Social Security and Pensions (Statutory Instruments) — House of Commons, 2015-02-09
Topic: Social Welfare
Stephen Creswell Timms (Labour, Centre-left): I am merely pointing out to the Minister that the increase is 0.2 percentage points higher than the increase in the RPI. Before the last election, the state pension was raised in line with the RPI. If that arrangement had continued each year since 2010, the state pension would be higher for the coming year than the figure in the order in front of us. I simply think that, in listening to his frequent protestations about how generous the Government have been to pensioners, the House should be aware that in every single year since 2010 the level of the state pension is lower than it would have been if the previous arrangement had stayed in place—except for the first year when they matched what the arrangement would have been before the election. That is surprising, especially in the light of the fact that Ministers keep on telling us about their generosity towards pensioners. As well as the state pension, the order contains uprating details for universal credit. Those are currently largely of academic interest, because so few people are in receipt of universal credit. The Government announced in November 2011 that a million people would be claiming universal credit by April 2014. That was an absurd boast, as we pointed out at the time. The Government have consistently failed to grasp the scale of what would be required to implement universal credit. The latest figure for universal credit claimants is 27,000. At the present glacial rate of progress, it will be 1,571 years before the transition to universal credit is complete In 2011, Ministers said that transition to universal credit would be complete by 2017, a date that was then six years ahead. Now we are told that the transition to universal credit will be complete by 2021 at the earliest, which is six years away. Expected completion has slipped by four years in four years. The National Audit Office reports that £344 million had been invested in universal credit IT up to 31 October 2014, but that the value of the assets created by that date was £125 million—little more than a third of the sum invested. Waste on such a large scale reflects just how much trouble this project is now in, and the problems continue. Last October, the Department predicted that there would be 100,000 people claiming universal credit by May of this year. I recently tabled a written question to inquire whether Ministers still thought that that would be achieved. The Minister for Disabled People, whom I am delighted to see in his place, answered the question on 26 January. He said: "The latest forecast agreed with OBR still rounds to 0.1 million cases" So the figure has clearly already slipped again, and that is only since October This debate is the last of its kind before the election, so it gives us an opportunity to reflect on the cumulative impact of the Government's changes to benefits in this order and the previous ones. That task has been greatly assisted by the publication last month of the report from the Institute for Fiscal Studies—the former employer of the Minister for Pensions—on "The effect of the coalition's tax and benefit changes on household incomes and work incentives." It is a very revealing analysis. Let me quote the opening couple of sentences, which say: "Tax and benefit changes introduced by the coalition have reduced household incomes by £1,127 a year or 3.3% on average...These involve an average loss to households of £489 per year, comprising an average gain of £321 a year from cuts to direct taxes, an average loss of £333 a year from increases in indirect taxes and a £477 a year average loss from benefit cuts." Even the gain through direct taxes is outweighed by the loss through indirect taxes, never mind the bigger loss from benefit cuts as a result of this order and its predecessors The report goes on to state: "Low-income working-age households have lost the most as a percentage of their income from tax and benefit changes introduced by the coalition…Middle-income working-age households without children have gained the most" That is what the Government have achieved. Low-income households have lost and middle-income households have gained. That is not what the Minister and his hon. Friends used to argue for when they were in opposition, but it is what they have delivered in office. The IFS found that households with children have been hit hardest by tax and benefit changes. The poorest households with children have lost more than 6% of their incomes and those without children in the middle of the income distribution have seen their incomes rise as a result of tax and benefit changes, as they have benefited from personal allowance increases and have not been affected by social security changes such as those to tax credits. Families out of work or with only one parent in work lost almost £2,000 a year as a result of the changes, while families with both parents in work lost between £1,000 and £1,500 a year The shadow Secretary of State, my hon. Friend the Member for Leeds West (Rachel Reeves), published new analysis from the House of Commons Library last week that shows that five more years of failure to make work pay of the kind we have seen in the past five years, with wages today on average £1,600 less in real terms than at the general election, and wages falling short of expectations to the same extent in the next Parliament as they have in this, would mean another £10 billion in social security spending on top of the figure already projected The Government’s own Social Mobility and Child Poverty Commission, in its second annual assessment of progress towards the 2020 child poverty targets, was scathing. It states: "The impact of welfare cuts and entrenched low pay will bite between now and 2020. Poverty is set to rise, not fall. We share the view of those experts who predict that 2020 will mark not the eradication of child poverty but the end of the first decade in recent history in which absolute child poverty increased…We have come to the reluctant conclusion that, without radical changes to the tax and benefit system to boost the incomes of poor families, there is no realistic hope of the statutory child poverty targets being met in 2020." The Minister served, as I did, on the Public Bill Committee on the Child Poverty Act 2010. He argued then that the targets should be more demanding, but his legacy, and that of his colleagues, will be that there is no realistic hope of achieving those targets by 2020 Should we be elected in May, our approach will be different. We will balance the books and get the national debt falling in a fair way. We also want the Office for Budget Responsibility to monitor and report on the Government’s progress in reducing child poverty. That is something that the OBR should do. We plan to restrict the growth of benefit spending through stronger, more balanced economic growth and more good jobs paying decent wages. We will tackle low pay and insecurity, raise the minimum wage and improve its enforcement, tackle the abuse of zero-hours contracts and expand free child care for working parents. We will incentivise payment of the living wage by employers by offering a 12-month tax break employers who raise their employees’ wages to that level. We will introduce our compulsory jobs guarantee to get more young and long-term unemployed people off benefits and into work We will reform the banks and end the dither on big decisions, such as airport expansion, with an independent infrastructure commission, and we will back British firms by cutting business rates for small firms and unashamedly arguing for Britain to stay in a reformed European Union. We have a radical plan for spreading power and prosperity across the country, including giving England’s city and county regions more power over their public transport networks and devolving £30 billion-worth of funding over five years to the English regions. We will tackle the housing crisis with a commitment to build 200,000 homes a year by 2020 We could have recognised the case for a temporary use of CPI for benefit uprating as an element of a balanced programme of deficit reduction. We do not, though, support the Government’s decision to adopt CPI permanently. We do support the increase in the state pension in line with the triple lock, and as voting against this measure would have the effect of delivering no increase at all, I will not be asking my hon. Friends to vote against the orders When we look at the impact on poverty and on middle income households of the policies that have been adopted over the past five years, it is clear that it is urgently time for a change.