Welfare Reform Bill

(Limited Text - Ministerial Extracts only)

Monday 13th June 2011 Commons Chamber

[The Minister of State, Department for Work and Pensions (Chris Grayling)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss Government amendments 1 to 13.

[Chris Grayling]

Mr Speaker, if you would permit me to go off the subject for a moment, I think it would be appropriate to mark, as you did just now, the recent honour received by the Clerk. I am sure that Members in all parts of the House send him our congratulations and best wishes. [Hon. Members: “Hear, hear.”]

Amendments 1 to 13 and new clause 1 introduce the direct earnings attachment, or DEA, as a method of social security debt recovery. An attachment of earnings is a method by which money will be stopped from a customer’s wages to pay a debt. The debt in question could be an overpayment of benefit, any associated penalty, a recovery of hardship payments or a payment on account. The measure will also be available for use by local authorities for the recovery of housing benefit overpayments. In due course it could also be used for the recovery of council tax benefit overpayment, once the localisation of council tax benefit takes place. A DEA would also be available to recover an administrative penalty for a benefit fraud offence or a civil penalty for failing to take proper care of a benefit award.

[Mrs Anne Main (St Albans) (Con)]

Is there some sort of structure in process so that if EU migrants who work in the country and are eligible for benefits move out of country when they no longer wish to work here, any overpayment of benefits could be clawed back, should those migrants move through other EU countries?

[Chris Grayling]

My hon. Friend makes an important point. Although in theory mechanisms do exist to recover payments, the process is much more difficult than one would wish. I take her point, and my ministerial colleagues and I will continue to seek ways of ensuring that in such an eventuality, we can make recoveries.

[Chris Bryant (Rhondda) (Lab)]

While the Minister considers that issue, will he also consider the case of the many hundreds of thousands of British people who live in Spain, who often rely on support, especially from the national health service and many other services that they receive, from the Spanish Government? The same applies elsewhere in Europe.

[Chris Grayling]

The hon. Gentleman is of course correct, but I am sure that he would also agree that if someone comes to live and work in this country, receives benefit payments and then returns overseas, they carry with them an obligation that they should fulfil. That is the sole point that my hon. Friend the Member for St Albans (Mrs Main) was making, and it is one that I think Members on both sides of the House would see as common sense. There is freedom of movement across Europe, but we must make sure that the mechanisms are in place to ensure that our systems are not abused. The primary purpose of DEA is to enforce recovery where the debtor is in pay-as-you-earn employment and will not make other arrangements for debt repayment. I think that that is a sensible approach to take.

I apologise to the Opposition for the fact that we were unable to bring the new clause forward in Committee. It has been very carefully considered and discussed in our regulatory processes. We have brought it forward at this time and hope that they will not find it controversial. One of the reasons why I hope that they will not find it controversial is that there is currently something of an anomaly in the system. If someone incurs a penalty, for whatever reason, and remains in the benefit system, we can recover that money through a deduction from the benefit payments they receive. However, if they move into PAYE employment and basically say, “No way. Go away,” we currently have no mechanism for recovering the debt that is owed. That is the purpose of the measures that we are considering.

The rates of deduction will be determined in the regulations, which will include a safeguard to ensure that deductions do not take the debtor beneath a given level of earnings. That is necessary and common practice in the operation of similar arrangements in other parts of society where deductions are made—for example, with court-related penalties and deductions for child maintenance. It is essential that we do not deduct money at a rate that will tip the person concerned below a given level of earnings. It is, and will be, a basic principle that recovery of overpaid benefits should not cause undue hardship.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

Will the Minister clarify whether any judicial process will be applied to attachments in relation to someone’s earnings? The reason I ask is because, as I am sure all hon. Members know, mistakes happen, sometimes because of errors on a claimant’s part but sometimes because of errors by the bureaucracy, and I am concerned that there may not be enough safeguards to ensure that attachments will not be made erroneously.

[Chris Grayling]

The hon. Lady makes an important point, and I will explain in a moment what rights individuals will have. It would of course be inappropriate to have a system in which a DEA could be applied and there was no comeback at all for the individual. A system that allowed no right of challenge or appeal would be wholly inappropriate, and I will explain in a moment why that will not be the case.

[Andrew Percy (Brigg and Goole) (Con)]

On that point, would a debt order have any bearing on the assessable income available for child maintenance payments?

[Chris Grayling]

That would depend on the circumstances. It is obviously important that a deduction of earnings takes into account the potential impact on the individual, so we would need to take into account other payments. Ultimately, it is a basic principle that recovery of overpaid benefits should not cause undue hardship, so all circumstances would need to be taken into account. I should clarify that council tax benefit will be deducted from council tax liability, so it will not be administered in quite the same way.

Imposing a DEA is intended to be an administratively simple process that replaces the current practice of obtaining an attachment of earnings order by application to the court. The ability of the Department for Work and Pensions to make DEAs on its own authority sends out a strong signal to potential fraudsters and will prove a useful tool in the fraud and error strategy. I hope, particularly given the comments made today by the Leader of the Opposition, that the Opposition will welcome this as a sensible measure to take against people who defraud the system.

