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Madam Deputy Speaker (Judith Cummins)
With the permission of the House, the motions relating to the welfare cap will be debated together.
The Minister for Employment (Alison McGovern)
I beg to move,
That, pursuant to the Charter for Budget Responsibility: Autumn 2022 update, which was approved by this House on 6 February 2023 under section 1 of the Budget Responsibility and National Audit Act 2011, this House agrees that the forecast breach of the welfare cap in 2024–25 due to higher forecast expenditure on Universal Credit and disability benefits is justified and that no further debate will be required in relation to this specific breach.
Madam Deputy Speaker
With this it will be convenient to discuss the following motion:
That the level of the welfare cap, as specified in the Autumn Budget 2024, which was laid before this House on 30 October 2024, be approved.
Alison McGovern
Before this Government were elected, we said that we would change this country, and we will. To get change done, any Government have to stand on firm foundations, which is why, as we have just heard from the Chief Secretary to the Treasury, we promised to be responsible with the public’s money. We know that every penny counts in this mission, because if we fail to protect the public purse, we fail to protect the purses of the public. Family finances can never withstand fantasy economics.
That was supposed to be the whole point of the welfare cap. It was designed to help better control public spending, counting the cost of the rising price of failure. I will come to some of the failures we are now seeing and the people thrown on the scrapheap as a result of the failure of 14 years of economic policy, particularly on the labour market.
The welfare cap was intended to ensure that the cost of important parts of the social security system, such as universal credit—though not counting those actively looking for work—the personal independence payment and pension credit, remains predictable and affordable. Only the state pension and benefits for unemployed households were excluded.
What was the result of a decade of Conservative welfare caps? Repeated breaches of the cap, with ever higher limits. The latest cap is now on course to be breached by an £8.6 billion overspend. This is not tolerable, given the state of our economy and the public finances.
Worse still, there is the human cost for every single person who could be enjoying the benefits of work but has been denied the choices and chances they deserve. I regularly meet people in that position. There is the young person who has not recovered from the dreadful legacy of the pandemic—not in college, not starting their first job, barely even able to go out with friends, and bearing the burden of the mental health crisis that our young people face. I believe the pandemic generation was completely let down.
There are our older relatives who have been pushed out of work before their time with hip or knee pain. The NHS is just not able to help them at the moment, and they are not even getting advice about how to make ends meet. That is the legacy we inherited, and it is not good enough for anybody. It is also the legacy of low growth, the higher cost of living and high inactivity, with employment and social security systems ill equipped to meet the requirements of an older, sicker nation. That is the Conservative party’s record.
Unfortunately, this breach—forecast as far back as March 2023 but ignored—is now wholly unavoidable in this fiscal year, given the scale of failure we have inherited. We will not duck the difficult decisions needed to restore economic stability, and we will deal with the failure we see before us.
Before I say how we will do that, I want to reflect on exactly how we ended up in this situation. The sad truth is that, in way too many parts of the country, too many people are denied the opportunity to have a good job so that they can support themselves and put a roof over their family’s heads.
The benefits bill only reflects that failure, with 2.8 million people locked out of the workforce due to poor health, and 3.4 million more working-age people reporting a long-term health condition than 10 years ago. We have large numbers of people turning up to a social security system that is not geared up to meet what has become the greatest unemployment challenge of a generation.
Alistair Strathern (Hitchin) (Lab)
My hon. Friend is doing a compelling job of setting out the damning state of the welfare system we inherited when we took charge. Does she agree that investment in the NHS, so that people finally have the healthcare support they need, is fundamental to making sure they can get back to work, contribute as they would like and build a secure future for themselves and their family?
Alison McGovern
The NHS is the bedrock that ensures people can thrive and contribute to society, economically and in every other way. We also need to ensure that the health support people get is the right support. At the moment, we are not doing enough on occupational therapies and other things that provide health support tailored to people’s work. We will have more to say about that in the near future, I am sure.
A huge number of people are turning to a social security system that is not geared up to meet the huge employment challenge. At the moment, social security cannot cope. Hon. Members may ask themselves how on earth we got to this place, after 14 years of so-called benefits crackdowns by the Conservatives. Well, I invite everybody to look at their record. When universal credit was introduced 12 years ago, the Government of the day made all sorts of promises. They said it would
“break the cycle of benefit dependency”
and offer
“greater incentives to find a job”.
The former Secretary of State for Work and Pensions, the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), said that universal credit
“will ensure that work always pays and is seen to pay”,
but what have we seen since? A disastrous series of wrong-headed choices that have achieved precisely the opposite effect.
New data, which we are publishing today for the first time, shows the extent of the effects of universal credit on incapacity benefits. There has been increase of 800,000 people receiving incapacity benefits between 2018 and 2023. Around 10% of that increase is because of the rising state pension age and another 10% because of the way changes were made in the move from employment support allowance and other benefits to universal credit, a situation that should have been foreseen and planned for by the previous Government. That leaves an increase of over 500,000 people, to which I will now turn. The Conservatives need to take a long hard look at the changes they made to universal credit.
We must consider how people transitioned between the “looking for work” group in the universal credit health journey, where they are told that they have limited capacity to do any work or work-related activity, to “actively looking for work”. How did people move between being told they cannot work and being told to actively look for work? People moving between those two groups used to receive a top-up to their benefits, but that was removed in 2017, creating a hard barrier between those categorised as incapable for work and those looking for work. In addition, there was a four-year freeze to the rates of universal credit in the late 2010s, except the highest tier of health-related benefits. As a result, the income of those trying to find work was squeezed, and the barrier between those on universal credit actively looking for work and those who had been told that they were unable to work was hardened.
We have seen a steady rise in the number of people on the highest tier of health benefits, where there are no requirements to look for work or to get any help to make the steps on that journey, and no support to find jobs when many people actually want to work. All the while, there have been more and more conditions and box ticking in a system that has failed.
Social security was designed to smooth people’s incomes over time and to take account of life events that could happen to any of us, but the result of all the changes is that either by design or mismanagement—probably both—the previous Government created a social security system that segregated people away from work and forgot about them. There was no helping back to work, and only the promise that they would be left alone.
The Office for Budget Responsibility has said that
“the wider benefits system—in particular the conditionality and generosity associated with incapacity benefits relative to other parts of the system—has affected incapacity benefits flows over time”.
Unfortunately, that situation, created by the last Government, is far from the only problem, because social security will only ever function where the Government take their wider duties seriously.
Jeremy Corbyn (Islington North) (Ind)
On the point of support for people who are on benefits, the Social Security Act 1986 ended the requirement on the now Department for Work and Pensions to provide advice and welfare support to people. Will it now be the policy of the DWP to automatically offer advice and support to people on the benefits they are entitled to claim, or to give more support to voluntary advice agencies so that people get what they are entitled to?
Alison McGovern
We published in November an extensive reform programme for the Department to get Britain working. We showed how in some parts of the country—I will come to this in more detail shortly—people have been abandoned and their labour market has not supported enough good jobs for a very long time. We showed how, by acting on better health and better local support services, we will reintroduce ambition into our support services.
