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Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Work and Pensions (Justin Tomlinson)
I beg to move,
That the draft Social Security Benefits Up-rating Order 2019, which was laid before this House on 30 January, be approved.
In my view, the provisions in the order are compatible with the European convention on human rights. The order reflects the Government’s continuing commitment to increase the basic and full rate of the new state pension by the triple lock, to increase the pension credit standard minimum guarantee in line with earnings, and to increase carer’s benefits, and benefits intended to meet additional disability needs, in line with prices.
The Government’s commitment to the triple lock means that the basic state pension will continue to be uprated by the highest of rises in earnings, rises in prices or 2.5%. The triple lock has been an invaluable tool in combating pensioner poverty, and keeping it in place gives pensioners the financial security and certainty that they deserve. This year the increase in earnings was the highest of the triple lock figures. As a result, the basic state pension will increase by 2.6% to £129.20 a week for a single person. Consequently, from April this year the basic state pension will be over £1,600 a year higher than it was in April 2010. We estimate that the basic state pension will be around 18.4% of average earnings, which is one of the highest levels relative to earnings for over two decades.
Three 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 on or after 6 April 2016. We have also committed to increase the full rate of the state pension by the triple lock. As such, from April 2019 the full rate of the state pension will increase to £168.60 a week—about 24% of average earnings.
Sir Peter Bottomley (Worthing West) (Con)
If the Minister will not say this, may I? That increase does not go to half our overseas pensioners, including those in South Africa, Canada and Australia and other places—50 countries around the world. Does he agree that it is about time we considered that?
Justin Tomlinson
I thank my hon. Friend, who has campaigned tirelessly on this issue. It has been the case for some 70 years that we do not uprate those pensions, and at this stage there are no plans to make any changes to that.
On the additional state pension, this year the state earnings-related pension scheme and the other state second pensions, as well as protected payments in the new state pension, will rise by 2.4% in line with prices. With pension credit, we are continuing to take steps to protect the poorest pensioners, including through the pension credit standard minimum guarantee—the means-tested threshold below which pensioner incomes should not fall. That will rise by 2.6% in line with average earnings. From April 2019, the single person threshold of this safety-net benefit will rise to £160.25—over £1,800 a year higher than it was in 2010.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
What assessment have the Government made of the changes to pension credit that will come in in May this year, making it unavailable to people whose partner is under 65? How many more pensioners will be driven into poverty as a result?
Justin Tomlinson
There are two elements to that. First, it depends on individual circumstances and the impact of factors such as different arrangements in whether people are working, their caring responsibilities, and their health conditions. Secondly, it is about the principle of fairness, in that those of working age should not be accessing pension-related benefits. We should not be taking people of working age out of the workplace. Pensioner poverty continues to stand at one of the lowest rates since comparable records began, and we intend to keep it that way.
Justin Tomlinson
I will come back to the hon. Lady.
Turning to universal credit, in the 2018 autumn Budget statement the Chancellor announced additional assistance for those on universal credit. As such, the universal credit work allowance will increase by £1,000 after they have been increased by prices, helping 2.4 million working families. This measure raises the amount someone can earn before their universal credit payment is reduced and directs additional support to some of the most vulnerable low-paid working families.
Finally, let me turn to disability benefits. This year the Government will continue to make sure that carers and people who face additional costs as a result of their disability will get the additional support they need.
Alison McGovern (Wirral South) (Lab)
I have to ask the Minister: is that it? We are in the middle of a benefits freeze that is seeing family poverty rise—is that all he has got to say about it?
Justin Tomlinson
With this uprating order, I am bringing forward plans to increase support for some of the most vulnerable people in society to the tune of £3.5 billion, with £3 billion alone to help those with disabilities and long-term health conditions, and pensioners—key people who the Government, as we share the proceeds of growth, will continue to target support towards. That is why the incomes of the lowest-paid have risen by over £400 in real terms since 2010 while the wealthiest fifth of society have seen their income fall by £800. We recognise the right places to target support through additional measures, including the introduction of the national living wage, worth £2,000 a year, and the increase to the income tax threshold of £1,200.
Justin Tomlinson
I will make some more progress.
These increases will cover disability living allowance, attendance allowance, carer’s allowance, incapacity benefit and personal independence payment. They will all rise by 2.4%, in line with prices, from April 2019.
Neil Gray (Airdrie and Shotts) (SNP)
I thank the Minister for giving way. I appreciate some of the uprating, but we have to note, as key stakeholders in this sector have, that the biggest driver of child poverty that this Government are enforcing is the benefit freeze. With £4.5 billion due to be saved this coming year, why have the Government not brought forward the necessary legislation to scrap the final year of the freeze?
Justin Tomlinson
As I have set out before, as the economy has continued to grow, we have been able to share the proceeds of growth to support some of the most vulnerable in society. That has seen increases to the income tax threshold, which will reach £12,500 this year, taking 4 million of the lowest earners out of paying any income tax at all. We are also seeing significant additional support for those with children. Whereas spending on childcare was £4 billion in 2010, it will be £6 billion by 2020—a 50% increase as part of our doubling of free childcare support, particularly helping lone parents who seek to take advantage of the record employment in all regions.
Alison McGovern
I thank the Minister for giving way again. He knows as well as I do that none of the figures he has just announced add up to the £12 billion of welfare cuts previously announced in this House by George Osborne. By the end of the benefit freeze and the other measures that the Government have introduced, children in poverty in this country will be worse off—is that not right?
Justin Tomlinson
But we know from announcements in the last two Budgets that spending on working-age benefits will be £2 billion higher than it would have been under the legacy benefits. That is why we now see 300,000 fewer children in absolute poverty, as we continue to target support at the most vulnerable in society.
Justin Tomlinson
I am going to make some progress.
In addition, the carer and disability premiums paid with pension credit and working-age benefits, the employment and support allowance support component and the limited capability for work and work-related activity elements of universal credit will increase by 2.4%. Those increases will ensure that our welfare system continues to provide the most support for the people who need it.
In conclusion, in this order the Government propose to spend an extra £3.7 billion in 2019-20 on increasing benefit and pension rates. With this spending, we are upholding our commitment to the country’s pensioners by maintaining the triple lock, helping the poorest pensioners who count on pension credit, ensuring that working people can earn more before their universal credit payment is reduced and providing essential support to disabled people and carers. I commend this order to the House.
