State Pension Underpayment Errors
Baroness Lister of Burtersett Excerpts(11 months, 3 weeks ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Viscount Younger of Leckie (Con)
The noble Lord makes a good point about home responsibilities protection, which is one of the issues that we are looking at in a timely fashion. We will be providing estimates and next steps for corrective action in the summer. Obviously, we are looking to move at pace to resolve these issues.
Baroness Lister of Burtersett (Lab)
My Lords, the noble Viscount’s Written Statement last week celebrated the fall in fraud and overpayment error in the social security system as a whole, but it rather glossed over the increase in underpayment to £3.3 billion. That is money which is not going into the pockets of people who need it. Do the Government not think that under- payments are as important as overpayments, and what are they doing to minimise underpayments?
Viscount Younger of Leckie (Con)
Of course they are important. Any underpayment is incredibly important, as I am sure the noble Baroness would agree. The department became aware of issues with state pension underpayments in 2020 and, as mentioned earlier, the issues go back several decades and through different Governments. We have taken immediate action to investigate the extent of the problem and are carrying out highly complex scans of computer systems. Correction activity commenced on 11 January 2021; I say again that this is an important matter and we are moving at pace.
Rent Officers (Housing Benefit and Universal Credit Functions) (Modification) Order 2023
Baroness Lister of Burtersett Excerpts(1 year, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Lord Shipley (LD)
My Lords, I move this Motion on behalf of my noble friend Lady Thornhill, who cannot be here today because she tested positive for Covid last night. She sends her apologies to the House, and I am sure we all wish her a speedy recovery. I draw the House’s attention to the wording of the Motion. Special attention is drawn to the instrument in the Secondary Legislation Scrutiny Committee’s 27th report.
No one in our society should be without a home but, due to successive freezes in local housing allowance, more and more people are being pushed into homelessness. This evening I will challenge the Government to reconsider urgently the decision to impose further real-terms cuts on local housing allowance this year. Last week the chief executive of Crisis described this decision as
“nothing short of crushing for people who rely on this vital lifeline”.
More than 1.87 million private renters on low incomes rely on local housing allowance to help pay their rent —this is more than one in three private renters.
It was right for the Prime Minister to act to protect these households during the pandemic, when as Chancellor he invested in the local housing allowance so that it would cover the cheapest 30% of rents in a local area. That meant that people were able to sustain tenancies during a period of hardship, and it also helped people who had been trapped in homelessness into tenancies. It is worrying that this progress has not been sustained. Despite inflation and rising rents, local housing allowance remains at the same cash level as three years ago, based on rent levels from four years ago. As the report by the Secondary Legislation Scrutiny Committee highlights, the Explanatory Memorandum did not “explain the policy objective” of the Rent Officers (Housing Benefit and Universal Credit Functions) (Modification) Order 2023 or explain what its effects would be on the recipients of local housing allowance.
However, the Government’s own figures show how severe the consequences are. Landlord repossessions increased by 98% at the end of last year. For every household facing eviction or rent rises it cannot afford, moving house is incredibly difficult to afford; for some, it is impossible. Advertised rents have risen at record rates since 2020, with Zoopla estimating an increase of 12.1% in the last year alone. Some areas have seen particularly high increases: rents are up 15.6% in Manchester, 14.1% in Glasgow and 17% in London.
In recent weeks, DWP Ministers have said that local housing allowance is not intended to cover all rents in all areas—nobody is calling for that, but surely the Government agree that it should cover some rents in all areas. Dataset after dataset shows that, in significant parts of this country, a household would simply not be able to find any properties to rent at local housing allowance levels. In July last year, the Bureau of Investigative Journalism found that only seven properties were advertised at local housing allowance levels across Wales. More recently, in February, the Bevan Foundation found that 16 local authorities in Wales did not have a single property advertised that was affordable on local housing allowance. Last autumn, Crisis and Zoopla found that only 8% of properties advertised across England over the previous 12 months were affordable on local housing allowance. In Watford, only 4% were affordable on local housing allowance. Overall, nearly a quarter of local authorities had fewer than 20 properties available at local housing allowance rates, and more than 100 local authorities had 3% of properties or fewer affordable on local housing allowance. For context, 38% of private renting households rely on local housing allowance to help pay their rent.
With an acute shortage of social housing, we need far more housing for social rent. As Members in this Chamber today have constantly pointed out over recent years, our building rate of social housing for rent has simply been far too slow. With that acute shortage of social housing, many people on low incomes have no alternative to renting in the private sector. As that becomes unaffordable, homelessness is rising. Having made progress in ending rough sleeping during the pandemic, the Government have now overseen a 26% rise in rough sleeping in England in the last year.
Investing in local housing allowance prevents people experiencing homelessness and makes it easier for people to move out of homelessness. As well as being one of the most effective ways to prevent homelessness, uprating local housing allowance would lead to savings across public services. Almost 100,000 households are stuck in temporary accommodation in England, including more than 125,000 children. Temporary accommodation costs local authorities nearly £1.6 billion a year. Staying in temporary accommodation, including unsuitable hotels and B&Bs, also has a damaging impact on people’s lives, making it harder for people to work, get their kids to school and stay healthy.
The Institute for Fiscal Studies has been clear that the choice to freeze local housing allowance is resulting in wide geographic disparities, whereby low-income renters in some areas can get the cheapest rents almost covered, whereas those in other areas must find an extra £150 a month to top up their rent, or face homelessness. Last month, Sam Ray-Chaudhuri of the Institute for Fiscal Studies said of investing to uprate local housing allowance:
“This isn’t an expensive policy”.
In a debate that can be overly focused on averages and aggregate costs, I will conclude with the experience of what it feels like for people on the brink of homelessness. One person—who it is not possible to name, but it is on the public record—has described how the rising cost of living was affecting him. He said,
“I wasn’t even earning enough money to be able to pay for the rent that I had currently for two years been paying, which was £870 a month, plus all of the other bills. And then of course when [the landlord] came back to me he said, ‘I put it up to £1200 because that is the going rate,’ and I just thought I have no hope … of being able to find that extra money, because it was hand to mouth pretty much all the time … to be able to find another £400 a month was just absolutely impossible. So, I had to tell the estate agent that I wasn’t going to be taking the lease on again and I was going to have to find other accommodation.”
