Health and Disability Reform

Debate between Mel Stride and Stephen Timms
Monday 29th April 2024

(3 weeks, 2 days ago)

Commons Chamber
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Stephen Timms Portrait Sir Stephen Timms (East Ham) (Lab)
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PIP assessment providers confirm that worsening delays in NHS treatment are a big factor in the increase in the number of people applying for PIP. The Secretary of State has confirmed this afternoon that the work capability assessment is to be scrapped and replaced by PIP assessments. There are people who are too ill to work, but not disabled, and so not eligible for PIP. How will their support be assessed in the absence of work capability assessments?

Mel Stride Portrait Mel Stride
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As I have set out, we will need to look at the conclusions that can be drawn from the consultation in the context of the replacement of the work capability assessment and PIP becoming the gateway to future universal credit health benefits, as the right hon. Gentleman mentioned. These are questions that are being asked in the consultation.

Women’s State Pension Age

Debate between Mel Stride and Stephen Timms
Monday 25th March 2024

(1 month, 4 weeks ago)

Commons Chamber
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Nigel Evans Portrait Mr Deputy Speaker (Mr Nigel Evans)
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I call the Chair of the Work and Pensions Committee.

Stephen Timms Portrait Sir Stephen Timms (East Ham) (Lab)
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Does the Secretary of State agree with the Chair of the Women and Equalities Committee, as I do, that those affected should not have to wait for the outcome of a Select Committee inquiry before learning the Government’s response? The equalisation of the state pension age was legislated for in 1995, giving 15 years’ notice to those affected. The 2011 changes, which accelerated the process, gave much less than 10 years’ notice to those affected. Is one of the lessons about what has gone wrong that we must ensure major changes of this kind provide at least 10 years’ notice, or preferably 15 years’ notice, before those changes take effect?

Mel Stride Portrait Mel Stride
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The right hon. Gentleman raises the potential role of Select Committees in these matters. As the Chair of the Work and Pensions Committee, he would have the authority to implement such ideas, if he were minded to do so. However, it is important that I and my Department seriously consider the findings in the report before we come to our conclusions, and that we then come to the House to present those conclusions. That is the most important point.

Budget Resolutions

Debate between Mel Stride and Stephen Timms
Thursday 7th March 2024

(2 months, 2 weeks ago)

Commons Chamber
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Mel Stride Portrait Mel Stride
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There is no immediate Government approach to merging income tax and national insurance, and I rather put that in the category of those comments about the apparent commitment of £46 billion, although I think the hon. Member for Bethnal Green and Bow nudged it up in a typical Labour way to £48 billion a moment ago.

Let me turn to the remarks that the right hon. Member for Leeds West made about growth. As she knows, we have had a technical recession of two quarters of negative growth—one of which was the princely amount of 0.1%—and most of the purchasing managers index data makes it clear that the economy is on a very different path. Indeed, to return to the comments of the hon. Member for Bethnal Green and Bow, the OBR makes it clear that over the period of the forecast, there will be reasonable and decent growth—greater than that of France, Italy and Germany. That is on the back of exactly the kind of growth record that this Government have had since 2010.

Stephen Timms Portrait Sir Stephen Timms (East Ham) (Lab)
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On growth, it was the former Prime Minister, when seeking election as leader of her party, who characterised the growth record since 2010 as lamentable. She was surely absolutely right about that particular point.

Mel Stride Portrait Mel Stride
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My point is that the externalities that I referred to, such as covid and the war between Ukraine and Russia, have impacted economies around the world. Relative to other economies, and looking at the OBR’s forecast over the next five years, we will have a growth record that is up there and better than many of our major competitors, including countries such as Germany.

--- Later in debate ---
Mel Stride Portrait Mel Stride
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I will not get into the weeds of the issue that the hon. Gentleman is attempting to draw me into, other than to say that he made at least one comment that I agree with: I am indeed a decent man. I thank him very much for that.

Inflation is falling faster than expected. People’s wages are rising in real terms, and have done for the last seven months. Under this Government, our labour market has been strong and resilient, delivering opportunities despite the headwinds. We have put incentives at the heart of our welfare. We have grown faster than Germany, France or Italy. According to the OBR, we will continue to do so over the next five years. We are attracting the business investment that is key to growth, delivering high- quality jobs across the country—from Nissan to Google to AstraZeneca, which announced £650 million of investment only yesterday.

