My Lords, I welcome the much-needed additional support that this Bill offers and the recognition that the social security system represents the obvious mechanism for providing it, despite concerns that are raised about the nature of the support. I am grateful to the Minister and the Minister for Welfare Delivery for the very helpful briefing that they provided last week.
At last, the Government are responding to the fact that the cost of living crisis is hitting those on benefits and pensions hardest, not least because the differential impact of inflation means that they face an even higher inflation rate than the rest of us—an estimated 10% or so for the bottom tenth of the population, according to the Institute for Fiscal Studies and the Resolution Foundation. The latest package, of which this Bill is a part, is progressive in its impact. Nevertheless, there is a “but”; I am sure that the Minister would be surprised if this were not the case.
My concerns stem in large part from the decision to provide one-off payments rather than increase benefit rates themselves so that they reflect the actual inflation rate instead of the 3.1% recorded last September. I understand and accept that there are technical difficulties when it comes to uprating benefits other than universal credit—although many stakeholders do not—but, if the Government had not delayed in bringing forward this package, would an autumn uprating really not have been possible? Even now, is it really the case that a decision to increase benefits in May could not be implemented in the autumn instead of a second lump sum payment?
Can the Minister explain how it was technically possible to uprate benefits twice in 1975, in April and November, in response to high inflation—a point made in the Commons but studiously ignored by the Minister there? Can she also tell us, in a subsequent letter if not now, exactly how long it would take if all the stops were pulled out to uprate universal credit, the legacy benefits that it replaces, the other benefits covered by the Bill and the other benefits not covered, in particular the carer’s allowance and contributory benefits? How long are we going to allow “computer says no” to drive policy?
A key group to lose as a consequence of the decision to make lump sum payments rather than uprate benefits is families with children—especially larger families because payments will not be differentiated according to family size. Thus, according to the Resolution Foundation, the average amount gained from the Bill by families with three or more children is less than that received by those with no children because the latter are more likely to receive a disability benefit. Yet spending on essentials is significantly affected by family size. The foundation suggests that fuel spending among families with three or more children is likely to go up by over £500 more than for those without children. It calculates that, had benefits been uprated by 9.5% in
October, larger families would have received more than £100 more on average than they will from the May support package.
In the Commons, the Minister emphasised that the payments are targeted at “those in greatest need”, as did our Minister. This is true and commendable, up to a point, but it ignores children—especially those in larger families, who are already at a significantly disproportionate risk of poverty, including deep poverty. This greater risk has grown over the past decade thanks mainly to government social security policies, including the two-child limit and the benefit cap. It is welcome that the payments covered by the Bill will be disregarded for the purposes of the cap. Nevertheless, as the chair of the Work and Pensions Committee pointed out in the Commons, it is high time that the level of the cap, which has not changed since it was established six years ago, is subject to the review required by statute. The Minister’s response to him was that it would be reviewed “at the appropriate time”. Can the Minister tell us when the appropriate time will be, as many would argue that it is already high time?
A growing body of evidence shows how much families with children generally are suffering. Just last week, the Childhood Trust reported that the mental health of children living in poverty is already suffering as a result of the cost of living crisis. Hungry, Anxious and Scared is how it summed it up. It quoted Charlotte, aged nine:
“Your emotions just drown and the only emotion that’s left is sad”.
That made me feel pretty sad and actually very angry. When the Chancellor was questioned by the Treasury Select Committee about the lack of additional support for children, he rather sidestepped the question but acknowledged that no analysis has been done of the package’s impact on child poverty. However, we were told by the Minister for Welfare Delivery last week that the lack of differentiation for families with children was due to technical reasons.
There is a pattern here that suggests an underlying disregard for the needs of children. The welcome universal credit uplift during the worst of the pandemic did not include any uplift in the allowances for children. It was only thanks to Marcus Rashford that action was taken on school meals at the height of the pandemic, and now the Government refuse to extend free school meals to all children on universal credit despite the recommendation in the independent national food strategy and the calls from teachers and others—although I do applaud its extension to all qualifying families with no recourse to public funds. According to analysis of government data by the Child Poverty Action Group, of which I am the honorary president, over one in three—more than 800,000—children in poverty do not qualify for free school meals.
If the Government really cared about hungry children, they would have found a way to boost their financial support and at the very least would have extended free school meals and also put more money into free school breakfasts as called for by Magic Breakfast. The Treasury has, understandably, highlighted the progressive vertical distributional impact of its latest
package of support, but nowhere has it shown the horizontal distributional impact as between those with and without children, which also matters. Can the Minister explain why the Government time and again ignore children when it comes to financial matters?