Margaret Greenwood (Wirral West) (Lab)
This uprating order increases a range of social security entitlements. However, it does not uprate those included in the Government’s freeze to working-age benefits enacted in the Welfare Reform and Work Act 2016—a freeze that is causing real hardship to some of the poorest people in our country. The Minister set out the range of benefits to be uprated in line with the consumer prices index. The order also increases the state pension in line with the triple lock—a measure that the Opposition fully support—and increases universal credit work allowances by £1,000, in line with the announcement in the last autumn Budget.
While we welcome measures to increase those payments, we are deeply concerned that most working-age benefits remain frozen. The fact is that austerity continues under this Government, and it is pushing individuals, families and children into poverty. This order fails to uprate a long list of social security benefits: child benefit, jobseeker’s allowance, employment and support allowance, income support, housing benefit, local housing allowance rates, child tax credit, working tax credit and the equivalent elements in universal credit. None of those are uprated by this order.
Let us think for a moment about who that failure affects. It is the person who has just lost their job after working for 20 years in the same firm. It is the parents struggling to feed their children. It is the sick or disabled person who is looking for work. These are vital social security payments that should lift people out of poverty and ensure that they do not become destitute.
Ruth George
I thank my hon. Friend for being prepared to give way to me, which the Minister was not. Does she agree that the freeze on housing benefit and local housing allowance is driving not only people of working age but more pensioners into poverty? Contrary to what the Government claim, pensioner poverty has risen by 0.3 million, and we are seeing more and more elderly people who have to rent houses suffering because of it.
Margaret Greenwood
My hon. Friend makes an absolutely pertinent point, and she does so with her usual alacrity and attention to detail.
These vital social security payments should lift people out of poverty and ensure that they do not become destitute, but under this Government that aim is not being met. Last year, research by the Joseph Rowntree Foundation found that more than 1.5 million have experienced destitution in the UK, and the social security freeze is a key reason for that. To put this in perspective, destitution in this context—[Interruption.] Yes, destitution. I do not know why the Whip on the Government Front Bench finds destitution such a matter for mirth.
The Lord Commissioner of Her Majesty’s Treasury (Craig Whittaker)
You don’t know the meaning of the word.
Margaret Greenwood
Well, let me explain. In this context, destitution means that a person has lacked two or more of the six essentials in the last month—[Interruption.]
Margaret Greenwood
Thank you, Madam Deputy Speaker.
To put this in perspective, destitution in this context means that a person has lacked two or more of the six essentials in the last month—shelter, food, heating, lighting, clothing and basic toiletries. It is truly shocking that 1.5 million are going without basic essentials in modern Britain.
The Social Metrics Commission, whose members are drawn from the left and the right of the political spectrum, has found that 14.2 million people in the UK are in poverty, including over 4 million children. More than one in 10 of the UK population live in persistent poverty. This is a shocking indictment of a country that has the fifth biggest economy in the world.
Heidi Allen (South Cambridgeshire) (Ind)
I want to put on the record that I have visited some of the poorest parts of the country in recent weeks with the right hon. Member for Birkenhead (Frank Field), and I can confirm that I have seen this destitution with my own eyes. I have spoken to individuals who have literally £5 a week to live on for a variety of reasons, including their inability to access universal credit, but the overriding fact is that people can no longer afford to live on the subsistence level that universal credit and working-age benefits are set at—they cannot.
Margaret Greenwood
I thank the hon. Lady for making the point so powerfully.
The benefit freeze increases poverty. According to the Joseph Rowntree Foundation, the freeze is set to drive almost 500,000 more people into poverty by 2020. In 2018, a couple with children claiming universal credit were up to £500 worse off, and a lone parent with children was up to £400 worse off, due to the benefit freeze. The JRF says that the freeze is the single biggest policy driver behind rising poverty levels. Before the freeze was introduced in the Welfare Reform and Work Act, working-age benefits were capped at 1%, yet living costs are rising. In the 12 months to September last year, prices grew by 2.4%, according to the CPI inflation measure. The Joseph Rowntree Foundation says that between the introduction of the benefits freeze in April 2016 and November 2018, the annual cost of living for people on low incomes rose by £900.
Rising living costs and frozen social security mean that the value of benefits is increasingly inadequate to protect people from poverty. A recent report by the National Audit Office shows how the real value of the basic rate of jobseeker’s allowance and income support has fallen nearly every year since 2012-13, and it is now below its value in 2009-10. Overall, the real cut to many benefits from the four-year freeze is over 6%. According to the Resolution Foundation, child benefit is now already worth less than it was in April 1999. Beyond a family’s first child, child benefit in April 2019 will be worth 14% less than it was when it was fully introduced in April 1979. This is compounded by the Conservatives’ broken economy: low wage growth and the rise of insecure and zero-hours contracts mean that incomes are failing to meet the rising cost of living.
Alison McGovern
Simply, child benefit is easy to claim and has wide support in society, so are not the statistics my hon. Friend has laid out absolutely terrible for working families?
Margaret Greenwood
My hon. Friend makes an absolutely pertinent point, and I thank her for it.
Mr Philip Hollobone (Kettering) (Con)
The hon. Lady has concerns about working-age benefits—we all understand that, and she is right to highlight them—but at the beginning of her speech, she spent about five seconds on the £3 billion extra going to pensioners. Does she recognise that never in our country’s history have we ever spent more on the state pension than now, and the average pensioner is getting £1,600 a year more now than they were when Labour left office?
Margaret Greenwood
I will come on to pensions further on in my speech, if the hon. Gentleman will wait for that.
Some 8 million people are in poverty and live in families where at least one person is working. According to Shelter, more than half of homeless families in England are in work. Under the Conservatives, having a job is not even a guarantee that someone can avoid homelessness. The benefit freeze cannot be seen in isolation. It is just one part of the Conservative austerity programme that has seen billions cut from public services around the country and taken the core out of our communities. The Conservatives have targeted social security with devastating cuts, taking vital support from poor and disabled people. According to figures produced by the Library, measures announced in the June 2010 Budget onwards are forecast to cut social security by £36 billion in 2020-21. Nearly £5 billion is forecast to be taken from disability benefits, including employment and support allowance and incapacity benefit; £4.6 billion from tax credits; and £3.4 billion from child benefit. These cuts have had a devastating impact on the incomes of millions of people. The freeze should be seen in the context of the chaotic roll-out of the Government’s failing flagship social security programme, universal credit.
