Oral evidence: Benefit Levels in the UK, HC 142

Oral evidence, 6 December 2023.

Witnesses

Rt Hon. Mel Stride MP, Katie Farrington and Katherine Green.

Chair

Welcome, everybody, to this meeting of the Work and Pensions Select Committee and a very warm welcome to the Secretary of State, Mel Stride. Secretary of State, could you briefly introduce your team to us?

Mel Stride

Thank you, Sir Stephen. I am Secretary of State for Work and Pensions.

Katherine Green

I am the Director General for Labour Market Policy and Implementation.

Katie Farrington

I am Director General for Disability, Health and Pensions.

Mel Stride

I want very briefly to say a couple of words about the late Alistair Darling, who, as you all know, was Secretary of State for two years at the Department for what was then social security, and then a year as Secretary of State at the Department for Work and Pensions when the Department was newly formed. Alistair clearly has a track record in the public service that is out there and everybody is aware of, but I want to convey the very warm sense that I got from those within the Department who had the privilege of working with him, both as somebody who achieved a great deal but whose interactions, despite the pressures of being Secretary of State, were always polite and courteous. He was a thoroughly decent man and will be missed.

Chair

Thank you very much. I was a Minister with Alistair for the first of those three years that you referred to and I very much echo your sentiments. Thank you for taking the trouble to say that. Can I put the first question to you, Secretary of State? At the autumn statement I welcomed the benefit uprating announcement for the next financial year and the decision to rebase the local housing allowance to the 30th percentile of local rents. Thank you for your work in securing those two very important announcements. I also asked at the statement if there would be a household support fund in the next financial year. The Chancellor said that there would be, but there is as yet no provision for that. Can you tell us this morning whether there will be a household support fund in 2024-25?

Mel Stride

First, on the LHA point, thank you for your words. I thought that it was important; 1.6 million people who will be better off by £800 on average. It is a considerable sum, particularly reaching into groups who are in poverty and in some instances in quite deep poverty, so I thought that was important. As to the question on HSF, I was in the Chamber and I am not sure that you said “financial year”. I think you said “next year”. The Chancellor interpreted that as: does it roll into next year? Under the current arrangements, of course, it does until the end of March.

Chair

We all knew the answer to that question. That certainly was not the question I was asking.

Mel Stride

I think that is how he interpreted it and what he meant, unless he said financial year. I do not think that he would have said next financial year; I think that he said next year.

Chair

Given that we were talking about benefit uprating for the next financial year, it was clear that my question was about the next financial year. However, there we go, the answer, as it turned out, was not correct.

Mel Stride

I cannot speak for him, so I do not know, but I suspect that he interpreted your question as, “Will this provision be available next year?” He would know, I would assume, that it is available until the last day of March next year and, therefore, he quite reasonably under those circumstances answered that, yes, it would be available next year. If he said the next financial year, or indeed if your question to him had been is it available next financial year and he had said yes—and I would need to check the record to see exactly what was said; I genuinely do not know, incidentally—then that would be different.

Chair

We all know that the household support fund is in place for the current financial year. I would not have asked whether that were the case, because we all knew that. Are you able to tell us now whether there will in fact be, or what thinking there is in the Department about, the household support fund in 2024-25?

Mel Stride

I cannot, on the basis that you rightly put the question to the Chancellor, because that is ultimately a decision that he will take, albeit in conjunction with my advice as it may be at the time. No, I am not in a position at the moment to even speculate as to whether that will be the case in the next financial year.

Chair

Do you anticipate that there will be an announcement at the spring Budget about whether or not—

Mel Stride

I do not know, Sir Stephen. If there is to be a further extension of it, that might be the logical time for it to come through. However, it is a matter for the Treasury, ultimately.

Chair

As you know, through a last-minute amendment to the Data Protection and Digital Information Bill last week, the Government are taking powers to inspect the bank account of everybody claiming the state pension and various other things as well. Did Ministers really intend to take that particular power?

Mel Stride

The Bill will provide powers that will be in the form of affirmative statutory instruments. They would have to go through the House on that basis. The Act in and of itself would not be determining whether a future power would be used in that way or not. However, in terms of the real detail, Katherine, you might be better to address that.

Chair

Just to clarify, what you are saying is that the Government did intend to take, with that amendment, powers to inspect the bank accounts of everybody claiming the state pension.

Mel Stride

What it intends is to have an Act that allows the Secretary of State to use powers, subject to an affirmative statutory instrument—so it is ultimately for Parliament to decide what finally happens—but not on the face of the Bill, for example, to state that pensioners would be within these new arrangements when they come into force.

Chair

Why would the Government want to look into the bank accounts of everybody claiming the state pension?

Mel Stride

I am not sure that they would, but perhaps Katherine—

Chair

Why, then, is that power being included in the legislation?

Mel Stride

Its ultimate overarching aim is to drive down fraud and error in the benefits and pension system.

Chair

I understand that, but specifically on the state pension—

Mel Stride

There is error and there is some small amount of fraud, I believe. I am certain there is a small amount of fraud within the pension space.

Chair

You will not find out about that fraud by looking into people’s bank accounts.

Mel Stride

These are arguments that are premature in the sense that we do not have an Act yet. When we do, this is presupposing that the Secretary of State, or whoever my successor might be at the appropriate time, comes forward to Parliament to seek those powers in respect of pension payments. There is no suggestion at the moment that that would happen is my point.

Chair

I do not think that it is premature, because the Government have legislated. The legislation went through the Commons last week.

Mel Stride

That in itself, Sir Stephen, does not give the power for DWP to request information of third parties in respect of pensions.

Chair

No, there will be some secondary legislation required.

Mel Stride

Exactly.

Chair

I do not understand why the Government are taking the primary legislation powers to inspect the bank accounts of everybody claiming the state pension.

Mel Stride

Simply so that there is a democratic mechanism in the form of the secondary power, with an affirmative SI, by which a Secretary of State might—emphasis on “might”—seek to take those particular powers. It would then be part of the parliamentary process that would decide whether that happened or not.

Chair

Have you met the Information Commissioner to discuss the Department’s plans?

Mel Stride

No, I have not, but I feel that I should get some more detail from Katherine.

Katherine Green

Let me add to that. The Secretary of State is absolutely right that it is a relatively broad power.

Chair

Extremely broad.

Katherine Green

That is partly to futureproof because, of course, fraud is evolving all the time. The power is basically putting controls in place so that we can ask for relevant data from third parties, but only where there is an indication of fraud and error. We will not be accessing individuals’ bank accounts directly. The power is so that we can ask for bulk data from financial organisations such as banks where we have an indication that there is fraud and error. That is what the power is doing. There is absolutely no direct access to bank accounts. The legislation does provide a number of safeguards. First, we need to have established a relationship between the customer, the third party and the Department. Secondly, as the Secretary of State said, we will need to come back to the House with affirmative regulations to access specific data where we do have that indication of fraud. Thirdly, we have committed to consult and lay before Parliament a code of practice. We have spoken to the Information Commissioner and have had a relatively detailed back and forth on this issue. We have also published an impact assessment, which has been green-rated, which at this point focuses on the burdens on the third-party data holders. As the legislation evolves, we will be publishing more impact assessments at the relevant points.

Chair

There will presumably need to be pretty stringent privacy safeguards around the use of these huge new powers. Are you planning to consult on those safeguards?

Katherine Green

Decisions are yet to be made on the precise consultation on the specifics. Remember that the Department does regularly handle bulk data and has exactly the same privacy, safety and security requirements across other bulk data that we handle.

Chair

When would you plan to announce the proposed privacy safeguards?

Katherine Green

The legislation is progressing at the minute. Secondary legislation will be in the new year, so we will be confirming all that in the new year.

Chair

Shouldn’t at least the proposals be made known before the legislation gets on to the statute book rather than afterwards?

Katherine Green

We have been very clear about the power that we are putting in place and we are taking it through the normal scrutiny and legislative process to then confirm the details.

Neil Coyle

Katherine, you mentioned a consultation. Where does the consultation fall if you expect legislation in the new year?

Katherine Green

What we said is that we are progressing this through the Bill that has been presented before the House. As we progress it and evolve it, we will publish the relevant impact assessments. We will make decisions on the issues that are raised.

Chair

You will appreciate that it has come as a great surprise to a lot of people that the Government think that it is appropriate to take powers to look into bank accounts of everybody claiming the state pension.

Katherine Green

If I can take you back to the fraud and error plan that was published in May 2022, these powers are about enacting that fraud plan. As you know, we have a fairly significant fraud issue of nearly £9 billion, and these powers are about enacting that plan, which were set out in May 2022, to refer you back to that.

Chair

There does not seem to be any fraud-related reason for looking into the bank accounts of people just claiming the state pension.

Katherine Green

As the Secretary of State has said, it is simply that the power is constructed in a way that would allow that, should that be necessary, should there be future evidence. We would not expect that at all. As we know and as the published statistics and the annual report and accounts say, most of the fraud that we are experiencing is within the UC system. This is not a particular intention right now at all to access or to delve into the accounts of pensions specifically. We know where the fraud is and we know what we want to prioritise. It is within Universal Credit and that is what we intend to prioritise.

