Social Security Benefits Up-rating Order 2025

Considered in Grand Committee

15:45:00

Moved by

That the Grand Committee do consider the Social Security Benefits Up-rating Order 2025.

In speaking to this order, I will also speak to the draft Guaranteed Minimum Pensions Increase Order 2025. In my view, the provisions in both instruments are compatible with the European Convention on Human Rights. Let us begin with the draft Social Security Benefits Up-rating Order. This instrument will increase relevant state pension rates by 4.1%, in line with the growth in average earnings in the year to May to July 2024. It will increase most other benefit rates by 1.7%, in line with the rise in the consumer prices index in the year to September 2024. As such, the up-rating order commits the Government to increased expenditure of £6.9 billion in 2025-26. In so doing, it maintains the triple lock, benefiting pensioners in receipt of both the basic and the new state pensions; raises the level of the pension credit safety net beyond the increase in prices; increases the rates of benefits for those of working age; and increases the rates of benefits to help with additional costs arising from a disability or health condition, as well as carers’ benefits. I turn now in more detail to the issue of state pensions. The Government’s commitment to the triple lock means that the basic and full rate of the new state pension will be uprated by the highest of the growth in earnings or prices, or 2.5%. This will therefore be 4.1% for 2025-26, in line with the conventional average earnings growth measure. As such, from April 2025 the basic state pension will increase from £169.50 to £176.45 a week, and the full rate of the new state pension will increase from £221.20 to £230.25 a week. The basic and new state pensions will increase by 4.1% in April of this year, benefiting 12 million pensioners by up to £470 next year. That is up to £275 more than if pensions had been uprated simply by inflation. Other components of state pension awards, such as those previously built under earnings-related state pension schemes, including the additional state pension, will increase by 1.7%, in line with the statutory minimum requirement of prices. The safety net provided by the pension credit standard minimum guarantee will increase by 4.1%. For single pensioners it will increase from £218.15 to £227.10 a week, and for couples it will increase from £332.95 to £346.60 a week. The Government are committed to supporting pensioners on the lowest incomes and want everyone entitled to this support to receive it. That is why we launched the national pension credit campaign. I turn now to the support given to those in the labour market, such as universal credit and the legacy means-tested benefits it replaces. The up-rating order increases the personal and standard allowances of working-age benefits, including universal credit, by 1.7%, in line with the increase in prices in the year to September 2024. Around 5.7 million families are forecast to benefit from the uprating of universal credit, with an average annual gain for a family estimated to be £150. Additionally, this order increases statutory payments by 1.7%, including statutory maternity pay, statutory paternity pay, statutory shared parental pay and statutory sick pay. The up-rating order will also increase rates by 1.7% for those with additional disability needs and for those who provide unpaid care for them. This commits the department to increased expenditure of £0.9 billion in 2025-26. This means that benefits such as disability living allowance, attendance allowance and personal independence payment, intended for those who have additional costs as a result of disability or health conditions, will rise in line with the rise in CPI in the year to September 2024. This order will also increase carer’s allowance by 1.7% from April 2025, from £81.90 to £83.30 per week. Recognising the vital role played by unpaid carers, the Government have also announced that from April, the weekly carer’s allowance earnings limit will be tied to the level of 16 hours’ work at the national living wage. I turn now to the draft Guaranteed Minimum Pensions Increase Order 2025—the GMP order—which is a routine, technical matter we attend to each year. I shall therefore be brief. The GMP order was laid before the House on 16 January 2025. It sets out the annual percentage increase that must be applied to the GMP part of an individual’s contracted-out occupational pension earned between 1988 and 1997. Occupational pension schemes that provide GMPs are required to increase GMPs earned during that period, and which are in payment, by 1.7% for the tax year 2025-26. The 1.7% figure is taken from the CPI inflation rate for the year to September 2024. That approach is broadly consistent with other uprating approaches, and it balances the need to provide members with a measure of inflation protection while giving schemes greater certainty about their ongoing liabilities. In summary, the draft Social Security Benefits Up-rating Order implements the Government’s commitment to the triple lock; it provides for a real-terms increase in the value of the safety net in pension credit; and it increases the rates of benefits for those in the labour market, as well as those with additional disability needs, and those providing unpaid care to people with those needs. The draft GMP order requires formerly contracted-out occupational pension schemes to pay an increase of 1.7% on GMPs in payment earned between April 1988 and April 1997. This provides people with a measure of protection against inflation, paid for by their scheme. I beg to move.