Jim McMahon (Oldham West and Royton) (Lab/Co-op)
I congratulate my hon. Friend on the points that she is making, many of which will resonate with my constituents. Does she agree that in-work poverty is a modern-day scourge on British society, and it exposes the lie that if someone is willing to work hard and make their own luck they can get on in life? Absolutely the opposite is true for too many people under this Government.
Margaret Greenwood
My hon. Friend is absolutely right, and there is a real sense of betrayal that that myth has been perpetrated by Government Members.
It is clear that universal credit is not working. It is driving many people into poverty, debt and rent arrears. One of its key defects is the inbuilt and unrealistic five-week wait. Originally it was even worse—a six-week wait. It seems that that senseless policy was devised by the Government without any thought for how people are supposed to survive for five or six weeks without any payment at all. The Secretary of State herself has spoken of the link between universal credit and the significant rise in food bank use. Why then have the Government failed to tackle this issue and why do they offer people a loan, rather than solving the problem?
The Secretary of State has said that the benefits freeze will not be extended beyond next year, but families cannot afford another year of the freeze. Next year alone, the benefits freeze is expected to cut £1.5 billion from the value of working-age benefits. We have called on the Government repeatedly to end the benefits freeze. It is not too late for them to stop the freeze. Ending it a year early would lift 200,000 people out of poverty altogether and boost the incomes of 13.7 million people on low incomes by an average of £270. The Government might be reluctant to do that now because the next financial year is only weeks away. However, when there is a desire to get a short Bill through and general agreement that it is non-contentious, Parliament can move primary legislation along quickly. As we saw in the recent work and pensions estimates debate, there is a cross-party desire to remove the damaging benefits freeze.
Part of the Government’s concern might be that the passage of such a Bill would be slowed down by amendments, so we will lay down a challenge to them: if they introduce a short Bill to end the benefit freeze one year early, Labour would support it and do whatever is possible to ensure its smooth passage before the next financial year. Will the Government agree to this measure, which would take hundreds of thousands of people out of poverty?
The increase in universal credit work allowances was introduced after considerable pressure from the House and Labour Members in the autumn statement. We welcome the increase, but we question why the Government cut the work allowances in the first place only to partially reinstate them a few years later. The 2015 cuts to work allowances dealt a major blow to the work incentives of universal credit and took money out of the pockets of working families. According to the Resolution Foundation, the increase to work allowances announced in the autumn restores only half the original cut overall. There are no work allowances for single people and couples who do not have a disability. Will the Government revisit this decision?
Turning to the uprating of the state pension in line with the triple lock, we are pleased that the Government have kept to this, despite the Conservatives’ plan to scrap the triple lock, which they announced in their manifesto. Presumably, the pressure from Labour Members made them think about that again. The latest figures show that pensioner poverty, as my hon. Friend the Member for High Peak (Ruth George) said, is rising again, with more than 300,000 additional pensioners living in poverty compared with 2012-13. That could be made worse by the news, slipped out on the eve of an all-important Brexit vote, that mixed-age couples will no longer be able to claim pension credit. They will instead be forced into making a universal credit claim, and some couples may lose as much as £7,000 a year as a result. Cumulatively, the cut amounts to £1 billion over the next five years. What assessment have the Government made of the effect this cut will have on pensioner poverty?
As the Government are still recklessly failing to rule out a no-deal Brexit, the threat of no deal and the effect it would have on the state pensions of UK citizens living abroad looms ever greater. As has been mentioned, the Government already withhold the pension uprating from pensioners living abroad in many countries outside the EU, an injustice Labour has pledged to reverse. In their no-deal planning, the Government have failed to commit to uprating the state pension across the EU beyond 2019-20. I have met pensioners who are very worried about this scenario and the effect it will have on pensioner poverty abroad. People who previously moved to the EU did so on the understanding that their pensions would be uprated. Why will the Government not give assurances to protect UK pensioners living abroad, whatever the outcome of the Brexit negotiations?
The Government have failed to address the financial hardship faced by millions of women born in the 1950s due to changes in pensions policy. Why, despite constant lobbying raising awareness of the issue, have the Government failed to take action? The Conservatives’ austerity agenda has inflicted real hardship on many of the poorest and most vulnerable people in our society. It has also drastically undermined our social security system.
We on the Labour Benches believe that we need a social security system that is valued as highly as our NHS and is there for any one of us should we need it. The Government are failing to deliver. If the Prime Minister was really serious about austerity being over, the Government should take action to tackle the rising poverty we are seeing throughout our country.
Paul Masterton (East Renfrewshire) (Con)
The greatest achievement of the modern capitalist system has been its ability to consistently deliver rising living standards across the globe. With higher living standards come longer lives, and that is absolutely something to be celebrated. Many of us can now look forward to living healthy and fulfilling lives into our 70s, 80s and, God forbid, possibly even beyond.
Alison Thewliss (Glasgow Central) (SNP)
The hon. Gentleman is making a point about life expectancy. Is he not aware that recent figures suggest that life expectancy is now rolling backwards and that a good deal of that could well be attributed to Tory austerity?
Paul Masterton
I should point out that I spent 10 years as a pensions specialist before coming into this place. The hon. Lady is not actually correct. What has happened is that the increase in life expectancy is slowing down. That is not a UK-only phenomenon; it is happening right across the western world because of very large advances. It is not unreasonable or linked to austerity. Longer lives mean that there will be an increasing number of older people in our society; the proportion of people aged 85 and over is projected to double over the next 25 years.
Debbie Abrahams
I am afraid that the hon. Gentleman has made an error. Public Health England published a report, alluded to by the hon. Member for Glasgow Central (Alison Thewliss), that says exactly that life expectancy is flatlining for certain groups but going backwards for others and for certain regions. Not only that, it pointed the finger at austerity as the cause.
Paul Masterton
I thank the hon. Lady for that intervention, but I would point out that that is not what the hon. Member for Glasgow Central (Alison Thewliss) actually said.