No matter how much the Labour party seeks to talk down Britain, the investment flowing into our economy is a huge vote of confidence in our country. It shows that our plan is working. By contrast, as has been laid all too bare this afternoon, the Labour party has no plan or credible record. I have already gone through the tale of woe about the level of unemployment that Labour has left us in the past. Those poor young people had a 45% increase in youth employment on the watch of the shadow Chancellor’s party, and over 1 million people were left on out-of-work benefits for almost a decade.

On the Government Benches, we believe that work, not welfare is key to improving living standards. That is why we are incentivising and rewarding work in this Budget. Making work pay and ensuring families are better off means tackling the global inflation that I have referred to, on which we are making significant progress. As inflation decreases, we recognise that there are still some people who need extra help. I was pleased to see the extension of the household support fund for a further six months from April, which was also pushed for by the Chair of the Work and Pensions Committee, the right hon. Member for East Ham (Sir Stephen Timms).

Stephen Timms Portrait Sir Stephen Timms
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The Minister is right that I warmly welcome that extension. Is there not a strong case for making the household support fund permanent, not just extending it for another six months?

Mel Stride Portrait Mel Stride
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Six months is a meaningful period of time. Inflation is coming down. As the OBR says in its report, inflation is expected to hit target within the next few months, which will make a huge difference. It highlights some uncertainties around that, but £500 million of investment over six months, including Barnett consequentials, is a major move forward to support the most vulnerable.

The sustainable way to change lives is through work, and the evidence could not be clearer. It is good for the economy, communities and the individuals concerned. I want everyone who can work to have the opportunity to do so. One of the great labour market challenges is economic inactivity, and I want to put that into context. In the UK, inactivity has come down since its pandemic peak and remains lower than the average across the G7, the OECD and the European Union. Our progress has seen a significant fall in the number of people who are inactive because of caring responsibilities. We have the second lowest youth inactivity rate in the G7, and thousands of over-50s are returning to work.

However, the rise in the number of people out of work due to ill health and disability is stifling potential—potential that I am determined to realise. That is why, as we cut taxes for working people, our multibillion-pound back to work plan is providing substantial support to help the long-term sick return to work and keep people in the workforce. That includes doubling the number of placements on universal support, expanding access to mental health support, delivering Work Well, giving people earlier and better access to integrated work and health support, reforming fit notes and working with employers to improve occupational health. Through our next generation of welfare reforms, we are breaking down the barriers to work. Our chance to work guarantee will enable people on incapacity benefits to try work without fear of losing their benefits if a job does not work out. As the OBR has confirmed, our reforms to the work capability assessment will reduce the number of people on those benefits by 371,000. That is 371,000 more people getting the support they need to enter employment.

As part of our back to work plan, we are also tackling long-term unemployment, because the longer people stay in unemployment, the less likely they are to rejoin the workforce. That is why we are phasing in more rigorous requirements for fit and able jobseekers, with more time with work coaches, more intensive support and mandatory work placements. Ultimately, if a claimant does not engage with the support they are being offered, they will lose their benefits, underscoring our belief that we should always be there for those who need our support, but we must equally be fair to taxpayers.

By contrast, for all the protestations from the Opposition that they have changed, they are not fooling anybody. They are squeamish on conditionality, weak on sanctions and completely out of touch with the British public, who rightly expect a welfare system in which everyone meets their obligations.

Oral Answers to Questions

Debate between Mel Stride and Stephen Timms
Monday 5th February 2024

(3 months, 2 weeks ago)

Commons Chamber
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Lindsay Hoyle Portrait Mr Speaker
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I call James Sunderland. Not here. I call the Chair of the Select Committee.

Stephen Timms Portrait Sir Stephen Timms (East Ham) (Lab)
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I agree with the Secretary of State about the cross-party success of auto-enrolment, which has doubled the proportion of eligible employees saving for retirement, but we know that the current regular auto-enrolment contribution of 8% of earnings is not enough to deliver the standard of living in retirement that most people hope for. Does the Secretary of State recognise that that minimum level of contribution will need to be increased?

