Cost of Living

Debate between David Rutley and Stephen Timms

Tuesday 5th July 2022 Commons Chamber

[David Rutley]

We are having to deal with some challenging headwinds, as a result of the pandemic and now these inflationary pressures, but we have sought to take targeted measures. During the pandemic, especially the early stages, we focused particularly on those who were feeling the impact of changes in the employment market, which were immediate. Now we are focusing our efforts on targeted support for the people and households who will be most affected by inflationary pressures. The means of dealing with those are complex, and we are having to develop systems and processes to get the payments out quickly. Because of their nature they will never be 100% perfect, but we have taken other steps to support those who may not previously have been eligible for support. I shall say more about that shortly.

Our labour market policies are part of our plan to manage inflation, and that is a further reason for us to redouble our efforts to encourage more people to get into work and take advantage of the current buoyant labour market, with a record 1.3 million vacancies. Our multimillion-pound plan for jobs is helping many people into work with the kickstart scheme and the restart programme. Opposition Members do not always talk about the importance of work and the achievements that have been made in the labour market, so let me point out that last week our Way to Work campaign met its ambition of moving more than half a million people into work in under six months. That is an important achievement, not necessarily for the Government —although we welcome it—but in terms of the difference it will make to households throughout the country.

Moving into work and making work pay are core tenets of our strategy to build long-term growth and prosperity up and down the country, which is why we have introduced a number of work incentives. In particular, we have cut the universal credit taper rate from 63% to 55%, and have increased work allowances by £500 a year. Tomorrow, 6 July, we are cutting the national insurance threshold, a move that will be worth up to £330 a year for nearly 30 million working people.

Some Members have mentioned uprating, including the Select Committee Chair, the right hon. Member for East Ham. As part of the Department’s long-term approach, the Secretary of State completed her annual review of benefit and pension rates last year in the usual way, using well-worn, well-proven methods and processes. The state pension and the pension credit standard minimum guarantee were increased by 3.1%, the rate of inflation for the year to September 2021 as measured by the consumer prices index. As I think the right hon. Gentleman will know, we remain committed to implementing the state pension triple lock for the remainder of this Parliament, and on 26 May the Chancellor confirmed that it would be reinstated next year. All other benefits have also been increased this year in line with the consumer prices index of 3.1%. That approach has formed part of a long-standing convention. Since April 1987, all benefit uprating has been based on the increase in the relevant price inflation index in the 12 months to the previous September, helping claimants through the inflationary cycles.

[Sir Stephen Timms]

I am grateful to the Minister for setting out the commitment to uprating in line with inflation, but does he accept my earlier point about the need, in this very inflationary environment, to uprate the level of the benefit cap? Is he able to tell us whether it will be reviewed between now and next April?

[David Rutley]

I was going to come to that later, but as it is an important point, I will address it now.

As has been acknowledged today, none of the new one-off payments will be taken into account in the benefit cap, but there is a statutory duty to review the levels of the cap at least once every five years, and that will happen at the appropriate time. The current unusual economic period, with potentially counterintuitive and shifting trends, will need to be considered in the context of any decision about a review. The benefit cap provides a strong incentive and fairness for hard-working taxpayers and households, and encourages people to move into work. Last week, the Secretary of State told the Select Committee that she was taking advice on the exact timing and the approach. The statutory obligation to review the cap levels at least once a year in each Parliament changed on 24 March 2022, when the Fixed-term Parliaments Act 2011 was repealed, and the new obligation requiring the Secretary of State to review the levels at least once every five years means that the DWP now has until 2027 to complete a review. As I have said, however, she is seeking advice on that.

The annual review of benefits and pensions for the next tax year will begin in the autumn. To measure inflation, the Secretary of State will use the consumer prices index in the year to September. To measure earnings related to the pensions side of the equation, she will use average weekly earnings for the period from May to July. The uprated benefits and pensions will come into effect in April 2023.