I want to address the order, which delivers on the triple lock to the state pension and provides an extra £3 billion for pensioners in 2019-20, uprating in line with earnings at 2.6%. The UK has a system whereby today’s taxpayers pay for pensions currently in payment. When people are living healthier lives for longer, spending much greater proportions of our lives in retirement, that is both unfair and unsustainable. The figure has already grown from 26.5% in 1981 to 33.1% in 2013. In 2010, the basic state pension stood at 16% of average earnings. Thanks to the triple lock, it will soon be around one quarter of average earnings. That has contributed to pensioner poverty falling significantly in recent years and the Government can be rightly proud of that. By some estimates, typical pensioner households now have higher incomes than their working-age counterparts. The triple lock has therefore served its purpose, and I would argue that it cannot be maintained indefinitely.
Jim McMahon
Does the hon. Gentleman see that as a justification for removing the free TV licence?
Paul Masterton
I thank the hon. Gentleman for that point. I will come on to some of the questions about universal pensioner benefits in just a second.
As the hon. Member for Wirral West (Margaret Greenwood) mentioned, all Conservative MPs were elected on a manifesto commitment to replace the triple lock with a double lock of inflation and earnings from 2020. I believe that that was the right policy, and it would of course be more generous than the Cridland review’s recommendation of moving to a simple earnings link. Even this year, we are raising the state pension in line with earnings, because they have risen above the 2.5% floor the triple lock provides. The system should of course provide generous support for vulnerable pensioners, but that support should be properly targeted.
The current universal system means precious public funds are being spent on well-off pensioners. In fact, the richest one fifth of pensioners on average receive a higher weekly income from benefits, including the state pension, than the poorest one fifth. That would be a shocking statistic even without the context of strained public finances. If we are serious about addressing intergenerational unfairness, we must recognise the unfairness of allowing higher income pensioners, many of whom remain in very well-paid employment—for example, as MPs—to retain certain entitlements, while workers on an equivalent income lose their child benefit and their marriage allowance, to give just two examples.
We are building huge levels of intergenerational inequity in this country under the current system that the triple lock, having done what it was designed to do, will only continue to exacerbate. If we want to avoid increasing the burdens on younger workers to fund large transfers of wealth to better-off pensioners, issues around the triple lock and, although they are not in the scope of the measure today, universal benefits need to be addressed. Why are we increasing and providing these benefits to extremely wealthy individuals if it means having to freeze the entitlements for those who are in work and struggling to make ends meet?
I know that the political reality following the experience of the 2017 election meant that that manifesto commitment had to go and that that could easily lead the Conservative party to conclude that it has had its fingers burnt on many of these issues and should steer clear of them in future, but that would be a betrayal of my generation and those to follow. While I, of course, support the uprating order and particularly the increase to the UC work allowances, which many Government Members lobbied very hard for, I hope that the door is not being slammed shut on the grown-up discussion that we all need to have in the House about the triple lock and other universal pensioner benefits in the near future.
Brendan O’Hara (Argyll and Bute) (SNP)
As much as on one level I would love to say otherwise, with some reluctance I say that we will not oppose this statutory instrument this evening. However, just because we do not seek to block these paltry, parsimonious increases to some social security benefits, Government Members should not think for one moment that we think that these miserable, inflation-linked rises are in any way adequate or go far enough to assist those in our society who are in most need of help.
Alison Thewliss
Does my hon. Friend agree that the WASPI women are one such group who deserve a pay rise and deserve the money that they have paid in but have not received? Does he pay credit to the women who came to march in Govan a couple of weeks ago not just from Scotland, but from other parts of these islands?
Brendan O’Hara
I absolutely do. My hon. Friend and many other Opposition Members have been fantastic champions of the WASPI women. I pay tribute to the WASPI women—in my time as a Member of Parliament, I do not think that I have come across a more co-ordinated, invigorated group. Those who attended in Govan should be left in no doubt that we know that they have not gone away and that they will not go away until justice is done.
As far as the Scottish National party is concerned, the Government stand accused of deliberately widening the gaps in the social safety net. If they push on with the final year of the benefit freeze, they will do so in the full and certain knowledge that those gaps will get wider. As they widen, low-income families, children, the sick, the working poor, the unemployed, the vulnerable and disabled people will continue to fall through that net—the collateral damage in the Government’s ideological crusade to seek to balance their books on the backs of the weakest in our society. I believe that, along with the catastrophic Brexit that we are about to face, entrenching poverty across the UK will be this Government’s legacy. I reiterate that these cuts are not a necessity. This is a political choice. These cuts are simply ideological.
Almost two years ago, the Prime Minister said famously, in response to a nurse who asked why she and her colleagues had not been given a pay rise, that
“there isn’t a magic money tree that we can shake that suddenly provides for everything that people want”.
Really? No magic money tree? You could have fooled me, because as far as I can see, there always seems to be a magic money tree handy when the Prime Minister needs £1.6 billion to bribe English MPs to back her appalling Brexit deal. There always seems to be one when her Government need to find £1 billion to buy off the Democratic Unionist party in order to keep themselves in power. Of course, there is always a magic money tree around when the historically hopeless Transport Secretary needs to be bailed out when he—as we know he will—messes things up again. Perhaps a more accurate answer to that nurse would have been, “Of course there’s magic money tree but not for the likes of you and those others who need it most.” Perhaps an even more honest answer would have been, “Of course there’s a magic money true, and you and the millions of people across the UK hammered by this Government for almost a decade are that money magic tree,” because the billions of pounds taken from the poorest and most vulnerable in our society have gone to bankroll much of the Government’s programme, and it has left deep wounds across many communities in the United Kingdom.
Stephen Kerr (Stirling) (Con)
As usual, the hon. Gentleman makes an impassioned speech—I admire the passion he brings to this debate—but the SNP are running away from their responsibilities for certain social security payments that it is within their power to take responsibility for. They cannot even begin to put their arms around the administration of those devolved responsibilities until 2024. When they talk in such impassioned terms, we have to match their words, sentiment and passion with the reality of the actions of the SNP Scottish Government, which are lacking in this significant area.