We want to help people get into a job that will support their family finances and help our economy thrive. We have a huge change programme underway in the Department for Work and Pensions, and we will be doing even more than we set out in that White Paper. The challenge is huge, but the potential is also massive. I worry about everybody who is out of work, but particularly our young people, who have effectively been thrown on the scrapheap. It is a disaster now in exactly the same way that it was a disaster, brought about by the economic turbulence that I grew up in, in the 1980s, which is the period the right hon. Member refers to. We will therefore take the challenge of restoring employment—proper employment—in this country extremely seriously.
In doing that, I want to talk about the Government’s wider responsibilities, not just in reforming the social security system but far beyond that. You will forgive me, Madam Deputy Speaker, if I return to the founding document of our social security system, the Beveridge report. In 1942, William Beveridge identified the
“establishment of comprehensive health and rehabilitation services, and maintenance of employment…as necessary conditions of success”
in social security.
That lesson is forgotten again and again in this country, and we will never have a social security system that functions well unless we have an NHS that works and we maintain policies designed to move towards full employment. Social security cannot soak up every single problem in this country if the Government forget their wider responsibilities. I note that the Beveridge report considered the consequences of war and the injury to the nation that that had brought about. In many ways, we ought to learn the lessons of the pandemic: that the health of the nation can never be taken for granted and that, in setting us on the right path in terms of both health and employment, we can plot a course towards a more sustainable future. As I have said, is it any wonder that our social security system is broken given the health of the nation, given what we have been through and given the last Government’s neglect of the NHS and the state of our labour market?
To look backwards again for a moment, we know that in our country’s economic history, we had periods when whole towns and cities were deindustrialised and left to fend for themselves. Economies simply failed, and while great progress has been made, including in my constituency, in my city region in Merseyside and in other places whose economies have moved on greatly since that time, sadly, too many have never properly recovered. As a result, we have a labour market that simply fails to offer good work everywhere.
As part of our “Get Britain Working” White Paper analysis, we found that when students are not counted, the inactivity rate, to give the example of Blackpool, is 29%. That is nearly a third of working age people. That can never be a good platform on which to build a thriving economy, and I am determined that we will turn it around.
More than half of the 20 local authorities with the highest rates of inactivity in England are in the north, while none are in the south-east. It is, however, far from a north-south divide. We have identified 14 types of labour markets in the United Kingdom and considered their features: what they share and what divides them. We want to identify those places that are furthest behind, precisely so that we can help.
It is not just the prevailing economic circumstances or what has happened in the recent past to a local authority that defeats people, but, unfortunately, the jobcentres that are supposed to be there to help. When we did our analysis for our “Get Britain Working” White Paper, we uncovered the record of the last Conservative Government. I was shocked to find that only around 8%—only 8%—of universal credit claimants in the “searching for work” group move into work from one month to the next. In the “no work requirements” group, 92% were still there after six months. That is the very definition of being on the scrapheap: no work and no help to get work. That is just failing people.
Then there is the price tag. Spending on universal credit and disability benefits was £10.9 billion higher than anticipated when the level of the welfare cap was calculated. That is a dreadful record. For the reasons that I set out earlier, the breach of the cap is unavoidable this year, but this Government are taking the action necessary to drive up opportunity in employment while driving down the benefits bill. Our “Get Britain Working” White Paper, as I have mentioned, set out the biggest reforms to employment in a generation, with a radical new approach backed by £240 million of investment. We are overhauling our jobcentres and creating a new jobs and careers service, doing away with needless admin and freeing up work coach time, so that my colleagues can give real, high-quality support to people.
Although I am often disappointed in the help that people receive in jobcentres, I am never disappointed by what our work coaches do. The thing that lets the work coaches down is the system in which they work. For example, they are told that they can see someone for only 10 minutes. How are they supposed to help in 10 minutes? They have to carry out numerous admin checks that could be done with modern technology, when the person in front of them is just sat there waiting, not receiving any help. Our work coaches are full of ideas, full of local knowledge and full of determination that we will make a new system work. I take this opportunity to put on record my thanks to every single DWP member of staff who has embraced change with gusto.
Daisy Cooper (St Albans) (LD)
When I visited the jobcentre in St Albans last year I, too, was struck by the fantastic support given by some of the work coaches. However, I was also struck by what some of the jobseekers had to say. One said that she had been in full employment, but had to give up her job to look after her two children because they could not get the special educational needs and disabilities support that they needed in school. Another said that they were struggling with addiction and could not hold down a job because they could not get the support needed from the NHS. Does the Minister agree that, while our work coaches are doing a really good job, ultimately, we need to get our public services, particularly the NHS, back on their feet?
Alison McGovern
I agree with the hon. Lady. Can we just take this moment to thank the DWP team in St Albans? They sound like they are doing a great job and they are also briefing their local MP, which is really good of them. I encourage all colleagues in the House to ensure that they have a regular catch-up with their jobcentre colleagues so that they know the kind of things that our work coaches have to deal with. Often, Members of Parliament can be quite helpful in putting people in touch with other organisations, so I encourage all colleagues to do as the hon. Lady has done.
On the point that the hon. Lady makes about SEND, she is absolutely right: this is a major barrier. If Members want to understand what a struggle to get to work and to stay in work looks like, they should ask the parent of a disabled child. This issue of where the effect of poverty and the SEND crisis can compound is being considered by the child poverty taskforce in particular. The hon. Lady is absolutely right: good public services and a good, strong economy go hand in hand. It is not “public services or a strong economy”—we called that ideology “austerity”, and it did not work. The two go hand in hand. We need to look in that rounded way to see how we can help people, and that is the approach that we are taking. We want to make every jobcentre in the country a place that people who are looking for work, and employers, will actually want to use. We know that what happens early on in a career echoes down the years; as I have said, our young people—the pandemic generation—were failed. That is why our youth guarantee will give every 18 to 20-year-old access to quality education, training or employment.
On top of that, we are working with local leaders who know their towns and cities best, supporting them to produce their own local “Get Britain Working” plans that join up work, health and skills to support their communities. I have mentioned the major fractures still in the UK economy following previous economic events that were not managed properly. That is how we know that the same thing just will not work everywhere. The DWP will reform itself so that we are able to localise support services, and we will work with local leaders to do that.
All of that will ensure that we help people to enjoy the benefits that good work brings to wellbeing—and I do mean “good work”. The choice in this country should never be between the scar of unemployment and the scar of poor work that does nothing but keep people poor. Poor work does not reduce the pressure on our social security system; it just means more people working too hard for their poverty. That is why we will improve the security and quality of work through our plan to make work pay. We will create more good jobs in every part of the country with a modern industrial strategy and local growth plans. Together, they will help us to meet our long-term ambition for an 80% employment rate.
We will create the conditions for success in social security. As I have outlined, the changes made to social security were ill-thought through. A fresh approach is needed to make our social security system sustainable, and we will build that system to give people the help that they need to find great jobs and feel the benefit of work. We want to tackle poverty and target support at those who need it most. We will set out our proposals in a Green Paper on reforming the health and disability system in the spring. We will work with disabled people and their organisations to get that right.