There are plenty of people like that, and the other accommodation that they would like is just not there. Hostels, sofas and rough sleeping are what remains for far too many people, and the instrument we are debating does not offer them a route out. Unless the Government change their approach, thousands more people will be forced into homelessness over the coming months. With that, I beg to move.
Baroness Lister of Burtersett (Lab)
My Lords, I am grateful to the noble Baroness, Lady Thornhill, for tabling the regret Motion and to the noble Lord, Lord Shipley, for moving it. I hope that the noble Baroness will be better soon.
The regret Motion follows a highly critical report from the Secondary Legislation Scrutiny Committee. The importance of the issues it raises was reflected in the unusually large number of very helpful briefings I received when I tabled an Oral Question on the issue recently and the “huge amount of evidence” on the impact of the freeze received by the Levelling Up, Housing and Communities Committee recent inquiry into the private rented sector. As the Commons Library briefing on the LHA notes:
“Numerous bodies, including homeless charities, the representative bodies of local authorities and private landlords, are making the case for LHA rates to be uprated to cover at least the 30th percentile of local rents, alongside relinking rates to the real cost of renting for future years.”
According to the IFS, the freeze means that just 8% of low-income private renters now have all their rent covered by housing benefits, compared with almost half in the mid-1990s. For nearly a third of them, the amount of rent not covered eats up at least a third of non-housing benefits income, a situation faced by just 14% of the group in the mid-1990s.
This is one reason why analysis from the Joseph Rowntree Foundation indicates that the cost of housing for private tenants is a key driver of poverty today, most starkly for families with children. The more that private tenants are having to use their non-housing universal credit to meet their rents, the less that next month’s 10.1% increase in universal credit and other benefits—which no doubt the Minister will pray in aid —will help them to meet other basic costs, such as food.
A recent report by the JRF and the Trussell Trust shows how universal credit is too low in any case to meet the most basic of needs. A piece in my local paper, the Nottingham Post, just last week cited the growing gap between the LHA and increasing rents as an important factor in the worrying increase in arrears and everyday living debts seen by the local Citizens Advice.
In his helpful letter following the uprating debate, the Minister said that DWP is working closely with DLUHC to monitor rental shortfalls. Could he tell us what their assessment is of the average shortfall and of the numbers affected? Following my Oral Question, he promised to write to the noble Lord, Lord Carrington, with a reply to his question as to what proportion of those receiving the LHA are unemployed and therefore more reliant on this money to pay their rent. Could he share that information—in a letter, if necessary—with the rest of us and include other private tenants without earnings?
The other reason that this is so important is that the inability to meet the full rent can tip people into homelessness, as the noble Lord, Lord Shipley, said, and as the homelessness charities have warned. So far, the Minister has carefully avoided answering questions as to the likely impact on homelessness of freezing the LHA yet again. I cannot believe that the Government have not done some kind of assessment of the likely impact, so I would be grateful if he could share it with us.
Hitherto, whenever this issue has been raised in either House, the ministerial response has been woefully inadequate. There seems to be three stock justifications, none of which is convincing. The first is simply the cost, which, it is suggested, cannot be borne in addition to the general benefit uprating. I have already indicated why this is short-sighted from the perspective of individuals suffering the consequences, but as the noble Lord, Lord Shipley, has highlighted, it is also short-sighted from a public-spending perspective, because of the knock-on effects on public services through homelessness, short-term accommodation and both physical and mental health. Have the Government made an estimate of those knock-on costs? From last week’s Westminster Hall debate, it would appear not, which betrays a very narrow approach to assessing the cost of policies to the public purse.
Social Security (Additional Payments) (No. 2) Bill
Baroness Lister of Burtersett ExcerptsMonday 20th March 2023
(1 year, 1 month ago)
Lords ChamberRead Full debate Social Security (Additional Payments) Act 2023 View all Social Security (Additional Payments) Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 6 March 2023 - (6 Mar 2023)
Baroness Lister of Burtersett (Lab)
My Lords, it would be churlish not to welcome this Bill, which will bring much-needed support to those who qualify for the payments it provides. However, I am sure the Minister did not expect unqualified praise from me. The qualifications are twofold: they concern context, or rather a different take on context from the Minister’s, and the shortcomings of one-off payments.
With regard to context, I will not repeat the arguments I made during our recent debate on the uprating regulations, covering the cuts in the real value of benefits since 2010, the current freezing of the local housing allowance, which we will be debating on Wednesday, and the impact of the much higher inflation rate suffered by those on low incomes when the price of basics such as food and fuel is going up faster than average prices. However, I want to go back to the point about claimants having had to struggle this past year on benefits uprated by only 3.1% when inflation was expected by the OBR to average 10.1% over the period. We were told last year not to worry as it would all be smoothed out in the subsequent uprating, but since our debate last month I have seen the following warning from the Institute for Fiscal Studies:
“Astonishingly, it is not until April 2025 that benefit rates are set to recover the ground they lost … due to lags in uprating them with inflation”.
I am sure the department will have seen the IFS pre-Budget briefing in which this was stated, so I would welcome the Minister’s comments on this warning.
This brings me to my second qualification, because no doubt he will respond that the one-off payments will help bridge the gap. But using one-off payments rather than an additional uprating to weekly benefits, to help those on low incomes cope with the cost of living crisis, has a number of limitations, as was made clear during the passage of the Bill in the Commons. A general point, made by the Work and Pensions Select Committee last year, with reference to the last set of cost of living payments, is that
“regular, predictable income”
rather than lump sums is
“better for households trying to manage a budget”.
In other words, a regular income does a better job of providing the financial security that social security is supposed to provide. However, the Government did not heed the committee’s call for options other than one-off payments to be prioritised in future. Instead, other than a small but welcome tweak, they have simply replicated the approach taken last year, with all its limitations. One of these, highlighted by the Treasury Select Committee, is the “cliff edges” it creates so that
“those who earn one pound too much, or become eligible for a benefit one day too late, may not receive it”.