Brendan O'Hara
That is the sort of patent nonsense I have come to expect from Conservative Members. The Scottish Government have spent hundreds of millions of pounds in mitigating the worst excesses of this callous UK Government. The bedroom tax, universal credit and carer’s allowance have all been mitigated by the Scottish Government. However, I am sure the hon. Gentleman would agree that the Scottish Parliament is not a mitigation Chamber for this Government. As long as we are to be in this place and this Government control the vast majority of welfare legislation, this is the source of the problem. As responsibility for benefits gets to the Scottish Parliament, we will use it properly and in time, but my goodness I will take no lectures from the Conservative party about universal credit and welfare.
I reiterate the oft-made calls from the SNP Benches for the UK Government to end their deeply damaging and socially divisive benefits freeze. In the last three years alone, the value of benefits affected by the freeze has fallen by more than 6%, meaning that those who can afford it the least have been hardest hit. This is seen as one of the key drivers in pushing up the number of children living in poverty across the UK. Data from the Office for National Statistics shows the reality of the benefits freeze on something as simple as the cost of basic foodstuffs. In the past three years, when working age benefits have not increased at all, the reality facing families on benefits is that bread is now 11% dearer, sugar is 17% more expensive, whole milk is up 12%, tea and coffee are up 7% and butter is up an incredible 23%. That is the price increase since 2016.
It goes without saying—or it should—that poorer families are hit hardest by economic shocks. The poverty premium means that what middle-income families may consider to be a small economic shock, such as a rise in the cost of bread or milk, has a much greater impact on those with smaller incomes who have less disposable income. The Social Metrics Commission report on poverty in the UK published last year found that 2.5 million people were living less than 10% above the poverty line. Relatively small changes in their circumstances could mean they easily fall below it.
Alison Thewliss
My hon. Friend is making some very good points about the cost of living. Is he aware that the UK Government’s cuts and their restricting of the child element of universal credit to the first two children in a family mean that a single mum with three kids working 16 hours on the Government’s pretendy living wage will have to work 45 hours to make up the difference from the cuts?
Brendan O'Hara
I was aware of that. The statistics are shocking, as I will come on to shortly.
In this, its final and most punishing year, the benefits freeze will claw back nearly £4.5 billion. That is nearly £1 billion more than the amount for which the Government budgeted. Late last year, the Joseph Rowntree Foundation said that, by lifting the freeze a year early, the Government could take 200,000 out of poverty. Given the economic turmoil that is expected as a result of Brexit, the Government know that the quickest way in which they could get money to those who need it most would be simply to lift the freeze. It is not too late to do that. As we heard from the hon. Member for Wirral West (Margaret Greenwood), they could introduce primary legislation as soon as they wanted in order to remove the four-year freeze section from the Welfare Reform and Work Act 2016, and they could introduce a statutory instrument to uprate benefits ahead of April. Like the hon. Lady, I can guarantee the support of my right hon. and hon. Friends if the Government were to take that bold and imaginative step.
We said at the outset, back in 2015, that the imposition of a benefits freeze was morally reprehensible, but to continue that freeze in the face of the almost unprecedented economic uncertainty caused by Brexit would, in my opinion, be an unforgivable abuse of the weakest and the most vulnerable in our society. In his report of November 2018, the United Nations special rapporteur on extreme poverty and human rights wrote:
“Given the vast number of policies, programs and spending priorities that will need to be addressed over the next few years, and the major changes that will inevitably accompany them, it is the most vulnerable and disadvantaged members of society who will be least able to cope and will take the biggest hit.”
Worryingly, he also wrote that, on the basis of his meeting with UK Government officials,
“it was clear…that the impact of Brexit on people in poverty is an afterthought”.
If, back in 2015, the Government intended those receiving benefits to suffer the effects of austerity more than most, they have certainly succeeded. Recently published statistics from the Resolution Foundation make sobering reading. According to the foundation, basic support for jobseekers will be equivalent to 14.5% of average earnings in 2019-20, its lowest ever level. Only once since its introduction in 1979 has child benefit for a first child been lower, and for a family with two children, its value has never been lower.
We all know that the 2015 Budget contained some of the most punitive cuts in social security that this country has ever seen, which are now beginning to actively reverse previous reductions in child poverty. Today, in some of the poorest areas of the United Kingdom, child poverty rates are running at 50%. That is an unbelievable figure in one of the wealthiest countries in the world, although, sadly, it is all too believable in one of the most unequal countries in the developed world. According to Oxfam’s analysis of the 2016 Credit Suisse report, just 600,000 of the UK’s richest people are worth 20 times as much as the poorest 13 million combined.
It is predicted that, if the Government continue on the same path, 200,000 more children will be growing up in poverty by 2020. The Resolution Foundation has said that child poverty is projected to rise by a further 6% by 2024, which would mark a record high. I understand that the Government will soon publish some very damning child poverty statistics, but must we wait for those figures to come out before the Government start to listen to calls for them to change direction? According to the Child Poverty Action Group and the Institute for Public Policy Research, Government policy, particularly the two-child policy, will be responsible for pushing hundreds of thousands of children into poverty. When giving evidence to the Work and Pensions Committee in December 2018, CPAG said of the two-child policy:
“You could not design a better policy to increase child poverty than this one”.
Alison Thewliss
That is absolutely right. It is welcome that the Secretary of State rowed back on making the policy retrospective, but it will still have a huge impact on child poverty in the future. If it is unfair to some families, it should be deemed to be unfair to all of them, and the policy should go altogether.
Brendan O’Hara
Absolutely. I could not have put it better myself.
What the Government have created is a social security system that believes people can be punished out of poverty. They have created a system where benefits are fraught with the threat of sanctions, and where disability assessments are psychologically and physically distressing and involve an appeals system so complex and drawn out that they actively discourage claimants from accessing the support they are due.