My Lords, I have lost count of the number of these debates I have participated in while in opposition on the Benches opposite. This is the first debate I have participated in while knowing that there is a commitment to tackle child poverty and a serious government taskforce drawing up a strategy to do so. So I can applaud that, and the welcome improvements in benefits announced in the Budget. But I am afraid I have to concur with the Joseph Rowntree Foundation, which in its recent poverty review described the improvements as “timid” and falling “a long way short of what is required to deliver the scale of changes needed.” So this speech is less supportive than I would have liked. As already noted, the uprating of working-age and children’s benefits by 1.7% follows the convention of increasing them in line with inflation the previous September. But as JRF points out: “According to OBR and Bank of England forecasts, this may well be the low point of inflation in the near term, with inflation in 2025/26 likely to be higher, meaning benefits will lose a little value next year”. Indeed, inflation is already at 3%, and just today we heard of a higher than expected energy price cap increase. Losing a little value may not sound very significant, but when benefits are so low to begin with, as I will come back to, it can make a real difference for families struggling to get by. My noble friend the Minister previously raised the long reference period for the uprating, as did the Work and Pensions Committee in last year’s report on benefit levels. Disappointingly, the DWP told the committee that even in the longer term, when the migration to universal credit is completed, it has no plans to shorten the reference period. Can my noble friend say whether this might be looked at again under the new Administration? The Work and Pensions Committee also recommended that limits on benefit entitlements such as the benefits cap be uprated annually. Again, it is disappointing that no such increase was announced for this year. As a recent report by the IPPR, supported by Save the Children, notes, the effect of the near constant freeze is to make the policy “considerably more punitive than at the point of introduction”. The stock response from the DWP—that the legislation requires the level of the cap to be reviewed every five years only, and that therefore, following the 2022 review, another review is not required until November 2027 —simply is not good enough. It may not be required but it is permitted, and so long as the cap continues, it should be reviewed annually so that, at the very least, those hit by it, mostly families with children, can benefit in full from the annual uprating. Together with the two-child limit—also ignored in the Budget—the cap is a key driver of child poverty, as well as contributing to homelessness and disproportionately affecting survivors of domestic abuse. Research has shown that it is not achieving its aims. I know that my noble friend will say that we have to await the outcome of the child poverty review for any decision on the cap and the two-child limit, but every day they continue spells misery for many thousands of parents and children. The other serious omission in this year’s uprating is the local housing allowance. As the IPPR report points out, this is tantamount to a benefit freeze for housing support and breaks the principle that support should be tied to changing rents in a local area. The result is that, for those with housing costs at or above the current LHA, the real value of their uprated UC will in effect be cut. The impact of all this has to be understood in the context of benefit levels that, in the words of JRF, fall a “long way short of what is needed to enable recipients to escape poverty”, and that mean that many continue to “struggle needlessly”. Paid work may be the best route out of poverty, but it is not a route open to all. For too many, it proves a cul-de-sac, as they swap out-of-work poverty for in-work poverty. Inquiries by the All-Party Parliamentary Group on Poverty, of which I am co-chair, and the Work and Pensions Committee received “a wealth of evidence that benefit levels are not meeting need”. Benefit levels were never generous, but the effect of years of freezes, cuts and restrictions imposed by the Conservatives have meant that, in the words of the Financial Fairness Trust, “we do not have a safety net worth its name”. As a result, claimants are denied access to the most fundamental material resources needed to function day to day and to have healthy lives. The Work and Pensions Committee’s recommendations concerning the establishment of a benchmark for assessing benefits adequacy and the review of the extent to which current benefit levels are meeting this benchmark were rejected by the previous Administration. I urge my noble friend and her colleagues to look at them again. I ask her whether any consideration has been given to Trussell’s and JRF’s proposals for a protected minimum floor in UC, as a first step towards an essentials guarantee. For anyone who believes that poverty is relative, this is a pretty minimalist demand. The Work and Pensions Committee also recommended that the local authority household support fund should be made permanent, so that local authorities can better plan the support they provide. This is not the place to go into detail but, if my noble friend has not already done so, I urge her to read the recent proposal from Trussell for a permanent and effective system of discretionary cash-first local crisis support, with broad statutory duties and ring-fenced funding that would incorporate both the household support fund and welfare assistance schemes where they still exist. It sees such a scheme as a crucial element in meeting our manifesto pledge to try to end mass dependence on emergency food parcels, which is a moral scar on society. At a recent meeting of the APPG on Ending the Need for Food Banks, the Minister for Employment assured us that the reform of local crisis support is definitely under review. It would be good if my noble friend could confirm this on the record in Hansard. As welcome as the extension of the fund for another year is—and it is welcome—those working on the ground need to be given some hope for the future. We heard reports at the meeting that food bank workers on the front line are scared and are burning out. Scared, too, are many in receipt of disability benefits, in the face of mounting speculation about cuts to their benefits. It is worth remembering that disabled people are at disproportionate risk of poverty, in part because of the additional costs associated with disability. A recent report by Pro Bono Economics for Z2K warned that cutting the benefits that go some way toward meeting these costs could have a seriously damaging impact on the health and well-being of disabled people. Also looking ahead, the Minister for Social Security and Disability advised, in the Commons debate on this order, that the Government would “set out shortly” how they plan to fulfil the manifesto commitment to a review of UC. Is my noble friend able to say any more at this stage about, for example, whether it will follow the example of the child poverty review in taking evidence from stakeholders, including those with lived experience of UC?