A strong social security system needs the confidence of us all. Anyone might suddenly find themselves unwell or with the extra costs that children bring, and we all hope one day to enjoy the benefits of the state pension, so we must protect the social security system now and in the future. Not only did we confirm at the autumn Budget that we would keep a welfare cap in place with a margin of 5% to account for the volatility of recent forecasts, but later this year we will publish a new annual report on social security spending across Government, setting out the DWP’s plan to ensure that it is on a sustainable path. The days of setting spending targets without a proper plan to meet them are over.
Jeremy Corbyn
If next year’s report recommends an increase in welfare spending, would that be impossible within this cap, or will she come back to Parliament to ask for a change in the cap well ahead of its 2029 expiration?
Alison McGovern
In the specifics of our proposal, we will publish a Green Paper on health and disability in the coming months. With regards to the financial controls, we will do all that the Chief Secretary to the Treasury set out some moments ago on allowing the Office for Budget Responsibility to perform its function. That is the best way to ensure that we take fiscal decisions within the guardrails that he set out.
The results of 14 years of failure are unfortunately only too obvious, as I said earlier. Everywhere we look in this country, we can see the impact of what the previous Government did. Too many people in far too many places were neglected and failed, starved of opportunity, and left to turn to a social security system that just is not working. Everybody in this country suffers the consequences.
Kirsty Blackman (Aberdeen North) (SNP)
I am not sure how long the Minister has left in her speech, but I have a question about the welfare cap. We are being asked to make two decisions: to approve the welfare cap, and to note the breach. She has made the case for how the Government are trying to get Britain working and why the breach has happened this year, but so far she has not made the case for why they are putting in a welfare cap this year and why we parliamentarians should agree to it.
Alison McGovern
I did make the case for the overall welfare cap and for that policy at the beginning of my speech, because it is important that we have proper controls on public spending. Fantasy economics will do absolutely nothing to support family finances and the Government are determined that we will manage public finances in a responsible fashion.
The results of failure are far too obvious; we all pay the consequences. That is why we will not stand for it. Every penny counts, but so does the future of every person in this country. That is why, in order to ensure we save every penny for the things we want to spend on in social security, we are bringing forward the biggest welfare fraud and error package in recent history. We are not just tweaking a broken system; we are going to fundamentally change the way we approach reform, starting with the principle of focusing on people.
We will tackle the root causes of unemployment—whether you are out of work because you cannot find a job or are out of work because the last Government wrote you off, everybody deserves to build a better life and fulfil their potential.
Peter Swallow (Bracknell) (Lab)
I am proud to be a Labour MP. Labour is the party of the dignity of work. We know that, for those who are able to, the best place to be is in work with a well-paid job with good rights. Does my hon. Friend agree that the previous Government did far too little to ensure that people who could work were helped back into work to get all the benefits and dignity that working can bring, and that they wrote off far too many people, which has left us in this sorry state?
Alison McGovern
I am glad that my hon. Friend is proud to be a Labour MP, as am I, and I am glad he is proud of the approach we are taking on employment, because so am I. We cannot afford this failure any longer in the cost to our public finances. We will never tolerate the failure in hope, dignity, ambition and opportunity that the levels of unemployment in this country now represent.
Helen Whately (Faversham and Mid Kent) (Con)
The welfare cap we are debating today was introduced back in 2014 by the Conservative Chancellor at the time, George Osborne, to hold the Government to account on the cost of our welfare system. Through the 2010s, in government, we broadly kept to that cap; it was part of the discipline we applied to the welfare system to make it fair for the taxpayer and to put into practice the strongly held Conservative principle that if you can work, you should work. We introduced universal credit to ensure that work always pays and supported businesses to create millions of jobs, and we helped thousands of people into work and drove down economic inactivity—and were opposed at every step of the way by the Labour party.
But in the years during and since the pandemic—I will not shy away from telling the truth—things changed. While the number of jobs kept going up, the number of people economically inactive also started to go up, and with that, the welfare bill, and that is a big problem. It is a financial problem that means we are today debating a welfare cap which has been breached. It is an economic problem because our economy needs the talents and energies of everyone. And it is a social problem: of the 9 million people of working age defined as economically inactive, 2.8 million are not working because of ill health. That includes growing numbers of young people. Young people are starting out on a life on benefits instead of starting out on a career, missing out on the opportunities that work brings—the sense of purpose, the connections with other people, the chance to learn and develop skills—missing out on the experience of being paid for their efforts, and missing out on the chance to build financial independence and security. We as a country have a moral and financial imperative to turn this around and in government we were working flat out to tackle it.
David Pinto-Duschinsky (Hendon) (Lab)
Will the hon. Lady acknowledge that under the last Conservative Government inactivity rates among the young were the highest in the OECD, and that they were working on it, but it was not working?
Helen Whately
As I am sure the hon. Gentleman heard, I was just acknowledging the fact that the economic inactivity rate started going up in the run-up to and particularly following the pandemic. We have a particular concern, which I am sure the Government share, around growing inactivity among young people. It is a challenge that we are experiencing more than other countries, and there is a lot of work to do to get to the bottom of it. I was involved in that work in government as a Health Minister, and it is imperative that the new Government get a grip on that issue.
Helen Whately
I will make some progress.
In government, we were working flat out to tackle that problem. We were changing how we assess people’s capability for work, recognising that the world of work has changed. We developed WorkWell to help people with health conditions or disabilities find and stay in work, and we were reforming the fit notes that GPs give people. Once again, we were opposed by Labour every step of the way.
We also had plans to go further. In our manifesto, we committed to £12 billion-worth of savings by reforming sickness benefits. Labour responded at the time by saying that the money is simply not there, and the present Chancellor said that not a single penny could be saved from welfare. It turns out that, on this one occasion, Labour has stuck to its word: it has no plans to control welfare spending. Today, the Government are setting a welfare cap that does not include a penny’s worth of savings at a staggering £195 billion by 2029-30—a 44% increase on this year’s cap. In cash terms, that is more than our entire defence budget. Not content with not saving a single penny, they have given themselves a £10 billion buffer on top of that. That lack of ambition is terrifying.
We believe that money can and should be saved from the welfare bill. The Chancellor finally seems to agree with us, because she has been busy briefing the papers in a panic about cutting spending. But where are those plans? Unfortunately, she has not got any because, as I said, until now she did not believe any savings could be made. Perhaps the Employment Minister can give us some clues. I believe she has canned my fit note reforms, so what will she do to get the welfare bill down and by when? How on earth does she expect to get people into work when 50,000 people were added to the unemployment figures in December alone?
Alison McGovern
I think I am being asked whether we stopped the extensive work that the previous Government were doing on rising inactivity. I have to say that when I got into the Department for Work and Pensions, there was not an extensive plan available. That is why we have had to embark on fundamental reform, which we set out in a White Paper in November, and that is why we will shortly be bringing forward a Green Paper on health and disability reform. The idea that somehow there was an instruction list left in the Department that we could just crack on with is a fantasy.