This is not a system based on dignity or respect; it is a system where all too often compassion is the exception. This is a system deliberately designed to afford the individual claimant as little personal respect as possible, and a system deliberately designed to make the poorest and most vulnerable in our society pick up the tab for an increasingly incompetent Government as they desperately cling to power.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
It is a pleasure to follow the hon. Member for Argyll and Bute (Brendan O’Hara). I think it would be useful to reflect on the categories of claimant who will not be receiving this uprating. Among those who will not receive any additional support this year are people on child benefit, on jobseeker’s allowance, on employment and support allowance who are looking for work, on income support and on housing benefit. It will not affect local housing allowance rates, child tax credit, working tax credit and the majority of comparable elements of universal credit. These have all been subject to a four-year freeze, and before that they had two years of just a 1% uprating. The freeze since 2015 is equivalent to a 6.1% cut. So I would be grateful if the Minister could confirm the savings to the Exchequer for this year alone. Could he also confirm that 10.5 million households will have the equivalent of £150 less in support available to them?
We have already heard estimates of the impact on child poverty, but it is important to reflect on them again. The freeze of child benefit and the child element of universal credit will be responsible for pushing 200,000 more children into poverty by 2020. The Minister said at the beginning of this debate that in his view the Human Rights Act is not affected. One of the rights in the Act is the right to education. How can children in poverty who are hungry and cold maximise the potential made available to them through education if they are hungry? More and more children are facing that.
More and more people from across all parts of this House are calling for the freeze to be ended, as are charities. My hon. Friend the Member for High Peak (Ruth George) has written to the Chancellor and the Secretary of State calling for the freeze to be lifted. I hope that the Minister can give us some good news at the end of the debate.
We had the DWP estimates debate last week, as I know you are aware, Madam Deputy Speaker; you were in the Chair at the time. We debated how in some respects the DWP budget has increased to cover the additional pensioners we now face and the fact that tax credits in terms of universal credit have transferred from HMRC to DWP. But, as has been mentioned, the generosity of other social securements has actually decreased. The freeze and other social security changes have meant there have been £30 billion of savings to the Exchequer. By 2021, that will be £36 billion, rising to £38 billion by 2023. I understand that there has not been an assessment of the uprating order, so I would be very grateful if the Minister committed to undertaking an assessment of the impact on poverty levels of disabled people in the work-related activity groups. Will he also conduct an assessment of the impact of this social security uprating on overall poverty levels? Does he think it is acceptable to make these cuts and to cause these levels of poverty at the same time as cutting higher rate tax levels? Last week, the Office for National Statistics published data revealing the increase in income inequalities across the UK. What is the Minister’s assessment of how much further these inequalities will increase if the Government fail to change their regressive tax and social security policies?
In 2018, inflation stood at 2.48%, and although this has fallen since the beginning of the year, estimates for the rest of 2019 are not favourable, with Brexit-related uncertainty a key driver. Research by the Joseph Rowntree Foundation shows that the price of essentials has risen, with domestic fuel costs increasing by more than 40% over the past decade and the overall cost of food rising by a quarter in the same period. At the same time, the stagnation of wages and the rise in insecure work are putting immense strain on family budgets. Last year, working lone parents saw a decline in the adequacy of their income to meet minimum costs, whether they work full time or part time. Even those working full time on the national living wage typically fall £70 a week short of the minimum income standards budget advocated by the Joseph Rowntree Foundation.
In addition, what are the Minister’s estimates of the impact of a no-deal Brexit on these levels of poverty? What are his contingency plans for this? Will he be transparent and publish these reports? By continuing the freeze on the social security payments not included in this order, the Government are subjecting 10.4 million households to an average cut of £150 this year. I would be really grateful if the Minister would comment on the freeze, and on any opportunity there might be in the spring statement to bring it to an early end.
The dehumanising treatment of social security claimants is reflected not just in the poverty-level support they receive but in how they are treated. Many people have heard of claimants being sanctioned for months on end, but I have been contacted by some claimants who say that they were visited by DWP officials when they were ill in hospital. I would be grateful if the Minister could confirm whether this is Government policy or, as I hope, a mistake. Will he also tell us whether he intends it to be Government policy for the DWP to have unfettered access to claimants’ medical records, as was reported today in the GPs’ journal, Pulse?
I have already mentioned my concerns about the changes to pension credit and the lack of availability of this for a couple, when one of the couple is under retirement age. Age UK has described the change as a “substantial stealth cut” that could have a devastating effect on the health and wellbeing of some older people and increase the number of pensioners in poverty. Again, I would be grateful for the Minister’s assessment of the increase in pensioner poverty as a result of this measure.
We have to welcome any small changes in the uprating order, and of course we do, but we cannot get over the fact that 10.4 million people will still be worse off. As my hon. Friend the Member for Wirral West (Margaret Greenwood) has mentioned, those people are in absolutely dire need, so I hope that the Minister will be able to respond positively to this.
Heidi Allen (South Cambridgeshire) (Ind)
Setting aside my concerns about the direction of the Conservative party, one of the motivations behind those of us determined to build a new centre ground party is the opportunity to develop policy based on evidence and to reflect on and amend our policy when that evidence changes. The motion in front of us today is one that this House debates annually. Its purpose is to increase welfare benefits in line with the economy—in other words, the consumer prices index. Those benefits include the state pension, disability living allowance, the personal independence payment, widows’ and bereavement benefits, the employment and support allowance support group premium, and the maternity allowance. However, as we have heard across the Chamber tonight, there is one glaring omission. The order excludes working-age benefits. Within this exclusion also sit standard allowances in ESA and income support, child tax credit and the child element of universal credit—in other words, benefits paid to those struggling to make ends meet but who are doing the right thing and working, as well as those too ill to work and those families with children who are also struggling to make ends meet. Our fair-minded constituents would be right to think that there must be some mistake here, but there is not. Individuals are being subjected to the final year of the four-year benefit freeze.
In the 2016 Budget, the Treasury announced the four-year year freeze with the aspiration of saving £3.5 billion by 2019-20. Everyone understood the need to reduce spending right across Government, but policy cannot be static and must be regularly reviewed, particularly when the policy so directly affects the most vulnerable people in society. Estimates recently published by the Resolution Foundation, which excels at statistical analysis in this space, indicate that the Government will have already exceeded their target by £900 million by the end of year three. Owing to inflation, the Resolution Foundation further estimates that while wages, the cost of living and pensioner incomes have risen over the period—everything has risen—these in-work benefits have seen a 6% real-terms decrease. The policy can no longer be right. The context within which the four-year benefit freeze policy was developed has changed. What kind of Government can think that it is morally acceptable to maintain this policy?
