Child Poverty

Lord Sikka Excerpts
Monday 29th April 2024

(1 month, 3 weeks ago)

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Lord Sikka Portrait Lord Sikka (Lab)
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My Lords, I thank the noble Lord, Lord Bird, for facilitating this much-needed debate. In a country boasting a record number of billionaires and where the top 1% has more wealth than 70% of the population combined, condemning 4.3 million children to poverty is really a political choice. There is no economic necessity for it whatever. Governments have bailed out banks and energy companies and handed billions in subsidies to rail, oil, gas, auto, steel and internet companies. They can eradicate child poverty too, if there is appropriate political will. Rescuing people from poverty will also stimulate the economy because poor people tend to spend more in the local economy, which has a considerable multiplier effect.

This Government have accelerated poverty by cutting real wages. The average real wage is now lower than in 2008. Austerity, unchecked profiteering, and the two-child benefit cap, accompanied by regressive tax policies, have deepened poverty. The poorest pay a higher proportion of their income in taxes than the richest. The richest fifth of households pay 31% of gross household income in direct taxes, compared with 14% by the poorest fifth. The richest fifth pay 9% of their disposable income in indirect taxes, compared with 28% by the poorest fifth. Can the Minister explain why the Government have not reduced indirect taxes, which would help the poorest households?

The Government actually have numerous policy options. They can reform corporate governance. For example, evidence shows that having worker-elected directors on the boards of large companies helps to secure equitable distribution of income and to lift families and children out of poverty. Since 2010, the Government have handed £695 billion of quantitative easing to capital market speculators. Will the Minister also support a call for QE to alleviate poverty? Why not?

The Government can also remove the two-child benefit cap and inflation-proof benefits by eliminating anomalies and the tax perks of the rich. For example, they can cap tax relief on charitable donations for donors at 20%. At the moment, the rich get tax relief at 40% and 45%. By capping this tax relief, the Government could generate £740 million a year extra, which could easily fund free school meals for children. By taxing capital gains at the same rates as wages, another £12 billion a year of extra revenue could be raised. Similarly, by taxing dividends at the same rate as wages, another £4 billion to £5 billion a year could be raised in revenue. By capping tax relief on pension contributions to 20% for all, the Government could generate an additional £14.5 billion a year of revenues. These are just some examples of how the Government could generate resources to alleviate child poverty, and, of course, I could offer up further options, if the Minister so wishes, either in this House or even privately. I hope the Minister will consider these things.

Finally, will the Minister acknowledge that child poverty is a political choice by the Government and not an economic necessity?

Baroness Chakrabarti Portrait Baroness Chakrabarti (Lab)
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What I am advocating to the Committee is that, in terms of our approach in this country to everyone in either category—or to people who are sometimes in both categories because they are, for example, entitled to some universal benefits but none the less must pay tax on their earnings, inheritance or whatever—the appropriate approach is a targeted approach beginning with at least some reasonable suspicion that a person’s financial matters are a cause for concern. Once there is reasonable suspicion—not even hard proof—because of their activities, that should be the trigger for an intrusion into their affairs. We have had that approach to privacy in this country for a very long time; it is the approach that, broadly speaking, is entrenched in Article 8 of the convention. Even if one does not like human rights conventions, it is none the less a tradition that people in this country—not just lawyers—have long understood.

Further, and in reference to the remarks attributed to the noble Lord, Lord Anderson of Ipswich—who is not in his place, which is the reason why I am also risking being sensible—it is absolutely flabbergasting that there are greater checks and balances for investigating matters of national security than for investigating what could be minor benefit fraud. An example is the allegation that the person giving a Christmas present to their pensioner relative or their relative who is not able to work should trigger a response in the algorithm that this is somebody who should no longer be worthy of the benefit or who, worse still, should face criminality or even potential incarceration.

I cannot say how horrified I am that the Government should have proceeded with a measure of this kind even as we still learn about the extent of the injustice perpetrated on the postmasters. After what we are just beginning to understand about the postmasters, I cannot understand why the Government would allow this kind of discriminatory intrusion to be turbocharged by AI and inflict the potential for the same type of injustice—not just for a limited cohort of people who were unfortunate enough to be serving their communities by working as postmasters—on millions of people in the United Kingdom.