Chair

You are taking the powers to do it.

Debbie Abrahams

What are the circumstances, then, that you say you may want to look into specific instances on specific accounts?

Katherine Green

Let me give you an example. You will probably be aware of the capital rule within Universal Credit, the £16,000 within a bank account. An example might be that we might ask a financial institution to give us bulk data on all UC recipients who have £16,000 within their account.

Debbie Abrahams

To get back to the point, this is state pensioners. What are the circumstances that you would want to look into somebody’s account on the state pension?

Katherine Green

Katie, I will hand to you on the pensioner example.

Katie Farrington

Thank you. I am happy to do that. As my colleague has said, at the moment we do not see large evidence of fraud and error in relation to state pension.

Debbie Abrahams

Why are you asking for the power?

Katie Farrington

Where we do see some fraud and error in relation to the state pension is about people living abroad and where the state pension would be frozen. If you were resident in this country, your state pension would be uprated. It is a very small number of cases at the moment. As Katherine has said, these powers principally target fraud and error where we know where it exists, which is in relation to Universal Credit. However, we are seeking to take these powers now to give the Government the freedom and the ability to tackle fraud where it does arise. There is a very small amount of fraud and error now that arises in relation to state pensions.

Chair

Can you find out where people are living from looking into their bank account?

Katie Farrington

No, it is not that. It is if you were to see lots and lots of transactions carried out in a different country.

Mel Stride

We expect these measures to reduce fraud and error by about £600 million over the next five years, which is an important point for the taxpayer and people having confidence in the system. As Katherine has identified, fraud and error is running at over £8 billion at the moment. We are very determined to get that down and we have had some success in doing that, but we want to go further. We would not be exercising these powers on any other grounds than that there was a signal given, in terms of the data that we were seeking, that there could be, or a reasonable expectation that there might be, fraud and error involved. The evolution point is very important. While at the moment there is a very low level, relatively, of fraud in the pension space, it is not inconceivable that at some time in the future that might change. The final point that I would make is the point that I made at the beginning, which is that this is all subject to the affirmative procedure and the statutory instrument going through the House. It would be finally for the House to decide whether these measures were proportionate and acceptable.

Nigel Mills

Mel, you said that you would only use these powers when you suspect fraud, but Katherine just said that one of the things you could do is to ask banks to check whether any bank account where UC is being paid in has more than £16,000 in it. At that point you would not suspect the individual of fraud. You do not suspect them of fraud until you think that they might have more than £16,000. That would be subjecting every UC recipient to that, not ones who are suspected of fraud, wouldn’t it?

Mel Stride

We know that capital fraud within UC is a major component of that fraud and error amount of £8 billion plus. We know that the £16,000 of capital is the trigger. As I said earlier, we would not be seeking data unless we were confident that a signal—not a certainty but a clear signal—that fraud and error may be occurring. The final point is that in the case of error it may be that somebody has inadvertently done something that causes them to be inappropriately claiming a benefit. We discover that and we sort it out early and we do not end up in a situation where an accumulated debt occurs on overclaiming. We sort it out early. First, it is important to catch up on fraud, and we should be absolutely firm on that. Secondly, we are not here to see people slip ever further into overclaims and having to claim that money back from them, which has been the subject of many discussions, quite rightly, on this Committee.

Nigel Mills

I am personally quite relaxed that you could ask the people who do the bank plumbing to send you an exception report that says, “You’re paying UC into these accounts that have more than £16,000. You might want to check what is going on.. I do not have a problem with that, but that is not the same as saying that you will only use these powers where you already have a suspicion of fraud by that individual. That is a check that you are doing on every claimant, isn’t it?

Mel Stride

The position currently is as you latterly described. If in an individual claimant’s case we have a suspicion of fraud, we are already entitled to go to the bank or building society and seek relevant information. What we are saying is a step further than that. That is, if we go to third-party data holders, banks and so on, and say, “These are conditions under which a reasonable signal will be that there may be fraud or error occurring, so people who have over £16,000 in their bank account and are on UC. Can we have the relevant data for those individuals?” We would then follow that up. There might be a perfectly reasonable reason why somebody has £16,000 at that particular moment in time in their bank account and that is absolutely fine. However, it could be something else, including organised criminal activity, so it is important to pick that up.

Nigel Mills

It is not a suspicion of fraud by the claimant, it is a suspicion that this is an area that fraud is taking place, that we want to pursue more broadly. I am glad that we clarified that. Can you talk us through the process by which you decide what the benefit uprating that we have just had announced is? Where does the number come from?

Mel Stride

There are three categories of benefit, as I see it. One is that through legislation, typically in the case of disability benefits, there is a requirement to uprate by at least CPI or more. That sets the framework for that particular decision. On the state pension, it is earnings, the minimum of earnings, although it is also subject to the commitment that the Government have to the triple lock. Other benefits, including most notably Universal Credit, are entirely at my discretion in discussion with the Treasury and others. I go through a process in the autumn, which has recently concluded. Within that there are a number of things that I consider. I am particularly interested with benefits such as Universal Credit that the incentives to work are right within that benefit. I am also very aware overall of the fiscal position of the country and, therefore, what can be afforded and what cannot be afforded and I have to make judgments around that. I am also aware that there are those individuals for whom improving their economic circumstances is rather restricted. That would include pensioners, who incidentally have also contributed to their pension as well, which is a factor that I would consider. However, for those who are not fit and able to work, for example, it is a slightly different judgment than for those who are, where work incentives would be an important part. It is quite a mixture of different elements that I would focus on.

Nigel Mills

What evidence or data do you draw on for that? I presume that you do not stick a finger in the air or pick a random month or one-time story on which to inflate—“Let’s not do September, let’s do October; it’s a bit lower”. I presume that you have some data that are provided to you.

Mel Stride

I would have data in some instances on some of the things that I have raised. I would be, as part of that process, talking to the Treasury about the things that I would like to do and what is affordable and so on. One of the things that I did push very hard for and was successful with was LHA, and I have explained the reasoning behind that in terms of poverty impact, which I thought was particularly important given what has happened with inflation and real earnings and other things going on in the economy. Yes, of course, there are things that one looks at, including plenty of stuff that is not within the Department. The IFS produces some very good analysis from time to time, as does the Resolution Foundation, the Joseph Rowntree Trust and so on. It is a variety of things.

Nigel Mills

When you are thinking about what different rises might be, do you look at what people need to live on? You have a large team of economists, and data analysis and policy people. Do you get them to say, “If we do this, the impact on people would be y”? Is that where the LHA thing came from—that there was some evidence that showed that people could not afford to live without that increase?

Mel Stride

I think what you are driving at, and in the ideal world this is what the whole process would look like, is that everybody would agree on exactly the objectives we have and we would have some super-sophisticated algorithm that would rush off and look at the benefits—I cannot remember how many we have now; several hundred if not more; 400 benefits, it might be—calibrate them all and come out with the perfect answer, whatever that may mean. I suppose what I am conveying is the sense that it is an inexact science in the sense that it does not work like that and there is a lot of subjectivity as well as objectivity but that, none the less, clearly there are the elements that I have already suggested on affordability, work incentives, poverty and so on that are important when I sit down and try in the best way that I can to come up with what I think is most appropriate, fairest and the right thing to do. I take that responsibility quite seriously.

Nigel Mills

Nobody gives you a report that says that if you do it by 1% less, people cannot afford the heating? There is no, “If you do it by this, it costs this”?

Mel Stride

This is where some independent analysis—so you have the Joseph Rowntree Trust essentials guarantee suggestion, for example, and various other metrics like that. I have met with them and I have discussed it and I have looked at it. Things like that, certainly in that category that I described where individuals are not able to very readily change their economic circumstances, are quite pertinent. When it comes to Universal Credit and out-of-work benefits, particularly given that people tend not to be on those benefits for a very long time because they are helped and assisted and encouraged to go into work, and we have a buoyant labour market at the moment, then if it becomes something that is bordering towards a universal basic income that we start talking about, if we say that we have a certain amount covered and benefits should cover all these things and they are in that category, then I am probably getting to the point where I am thinking that those work incentives are beginning to diminish. It is a balance of all those things and it is difficult to reach in and put your finger precisely on some mechanism that I can lay out in very precise terms for you. I wish I could.

Nigel Mills

No one gives you a report that says, “Here’s what we think the minimum a single person needs and here is what we think a couple needs and if you go below that this will be a horrible mess”. Is there no paper that you are given that sets that out?

Mel Stride

There is advice, of course, during that process, internally within the Department, discussions with other Ministers, discussions with officials, information externally and discussions with the Treasury. There is a lot of information that I am looking at to try to balance out all the various metrics that I have described.

Nigel Mills

What do you think of the parliamentary process? We have had the debate before about whether we need to use September data for UC when the process is a lot easier and couldn’t we do it nearer the uprating point. We now know what the uprating is but at some point we will be asked to vote on an order that Parliament cannot change, and even if Parliament wanted to change, apparently you could not process the change in time anyway, so we have a relatively meaningless debate and vote at some point between now and the end of March, don’t we? Is that a constructive use of Parliament in that situation?