We think that the measures will also encourage claimants in debt to be more aware of the possibility of deduction at source, reducing any expectation that they will avoid repaying debt. There is always a concern that they will think that they can just pile money up and up, and that there will be no day of reckoning. The proposals make it much simpler for us to ensure that there is indeed a day of reckoning.

The measure will make use of an existing process used by the Child Maintenance and Enforcement Commission, with which businesses are already familiar. It is a matter of routine for an employer to make a child maintenance-related deduction from a person’s salary cheque each month, and this measure will use the same process. The provision also allows for the levy of an administration charge against the debtor by the employer administering the deduction, offsetting any increased administrative costs resulting from the increased use of earnings attachment as a recovery method.

Using a DEA to recover debt does not remove a debtor’s rights to challenge any decision relating to the recovery of benefits or the imposition of a civil penalty. This relates to the point just raised by the hon. Member for Banff and Buchan (Dr Whiteford). For example, when an overpayment occurs in relation to an award, an independent decision maker decides whether a recoverable overpayment exists. As I set out in Committee, there are circumstances in which overpayments will be recovered, and circumstances in which they will not. We will focus on offering discretion to our front-line staff in judging what is right and what is wrong. We accept that there will be times when an overpayment results from an administrative error within the Department, and that we should accept the blame for that and not seek recovery of the overpayment. The general position, however, is that if someone receives money that they should not have received, we will expect them to pay it back. If they refuse and have already started work, this mechanism will enable us to recover the money.

In addition, there will be a right of appeal to an independent appeal tribunal, should the person be unhappy with the original decision. So there is still a full judicial process available, similar to the one available when a sanction is imposed that could lead to the withdrawal of benefits. The claimant has the right first to go to the decision maker and then to a tribunal, and those rights will remain in this situation. However, we will not have to go to court to secure the original order to make a deduction of earnings.

Before taking action to impose a DEA, we will ensure that the debtor is aware that we are taking such action. We are also keen to remain mindful of our welfare obligations. We do not, for instance, want to push the debtor into leaving work in order to avoid a repayment under a DEA. This measure must be applied with common sense and care. In certain instances, it might be determined that another method of recovery should be employed, or that arrangements should be made so that the DEA commences only after other commitments have been cleared. This relates to the point that my hon. Friend the Member for Brigg and Goole (Andrew Percy) raised a moment ago: we will take into account other commitments.

The DEA is designed to recover debt from those who currently seek to avoid repayment—those who hope that they can avoid paying the money back. Those who comply with requests for repayment and who either come to a reasonable arrangement to repay or can show that they are currently unable to repay will not have a DEA imposed. I am sure that hon. Members will agree that when someone refuses to meet their obligations to repay benefit debt, such powers should be available to the relevant authorities to make recovery.

That is all that the new clause and the other amendments are designed to do. They are designed to ensure that we treat people fairly and appropriately within the system. When necessary we can recover benefits directly from people who are still on benefits, but we cannot currently do that easily, without going to court, from people who have moved into PAYE employment. These provisions will allow us to change that. I believe that this is a prudent and sensible step. It is very much in keeping with our anti-fraud strategy, and I hope that it will be in keeping with that of the Opposition as well. I hope that the new clause will command support on both sides of the House.

[Stephen Timms (East Ham) (Lab)]

I welcome this opportunity to respond to this first group of amendments. It is certainly one of the less contentious groups that we shall consider, and the Minister should not imagine that we will be equally amenable throughout the debate today. The new clause aims to amend the Social Security Administration Act 1992 to allow the Government to recover overpayments resulting from mistakes or fraud in out-of-work benefits and housing benefit, as well as in universal credit and the other contributory benefits.

I can well see why the Minister wants to make these changes. In particular, because universal credit will encompass people who are in work as well as those who are out of work, it makes sense for the recovery of overpayments to be extended into earnings received in work, as he has outlined.

However, a number of questions need to be asked about these plans. The Minister has already been pressed about the mechanism for appeals. The changes will certainly require a good deal of co-operation from employers, as those are the organisations on which the Government will be serving notices to deduct from earnings. Employers will bear the burden of the administration of these deductions through having to pay in amounts, keep records of those amounts, and keep the Secretary of State informed if the person concerned leaves their employment.

The Minister has made the perfectly reasonable point that a system already exists for child support payments, but in order to take into account the additional burden that he is imposing, the Government are allowing for the employer to deduct an amount in respect of their administration costs. We need to have some idea of the amount that employers will be permitted to deduct, which should be seen to be fair by the person whose pay is being deducted, while adequately compensating employers. Will the Minister tell us a little more about how that amount will be calculated, and how it relates to the existing arrangements for child support that he touched on?