Social Security (Additional Payments) Bill

Debate between David Rutley and Stephen Timms

2nd reading
Wednesday 22nd June 2022 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (David Rutley)]

I thank those who have contributed to this debate. I echo the points made by my right hon. Friend the Secretary of State to stress the importance of this urgent legislation to support people up and down the country. The sharp increase in the cost of living is a challenge shared across the globe due to the aftershocks of covid on global supply, amplified by Russia’s unacceptable invasion of Ukraine. This Bill is the flagship component of our bold package of cost of living additional payments which have been designed to help people to cope with increased costs.

We are grateful for the support of Opposition Front Benchers in facilitating the speedy progress of the legislation. It is vital that these payments get to the people who need them. I am also very grateful for the contributions that have highlighted that these are a serious response to serious challenges, such as those made by the Chair of the Select Committee, the right hon. Member for East Ham (Sir Stephen Timms), as well as by my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) and my hon. Friend the Member for Amber Valley (Nigel Mills).

The support provided through this Bill is timely and comprehensive, and we are taking significant steps and targeting resource to support those in greatest need. The spirit of this Bill is in line with the approach that the Government have taken since the start of the pandemic, which has been shown to deliver for the people of this country in challenging times. We will continue to work hard to help people on low incomes get the support that they need.

We have worked hard through the vaccine roll-out, through the dedication of amazing people, to reopen society, and our economy has responded positively. There are record numbers of people in payroll employment, unemployment is just 3.8%, which is around the lowest level since the 1970s, and there are 1.3 million vacancies, which we are working diligently with employers and communities to fill. My hon. Friend the Member for Ashfield (Lee Anderson) will be pleased to know that, given his focus on work.

With all the work going on to help get people into work and progress in work, we recognise that people do need additional support in dealing with the cost of living challenges. That is why the Chancellor has set out his generous package, with another £15 billion of targeted support, which brings our total package to £35 billion this year alone. Of these additional payments, a particularly important one is the means-tested benefit that will provide a £650 one-off cost of living payment. It will be paid in two instalments to recipients entitled to qualifying means-tested benefits or tax credit. The first starts on 14 July and the second, of £324, later in the year. The hon. Member for Richmond Park (Sarah Olney) asked if there could be one payment. I understand the point she made, but we have consciously staggered the payments to help people on low incomes with their budgeting, which I hope she will welcome. The other important element of the Bill is providing disability cost of living payments of £150, which will go to 6 million people in the United Kingdom and will be paid in September.

We have deliberately kept the rules of the additional cost of living payments as simple as possible, because that is the way we can ensure that we develop the systems and processes required to make the payments at pace. I pay tribute to the hard work of officials across the Government to make that possible.

There are a number of contributions in the debate to which I need to respond. The benefit cap was raised by the right hon. Members for East Ham and for Leicester South (Jonathan Ashworth) and also by my hon. Friend the Member for Amber Valley. We have kept the payments very simple both for those receiving them and for Government systems. They are tax-free, they will not impact on benefit entitlement or the benefit cap, and they will be paid to people without the need for paperwork. They will be paid into people’s bank accounts.

The hon. Member for Aberdeen North (Kirsty Blackman) made points about uprating. Of course, as the Secretary of State said in her speech at the start of the debate, there will be an annual review of benefits and pensions for the tax year 2023-24, which will commence in the autumn as per convention.

Some hon. Members have highlighted the legacy systems and pensions, and asked why we cannot do uprating more frequently. I think we know that the legacy systems are not that agile. Of course, what we are trying to do and working very hard to do—recognising how flexible universal credit is and how resilient it has proven through the pandemic—is to move people through to universal credit by the end of 2024.

[Sir Stephen Timms]

I want to go back to what the Minister said about the benefit cap, and I welcome the point he made. Does he recognise that, in a very high inflation environment, there really is quite a compelling case for looking again at the level of the benefit cap for next year alongside the other benefit uprating matters?

[David Rutley]

There is a statutory duty to review benefit cap levels at least once every five years, and this will happen at the appropriate time. When the Secretary of State decides to undertake the review, she will consider the national economic situation and any other matters she considers relevant at that moment in time.

I reiterate that carer’s allowance is not a means-tested benefit. Nearly 60% of working-age people on carer’s allowance will get the cost of living payment as they are on means-tested benefits or disability benefits. Carer’s allowance recipients will benefit from the £400 per household universal support being provided to help with the cost of energy bills.