Mel Stride

The first point is that the uprating order is subject to parliamentary approval. That is a fact. It is true that it cannot be amended but it is a straight up-down vote on whether it goes through or not. We are constrained by a few things here. One is that the September CPI figure, for example, is the figure that is used for uprating. It need not be that; that could be changed. There was speculation that I might seek to change it to the October figure, which would have been a smaller uprating. However, there is an element of fairness to the consistency. In other words, it is right that you stick with where the anchor is in that sense, and the same for the earnings measure, which is May, June and July of the preceding year. You do also have the constraints of the fact that it is quite a complicated exercise to programme in the uprating. That has to be completed by the end of November. That does not just involve my Department, it also involves interactions with local government because they depend on some of the decisions that we are taking in the programming and changes that we are making, as indeed does the Treasury on the tax and pensions front and so on. If you put all that lot together, you do end up with the timeline and the framework that we have. If the question was, “Would it be relatively easy to change that and pull forward the date for the uprating order going through?”, the answer unfortunately would be that it would be quite difficult.

Nigel Mills

It would not be hard to pull the date of the order through. We could do that next week if we wanted to. We know what the numbers are now, don’t we?

Mel Stride

It is getting it all together with all the information. Having gone through the uprating process and its conclusion by the end of November is quite complex. Katie may like to come in on that. My understanding is that it is quite complicated.

Katie Farrington

The Secretary of State has described this quite thoroughly already, so I will not add very much. The point that is quite important here is the interdependencies with other organisations. We set the benefit rates, 400 different rates with more than 20 million recipients. We set the rates and then share that information with local authorities to determine the housing benefit for pensioners and with HMRC to determine tax codes, so you have a sequencing element. On the uprating order, what we do every year when the Secretary of State has made his decision by the end of November, he would typically lay a written ministerial statement to make sure that we notify Parliament immediately. We then get the uprating order ready and it tends to be laid soon after Parliament returns after Christmas.

Nigel Mills

You were not seriously looking at just missing out inflation in October 2022 from the calculation?

Mel Stride

No, I just made the observation that some people—in the spirit of “j’accuse”, before I have even come out with anything—say, “Well, what they’re going to do is this,” or, “What they might do is that”. We get attacked for apparently considering these things, but that was not something that was ever close to becoming a reality.

Nigel Mills

You are just missing out the highest inflation month on record, in a slightly bizarre way of doing the calculation.

Mel Stride

I agree with you.

Selaine Saxby

We have been spending a lot of time looking at benefit levels and some of this you have already touched on, but I want to delve into it a bit deeper from the perspective of the claimant as opposed to the decisions that we take as a state. At a minimum level, what benefits do you think that a person should be experiencing in terms of providing for their everyday living costs and determining what their experience is, based on that claim?

Mel Stride

It is difficult to be entirely objective because everybody’s circumstances are different. Indeed, there are 400 different benefits that are in the frame when that question is asked because it is pertinent to them all. As I set out earlier, there is a distinction, particularly in my mind, between those people who can improve their economic circumstances by, for example, working or working more hours or whatever it may be, and those for whom there is not a realistic chance of them doing that; for example, those in the LCWRA group. I do not think that that applies to them all, incidentally, because we know that a fifth of them want to work and with support say that they could work. None the less, there is a substantial number of people for whom that is the case. Therefore, what the benefit covers in terms of living costs and so on is pertinent. When you look at things like UC, however, it is the balance that I was referring to earlier between maintaining work incentives and providing some provision within the benefit system, but making sure that that incentive is still there, that is it not a universal basic income that takes away all that incentive, or the larger part of it, but that it is still there. It is that balancing that one is always doing when looking at all these different benefits.

Selaine Saxby

How would you objectively decide what an adequate benefit level is and whether the support provided should prevent people from moving into poverty?

Mel Stride

On the poverty point, which is important, the Government’s view, and it is my strong view as well, is that the best way out of poverty is to work. For example, we know that you are five times less likely as a child to be in poverty if you are in a working household rather than one that is a workless household. Therefore, I see my mission, particularly on the poverty front within the Department, as doing everything that we can to facilitate everybody going into work and benefiting from work, not just financially but mentally and physically, and the good things that that brings to society more widely. There is stuff that the Government are doing outside of this Department that strongly impinges on work incentives. The national living wage increase that the Chancellor announced, virtually 10% on the back of a large increase the last time around, and the reduction in National Insurance for employees are very important further steps in those directions, and they are significant steps. If you look at what it means for an average person on the national living wage, this can mean £1,000-plus in your bank account across the year that you were not getting before. Those are the important things to drive on when it comes to the poverty issue.

Selaine Saxby

Building on that point, how would you describe what constitutes a social contract with regards to work and benefits and any further aspects of Government policy beyond what we have already mentioned that is supporting it?

Mel Stride

Whether you call it a social contract or a contract, I think that there is a contract between claimants who are fit and able to find work and the state. The state’s part of that bargain is two things. One is to provide benefits and then, secondly, to provide assistance to help people into work. We do a huge amount, as this Committee is fully aware, in that category. The part of the contract for the claimant, and it is set out in the claimant commitment when the benefits are first entered into, is to engage. That can be engagement around meeting work coaches, engagement in terms of going to interviews, going to job fairs and so on, taking seriously job opportunities that are presented. On balance, I think that is where the public is. They feel that that is a reasonable deal between the state and the individual in those circumstances.

Selaine Saxby

Since you have been in post we have seen a huge amount of work from the Department to meet that objective of incentivising work. However, do you think, beyond your own Department as well, that we are as a Government achieving that? I would like to particularly bring to your attention, having spent a lot of time this week with the local food bank and the Trussell Trust in Devon, the issue around the interaction with things like the VAT threshold. In my constituency we have swathes of businesses that close down at the end of summer when they hit the £85,000 threshold. We have a rotational group every year of the same people going on to benefits for three or four months and still go through the five-week wait, because of the choices that the businesses are taking. While we might be focusing on incentivising people to get work, the nature of those jobs moves with the season. In an economy like mine, and no doubt yours next door, there are a lot of small businesses that are taking different choices, and that increase in the national living wage will mean that they are paying people fewer hours. Is that cross-departmental thing working and are we really incentivising people into work when those jobs start moving around?

Mel Stride

I recognise the issue on the £85,000 threshold. It presents a cliff edge and there is some evidence that even in the cruise ship industry some people disappear and go on a cruise rather than working because they do not want to hit that £85,000. There is also evidence that some people want it abolished or taken down to the levels that it is in other European countries, which can be as low as about £6,000. There are others who want to see it go up substantially because they accept that once you get to a certain level of turnover it is not unreasonable that indirect taxes should apply. Ultimately, these are questions for the Treasury so I cannot say much more than that I understand the point that you are making. However, it is ultimately for the Chancellor at fiscal events to come to decisions on that.

Selaine Saxby

You have already mentioned the minimum income standards and the idea of the essentials guarantee put forward by the Joseph Rowntree Foundation. They do interact. How useful do you think that these exercises are, given that the process that we seem to be following in your Department does not go that way around, it comes top down as opposed to bottom up.

Mel Stride

I think that they are very valuable, and I say that quite genuinely. That does not mean that I agree with everything that is put forward, but any serious organisation that goes out—they may have a political angle to it, they may have a particular social or economic angle to it, from left, right, centre or whatever. All that information, if thoughtfully put together and thorough and robust, is worth looking at and thinking about. That is why in the case of an essentials guarantee I had meetings around that and had a close look at it and made sure that I understood the arguments that were being put forward. They are important but they are a part, one part, along with lots of other information that guide the decisions that we come to.

Sir Desmond Swayne

What triggered your decision to uprate the local housing allowance that did not trigger Ministers to take that decision over the last three years? Is it just the cumulative effect over those three years?

Mel Stride

It is a situation when you have a freeze—and I know that I am stating the obvious—and through time, particularly with inflation, in this case inflation relating to property rental costs, the situation gets more and more difficult. We have uprated, as you know, to the 30th percentile. Probably it had slid down the order to something around as low as the 5th percentile. I thought that, in terms of the impacts on those people, it was becoming an increasingly important consideration. It has employment impacts as well, because to the extent that housing becomes less and less affordable, it is more difficult for people to move around to where the work is. There is often a very high correlation between employment availability and high rentals. That is why I am particularly pleased that, for example, Michael Gove is doing what he is doing in inner cities, developing and trying to get supply improved through that route. However, you also have to bear in mind that some of these are quite expensive decisions. If you give an average gain of £800 to 1.6 million people, that is quite a big deal. It is about £7 billion, I believe, across the scorecard, or £1.7 billion in the last year of the scorecard, 2028-29. To put that into context, if I may mix up the two scorecards for a minute, that £1.7 billion is over 25% of the headroom that the Chancellor had back in the spring Budget. These decisions have real impact right across Government when they are of this size and that probably explains the freeze in the first place, although I was not around at that time. However, for me I felt that something needed to be done and I pushed particularly hard on LHA.

Sir Desmond Swayne

It is to be frozen again from 2025-26 onwards.

Mel Stride

Subject to whatever may be decided in the future.

Sir Desmond Swayne

Have you done any calculations of what the financial implications of unfreezing it would be?

