Social Security

Before I call the Minister to move motion 4, I should alert the House to the fact that the published Order Paper states, incorrectly, that the instruments referred to in motions 4 and 5 have not yet been considered by the Joint Committee on Statutory Instruments. In fact, they have been. The online version of the Order Paper has been corrected. I call the Minister, Will Quince, to move motion 4.

I beg to move,

That the draft Social Security Benefits Up-rating Order 2020, which was laid before this House on 30 January, be approved.

In my view, the provisions in these orders are compatible with the European convention on human rights. This order reflects the Government’s continuing commitment to support working families and pensioners across the nation. It will increase the basic state pension and the new state pension in line with the triple lock. The basic state pension will increase by 3.9% and we have committed to increase the new state pension by the triple lock. The state earnings-related pension schemes and the other state second pensions, as well as protected payments in the new state pension will rise by 1.7% in line with prices. It will increase the pension credit standard minimum guarantee by 3.9% in line with earnings. It will increase working age benefits by 1.7% in line with prices. Universal credit work allowances will also rise in line with prices. It will increase carers benefits and benefits intended to meet additional disability needs by 1.7% in line with prices. In addition, the carer and disability-related premiums paid with pension credit and working-age benefits will increase by 1.7%.

The Government are committed to supporting the most vulnerable in our society. In this order, the Government propose to spend an extra £5 billion in 2020-21 on increasing benefit and pension rates. With this spending, we are upholding our commitment to the country’s pensioners by maintaining the triple lock and helping the poorest pensioners who count on pension credit; spending an additional £1 billion on working-age benefits and ensuring that we continue to support working people; and providing essential support to disabled people and carers. I commend the order to the House.

This uprating order will increase a range of social security entitlements and pensions. As a result of the Government’s Welfare Reform and Work Act 2016, most working-age benefits and tax credit elements have been subject to a four-year freeze, covering the period 2016-17 to 2019-20. It is a basic human right to have security and stability in our lives, secure housing, reliable income, and support when things get difficult. Society’s choices about benefit levels help to determine the levels of inequality and living standards, sometimes for the most vulnerable in our society.

I am grateful to my hon. Friend for giving way, especially as I did not have the opportunity to intervene on the Minister. Does my hon. Friend agree that one of the fairnesses that we have to consider is intergenerational fairness? We are seeing a widening discrepancy between the protection for pensioners—rightly—through the rise in the basic state pension, and what is provided for those on working-age benefits. If people on working age benefits are kept in very difficult financial circumstances, they cannot save for their old age. Is not this really politically motivated, rather than a genuine policy to achieve better equality and protect the most vulnerable?

My hon. Friend makes a very valid and powerful point.

For too many of our citizens, there is no such security. The responsibility for this situation lies firmly at the door of the Government, whose lack of compassion and cruel social security policies have afflicted those who are most in need.

Does my hon. Friend agree that many of the cuts have been self-defeating, and current decisions are self-defeating as well? Research by Alma Economics shows that if the Government decided to restore the local housing allowance rates for the cheapest 30% of rents, that would save local authorities, the health system and many others billions of pounds in the long run. Surely the Government need to look at that.

I agree with my hon. Friend, and I will come on to that later in my speech.

I am listening very closely to the hon. Gentleman, and, having skim-read the order, I concede of course that some of the increases are very modest, but my hon. Friend the Minister set out the overall cost of even those increases. What would the Labour party do? How big would its increases be and what would the overall cost be to the taxpayer?

Unfortunately, the Labour party is not in government, but I will say to the hon. Gentleman that the cuts have amounted to £4.7 billion per year, so the so-called investment that the Government propose pales into insignificance against that.

As we have heard from the Minister today, the Government intend to end their four-year freeze on benefits by proposing to uprate working-age benefits in line with the CPI rate as of September 2019, which was 1.7%. We welcome that slight step forward. Remarkably, for a range of benefits and not just universal credit, this will be the first cash increase in basic entitlements since April 2015. It is important to point out that there has not been any recent change in policy from the Government: the freeze was always due to come to an end in April this year, as announced by the previous Chancellor.

If we scratch beneath the surface of the increase, we find that, after adjustment for price increases, the four-year benefit freeze has actually meant a cut in the real level of benefits by 6%. In many cases, that has come on top of earlier cuts. The 2015-16 benefits freeze followed uprating by only 1% each year in the three years prior to its introduction. There is, therefore, now a yawning gap between the level of benefits offered and essential living costs. Those political choices have consequences, with child poverty, homelessness and in-work poverty at alarming levels, as evidenced in the recently published Joseph Rowntree Foundation UK Poverty report.

Indeed, under this Prime Minister, children will receive a miserly increase of 75p per week in child benefit, and the second child just 55p per week.

My hon. Friend is making a lengthy and well thought-out speech, unfortunately not reflected by the Government. He mentioned the increase in child poverty and the concerns that so many charities, including the Joseph Rowntree Foundation, have. Their conclusion is that the cuts in social security are driving not only child poverty but disability poverty. Does he agree?

I do agree with my hon. Friend. Social security has become a vehicle for cuts and children have borne the brunt, with over 4 million now in poverty.

The 75p per week for the first child will not even buy a loaf of bread in many shops. As a result of the four-year freeze, families living in poverty are now a total of £560 worse off a year on average, equivalent to three months of food shopping for low-income families. Harsh and punitive Conservative policies such as the benefits freeze, the two-child limit and the five-week wait have created a society in which people are forced to turn to food banks in ever-increasing numbers just to get by.

The flagship social security reform of universal credit is not working. The full roll-out will now be delayed yet again until 2024, seven years behind the original plan. It is driving far too many people into poverty, debt and rent arrears. One of its key defects is the in-built and unrealistic five-week wait. At what stage will the Minister apply common sense and change that to fortnightly payments?