The amendments allow for a level of earnings below which earnings must not be reduced by the deductions. Again, that seems appropriate, but we need to know how that level of earnings will be prescribed. There could be a significant impact on work incentives, particularly for people who have received overpayments and who may well have been acting entirely innocently, having been confused or having made a mistake—or perhaps the job centre has made a mistake. If the amount is too low, claimants who are out of work could see little gain from moving into work. Additionally, if the deductions are at a flat rate or not a percentage of hourly pay, the work incentives that the universal credit taper mechanism is designed to provide will be compromised. Will the Minister tell us how the minimum level of earnings will be calculated? Will he ensure that people who are repaying overpayments will still be better off if they increase their income through working additional hours?

Subsection (3)(i) of new section 71ZCA of the Social Security Administration Act 1992 creates a criminal offence for non-compliance with the regulations, with a fine of £1,000, which would be a hefty sum for a small business. Small businesses have less time and energy to spend on administration or human resources, so the additional burdens being placed on them could prove a significant disincentive to their recruiting new employees who have overpayments hanging over them. That would result in those people finding it more difficult to get into work. Will the Minister tell us a little more about how he thinks that the new provisions will affect people who are paying back overpayments while trying to find a job? How he will ensure that the provisions do not create a new barrier to those people getting back into work?

The move towards allowing deductions from earnings to repay benefits lost due to error or fraud is sensible, particularly because universal credit will be paid to people in work as well as out of work. The Government are already introducing several penalties for those whom they feel have negligently made incorrect statements. It is important that we do not penalise people who have made mistakes but have done so honestly, by placing new and unnecessary barriers to employment in their way. The minimum level of earnings and the red tape that this will mean for small businesses could have that result if the Government get the judgments wrong. I hope that the Minister will be able to give us some reassurances about how the measures will work in practice.

[Kate Green (Stretford and Urmston) (Lab)]

It is a pleasure to make my first contribution to this stage of proceedings on the Bill by welcoming an aspect of Government amendment 2. Specifically, it is enormously welcome that the short paragraph (e) will enable regulations to include

“a level of earnings below which earnings must not be reduced”

when overpayments are being recovered. That echoes the practice in Sweden, Germany, the Netherlands, Norway and other nations, which have legally enforceable, attachment-free limits when debts are being enforced, below which claimants must be protected. The limits relate to a national minimum income standard, which is set by a variety of methods. I am grateful to Professor John Veit-Wilson, Professor Elaine Kempson, Damon Gibbons of Debt on our Doorstep and Rev. Paul Nicolson of the Zacchaeus 2000 Trust, who have helped me to prepare for this debate.

I would be pleased to see the principle of irreducible attachment-free minimums extended to all debts and to the unemployed, in particular to safeguard children’s, disability and housing benefits. That would prevent the damage that is done to physical and mental health by the enforcement of debt against poverty incomes, and the damage that that does to the capacity of the poorest adults to find and keep work.

In Sweden, the standards for a reasonable standard of living are uprated for price index changes every year and reset every five years by the National Board for Consumer Affairs. The standards are based on survey data on national household consumption patterns and current prices; statisticians and NBCA policy officials decide what is reasonable in terms of deviations from the averages. For example, for the past four years in the UK, the prices of food and domestic fuel have increased faster than the retail prices index and the consumer prices index. The standards are used by the social service board for setting benefits and by the tax authority for setting the tax threshold. The tax threshold is also used by the court enforcement authority to set its attachment-free sum for debt enforcement. That sum consists of two parts: variable housing costs and a fixed standard normal sum for all other living expenses.

There are clearly other methodologies for setting the minimum acceptable income standard below which incomes should be protected and attachment-free. In Committee, we explored work that is under way in this country at the universities of York and Loughborough, among others, to develop a minimum income standard that can command and be informed by the perceptions of the public. There is a range of options for assessing and setting the minimum standard below which there will not be deductions. There are examples from other nations where such a minimum is enforceable by the courts and related to national minimum income standards. In countries that have legally enforceable limits, the courts, in setting payment plans, can ensure that the debtor is left with a minimum level of income, taking account of family size.

I hope that the small but vital paragraph (e) in Government amendment 2 will begin an era of cross-party support for legally enforceable irreducible and attachment-free minimums when people are repaying debts, which are based on minimum income standards. That would contribute to a reduction in the huge cost of mental illness to the health service and the wider economy, and make a significant contribution to the reduction of poverty in the UK. I hope that we have an ambitious approach to setting that minimum.

[Chris Grayling]

I start by saying that I very much appreciate the comments of the hon. Member for Stretford and Urmston (Kate Green). I listened carefully to her points, a number of which she made in Committee. She has given a great deal of thought to these matters, and although I cannot offer her a guarantee that we will do all the things she wishes, I can say to her that we will take great care, in the regulations attached to the Bill, to ensure that we get the right balance. It has been clear for a long time in this country, and remains absolutely clear under the current Government, that in setting the levels of any deduction we have to be extremely careful not to tip people into hardship. In particular, we must not encourage them to leave work and end up moving them and their families down the poverty scale.

The hon. Lady and the right hon. Member for East Ham (Stephen Timms) asked how we would determine the level of earnings below which deductions for overpayments cannot be made. Of course, there is no one-size-fits-all approach, and the circumstances of different families are very different. There may be a case in which, as my hon. Friend the Member for Brigg and Goole (Andrew Percy) suggested, there is a deduction for child support, or the number of children in a family or a disability may be factors. Great care therefore has to be exercised.