Helen Whately
The hon. Lady will know—at least I think she will know—that the vast majority of what she set out in the White Paper was the continuation of things we were doing in government. In fact, if she has read it she will see that it even says that the youth guarantee is essentially a new name for a repackaged set of measures that are already in place. That is literally in the White Paper. I am happy to follow up with her afterwards on the page that she will find that phrase on.
I have yet to see a single sign to suggest that this Government can tackle the welfare bill, and the cap they are setting today tells us that they agree. The Opposition will support efforts to bring down welfare costs sensibly. We need a compassionate safety net, but that net should never become a trap. If the Government do not get a grip of the problem, it will put our entire social contract at risk. Ministers have finally twigged that action is required—a Green Paper is, they say, on its way. I urge the hon. Lady to get on with it, because each month that passes see thousands more drift out of work and into a life of inactivity.
Dr Jeevun Sandher (Loughborough) (Lab)
Every person in this country should be able to live a decent life, but too many of us are unable to earn a decent wage. That is what is pushing up social security spending, leading to the motions that we are debating today. Too many people are forced to claim sickness benefits because the NHS has failed them; there are not enough well-paid jobs; and people do not engage with the social security system that the Conservative party left us, because it demonised and attacked them.
That left us as an incoming Labour Government with a choice between massive implementing cuts to social security this year and technically breaching the welfare cap. I am proud that this Government have chosen to breach that cap rather than drive people into destitution. I am proud that we will get people who want to work into work, and that we will change the system for the future to ensure that people are not left as they have been for the past 14 years. I am proud that this Government will ensure that every person has the support they need when they need it.
Our nation is sick, and things need to change—specifically, three things. First, our NHS needs to shift. After 14 years of mismanagement and the disastrous Lansley reforms, we have almost 3 million people out of work. We were the only G7 nation to see sickness rise during the pandemic and after it as well. Every single one of us sees that degradation and damage when we try to get an appointment with our local GP. That is what we need to fix in the years ahead.
Secondly, we must transform our low-pay, low-training economy, which does not provide enough good jobs or pay enough to live. Thousands of people are unable to turn on the heating because they cannot afford it, and thousands are unable to eat; nurses are forced to go to food banks. Around 70% of children in poverty are in working families, and being cold and hungry makes people sicker. Too many people in this country go straight from school into sickness; the number of young people in this nation who are too sick to be active in the labour market has almost doubled since 2013. Those are the problems that we will be fixing in the years ahead.
The third thing that needs to change, of course, is the punitive social security system that pushed people to the brink. When people could not see their GP, could not earn enough to live a decent life and were too scared to go to the jobcentre, they stopped working altogether. That has led us in this country into a toxic doom loop, with sicker people having less money in their pockets and becoming too sick to work, leading to higher social security payments. The amount we are spending on social security is a sign not of the former Conservative Government’s generosity, but of their failure. That is what we will be addressing in the year ahead.
The amount that we are spending on sickness and disability benefits has risen from £42 billion in 2010 to £65 billion today, and that is in real terms, not nominal terms. That is an increase of around 40% to 50%. That is why we will breach the cap by £8.6 billion this year, rather than impose devastating and swingeing cuts on those who already cannot afford to eat. We on the Labour Benches know that food banks are not an integral part of our welfare system; they are a symbol of failure. These are the things that we must change in the future.
We need changes not simply to policy but in attitudes. For 14 years it was said that every person who was failing to earn enough was somehow a skiver. That was wrong, and it drove those who needed to engage with the social security system not to engage with it at all. I used to work at the Department for Work and Pensions and I can tell the House that people on both sides—those who wanted to work and those who wanted to help people into work—were good people who were let down by a bad system.
Chris Curtis (Milton Keynes North) (Lab)
Somebody who works in my local jobcentre in Milton Keynes came to visit me last week and told me about his experiences. He currently has to conduct 10-minute appointments, and as a lot of that time is spent on admin, he is not able to give the necessary help and support to people who are desperate to find a job. Does my hon. Friend agree that it is really important that this Government, unlike the previous Government, focus on providing the support necessary to get people into work, rather than setting a narrative about people being workshy and not wanting to work, which is not the truth?
Dr Sandher
I could not agree more with my hon. Friend. Ten minutes is nowhere near enough time for people to get the job support they need. It is not enough for those who are seeking help or for those seeking to give that help, especially as the economy is changing and getting a well-paid job requires more training. The country changed before with the automative revolution, and it is now changing with the artificial intelligence revolution. Those people need support and help in order to get security, but they are not guaranteed it or given it at the moment, and that is the precise intention of the changes we are putting forward. It is not easy to put forward these changes and it will not take a short time, but by starting that work today and by changing the relationship between those who are seeking to give help and those who are receiving that help, we can ensure that those who need help will actually receive it.
This is not just about those on the ground who are doing great work, or indeed about my former brilliant colleagues at the DWP. It is also about how we in this House speak about those who need help, who are in poverty or who receive social security payments. We must understand that every single person in this country wants to work and wants the dignity that comes with it, but they are too often let down because of a lack of well-paid jobs, a lack of support and a lack of dignity afforded to them by a party that sought only to demonise. That is what we seek to change in this House and, indeed, in this country. That is the choice before us, and it is why we are making these decisions: a technical breach of the welfare cap this year and a more accurate welfare cap in the years ahead, so that we can begin to provide the support that people need.
Kirsty Blackman
People go to food banks because work does not pay and the two-child cap, for example, means that they do not have enough money to live on or to support their families. Why is the hon. Member supporting a welfare cap that bakes in the two-child limit?
Dr Sandher
I do not believe that the hon. Member is correct. The welfare cap does not define future decisions; the welfare cap in future years defines the total amount that will be spent at that time. We should be clear what the welfare cap refers to. She mentioned the two-child limit in particular, and Government Members have been clear that choices have to be made in straitened times. We know that children are driven into poverty and that no child deserves to be born into such circumstances. Indeed, we know about the huge and shocking rise in child poverty and child hunger in this country. I know that Members across the House are shocked by that, but the truth is that we cannot make every such decision in this House because these are straitened times. However, I appreciate the intervention and, indeed, the good faith in which it was made. There is a lot we have to change in this country, and I am sure we will do so in the years ahead.
The choice before us today is simple. The technical breach this year and the change in the years to come are the right choices, and we are making them for the right reasons. Many in work today cannot make it pay, and that is why we will make sure that people who are in work get the training they need. That is not just about the training they need to get a better job; it is about the support they need to ensure that their healthcare, and indeed their health, is good enough to continue working.
More broadly, we must ensure that every single person in the country can have a decent job that pays enough, and we are taking action in three areas to do that. First and foremost, there is our action on the NHS and through the Darzi review, because we should not live a country where almost 3 million people are too sick to work. We have offered thousands more appointments to get waiting lists down, because people who cannot see a GP today are far more likely to end up out of work tomorrow.
Secondly, we are helping people get into work. There are the 16 trailblazer programmes to join up work skills and health support, and the £115 million to help those with complex needs get back into work.
Thirdly, we are creating good jobs for young people with the youth guarantee, so that every single young person in this country can access the training they need and the apprenticeships they require.