16:00:00

In conclusion, there is a lot of talk these days about the so-called ballooning welfare bill, ignoring the £50 billion a year which, according to CPAG, has been cut from the social security budget over the past decade or so. As charity after charity has emphasised, in the words of JRF, any credible child poverty strategy must include policies that rebuild the tattered social security system. This will of course take money, so it is crucial that the Treasury is on board. I know that my noble friend understands all this and is limited in what she can say to us, but I hope that she will feed back to the Treasury the concerns that have been raised.

I finish by quoting someone with lived experience of living on benefits who is part of the Changing Realities project. Gemma is disabled and a single mother of three children, as well as a carer for her autistic nephew. She writes of sleeping in the same bed as her children to keep warm during the cold spell and of the black mould that is starting to appear: “For families like mine, living on a low income, we have run out of corners to cut. I cannot wait for warmer days. I’m at the bottom of a dark hole and there is no way of getting out. I sometimes find it difficult to imagine how my situation can get better, but it really has to because life should not be this hard”. My Government have a responsibility to give parents like Gemma some hope that their situation will get better and that their lives will not continue to be that hard. As Gemma herself advises, that has to mean bold and real change by investing in social security.

My Lords, it is very good to be here today and I am glad to be able to contribute on this important subject. As we consider a proposed uprating of 1.7%, as compared with 6.8% last year and 10.1% the year before, I am mindful of the different backdrop to this year’s decision. We may no longer be in a period of soaring inflation, but costs remain high in just about every area of life. The discrepancy between the inflation rate from September 2024, by which most means-tested benefits will be uprated, and the current rate of 3% will be felt particularly by those who have not benefited from wage growth this year. This is a timely moment to explore social security as the Government set out their wider agenda in this area. The manifesto commitments to review universal credit as a means of supporting people into work and addressing poverty and to produce a child poverty strategy could give us a basis on which to improve the lives of millions of people in our country. Indeed, bold action is required in both these areas and, like other noble Lords, I await the outcome of these reviews with keen interest. As the Church of England’s lead bishop for housing, I see the consequences of not aligning housing support with housing costs, with half of private renters on housing benefit experiencing poverty. I suggest that local housing allowance ought to be linked to private rents as a matter of course, especially taking into account research from the Joseph Rowntree Foundation, which shows that 81% of low-income private renters in receipt of housing benefit are going without essentials such as food, heating and warm clothing. I very much hope that the Government will consider the adequacy of social security in their review of universal credit. For the first time since its introduction, we have an opportunity to explore how well the system works and to consider carefully the impact of sanctions, deductions and the five-week wait on the lives and incomes of people who rely on social security simply to make ends meet. I welcome the introduction of the fair repayment rate, which is an important step towards ensuring that deductions do not cause people to fall below the threshold of what we would consider an acceptable standard of living. Despite this, I still worry about the impact of the deductions. I draw the Committee’s attention to the Private Member’s Bill brought forward by the right reverend Prelate the Bishop of Manchester, which would equalise the standard allowance of universal credit for care leavers under the age of 25. Care leavers have shared their experiences of deductions from their universal credit, which, when taken from an already lower rate, can leave them struggling to afford essentials. This cohort of young adults cannot necessarily rely on the same level of family support as many of their peers. Even though we have resumed uprating benefits in line with inflation, their real-terms value is low by historic standards. The major issue is that benefits are not calculated in relation to the day-to-day costs people face. One solution could be for benefits to rise in line with wages rather than prices, as advocated by, among others, the Resolution Foundation. Another could be to introduce a minimum floor in universal credit to ensure that people have the money they need to afford the essentials, as advocated by the Trussell Trust and the JRF. It seems eminently sensible to calculate benefits in relation to the day-to-day costs people face. We have a precedent for this, with pensions credit calculated by comparing a person’s income with the amount the Government think necessary to live on. I would be grateful to hear the Minister’s views on whether means-tested benefits could be subject to a similar assessment. As I close, I reflect on the impact of poverty on our places of worship and wider communities. There will always be a place for voluntary provision, particularly when it comes to support that requires a more human and relational touch; but we must be attentive to the reasons why there is so much demand for food banks, warm spaces, breakfast clubs and the many other activities hosted in church buildings and by other faith groups and charities. We see first hand what the statistics bear out: poverty is deepening in our country. Investment in social security, alongside reforms in other areas, is essential in order to turn the tide on poverty.