The minimum level that we will pursue will be determined to ensure that the debtor is left with sufficient income to maintain themselves and their family, in line with similar provisions in the Attachment of Earnings Act 1971. We therefore plan to use the same basis that the previous Government used—for example, to determine deductions from benefit payments.

In many cases, however, a direct earnings attachment will be implemented with little negotiation with the debtor. There will be a prescribed minimum level that will not take account of individual circumstances. We will try to create a system whereby we are mindful of the need to reflect the circumstances of the individual, but we cannot go the whole way, and we certainly cannot go quite as far as the hon. Member for Stretford and Urmston would wish.

If a debtor finds that they are unable to cope with the deductions being made from their earnings, they should contact us to discuss an alternative payment rate. Of course, they can avoid being placed in that situation, bearing in mind that we are discussing not people who are struggling to deal with something that they have already agreed but those who have wilfully refused to enter an agreement with us and are basically saying, “I’m not paying the money back”, or who have not even got to the point of saying anything to us at all.

Debtors who are repaying their overpayment by means of a direct earnings attachment will, in line with those repaying by other methods, be able to claim that the repayment rate causes them hardship and ask for it to be reduced. Although we of course have a responsibility to recover overpayments in order to protect public funds, we also take into account an individual’s financial and personal circumstances. The hon. Lady articulated a strong case for her points, but I cannot offer her quite as much as she would wish. However, I can offer her an assurance that we will always take an individual’s circumstances into account, particular where poverty, deprivation and hardship could arise.

The right hon. Member for East Ham made a point about employers. We will, of course, use the same mechanism for the attachment orders in the Bill as is used for child maintenance deductions. That process is well established through the Child Maintenance and Enforcement Commission system, and prior to that through the Child Support Agency, so it should not cause employers to recast their processes and do things very differently. On that basis, I am confident that it should not represent a significant additional burden on employers.

The right hon. Gentleman mentioned the provision for a £1,000 fine. In truth, there is no excuse for a refusal to engage in any part of the process. The orders will arise only because an individual claimant has refused to engage, and there is no real excuse for an employer to refuse to engage either. The matter should not be complicated, and it certainly should not be complex enough to cause an employer to decline an expansion in business or a recruitment to fill a vacancy. The process is established and many employers up and down the country are used to dealing with it, and I do not believe there will be significant extra burden on business.

The right hon. Gentleman asked how much employers could deduct for the administration charge, and the answer is an amount not in excess of £1 for each deduction. He asked for an assurance that the measure will not damage work incentives. The answer to that is that, as with all debt recovery, we must of course be mindful of the Department’s welfare obligations. As I said, recovery of overpaid benefits should not cause undue hardship. In the calculation of a repayment, we certainly would not want to push someone into a position in which they have to leave work to avoid payment under a DEA.

The operation of the DEA does not mean that the debtor will commence the repayment of their debt earlier than they would under another repayment method. The debtor will have had ample opportunity to make other arrangements to pay, or indeed to show that suspension of recovery was applicable in their case. We are not talking about people who have had no chance to engage and discuss.

[Stephen Timms]

Will people who receive pay rises always receive some benefit from it, or could they lose all of that increase in additional repayments required by the Department?

[Chris Grayling]

It is very difficult to give an absolute answer to that question. It is unlikely that we would seek to withdraw an entire pay rise, but clearly, if we had given somebody a lot of slack in making their repayments, and their financial circumstances improved, we would not allow them simply to continue paying at the hardship rate that they had previously paid. We would expect an improvement in the terms based on their improved circumstances.

The right hon. Gentleman, as a former Minister, knows the reality. Well-established hardship considerations are in place. If the customer engages with the Department, their circumstances could suggest that another method of recovery should be employed. Arrangements are made so that the DEA begins only after a period time, but only in exceptional circumstances would we waiver repayment.

Common sense lies at the heart of this measure. It is our job to recover funds that have been overpaid to a claimant when there is not a good reason for waiving the repayment because of departmental error. At the same time, it is not in any of our interests for the system to force people into severe hardship and poverty—the system should reflect the reality of people’s financial situations.

There is a clear obligation to repay. The Leader of the Opposition spoke this morning of responsibility, and he was right to do so. Those who we are talking about have a responsibility to repay the money that is due to us. However, the Department, and indeed the courts, must apply common sense to the process, achieve the right balance and ensure that we recover the money that is due to the taxpayer correctly and sensibly.

I welcome the Opposition spokesman’s positive comments. We are likely to have livelier debates as the hours go by, although I hope, having heard the Leader of the Opposition’s comments this morning, that such debate masks their willingness to support the Bill. It would be disappointing if the Opposition did not support the Bill. If they decline to support it, I will look forward to having a debate in public on who is right and who is wrong, but for now I am delighted that there is cross-party co-operation on this group of amendments and the new clause.