As a result, some of those on low incomes will lose out, with
“implications for fairness, and … work incentives”,
as the committee pointed out. The committee therefore recommended a payment each month for six months, but it seems that “the computer said no” and the only concession has been the tweak that replaces the original two payments with three—mentioned by the Minister.
Unfortunately, some of those “cliff edges” are created by the rigid operation of universal credit’s monthly assessment period, which means some universal credit recipients do not receive the benefit for one month because of the way their wages are paid. Other problems raised in the Commons debate concerned the self-employed, pursued by Conservative Sir Robert Neill, and those who have been sanctioned. According to the Bill’s impact analysis, 7,000 households lost out on the first of last year’s cost of living payments solely due to a sanction.
Nigel Mills MP, a Conservative member of the Work and Pensions Committee, tabled an amendment with Sir Stephen Timms, its chair, that would extend the qualifying period from one to two months, making it less likely that someone would lose a payment arbitrarily. He made, in my view, a very strong case, pointing out that it would be more consistent with universal credit’s objective that work should always pay. He also pointed out that the current rules put UC recipients at a disadvantage compared with those still receiving tax credits, which was unfair. He made a similar suggestion last year, so there was plenty of time for it to be considered.
I found the Minister’s reasons for rejecting the amendment, which referred to
“administrative challenges such as out-of-date contact or bank details”
and extending the time
“between eligibility and payment”—[Official Report, Commons, 6/3/23; col. 99.]
less than convincing. Perhaps the Minister today could make a better fist of explaining why what seemed to me a perfectly sensible amendment was rejected. To say breezily, as the Secretary of State did, that even if someone loses out on a payment because of qualifying period anomalies, there will be one or two others they may qualify for coming along, suggests a complete lack of understanding of how every pound can make a difference when someone is struggling to make ends meet.
Another problem with the way that these one-off payments have been structured is that a single person gets the same amount as a family with children. The Minister in the Commons did at least acknowledge the point, but said they could not find any better solutions. Once again it would seem that policy is driven by technology rather than the other way round. When Barnardo’s finds that almost a quarter of parents polled struggle to provide sufficient food for their child—just one example of the impact of the cost of living crisis on families with children—surely everything possible should be done to ensure that children are adequately protected. Surely this group fits the Minister’s description of those most in need.
Another group in vulnerable circumstances who are losing out are carers not in receipt of means-tested benefits, just as was the case last year. According to Carers UK there are several hundred thousand carers in receipt of carer’s allowance who do not receive means-tested benefits, many of whom are facing serious financial stress. Carer’s allowance is paid at a lower rate than equivalent benefits, yet carers do not qualify for a cost of living payment akin to the disability additional payment included in the Bill—why not? Why are carers being ignored in England when in Scotland and Wales additional provision has been made by their respective Governments?
The stock ministerial response, which we have heard again this evening, to all these criticisms is that those who do not benefit from the payments in the Bill can turn to the household support fund, which has been extended for a year, which is of course welcome. However, a discretionary cash-limited fund is no substitute for reliable payments as of right. In the Commons, Nigel Mills was pretty dismissive of this stock response, pointing out:
“It is far better practice to make the laws we pass work, than to have discretionary funds to try to fix things.”—[Official Report, Commons, 6/3/23; col. 87.]
Both he and Sir Stephen Timms were sceptical that many constituents would know about the fund and would realise they could apply to it if they failed to qualify for a one-off payment even though they were struggling. The Minister tried to reassure them by referring to
“strong communications and engagement with local authorities for anybody who may be missing out”.—[Official Report, Commons, 6/3/23; col. 98.]
Could the Minister give us more information on what exactly the Government will be doing to increase awareness of the fund and its availability in such situations?
A note on the fund from Citizens Advice suggests a degree of growing awareness as more people claim help, but it also indicates a number of barriers to accessing it and difficulties where help is provided by way of vouchers rather than cash. It raises a number of issues with the eligibility criteria, with some local authorities applying more restrictive criteria than others and many rationing access or running out of money. Inevitably, given its discretionary nature, there is something of a postcode lottery. Ultimately, Citizens Advice concludes that the fund is not really suitable to deal with a situation in which huge numbers of households are finding themselves with incomes that cannot stretch to cover their outgoings. CA advisers commented:
“It’s just a drop in the ocean … a very small sticking plaster on a very big wound.”
At the end of the Commons consideration, the Minister said that the DWP
“is planning an evaluation of the cost of living payments … we will consider what further information we can release in future.”—[Official Report, Commons, 6/3/23; col. 101.]
Can the Minister, either now or in a letter, give us more details of that evaluation and an assurance that its findings will be published? We cannot amend this Bill, but given that this is the second year running in which we and colleagues in the Commons have criticised the approach taken, at the very least we can hope that questions will be answered and that the evaluation will lead to lessons being learned.
I have one final practical question. Organisations on the ground are urging the Government to name the date of the first instalment to help struggling families budget. The DWP has responded that it will be in the spring and that specific dates will be confirmed closer to the date. Given that today is the spring equinox and, officially, it is spring until June, can the Minister at the very least tell us whether it will be early, middle or late spring, to give struggling families a little bit more certainty?
Health and Disability White Paper
Baroness Lister of Burtersett Excerpts(1 year, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Viscount Younger of Leckie (Con)
My noble friend makes a good point: small employers are five times less likely to provide access to occupational health services than large employers. Only 19% of SMEs provide occupational health services for their staff. Bearing in mind that, as I said, this must be a game-changer, we have a number of supporting initiatives in place: developing the test for a financial incentive and market navigation support for SMEs and self-employed people; working with the occupational health sector to identify better ways to support development; and delivering a £1 million fund to stimulate innovation in the occupational health market.
Baroness Lister of Burtersett (Lab)
My Lords, the noble Baroness, Lady Brinton, asked about sanctions, but I do not think that the Minister answered her, so perhaps I will ask the question in a different way. Can the Government guarantee that work-related activity will be voluntary for those receiving the health element?