My Lords, I refer to my entry in the register of interests as a trustee of pension schemes, and I thank the Minister for her clear explanation of the two statutory instruments before us. I want to raise an issue concerning the Guaranteed Minimum Pensions Increase Order 2025. Given the pace at which DB pension schemes are transitioning to buyout contracts, this raises the issue of the extent to which, and how, a buyout contract contains liability for a guaranteed minimum pension, and the contractual provision of a promise to provide at least that pension from the age of 60 or 65. Is this a liability that all buyout contract providers must take on when they accept the original transfer from the defined benefit pension scheme? Secondly, does the DWP intend to update its guidance on the guaranteed minimum pension, considering the extent of buyout activity now taking place among DB pension schemes?

My Lords, I, too, thank the Minister for her presentation. I also support very strongly the Government’s commitment to the triple lock, despite the loud and frequent calls for it to be abandoned. It is worth repeating that those who call for it to be abolished often do so from a position of financial security, conveniently ignoring the fact that large numbers of pensioners are dependent on the state pension, which is still one of the lowest in Europe. I also welcome the capping of automatic deductions on debt from universal credit that leave people far below the amount they need to live on. But over the last year there have been reports of record levels of deductions from universal credit, and I wonder if the Minister could comment on the reasons for those. The 1.7% uprating for other benefits will be of little comfort to the growing numbers in poverty. The Joseph Rowntree report has been mentioned already; it tells us that one in five people in the UK—21%—are in poverty. Of these 14.3 million people, 8.1 million are working-age adults, 4.3 million are children and 1.9 million are pensioners. Children, as we have heard, have higher risks of poverty overall, at 30%, versus 21% for the whole population. But larger families with three or more children have consistently faced a higher rate of poverty: 45% of children in large families were in poverty in 2022-23. That is an appalling indictment of this policy, which Labour Oppositions have criticised so much, as the noble Baroness, Lady Lister, acknowledged. I wonder how long it will take for the Government to abolish it. Today’s uprating means that we are looking to approve a basic rate of universal credit of £92 a week for a single person aged over 25, and £145 for a couple. Yet the Joseph Rowntree Foundation and the Trussell Trust have estimated that at least £120 is needed for a single person, and £200 for a couple, in order to afford even the basic essentials—a shortfall of around £30 a week on the bare minimum needed to survive. Shortfalls in the benefit system are key drivers of poverty, depriving people of the basic necessities for survival. Specific features have been found to increase the numbers in poverty, including the benefits cap and the two-child limit, and the erosion of the value of universal credit means that its standard allowance is now at around its lowest levels as a proportion of average earnings. I too support the Joseph Rowntree Foundation on having a basic minimum floor for universal credit. Another feature is that the capital cut-off for universal credit has been frozen since the benefit was introduced. This is a form of taxation by stealth of the least well-off, and it hits hard people in their 50s and 60s who are on benefits, having saved something for later life. For example, if they have more than £16,000 in non-pension ISAs, they are disqualified from universal credit. I wonder whether this needs to be looked at again. The House of Lords Select Committee report Hungry for Change recommended that: “The Government should embed consideration of the cost of the Eatwell Guide into calculations of benefit payment rates”. Many of us were very surprised to hear that this is not factored into the calculation of the amount of benefits needed to live on. The report continued: “The cost of the Government’s dietary guidance should be built in as a reference point to consideration of government interventions, including those relating to welfare and public food provision”. It also cited, horrifyingly, that “the poorest decile of UK households would need to spend 74% of their after-housing … income on food just to meet the cost” of the Government’s Eatwell Guide, as “compared to just 6% in the richest decile”. With individuals and families denied the means of buying bare essentials, will the Government undertake a proper assessment of the adequacy of benefit payments to pay for the cost of essentials, including food? The uprating today, as others have said, is not realistic in the face of ever-increasing poverty in the UK. A far-reaching and radical review of the benefits system is needed to tackle some of the fundamental problems. I know that we all look forward to the forthcoming benefit review, and the child poverty strategy, which we very much hope will address some of these desperate issues that continue to condemn families and individuals to a life of insecurity, hunger and misery, and children to a childhood of deprivation that will stay with them for life.