Question put and agreed to.

New clause 1 accordingly read a Second time, and added to the Bill.

Clause 102

Recovery of benefit payments

Amendments made: 1, page 67, line 35, at end insert—

‘() by deduction from earnings (section 71ZCA);’

Amendment 2, page 68, line 17, at end insert—

71ZCA Deduction from earnings

(1) Regulations may provide for amounts recoverable under section 71ZB to be recovered by deductions from earnings.

(2) In this section “earnings” has such meaning as may be prescribed.

(3) Regulations under subsection (1) may include provision—

(a) requiring the person from whom an amount is recoverable (“the beneficiary”) to disclose details of their employer, and any change of employer, to the Secretary of State;

(b) requiring the employer, on being served with a notice by the Secretary of State, to make deductions from the earnings of the beneficiary and to pay corresponding amounts to the Secretary of State;

(c) as to the matters to be contained in such a notice and the period for which a notice is to have effect;

(d) as to how payment is to be made to the Secretary of State;

(e) as to a level of earnings below which earnings must not be reduced;

(f) allowing the employer, where the employer makes deductions, to deduct a prescribed sum from the beneficiary’s earnings in respect of the employer’s administrative costs;

(g) requiring the employer to keep records of deductions;

(h) requiring the employer to notify the Secretary of State if the beneficiary is not, or ceases to be, employed by the employer;

(i) creating a criminal offence for non-compliance with the regulations, punishable on summary conviction by a fine not exceeding level 3 on the standard scale;

(j) with respect to the priority as between a requirement to deduct from earnings under this section and—

(i) any other such requirement;

(ii) an order under any other enactment relating to England and Wales which requires deduction from the beneficiary’s earnings;

(iii) any diligence against earnings.’

Amendment 3, page 69, line 22 , after ‘71ZC’ insert ‘, 71ZCA’

Amendment 4, page 70, line 13 , leave out from ‘etc)’ to end of line 15 and insert—

‘(a) for subsection (4) there is substituted—

(4) If the recipient of a notice under subsection (3) above agrees, in the specified manner, to pay the penalty—

(a) the amount of the penalty shall be recoverable from the recipient by the Secretary of State or authority; and

(b) no criminal proceedings shall be instituted against the recipient in respect of the conduct to which the notice relates.

(4A) Sections 71ZC, 71ZCA and 71ZD above apply in relation to amounts recoverable under subsection (4)(a) above as to amounts recoverable by the Secretary of State under section 71ZB above (and, where the notice is given by an authority administering housing benefit or council tax benefit, those sections so apply as if references to the Secretary of State were to that authority).’

(b) in subsection (9), the definition of “relevant benefit” is repealed.’—(Chris Grayling.)

Clause 112

Civil penalties for incorrect statements and failures to disclose information

Amendments made: 5, page 75, line 29, after ‘71ZC’ insert ‘, 71ZCA’

Amendment 6, page 75, line 31, at end insert—

‘(and, where the appropriate authority is not the Secretary of State, those sections so apply as if references to the Secretary of State were to that authority)’

Amendment 7, page 76, line 24, leave out ‘Secretary of State’ and insert ‘appropriate authority’

Amendment 8, page 76, line 26, leave out from ‘71ZC’ to end of line 27 and insert—

‘71ZCA and 71ZD apply in relation to amounts recoverable by the appropriate authority under subsection (4) as to amounts recoverable by the Secretary of State under section 71ZB (and, where the appropriate authority is not the Secretary of State, those sections so apply as if references to the Secretary of State were to that authority).’—(Chris Grayling.)

Schedule 14

Repeals

Amendments made: 9, page 155, line 37, at end insert—

--- Later in debate ---

[Stephen Timms]

I am grateful to my hon. Friend, who is absolutely right about the centrality of free school meals entitlement in the system. The Government have simply failed to work out who, under their proposals, will be entitled to free school meals. It is not that I am disagreeing with the Government’s policy: the problem is that they have no policy. We have no idea whom they believe should be entitled to free school meals. As far as we can tell, they have not got a clue, either.

As my hon. Friend points out, free school meals are an important part of the system. They can be worth more than £350 a year to a family with one child in a primary school and easily more than £1,000 a year to a family with three or more children at school. Clearly, that makes an enormous difference.

Families currently receive free school meals until they work for more than 16 hours, at which point they receive working tax credit so that they are not worse off as they move into additional hours of work. The universal credit White Paper suggested that the Government intend to remove entitlement to free school meals at a fixed income threshold. That may partially answer my hon. Friend’s question. However, if they do that, it creates precisely the sort of cliff edge that we were told the Bill would eradicate. I presume that that difficulty has prevented the Government from setting out their policy and is the reason for the Bill’s silence on the matter and the absence of notes on the regulations to explain the Government’s policy.

If a lone parent with three children lost entitlement to free school meals at some level of earnings—say, £150 a week or more—their net household income would fall unless they earned more than £4,000 extra a year. If the new system works like that, it will be a disaster. It is exactly the sort of disincentive that we have been told all along that universal credit is supposed to remove. If the Government introduced such a policy, universal credit would make the problem of work disincentives far worse than it is in the current system.