The fundamental reforms the Chancellor set out in her speech today are also about supporting people into work so they can contribute to our economy, and do what they need to do to get a decent life for themselves and their family. Having a decent job and earning enough to live is about more than the pound in a person’s pocket; it is about a sense of contentment and something to talk about with their mates. It gives meaning to each day.
Robin Swann (South Antrim) (UUP)
The hon. Member has talked eloquently about the challenges of getting into the workplace. Does he realise that a large number of people across our society who are economically inactive have the desire to look for work and have welfare payments to support them getting into work, but sometimes through no fault of their own the system works against them?
Dr Sandher
I thank the hon. Member for that point. Indeed, that is the entire reason why we are changing the system today. Yes, it is about practical changes and providing more support, but it is also about a change of tone, a change of attitude and treating people like human beings. That is exactly what Labour Members believe.
These reforms and support, at their core, are about ensuring that every single person has a decent job, which gives them meaning and something to talk about with their mates. A previous Labour Government did that so well, and that is how we got poverty down. A previous Member for Sedgefield, who is a shining light for us on the Labour Benches, promised to end child poverty in a generation, and a previous Member for Dunfermline, who is a hero to us, put that into practice and reduced child poverty by almost a million. It is that Labour tradition to which I speak. That Labour tradition is why I am proud to stand here today, and that is why I am proud to vote in favour of these motions.
Madam Deputy Speaker (Judith Cummins)
I call the Liberal Democrat spokesperson.
Daisy Cooper (St Albans) (LD)
Years of mismanagement by the previous Conservative Government damaged our economy, hit people’s living standards and left our public services on their knees—especially our NHS and care—so it is no wonder that we have seen the welfare bill go up. The Conservatives left GP and hospital waiting times soaring. They also saw staff vacancies spiralling, and local public health funding was slashed. The cancer treatment target has been missed every year since 2015. They promised 6,000 GPs and left government with fewer of them. Of course, the 40 new hospitals fell apart—literally in some cases—leading to inefficiencies in our health service as staff and patients battle cramped and crumbling buildings. I remember a former Conservative Prime Minister standing on the steps of No. 10 and promising to fix social care once and for all, but, as we know, millions of people around the UK are left to pick up the pieces of a broken social care system.
That disgraceful legacy and the blatant mismanagement of our economy has left millions of people unable to work due to long-term illness and having to rely on support instead, impacting growth and productivity. Under the last Conservative Government, the number of people not looking for work, especially due to ill health, reached record levels, and Government spending on welfare went up drastically as a result. Their mismanagement has left so many people unable to seek work and reliant instead on Government support.
We Liberal Democrats have always understood that a healthy economy requires healthy people. As I have said a number of times in the House, health and wealth are two sides of the same coin. The best way to bring down welfare spending is for the Government to act with urgency and ambition to end the crisis in our NHS and care, empowering people to join the workforce and reducing the need for welfare support in the first place.
The Conservatives’ mismanagement of the economy has had a direct impact on decisions being made today. At informal assessments in 2020, 2021 and 2023, the OBR clearly said that the welfare cap was on track to be breached this year, but the new Labour Government must do far more to fix our health and care services so that fewer people require Government support in the first place. I have to say that the Conservative party has lost every right to criticise the current situation when its fingerprints of failure are all over it.
We have previously discussed the impact of the Government’s national insurance contributions rise and other changes. The Government have said repeatedly that these changes are inevitable as a way to fund the NHS, but they know, and we know, that some of this is really not needed. The national insurance contributions rise will impact our GPs, dentists, public health providers, primary care providers, pharmacists, social care providers and hospices—the list goes on. Those people and businesses are propping up our NHS.
I use this opportunity once again to encourage the Government to reverse the national insurance contributions rise and look to other means of raising those funds. Fundamentally, the best way to bring down welfare spending is for the Government to act with urgency and ambition to end the crisis in our NHS and social care. We Liberal Democrats made that our No. 1 priority during the general election, and with 72 MPs, it remains our No. 1 priority in this House.
David Pinto-Duschinsky (Hendon) (Lab)
I thank my hon. Friend the Minister for her opening speech, on a timely subject as the Government have just laid out their bold and striking ambitions to grow our economy and take the tough decisions needed, after years of dither and delay by the Conservative party. Today more than on other days, we have seen laid out in stark relief the choice before us of either doubling down on the failures—more of the same—or picking a new route. That is what this debate is about.
I want to talk about the root causes of some of the growth issues that we face. But first I want to focus on a number: £8.6 billion. That is how much the welfare cap was breached by, because of the Conservatives’ failures time and again. That is not a small amount. To put it in some context, it is as much as the entire programme budget of the Department for Work and Pensions. To give another comparison, it is half the entire police grant for all policing in England and Wales.
It is a phenomenal failure on the part of the Conservatives that we face this issue today, and it is not their only failure in the DWP. My hon. Friend the Minister laid out fantastically well the litany of failures. Let me pick up one in particular: the Conservatives breached the welfare cap, but we have not had much time to talk about their failures on fraud and error. Because of failures on their watch, the numbers more than doubled, and are now stuck at an elevated post-covid rate. They left us with an entrenched fraud and error problem.
We could go on. The litany of catastrophic mismanagement is almost endless. The hon. Member for Faversham and Mid Kent (Helen Whately) said that she could make savings. The Conservatives had 14 years —where were they? Instead, we got lots of “dog ate my homework” excuses. They should be hanging their heads in shame. As hon. Friends have pointed out, it is telling that, behind the shadow Minister, the Opposition Benches are empty. They know how badly they let the country down.
It is not just about the £8.6 billion; the Conservatives’ failures shine a spotlight on two deeper failures that are the root causes of today’s motions: a failure to grow the economy, and a failure to get people into work and to help those with health conditions move on in the labour market. Let me turn to growth first. We have heard a lot today about the economy, but it is worth pausing to remember how bad things were under the Conservatives. From 2019, on their watch, the economy grew slower than any other G7 economy, bar one. In the last decade of their rule, GDP rose in real terms by only 6%. If it had grown at the same rate as comparable countries, on average we would each be more than £8,000 better off.
I welcome the fact that after years of this country being held back by previous incompetent Governments, this Government are finally taking the decisions to realise our country’s potential. That is what we heard today: £78 billion being released through supporting the Ox-Cam arc; £160 billion through the Chancellor’s excellent announcements over the weekend to allow investment of pension surpluses; £7.9 billion of infrastructure to give us nine new reservoirs. The Conservatives had 14 years in government—do you know how many reservoirs they built, Madam Deputy Speaker? Zero. That is the difference.
I am proud of our Chancellor, who has made the tough decisions that have given us the foundation of stability and allowed us to make these announcements today. It is because of the stability created by the Budget and her other decisions that we now have inflation of 2.5%, that interest rates have been cut twice, because the Bank has confidence in the Government’s fiscal management, that investment is at a 19-year high, and that wages are growing at their fastest rate in three years—I could go on. It is only because of the tough decisions that we have made that we are in that position.