People who receive carer’s allowance may live in a household that will benefit from the Government’s support package. For example, they may live with someone who receives a means-tested benefit, a disability benefit or tax credits. If so, the household will benefit from the cost of living payment.

The hon. Member for Westminster North (Ms Buck) has asked me in a number of debates why this measure does not more fully reflect different family sizes and formations. The challenge is trying to get these payments out as fast as possible. To do that, we need to get the payments out to “single benefit units,” as they are described, and households. The important thing to highlight is that most low-income families will be able to receive the £150 council tax support and the energy bill support, on top of the work allowance taper and the increase in the national living wage.

It is not possible to distinguish between those who have a permanent increase in their earnings and those whose earnings are temporarily fluctuating. If a UC claimant’s income subsequently falls, they will return to having a positive award after the cut-off date, and they may be eligible for the second payment.

The right hon. Member for Leicester South talked about the minimum income floor, which ensures we do not prop up unproductive employment or self-employment indefinitely. There is a start-up period to protect newly self-employed people. Beyond that, having a minimum income floor is the right policy. If it means there is a nil UC payment, the claimant would not be entitled to the means-tested payment. However, they would get the £400 energy payment and the £150 council tax rebate, and they would potentially be eligible for the household support fund. It is worth recognising that there are paid employment opportunities out there, given the high level of vacancies.

We have heard about the take-up of pension credit, and I am sitting next to the expert, the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham (Guy Opperman).

DWP Risk Review Team

Debate between David Rutley and Stephen Timms

Wednesday 26th January 2022 Westminster Hall

[The Parliamentary Under-Secretary of State for Work and Pensions (David Rutley)]

It is a pleasure to serve under your chairmanship, Mr Twigg. I have had an opportunity to work with you in the House, but also on various hills—with mixed results, but it is always a pleasure to be in your company.

I congratulate the hon. Member for Edmonton (Kate Osamor) on securing this important debate. My Department faces a huge responsibility, day in and day out, to pay benefits to millions of households, ensuring they have the help and support they need and wherever possible helping them into sustainable employment. We do everything we can to make sure that happens in a timely way. That was proven when covid-19 hit. We paid out to over 3 million more households at a time of global crisis. Universal credit in particular is a very resilient system, because it has been stress-tested in such an environment. Our latest public statistics show that around 90% of new universal credit claims are paid in full and on time.

Alongside that, we have another responsibility: to ensure that we are using taxpayer money properly and that funding is going to those who need it. Unfortunately, there are those who think it is acceptable to commit fraud against the welfare system. Those people cost the taxpayer—in fact, stole from them—an estimated £6.3 billion last year. That is £6.3 billion of taxpayer’s money—an absolutely staggering sum. I can just imagine what any Member in this House would want to do with that money to help not only their constituents but thousands of others. It is money that could be going to fund other vital Government services. Those who fraudulently claim that money clearly have no right to it.

I believe it is right that my Department makes every effort to find and crack down on fraud, and to ensure that we have the fullest range of tools at our disposal to achieve that. Those committing fraud are clever, committed and constantly thinking of new ways to get around the systems that we have in place, and to turn new technological advances to their advantage. The job of the DWP is not just to keep up with that, but to try and get ahead of it. It is our job to keep innovating and finding new ways to identify fraud where it happens and to put a stop to it. It is our job to keep fraudsters guessing at how we might find them, so that they do not find new ways to evade us. The risk review team is one of those innovations, established as a direct response to new threats. Its role is to provide an operational response to threats that have been identified. It does this by suspending suspect cases, where specific intelligence provides evidence of fraud.

I would like to stress that we are talking about a relatively small number of claims. Of the 3.7 million claims made to universal credit since May 2020, less than 4%, approximately 149,000, have been suspended under the risk review process. Those are not run-of-the-mill cases, but ones where, based on our analysis, we believe there is a high level of risk. It is because of that level of risk that claims have been legitimately suspended. It is an approach that provides much needed capability to disrupt and respond to new and emerging threats at pace.

