Lords second reading of Welfare Benefits Up-rating Bill

12 February 2013

Members of the Lords discussed the key principles and purpose of the Welfare Benefits Up-rating Bill during second reading, on Monday 11 February 2013.

Baroness Stowell of Beeston (Conservative), began the debate, saying: ‘The bill provides for most working-age benefits, tax credits and statutory payments to be subject to a 1% increase in 2014-15 and 2015-16... As a result of this, the bill will save £1.9 billion in 2015-16. We have also retained safeguards for a number of key benefits, which will not be subject to the provisions in the bill... For pensioners, we are maintaining our commitment to the triple lock, a commitment which will see the basic state pension rise by earnings, prices, or 2.5%, whichever is highest. In 2013-14, when both prices and earnings growth are below 2.5%, we will ensure that the poorest pensioners will see the same cash increase by over-indexing the guarantee element in pension credit, which would normally rise with earnings.’

She continued: ‘It is important that we see this bill in its broader context. It enables the government to make savings that are crucial to reducing the deficit and to maintaining our credibility with the financial markets while protecting those on fixed incomes or with additional needs. But at its heart it is a bill for the long term, one that plays a crucial role in repairing the public finances’

Lord McKenzie of Luton (Labour) followed, saying:  ’...analysis now shows that two-thirds of those affected by this bill are actually in work, striving to rise above poverty levels and support their families. The Children's Society shows that up to 40,000 soldiers, 300,000 nurses and 150,000 teachers will lose out as a result of this bill. Despite what we are told, disabled people are not properly protected. The bill penalises working mothers and punishes children, trapping them in poverty. Two-thirds of those hit by cuts to tax credits and benefits are women.’

Lord German (Liberal Democrat), then spoke, saying: ‘Clearly, many noble Lords are concerned about the welfare budget reductions contained in the bill. I can understand that concern. It is never easy reducing welfare payments; it is very uncomfortable and something which gives me concern as well. However, it would have been a lot worse if the government had not slowed down the deficit reduction programme.’

He went on to state: ‘This measure is temporary. It is time-limited to end in the financial year 2015-16. Unless changed again by an incoming government, the present arrangements for annual up-rating will apply once more. However, there are some rough edges to the bill. I hope that the government will explain and debate these in detail in committee. It is right to have sweeping exemptions for pensioners, the sick and the disabled - but some anomalies will need explanation, justification and perhaps amendment.’

Lord Newby (Liberal Democrat) responded on behalf of the government, saying: ‘A number of noble Lords asked why we are proceeding via a legislative route. We believe it is only right that we set out our plans in advance and give as much certainty as possible. The bill gives certainty on further savings, making a crucial contribution to our plans and helping us to maintain credibility, not least in the markets... Welfare spending accounts for more than a quarter of all public spending. In these tough economic times, when people across the public and private sectors have seen significant restraint in their pay, this bill finds the right balance between finding savings from welfare while ensuring that benefits and tax credits continue to be increased in cash terms.’

Committee stage, line by line examination of the bill, is scheduled to start on 25 February.

Welfare Benefits Up-rating Bill summary

The bill implements an announcement by the chancellor in the 2012 Autumn Statement that increases in certain working-age welfare benefits and tax credits would be limited to one per cent, rather than increasing them in line with inflation.

What is second reading?

Second reading is the first opportunity for members of the Lords to debate the main principles and purpose of the bill and to flag up concerns and areas where they think changes (amendments) are needed.

Before second reading takes place, a list of speakers for the second reading debate is opened and interested members add their names to it.

The government minister, spokesperson or a member of the Lords responsible for the bill opens the debate.

Any member can speak in the debate so this stage can indicate those members particularly interested in the bill - or a particular aspect of it - and those who are most likely to be involved in amending the bill at later stages.

Second reading debates usually last for a few hours but sometimes stretch over a couple of days.

Further information

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