My Lords, I, too, thank the Minister for clearly outlining the essence of these two SIs. I recall that last year, they were debated separately but I cannot remember why. Nevertheless, we are reverting to the status quo ante, and I hope that this will speed things up somewhat.

16:15:00

However, at the outset, I wish to state that His Majesty’s Opposition support the core principles of these SIs—namely, the uprating of pensions in line with earnings, and of benefits in line with inflation. I also acknowledge that the SIs are largely technical in nature. I shall now turn to the effect of the orders. I do not intend to go into too much detail because the Minister set out the specifics, and for that I am grateful. However, I note the pension uprating and the guaranteed minimum pension, and the two questions raised by the noble Baroness, Lady Drake. I am sure that the Minister will put her mind to answering those. This is very much an annual issue and a technical adjustment. The GMP also remains an annual point of discussion in the Committee.

However, I understand that some pensioners may not see the effect and value of the uplift until the end of May, due to a quirk in the timing of payments, as pensions are paid four weeks in arrears. The change takes effect from 7 April, as we know, and unless I have misunderstood, this issue warrants clarification from the Minister, particularly regarding any mitigating measures that can be put in place. I am ever mindful of the pensioners affected by the cut in the winter fuel allowance. What might be done there?

The uplift will see the benefits rise in line with inflation. The level of the rise is based, as we know, on retrospective statistics—1.7%—in line with the September CPI rate of inflation, which has been alluded to today. As the noble Baroness, Lady Lister, and the right reverend Prelate the Bishop of Chelmsford have said, we should all be concerned about the latest ONS figures on inflation, up 0.5% from December and now at 3% for January. Inevitably, this will erode the value of family finances. Price rises of certain goods are the core of the problem. This is another blow on top of the winter fuel allowance cut for pensioners and the employer national insurance contribution rises, with their impact on businesses and job security, and the emerging evidence of a chill on recruitment, I am afraid.

Although this debate focuses on the two SIs, it provides an opportunity for me to reflect on the wider welfare and pensions landscape. I hope the Committee will forgive me for doing that, because we face the serious issues of inactivity and dependency on our welfare system, with taxpayers currently spending £65 billion a year on incapacity and disability benefits—a figure expected to rise to £100 billion by 2029 unless the Government undertake clear, serious and immediate reform. We have also seen an alarming rise in musculo- skeletal and mental health issues, with people opting for sickness benefits whose financial support far exceeds what they could earn from work. The system is failing to incentivise work and, as a result, we are seeing a growing number of individuals on long-term sickness benefits. We have read a lot about that in the press.

Universal credit has succeeded in reducing unemployment benefit claims and moving people into work by providing support and strict job-search conditions. However, the incentives in the sickness benefit system, particularly the limited capacity for work-related activity allowance—the so-called LCWRA category—have led to individuals receiving significant support without any meaningful obligation to re-engage with the workforce. So, I should like to touch briefly on welfare reform proposals and the delays. Here, I diverge from the views of the noble Baroness, Lady Lister, and one or two others who have spoken. The Government have picked up from where we left off with the opportunity for substantial reform. Suggestions in the media about scrapping the LCWRA category, abolishing the work capability assessment or introducing a duty to engage—if that is the way it is described—with work coaches are certainly encouraging.

So, here are my questions for the Minister. Can she update the Committee on the current strategy for incapacity benefit? Can she confirm that fit notes from doctors are not being reformed? If so, what will the process be to move from a doctor’s medical assessment—as I understand it, the current sign-off rate is 94%—to a detailed and fair assessment, with a definitive decision on an individual’s ability to work, to work part-time, to work from home only or, as I do acknowledge, to do no work at all if that is the outcome of the assessment?

The concern remains that too many people are being consigned to sickness benefits without proper reassessment or support. Can the Minister provide a timeline for the Green Paper on welfare reform and clarify when we can expect actual decisions on the ground to be made? If she cannot tell us the contents of the Green Paper—I realise that she may not be able to—can she at least tell us what to expect in terms of process? Will there be, for example, a White Paper after the Green Paper, and how long will that take? I lived in hope that a decision on welfare reform would be made today, in addition to the announced cuts in overseas development aid, in line with the increase in defence spending—on this aspect, we are in favour.