Mel Stride Portrait Mel Stride
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The contribution rates of the employer and employee are a very important matter, and we keep both under review.

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Stephen Timms Portrait Sir Stephen Timms (East Ham) (Lab)
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Will the Secretary of State point out to the Chancellor that many councils have used the household support fund to pay £3 per day per child during the school holidays to families entitled to free school meals, and that if the fund closes at the end of March, those families will be straight into hardship in the Easter school holidays?

Mel Stride Portrait Mel Stride
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I thank the right hon. Gentleman for his representation, and indeed would be grateful for any others that he is minded to make to me as we conduct our ongoing review on where we go with the household support fund.

Oral Answers to Questions

Debate between Mel Stride and Stephen Timms
Monday 13th November 2023

(6 months, 1 week ago)

Commons Chamber
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Stephen Timms Portrait Sir Stephen Timms (East Ham) (Lab)
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Those Trussell Trust figures published last week made grim reading. Does the Secretary of State recognise that if working-age benefits are uprated by less than September’s rate of inflation in April next year, there will inevitably be another big surge in food bank demand and destitution?

Mel Stride Portrait Mel Stride
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The right hon. Gentleman has raised an important point. I take the uprating process extremely seriously, and, as he will know, I look at a number of factors, including the effects on poverty. However, as he will also understand, I am not able to comment on a parliamentary process that has not yet been concluded.

State Pension Age: Review

Debate between Mel Stride and Stephen Timms
Thursday 30th March 2023

(1 year, 1 month ago)

Commons Chamber
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Rosie Winterton Portrait Madam Deputy Speaker (Dame Rosie Winterton)
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I call the Chair of the Work and Pensions Committee.

Stephen Timms Portrait Sir Stephen Timms (East Ham) (Lab)
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I am grateful for early sight of the statement. I understand why the Secretary of State has chosen to defer the key decision. Like John Cridland’s independent review six years ago, Baroness Neville-Rolfe’s report should have been published soon after the Department received it six months ago, rather than kept needlessly under wraps until today. John Cridland proposed early access to pension credit. Will the Secretary of State consider leaving access to pension credit at age 66 when the state pension age rises to 67 in three years’ time?

Mel Stride Portrait Mel Stride
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The right hon. Gentleman raises the issue of when Baroness Neville-Rolfe’s report was published. We had a fairly detailed discussion about that when I appeared before his Committee yesterday, so he knows my arguments around that. It is something that I certainly would not rule out for future reviews as a perfectly reasonable practice, but he knows the reasons it did not happen on this occasion. In terms of early access to pension credit, that is not something that the Government are currently planning—nor was it something that previous Governments planned to do at any stage—but of course, as with all matters around pensions, we will keep that under review.

Budget Resolutions and Economic Situation

Debate between Mel Stride and Stephen Timms
Thursday 16th March 2023

(1 year, 2 months ago)

Commons Chamber
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Mel Stride Portrait Mel Stride
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The answer to the hon. Gentleman’s inquiry is in the early measures, which I was going to come on to. The Chancellor has dealt with the one-month requirement for the up-front payment by making it clear that jobcentres will fund that payment. That will come in in the short term, as will the increase in the cap—the maximum amount that those who claim those benefits can receive.

Before I come on to specific measures in detail, I think it is important to put workplace participation in the wider context of a robust and resilient UK labour market and economy. As confirmed again by Tuesday’s labour market statistics, unemployment is at a near-historic low of 3.7%, payroll employment is at an all-time high and economic inactivity continues its downward trend. However, there are still 1.1 million job vacancies, and we have many people who could work and want to work, but who do not work. This Budget will help to unlock that potential and fill the vacancies. It builds on our key Conservative belief that we should make work pay, and on our sustained efforts to reward and incentivise employment to get more people into work. That is why, as well as keeping unemployment low, I am determined to see participation in the labour market continue to rise and inactivity fall. In doing so, we will see more people fulfil their potential and more employers get the skills they need to support their businesses and ensure the economy grows for the future.