This is what Committee on a Bill is for. I will therefore calm myself in the knowledge and belief—and certainly the hope—that, in his response, the Minister will at least offer to meet with Members of the Committee who have put their names to the clause stand part notice from the noble Baroness, Lady Kidron, and with campaigners and experts to hear a little about the detail of the concerns and to compare this provision with the other provisions, as the noble Baroness, Lady Buscombe, suggested in relation to national security, or indeed for tax fraud. Nobody is suggesting that fraud should be perpetrated with impunity, but we must learn from the mistakes of injustices already perpetrated. They are perpetrated because of blanket trust in the authorities and AI and a lack of checks and balances. There were plenty of humans in the loop at the Post Office, but that is not enough. This is a sweeping power that will lead only to intrusion, discrimination and the worst kind of injustice. In the meantime, before that moment even comes, millions of people will live in fear.

Lord Sikka Portrait Lord Sikka (Lab)
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My Lords, I will address, first, the exclusion of Clause 128 and, secondly, Amendment 219 in my name.

I spoke at Second Reading to oppose Clause 128. I was a little too late to put my name to the clause stand part notice in the names of the noble Baronesses, Lady Kidron and Lady Chakrabarti, and the noble Lords, Lord Clement-Jones and Lord Anderson. I would therefore like to address a few things relating to that before I move on.

This clause creates two kinds of citizen: those who are entitled to financial privacy and others who are not entitled to any privacy, just because they happen to be poor, old, sick, disabled, infirm and unfortunate. Hopefully, the Minister can explain the rationale for creating this form of discrimination. This discrimination will particularly affect women, because a lot of women receive social security benefits, and people of colour, who are generally paid poorly and often have to rely upon universal credit and other benefits to make ends meet. Hopefully the Minister will also be able to tell us how this squares with the levelling-up agenda. Certainly this clause does not really provide any fairness at all.

I have received lots of emails and letters and met individuals who are very concerned, as earlier speakers articulated, that they will be made homeless because their landlords will not want their bank accounts to be put under surveillance. What assessment have the Government made of the impact that this clause may have on future homelessness?

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On the remarks from the noble Lord, Lord Sikka, on his amendment, fraud against the public sector is a crime that impacts us all. It affects the quality and quantity of public services and ultimately damages those whom society should protect the most. The Government are committed to tackling all fraud committed against the taxpayer. That is why we have established the Public Sector Fraud Authority within the Cabinet Office. To broaden these powers, as suggested by the noble Lord, would be disproportionate and unworkable. It would undermine the effective safeguard in place as part of the power to ensure that it is targeted only where there is a link between the department, the claimant and a third party, and would diverge from the policy intent, which is to tackle welfare fraud and error.
Lord Sikka Portrait Lord Sikka (Lab)
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I would be convinced about the Government’s intentions, and would not press this amendment at the next stage, if the Minister can name just one big accounting firm which since 2010, as a result of a court judgment that said it was selling unlawful tax avoidance schemes, has been investigated, fined or prosecuted. If he can give me such an example then I will be convinced that the Government are seriously tackling tax fraud and its enablers.

Viscount Younger of Leckie Portrait Viscount Younger of Leckie (Con)
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The noble Lord has set me quite a challenge at the Dispatch Box. It is out of scope of today’s session but, having said that, I will reflect on his question afterwards.

I am aware that time is marching on. My noble friend Lord Kamall asked about burdens on banks. We believe that the burdens on banks will be relatively low.

The noble Baroness, Lady Sherlock, made a number of points; I may have to write to her to expand on what I am about to say. Removing the requirement for third parties to provide legible copies of information means that DWP could receive the information but there is a risk that the information is not usable; that is my answer to her points. This could limit the data that DWP receives and prevent us utilising the power in full, which could in turn impact the savings due to be realised from this important measure.

I turn to the final amendments in this group, which were raised by the noble Baroness. They would place requirements on the Secretary of State to issue statements in the House and consult on the code of practice. We will talk more about the code of practice later on in this debate, and I have already made clear my firm opinions on it: we will take it forward and are already working on it. There will be a consultation that will, of course, allow anybody with an interest in this to give their views.

I turn to the number of statements that must be made in the House regarding the practical use of the measures before powers can commence, such as the role that artificial intelligence will play or assurances on any outsourcing of subsequent investigations. This is an important point to make and was raised by other Peers. I want to make it clear that this measure will be rolled out carefully and slowly through a “test and learn” approach from 2025, in conjunction with key third parties. To make these statements in the House would pre-empt the crucial “test and learn” period. I say again that discussions with the third parties are deep and detailed and we are already making progress; this point was made by the noble Lord, Lord Clement-Jones, on the link with banks and third parties.