The Government are also reviewing universal credit—yet another review. I hope they will conclude, as they should conclude, in my view, that it serves the country well. More than this, does the Minister agree that it more than proved itself as a robust system during the incredibly challenging times of the pandemic, when the old system comprising six benefits would most likely have failed? Does she agree that the Government should work with UC and just use it?

There was a brief debate in the Commons on the Government’s commitment to the triple lock for pensions, and the Minister there recently confirmed the triple lock. Of course, it has been mentioned here today, including by the Minister herself. I have a specific but fairly easy question for her: can she specify how long this commitment will last?

Finally, the 1.7% rise also benefits those who are receiving benefits but are not supposed to. Fraud is prevalent primarily in the benefit system, but the Government have acknowledged that there is some limited fraud in the pension sector. The Minister is well aware that we are broadly behind the crackdown on fraud, with upwards of £8 billion of fraud to rein in. I was pleased to read in the papers last week that the Government acknowledge that they are, in effect, continuing a lot of the good work that I believe we started; I hope that the Minister recognises this. Although we will have many questions when the Bill in question eventually reaches the Upper House, in general, we will support efforts to stop fraud; no more uplift of fraudulent payments is what we all want.

With that, I look forward to hearing the Minister’s responses to these points.

My Lords, I thank all noble Lords who contributed to this afternoon’s debate. In opposition, the presence of lots of well-informed Peers asking great questions seemed like a good thing, but in government its appeal has waned very slightly. It turns out that it is rather harder to answer questions than to ask them—who knew? I will do my best, and if I do not provide answers, I will be in touch afterwards. It is worth beginning by briefly touching on the context in which today’s uprating decisions are being made. These decisions are being taken against the very difficult backdrop of a challenging fiscal inheritance and a seriously uncertain global economic outlook. I think we all know the situation we face. Despite those challenges, today’s orders commit the Government to an increased expenditure of £6.9 billion on social security in 2025-26. I just want to note that as a starting point. That said, I very much hear the challenges referred to by the Committee, and I will try to work my way through them. I thank the noble Viscount, Lord Younger, for his support for the approach taken by the Government and the traditions here. I also thank the noble Baroness, Lady Janke, for her support for our position on the triple lock; it is helpful to know that. I wish to address the noble Viscount’s question head on. This order demonstrates the Government’s commitment to pensioners by maintaining the triple lock, even in the current economic climate. The commitment was made very clear in our manifesto: we committed to the triple lock for this Parliament. This will mean spending on the state pension being forecast to rise by more than £31 billion across this Parliament. The noble Viscount raised a specific point about pensioners waiting for their first uprated payment of the state pension. I think he will know from his time doing the job I now do that the state pension is paid in arrears, so the date on which somebody is first paid the higher rate—their pay date, essentially—will depend on where their cycle is. I understand that that means two things. For example, if somebody were paid on 2 May, in practice, roughly three weeks of that payment would be at the higher rate and the rest would be at the earlier rate, so there would be another month before they got their first full payment. But, crucially, this means that people receive the same rates of state pension for an equal number of weeks across the year, regardless of their pay day. I hope that helps to clear the matter up, but if I have made it more confusing, the noble Viscount can let me know afterwards and I promise to write to him. The noble Viscount referenced the change to the winter fuel payment eligibility. Without relitigating that yet another time, I should just say that, as I have said before, the decision to target winter fuel payments on the poorest pensioners was difficult, but I believe it was right given the challenging public finances. But we are determined to get help to those who need it most, which is why the winter fuel payment is still available to those on pension credit. It is why the Government have done so much to promote pension credit and have seen such significant increases in applications for it. A number of noble Lords mentioned the challenges of the cost of living, particularly energy. It is maybe worth reminding the Committee that additional financial help is available for low-income pensioners, first through the cold weather payments in England and Wales but also through the warm home discount scheme. Committee Members may know that this provides a £150 rebate on winter energy bills to eligible low-income households across Great Britain. We expect over 3 million households to benefit from that this winter, including over 1 million pensioners. I do not know whether noble Lords have heard the news that, just today, the Government published a consultation on an expansion of the warm home discount, which would bring another 2.7 million households into it. This means that up to 6 million households could benefit from that rebate by next winter. I hope that that will be welcomed. The Government are also working closely with Ofgem to accelerate proposals for a debt relief scheme—something previously consulted on. The idea is that it would target the unsustainable debt built up during the energy crisis, which has led to some of the deductions that have been mentioned and challenges elsewhere. A couple of noble Lords mentioned the household support fund in England, which is there to provide discretionary support to those most in need with the cost of essentials such as food, energy and water. I am grateful to my noble friend Lady Lister for welcoming the household support fund. It was pretty challenging. It was one of the very first things my department had to do: six weeks after the election, it had to find £0.5 billion to continue the household support fund for the rest of the last financial year. The Government have now found the money to extend the fund by a further year from 1 April 2025 until 31 March next year, with funding of £742 million plus Barnett consequentials for the devolved Administrations. On the longer question, I regret to say to my noble friend that all I can say at the moment is that no decision has been made at this stage on the funding beyond the end of March 2026, and all the problems will be considered in the round. But we hope at least that, by giving notice ahead, we have enabled local authorities to plan much further ahead than in the slightly hand-to-mouth situation of previous times. But we will keep this under review and, if there is any change, we will obviously share any news as soon as possible. My noble friend Lady Lister, the right reverend Prelate the Bishop of Chelmsford and the noble Baroness, Lady Janke, raised the levels of benefits and the need to tackle poverty. The Government are committed to tackling poverty and making work pay, and they have already taken some steps. I really appreciate the right reverend Prelate the Bishop of Chelmsford welcoming the decision to fund what we call the fair repayment rate. I am so grateful that my boss, Liz Kendall, wanted to spend a significant sum of money on that, even though most people will have no idea what it is. It genuinely targets those most in need by helping them to keep more of their money. But we know we have more to do on this. The Child Poverty Taskforce is continuing its work and will explore all levers, although I am not in a position to say anything today about changes to matters such as the two-child limit. The Child Poverty Taskforce will look to span the key themes of increasing incomes, which will include social security reforms and reducing essential costs, and increasing financial resilience and better local support, especially in the early years. We will continue to watch this space as best we can. The noble Viscount, Lord Younger, and the right reverend Prelate, among others, asked about the Government’s review of universal credit. We have now started the review, and the idea is to make sure that universal credit does its job in tackling poverty, helping people manage their money, making work pay and improving work incentives. We want to maximise the potential of universal credit, looking at its impact on customers. I say to the noble Viscount that there are things that universal credit does well, but aspects of its design have caused significant challenges to the people using it. This is an opportunity to look at how it is designed, to listen to those with experience of it and to look at whether there are ways we can better achieve the objectives I have outlined.

