Advice NI Response to Work and Pensions Committee Call for Evidence on Cost of Living June 2022

20 June 2022 13:34

Consultation Responses

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Background

Advice NI

Advice NI is a membership organisation and service provider that exists to provide leadership, representation, support and services for the Independent Advice Network and people in Northern Ireland. We support 67 members across NI, who providing advice on benefits, debt, housing, employment and consumer related issues.

Advice NI also delivers a range of advice services to the public via a Freephone helpline which includes Debt & Money, Benefits, Tax Credits & HMRC products/services, EU Settlement Scheme, Covid-19 advice and Business Debt.[1]

Advice Sector

The independent advice sector plays a fundamental role in tackling poverty in NI: the service underpins all other work including community, health, education and economic / social wellbeing. Providing advice and information at the right time for people who need it, in a range of formats and through a range of channels, with benefit entitlement checks, income maximisation, debt advice, tribunal representation, housing and immigration advice (with access to interpretation services as required), allows people to then go on and fully engage and participate in society.

But the experience of poverty is about more than this. It’s not just a disadvantaged and insecure economic condition but also a shameful social relation, corrosive of human dignity and human rights. A key role of independent advice services is empowerment: advisers do not tell people what to do; they explain their options and the possible outcomes of different courses of action. People are encouraged to make their own decisions and act on their own behalf. Advice providers enable people to manage their own problems by focusing on their needs as individuals.

Access to independent advice has been an essential service for communities and a lifeline for so many.[2] To tackle the Cost of Living Crisis, there must be the right to access independent, free, quality, confidential advice and information. This will provide people with access to a range of welfare support including social security benefits, debt, housing, immigration advice and tribunal representation. This provision should be made widely available across all council areas, with increased provision within areas of high deprivation, and including specialist help for specific social groups and for specific issues as required.

Furthermore, the independent advice sector should be sustained by receiving appropriate, adequate and longer term (3 – 5 year) funding settlements using the full cost recovery model, that will allow for a strategic coordinated approach to delivering advice services and ensuring targeted projects on generalist / specialist services and including benefit uptake, welfare reform, debt prevention, immigration advice (including interpretation costs) appeal representation and financial inclusion: deliverable with clear objectives and outcomes.

Cost of Living Background

We have had a decade of austerity coupled with income inadequacy, whether that is income from benefits or from paid employment. We have had over two years of a global pandemic that is still ongoing. We are now dealing with a cost of living crisis where we are seeing rising inflation in the form of rising energy and food prices; as well as rising interest rates that are impacting mortgages and loans and which could potentially cause an explosion of debt. All of this is eroding resilience in households and communities and is sure to bring about job losses, home losses, destitution and ever deeper levels of poverty. We can blame Covid, we can blame the war in Ukraine, we can blame housing booms, we can blame dotcom bubbles, we can go back in time as far as we like and blame anything we like. But the fact is, this is how our economic system works; it moves from one crisis to another, from one recession to another. The cost of living crisis is yet another crisis in our economic system.

The Institute for Government defines the cost of living crisis as the fall in disposable incomes due to rising inflation, largely driven by the substantial increase in energy costs, particularly the wholesale price of gas.[3] The most noticeable price increases are in the cost of energy, fuel and groceries.[4] In response, primarily to rising energy costs, the government introduced a number of financial interventions. The Energy Bills Rebate announced in February was overhauled and rebranded so that rather than a payment of £200 that had to be repaid, households will receive a £400 grant to reduce their electricity costs. Those on most means-tested benefits will receive an additional one-off Cost of Living payment of £650, made in two instalments in July and October. A further payment of £300 will be made to pensioners in recognition of the greater impact rising energy costs have on older people. Anyone in receipt of certain disability benefits will also receive a further one-off payment amounting to £150 in September 2022. Reactions to the announcement were broadly positive, with many recognising that these measures were a substantial improvement on the support that the Chancellor had announced previously.[5] However, substantial concerns have been raised about the short-term nature of the support and the economic choices made by the Chancellor.[6]

Consultation Response

How effectively will the new Cost of Living Payments protect different types of households from increases in the cost of living?