Over the past few months, I and my Ministers have been leading work across Government to look in detail at the issue of participation in the labour market. I have looked carefully at the cohorts that make up the 8.9 million inactive people in the economy and the nature of the barriers these groups face, and I and others have thought innovatively about how we can help many of them into the workforce. That involved examining in detail international comparators, as well as engaging with a wide range of stakeholders and experts, and I thank in particular those who served on my expert panel.

It is clear from this work that concerted action across the board is required, and yet it is important to recognise that the level of economic activity in the UK is lower than in the United States, France and Italy. It is below the EU average and below the average of OECD countries. However, it is equally important to recognise that, whereas for most other comparable countries the increase in inactivity that occurred during the pandemic has since returned broadly to its pre-pandemic level, in the UK it has remained elevated. So this Budget focuses on economic inactivity and on the key groups that I considered in my review: disabled people and those with health conditions, the over-50s, parents and carers, and people looking for work or working a low number of hours.

We know that many disabled people and people with health conditions want to work and benefit from the positive impact on health and wellbeing that employment can bring. We have made good progress, contrary to the remarks of the right hon. Member for Leeds West. There are over 1 million more disabled people in work compared with 2017—a milestone that I am particularly proud of and that we marked last year, having delivered on this commitment five years early. That is a record of which this Government can be proud.

Stephen Timms Portrait Sir Stephen Timms (East Ham) (Lab)
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Will the Secretary of State give way?

Mel Stride Portrait Mel Stride
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I give way to the Chair of the Work and Pensions Committee.

Stephen Timms Portrait Sir Stephen Timms
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I am pleased that the White Paper says the Department will keep a focus on the disability employment gap, which is the really telling indicator. Will the new target that the Secretary of State sets relate to that gap, rather than a rather arbitrary number of increased jobs?

Mel Stride Portrait Mel Stride
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The right hon. Gentleman will know that hitherto we have indeed focused on a gap. The Department will come forward with something to say on that in the not-too-distant future, and he will have to wait until that point to know the exact kind of target, although I recognise that the current measure has value.

The measures we have set out in the Budget and in our health and disability White Paper will help to remove barriers, so that disabled people have the same opportunity as anybody else to thrive in work. Some 20% of those who have been assessed through the work and capability assessment as having limited capability to work and to look for work say that they want a job at some point in the future, but one of the barriers to work is the health and disability benefits system itself. For too many disabled people, the system feels like it focuses on what they cannot do, rather than what they can do.

Having listened to disabled people, the White Paper that we published at Budget yesterday sets out how we will fundamentally rewire the benefits system, changing it from a system that can often leave people feeling that moving towards work is too risky and that they might not be able to return to benefits if that work does not work out. I want to give people the confidence to try work without the worry that they will not be able to access benefits again promptly if a job does not last. Under our new approach, people will have the confidence that they will receive support for as long as it is needed. Our reforms will also provide additional support to those disabled and long-term sick who request it.

These reforms have been years in the making and follow the Green Paper that we published in July 2021. We have engaged widely on these changes, including with disability charities and disabled people’s organisations, as well as with disabled people themselves who have been through the current process and understand how and why it needs to change. Just as we have taken a measured approach to developing this way forward, so we will operationalise this approach with care.

Social Security (Additional Payments) (No. 2) Bill

Debate between Mel Stride and Stephen Timms
Mel Stride Portrait Mel Stride
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As the hon. Lady will know, the disability employment gap is a key measure on which we are focused. It has more recently increased a little, which I think is the point that she is alluding to, but generally, prior to that it was on a downward trend. The Department is very focused on making sure that we get it as low as we possibly can.

In the last year we also had the energy price guarantee, which ensured that average energy bills came in at £2,500 on average, and £400 off energy bills directly paid to bill payers. In England, we had the council tax discounts for bands A to D. We had two further extensions to the household support fund, as was just referred to by my hon. Friend the Member for Bosworth (Dr Evans). For the devolved Administrations, there have been Barnett consequentials of £1.5 billion since October 2021. I am very proud of our record and the wide package that has already been deployed, which is valued at £37 billion.