Beyond the Conservatives’ failure on growth, the breaches of the welfare cap also shine a spotlight on their terrible failure to get people into work and to combat poverty. The figures are extraordinarily stark; I thank my hon. Friend the Member for Loughborough (Dr Sandher) for sharing some of them. Today, one in five adults is economically inactive because of the Conservatives’ legacy. We are the only G7 country where employment rates remain below the pre-covid level. I note that the hon. Member for Faversham and Mid Kent, when asked, acknowledged the fact, but she could not tell us why that is. Well, I have a clue for her. It is because of the incompetence and the failures of her party.
What is more, we know that these problems are driven overwhelmingly by ill health, with 85% of those who have dropped out of the labour market having done so due to ill health. This disproportionately hits those over 50, but, scandalously, also affects the youngest in our society. The number of NEETs—those not in employment, education or training—went up by a third in the last three years of the previous Government.
It goes deeper than that. Beneath the shocking rise in 16 to 24-year-olds who are out of work and inactive, a stunning 79% are also low skilled, with skill levels lower than GCSEs. Because of Conservative failures, so many of our young people have been caught in a downward spiral of low skills, poor opportunity, low self-esteem and poor mental health.
This failure by the Conservatives is a moral disgrace, but it is also a massive economic problem. If not addressed, the sickness bill they bequeathed the country could exceed £100 billion by the end of this Parliament. I would like to say that this is the first time they Conservatives have done something like this, but that would not be true. Those of us old enough to remember will know that in 1997, the outgoing Conservative Government bequeathed more than 5.1 million inactive people to the incoming Labour Government. It is just what Conservative Governments do.
My hon. Friend the Minister also mentioned the fact that many of the technical changes the previous Government made to universal credit and other benefits actually dragged people further away from the labour market, putting up barriers and making it harder to get work. This is an absolute scandal, especially because we know that DWP staff—the people who work on this—want to make a difference. I worked for the new deal taskforce 26 years ago, working on the previous Labour Government’s strong efforts to get people back into work. I know that DWP staff want to make a difference, but, because of the previous Government’s terrible policy design and incompetence, they are often prevented from doing so.
This is a massive human tragedy. We know from survey work that at least half of the people who are inactive—4.5 million people—say that they want to work if they can have the right support. We also know that work is the best tonic for many of the issues faced by those who are inactive. We know from a University of Cambridge study, for instance, that just eight hours a week of paid work can reduce mental health issues in a large portion of the population by up to 30%.
What is more, the Conservative party did far too little to tackle the underlying dynamics of low work and no work faced by so many people in poverty. We know that the average family in poverty goes through up to seven separate spells in poverty. All too often, it is like “Hotel California”: they can check out, but they can never leave. Rather than trying to deal with that problem, all we got from the Conservative party were sticking plasters and political slogans.
I am incredibly proud to sit on the Labour Benches and support a Government who will take a different approach and are absolutely determined to make an actual difference and tackle the root causes. We heard from the Minister the action that will be taken to give our young people a choice, through the youth guarantee, between earning and learning—a real, proper stable start in life. We heard about the changes we will make to the DWP to actually get it working. We heard about the changes that will actually tackle the barriers to work—real, practical steps rather than the slogans of the Conservative party. We heard about the work on fraud and error, so that our public money is spent on helping people to get back to work, rather than leaking out of the system. We heard about the efforts that will be made to get people not just into jobs, but into good jobs.
It is worth pausing on that point for a second. The labour market has changed a lot in the past 30 years. It is no longer a given that all jobs provide a ladder to good, fulfilling, family-supporting work. For too long, the Conservative party, when it was in government, ignored that. It is such good news that through the good work laid out by the Minister on the industrial strategy, and through bringing the careers service together with Jobcentre Plus so that we have a system that focuses not just on getting people into work but on helping them get on, we finally have a Government who are taking the problem seriously.
Our ambition is no less than to give people proper power over their own lives. As my hon. Friend the Member for Loughborough pointed out, the Conservative Government so often just sought to demonise and sloganise. We are trying to put power back into people’s hands and give them the real power over their own lives that only fulfilling and decent work can offer.
As I said, I started work in the new deal taskforce in the DWP’s predecessor Department. I was lucky enough, later on, to work on similar issues in the Prime Minister’s strategy unit. What characterised the Administration then was a real passion to change lives and a real passion to make things better. That has been so lacking for the past 14 years, and it is so refreshing to hear that it is back. I am absolutely proud to stand here and support the motion.
Jeremy Corbyn (Islington North) (Ind)
I am pleased we are having this debate, although I am sorry that it is relatively short. My concern about the proposal before us is that it recognises an overspend on the welfare cap—I support the idea that we should be allowed to overshoot the cap—but hardwires decisions on welfare spending for the next five years. It therefore restricts any future changes to any element of welfare spending.
The cap does not include pensions and work-related benefits. What it does include, in particular, is disability living allowance, housing benefit and personal independence payments. Those benefits relate to the areas in which, it seems to me, there are often the greatest levels of poverty and people face the greatest problems in simply trying to survive. The Government have already removed the winter fuel allowance, which is included in the estimates for the next five years, and are maintaining the two-child benefit cap, which restricts the amount of money paid on benefits to families. I understand all the points the hon. Member for Loughborough (Dr Sandher) made and the passion with which he made them, but the reality of not removing this ridiculous cap, put in place by the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) when he was Secretary of State for Work and Pensions, is that we have a lot of children living in desperate poverty.
Any Member who goes to a food bank—we all have food banks in our constituencies—and talks to the parents picking up food will find a wholly disproportionate number of, usually, mothers of children in very large families who cannot make ends meet because their benefits apply only to the first two children. We need to get rid of the two-child benefit cap, but what we are being invited to support today will ensure that we keep it, while maintaining the removal of the winter fuel payment and boxing us in when it comes to what we can do to improve both the take-up and the availability of disability benefits as a whole. I must therefore caution the Minister and question her optimism. I recognise the need to overshoot the cap today because I understand why it has come about, but we need to look at the levels of poverty in our society.
I also understand all the points that have been made about the role of the Department for Work and Pensions in relation to people seeking work. In 1986, I was a member of the Bill Committee that took a sledgehammer to the then Department of Health and Social Security’s methods of supporting people who were out of work and helping them into work. We have suffered ever since as a result, and I am pleased that the DWP is reforming its ways of doing things and will help people into work by providing more advice and support. The reality is, however, that many people in this country suffer because of the mental health crisis that we are in, have suffered industrial injuries or are living in great poverty, and they need support. Surely we should be measuring the levels of poverty, the increased levels of child poverty and the educational underachievement of children living in poverty, rather than saying that the most important thing to do is limit the level of welfare spending.
There is a reason for that. I meet many people, in my constituency and in other places, who are receiving DWP benefits. Some are in work, some are unemployed and some have sickness problems and cannot work. They are not shirkers. They are not skivers. They are people who need help within our society. For too long we have had a culture of blaming anyone who seeks help within the law through our benefits system. I hope that we will hear a reply from the Government in which they accept the need for a re-examination of the levels of poverty in society and demonstrate a preparedness to change the welfare cap in the future to accommodate any increased needs that result from it. The thinking behind the cap was not about eliminating poverty from our society; it was all about limiting the level of welfare payments and the benefit that people gain from them.