Importantly, I assure the noble Baroness, Lady Sherlock, that we will not make any automated decisions off the back of this power; this was also raised by the noble Baroness, Lady Kidron. The final decision must and will always involve a human being—a human agent in these cases—and any signals of potential fraud or error will be looked at comprehensively. I am grateful for the remarks of my noble friend Lady Buscombe on this matter.

I know that I have not answered a number of questions. Perhaps I can do so in our debate on another group; otherwise, I certainly wish to answer them fully in a letter. I hope that I have explained clearly, from our perspective, why this power is so important; why it is the right power to take; and how we have carefully designed it, and continue to design it, with the key safeguards in mind. I strongly value the input from all those who have contributed today but I remain unconvinced that the proposed amendments are necessary and strengthen the power beyond the clear safeguards I have set out. With that, I hope that the noble Baroness will not press her opposition to Clause 128.

Viscount Younger of Leckie Portrait Viscount Younger of Leckie (Con)
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Absolutely; I am keen to make sure that I answer on that. It may be possible to do so in the next group but, if not, I will certainly do so in the form of a precise letter—added to the larger letter that I suspect is coming the noble Lord’s way.

Lord Sikka Portrait Lord Sikka (Lab)
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A number of pensioner groups are watching these proceedings. I have received some messages. They are asking, “When is the Minister going to answer the questions asked about the operation of the surveillance of recipients of the state pension, especially those who have foreign accounts?” I assume that the Minister will clarify that in any subsequent letter to me.

Viscount Younger of Leckie Portrait Viscount Younger of Leckie (Con)
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Absolutely; the noble Lord will know that I have not managed to answer all the questions. I have tried to bring in everybody on this important and serious debate. The answers will be forthcoming.

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Lord Sikka Portrait Lord Sikka (Lab)
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My Lords, I ask the Minister for clarification. The noble Baroness, Lady Sherlock, asked about the number of individuals; I guess it may be 24 million or 25 million. However, from what the Minister has said, the number of bank accounts subject to surveillance would be far greater than that. For example, I receive a state pension and am also a trustee of a small not-for-profit organisation; from what the Minister said, I would be caught, as would that organisation. Landlords and many others could possibly be added. It seems that the number of bank accounts would be far greater than the number of individuals. When he provides the data, can the Minister estimate how many bank accounts and transactions there might be?

Baroness Bennett of Manor Castle Portrait Baroness Bennett of Manor Castle (GP)
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I will add to that the issue of overseas bank accounts. I cannot see how the British Government can apply this measure to them. Will this not push people to go to overseas bank accounts? Or will the Government try to pursue them through challenger banks—including multiple accounts from one person who may have one original, normal current account here?

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Viscount Younger of Leckie Portrait Viscount Younger of Leckie (Con)
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I know that I said earlier that child benefit was not included. I will clarify that child benefit is not a benefit for which the DWP is responsible or has any functionality for. This measure will be exercised by the DWP Secretary of State, and we cannot use this power for that benefit.

I was in the middle of answering a question from the noble Baroness, Lady Sherlock.

Lord Sikka Portrait Lord Sikka (Lab)
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My Lords—

Viscount Younger of Leckie Portrait Viscount Younger of Leckie (Con)
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I will finish this answer, if I may. The DWP personal information charter lists banks and financial institutions, and other parties, among the parties with which DWP may share data and from which we may receive data. It also lists checking accuracy and preventing and detecting fraud among the purposes for which we may share or receive information.

A claimant will not be notified if their account details have been returned to DWP by a third party as that could alert fraudsters to the criteria, enabling them to evade detection—I think that is a valid point—but they will be notified if a DWP agent determines that a review is required as a result of the information provided by the third party. That notification will be done through the business-as-usual processes.

Moving on to defining working-age payments in legislation, which relates to the final amendment in this group, Amendment 235, which was tabled by the noble Baroness, Lady Sherlock, it would require the Government to specify in regulations the working-age benefits with which this power could be used. As she demonstrated, there is a wide range of benefits and therefore potential avenues for fraudsters to seek or exploit or for error to creep in. That is why it is important that the power enables the department to respond proactively as new fraud risks emerge.

That said, as the noble Baroness knows, the power will not be exercisable in all the benefits she listed—I took note of her long list—such as child benefit, which we have just mentioned, because the legislation is drafted in such a way that it could reasonably be exercised in relation to benefits for which the Secretary of State is responsible. I reassure the noble Baroness, Lady Sherlock, and the Committee that in the first instance, we plan to use this with universal credit, employment and support allowance—ESA, pension credit and housing benefit. That is the way forward.