That brings me to this year, when we intend to go still further. As the Prime Minister has stated, one of our key aims as a Government is to reduce inflation by 50% by the end of this year. I am confident that we will achieve that, but we recognise that, despite the relief that that will provide to millions up and down the country, we need to provide further support payments. There will be three payments totalling £900 for around 8 million low-income households. Like last year, there will be a £300 payment alongside the winter fuel payment of £300 to pensioners, and a £150 payment to disabled people. The delivery of the support for pensioners will be via regulation and is not the subject of the Bill, but the other payments will be delivered through this legislation.

The Bill sets out the basis of qualification for the payments and who makes the payments, whether that is me and the DWP or His Majesty’s Revenue and Customs in the case of, for example, tax credits. It makes provision as to how the timing of the payments will be set out and it exempts the payments from charges to taxation. It sets out the arrangements that will ensure that data can be transferred and shared between my Department and HMRC, so that all the payments run smoothly and we avoid duplication and minimise fraud.

Stephen Timms Portrait Sir Stephen Timms (East Ham) (Lab)
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Will the Secretary of State give way?

Mel Stride Portrait Mel Stride
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I give way to the Chair of the Work and Pensions Committee.

Stephen Timms Portrait Sir Stephen Timms
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As I understand it, the eligibility for the payments is based on being in receipt of benefit—at least 1p—in a specific month. There will be people who, for example, are paid every four weeks instead of every month and may get two payments in a particular month, so they do not get any benefit in that month. Would it not work better to base eligibility on a two-month period to reduce the likelihood of that problem arising?

Mel Stride Portrait Mel Stride
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The right hon. Gentleman raises a valid point and we looked at instances where anomalies can occur in what is known in the legislation as the “qualifying period”. The reality is that we cannot iron out all the possible hard edges, but we did break the payments into three for this financial year, rather than the two that we had last year, so that in the event that the circumstances he described were to occur, there would at least be other periods in which someone could qualify. There is also the household support fund, which has already been referred to and is for just the kind of circumstances that he described.

Oral Answers to Questions

Debate between Mel Stride and Stephen Timms
Monday 23rd January 2023

(1 year, 4 months ago)

Commons Chamber
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Stephen Timms Portrait Sir Stephen Timms (East Ham) (Lab)
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19. What assessment he has made of the impact of real-terms reductions in local housing allowance rates on families.

Mel Stride Portrait The Secretary of State for Work and Pensions (Mel Stride)
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In 2020, as the right hon. Gentleman knows, the Government boosted the local housing allowance by almost £1 billion, taking it to the 30th percentile of rents. For those where there is a shortfall, the discretionary housing payments arrangements are available. We should all be mindful of the expense of the support for housing, which is running at £30 billion a year, and is projected to rise to £50 billion in 2050.

Stephen Timms Portrait Sir Stephen Timms
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Rightmove reported last autumn that rents in London had increased by more than 16% in a year, yet, as the Secretary of State has said, housing support through local housing allowance has been frozen since 2020. Will Ministers look again in the Budget at the level of local housing allowance for the coming financial year?

Mel Stride Portrait Mel Stride
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The right hon. Gentleman makes a perfectly valid point, but he needs to see this issue in the round. My fellow Ministers have outlined at some length the cost of living support payments that were made available last year and that were announced in the autumn statement and will be available from April onwards. I have already mentioned discretionary housing payments, with £1.6 billion of support since 2011. There is also the household support fund, which gained an extra £1 billion for 2023-24. I look forward to appearing before his Committee at the end of March, where no doubt we can discuss these matters in greater detail.

Oral Answers to Questions

Debate between Mel Stride and Stephen Timms
Monday 5th December 2022

(1 year, 5 months ago)

Commons Chamber
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Stephen Timms Portrait Sir Stephen Timms (East Ham) (Lab)
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We were grateful for the answers that the Secretary of State gave at the Work and Pensions Committee meeting last week, and we are looking forward to him returning on 11 January. He has been pressed this afternoon, repeatedly and rightly, about local housing allowance, and I have heard his answers to those questions. Next year will be the fourth year that the local housing allowance has been frozen at its current level, during a period when rents have risen sharply. Does he recognise that the case for rebasing local housing allowance, so that it reflects actual local rents, is becoming a very pressing one?