According to latest figures available, in 2018-19 the Trussell Trust distributed just short of 1.6 million emergency food parcels, of which 578,000 went to children—the highest level since the charity opened and up nearly 20% on the previous year. In some parts of the UK—Scotland and London and the north-east—the percentage increase year on year was even higher. That represents a depressing 73% increase in food bank use over the past five years, and the Trussell Trust identifies the failing benefits system as one of the main reasons behind that. Behind these devastating statistics are real people, families and children up and down the country, many of them in the constituencies that the new Tory MPs in the north represent.

I turn to the freeze in the local housing allowance. Evidence suggests that it has been a particular source of hardship because of the increasing number of people forced into private rented accommodation by the shortage of social housing. The charity Shelter has calculated that as a result of the benefit freeze, 94% of areas in the UK are unaffordable for people claiming LHA. Recent research by the charity Crisis and the Chartered Institute of Housing found that almost 93% of areas were still unaffordable. There are huge discrepancies throughout the country. For example, an average of £87 a month would be needed to make the bottom 30% of the rental market available in the UK. However, in London a claimant would need an extra £1,398, so the uprate of £10 per month is totally unrealistic.

As my hon. Friend knows, Trafford in Greater Manchester, where I am a Member of Parliament, has relatively high housing costs. I frequently see people who are driven into rent arrears because of the lack of generosity in local housing allowance. That means that they have to seek advice to avoid penalties or eviction, but that advice is not available. Eventually, the cost piles up and they arrive at the door of the local authority saying that they are now in housing need because they have been evicted from their private rented accommodation. How can that be sensible?

My hon. Friend is totally correct. It is not sensible at all.

The devastating repercussions of 10 years of Tory austerity and the impacts of the benefit freeze will remain for a long time to come. The 1.7% uprate is a token mild thaw at the tip of the iceberg of systematic and pernicious cuts to the benefit system. It is too little, too late, and it does nothing to repair the damage done to people’s lives by this Government’s failed social security policies. It has served to further entrench poverty in society. For those reasons, it is Labour’s intention to abstain from voting on this statutory instrument.

There is, of course, nothing to celebrate here. The Conservative Government are trying to clean up the mess they created, and they are not even getting the job done properly. We have repeatedly called on the Government to scrap the benefit freeze. This uprating is of course welcome, but it appears to be too little, too late. The brutal cuts imposed by the Government have entrenched, and continue to entrench, poverty across these islands. A 1.7% increase in working-age benefits does not make up for the damage caused by the four-year freeze. If austerity was really over, the Government would be making up the shortfall.

Let us look at some of the effects. Overall, benefits and tax credits affected by the four-year freeze will be around 6% lower in 2020-21 than they would have been if CPI indexation had been applied during the four years of the freeze. Taking account of all uprating restrictions across the decade, affected benefits are around 9% lower in 2020-21 than they would have been if CPI indexation had applied since 2010. Child benefit and working tax credit elements are between 13% and 17% lower in 2020-21 than would have been the case if CPI indexation had applied throughout the decade.

The Resolution Foundation estimated that the four-year freeze saved the Government £4.7 billion a year by 2019-20, of which £1.8 billion was attributable to the final year of the freeze, and yet the Treasury forecast at the 2016 Budget that the four-year freeze would achieve an annual saving of £3.5 billion by 2019-20. Just last week, the Joseph Rowntree Foundation reported:

“The benefit freeze has seen the value of many benefits fall. The same benefit received in 2019 and 2013 is worth around 6% less”.

We have to wonder about that. If austerity was really over, as we are continually told it is, the Government would make up that shortfall.

On that point, I wonder what the hon. Member thinks of the Citizens Advice proposal that all frozen benefits be uprated not just by CPI, but by CPI plus 2% for the next four years. That would go some way to addressing the appalling imbalance, and the poverty that so many of our children and our disabled people have found themselves in.

The hon. Lady—my good friend—is right that Citizens Advice has produced an excellent report on this. My local citizens advice bureau bears the brunt of trying to help people fill out forms and navigate their way through the social security system, and I am sure she knows all about that. I hope that the Government will take cognisance of the Citizens Advice report to which she refers.

There is an inescapable and undeniable link between the paucity of affordable rented property in the private rented sector, as we have heard from the shadow Minister, and the increased risk of people becoming homeless simply because they cannot afford to meet the cost of living in private rented accommodation. There is a chasm of difference between what people are expected to pay and what they can afford to pay.

Let us be absolutely clear: this housing crisis—particularly in England—and the rising levels of homelessness and rough sleeping did not happen by accident. There has not been some unforeseen set of circumstances that has led to the number of households living in temporary accommodation in England rising by 60% between 2012 and 2018. No unexpected or unforeseen quirk has led to the number of rough sleepers in England nearly doubling over the past five years. This housing crisis was all too predictable, because just about every stakeholder warned the Government right from the start about the inevitable consequences of pursuing their austerity agenda. When they froze local housing allowance and failed to meet their targets for building social housing, what did they expect to happen other than a rise in homelessness and the number of people sleeping rough on our streets? That is exactly what has happened, so let us call this what it is: a crisis entirely of the Government’s own making.

It is incontestable that the Government’s austerity agenda has had a hugely negative impact on people’s ability to rent private sector accommodation. Research from the Chartered Institute of Housing shows that many LHA rates now fail to cover even the cheapest third of rents, as they were designed to. A survey carried out by the National Housing Federation and the Scottish Federation of Housing Associations found that tenants on universal credit were more than twice as likely as other tenants to be in debt.