The Secretary of State has herself previously warned that one-off payments are less helpful from a budgeting perspective than a steady stream of money—a point made also by charities such as Sense and CPAG. One consequence is less security. Another consequence of making lump-sum payments linked to entitlement on a specific date is the much steeper cliff-edge that it creates, adding to the insecurity created by often fluctuating incomes and circumstances among those on low incomes. What estimate has been made of the numbers who might become eligible for one of the qualifying benefits in the period until next April when they are next uprated but who do not qualify for the payments in the Bill because they were not entitled to a qualifying benefit at the specified times? Anyone who, say, starts claiming benefit because they have lost their job or become ill after the second cut-off date will get nothing at all. This seems like very rough justice.
Even rougher justice is the issue raised by my noble friend Lady Sherlock in last week’s briefing, and by MPs, where someone has not qualified for UC in the specified month because of the way their wages are paid. Has thought been given to the suggestion made by Nigel Mills MP that the qualifying period be extended to two months? Another group who are victims of rough justice is low-income self-employed people who do not receive UC during the qualifying period solely due to the operation of the minimum income floor. Equity has challenged the response to this point in the Commons, and I ask the Government to reconsider the exclusion of this group.
Just to follow up on the briefing meeting, the Minister for Welfare Delivery promised to let us know how payment will be made to the small number of people without a bank account. Is the Minister able to tell us today? For the record, can she confirm that all recipients will be informed individually as soon as possible after payment has been made so that they know why this extra payment has appeared in their account?
I have emphasised the failure to help children; I am also very concerned about the exclusion of carer’s allowance. I realise it is not a means-tested benefit and that some recipients will qualify via a means-tested benefit they are claiming but, according to Carers UK, there are several hundred thousand carers in receipt of carer’s allowance who do not receive means-tested benefits and many of them are facing serious financial stress. Carer’s allowance is lower than other equivalent benefits. Many carers face additional costs associated with caring. Why, therefore, could not the disability payments have been devised in such a way as to include carers? Nine out of 10 carers surveyed by Carers Trust earlier this year said that they feel ignored by the Government. The exclusion of carer’s allowance from the Bill’s qualifying benefits will only reinforce this sense of being ignored and, of course, many of those affected will be women who also bear the main burden of budgeting in low-income families. It is also not clear why the qualifying disability benefits do not include contributory employment and support
allowance—an example of the downgrading in importance of contributory benefits. Can the Minister please explain why it is not included?
When announcing the package, the Chancellor acknowledged that small numbers will fall between the cracks and gave the example of those in receipt of housing benefit not also claiming other benefits but—“fear not”—they can claim help from the additional £0.5 billion that is being put into the local authority household support fund from October. The problem is that those raising concerns about, for instance, children in poverty—not exactly a small group—excluded carers or low-income self-employed people are also being directed to the fund. I fear it is the loaves and fishes approach to policy-making, which we have seen all too often. While the fund has provided much needed help to some, it is discretionary and cash-limited and, as such, is no substitute for weekly payments as of right. What will be done to direct excluded groups in need to the fund, what monitoring of the fund’s use is taking place and what happens if a local authority runs out of money, as we know they do? Can the Minister also tell us whether any thought has been given to the calls from stakeholders, including the Lloyds Bank Foundation, for the suspension of deductions from benefits, at least until next April when benefits are uprated?
This brings me to my final point—which I am sure will be a great relief to noble Lords. I welcome the confirmation that, subject to the Secretary of State’s review, benefits and pensions will be uprated next April in line with this September’s inflation rate, although claimants will face a long, hard winter before that. I hope the Government will ignore the siren voices arguing against such inflation-proofing. The Chancellor concluded his Statement by noting the need to put the measures into context. We need to do the same, but it is a rather different context to that highlighted by the Chancellor. Overall, working-age and children’s benefits have been reduced by approaching £40 billion a year as a result of freezes and cuts since 2010. The latest OBR Welfare Trends Report notes that the
“decline in the real value of unemployment-related benefits … even excluding the effects of the removal of the … £20-a-week uplift … represents the largest fall since annual uprating began half a century ago”.
As the Covid Realities research demonstrates, the reality of life on a low income is one of perpetual crisis. This Bill represents no more than a temporary salve to mitigate the crisis, welcome as it is. We now need a commitment to a review of how benefits are uprated, as called for by the chair of the Work and Pensions Committee and others. Ad hoc one off-payments and discretionary local authority support do not provide the security that those on low incomes desperately need and that the social security system ought to provide.
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