Viscount Younger of Leckie (Con)
It will be, but, as I mentioned to the noble Baroness, Lady Brinton, we have a number of matters to work through, which is why I have said that it will take time. Sanctions are part of this: for example, in November 2022, the universal credit sanction rate was 6.51%. Sanctions underpin conditionality and are a key part of a fair and effective welfare system, so it is right that a system is in place to encourage claimants to take reasonable steps to prepare for and move into work. We need to keep our eye on this.
Social Security Benefits Up-rating Order 2023
Baroness Lister of Burtersett Excerpts(1 year, 2 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Lister of Burtersett (Lab)
My Lords, I welcome the Minister to this annual outing for us social security geeks and thank him for meeting me earlier this week. Of course I welcome the uprating of benefits and the benefit cap in line with inflation, even though it is no more than convention that leads us to expect it when it comes to the benefits themselves. I realise that the Government were under some pressure from within the Conservative Party to limit the increase to that in average wages, and it is to their credit that they withstood that pressure.
However, there is a real danger that, come April, some of the media will go to town on the 10.1% increase as if it somehow represents a bonus for claimants not enjoyed by those in paid work. It is therefore important that the Government make clear the context of the increase and also that, for two-fifths of universal credit claimants, their UC is topping up earnings. The issue was raised in the Commons debate on the regulations by Conservative MP Jerome Mayhew, who said it had been raised by his constituents on the grounds that they felt it was unfair, but he explained why
“it is fair. That is because it is morally right to protect the purchasing power of those very poorest families at an absolute level, even when other people in employment are suffering as well. I think it is right, because personal inflation is at its highest in the poorest families and food inflation is responsible for a higher percentage of their spending”.—[Official Report, Commons, 6/2/23; col. 706.]
Mr Mayhew made a strong moral case and rightly pointed to how, when energy and food prices are rising faster than overall inflation, those on low incomes suffer most. According to the Child Poverty Action Group, of which I am honorary president, in 2023-24 benefits will be 14% higher in cash terms than in 2021-22, but over the same period prices will be 21% higher for low-income families, so despite the uprating in line with overall inflation, they will be worse off. The Resolution Foundation warns that even as inflation starts to fall, food price inflation, currently running at nearly 17%, will continue to pose a particular problem for low-income families, as will high energy costs.
There are a number of further important points that help put this April’s uprating in context and serve to strengthen Mr Mayhew’s case. First, claimants have had to live on benefits plunging in value over the past year as a result of an increase last April of a mere 3.1%, despite our best efforts in both Houses, when inflation was expected by the OBR to average 10.1% over that period. According to the Joseph Rowntree Foundation, as a result 2022 saw the greatest fall in the value of the basic rate of unemployment benefit since 1972, when annual uprating began. The Minister has, as I expected, pointed to the additional cost of living payments that have been made and to the extension of the discretionary household support fund available from local authorities but, welcome as they are, neither provides the certainty and security that an increase in weekly benefits provides. One Citizens Advice adviser cited in a just published report spoke for many when they described the support fund as
“a very small sticking plaster on a very big wound”,
and because the cost of living payments take no account of family size, couples with two or more children will be worse off despite them, according to the CPAG. I will leave to the forthcoming debate on the additional payments Bill the other problems associated with one-off payments.
Just how difficult this past year has been for families in receipt of benefits was underlined in an open letter to the Prime Minister and the Chancellor yesterday from a group of organisations which called on them not to let this become the “new normal”. Resolution Foundation research highlights the emotional distress suffered by many in receipt of benefits and that one-third of poorer household feel that their health has been negatively affected by the cost of living crisis.
This all underlines the point that we made last year about the shortcomings of an annual uprating based on inflation around half a year earlier, especially at a time of high inflation and given that universal credit can be uprated much more quickly. Nigel Mills, a Conservative member of the Work and Pensions Committee, was one of those who expressed exasperation at this state of affairs in the Commons debate. He said:
“Now that we know that more of the legacy benefits will be continued on late into this decade, surely it is time to try to get a system that means we can do an uprating that reflects the real cost of living at the time that income comes in.”—[Official Report, Commons, 6/2/23; col. 687.]
His plea was echoed by Sir Stephen Timms, the chair of the committee that last year called for reform but to no avail, but it was ignored by the Minister in his closing speech. I know that the Minister addressed that in his opening speech, but I ask him to take this point back to the department and have another look at it.
Another theme of the Commons debate was the extent to which the benefits being uprated meet or do not meet the needs of those who rely on them. I think I have raised this issue in just about every uprating debate I have participated in, but it has taken on a renewed urgency given the growing evidence of hardship. Indeed, the APPG on Poverty, which I co-chair, is currently undertaking an inquiry into benefit adequacy. Bright Blue is one of many organisations that have recently drawn attention to this issue. In a recent article for Conservative Home, its head of research noted that
“the baseline level of support is inadequate in helping people avoid destitution.”
Similarly, the Joseph Rowntree Foundation concluded in its poverty report that
“the basic rates of benefits are inadequate and do not allow recipients to meet their essential needs.”
Have the Government’s considered the recommendation from Bright Blue and others that there should be a Low Pay Commission-type body to advise government on benefit rates?
Although it has been a failing of successive Governments to have uprated benefits without questioning whether the rates are adequate to meet people’s needs, the situation has been made worse by the cuts made over the past decade, which have reduced the value of working-age and children’s benefits and, particularly for families with children, have broken the link between need and entitlement. That is another reason why inflation-proofing is justified now.
However, one key benefit is not being inflation-proofed: the local housing allowance. Despite the Work and Pensions Secretary representing the freezing of the allowance as maintenance in cash terms at the elevated rates agreed for 2021—as if it were a bonus—the fact is that the value of the LHA has been cut for the third year running when average private rents increased by between 8.6% and 10.5% between September 2020 and September 2022, according to a highly critical Secondary Legislation Scrutiny Committee report. Although that freeze is covered by separate regulations, it affects the impact of the regulations that we are debating today because it means that claimants must use more of their basic benefit to cover their housing costs. I argued this earlier in Oral Questions but neither of the questions I asked were replied to by the Minister, and he may well bow his head in shame at that.