My recent visits with the right hon. Member for Birkenhead (Frank Field) to the parts of the UK struggling most with poverty have provided me with clear quantitative evidence, too. Society is responding with compassion and the strength of human kindness. Beneath the Government’s welfare safety net, society is providing three further layers: the established and now almost “normalised” food bank network; third sector charities and faith groups who open their doors when food banks are closed; and, most movingly, individual families helping those around them. The motion before us today therefore brings into sharp focus the damaging impact of the benefit freeze on the most vulnerable in society. With the recent news that tax income in January outstripped public spending by £14.9 billion—the biggest January surplus since records began in 1993—there is simply no reason to persist with the final year of the benefit freeze. We can afford it.
Working-age benefits must be uprated in line with all benefits from April 2019. As we have heard, ending the freeze would lift 200,000 people out of poverty. It is now almost universally understood that working-age benefits are insufficient for claimants to even maintain subsistence living. Claimants at the lowest point in their lives cannot afford to live on the current welfare safety net. The Secretary of State for Work and Pensions herself has spoken out about the need for the freeze to end, and I can see the discomfort among those on the Front Bench, because I know that it is not within their gift to change things, but it is not too late for the Treasury to change course and end the four-year freeze. I have also been disappointed not to hear any suggestion from Ministers that the matter will be dealt with at the spring statement on 13 March. This Government must look again at the evidence: their benefit freeze is no longer morally nor economically viable and must end in April this year.
Ruth George (High Peak) (Lab)
The benefits freeze affects 10.7 million of the lowest-paid and most vulnerable people in our society. It comes on top of not just two years of a benefit cap, but a three-year freeze on tax credits from 2011 that saw them lose over £1,000 in value for ordinary, low-paid families. That came on top of VAT rising to 20%, the end of the education maintenance allowance and health in pregnancy grants, changes to the statutory maternity allowance and the £500 grant, and the bedroom tax. Families have lost a further £900 a year under the benefit freeze since 2016. It is therefore unsurprising that child poverty has risen since 2011-12, as the Joseph Rowntree Foundation set out. We have seen the number of children living in poverty increase by half a million, almost all of them in working families supported by working-age benefits. Nearly half of children in lone parent families are in poverty. That number will sharply rise when maintenance is included in universal credit, and the up-front costs of childcare mean that lone parents struggle to escape poverty.
Work is no longer a route out of poverty. Four million working people, a record number, are still living in poverty—half a million higher than five years ago. This benefits freeze will cost families another £210 a year. When this Prime Minister took office, she promised to support people who are just about managing. What are these 10.7 million people on working-age benefits if not just about managing?
Instead, we see that six in 10—over half—of the poorest fifth of the population are now in problem debt, which is contributing to the huge rise in mental health difficulties and emotional anxiety. The biggest problem, as I said earlier, is housing costs. Since 2010, housing costs have fallen for the richest three fifths of the country, but they have risen for the poorest two fifths. Of those on full housing benefit, 43% of single parents and 37% of couples still have to top up their rent from already inadequate other benefits. It is no wonder that people are having to make a choice between heating and eating.
We are seeing the number of pensioners in poverty rising: 330,000 more pensioners are now in poverty than five years ago, and most of them are in rented property, according to the annual poverty report from the Joseph Rowntree Foundation, which is not disputed by any other organisation.
The costs for people on the lowest incomes rise even more than CPI inflation: food, heating, energy, public transport, council tax rises of 5% this year—4% in my area of Derbyshire—and rising care costs. Yes, charities can step in, and we are seeing some fantastic work by communities across the country, but this Government must not go back to a Victorian age in which struggling people are forced to rely on charity. With the best will in the world, charities cannot be expected to cover the whole country, especially in sparse rural areas like mine.
We also see people who are too proud to want to approach charities—people like Chris, whom I met on Saturday. Chris is living on the streets of my hometown of Buxton and unable to access support, and not wanting to because of the conditions placed upon it. It is not right that we have people living on our streets in this day and age, in the fifth richest country in the world.
This is a political choice that this Government have made at a time when corporation tax is due to fall again, the highest rate of income tax is also falling and the main rate of corporation tax for companies with profits of more than £1.5 million a year has almost halved, and will have halved over the next 10 years. That is where this Government’s choices are being made: not for the people who are visiting food banks, not for the people who are living on our streets but for the people who have the most.
Steve McCabe (Birmingham, Selly Oak) (Lab)
If it is true that, as we heard from the hon. Member for South Cambridgeshire (Heidi Allen), tax income outstripped public spending by £14.9 billion this January—giving the Government their biggest surplus since records began—we have to ask ourselves why on earth we are doing this. There can be no persuasive economic case to support it. Why is there a need to persist with another year of benefits freeze? Why are we holding most working benefits and tax credits to their 2015-16 value?
Pensioners, as we have heard, can expect a 2.6% increase, which I welcome, but the Minister’s persuasive argument for the triple lock to maintain income security for vulnerable pensioners could just as easily be made for all the other people who are about to lose out. Benefits aimed specifically at disabled people and carers are also set to rise, and I welcome that too, but how are those people fundamentally different from young children in their needs?
I will not go over all of this, but we have heard about the range of frozen benefits—in particular, child and working tax credits and child benefit. The attack on those benefits is about the meanest of all. If they were not frozen, those benefits would be rising by about 2.4% in today’s announcement. That might make the difference in whether someone can buy their kid a pair of shoes or guarantee that they have their breakfast before they go to school in the morning. Over the past four years, the most exposed, the most vulnerable and those at the poorest end of our society have suffered the loss of about 6.1% of the value of their benefits. It looks as though this is a deliberate strategy to punish people for being poor and vulnerable. It is hard to equate that with the idea that austerity is over.
As we have heard, the ending of this benefits freeze would lift 200,000 people out of poverty, but as things stand this Government are on course to plunge a record number of children into poverty, and it sends the signal that they do not care. They could do something about it—there is no economic case here—but they do not care. If the Prime Minister had been sincere when she stood on those steps outside No. 10 Downing Street, we would not be listening to this uprating today. The social security uprating that has been announced tells us all we need to know about this Government. They are not only incompetent but mean-spirited and punitive towards the very people in society who should be most able to rely on our help.
