Households Below Average Incomes Statistics — House of Lords, 2019-03-28
Topic: Social Welfare
Peta Buscombe (Conservative, Centre-right): My Lords, I will do my best to respond to the noble Baronesses, Lady Sherlock and Lady Thomas of Winchester, without repeating what I have already said in the Statement. It is important to make clear that these statistics focus on household income only, and are based on a survey of households which took place in 2017-18. It is important to recognise that the vast majority of people who were part of this survey were trapped on legacy benefits at that time, as only 10% of the universal credit programme had been rolled out. I make that point because it is important to recognise that we believe that one of the most important ways of lifting people out of poverty is through the universal credit system, which is encouraging many more people to go into full-time work It is true that many of those trapped in poverty are the lowest paid or are part-time paid, and those on very low, self-employed incomes. I want to make that clear. Unfortunately, inflation was also high in 2017; it was 2.8% but that has now come down. Lone parents were not incentivised to work full-time due to the 16 and 30-hour cliff edges on legacy benefits. In other words, the tax credits were a disincentive to work, and there was no incentive to work more than a 16 or 30-hour week. Universal credit is changing all of that. Indeed, in 2017-18, there was also stagnant wage growth following the financial crisis It is important for me to articulate to your Lordships’ House, to the best of my ability, where we are now. We believe we are in a better place: it is getting better and we want to make it even better. The taper rate is being reduced; work allowances are being increased by £1,000 next week; we have the run-on of housing benefit for those transferring to universal credit; transitional protection has been budgeted for next year; and our fiscal position has improved. We are looking to reduce fraud and error—hugely important to affordability and our ability to inject more into the welfare system—which costs more than £3 billion at the moment. I reassure all noble Lords that an amazing team in the Department of Work and Pensions is improving the way we can track it, with the support of amazing technology, so that will make a real difference Money has been reinvested elsewhere in the system. It is important that we look at the bigger picture. Much of overall public spending is not included in these stats. For example, we are now spending more than £6 billion a year on childcare; we have had enormous additional investment in the NHS; we have free healthcare; and we have a free education system. None of that is reflected in these poverty stats. It is also important to recognise that the poorest households receive 70% more in public spending than the richest households. Income distribution is not just about benefits; it is also about the labour market. We now have record employment figures. It is about wages—we need to look more at low wages—taxes and the housing market. Other support across government needs to be considered as part of the jigsaw I say to the noble Baroness, Lady Thomas of Winchester, that the Chancellor has injected £10 billion into the universal credit system since 2016—I think the figure she used was rather less than that. The noble Baroness, Lady Sherlock, referred to the Joseph Rowntree Foundation. Its analysis shows that universal credit will reduce the number of people in working families in poverty by 300,000 There is much to say. From next month, we will start to inject £4.5 billion into universal credit to give the country’s lowest earners a pay rise. We want to help the vulnerable through world-class public services, and we want to deliver a sustainable, long-term solution to poverty. We need a strong economy and a welfare system that works with the tax system and the labour market to support employment and higher pay, and we will continue to reform the system so that it supports work. We know that a child in a household where all the adults work is five times less likely to be in relative poverty, hence my reference to part-time workers. We need to encourage more people into work. A household where everybody works makes a huge difference On the NAO report, we are committed to improving employment outcomes for disabled people and those with long-term health conditions. We have seen 930,000 more disabled people in work over the five years to the fourth quarter of 2018. The disability employment rate increased by one percentage point over the same period. In 2017-18, that number rose, and then the disability employment rate increased by a percentage point over the same period to 51.5%. However, we want to be more ambitious. That is our response to the NAO report. We can be more ambitious if we set our hearts on it, and we are working incredibly hard at the department to do as the noble Baroness asked and deliver a consistent system for universal credit across the UK. Our work coaches and case managers do fantastic work I say to the noble Baroness, Lady Sherlock, that we have gone further than previous Governments to support those on low incomes. Income inequality has fallen under this Government. The national living wage is expected to benefit up to 2.4 million people. With the rise this April, a full-time worker’s annual pay will have increased by over £2,750 since it was introduced. However, we need to do more and we are absolutely on course. Noble Lords will have heard what my right honourable friend in another place has said—that it is our ambition to further reduce the number of those in poverty. We take this issue incredibly seriously and our reforms have made sure that our welfare system encourages people into work and is fair for taxpayers and sustainable for the future. Tackling poverty will always be a priority for this Government.