Mel Stride Portrait Mel Stride
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Once again, I thank the right hon. Gentleman for the opportunity to appear before his Committee last week. He raises again the LHA. In 2020, it was, of course, raised to be in line with the local 30th percentile of rents at a cost of approaching £1 billion. He is absolutely right that, clearly, the higher the rate of inflation, and house rental inflation in particular, the more pressure that is put on that particular allowance. All I can undertake to do is to look at this matter very closely the next time I review these particular benefits, which will be in about a year’s time.

State Pension Triple Lock

Debate between Mel Stride and Stephen Timms
Tuesday 8th November 2022

(1 year, 6 months ago)

Commons Chamber
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Mel Stride Portrait Mel Stride
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As I have set out, we are facing what is being called a Budget. It is a major fiscal event and many decisions will be taken within it. It would not be right for a member of the Government at the Dispatch Box to prejudge what may be included in it.

Stephen Timms Portrait Sir Stephen Timms (East Ham) (Lab)
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I welcome the Secretary of State to his first Department for Work and Pensions debate. Surely he is not suggesting that the current Prime Minister was irresponsible when he said last May that the triple lock would be honoured for next April. Will he confirm that, if the triple lock is not honoured for next April, it will be almost without precedent, going back 50 years or more, for the state pension not to be uprated at least in line with inflation?

Mel Stride Portrait Mel Stride
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I welcome the question from the Chair of the Work and Pensions Committee. As a former Pensions Minister, he will know that, in the situation we are in at the moment, right hard up against a major fiscal event that is about to set out major tax and spending decisions, it would simply not be right, as I have said on countless occasions, for any member of the Government to prejudge and pre-empt the measures that the Chancellor will be coming forward with.

Oral Answers to Questions

Debate between Mel Stride and Stephen Timms
Monday 31st October 2022

(1 year, 6 months ago)

Commons Chamber
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Stephen Timms Portrait Sir Stephen Timms (East Ham) (Lab)
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7. What assessment he has made of the impact of the level of universal credit on food insecurity.

Mel Stride Portrait The Secretary of State for Work and Pensions (Mel Stride)
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I begin by recognising the important work that the right hon. Gentleman carries out as Chair of the Work and Pensions Committee and thank him for the co-operation that he showed me when I was a fellow Chair of a Select Committee. I look forward to appearing before his Committee before too long.

As the right hon. Gentleman will know, universal credit is but one factor in addressing food insecurity. The Government have provided significant support with the £37 billion cost of living package.

Stephen Timms Portrait Sir Stephen Timms
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I congratulate the Secretary of State on his appointment and warmly welcome him. We already have a date in the diary for him to come before the Committee and we look forward to that.

Current large-scale food bank dependence is shameful. It was up by 46% in August and September on a year previously, according to the Trussell Trust, and it is reported in the press today that hospitals are seeing a big rise in malnutrition cases. The family resources survey also says that food insecurity among universal credit claimants fell from 43% to 27% after the £20 a week uplift was introduced. Does not all that show how crucial it is that the Prime Minister keeps the promise he made as Chancellor to uprate benefits next April by 10.1%?

Mel Stride Portrait Mel Stride
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I am not going to pre-empt my decision on the uprating of benefits or indeed the triple lock. We will need to wait until at least 17 November when my right hon. Friend the Chancellor will come to the House with his autumn statement and those details will be known at that point.

The right hon. Gentleman raises the family resources survey. One statistic that caught my eye was that the percentage of households with UC claimants who are in food security rose from 57% in 2019-20 to 73% in 2020-21. Any element of food insecurity is too much—I recognise that—which is why this Government and this Prime Minister are absolutely determined to use whatever we have at our disposal to work on those figures and to improve them. That includes the various interventions that we have already discussed during these questions.