In an intervention in the earlier debate, I pointed out to the Chief Secretary to the Treasury that huge infrastructure projects had gone massively over budget and had been financed. I support the Elizabeth line—it is a wonderful thing—but it was way over budget, like plenty of other projects. There seems to be one approach to investment in major infrastructure projects that run way over budget, and another when it comes to a welfare budget: anything that might go over will be prevented from going over by the Treasury. We cannot predict who will be injured next year, what illnesses will come or what needs will arise. Surely the principle of the welfare state must be that we help and support people when they need that help and support—and yes, help them to be available for work and get back into work, and say to employers, “You need more flexible working arrangements so that people can work part time.” We must look at the levels of unemployment among people with disabilities who simply cannot get work because the employment laws are not strong enough to require employers to provide work for people who, despite having disabilities, are well able to work.
I think we should be more cautious, rather than adopting a gung-ho approach and saying, “We are cracking down on welfare.” I want to crack down on poverty, I want to crack down on unemployment, and I want to crack down on those who prevent people from achieving the best that they can in their lives and in our society.
John McDonnell (Hayes and Harlington) (Ind)
I hope that the Government will consider completely scrapping this debate in future years, because it has become farcical. The right hon. Member for Islington North (Jeremy Corbyn) will remember that the welfare cap was introduced because of the Dutch auction that was going on in this Chamber about who could be more brutal on the poor. The welfare cap was part of that period of debate, in which anyone claiming benefits was allegedly a welfare benefit scrounger who was not willing to work for a living. That was the atmosphere that was engendered in this Chamber. At that stage, to be frank, it was deeply worrying. In many ways, humanity almost left the Chamber.
The farcical nature of the debate is that, having introduced the cap, Minister after Minister would have to come back each year and report that the cap had been breached, because more expenditure had been forced on the Government as a result of the increasing levels of poverty. I suppose that it at least gives Members the opportunity to have some discretion over issues of poverty.
May I suggest to those on the Labour Front Bench that they should remove the cap, because it has become a farcical exercise? If we are to have a debate on poverty, there should be an annual report by the Labour Government on the poverty strategy that they are now developing. I believe that the commission established by the Labour party is now working, and it would be so much better if we had a report and did not have the farcical pantomime that we have today.
Alison McGovern
I thank the right hon. Gentleman for allowing me to intervene briefly to say that the child poverty taskforce’s work is ongoing, and that it regularly engages with parliamentarians and others to update them. I know that many parliamentarians have been pleased to involve themselves in that work, given the importance of tackling child poverty.
John McDonnell
That is a really helpful response, but it does not respond to the fact that if we are to have a focus on poverty, rather than a debate on the welfare cap, which is breached on virtually an annual basis, it might be better to have a debate on the Government’s strategy to tackle poverty overall. Then we could have a proper discussion, and even a debate with a motion that could be amended where we want to see improvements. That is what I want to get on to now.
I hope that people have seen today’s Joseph Rowntree Foundation report on overall poverty, which reflects what most of us know and experience in our constituencies. It is shatteringly depressing, to be frank, because it does not show any improvement over the last few decades. The hon. Member for Faversham and Mid Kent (Helen Whately) mentioned that the Tory Government introduced this measure when they came into power. It was during the period of austerity, and it is worth reflecting on what that meant.
The London School of Economics’ report and other independent reports say that 140,000 people lost their lives as a result of austerity; others have estimated that the figure could be up to 300,000. In part, that was because of the grinding poverty that was imposed on people, as reflected in all our constituencies—we saw it. I remember a time when there were no food banks in any of our constituencies, because they were not necessary, but now they are, as a result of 14 years of austerity.
If we are to have a proper debate on poverty, we need to highlight as individual constituency MPs where we think the Government should be going, so I will briefly do so on the basis of what we have seen in the Joseph Rowntree Foundation report. I always cite the overall figures: we have 15 million people living in poverty, including 5 million children. I think the Joseph Rowntree Foundation report says that there are 4 million people living in deep poverty, and nearly 4 million in destitution.
The statistic that always shocks me is that 1 million children are in destitution. I never thought we would use the word “destitution” again in our society; I always thought we would improve year by year and lift people out of poverty. I never thought that children would live in poverty in the way that some of my generation did.
There are groups that clearly need to be on the agenda, and my hon. Friend the Minister has mentioned some of them, thank goodness. I chair a group of unpaid carers, of whom there are 5 million in this country. If an unpaid carer is looking after a disabled member of their family, it is almost inevitable that they will be living in poverty, unless we face up to the central demand of unpaid carers, which is to address their income. It is not just about how much they can earn, which the Government have looked at recently; it is about the carer’s allowance being at such a level that people cannot survive on it.
Looking at the report with regard to families with children living in poverty, I cannot at the moment see a faster way of getting children out of poverty than scrapping the two-child limit. I am hoping that will be on the agenda as a priority when the Child Poverty Action Group reports to Parliament.
The Joseph Rowntree Foundation has identified that the poverty rate among disabled people is now 30%. The Government are about to consult again on the work capability assessment reforms because they lost in court to Ellen Clifford two weeks ago. I am pleased that the Government lost in court, to be frank. The basis of that decision was the lack of consultation on the previous Government’s reforms. I do not understand why our Government continued the appeal within the court, but they did. They have now lost and have been forced to bring forward their consultations on the reform of the work capability assessment.
I am hoping that those reforms will be done in co-production with disabled people—on the basis of the disability groups’ principle, “nothing about us without us”. My fear is that an overhanging £3 billion-worth of savings is required from the DWP on this issue. If that results in cuts to individual benefits, I think there will be uproar within our communities and across this House. What is also interesting in the Joseph Rowntree Foundation report is that the poverty rate among people who are suffering long-term health conditions is 50%. The work that the Department of Health will now do in walk-in advice surgeries, for example, and the focus on mental health, will be key.
The household benefit cap overall is iniquitous. It forces families into poverty, particularly in places such as London, because of the high rents that are hitting people. According to the Joseph Rowntree report, the poverty rate among renters in social housing is 44% and in the private rented sector it is 35%. The Government’s refusal to accept the amendment to introduce rent controls, which was tabled by a number of Labour Members, was extremely disappointing. The Government could at least devolve that power to the individual Mayors so that they can represent their communities and introduce rent controls where necessary. I believe that Sadiq Khan has expressed his support for that power to be devolved. With rent controls, we could tackle the housing crisis that we face within our constituencies.
When we talk about poverty, we need to come forward with an agenda that will tackle it at pace, and I do not think that, in our discussions in the future, a welfare benefits cap in any form will assist in bringing forward the reforms that our constituents so desperately need.
Kirsty Blackman (Aberdeen North) (SNP)
I agree with a number of the comments that have been made across the House today. I found myself nodding along with the right hon. Member for Hayes and Harlington (John McDonnell) there, and particularly with the right hon. Member for Islington North (Jeremy Corbyn). I just want to highlight a couple of things before I get into the meat of my speech.