Mel Stride

Going forward, no. I am not saying that the Department might not have done, but I do not have that at my fingertips.

Katherine Green

We would not normally publish that prospectively.

Mel Stride

It would be a very large amount of money, given what I have just described for this one year.

Sir Desmond Swayne

Given what you have just said about the impact that these decisions have financially, the sheer magnitude, would you countenance extending the mandate of the advisory committee or indeed any other independent organisation making assessments of the adequacy of benefit levels and providing you with that information and clearly making it public?

Mel Stride

A lot of people make assessments of the adequacy of benefit levels. I have mentioned some of the organisations that do just that in different ways and come to slightly different conclusions. There is a fundamental part here, which is that we are the politicians, we are elected. There is a democratic point here and ultimately we have to take those decisions. Therefore, to the extent that your question was suggesting that independent—whatever that might be defined as—bodies might start to effectively shape where benefits changes go and how uprating occurs and to what extent across different benefits and so on, that is a democratically unattractive space to end up in. That would be my view. Ultimately, the responsibility rests with me and other Ministers in Government and that is the right position.

Sir Desmond Swayne

No Government would hand the decision to independent organisations, would they?

Mel Stride

I cannot possibly comment about the future. Who knows how mad things could get. I would like to think not. I would like to think not, no.

Debbie Abrahams

You mentioned the Resolution Foundation. Have you managed to read the latest report, “Ending Stagnation”, which came out on Monday? It is quite scathing of the role of social security in the last 15 years but particularly in the last 10, on the impact not just of social security in increasing poverty levels and destitution but also in terms of contributing to a stagnating economy. It provides the analysis, which is what you as a Secretary of State need, around the 11 million individuals whose earnings make up less from income than social security, and half of those households are working, the other are sick and disabled. Only a million of those households are traditionally unemployed. It argues that the increase in income inequality, the prosperity gap, has been driven by social security policy, which has “failed to keep pace with prices” in the last 10 years, “Leaving the basic level of benefits at just £85 per week, only 14% of average pay and its lowest level on record”. It points to the, “Doubling of destitution since 2017, with 3.8 million people, including 1 million children”, not able to feed or keep themselves warm, dry or clean. Fundamentally, because it is the argument that you are making as well, it says that it is contributing to the stagnating economy that we are seeing because of the rise in income inequalities. It makes the case that social security support should increase to drive the things that you say you want to see, which is a safe and secure population, a safety net that provides that, and a thriving economy. It says that unfortunately the 10 years of social security policy that we have is not doing that. Do you agree? If not, why?

Mel Stride

Thank you very much for that. I have not read the report but I will read it. From what you have described, I would have the following observations. The first is that when it comes to poverty we have made progress since 2010. I know that you have heard these figures many times but it is important to get on the record. There are 1.7 million fewer people in absolute poverty after housing costs, compared to 2010.

Debbie Abrahams

That is because average incomes are coming down. It is an arbitrary figure.

Mel Stride

These are absolute measures of poverty pegged against 2009-10, so they are not a relative measure that is moving with the change in average incomes. That also applies to hundreds of thousands of children, disabled people and pensioners and I think 700,000 fewer children living in workless households. I would say two things about that. First, I do not think that we should just dismiss progress that has been made. Secondly, we should not say that there is not a lot more work to be done; there is more work to be done. On the second point, at the heart of the argument that you have just put forward is the idea that the economy is stagnating as a consequence of the welfare system and I do not—

Debbie Abrahams

That is not my argument, it is the—

Mel Stride

The Resolution Foundation, if that is its argument, that it is the level of benefits that is leading to a stagnating economy.

Debbie Abrahams

Contributing to it; it is increasing that income inequality.

Mel Stride

It is contributing to a stagnating economy. I would fundamentally disagree with that. If you went back to about 2012, when IDS came forward with Universal Credit, it disentangled a hugely complicated legacy system of benefits, riven with cliff edges and disincentives simply by virtue of its complications, often, to people to go into work. We brought in UC and that revolutionised that aspect of the welfare system. We now have further work to do, and we have spoken a lot about this and there was a lot of it in the autumn statement as well, on providing further support, particularly for those who are long-term sick and disabled, particularly for those who are economically inactive, where we saw a spike during the pandemic, albeit that we have made considerable progress in that respect.

Debbie Abrahams

Down to pre-pandemic levels, yes.

Mel Stride

It has come down 300,000 since peak. There is more to be done; that is totally accepted. However, I do think that things such as our back to work plan, the approach that we are taking to long-term sick and disability, the national living wage change, the National Insurance tax change are all about growing the economy. They are all about improving the supply side of the economy in an inflationary environment, which makes it doubly important, because if we can get supply up, through labour and through planning changes with the stuff that Michael is doing—

Debbie Abrahams

My point is that half of those households are sick and disabled. I do not want to try the patience of the Chair. If I could point you to an IMF report going back four or five years now, it quite clearly said that income inequality drove less growth. You might want to look at that one as well. It is not just the Resolution Foundation. JRF has said that 5.7 million are skipping meals because they cannot afford to eat. Households are borrowing to stay afloat. Trussell Trust has said that food bank use is at a record high, with 1.5 million emergency food parcels just in the last six months, up 16% from 2022. Do you think that someone who is hungry, cold, cannot afford broadband, and is generally exhausted, trying to make ends meet, is going to have better or worse health outcomes? Could I also ask what the impact will be—better or worse—on the health and wellbeing of those people as a consequence?

Mel Stride

I do not want to see anybody in that situation. One person in that situation is one person too many. What we have done as a Government—this is a bit broader than just my Department, but if you look at my Department—is to focus whatever support we can on just those individuals. If you take the cost of living payments, billions of pounds worth of payments to 8 million low-income households, £900, 6 million people, £150, £300 to pensioners, that support has cost billions of pounds. People looking at tax, for example, will say that we have become a high-tax economy and we should be getting taxation down and we should be growing the economy that way. One of the reasons why it is difficult to do those things and meet those challenges is because we have done what you would want us to do, which is to try to target as much support as we can possibly afford into exactly those people, while maintaining within the welfare system and Universal Credit the work incentives to drive employment supply up and improve people’s lives and financial positions as a consequence.

Debbie Abrahams

Do have a look at the report because it shows that those one-off payments will not hack it. My last question is that you will be aware of Professor Sir Michael Marmot’s analysis that since 2015 we have had a flatlining life expectancy and healthy life expectancy, how long people will live in good health and be able to work and be productive members of society and the economy. A Glasgow University study has estimated that there are 335,000 excess deaths that the lack of social security support has contributed to. Nigel has asked you about the assessments that you make. I would advise you that this is something that we should be doing. Have you made any assessments of the impact of these policies on particularly the healthy life expectancy of the population and the impact that that will have on their being able to contribute? It links very much to my question to you about the autumn statement. What do you think the impacts of the autumn statement and the provisions that you have within that will have on the health and wellbeing of the people who they are going to affect?

Mel Stride

Life expectancy itself is still increasing, although at a lower rate.

Debbie Abrahams

It is not. No, it is not, it is declining. It is declining, along with the US and Iceland, three advanced economies where it is declining. There is huge evidence that our lack of social security support is contributing to that. We cannot argue about what is fact.

Mel Stride

I understand that the fact is that life expectancy is still increasing but not at the rate that it was expecting to have been increasing when it was looked at in the context of the state pension age in 2017. However, I will go away and check that. Notwithstanding that, you still have a very valid point about the importance of people having a long and healthy life and I accept that. I would come back to the fundamental evidence that there is around work being good for health. We know that if we talk about ill health, we are increasingly nowadays talking about poor mental health and musculoskeletal problems. If you take things like mental health in particular, we know that work is a good thing. Therefore, from my Department’s point of view, when I think of people suffering with health conditions and what we can do, we can provide lots of support through the announcements in the autumn statement. You were asking about that: 400,000 more talking therapies within the NHS will be very good for those who are suffering from mental health conditions, part of a drive to open up the opportunities of work to as many people as possible, particularly the people who you have described. It is not just my Department. The Health Department has huge issues around that and obesity and people being overweight and so on, which it is looking at addressing in different ways. However, from my Department’s point of view, the most important thing that we can do, and I keep repeating this, is to encourage and support people into work.

Debbie Abrahams

I would be delighted, because this is what I did as a public health consultant and academic, to get together a team of people who would be able to provide you with the evidence of the prospective impact of your policies on the health of the people who they will affect. I have one final one. Where do you think the DWP’s safeguarding policy starts? Does it start at an operational level or does it start with the design of your policies, including the level of support?

Mel Stride

In terms of safeguarding it has to be built into the processes that we deploy within the Department.

Debbie Abrahams

Not the policies.

Mel Stride

We have had a long discussion about how we shape these policies with the things that I would be thinking about and looking at. However, the overarching aim of the policies that I bring forward are about encouraging people into work where they can work and recognising the importance and value of work to people’s health and the wider economy. That would encapsulate the overarching lens through which I look at policy. As to getting together a group and sending me things, my door is open, Debbie, you know that. I am very accessible.

Debbie Abrahams

We will be knocking on that door.

Mel Stride

I will always take any colleague’s input seriously. I may not agree with it, but I go into it with an open mind to see what I can agree with and what has value.