Baroness Lister of Burtersett (Lab)
Yes, he could. Incidentally, the concern that this freeze is causing was evident from the unprecedented number of unsolicited briefings that I received for my Question.
According to the IFS—these figures are different from the ones I used earlier—just 8% of low-income private renters now have all their rent covered by housing benefits, compared with almost half in the mid-1990s. For 32% of them, the amount of rent not covered by housing benefits eats up at least one-third of their non-housing-benefits income, a situation faced by just 14% of the group in the mid-1990s. I ask the Minister not to say again that those affected can turn to discretionary housing payments because, as they are discretionary and cash-limited, they do not provide the security that is needed. The DHP budget was cut by 29% last year, leaving many authorities struggling to meet demand, according to Shelter.
Another related way in which the link between need and entitlement has been broken is the benefit cap, which, along with the two-child limit, hits larger families particularly hard. Of course, it is very welcome that the cap will for the first time be uprated in line with inflation this year, but that will cover only one year’s inflation. According to calculations done for me by the Library, the rates contained in the regulations will still leave the cap 9.8% less than it would have been had it been uprated in line with inflation since it was set at its current level in 2016. How is that fair? Whatever one thinks of the cap—I agree with the noble Lord, Lord Freud, that it is an excrescence—at the very least, its level should be maintained in real terms annually. I hope that it will be from now on for as long as it exists.
Lord Davies of Brixton (Lab)
My Lords, I, too, welcome the noble Viscount to our deliberations. He was possibly here as a Whip last year. I took the opportunity to look again at what I said then and, in fact, it would be possible for me to repeat what I said for the benefit of the new Minister, but I have amended it slightly and added some detailed comments on GMPs, which I am sure the Minister will look forward to.
There is no doubt that because of the lag in carrying out a pension increase the poorest in our society lose out. A figure has been calculated, which I was given by the researchers who work for the parliamentary party, that it is of the order of £520. That is the cash loss that they have incurred this year because of last year’s inadequate increase.
The important point is that it is no consolation to those who have lost that money to be told, “Okay, you’ll catch up next year” or, in the Minister’s words, “the fluctuations even out”. We are talking about the poorest people here; they are in no position to even out their income, as they have no savings worth addressing. The year of plenty when they are nudged marginally higher within the range of poverty does not ameliorate in any way at all the loss they incurred in the year that they fell behind. We are talking about pensioners in poverty. Let us not pretend that there are not millions of pensioners still in poverty. For them, this is simply not good enough; they suffer the effects in the current year.
The question is: what can be done about it? Last year, the Minister said that
“it is not possible to undertake the uprating exercise any later than currently timetabled.”
But she gave the game away a bit by also telling the Grand Committee:
“All benefit uprating since April 1987 has been based on the increase in the relevant price inflation index in the 12 months to the previous September.”—[Official Report, 9/3/22; col. GC 484.]
In truth, the seven-month delay goes back even longer. I can recall being in discussions with officials in the relevant department on this topic in the early 1970s, so we are going back on a system that has existed for 50 years. I find that less than impressive. Seven months is too long when inflation can change so rapidly. Given all the changes there have been in handling and processing data in the past 35 or 40 years, it is amazing that we cannot do any better.
I quite understand why officials tell the Minister “It has to be that way” but, really, with modern systems of handling data, it is simply untrue to say that nothing can be done and that we cannot move to a system that more closely aligns increases in prices with increases in benefits. Even if it were not possible—which I do not accept—could we not move to a system where the increase allows some provision for back-payment to make good the shortfall that people have suffered in the seven-month interim? I really do not accept the department’s line that nothing can be done about the delay in the increase.
My second point is about the triple lock. Last year, I asked how much credence we could give the Government’s repeated promises to keep the triple lock for the basic state pension and new state pension. The Secretary of State said last year:
“I am again happy to put on record that the triple lock will be honoured in the future.”—[Official Report, Commons, 21/3/22; col. 99.]
but she said the same thing in 2020 when she went on to break the triple lock. We know that the Government are prepared to break the triple lock—that is a fact—but we do not know what they count as the exceptional circumstances in which they are prepared to break it. The important thing about the Government trying to justify it last year is that they quoted exceptional circumstances, but those are not unique circumstances.
I was very pleased that the Minister, in his introductory remarks, reaffirmed the commitment to the triple lock. It is perhaps unfortunate that the Minister in the Commons, when introducing the same order, failed to refer to the triple lock at all even though it was mentioned several times in the debate. I was going to ask the Minister to give a commitment, but he has already done so.
It is worth stressing again the importance of the triple lock in this current period. Views differ, I know that, but I am totally committed to it so long as and until the state pension reaches an adequate level. When we compare it with the figures quoted by the Joseph Rowntree Foundation about what constitutes an adequate retirement income, we still have some way to go. If and when we reach that sort of level, we can have a debate about the triple lock but, at the moment, it is important that people receive the benefit.
I will just explain the triple lock a bit more. People refer to pensioners’ incomes but it only partly affects those. Pensioners who depend on the state pension, who by definition are on very low incomes, get the full triple lock. The people a bit above that level, who are not on massive incomes but whose additional income is from a personal or an occupational pension, are not getting triple-lock increases on those pensions; their overall increase is somewhat less. So long as we have this unequal and inadequate benefit system, the triple lock retains its justification.
I will make two more points. First, this is about taxation. I am sorry that the noble Baroness, Lady Penn, has left because this is really a Treasury point. It is important for the department to understand the implications of the decision to freeze the personal allowance until 2028. People have not realised how significant that is in terms of running the social security system. The state pension is not subject to PAYE. That works as a system where almost everyone has a state pension below the personal allowance, so they pay the tax on any income they get over the state pension. But we are heading towards the personal allowance being the same as the new state pension in 2028. Any income a person receives from the state over that level—and many do, because of retained rights from the state earnings-related pension scheme—has to be taxed from their other income. They may not have any other income, so in the following year, they will start receiving the brown envelopes saying, “You owe the tax system and HMRC significant sums of money”, which will have to be paid as a lump sum.
