Welfare Reform and Work Bill — House of Lords, 2016-01-25
Topic: Macroeconomics
Natalie Evans (Conservative, Centre-right): I thank noble Lords for tabling these amendments. I do not wish to spend too much time restating the same points that were made in Committee so I will keep my remarks brief. First, I address the amendments tabled by the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie, which replace the provisions in the freeze with a duty on the Secretary of State to review the benefits in question, having regard to inflation and the national economic situation I remind noble Lords that the provisions in Clauses 9 and 10 contribute £3.5 billion of the £12 billion of welfare savings by 2019-20 that the Government are committed to. The Government have a £35 billion consolidation plan, as the Chancellor set out in the summer Budget and the joint Autumn Statement and spending review, and we are on target to achieve a surplus of around £10 billion by 2019-20. The savings that the freeze provide therefore represent a significant proportion—10%—of the work that remains to be done through this Parliament to restore the nation’s finances Noble Lords have argued that these amendments would merely place a review on the freeze rather than remove it altogether, but they would remove the certainty provided by a legislated-for four-year freeze. This would lead to increased uncertainty about where the Government intend to find the necessary savings to restore the nation’s finances and could decrease market confidence in the Government’s ability to deliver their target surplus by 2019-20. Noble Lords have also raised concerns about the impact of this freeze. I reiterate that there are no cash losers to this policy and that inflation is still forecast, by the independent Office for Budget Responsibility, to be relatively low over the next two years, providing time for benefit recipients to adjust their finances to compensate. Furthermore, OBR forecasts at the Autumn Statement projected average earnings growth of around 3.9% by 2020, higher than projected inflation at around 2%, meaning many working families can expect to see the impact of the freeze offset by their rise in earnings. The annual average income of the poorest fifth of households has risen by £300 in real terms, compared to 2007-8 I turn to the amendment in the name of the noble Lord, Lord MacKenzie of Culkein, regarding employment and support allowance. This amendment seeks to place into legislation a requirement for the support group component of ESA to be uprated by an additional amount above the amount it would otherwise be uprated by. This additional amount would be equal to the difference between the current main rate of ESA and that rate if it were uprated by inflation. I should remind noble Lords that, as said in Committee, those in the ESA support group receive an additional amount on top of the personal allowance—the support group component—which we have specifically exempted from the benefits freeze. Furthermore, the enhanced disability and severe disability premiums within ESA are also exempt from the freeze, as are benefits which contribute towards some of the additional costs of disability such as disability living allowance and personal independence payment Noble Lords will be aware that spending on main disability benefits went up by over £2 billion over the course of the last Parliament, and that the proportion of those in relative poverty who live in a family where someone is disabled has fallen since 2010. We believe that we are continuing to provide important protections for the most disabled through the exemptions we have from the freeze, and that this amendment is therefore not required In conclusion, the Government believe that the freeze strikes a necessary balance between making important welfare savings while having in place the protections for the most vulnerable and disabled. I therefore urge the noble Lord to withdraw the amendment.