16:30:00

To respond to my noble friend Lady Lister, the Minister for Social Security and Disability, Stephen Timms, is going to lead the review and will engage with people over the next year, inviting views on how we can improve universal credit and looking at the sort of issues I have raised. We will continue to work with stakeholders, and I will take back to the department her specific point about those with lived experience of poverty and make sure that it is heard.

The right reverend Prelate raised the important issue of support for care leavers. While the Government have not been able to support the Private Member’s Bill, and although, as she will be disappointed but not surprised to hear, I cannot offer to increase the rate of universal credit, I want to reassure her of the support the Government give to care leavers. We offer various support, such as the exemption from the shared accommodation rate, and “staying put” arrangements. We try to make sure we are supporting care leavers into work. They have special single points of contact in jobcentres, priority access to universal credit budgeting support, and the opportunity to make advanced claims for universal credit to try to bridge those gaps as they effectively become independent adults. We are doing our best to support them to move into work and to develop in work, to give them a more sustainable future.

There were a number of questions about the timing of uprating. It has been done this way for a long time for a reason. The first challenge is that inflation clearly moves, but when inflation is stable it might be worth using actual inflation rates for the previous September. That will mean that, over the medium term, benefits will hold their value over the course of the year and broadly match inflation trends. It might be worth noting that for the past two financial years, using the September inflation figure actually resulted in increases higher than the rate of inflation the following year. Working-age individuals, for example, benefited from an increase that was 1.4% higher than the rate of inflation in April 2023 and 4.4% higher than the rate of inflation in April 2024. It does move, but it often moves in different directions.

My noble friend asked whether we can move to a shorter timeframe. Inevitably, things are always more complicated when one is in government. It is worth saying that the Government begin programming the IT systems for the new rates for the following April in November. Using a shorter timeframe could only ever be achieved for universal credit, not across all benefits, because the systems are different. I will take this idea back and we will keep looking at it, but one of the challenges is the number of interdependencies. For example, we are quite dependent on data going to and from DWP, but also housing benefit for pensioners, and HMRC for calculation of 12 million tax notices. These interdependencies mean that it is never quite as straightforward as one hoped, but I take note of her aspiration and I will keep conversations going on that.