There may be a number of questions that I have not addressed, but I hope that I have continued to make the case for why this measure is so important and our aim to tackle fraud and error. I continue to make the case that it is proportionate and that proportionate safeguards are in place. With that, I hope the noble Baroness will agree to withdraw her amendment.

Women’s State Pension Age

Lord Sikka Excerpts
Tuesday 26th March 2024

(2 months, 3 weeks ago)

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Viscount Younger of Leckie Portrait Viscount Younger of Leckie (Con)
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I thank the noble Lord, Lord Dodds, for his support and endorsement of our stance on the triple lock and our decision to include it in our manifesto. On the points on WASPI that he has mentioned, absolutely—I think I have said this before—I recognise the strength of feeling and I am aware of the urgency in dealing with many of these matters. I probably will not repeat it again, but just to say it briefly, I have highlighted very clearly the complexity of the issues. The noble Lord would not expect me to be in a position to set out a timetable, even if I could. So I am afraid that I will disappoint him by sticking to the line, which is that we will be coming back to Parliament without undue delay.

Lord Sikka Portrait Lord Sikka (Lab)
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My Lords, I congratulate the WASPI and Back to 60 campaigners on their quest for justice. The ombudsman’s reports have said that:

“Our investigation found maladministration … thousands of women may have been affected by DWP’s failure to adequately inform them that the state pension age had changed”.


This has led to anguish, hardship and many other problems. I have met many of these women and listened to their arguments and to their case. This problem of not telling them about the hike in pension age is part of a bigger problem about how women have been treated by successive Governments. Despite the Equal Pay Act 1970 and the illusions of equality, women continue to be treated as second-class citizens. The gender pay gap persists, which then leads to the gender pension gap. Despite hiking the state pension age for women, women continue to receive a lower state pension. No attempt whatever has been made to equalise the two, although the equality horse was ridden to raise their state pension age. Unfortunately, many of the wronged women have died. I am sure that the House would agree that justice delayed was justice denied.

I do not understand what, in the light of this report, the Government need to consider. It is very clear that women have been wronged. I press the Minister to give a commitment that women will be compensated for the anguish and hardship that they have suffered and that this compensation will be paid, I hope after the Easter break.

Viscount Younger of Leckie Portrait Viscount Younger of Leckie (Con)
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I will disappoint the noble Lord by saying that I am not able to give any such commitment, apart from those that I have given. I am beginning to sound like a long-playing record but, despite what he said, these are complex matters, and he will have to respect that. I want to pick up on one thing that he mentioned—the role of DWP. Yes, the report’s words, not mine, were that the PHSO found maladministration in the steps that the department took between 2005 and 2007 in relation to notifying the women affected. I gently point out that this was when the Labour Party was in power. The point has been made before, but it is worth making. However, this is one of the many complexities. I am unable to answer the precise questions. I hope that the noble Lord respects this.

Workers (Economic Affairs Committee Report)

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Thursday 8th February 2024

(4 months, 2 weeks ago)

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Lord Sikka Portrait Lord Sikka (Lab)
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My Lords, I thank the Economic Affairs Committee for its report. The title, Where Have All the Workers Gone?, is intriguing. Neoliberal economists would argue that markets do not have shortages if buyers are willing to pay the appropriate price. However, the report does not advocate higher real wages to address market failures, even though that reduces staff turnover and training costs. The report seems to hanker for an expanded reserve army of labour at low wages, and it associates higher wages with inflation. This logic is at odds with the current bout of inflation, which is caused by profiteering. The real average wage has not changed since 2007. The Government themselves do not associate inflation with higher executive pay and bankers’ bonuses, so it is surprising that they are not advocating the same for workers in order to relieve worker shortages. Perhaps the Minister would like to comment on that.

Government policies have caused labour shortages in this country. With never-ending austerity, millions are struggling to get access to good food, housing, education, clothing, upgrading of skills and healthcare. Deprived people cannot work long hours or fulfil their potential. More workers are reporting being sick and have mental health problems, as has been said by other speakers. So higher disposable income and good public services are key requirements for maintaining and expanding the labour supply.