Our proposal in new clause 3 is that the value of free school meals should be paid through universal credit and then tapered away gradually as household income rises. I recognise that there is concern among many who follow these matters closely that that could mean that the cash is not used for school meals but other expenses. Given the pressure on household budgets, one can well understand how that might happen. I therefore suggest that the solution is for the cash to be paid on to an electronic card, which could be used only to purchase school meals. An arbitrary cut-off in income, whereby all support for free school meals was withdrawn, would be damaging.

[Chris Grayling]

Does the right hon. Gentleman accept that his proposal flies in face of the admirable position at the moment whereby, in the lunchtime school queue, there is no obvious and visible difference between those who receive free school meals and those who do not? A provision that would effectively give some, but not others, a particular card with money on it would surely stigmatise those kids who get free school meals.

[Stephen Timms]

No, the Minister is mistaken. All pupils in the school would pay for their meals with the card. The difference would be how the money got on to the card. Some would pay cash as currently happens and others would have the money placed on the card through universal credit. The Minister is right to raise the matter, which is important, but my solution would solve the problem.

[Chris Grayling]

rose—

[Stephen Timms]

I gladly give way to the Minister again. Perhaps he will tell us how the Government propose that entitlement to free school meals will be determined.

[Chris Grayling]

If the right hon. Gentleman will forgive me, I will try to catch Mr Speaker’s eye in a moment to answer questions, but for now, perhaps the right hon. Gentleman can answer one for me. As different schools today use different systems—some use fingerprinting, some use an electronic card system and some still use cash—does he envisage his proposal requiring schools up and down the country to scrap their current systems and have a new, harmonised system? If so, has he calculated what the cost of that system would be and how long it would take to introduce?

--- Later in debate ---

[Stephen Timms]

My hon. Friend is absolutely right. For that very reason, the risks are great indeed. When I come on to speak to amendment 24 in a few moments, I will point out that if people go beyond a prescribed level of savings, they will lose all that help under all those headings.

[Chris Grayling]

Will the right hon. Gentleman clear up one point of confusion for me and, I suspect, for my hon. Friends? Over the past two or three months, he has said that he supports the universal credit in principle. However, his remarks and those of his hon. Friend the Member for Stretford and Urmston (Kate Green) imply some distancing from the proposal. Does he intend to support the Bill on Third Reading or not?

[Stephen Timms]

The right hon. Gentleman will find out the answer to that question in due course. We have been consistent in supporting the principle of universal credit. We think that bringing in-work and out-of-work benefits together is a good idea that has a number of attractions. The problem is that the detailed work to make that policy fly has simply not been done by the Minister and his hon. Friends. There are desperate, gaping gaps in the policy and fundamental questions that he is unable to answer or explain about how the arrangements will work. As a result, the Bill, on departing this House, will leave many households, and many working families in particular, in a very precarious position.

Having talked about a lot of things that we do not know about, let me now deal with some things that we do know about. Clause 5, which I touched on a moment ago, will badly undermine the aspirations of people who are in work on modest incomes. Under the current rules—they have been a long-standing feature of the system—people who are out of work but who have above a prescribed capital sum are expected to use it to support themselves before claiming income-related, out-of-work benefits. If somebody has more than £6,000 in savings, the Government assume an income from them, which is then subtracted from the benefit entitlements; someone with more than £16,000 in savings will not receive means-tested, out-of-work benefits at all. Those two figures were increased from £3,000 and £8,000 by the last Government to help people retain some of their savings when they lost work. For people in work, the story has been very different. There is no savings cap at all on tax credits. Clause 5 will change that fundamentally by extending the rules on savings for those who are out of work to people who are in work.

The Conservative party used to tell us that it wanted to encourage people to save. Clause 5 will not just discourage people from saving; it will make it impossible for them to save. Anyone on a modest income who decides to save for a deposit to buy a house in the future, or for the cost of university education, will suffer an extraordinary punishment under the clause. It is impossible to buy a house today, or to obtain a mortgage for shared ownership, with a deposit of less than £16,000. However, if people have savings of £16,000 towards, say, the deposit for a mortgage—if, as Ministers seem to believe, they start to get ideas above their station—they will lose all their universal credit. Typically, that might be £5,000 a year. In addition, they will lose any support that they receive for the costs of child care, and on top of that they will lose any help that they are given with housing costs.

Those measures will add up to an extraordinary punishment for saving. They will make saving literally impossible, because as soon as people have managed to save £16,000 from their earnings, the Government will drain their savings away. The problem will start as soon as they have saved £6,000. The hon. Member for Redcar (Ian Swales)—who, I am pleased to see, is present—said in Committee that the problem would not last very long because people’s savings would soon be gone, and he was absolutely right. These proposals mean that if anyone attempts to start building up a saving that would be enough for, say, a deposit on a house or a contribution towards higher education costs, the Government will take it away by withdrawing their universal credit. The message being sent to people on low incomes who are doing the right thing and working to support themselves could not be clearer: “This Government will not support you.”