On the levels themselves, we recognise that there are challenges, and different benefits do different things and have therefore always been uprated in different ways. We probably do not have time to go into that, but I take the broader points that have been made. On the question of work, the Government are absolutely committed to providing financial support for those in low-paid work, those who are looking for work and those who cannot work, but we also know that reducing economic inactivity and increasing the number of people in work is crucial to their best interests, and to growing the economy. That is why this Government’s Get Britain Working White Paper outlines the biggest employment reforms in a generation, backed by £240 million of investment.

My noble friend Lady Lister raised the question of in-work poverty. One thing that will help, of course, is that the Chancellor has raised the national living wage and the national minimum wage from next April, which will benefit 3 million full-time workers by up to £2,500 a year. Part of our job is to pursue good work, and to get people into work and moving up within that.

In response to the noble Viscount’s comment about reform of health and disability benefits, we might have to disagree about the effectiveness of the previous Government’s attempts to get people into work and what the consequences were, but we can have that debate at more length when we publish the document. I am afraid that it is good revenge for all the times I have pressed him to tell me when reforms would happen. All I am able to say to him now is what he has often said to me in the past: “in due course”. In fact, I can be more specific: the Green Paper will come out in the spring, and it will contain details. We are looking to develop proposals specifically to reform the system of health and disability benefits, in order to promote and enable employment among as many people as possible.

The noble Viscount raised the issue of work capability assessments. We are clear that the WCA is not working and needs to be reformed or replaced, alongside a proper plan to help disabled people into work, which will help them, business and the economy. We will reconsult on the WCA changes as part of the Green Paper.

The right reverend Prelate the Bishop of Chelmsford, my noble friend Lady Lister and others raised the question of housing—the LHA issue. The Government had to take some difficult decisions in the Budget to address the challenging fiscal context. But we clearly have a problem with the housing market. We currently spend around £33 billion a year on support for renters in both private and social rented sectors. One of the things that we are determined to do is work with MHCLG on its long-term housing strategy, which will be published in the spring. That will set out a plan to reform the housing market to work better for communities, to build another 1.5 million high-quality homes and deliver an increase in affordable housing.

I will try to run through the other questions quickly. I have plenty of time. On the question of food banks, this Government are committed to reducing mass dependence on food banks, and we are open to evidence from anywhere, including from the Church —particularly in relation to child poverty—about what is driving that. I am meeting with Church organisations and looking forward to visiting projects exactly to see at first hand the kind of things the right reverend Prelate is describing. We are keen to learn from that as part of the process in trying to review the child poverty strategy. I ask noble Lords to intervene if I have missed anything out.

Can I ask about the record levels of deductions in universal credit that have been made in half of last year, which hit record numbers? I have been reading reports about them. Could we have some insight into that?

I do not have an insight on that at the moment. It is something I have asked about and have not yet got clear data on, but we are hoping that the changes we will make around things such as the fair repayment rate will help to rebalance that at the bottom, but I will have a look and, if I have any more data, I will write to the noble Baroness, if that is okay. I turn briefly to the guaranteed minimum pensions increase order. I am grateful for the support for it. It simply aims to ensure that members who have a guaranteed minimum pension earned between 1988 and 1997 receive a measure of protection against inflation. My noble friend Lady Drake asked a good question, as ever—in this case, about whether all buyout contract providers have to take on GMP liabilities in full when they accept the original transfer from the defined benefit pension scheme. I am happy to say that the Pension Schemes Act 1993 and associated regulations require all bulk annuity contracts to provide GMP benefits where applicable. From the point of view of scheme trustees, if a scheme was contracted out and still contains GMPs, both its trust deed and rules, and the legislation, will require the trustees to make sure that the bulk annuity contract provides those GMPs. From the point of view of the buyout contract provider, if a buyout contract includes GMPs, the provider is under a contractual obligation to provide those benefits. If the correct benefits somehow are not properly reflected in the bulk annuity contract, the scheme trustees, I am afraid, will remain liable for any additional liability, and that would include any GMPs. A question has been raised about whether there should be additional guidance, but the schemes and providers already have a clear legal duty or requirement that they have to follow and that they should be familiar with before they consider a buyout. To conclude, through these orders, the Government are increasing the basic state pension and new state pension in line with earnings growth by 4.1%, meeting our commitment to the triple lock. We are increasing the pension credit standard minimum guarantee in line with earnings growth by 4.1% to support pensioners on the lowest incomes, increasing benefits to meet additional disability needs, and increasing carers benefits and working-age benefits in line with prices by 1.7%, and we are ensuring indexation on guaranteed minimum pensions earned between 1988 and 1997 that are in payment. I commend these orders to the Committee.

Motion agreed.