Tackling Short-term and Long-term Cost of Living Increases

Debate between Mel Stride and Stephen Timms
Tuesday 17th May 2022

(2 years ago)

Commons Chamber
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Mel Stride Portrait Mel Stride (Central Devon) (Con)
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I rise to very much welcome this debate, which addresses one of the great challenges of our time: the cost of living. Right at the centre of that lies the rate of inflation, which many Members have referenced in the debate so far, and that responsibility is with the Bank of England. In very recent times, the Bank has come in for a good deal of criticism for apparently not having got on top of that rate of inflation. It is currently above 7% and will rise to 10% in the autumn, before falling back again next year. That is well detached from its target of 2%, so the question arises: is the Bank of England culpable for having missed that target to that extent? I want to speak—partially, at least—in defence of the Bank of England, which is one of the most important independent institutions in our country, and to make the following observations.

First, as the Chancellor has already pointed out, the level of inflation across the world is elevated. There are some exceptions to that, but most leading economies are facing very high levels of inflation. In fact, the United States, Spain and Germany have higher rates of inflation than we do in the United Kingdom, and our rate is broadly similar to that across the eurozone.

My second point is about what one can expect from monetary policy under the current circumstances. The main drivers of inflation are a war in Ukraine; surging energy prices; surging food prices; some of the effects of the unlocking of the economy and its rapid growth, and supply chain bottlenecks that developed as a consequence; and then what played out in the labour market as the economy opened up. Very few of those factors are amenable to being controlled through interest rates and monetary policy. Of course, it takes time for monetary policy to take effect. If interest rates are put up, it typically takes about a year or more, through the transmission mechanism, to have an effect on demand and to start to bear down on inflation.

For about 80% of the rise in inflation above the 2% target, therefore, we should not hold the Bank of England particularly culpable. The notions of those people—some of whom are on my side of the House—who have called into question the independence of the Bank of England as a consequence of high inflation are misplaced. We should firmly defend the Bank of England in that respect.

There is one area, the other perhaps 20% of the growth in inflation, which relates to what has happened in the labour market, where the Bank is at least partially culpable, because it was slow to establish the fact that the market was getting overheated. What appeared to be isolated areas, such as among HGV drivers and other pools of labour in the labour market, soon spilled over into a more general price increase across labour. The danger now is that we will have a wage-price spiral in which wages chase prices and, in turn, drive up wages further. There is a real danger that we are in a position where future expectations of inflation have become substantially de-anchored from that 2%, which will be a challenge in the medium and longer term.

Overall, however, it is extremely important that we have confidence in the Bank of England, imperfect though it is, and even though it is presiding over a situation in which there are high levels of price increases.

Stephen Timms Portrait Stephen Timms
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I agree with the right hon. Gentleman about the independence of the Bank of England. At the Liaison Committee in March, he suggested to the Prime Minister that there should be a one-off uprating of benefits, given that inflation is much higher than the 3.1% by which uprating was applied. I agree with him about that and I wonder whether he stands by that suggestion.

Mel Stride Portrait Mel Stride
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I thank the right hon. Gentleman for that intervention, and I do indeed stand by that. I still believe that it is possible, in a relatively fiscally neutral manner, which would not require a fiscal loosening across the period of the Office for Budget Responsibility forecasts, to smooth the way in which benefits are indexed. It seems particularly regrettable that benefits such as universal credit are tagged to a 3.1% increase, which goes back to what inflation was in September, given that we are now facing 8%, 9% or 10%-plus inflation. There is the possibility of smoothing that out, so that on the way up it becomes less painful for people, and some of it will be taken back as it all comes out in the wash for everyone down the line. I am happy to continue to work with him with that in mind.

That brings me to other fiscal measures that can be taken to ease things for our struggling constituents. We have heard about a windfall tax in great detail today, which I would support. Although I would not be as partisan as the way in which the right hon. Member for Doncaster North (Edward Miliband) made his case earlier at the Dispatch Box, I think the arguments that he has put forward are largely sensible. I am pleased that in turn the Chancellor has indicated that the door is at least partially open, albeit caveated on the investment performance of the companies concerned.

Unlike the Opposition, I think that it is important to look at the size of the civil service and to have an ambition to get it back to its size in about 2016 before a number of these different crises struck and we had to gear up the numbers involved. If we were to do that, it would be possible to save a total of £3.5 billion a year, which would be a useful amount to have.

I am sorry, Madam Deputy Speaker, but I have completely run out of time. I had much to say, as I know many other hon. Members will.