the guaranteed minimum pension and social security benefits, I commend them to the Grand Committee and I beg to move.