This situation needs to be addressed at some stage but I have seen no indication by the Government that they understand this problem coming down the tracks. The most appropriate way would be to include PAYE to cover the state pension. It is a historic anomaly that it does not. I hope that the Minister, who may not accept all my arguments, will agree that this needs to be looked at now, and that we do not need to wait until 2028 before it is resolved.
Finally, I come to my point on the GMP. I think I have said previously in this Room that if I was ever on “Mastermind”, my specialist subject would be the GMP.
Lord Davies of Brixton (Lab)
Yes, I agree. In the Commons, the Pensions Minister said:
“Under the Guaranteed Minimum Pensions Increase Order 2023, there will be an increase of 3% paid by occupational pension schemes, which means that that part of the GMP will increase by 3% from April 2023.”
The important bit is this:
“The 3% cap strikes a balance, I suggest, between providing members with some protection against inflation and not increasing scheme costs beyond what can be afforded.”—[Official Report, Commons, 6/2/23; col. 681.]
This is rewriting history. That is not in any way, shape or form why that 3% is there. It is to relieve strain not on the pension schemes but on the state pension, because it was the state pension scheme that was meant to be paying for any increases required over that 3%. I listened carefully to what the Minister said in his speech today, and it was a bit more nuanced than what the Minister said in the Commons the week before last.
This fiction is given a bit of support in the Explanatory Memorandum on the GMP increase order which says, in words very similar to those of the Minister:
“Guaranteed Minimum Pensions are increased yearly to help ensure that the value of a member’s pension has some protection against the effects of inflation”.
It is only “some protection” because the state was meant to be paying the excess over the 3%. The issue is complicated because, in some ways, people with GMPs got favourable treatment from the new state pension. That was reflected in some of the Minister’s words, but we need to be clear that we should not let the Government get away with the idea that it is only 3% because we do not want to put the burden on the schemes. It is only 3% because the Government previously promised to pay that excess, so perhaps the Minister could clarify that and tell me that I have got all the points from my “Mastermind” entry.
Viscount Younger of Leckie (Con)
That is fine; I accept that. I think we can leave it at that.
I will start by tackling a couple of issues that were raised by the noble Baroness, Lady Sherlock, towards the end of her speech. She made some good points that completely chime with what the Government think. We totally understand that a number of individuals are suffering as a result of the war in Ukraine, the pandemic and cost of living issues generally. I completely acknowledge that; I hope the Committee understands that.
Let me start on why childcare has not been included; perhaps I can help. Regardless of the number of hours that they work, eligible parents can claim back up to a generous 85% of their childcare costs each month, up to the maximum amount of £646 for one child and £1,108 for two or more children. The vast majority of UC claimants receiving a childcare element do not hit the UC childcare caps. In fact, between August 2020 and July 2021, 92% of universal credit claimants receiving a payment for the UC childcare element were eligible to receive the full 85% of their childcare before the earnings taper.
So we believe that our policy provides fairness in the welfare system between those receiving out-of-work benefits and those in work by putting in place a reasonable cap on the childcare costs that a household can have reimbursed through UC, in each assessment period. We believe that the childcare policy aligns with the wider government free childcare offer in England and our similar funded early learning offers in the devolved nations. We keep childcare under review. We know that childcare costs are extremely high; I am certainly aware of that. I cannot add anything more to that, only that the Committee should be aware that we are aware of these issues. I will stick with that.
Secondly, the noble Baroness, Lady Sherlock, raised a perfectly reasonable point about food back usage. I am aware from a previous Oral Question in the Chamber of various Peers’ strong concerns and the comments that have been made. I chime with those as well. As the noble Baroness knows, food banks are independent, charitable organisations and our department does not have a role in their operation. What she and the Committee should know is that we are looking to give some feedback from a series of questions posed by the Family Resources Survey. We hope that these will be published next month and will give the Government some idea about usage. It is very much our wish that food banks are not needed. We need to continue to work as hard as we can to look at the reasons behind their usage. We can all guess what they are; I have given some flavour of that this afternoon.
On the same theme, I will touch on inflation. This leads to a number of important points raised by noble Lords, in particular the extremely good point from the noble Baroness, Lady Lister, on the increase in food prices. We are all concerned about the price of certain food items rising particularly steeply. Like many countries around the world, and as the noble Baroness knows, the UK faces the challenge of high inflation. We will continue to provide support through cost of living payments, which have been well rehearsed in this Committee and in the Chamber, while increasing state pensions, benefits and the benefit cap levels by 10.1%.
To help the Committee, the CPI stood at 10.1% for the 12 months to January 2023, down from 10.5% in December. This monthly decline was principally driven by lower rises in motor fuel. The Bank of England predicts that the CPI will continue to fall. The OBR states that government action has limited the severity of the recession and protected 70,000 jobs, and that it will take 3.4 percentage points off inflation by the end of March. This will contribute to a fall in inflation, which, as the Prime Minister has said, is expected by mid-year.
This leads quite neatly on to some of the points raised by the noble Baroness, Lady Lister, and the noble Lord, Lord Davies. To paraphrase, the general gist of their question was: why can we not uprate more frequently using a more up-to-date CPI figure? That is a fairly reasonable question. The Secretary of State undertakes an annual review of benefits and pensions. As I mentioned earlier, the CPI in the year to September is the latest figure that the Secretary of State can use. This is crucial to allow sufficient time for the required operational changes before new rates can be introduced at the start of a new financial year.
All benefit uprating since April 1987 has been based on this particular timing. Given the volumes involved, the technical and legislative requirements and the interdependencies across government, we state very firmly that it is not possible to undertake the uprating exercise any later than currently timetabled. I do not say this to be particularly cheeky but I wonder whether the comments might not have been quite so critical of this timing issue for the higher uprated figure had there been real evidence today of a much lower level of inflation, so all those people would be getting more than the level of inflation—perhaps I should not go there.