We know that 38% of universal credit claimants are in work, so I am glad that the Government are talking about how to make work pay and how to get more people into work. I am glad that the Government are investing in strategies that will get young people into work, and that will get people who have been long-term unemployed, or even short-term unemployed, back into work. I am glad that they are reforming jobcentres so that they will be assisting people in a way that they maybe have not been doing in recent times. I am pleased about all of that, but we need to recognise that 38% of those on universal credit are already working. It is just that their work is not paying enough or is not offering flexible enough hours if they have childcare or other caring commitments, and therefore they need that top-up.
The welfare cap covers not only benefits and other elements of social security provided to people who are out of work, but child benefit and a huge number of different things. It is not entirely focused on people who are out of work, although I appreciate the Government’s action on that.
The right hon. Member for Islington North talked about how the welfare cap is a bit backwards. Everyone would be jumping up and down, saying, “That’s backwards,” if we said, “We are going to put a cap on the number of people who can receive chemotherapy, and on the amount spent on it, because we are going to reduce the rates of smoking, obesity and other risk factors. We are going to have a healthier population, so it is okay for us to cap chemotherapy. We are going to put all this stuff in place to ensure that we reduce the spend on chemotherapy.” We should first spend the money and solve the problem, and then the spend will reduce.
That is the whole point about the welfare cap—it is backwards. By having a welfare cap, the Government are saying that they will reduce the spend on welfare by doing all the things that they are not yet doing. They have not solved the problem. Once they have solved the problem, and once the welfare system has improved in the way they are trying to improve it, the numbers and the spend will reduce.
I am, however, not entirely convinced that everything the Government are putting in place will reduce the spend, because they are battling against a number of factors. Even if they manage to get jobs to pay better, even if they further increase the minimum wage so it is closer to a living wage, even if they ensure there are more opportunities, and even if the Chancellor’s opportunities for growth actually exist and create many more jobs, there will still be a significant number of people whom the system is not set up to support.
I have dealt with people in my constituency surgeries who are being supported by third sector organisations, which are being hammered by the national insurance changes and will not be able to provide the support they have been providing. I have dealt with individuals who are six months away from having the consistency in their lives to be able to get up at 8 o’clock every morning.
My concern is that all Governments—I am not specifically blaming the Labour Government—look for quick wins. They look for the low-hanging fruit. “Where can we try to improve things so that people who are pretty close to work anyway—who are not that far out, who have pretty stable lives and who do not have an incredibly chaotic lifestyle—can access work?”
We will be letting down those people who have chaotic lifestyles and who are so far away from being able to get into paying work—particularly full-time paying work—if we reduce the amount of disability benefits they can claim or reduce the amount of support they can receive, when they are a year away from having the stability to be able to access work.
The social security safety net is not a safety net unless it provides support to people who absolutely cannot work right now, and who will need 12, 15 or 18 months, or two years, of intensive support to get to a position where they can achieve part-time work. I do not think that support is in place, and I do not think any Government have provided enough support to ensure that people are not left on the scrapheap.
Robin Swann
We talk about labelling people, and we used to have that awful acronym “NEETs”—young people who are not in education, employment or training—and thank goodness we have moved away from that.
The hon. Lady is talking about programmes, and the programmes we had in Northern Ireland under the European social fund and the UK shared prosperity fund are now being withdrawn from those communities. Those organisations were crucial in helping people who were far from employment get into gainful work. It takes time to build up young people’s confidence in society so that they see the value of work. I agree with the hon. Lady that the problem requires a long-term plan, but the Government are looking for short-term plans.
Kirsty Blackman
It is absolutely about long-term planning. That is why we are making the case that we cannot have a welfare cap and that things are being done backwards. We should put in place all the supports that the Government are promising, and more, to get people to the position where they can get into work.
The welfare cap is an unfortunate hurdle, particularly as it bakes in some of the cuts that have been made, such as the winter fuel payment. It seems that there will not be an increase in the level of paternity pay; it would be nice to see an increase in paternity pay levels and in the number of men taking up paternity leave. On young people not in education, employment or training—a phrase that was used earlier, when somebody said NEET—it would be great if young people had more chances and choices.
Finally, on issues relating to specific geographical locations—the Minister mentioned Blackpool—hon. Members would not expect me, as the hon. Member for Aberdeen North, to avoid talking about the importance for Aberdeen of having a just transition. I mentioned doing things backwards; the Minister needs to ensure we build up renewable energy jobs before we knock down the jobs in fossil fuels. I am concerned that the Government are failing to do that in the right order, and that we will have gaps where people will become unemployed because of the UK Government’s actions.
Dan Tomlinson (Chipping Barnet) (Lab)
I thank the Secretary of State for all the work on these important issues. I am aware that we are close to the end of the debate, so I will raise just one issue.
A small business owner in my constituency of Chipping Barnet in north London told me about the way the jobcentre failed to support people into work when the previous Government were in charge. It is encouraging to see what is coming forward in the White Paper, but the small business owner, whose name is Simon, told me how he had advertised some jobs in his company. He and his team spent seven hours going through lots of issues with 80 applicants, all of whom were referred by the jobcentre but none of whom had any desire to take up the job. They were applying because they were being forced to do so by the work coaches in the jobcentres in those 10-minute appointments.
I am happy that the Government have set out proposals in the White Paper—there will be more to come soon in the Green Paper—to help people who want to work to find jobs that are right for them, and to help employers to get good matches to improve productivity and growth in this country.
Alison McGovern
I thank every Member who contributed to the debate. My hon. Friends the Member for Loughborough (Dr Sandher), for Hendon (David Pinto-Duschinsky) and for Chipping Barnet (Dan Tomlinson), the hon. Members for St Albans (Daisy Cooper) and for Aberdeen North (Kirsty Blackman), and the right hon. Member for Hayes and Harlington (John McDonnell) all made important contributions.
All of us have pointed out that our social security system should be a safety net and a springboard, and should help people be and do all the things they might wish. However, when we look at what we have inherited, it is a mess and it does not serve the purpose it is supposed to serve. That presents a crisis for this country, because each and every one of us knows that one day it could be us that gets sick and needs help, and that one day, hopefully, we will receive a state pension. We need the social security system to do its job. We are not in a good place, but we will move on.
We are all impatient to get the change we need. We have already set out plans that are being discussed. We need big, fundamental reform, because the scale of the challenge is huge. There is an £8.6 billion breach this year; the OBR saw the breach coming for over 18 months, but the previous Government did absolutely nothing to prevent it. That is not a number that you get because of one or two—
One and a half hours having elapsed since the commencement of proceedings on the motion, the Deputy Speaker put the Question (Order, this day).
Question agreed to.
Resolved,
That, pursuant to the Charter for Budget Responsibility: Autumn 2022 update, which was approved by this House on 6 February 2023 under section 1 of the Budget Responsibility and National Audit Act 2011, this House agrees that the forecast breach of the welfare cap in 2024–25 due to higher forecast expenditure on Universal Credit and disability benefits is justified and that no further debate will be required in relation to this specific breach.
Welfare Cap
Resolved,
That the level of the welfare cap, as specified in the Autumn Budget 2024, which was laid before this House on 30 October 2024, be approved.—(Alison McGovern.)