Debbie Abrahams

It will always be evidence based from me. Thank you so much.

David Linden

Secretary of State, let’s talk about disability and, in particular, the support through personal independence payments. On what basis is the level of monetary support provided through PIP determined?

Mel Stride

It is there as a contribution to the additional costs of disability. You will know, David, that there are different levels of it and it can go up to about £9,000 a year, which is tax free. It is there to cover those costs. For some people, of course, that will mean that it might be a stretch, although it is an annual payment. It is an ongoing payment. For others it may substantially cover their costs several times over. That is just a feature of the way in which that benefit operates.

Katie Farrington

I will just add a couple of things. The Secretary of State has described this well. The benefit is designed to be a contribution towards extra costs. It is a functional assessment of how the benefit affects your daily life—things like whether you can wash yourself, dress yourself, and cook independently. Then it is designed to be a contribution towards those extra costs. As the Secretary of State said, the costs will vary considerably from person to person. It may also be worth saying that it is not means-tested. It is designed to contribute towards those costs.

Mel Stride

To clarify that on the means-testing front, I agree that it is not means-tested in the sense that there is any minimum capital requirements around it, as there is with UC. However, there is a certain amount at which, if you earn above, you lose the benefit. Sorry, am I thinking of carers? Sorry, ignore that.

Katie Farrington

Yes, PIP is not means-tested.

Neil Coyle

Is that a plan of the Government, to introduce that policy?

Mel Stride

No.

Neil Coyle

Absolutely categorically not?

Mel Stride

No.

David Linden

The MS Society conducted an online survey of 1,100 people affected by MS in the UK. It found that people affected by MS had a number of extra monthly and one-off costs that meant: “Disability benefit rates often fail to enable people with MS to cover the extra costs they face due to their condition”. That shows that something has gone wrong, doesn’t it, Secretary of State?

Mel Stride

To the extent that people are not getting all their additional costs covered shows the way that the benefit is structured—which is probably due to the fact that benefits do benefit in themselves from having at least some element of simplicity about them—is not calibrated on the actual additional costs that are being incurred but, as Katie set out, on the functionality of the individual receiving the benefit. That will inevitably lead, because of the way that it works, to some PIP recipients not having all their costs covered, although the benefit is there as a contribution to costs. It is not there necessarily to cover all costs. However, for many recipients it will mean that their costs are very amply covered, in fact maybe several times over.

David Linden

How many people come to your Department and say that they are getting too much money from the DWP?

Mel Stride

People tend not to do that, David.

David Linden

Do you think that there is perhaps a reason why?

Mel Stride

If the question is why people do not come forward and say, “Give me less” of things to government, I cannot think of almost any area of government where people come forward and ask for less. I do not know whether you have ever stood up in the Chamber and asked for less of something; perhaps you have.

David Linden

Less government from Westminster would be good.

Mel Stride

Well, that is true, but I am afraid we will have to continue to disappoint you on that one.

David Linden

I suspect you might. As a principle, though, people with MS do not get better, do they? The condition generally gets worse.

Mel Stride

PIP operates by looking at the functionality of the individuals involved and that is not tied to any particular condition. It is on their own personal specific circumstances. I think that is an important way of how it works.

David Linden

In your Department’s work to review the level of support provided relative to the needs of claimants, how does your Department carry out that work?

Mel Stride

Across the benefit system, there are different benefits that reflect the situation people are in. As we have described, PIP is to make a contribution to the additional costs of disability. For some people, that may cover all those costs or it may cover more than all those costs; for others, it will cover less, but that is the way it works. Other disability benefits are there to reflect, for example, that some people in that category will not be able to work and further their economic circumstances through work. The level of benefit and that element under UC is there with the specific purpose of helping in that particular respect. Across the benefit system targeting operates depending on people’s general circumstances.

David Linden

I have a final question on the issue of contribution. To what extent should PIP contribute to the entirety of extra costs associated with a long-term health condition or disability?

Mel Stride

It is there to make a contribution. It is not designed to cover people’s costs in their entirety. It would be an immensely complicated bureaucratic process if one were to look at every single individual, work out exactly what they need and calibrate the exact amount to cover it. That gets back to the earlier point I made: that inherent within the benefit system has to be some element of operability, apart from anything else. I think that for many people it is extremely welcome. It can come up to £9,000 in total, which is a significant tax-free sum that is there year in, year out.

David Linden

In summary, there are people who have long-term health conditions and disabilities who will fall between the cracks and that is just how it has to be.

Mel Stride

You say fall between the cracks. I think that the benefit system is there to provide targeted support in the most meaningful way wherever possible. I think that PIP substantially does that. There are other elements; the people you are describing may be on housing benefit or child benefit. They may be benefiting with a taper under UC if they are working. There are all sorts of ways in which help and assistance is channelled in. It will never be the perfect targeted measure for every single one of the tens of millions of people that the Department helps and tries to look after, but I think that overall the system is certainly fit for purpose.

David Linden

I think that the MS Society might take a different view. Thank you for now.

Chair

Thank you very much. I will go back for a moment to what we said at the beginning about bank accounts. You have explained in the case of the state pension where there is no capital limit that you are interested in finding evidence where people do not live in the UK and, therefore, their state pension should not be uprated. In the case of PIP, why would you want to look into people’s bank accounts to find out?

Mel Stride

I would gently push back on the presentation of my position on pensioners and fraud. Katie gave an example in answer to your question as to how there might be some fraud occurring in the pension space, but that does not lead to—as you characterise it, Sir Stephen—deciding that this is an area we want to pursue. It is not. If I had the powers now, I would not open it up to look at pensioners on the basis of overseas payments. The answer to your question about PIP is that I do not know. There is no obvious immediate point there around bank accounts. I am not saying there is no fraud within PIP.

Chair

To defend Katie, I was grateful because before she gave that example I could not conceive of any reason why the Department would want to look into the bank accounts of people claiming state pension, but I can see that there is possibly an explanation there. However, on PIP, I cannot think of anything.

Katie Farrington

The general point here is the one Katherine made, that we are trying to take the power that we need. The nature of fraud changes over time. At the moment, the fraud we see is in relation to Universal Credit, so that is where we are focusing as set out in our fraud plan. I also cannot think of any example in relation to PIP.

Neil Coyle

If the Secretary of State were to consider means-testing PIP, it would be necessary, wouldn’t it?

Katie Farrington

We do not means-test.

Mel Stride

I can absolutely assure you I am not looking at means-testing.

Chair

I think that it would probably be a widespread view across this Committee that if there is no current reason for taking these powers, they ought not be taken. I think that the Government taking powers to look at people’s bank accounts in case one day there might be some need for it—

Mel Stride

At that point, Sir Stephen, we would need to come forward with the secondary legislation to enable that to happen. The passing of the Act does not generate the circumstances described.

Chair

When the primary legislation happens there is an opportunity for genuine parliamentary scrutiny, not around the secondary. Anyway, Steve McCabe.

Steve McCabe

Interesting. I want to ask a few questions about the work capability consultation and some of your plans. There has been some criticism of the consultation. We wrote to you on 25 October. Some of the organisations have complained that eight weeks was too short, that you did not involve them in co-design, and that the intentions may not be honourable. What is your response to that?

Mel Stride

I do not accept that the consultation was inadequate. We had 13,000 responses to it, we engaged very widely with stakeholders and we held a number of events—virtual and physical—up and down the country. I think there were 14 events in total, if my memory serves me correctly. There was plenty of time to properly gauge how people felt and to take into account that feedback that we received.

Steve McCabe

You cited in your response letter to the Chair that you had a number of discussions with members of the Disability Benefits Consortium, which you said was composed of about 100 charities and organisations. However, in its response to the consultation, it said that it considered it inappropriate and detrimental to the wellbeing of disabled people and it was critical of the intention of restricting access to the higher rates of benefit. It does not sound as though you had a very healthy discussion with them.

Mel Stride

I think that it is important that, irrespective of whether people or individuals agree or disagree with us, we still have those conversations. In fact, I think there is particular value in—

Steve McCabe

If a lot of people say in response to the consultation that they are not happy, is it appropriate for you to then say you are satisfied with the consultation?

Mel Stride

As we all know, Steve, the way a consultation works is that it is there to inform policy decisions and, of course, the responses were taken into account very carefully when policy was further developed. It was helpful to have the input we had from all those that replied to the consultation, particularly stakeholders representing the organisations that you have highlighted.

Steve McCabe

Of the 100 or so organisations that make up the Disability Benefits Consortium, how many of them did you have direct discussions with?

Mel Stride

Katie would be best to address that.

Katie Farrington

The Disability Benefits Consortium is a representative organisation, as you say. We talked to the leadership of that organisation but there are organisations that make up that consortium, such as Mencap for example, that we would have also talked to directly. As the Secretary of State said, we had both physical and virtual events. Some of those organisations were represented there.

Steve McCabe

The Secretary of State said in his letter that he had had discussions with members of the consortium, and it was made up of over 100 charities. Would you say you had direct discussions with 80, 75, 50? What do you think?