Justin Tomlinson
I thank all those from across the House who have taken the time to speak in this debate. As in last week’s estimates day debate, there was a lot of passion about very important issues. Although we do not agree on everything, this is a helpful debate in focusing our minds as we share the proceeds of growth in the coming years to make sure that we are targeting support at those who most need it.
I wish to pick up on a few points raised in this debate. A number of speakers said that we were not supporting those too sick to work. Let me be absolutely clear that the employment and support allowance support group rate will be increased from £37.65 to £38.55, and the severe disability premium will increase from £77.65 to £79.50. The hon. Member for Wirral West (Margaret Greenwood) was spot on when she talked about the impact of unemployment; we could not agree more, which is why we are proud to have delivered record employment in every region. That is in stark contrast to every Labour Government, who have left office with higher unemployment. This was echoed in the speech made by the hon. Member for High Peak (Ruth George), who continues to attack job creation policies, seeking to remove the opportunity for people to fulfil their potential.
Jim McMahon
The Minister must surely know that the reason there are more people in work is that there are more working-age people. In my constituency, unemployment is higher this year than it was last year, and there is still a struggle to get people on long-term unemployment back into the labour market. He must know that, surely.
Justin Tomlinson
What we know is that every region of the UK is seeing more people working. Youth unemployment increased by 45% under the last Labour Government, but it has almost halved under this Conservative Government, and that will continue.
Ruth George
I assume that in claiming that I am attacking policies aimed at job creation, the Minister is referring to the huge cuts in mainstream corporation tax, which I analysed at the Union of Shop, Distributive and Allied Workers when working on some of the major supermarkets. They actually took their corporation tax reduction and refused to even put that amount into wage growth, let alone into jobs. This is not a job creation scheme; it has made profits for shareholders, not for workers.
Justin Tomlinson
It is delivering record employment in every single region. Increased corporation tax receipts are the folly of the hard-left failed economic policies that deliver higher unemployment every single time, which is why voters repeatedly reject failing Labour Governments.
Justin Tomlinson
I will just make some progress.
Many speakers talked about poverty. Income inequality has fallen—it increased under the previous Labour Government. Rates of low income and material deprivation for children and pensioners have never been lower. There are 300,000 fewer children in absolute poverty and 200,000 fewer pensioners in absolute poverty. In the past five years food affordability has almost halved and is well below the EU average.
Debbie Abrahams
According to the Child Poverty Action Group, 100,000 children are in severe poverty as a result of the benefits freeze. Would the Minister like to accept that fact?
Justin Tomlinson
The stats are very clear: there are now 300,000 fewer children in absolute poverty. Where we are in agreement in this debate is that all speakers rightly welcomed the additional £1.7 billion for the universal credit work allowances. We continue to support those who are seeking to enter work, increase their hours or increase their pay.
Overall, this order is about striking the balance between targeting support to those who most need it and what is fair for the taxpayer. Under the previous Labour Government, who increased welfare spending by £84 billion—the equivalent of £3,000 per working household—that was not a fair balance.
Jim McMahon
Can we just take away this artificial divide between taxpayers over here and claimants over there? People who claim benefits also pay tax. They contribute and work hard, and they deserve a better deal than this.
Justin Tomlinson
That is why we are delivering record employment and increasing support for those who most need it, and why we are today announcing the latest sharing of growth with those who most need it, with a £3.7 billion increase. We are maintaining the Government’s commitment to the triple lock for both the basic and full rates of the new state pension; increasing the pension credit standard minimum guarantee by earnings to support the poorest pensioners; increasing the universal credit work allowances so that claimants can earn more before their payments are reduced; and 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 2019, which was laid before this House on 30 January, be approved.
Patrick Grady (Glasgow North) (SNP)
On a point of order, Madam Deputy Speaker. I notice that we now move on to some 18 different remaining orders, some of which are very important and will affect the outcome of Brexit for this country on a whole range of issues, from road traffic to animals, gas, energy and arms and ammunition—all kinds of things. If each of these remaining orders were subject to an individual Division, by my calculations it would take up around four and a half hours of the House’s time, which is quite incredible. I believe, though, that if we get past 10 o’clock, we can have the much more sensible opportunity of voting on these issues using the deferred Division procedure. Can you advise us on what steps we can take to make sure that Members are not unnecessarily detained this evening by multiple complex Divisions, until such a time as this House introduces a more sensible, modern electronic voting system?
Madam Deputy Speaker (Dame Eleanor Laing)
I thank the hon. Gentleman for his point of order. I can give him no advice further than that of which he is already well aware as an experienced and erudite parliamentarian. The fact is that I am about to proceed to the motions, as on the Order Paper.
Jim McMahon
On a point of order, Madam Deputy Speaker. Earlier, there were exchanges relating to the Seaborne ferry contract, and I was staggered to see that the Secretary of State for Health and Social Care was at the Dispatch Box responding to questions. I would welcome your advice about whether that was standard practice or unusual. Was there a point in our recent past when that was the case? Apparently, the issue was—
Madam Deputy Speaker
Order. I can answer the hon. Gentleman’s point of order. The reason why the Secretary of State for Health and Social Care was at the Dispatch Box is that the contract in question was made by the Department for Health and Social Care. It was therefore the responsibility of the Secretary of State for Health. Such matters are not for the Chair or the Chamber, but for the Government.
Steve McCabe
On a point of order, Madam Deputy Speaker. I know that this Government are tempted to play with rules as if they did not really exist, but is there any precedent for a set of orders of such importance to be placed on the Order Paper in the fashion that the Government have done this evening? I cannot recollect that ever happening in the 21 years that I have been in this place.
Madam Deputy Speaker
Again, I am happy to answer the hon. Gentleman’s point. It is quite normal for there to be several such orders on the Order Paper, to come up after the end of the business. I agree with him in saying that it is unusual to have such a large number, but he will not need me to tell him that this Parliament is currently dealing with a great many matters of secondary legislation in pursuance of the leaving of the European Union. If he notices that there is something unusual, then my guess is as good as his that that is what is unusual—we have not dealt with something of that kind before, and it does require a lot of legislation. As we have now passed the point of interruption at 10 o’clock, the matters before us will not be put for immediate Divisions—I think hon. Members had worked that out.