Social Security and Pensions

With the permission of the House, the motions on the draft Social Security Benefits Up-rating Order 2022 and the draft Guaranteed Minimum Pensions Increase Order 2022 will be debated together.

I beg to move,

That the draft Social Security Benefits Up-rating Order 2022, which was laid before this House on 17 January, be approved.

With this it will be convenient to consider the following motion:

That the draft Guaranteed Minimum Pensions Increase Order 2022, which was laid before this House on 17 January, be approved.

The Social Security Benefits Up-rating Order reflects the Government’s continuing commitment to support working families and pensioners across the nation. The order will increase state pensions, benefits and statutory payments by 3.1%, in line with the consumer prices index in September 2021. With support from the House, when the order is passed, the new rates will come into force from April this year. With the approval of this order, in 2022-23 the total Government expenditure on benefits for pensioners in real terms will be £131.1 billion and the total expenditure on benefits for people below state pension age will be £108.7 billion. The pandemic has been a very difficult time for many. Our welfare system, particularly universal credit, has proved agile.

Before the Minister rushes on from that part of his speech, will he confirm that by uprating in line with inflation last September, given that inflation is likely to be 6% over the year and could be more than 6% by April, according to the Bank of England, what he is proposing is in fact a real-terms cut for those on benefits and the pension?

We are following the policy that Governments have followed for many years, by increasing in line with CPI over a year to September 2021. On the point he makes, I will come on in more detail to explain the smoothing effect, which he is well aware of, given his experience in the House. We will come to that point and see what he has to say at the end.

We are well aware that over the weekend the chief executive of Tesco was on the TV, and has been in the papers today, saying that the price of food will increase by another 5%. We are in incredibly difficult times that we have not been in before, at least not that I can remember in my lifetime. Given that and what the right hon. Member for Leicester South (Jonathan Ashworth) is referring to, can consideration be given in this legislation to these abnormal price increases?

I thank the hon. Gentleman for his question. He will have seen the Chancellor set out last week a three-part plan to deal with rising energy prices. Of course the Government are watching the situation, but, as we will discuss, there is more than just the uprating legislation being put in place to help people through these challenging times.

Does the Minister accept that, for people with the least who have to get through next winter, it is hard to defend using an inflation rate from before this winter? Before we get to that point next year, will he have a look at why we must use the September base point? We must have the three weeks of December data showing a 4.8% rise in inflation, which would at least help get the systems working in time for April.

That is a thoughtful point from my hon. Friend who is an expert on these matters, but he will be aware that there are practical reasons, as well as data-driven reasons, why we use the September data; we are then able to put these uprated changes through the system in time for April. The pandemic has been a very difficult time for many. The welfare system, particularly universal credit, has proved incredibly agile in response to the pandemic, and we have made unprecedented changes to the system to help people when they need it most. Indeed, since the start of the pandemic—[Interruption.] I am hearing a lot of chuntering from the shadow Secretary of State, but what I am trying to say is that DWP staff have done a fantastic job in response to a huge uplift in the number of people who need universal credit. Those are the people I am keen to praise in this debate, so I hope the right hon. Gentleman was talking about them with his colleague.

Will the Minister give way?

No, I will make some progress. If there is chuntering involved about DWP, I want to get it on record that we have an enormous number of people—more than 90,000—who are committed to moving forward and helping to support people.

Will the Minister allow me to chunter on that?

No, I will make some progress. I am sure the hon. Gentleman will chunter later, and I will look forward to that.

Since the start of the pandemic, the Government have assisted the country, its people and its businesses with more than £400 billion in support. Since 2011, the Secretary of State has used the consumer prices index for the year to September as the measure for price inflation in her annual statutory review of benefit rates. The Bank of England forecasts that CPI will reach 7% in spring, before falling to 5.2% in quarter 1 next year and returning to a more historically normal level of 2.1% by the beginning of 2024. CPI will be the measure used in the Secretary of State’s application of the triple lock, which will mean that the new and basic state pensions increase by the highest of earnings growth in the year to May and July 2022, CPI in the year to September 2022 or 2.5%.

Using the same period for CPI each year—I think this is the point that the right hon. Member for Leicester South (Jonathan Ashworth) was making, and I am keen to get to his point—means that the peaks and troughs are evened out over time. Around half the time, CPI in the year to April is lower than it is in the year to the preceding September, and around half the time it is higher, so there is a smoothing effect. I understand the point that he makes.

The Minister is making an interesting point. He talks about peaks and troughs and smoothing, but inflation is going in only one direction. At the end of this process, will people who are dependent on benefits be worse off or better off? It looks to me as though they are going to have a tough time on top of an already tough time.

We recognise that these are challenging times, and that is why, as I said to the hon. Member for Strangford (Jim Shannon), the Chancellor set out last week what we are doing to support vulnerable people with the rising costs of energy. We are taking steps to recognise and lean into the peaks in the inflationary pressures that we are seeing not just in the UK, but globally. We recognise the impact that global increases in energy prices are having on household finances. As the Chancellor announced recently, from 1 April the energy price cap will rise from £1,277 to £1,971—an increase of almost £700 in energy bills for the average household. We are introducing crucial and timely measures to help with the increased costs, as part of a comprehensive package of support worth £9.1 billion in 2022-23.

More than 30 leading anti-poverty groups, including the Child Poverty Action Group, the Joseph Rowntree Foundation and the Trussell Trust, have warned that this motion will drive the most vulnerable deeper into poverty and misery, and they call on the Government instead to uplift benefits by 6%. Does the Minister accept that that needs to happen?

As I have been setting out in my opening remarks, we are taking forward this step in combination with a raft of other measures to help residents in this country face the challenges ahead. In fact, as part of the three-point plan, we have a £200 discount on energy bills this autumn for domestic electricity customers in Great Britain that will be repaid automatically over the next five years. There is a £150 non-repayable rebate on council tax bills for households in bands A to D in England; that is 80% of households. Of course, there is £144 million of discretionary funding for local authorities to support households who need support but are not eligible for the council tax rebate.