But the Government have done the opposite, cutting real wages and access to healthcare. Some 6.3 million people in England are waiting for 7.6 million hospital appointments—that is 1 in 9 people. Around 2.8 million people are chronically ill and unable to work, and more than 500,000 under-35s in the UK are out of work due to long-term illness. An August 2023 study by the Times reported that, in the five years to 2022, some 1.5 million people in England died while waiting for a hospital appointment—that is 300,000 a year. A 2022 study published in the Journal of Epidemiology and Community Health reported that, between 2012 and 2019, government-imposed austerity caused 335,000 excess deaths in England and Scotland—nearly 48,000 a year. One-third of these deaths were among people under 65. The Government’s obsession with austerity, wage cuts and defunct economic theories has turned the state into a debilitating killing machine, and this is a major cause of the labour shortages we are experiencing.

Reskilling should be a major issue. Apprenticeships have more or less vanished, or are scarce, and fewer people in England are now going to universities. They are burdened by student debt of £206 billion. Unlike other European countries, England charges university fees, which is now deterring people. The Government seem to have little by way of a strategy to address these issues. I hope that the Minister will announce that the Government will write off student debt, because it will have to be written off sooner or later.

The labour shortages are deepened by having too much dead weight in the economy. For example, the UK has nearly 400,000 professionally qualified accountants, which is the highest number per capita in the world. Nearly a quarter are engaged in what is called “tax planning”, which is really a euphemism for tax dodging—there is no other word for it. They are well paid to plunder the public purse, but this adds little to the productive capacity of the economy. The higher rewards from tax abuse persuade graduates to shun other sectors of the economy. Just think about the huge social cost associated with producing one tax-dodging accountant. There is a huge misallocation of resources, which exacerbates labour shortages in other industries. The Minister will, I hope, tell us how he will rebalance the economy.

Labour shortages can be alleviated by new technology, but there is chronic underinvestment in the UK economy. Investment has fallen from 23% of GDP in the late 1980s to around 17% from 2000 onwards, compared to 20% to 25% in other major industrial economies. In the OECD league table of investment, the UK occupies the 35th spot out of 38 countries. The private sector does not invest enough because people do not have enough purchasing power to buy the goods and services it might actually produce. These days, the public sector is more about handing cash to footloose corporations, rather than directly investing in industries. There was a time when we had an entrepreneurial state that directly invested in new industries and created information technology, aerospace, biotechnology and other industries. But these days, we just give cash away and nothing is created.

To sum up, government policies are a key reason for labour shortages. We cannot alleviate them with further doses of neoliberal policies that oppose higher wages, better public services and the creation of new industries. I hope the Minister will tell us that the Government will change all their policies.

Employment and Support Allowance

Lord Sikka Excerpts
Wednesday 18th October 2023

(8 months, 1 week ago)

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Viscount Younger of Leckie Portrait Viscount Younger of Leckie (Con)
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Although I do not have information on that specific programme here, I will certainly write to the right reverend Prelate. It no doubt fits in well with and complements many of the other initiatives we are taking, including, as I mentioned earlier, the work coach support, the disability employment advisers, the Access to Work grants and the Disability Confident scheme—I could go on.

Lord Sikka Portrait Lord Sikka (Lab)
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My Lords, in May 2010, 527,000 people were claiming the employment and support allowance. At that time, the NHS England waiting list was 2.5 million; now, it is 7.8 million and 1.63 million people are claiming the allowance. Clearly, there is a correlation between the two statistics. Can the Minister explain why the Government have failed to address the main cause—the degradation of the NHS?

State Pension Underpayment Errors

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Tuesday 16th May 2023

(1 year, 1 month ago)

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Viscount Younger of Leckie Portrait Viscount Younger of Leckie (Con)
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Very much so; it is being done. I think I alluded to this earlier. Any systemic problem has to be looked at as a matter of urgency. On the other question the noble Baroness raised, I mentioned the number of extra people we have put on to this particular case. I reassure her and the House that the data shows that we have reviewed an average of more than 15,000 cases per month between November 2022 and February 2023, compared with an average of only 5,000 per month over the first 22 months of the exercise.

Lord Sikka Portrait Lord Sikka (Lab)
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My lords, it is estimated that between 20,000 and 25,000 pensioners die each year because of low income and the hard choices they have to make between heating and eating. Can the Minister explain whether any assessment has been made of the deaths and hardship caused by underpayment of state pension over the last 13 years?

Viscount Younger of Leckie Portrait Viscount Younger of Leckie (Con)
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No, I do not have any figures to support the argument that the noble Lord is proffering. What I can say is that we very much take note of wanting to support the most vulnerable. We have increased benefits in line with the September 2022 consumer prices index of 10.1%, including around 12 million pensions.