Amendments 23 and 24 would change that. They would allow people to save money in an individual savings account—up to £50,000 if they are in work. Ministers have told us that it would cost just £70 million a year to exclude all working households from the savings cap, and this measure is obviously more modest than that.

Surely we should be encouraging people to save, not punishing them for saving. People work to improve their lives and the lives of their families. They are aiming not for a bit more spending money each month, but for the means to buy a house, to help their children through university, to start a business or to pay for a child’s wedding. If they are to achieve such aspirations, people need to be able to save from their earnings, but clause 5 denies them the chance to do that.

--- Later in debate ---

[Chris Grayling]

The right hon. Gentleman will remember that we debated this matter extensively in Committee, so it is not quite the bolt from the blue that he suggests. Is it his party’s policy that people under retirement age who happen to have a partner who is over retirement age should, through that partner, be able to access means-tested support from the state without any obligation to look for work themselves?

[Stephen Timms]

In government, we set out the arrangements for pension credit as they stand. In our view, those arrangements made sense. If the Government want to make a case for changing those arrangements, I simply suggest that they need to announce that change and to stand up openly and say that they have decided that in future people cannot have pension credit if their spouse is under pensionable age. We could then have a debate. I would have thought that such a measure ought to be in the Pensions Bill. The Minister is right that we were able to spot the change in Committee and to discuss it then, but this is certainly not an example of the Government’s being open—far from it. They seem to have hoped that they could slip this measure through and nobody would notice.

For those couples for whom there is a substantial age gap—in 40% of those cases, the partner will be younger than 55, so the gap will be more than five years—this measure could represent an enormous cumulative loss of £5,000 a year for five years or more.

[Chris Grayling]

May I take the right hon. Gentleman back to the key question? We are talking about people of working age whose households would be in receipt of means-tested benefits from the state without being obliged to look for work. Is it his policy that those people should not have an obligation to look for work and that their households should be able to continue to receive means-tested benefits from the state?

[Stephen Timms]

As far as I can see, the arrangements for pension credit have worked perfectly well up to now, presumably with the feature that the Minister is now deprecating. My case is that if the Government want to change the rules for pension credit to discriminate against people who have a spouse under pensionable age, they should do so openly. They should announce the change: it should have been in the Budget, the welfare reform announcement or the Pensions Bill. We have a Pensions Bill going through Parliament at the moment—why was it not included there? Instead, the change was slipped into a schedule to this Bill and no Minister, until asked, said anything about it.

--- Later in debate ---

[Stephen Timms]

No, it is not. Any income to the household from a working spouse will be counted in the household income for pension credit purposes. My argument is that if there is a case to be made for a change to pension credit, it should be made openly, and it should have been in the Pensions Bill, which Parliament is currently considering.

[Chris Grayling]

Forgive me for probing. The right hon. Gentleman has rightly set out his case as an amendment, but I wish to press him on the following point. If a household is receiving elements of pension credit that gives them the wherewithal to survive, is he saying that a 45-year-old should have no obligation to work while the household receives means-tested benefits from the state? It would be helpful to understand that. If that is his party’s policy, will he say so clearly and unequivocally?

--- Later in debate ---

[Stephen Timms]

I look forward to reminding the hon. Gentleman of that comment in September 2013.

The intention of universal credit is that work should always pay. Without decisions and policies on child care or passported benefits, we cannot know whether work will always pay, and all the indications are that the Government will in due course, when they finally put a policy together, introduce one that will mean that for many work will no longer pay.

On savings, I am afraid that the Government are heading to crush the hopes of many people in work. On the self-employed, the Government will crush the hopes of many who want to set up their own businesses. As Policy Exchange recently argued in its report, universal credit has been oversold by Ministers. I very much hope that the House will support our amendments so that universal credit can support the aspirations of families across the country.

[Chris Grayling]

I should like to start by making the same point that I made in Committee. I have listened to the right hon. Member for East Ham (Stephen Timms) setting out a vast range of measures and details that he wants us to write into the Bill. He is conveniently forgetting the first fundamental element of a Bill, and the lesson that he taught me 10 years ago, when I was first elected to the House, about the nature of primary legislation. I remember, as a new Member of Parliament, debating an education Bill in Committee and asking why there was not more detail in the Bill. I proposed amendments to provide certain details. I remember the right hon. Gentleman, as a Minister, arguing why that should not happen. He explained that it was a piece of enabling legislation to create a framework for the changes that his Government were seeking to put in place, and that my amendments were all unnecessary. Today the roles are reversed, and the right hon. Gentleman has conveniently forgotten everything that he, as a Minister, taught me all those years ago. Instead, he is telling me that I should put all kinds of new details into the Bill that I have introduced. I am sure that hon. Members will therefore forgive me if I take some of his proposals with a pinch of salt.

[Stephen Timms]

Is the Minister seriously saying that how the cost of child care will be supported is a detail?