I turn to the local housing allowance—the LHA—which was raised by the noble Baroness, Lady Lister, and others; yes, we had 10 minutes on this in the Chamber earlier. I am not sure that I can really add to what I have said. I genuinely believe that the £1 billion that we invested in 2020 to provide support for private renters by increasing the rate to the 30th percentile was the right thing to do. It is a fact that it has been frozen but it is also a fact that the discretionary housing payments—DHPs—and homelessness protection grants are helpful. I say again that we believe it is right that we defer to local councils and local authorities to make the right decisions in terms of how to target the funds that we have given them, including to people who are generally suffering and are on the lowest incomes. It is up to them to decide what to do.
Baroness Lister of Burtersett (Lab)
Perhaps I can ask again the question that I asked this afternoon but in a slightly different way. Let us take somebody whose local housing allowance is well below the rent that they are paying and they are on benefits. They are probably struggling anyway because, as we have heard, benefits have been cut in real terms in recent years—if benefits had not been cut since 2010, people might have been in a better position that they are to withstand the current cost of living crisis. Let us say that they also live in an authority where the local housing allowance budget is under great strain; according to Shelter, some authorities are really struggling because demand is so high. What is the Minister’s advice to them? What should they do? There is no point saying, “Go to the local authority”, because there may not be any money there.
Viscount Younger of Leckie (Con)
I take note of that; I am certainly not dismissing what the noble Baroness says. It is a legitimate point that she raises. I hope, though, that she will acknowledge that it is right that the money we give is properly targeted to those who are in genuine need. I would like to hear of issues where they are not particularly targeted. If the money is going to people who do not need it, that is an issue, but the main thing is that the money should go to people who are genuinely in need. However, it does not just rely upon that; it relies upon the other initiatives that I have already mentioned.
To pick up on what the noble Baroness said in her remarks, the local housing allowance rates are not intended to meet all rents in all areas. In areas where rents are more expensive, those in receipt of benefits have to make the same decisions about where to live as those not claiming benefits. May I just leave it that we probably will not agree on this and that I will take away what the noble Baroness has said? It is important, I acknowledge, that local authorities follow through and give support to those who are in genuine need in all areas.
I will move on to the transitional element—that is, the uprating and the link to universal credit and transitional protection, which was raised by the noble Baroness, Lady Lister, and the noble Lord, Lord Davies. As they know, TP provides eligible claimants time to adapt to UC by protecting entitlement at the point of migration to universal credit. TP is neither intended to replicate permanently nor be an indefinite increase in benefits. I therefore acknowledge that it erodes. This ensures that UC entitlement for those managed migrations will gradually align with new claimants in the same circumstances. The noble Lord, Lord Davies, asked how many people will see a less than 10.1% increase due to the interaction with transitional protection; I will need to write to him on that point.
Baroness Lister of Burtersett (Lab)
I asked that question as well. Will the Minister write to me about how many will be affected? I had hoped that he might be able to bring those figures today.
Viscount Younger of Leckie (Con)
If I had been given advance notice of the questions, I might have been able to.
Baroness Lister of Burtersett (Lab)
The noble Viscount was. I am sorry but the very reason I raised it with him earlier this week was so that it might be possible to bring the figures today.
Viscount Younger of Leckie (Con)
In which case, I apologise. I would normally take note and come back with some answers. Of course I will include the noble Baroness; in fact, I will include any Peer who has taken part in this debate in my letters about anything that I am not able to answer.
The noble Lord, Lord Davies, and the noble Baroness, Lady Sherlock, said that the Government need to be clear about why we are raising the guaranteed minimum pensions by 3%. For the pre-2016 pensioners, the Government meet the difference; for post-2016 pensioners, we do not—however, these people benefit from transitional protection. I hope that gives some form of an answer.
The noble Baroness, Lady Sherlock, raised communication. A fact sheet covering the policy change was published on GOV.UK in August 2021—I see that she is nodding at that—which invited people to write to the department if they wanted an explanation of how they had been affected by the policy change. One request for compensation has been received so far, which is interesting. As of 25 January, we do not yet know the outcome of that claim, but I hope that provides an answer.
The noble Baroness also asked about the benefit cap increase linked to child poverty. As she will know, the Government are fully focused on tackling the root causes of poverty, such as children’s education and parental worklessness, to improve the lives of people in our country. She will know that the best way of doing that is for us to have a strong economy and get people into work. As mentioned earlier, the proposed levels will mean that households will be able to receive benefits up to the value of gross earnings of around £26,500, or £31,300 in London.
The noble Baroness, Lady Lister, asked about low pay and whether the Low Pay Commission—the LPC—would include in its deliberations the adequacy of benefit rates. I thank the noble Baroness and will draw the Treasury’s attention to that.
There are a number of other questions that I need to answer, but we probably need to draw a halt, as time is running short.
Local Housing Allowance Rates
Baroness Lister of Burtersett Excerpts(1 year, 2 months ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Baroness Lister of Burtersett
To ask His Majesty’s Government what assessment they have made of the impact of the freeze in local housing allowance rates.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)
My Lords, the local housing allowance policy is kept under regular review. We monitor the average rents and shortfall levels for claimants to assess the impact of the policy. A significant support package was announced in the autumn Budget, including uprating benefits by 10.1% and extending the household support fund for 2023-24. Further support—discretionary housing payments—is available, and since 2011, nearly £1.6 billion in DHPs have been provided to local authorities.
Baroness Lister of Burtersett (Lab)
My Lords, according to the Institute for Fiscal Studies, this further freeze in private rental support means that two-thirds of lower-income private renters must cover at least a quarter of their rent from elsewhere. For many, this means a real cut in the value of inadequate benefits that are supposed to cover basic needs such as food. Cash-limited local authority discretionary housing payments are no answer, especially as their budgets have also been cut. Does the Minister accept that one consequence of this freeze is likely to be increased homelessness? What is his advice for those faced with a growing, unaffordable gap between help with housing costs and actual rents?