Katie Farrington

We had direct discussions with a number of organisations. We also made certain that we were talking to some individual disabled people, not just the representative organisations. One other thing worth saying is that Ministers carefully considered the responses to the consultation, and in our consultation response there were a number of measures on which we decided to proceed differently than we had consulted on.

Steve McCabe

I am not trying to be clever here, I am just trying to understand. Do you not know the figure of how many of the 100 or so you had direct discussions with?

Katie Farrington

Of course we know who we spoke to.

Steve McCabe

What is it, then? That is what I asked.

Katie Farrington

I think that the consultation response lists all the organisations at the back, but the Disability Benefits Consortium is an umbrella organisation. We meet the leadership and we meet the constituent organisations for precisely the reason you are describing.

Mel Stride

The important point here is that our door is open and was open through the 14 different events that we held up and down the country. We said very clearly to all those organisations, “Please come and talk to us. Send in your submissions via email, but also come and talk to us at these events”.

Steve McCabe

The reason I pursued it is because they appeared to tell us that when they came to talk to you, they told you they were not very happy. I was asking you how satisfied you were with it. Let me move on. I want to ask about the Information Commissioner and his requirement that you publish the impact assessment and the cost-benefit analysis on your plans to form the assessment. Will you do that?

Mel Stride

We are appealing that decision. Given that it is subject to legal process at the moment, it would not be appropriate for me to say anything further on that.

Steve McCabe

The commissioner said that you had not provided compelling arguments for withholding it and there is a particularly strong public interest in the disclosure of the information, but you do not accept that because you are appealing it. Is that right?

Mel Stride

Correct.

Steve McCabe

The commissioner is wrong in the sense that you do not accept his judgment.

Mel Stride

We are appealing it.

Steve McCabe

That is fair enough. Thank you very much. Can I ask about the overall assessments and assumptions the Department has made, particularly for your submission to the OBR. Do you have any plans to publish the assessments and assumptions that you made in your submission to the OBR? What will this cost? What will you save?

Mel Stride

I might bring in Katherine in a minute, but when it comes to a submission to the OBR, there is a process leading up to a major fiscal event such as the autumn statement that I would broadly describe as iterative. There are a series of forecasts that the OBR draws together. Within that process, we are in constant dialogue with the Treasury, OBR and so on, where various information is exchanged, discussed and argued over, further information sought and so on. That is a process rather akin to policymaking. I think is right and proper that there is private space for that to occur. I am not sure I could say that there is a single document that represents our submission to the OBR. That is not the way it works.

Steve McCabe

I ask because some of the groups that you consulted with have reported that your proposals could result in people in the low capability work-related group losing up to £390 per month. That sounds as if the proposals were designed to have a cost-saving effect. If you will publish what you said to the OBR, we could test out whether that is accurate or not.

Mel Stride

The OBR has scored the impacts of this particular policy. I think that is important to put on the record here that those who are currently receiving those benefits are not, as a consequence of these measures, being put in a position where those benefits will be removed, with the exception of very limited circumstances, including fraud, for example. In fact, we are bringing in a back to work guarantee in which those people would be able to work without fear of losing those benefits, which is one of the reasons that has deterred them from going into work. We know that 50% of that cohort have that concern. In the future, this will apply to the way in which assessment occurs and, therefore, the flow of those into those benefits. The emphasis will be on identifying people who, with help, can work, particularly given how the nature of work has changed since the last time we reassessed the capability assessment gateway back in 2011, when the world of work was a different place, with flexibility, working from home and so on. That is basically the policy there.

Steve McCabe

You will not publish the estimates and the assumptions that you provided to the OBR.

Mel Stride

The costs and numbers of people that will be impacted in different ways by this policy are in the public domain already within the Treasury’s scorecard. I think that you can see those numbers there currently.

Steve McCabe

We will check that out. One last thing, the Z2K organisation has suggested that there was an internal exercise you used to make some of your decisions. It has requested that you publish that. Do you have any plans to accommodate this?

Mel Stride

I am not familiar with that specifically.

Steve McCabe

It asked about your “risk to self” plans and said that you based some of it on an internal exercise conducted within the Department. It thought it should be placed in the public domain. Are you planning to do that?

Mel Stride

I think that the answer to that is no, but let me explain why. It goes back to the first question Sir Stephen asked me the first time I appeared before your Committee on the publishing of information. I think that I set out then that I am always trying to balance—on the one hand, there is value on many occasions of publishing information, but equally, protecting that private space is important. When you served as a Minister in the Department, Sir Stephen, you will recognise the importance of being able to make policy without every single iteration of that process naturally being made public. That balance is required. What you are referring to there, Steve, would in my mind fall into the latter category rather than the earlier as being policymaking process that would not be appropriate to publish.

Steve McCabe

You have a reputation for being an open, fair-minded Minister. Do you think that there is a danger in relation to this particular exercise that it looks as if you are hiding something or being less than forthcoming with the information in the public domain?

Mel Stride

David is almost chortling but not quite. I accept that that will always be the characterisation many will place on this decision. That is a natural thing and people have a different view, but I have expressed my view. I have a strong view. It is important that if we want to have Ministers operating in a way where they look at facts, they are prepared to push boundaries and prepared to push officials with different ideas—some of which may seem to be a good idea at the time and then subsequently after future discussion the Minister realises it is a completely mad idea—I think that there needs to be a safe space for those things to happen, and that can lead to good policy.

Steve McCabe

I understand that, but when the Information Commissioner says there is a particularly strong public interest in disclosure, it might be tempting to say that you are on the wrong side of that judgment.

Mel Stride

That is a difference of agreement. That will not be the first time that we have disagreed and probably not the last time with the IC, but it will go to appeal and we will see where that goes.

Siobhan Baillie

There has long been a focus on keeping people in their own homes—young, elderly, if they are disabled—and we have put ourselves into a situation where the Carer’s Allowance has not been modernised or properly received any attention since about 2000. That is Labour, Liberal Democrats and Conservative. Do you think that it is ripe for reform and needs some attention now?

Mel Stride

It is a very important benefit. I recognise that there is an army of carers out there doing incredible work under often very difficult circumstances. I totally accept that it is an important benefit. Its annual value is about £3,000.

Katie Farrington

Yes, it is about £80 a week.

Mel Stride

Yes, £3,000 to £4,000. I think that there are some issues. People often say that there is a certain threshold over which if you are working you then lose the entire benefit, which generates a cliff edge that is unwelcome. We keep all benefits under review. I am aware of keeping this one under review.

Siobhan Baillie

I am interested because the suggestion is that the Carer’s Allowance helps people stay in work and it is described as an income replacement benefit, but at £79 a week it will not do that. This comes up on doorsteps and this is people trying to do their best helping their loved ones and they are really struggling. What do you think the allowance is for? Is it to allow people to not work or is it to support the rest of the family? What is the policy principle?

Mel Stride

It is possible for someone on the Carer’s Allowance to be on Universal Credit and receive other benefits. You have to look at different people in different situations and the consequences of that to answer that question.

Katie Farrington

Shall I add a couple of things? The Secretary of State is right about this. We have a carer element within Universal Credit, which is for people at the lower end of the income scale. That is about £2,300 a year. Carer’s Allowance is not means-tested. It is about £80 a week, or £76 and about to rise to £81.90 from April through the uprating process. That is designed first as a recognition that people are caring, and secondly as a contribution towards income that they may be forgoing. You are right about this and I would say, having met groups of carers with Carers UK, I recognise what a valuable and important role people play and how very challenging it is. This is an amount of money that is designed to support that group.

Siobhan Baillie

I am square in with the Secretary of State in believing in the power of work having other benefits, but where we have an eligibility that requires that unpaid carers must provide care for at least 35 hours a week, that is screening people out of work. For example, if you have parents who are working age and totally capable, they are not able to do that without losing this benefit. It is not enough money to live on, but it is not money that those families can lose. The other eligibility criteria that I think goes contrary to the way we recognise the power of work—which is right for the country—is that unpaid carers cannot be in full-time education either. With the way that people now enter education—with Zoom courses and all sorts of things that can be done at home—is there any move to update the eligibility criteria to be more flexible to support people?

Mel Stride

I will go back to my earlier answer without suggesting that we are on the brink of making big changes to Carer’s Allowance. These are points that are well made and understood, and as we look at benefits in the round, I will take into account going forward. They are fair comments.

Siobhan Baillie

Minister Pursglove said that there has been some research into the experience of carers, which will be very valuable. I cannot stand the way that this place cannot do anything without a consultation when we probably know what the outcome of that research will be because we hear it so often. When will we see the results of that research?

Mel Stride

I think that he is considering the research at the moment. I am not sure that there has been a decision as to whether to publish that or not. Sorry, Katie, you might know more.

Katie Farrington

Yes, the Secretary of State is right about this. As he said, there is an ongoing process to look at all the benefits, including Carer’s Allowance, partly in response to the points that you and others have raised. While that is a live process, we would not intend to publish the research.

Siobhan Baillie

This year or next year?

Katie Farrington

That will be a judgment for Ministers depending on when the process is over.

David Linden

Your senior Minister is sitting right there.