That we are still in a crisis, is clear evidence that the current interventions are simply not working. Giving people a one-off lump sum payment does not change their circumstances. It only provides momentary respite from a perpetual state of poverty. You might be able to fill your oil tank today, but what about food on the table tomorrow? Billions have already been spent on such interventions. In NI, the Covid Energy Payment & Emergency Fuel Payment Schemes, Food Boxes Scheme and the Holiday Hunger food grants; the High Street Voucher scheme at the end of 2021; the Fuel Payment at the start of 2022; these are all examples of recent schemes in NI where one-off lump sum payments have made little impact. All the money is gone and yet we are facing a cost of living crisis that is worse than that of the Great Depression of the 1930s.

Continuing to take this approach of paying out lump sums is lazy, stupid and pointless. It is not helping people in the long-term and it is wasting money. Another approach is desperately needed.

What approach should the Government take to the uprating of benefits and state pensions in future years?

Following the Chancellor's announcement on 26 May, are there other ways in which the Government should increase support for people on legacy benefits and state pensions ahead of the next scheduled benefit uprating in Spring 2023?

What changes should DWP make to their deductions policies and practices to protect those on Universal Credit and legacy benefits from reduced incomes?

How can the Government act to increase Pension Credit take up to help pensioners with rising living costs?

We need more upstream interventions that tackle the problems closer to the root causes rather than simply addressing symptoms; interventions that leave a longer term legacy. It is the difference between giving somebody a fish and teaching them how to fish. We suggest a range of upstream solutions:

Social security:
- Design and implement a new campaign for the take-up of Pension Credit, Social Security benefits and other entitlements utilising the skills and expertise of independent advice services.
- Reverse the recent trend of cutting and ‘freezing’ the uprating of working age in work and out of work benefit levels, and uprate benefits in line with current inflation.
- End the perverse disparity in UC rates for people aged under and over 25, given the ‘cost of living crisis’ does not distinguish between these age groups.
- Safeguard people by mitigating threats to benefit income (e.g. disability benefit renewals, deductions, sanctions, expedite appeals).
- Carry out an impact analysis of Welfare Reform to address those aspects that are causing greater poverty e.g. 5-week wait for UC, high levels of deductions, extreme sanctions.
- Delay the implementation of Managed Migration to UC. It is madness to carry out this transition in such a short timeframe during a cost of living crisis when it comes with such huge risks to people's incomes.

Economic, social, environmental:
- Adopt Community Wealth Building as national policy; CWB is a viable model for addressing poverty as well as climate change, and should be implemented across government departments to ensure wealth (whether it is in the form of bank deposits and savings, procurement budgets, public and community assets, etc.) remains in the communities where it is generated rather than leaking out to external and corporate investors.
- Provide funding for local regions to develop and deliver their own Green New Deal; the Community Wealth Building can help regions deliver on their Green New Deal programmes.
- Between them, both Community Wealth Building and the Green New Deal will, among other things, help create more jobs that pay at least the real living wage and that are secure, and will help address both fuel and food poverty, while also making the transition to net-zero carbon.
- Support the mutual banking movement to help regions establish their own regionally-owned mutual banks.
- Outlaw zero-hours contracts.
- Adopt the real living wage at the national living wage. The real living wage is better for workers than the minimum wage because it is independently calculated every year based on the real cost of living and on a social consensus of what people need for a decent standard of living and to participate fully in society; it is also up-rated annually.
- Initiate a Universal Basic Income pilot to gather evidence on its effectiveness.

Government may want to dismiss the upstream solutions suggested here because they are unaffordable. However, lack of money cannot be used as an excuse for not implementing these solutions. First, we all know that money can be created when needed (government has done this in the past to benefit banks and corporations; and money has been ‘found’ for the cost of living payments). Second, there is already plenty of existing wealth that is being extracted from the real economy that could be retained for spending locally if the CWB model was put in place; and if corporate and High Net Worth (HNW) tax evasion and avoidance were addressed – if you need ideas for doing that, the Tax Justice Network can help. Third, putting money into an upstream solution is an investment, not a drain of public resources. It will build a legacy, put more money into people’s pockets in a sustained way rather than just one time, and will help build local economies in a way that will make them more resilient and less dependent on public resources. Upstream solutions are a win-win for government and people.