Viscount Younger of Leckie (Con)
I absolutely hear the noble Baroness, because we recognise that rents are increasing—there is certainly lots of anecdotal evidence of that in the press. However, the challenging fiscal environment means that difficult decisions were necessary to ensure that support is targeted effectively. That is why the Chancellor announced at the Autumn Statement a substantial package of cost of living support to target the most vulnerable households. As I mentioned earlier, one of the initiatives for those who require additional support is the discretionary housing payments available from local authorities, which are best able to target those funds.
Universal Credit: Benefit Cap and Two Child Limit
Baroness Lister of Burtersett Excerpts(1 year, 3 months ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Baroness Lister of Burtersett
To ask His Majesty’s Government how many families in receipt of Universal Credit are subject simultaneously to the benefit cap and the two child limit.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)
My Lords, both policies aim to introduce fairness between households claiming benefits and taxpayers who support themselves solely through work. We estimate from published statistics that fewer than 30,000 households were impacted by both policies in April 2022, which is under 1% of households on universal credit. These families may benefit from additional financial help, such as the cost of living payment and discretionary housing payment, if they need additional support to meet rental costs.
Baroness Lister of Burtersett (Lab)
My Lords, in the absence of official data hitherto, the Benefit Changes and Larger Families Project estimates that at least 110,000 children are being pushed deeper into poverty because their parents are caught by both the cap and the two-child limit. Evidence of the damaging effects strengthens the case for scrapping both policies, which are far from fair. At the very least, will the Government now undertake to publish regular data on the numbers affected and monitor the impact on children and their parents?
Viscount Younger of Leckie (Con)
I am certainly aware of the larger families project. The latest published statistics on households on universal credit show that the majority of families—79%—on universal credit had fewer than three children, with 21% of universal credit households with children having three or more children. Having said that, it is important to note that there are a number of other initiatives where we can help families with more than two children if they get into difficulty.
Carer’s Allowance
Baroness Lister of Burtersett Excerpts(1 year, 5 months ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Baroness Lister of Burtersett (Lab)
My Lords, this Minister and other Ministers constantly tell us that carers are well valued, yet the carer’s allowance continues to be paid at a lower rate than equivalent benefits, despite the growing evidence of the serious hardships experienced by carers. How can this state of affairs be justified? Asking carers to claim means-tested benefits is not the answer.
Baroness Stedman-Scott (Con)
We should wait and see what the Chancellor says, and I am hopeful about that. I re-emphasise that means-tested benefits can increase payments to carers quite significantly. I am sure that, when Carers UK meet the Minister for Disabled People and talk about the report, they will discuss in detail some plan to raise awareness of those benefits.
Child Poverty: Ethnicity
Baroness Lister of Burtersett Excerpts(2 years, 11 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Lister of Burtersett (Lab)
My Lords, I am grateful to the noble Lord, Lord Woolley, for tabling this QSD, which raises important questions about child poverty and ethnicity.
In addition to the sobering ONS statistics that it highlights, recent analysis from Leeds University shows how children from black, Asian and other minority ethnic backgrounds are at the greatest risk of deep poverty—to which the noble Lord referred—which is increasing among children generally. Indeed, the latest official data showed that two-thirds of the growing number of children in poverty are in deep poverty. What steps are the Minister’s department taking to address this growing problem?
Although the recent attention given to child food poverty is welcome, it is but a symptom of what the New Policy Institute has called a “child poverty disaster”, as earlier progress made in reducing child poverty has been all but wiped out in the past six years. The Trussell Trust, which has done so much to draw attention to growing food insecurity and reliance on food banks, is clear that the problem is not one of food but of people not having enough money for basics. The answer, it believes—as do others—lies at least in part in improved social security support, especially for children.
According to the Centre for Analysis of Social Exclusion, social security spending on children has been cut by £10 billion in real terms since 2009-10. Analysts agree that social security cuts, both the general freeze and cuts targeted at larger families, have been a key driver in worsening child poverty. What assessment have the Government made of the likely impact on child poverty of: first, ending the £20 universal credit uplift this autumn as planned; secondly, retaining the two-child limit, when just yesterday three of the UK’s Children’s Commissioners called on the Government to scrap it, arguing that it is a clear breach of children’s human rights and pointing to its disproportionate impact on black and minority ethnic children; and, thirdly, refusing to review the benefit cap as a matter of urgency, as was called for by the Economic Affairs Committee back in December? Again, the cap has a disproportionate impact on black and minority ethnic children.
Tackling child food poverty, including among black and minority ethnic children, requires a comprehensive cross-departmental child poverty strategy that goes well beyond paid work, which is increasingly failing to provide protection against poverty. Where is it?
Extreme Poverty
Baroness Lister of Burtersett Excerpts(3 years, 4 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Lister of Burtersett
To ask Her Majesty’s Government, further to the report by the Joseph Rowntree Foundation Destitution in the UK 2020, published on 9 December, what steps they are taking to address any (1) increase in, and (2) intensification of, extreme poverty in the United Kingdom.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)
My Lords, tackling poverty is a priority for this Government. Throughout this pandemic, this Government have sought to protect jobs and incomes, spending billions on strengthening welfare support and ensuring the most vulnerable can meet their basic needs. Our long-term ambition is to level up opportunity across the UK by helping people back into work as quickly as possible, based on clear and consistent evidence of the important role work can play in tackling poverty.
Baroness Lister of Burtersett (Lab) [V]
My Lords, is it not shocking that the JRF found that
“even before the COVID-19 outbreak destitution was rapidly growing in scale and intensity”,
with 2.4 million people, including over 500,000 children, in households unable to afford the essentials needed to eat and stay warm and dry? Given that this and other research identifies social security cuts and design flaws as the key cause of this hardship, what assessment have the Government made of the impact on extreme poverty of withdrawing the £20 UC uplift in April and refusing to extend it to disabled people, the unemployed and carers on legacy and related benefits?
Baroness Stedman-Scott (Con)
Tackling poverty, as I said, is an absolute commitment and a priority for this Government. The noble Baroness raises the issue of the £20 uplift, and I can only confirm that the £20 uplift is in place until April 2021. Discussions between our department, the Treasury and others are ongoing, and a decision will be made in due course.