Neil Coyle

Thank you, Secretary of State, for being with us and for your kind words about Alistair Darling. You mentioned disentangling the system and simplifying it, but you oversee the highest level of fraud error in the social security system. I want to ask about one of those errors, for people who moved from incapacity benefit on to ESA but only received contributory ESA. How many requests for compensation has the Department received from people affected?

Katie Farrington

We reviewed 600,000 cases.

Mel Stride

Of those, 120,000 were found to be in arrears, I think.

Katie Farrington

You are right, 118,000 were found to be in arrears.

Neil Coyle

That is 120,000 people identified as receiving the wrong amount. How many of those people are now receiving the right amount?

Katie Farrington

When the process was completed in July 2021, the Department published a report summarising all the work. We will be happy to share this again with the Committee. The average compensation payment was about £5,000 for each of those 118,000 people.

Neil Coyle

Has that all been paid alongside all their backdated pay?

Katie Farrington

My understanding is that it has been paid, but if there are cases you are aware of, you can raise them with us. My understanding is that the process is complete. We reviewed the cases and compensated people where there was error, and the average compensation was £5,000.

Neil Coyle

Is it possible to update the Committee with the full statistics to make sure that the money has gone to the individuals directly affected?

Mel Stride

Yes, I am happy to write to the Committee.

Neil Coyle

Thank you. Was any work done on the cost to the NHS in the period that people were receiving the wrong amount? In Ms U’s case that went to the ombudsman, she provided evidence of mental and physical ill health. Was any assessment done of the cost to the NHS of that error by the DWP?

Katie Farrington

We are not aware of any such assessment. We have put right the error that we discovered and we have sought to compensate the individuals affected.

David Linden

Let’s come back to conditionality and sanctions. Within the sanctions regime, how would you characterise the importance of the deterrence effect compared with the scale of sanction imposed on claimants?

Mel Stride

I think that the deterrent effect is very important. We know from surveys and so on that those who are not sanctioned or perhaps never come anywhere near being sanctioned highlight the fact that it is an approach that leads to a behavioural response that is about engagement. There are two things that I always look at when I look at somebody’s report or analysis that criticises sanctions. First, has their approach taken into account the deterrent effect? It is there and we need to try to measure it. Secondly, to what extent has it been recognised in the analysis that the group that has been sanctioned are probably different in a number of characteristics to any control group that has not been sanctioned? For those in a group that has been sanctioned, we know there will be reasons for that sanction, such as non-engagement. Therefore, if you measure the outcomes from that group and compare them with a control group that has not been sanctioned, it might not be surprising that the lack of engagement that led to the sanction may also be present when it comes to finding work or a particular type of work. It is a very inexact science, but I always think that those two things need to be addressed within any analysis. Sometimes when I am presented with analysis that says it demonstrates it clearly does not work, one or both of those aspects have been deficient, in my view.

David Linden

We received some written evidence for this inquiry from Professor Jane Millar, Dr Rita Griffiths, Dr Marsha Wood and Fran Bennett. They cited a particular case where a lone parent in their research had a sanction of £300 for arriving 10 minutes late for an appointment. She had moved cities and was unfamiliar with the local bus timetables and route to the jobcentre located some way out of town. The significant loss of income and distress this incident caused had impacted on her mental health, reducing the likelihood of her finding work. They go on to say in the written evidence, “In no instance we came across did the sanction function as an incentive to work or to work longer hours”. That is the evidence that we have received in this inquiry. Why do you think that is wrong?

Mel Stride

First, I am not intimately familiar with the analysis you have raised. It could be that the answer might be that one or both of the fundamental points that I raised are not, in my opinion, sufficiently addressed in that analysis. Secondly, I think that this Committee has received evidence on this point, that there is evidence out there that sanctions work. There are perfectly good studies around the world that, in my opinion, are robust in the terms that I have set out and show that sanctions are effective in a number of ways. I think that I wrote to Sir Stephen after my last appearance pointing out an IFS article that cited a number of these particular studies and made the fundamental points that I have just made to the Committee. I would also make the point, which goes to the example you have given, David, that nobody wants to see anybody in a situation where they are inappropriately sanctioned for no good reason. That is why we have a very robust process in place. Well over 90%, getting on to 100%, of sanctions are for people who miss an appointment. That is how the current data stacks up. The process is that the work coach will engage with that individual, clearly listen to what they have to say about the circumstances and try to sort things out without the need for a sanction. In the event that progress cannot be made, it is not the work coach who makes the decision on the sanction, it is a third party who assesses the case in the round. There is an opportunity for the individual’s comments and thoughts to be fed into that process. If the claimant is still unhappy with the sanction at that point, if it is applied or due to be applied, there can be a referral to another individual to reassess the situation. Finally, the decision can go to the first-tier tribunal. I think that we have belts and braces put into the process to be fair and make sure that people’s circumstances are heard and properly taken into account. That does not mean that everybody who is sanctioned is happy about it or feels it is fair.

David Linden

I will come back to what I perceive to be the inconsistency of the application of sanctions in my final question. You mentioned the comparison with other countries earlier. We heard that compared to other European countries the UK is much more reliant on the conditionality regime than training and subsidised employment. What non-financial sanctions does the Department use? Does it have any others at its disposal?

Mel Stride

I am not aware of non-financial sanctions.

Katherine Green

I can come in on that. The important point is to go back to how conditionality is applied. It is through a claimant commitment. That is an agreement between the claimant and the Department for what the claimant will do in return for the benefits that they receive. That is fundamental to the whole process. The sanctions are then applied, should the claimant not oblige with the policy and if they do not have a reasonable reason for doing so. As the Secretary of State described, that goes through a robust process with an appeal system. The short answer is that the sanctions available are only financial but there are a range of sanctions. There is a spectrum depending on the gravity of the issue. The fundamental thing is that the claimant has agreed at the start of the process of receiving benefits as to what they will do in return for those benefits.

David Linden

The fundamental point is that, compared to other European countries to which the Secretary of State was making a comparison, the UK is an outlier in not having any non-financial penalties. That is right, isn’t it?

Katherine Green

I am not sure we would recognise that. Coming back to your point on training elements, within the claimant commitment are things such as the claimant must go on a training course, which is an investment and support for that individual to gain skills to get back into the workplace. The UK system has a whole range of training elements to it—for example, SWAPs, some of the sector-based programmes or Restart, which we have just extended as announced in the autumn statement. I am not sure that we would recognise that we are out of kilter necessarily.

David Linden

I want to finish off by asking about the application of sanctions. The Committee has received evidence that sanctions are not always applied as consistently as intended, for example, when sanctions are imposed on individuals who do not meet that claimant commitment for a good reason. How does the Department monitor that area in practice?

Mel Stride

There is a structure around Jobcentre Plus that has regional directors and feeds in ultimately to directors general themselves. There are frequent discussions and meetings held about the way in which the whole operation works and whether or not it is effective. That is the route through which dialogue and making reiterations to policy work. I think that is as it should be, grassroots up. When I have time, which is in short supply, I like to get out to jobcentres and talk to work coaches and hear what they have to say.

Katherine Green

I would add that the whole point of having an independent set of decision makers is to gain consistency as well. The work coach will put the evidence in but there are a set of decision makers who are trained and expert. They ensure consistency across the piece.

David Linden

Secretary, you mentioned that you like to get out and see how things are working at jobcentres. I do not know when you last spoke with Citizens Advice, but it said that sanction rates within Universal Credit had more than doubled in the last three years. Indeed, the rate of sanctions has risen at a faster rate than the rise in Universal Credit claims over time. That does not sound particularly great, does it?

Mel Stride

In answer to your question about when I last met Citizens Advice, I had a surgery in my constituency reasonably recently in which I met a representative from Citizens Advice. We work very closely with them, as you know, as a Department, not least through the Help to Claim service that we fund. On the sanctions rates, broadly speaking they have been on a slight downward tilt, having peaked at about 6%. Pre-pandemic, they were 3%. Of course, in the intervening period a lot of controls and face-to-face requirements that were normally there had to be removed. I think that disengagement and a different way of working probably explains the larger part of that increase.

Katherine Green

Yes, I think that is right. I would also point you to our published statistics on this. Every three months we publish full statistics on sanctions where you can see that historic trend. The Secretary of State is right. In order to ensure that benefits got out there during Covid-19, we rolled back and made some easements across the whole system. Rightly, we are now putting those more structured systems back in place.

David Linden

The last question I want to ask is on the case I cited earlier of the lone parent who had been sanctioned to an amount of £300. When you delve into the case, it seems pretty unfair. What protocols are in place to ensure that claimants who failed to meet the claimant commitment have the opportunity to at least provide evidence before a sanction is imposed? In that case, the sanction led to destitution. It strikes me that if there was a more robust protocol in place to ensure that evidence can be provided, that case would not have played out like that.

Mel Stride

It is built into the process.

Katherine Green

Absolutely. There are two things to say. First, it is important to acknowledge that the sanction can only be applied on the standard allowance, which is only one element. The vast majority of people on UC receive housing, childcare or some other form, or the health element as well. It can only be applied on the sanction. The safeguards are the clear process and the decision maker. There is a clear process that, when a possible sanction is occurring, claimants are given seven days to provide a reason for their failure to turn up to an appointment. For example, if a child is ill or there was a work interview or another valid reason, the work coach will not take that any further. The absolute safeguard is the decision maker. The decision maker will look at the evidence and make a robust decision about whether or not that sanction is justified. That is exactly what their job is.