To give an example of one of the challenges that the DWP has faced, in May 2020 the cyber-resilience centre, working as part of the integrated risk and intelligence service—we are pretty good at coming up with snappy titles for teams—prevented an attack by organised criminals. That led to the suspension of thousands of universal credit claims and prevented £1.9 billion in benefits from being paid to people trying to scam the system in 2020 and 2021. That is just one example; those attacks continued and more cases had to be suspended to safeguard public funds.

[Stephen Timms (East Ham) (Lab)]

I am grateful to the Minister for giving way, and I congratulate my hon. Friend the Member for Edmonton (Kate Osamor) on securing this debate. I agree with the points that the Minister is making about the importance of tackling fraud, particularly as universal credit has the highest level of fraud of any DWP benefit in history. Does he agree that it is not acceptable to take somebody’s benefits away for 11 months, as in one of the cases that my hon. Friend mentioned, with no support available? That potentially completely ruins someone’s life.

[David Rutley]

I understand the point that the Chair of the Work and Pensions Committee makes, but the key thing is that claimants need to prove eligibility. We want to help them to prove eligibility for a benefit. The challenge, and the reason these cases take time, is often that claimants are not able or willing to provide that evidence. I will come on to that later.

Underpayment of Benefits: Compensation

Debate between David Rutley and Stephen Timms

Thursday 13th January 2022 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

I welcome this important report, and I thank you, Mr Speaker, for granting the urgent question.

What is the position relating to the payment of interest in cases such as this? The ombudsman found that these failings had had a severe effect on Ms U’s existing mental and physical health problems, and no doubt the same is true for quite a number of the other 118,000 people affected. Will the Department work out, proactively, who should be receiving compensation? One of the ombudsman’s recommendations is that the Department should report to the Select Committee on its progress in considering his report and the decisions that it makes on how to remedy its own failings. Will the Department accept the recommendation and report to the Committee, and if so, when can we expect that to happen?

[David Rutley]

Obviously the primary responsibility is to respond to the report, and we will do that, but I—and, no doubt, the Secretary of State—will note the right hon. Member’s point, and will make appropriate responses to his Committee. I have mentioned the 118,000 people who have received the arrears, and, as I said earlier to the Opposition spokesman, the right hon. Member for Leicester South (Jonathan Ashworth)—I am sorry, I should have said “the shadow Secretary of State”: I do not want to understate his importance—there are mechanisms for those who feel they have grounds for further compensation to get in touch with the Department and explore that further.

Oral Answers to Questions

Debate between David Rutley and Stephen Timms

Monday 13th December 2021 Commons Chamber

[David Rutley]

I think the hon. Member will welcome the fact that the vast majority of the nearly 6,000 claimants in work will gain from the reduction in the taper rate and the increase in work allowances in the Budget, which is terrific. For those who are vulnerable, £1.8 million has been made available to local authorities to help them through the household support fund.

[Stephen Timms]

A single father who is unable to work on health grounds told the Select Committee in September that removing the £20 a week uplift would force him to skip meals so that his children did not have to. Christians Against Poverty, which supports him, says that he now cannot afford the absolute basics: food, heating and bus fares to take his children to school. He certainly cannot afford to buy his children Christmas presents. With prices rising so fast, is not the social security safety net just too low?

[David Rutley]

As I just set out to the hon. Member for Luton South (Rachel Hopkins), we have introduced the household support fund. In Newham, £3.3 million is available to help people exactly like the right hon. Gentleman’s constituent with the challenges they are facing this winter.

Oral Answers to Questions

Debate between David Rutley and Stephen Timms

Monday 8th November 2021 Commons Chamber

[Mr Speaker]

I call the Chair of the Select Committee on Work and Pensions.

[Stephen Timms (East Ham) (Lab)]

Unemployment support is now at the lowest level in real terms for more than 30 years, even though the economy has grown by more than 50% in real terms over that period. As a proportion of average earnings, it is the lowest ever—lower than when Lloyd George introduced unemployment benefit 110 years ago. Why has unemployment support been set at this historically extremely low level?

[David Rutley]

It is always important to have a safety net, but it is also very important to make sure that we get people into the world of work, and that is what our focus is, as I have said repeatedly in my answers today. With 1.1 million vacancies and with a plan for jobs, that has to be our focus.