David Linden

Lastly, should the two Conservative MPs who are not at Committee today be sanctioned for not coming to work?

Mel Stride

I think that is a matter for the Committee, isn’t it, Sir Stephen? I will certainly not pass any comment on that. I do not think you have full attendance every time, do you?

Chair

Not every time but it is not bad on the whole, I am pleased to say. Debbie Abrahams, you wanted to come in with a quick question.

Debbie Abrahams

Yes. I think I heard you say that sanctions are down. The figures that were released in November show a slight increase and the average duration of UC sanction is 11 to 12 weeks. There were 1.89 million UC claimants subject to conditionality, or over 30%. Eleven to 12 weeks, nearly one in three, and an uptick in that. It has not gone down to pre-pandemic levels. We need to get that on the record and get the facts straight.

Mel Stride

Certainly. I have in my mind a graph that comes down slightly at the end, but we will check that and let you know, Debbie. This 30% figure, though, I think refers to 30% of those that are in the UC system who are subject to conditionality, not subject to sanctions.

Debbie Abrahams

No, 30% of all UC claimants.

Mel Stride

Subject to conditionality but not a sanction.

Debbie Abrahams

No, 1.89 million UC claimants are subject to conditionality, or 30%, and the average duration is 11 to 12 weeks.

Mel Stride

I think we might be confusing conditionality with sanctions. Conditionality is where the claimant commitment is entered into between the JCP and the claimant. Those people are subject to conditionality. They need to turn up and engage with the system. That is the 1.89 million or 30% of those.

Chair

Surely all UC claimants are subject to conditionality in that sense. Everybody has to comply with conditions.

Mel Stride

If they are beyond the AET, they will be in a different regime—intensive work searches.

Katherine Green

There is a subset of UC claimants that are subject to full conditionality. That is the 1.89 million and it is exactly right, that is around a third of everybody who receives UC. Those are people, for example, in the intensive work search category—they are fit and able to work and, therefore, we feel that it is reasonable to impose conditionality, which essentially means you have the potential to impose a sanction. There is a set of people with particular health or disability benefits who are not expected to work, and they are not within the sanction system. Those are the figures you are referring to. It is the wider group that is potentially subject to sanctions, which is the conditionality group of 1.89 million. Of those, the latest statistics show that 6.48% were actually sanctioned. That is nearly 123,000. That is what our latest statistics show. That is the number that had sanctions imposed upon them. That is a percentage of that wider group, 1.89 million, who are subject to conditionality.

Debbie Abrahams

Okay. I will follow that up because they are slightly different figures that I have here.

Katherine Green

Our statistics on this are published. We can follow that up.

Mel Stride

Yes, we will provide you with the up-to-date numbers on that, Debbie.

Neil Coyle

Is primary legislation required to make the changes in the autumn statement about closing UC claims for people on open-ended sanctions over six months or others, for example?

Mel Stride

Yes.

Katherine Green

The short answer is yes.

Neil Coyle

When will it appear?

Mel Stride

Not immediately. When the business managers deem it appropriate but not one that you will see in the short term.

Neil Coyle

When will the consultation on those plans appear?

Katherine Green

There is not a specific timetable to plan yet. As the Secretary of State says, the first thing is when the business managers would give us a slot for the primary legislation.

Neil Coyle

You do not know, but it has been announced. It is a very significant change. Secretary of State, you told this Committee in March that there were no changes to sanctions and conditionality plans that required legislation. We have seen a reverse ferret of sorts, but it is very significant because it affects so many more people and obviously affects your frontline staff. What is the intention behind the policy? What is the evidence base driving the significant change since March?

Mel Stride

Under the back to work plan—there are various parts of this but let me just walk you through it. A timeline is probably the best way of looking at it. Somebody enters into a claimant commitment, they engage with us at a Jobcentre Plus, they look for work, and so on. We are now bringing in through time what we call AJS, which is additional job support, at seven weeks. That is an intensive week of assistance, help and support for that individual. We have already been piloting the same approach at 13 and 14 weeks, so they would then go through that. We are now moving to a situation where a number of people would then go at the six-month point on to Restart, which would last for up to a year of very intensive work support to get people into work. What we are saying on the sanctions front is, after that 18 months, given that they are fit and able to work, in the event at that point they refuse to take a job that we may have found for them, which is appropriate for them, we feel under those circumstances it is right to apply a sanction to that benefit. Now, the six months point, Neil, is a slightly different point and sometimes gets conflated with that, which is why I have set that out. There are those out there who are subject to an open-ended sanction and that open-ended sanction has been in place for at least six months. Where it relates to people who are only receiving the standard allowance, so they are not receiving child housing or disability elements within UC, we think it is perfectly reasonable to—on having contacted that individual and said, “Look, we haven’t heard from you for six months”, there is no benefit that is being paid, of course, at that point because they have been sanctioned on the standard allowance—close those claims.

Neil Coyle

Have all the stats from the pilots been published? How many people—as a percentage or a number, I don’t mind—fell into this category of non-engagement?

Mel Stride

There is a number.

Katherine Green

From the pilot? The pilots are ongoing so we haven’t published or completed the pilot—

Mel Stride

Sorry, are you talking about the closing of the six-month claim?

Neil Coyle

As a first point.

Mel Stride

Okay. It would ultimately be 120,000 that would be coming through, I think I am right, at the end of the 18-month period.

Katherine Green

Are you asking about the AJS pilots?

Neil Coyle

Yes.

Katherine Green

Okay. Yes, the AJS pilots are ongoing. They are only three or four months in.

Neil Coyle

I asked about the evidence for the new decision and the legislation and you suggested that there was something within those pilots that identified that group.

Katherine Green

Yes, we will learn from those pilots how many become disengaged, all that, but they are not at the six-month point yet. We are three or four months in. In answer to your question, if you are interested, I think we are going to publish some statistics shortly on how many we have on the stock, if you like, that will be affected by that claim closure announcement in the autumn statement.

Neil Coyle

Will that be broken down by who they are and the elements they receive?

Katherine Green

Well, as the Secretary of State has said, we will only be closing claims of people who are on the standard allowance.

Neil Coyle

There will be no disabled people, no single parents within those groups?

Katherine Green

Correct.

Neil Coyle

It would be interesting to see those—

Mel Stride

If they are in receipt of the child element, the housing element or the disability element, then we would not be closing those benefits. It would only be for those who, by definition, because they are being sanctioned on the standard allowance, would not be receiving anything and would not have done so for six months.

Neil Coyle

It will all be subject to an equality impact assessment, so there will be data before the primary legislation?

Katherine Green

In the normal process.

Neil Coyle

Normal, okay. There is a cost attached to this in the autumn statement. The Treasury suggests it is, I think, £5 million next year. Is that because some of those people will then reapply and it is additional staff time? What is that?

Mel Stride

I think that line from memory in the scorecard is slightly misleading in that sense, because what it is referring to is the additional staff that will be deployed to engage customers at the 18-month point in a new claimant commitment, which will embody this. If we have a job, then you should be accepting it. If not, then it is a more intensive regime and work placements and so on. I think it is 5 million, then it goes to 10 million across the scorecard from memory. It is referring to that, not to the process of closing at the six-month point.

Katherine Green

That is correct. It includes two measures, the claim closure measure and also the one the Secretary of State is referring to, which is the revision of the claimant commitment at the end of Restart.

Mel Stride

That does require more people.

Katherine Green

Yes, the answer to the question is that it does require some small staffing and processing costs to take those forward and to do any extra checks and balances, given this is a new process around the claim closure. Probably the important point to add, though, is we would expect in the end that to have some deterrent effect and also possibly to have some effect on passported benefits. Obviously, with claim closure those individuals will not be entitled to those passported benefits either.

Neil Coyle

Do you expect to publish more information on those costs and potential benefits as well as a longer-term view? If it is 5 to 10 million, what happens in the year after it is 10 million?

Katherine Green

We will be reviewing and updating the figures in the public finances as normal. If we track and find that the policy has different effects, then those will be updated in the normal way, yes.

Neil Coyle

This has already been touched on. Announcements made in both the spring Budget and autumn statement will bring thousands more claimants into conditionality. The Committee has questions about capacity here, within the Department and more widely. How does the closure of jobcentres map across this extension, the additional role that you have just mentioned and suddenly the new recruitment 5 million, 10 million or whatever proportion of that is on new staff?

Mel Stride

There are a couple of points I would make and then Katherine will probably make a useful contribution. First, the jobcentres that are being closed are often and typically those that were stood up as extra estates during the Covid pandemic. What is pertinent here, Neil, is the number of work coaches that we have. You are right if you are saying there are lots of new interventions coming along, but what does that mean for work coaches? We are currently at about 12,000 and we will rise, I think in March, to about 16,000 or thereabouts.

Katherine Green

That is correct. We are actually slightly higher at the minute. We are just about 14,000. We were at 12,000 back in the summer and that will rise to around 16,000 for exactly the reasons that you say, to make sure we can implement the policies announced.