[Chris Grayling]

I am saying to him precisely what he said to me all those years ago—that many of the details will be dealt with in secondary legislation. The Bill contains a framework that will include, among other things, provision for a child care element in universal credit. That is fundamental, and we all agree that there should be such an element, just as there should be elements relating to disability and to other aspects of the current benefits system that need to be replicated in universal credit.

[Sheila Gilmore (Edinburgh East) (Lab)]

Why does the Minister expect us—and, indeed, the general public—to accept his statements about the impact of this huge reform when so much of the detail in unknown? Is it not reasonable for us to request the details that will tell us whether people are in fact going to be better off?

[Chris Grayling]

I expect it for precisely the same reason that the right hon. Member for East Ham expected me to support his education measures 10 years ago. He asked me to take on trust many of the same kinds of thing that I am asking the House to accept today. We have been completely transparent in setting out the different stages of the formulation of universal credit, and about the consultation processes that we have been through to fill in the details. We have also been clear and transparent in setting out the principles that we are following in trying to fill in those details.

[Dame Anne Begg (Aberdeen South) (Lab)]

I went along to one of the meetings about the Government’s proposals for child care to which the Secretary of State was kind enough to invite people. We were presented with three options containing some very selective figures, and it was therefore impossible to tell exactly what the Government were proposing. I am still none the wiser. It is very difficult to vote on a principle when we do not know what the Government are going to do to implement it.

[Chris Grayling]

The point is that we do not write numbers on the face of a Bill. I will speak in detail about the right hon. Gentleman’s amendments in a moment, but the fact is that primary legislation sets out the framework for such things. We have worked with the hon. Lady and her Select Committee members, with other Members on both sides of the House and with people and representative groups outside the House working in child care and other areas. We started a discussion process to determine which was the best of a number of options to fit into the framework that we are creating.

[Dame Anne Begg]

The Minister is right that often things are not written into a Bill, but usually the regulations have been published before the Bill leaves the House of Commons. I remember Members who are now on the Government Benches criticising regulations for being late—not for not having been published, but merely for being late. Where are the regulations so that there can be parliamentary scrutiny of this important aspect of the Bill?

[Chris Grayling]

I have had this discussion within the Department. We have already brought forward a number of draft regulations—far more, I am told, than was the case under the previous Government, when, I was told, the instruction of Ministers was very much not to bring forward as many regulations. We have produced as much detail, if not more, about this measure than the previous Government did about their measures. They did introduce some sensible measures—for example, their reforms to introduce employment and support allowance, which was the project of the right hon. Member for East Ham himself—but they wrote a framework into their legislation and filled in the detail with secondary legislation.

[Dr Whiteford]

One of the concerns raised by children’s organisations in Scotland is that not enough consideration has been given to the different statutory framework that pertains to child care in different parts of the UK. In particular, they are concerned that the existing child care infrastructure may not be able to cope with the increased demand that could arise from the introduction of universal credit. I appreciate that the Minister does not want to be drawn on the detail, but can he assure us that parents who are unable to access good-quality affordable child care will not face sanctions if, through no fault of their own, they are unable to find the child care that they need?

[Chris Grayling]

Of course, we already provide child care universally through our schools system. The truth is that no parent with a youngest child under school age can be subject to any job search-related sanctions. Only once their youngest child reaches school age are they subject to a work-search requirement and can face sanctions. Under the rules that are pursued at the moment, and under the provisions that we have clearly said will exist within universal credit, we will expect lone parents of children at primary school to do a part-time job only if that fits in with the hours of that school.

[Dr Whiteford]

I am slightly surprised to hear the Minister describing school as a glorified babysitting service. The real pressure point pertains to older children, and particularly to out-of-school care. That is not covered across the UK by the Childcare Act 2006, which applies only to England and Wales. I urge him to take a closer look at that and to give the House the assurance that parents will not be penalised.

[Chris Grayling]

The point is that we do not penalise parents, particularly lone parents. We do not require them to pursue work; that is out of keeping with the reality of their child care responsibilities. I am not describing school as a giant babysitting service; I am saying that for a goodly part of the year children of school age are at school, and therefore do not need additional child care. The requirements placed on parents by Jobcentre Plus in relation to their job search and whether they take up employment are designed to work around what it is reasonable and what it is not reasonable for them to do. For example, we do not expect lone parents of school-age kids to work night shifts. I can certainly assure the hon. Lady that it is not our intention, nor will it be, to seek to sanction parents in relation to a job requirement that is unreasonable and unrealistic given their child care responsibilities.

[Dame Anne Begg]

On a matter of principle, does the Minister believe that the regulations should be subject to parliamentary scrutiny in the same way as primary legislation?

[Chris Grayling]

Of course.

As the right hon. Member for East Ham will know, I have tabled several Government amendments to address the concerns that he and other Members raised in Committee. I will deal with those before I talk in detail about his amendments.

Government amendments 14 to 21 will make certain regulation-making provisions for universal credit, employment and support allowance, jobseeker’s allowance and pension credit subject to the affirmative resolution procedure when they are first used. I recognise the hon. Lady’s point, and it is a point that was made well by the right hon. Member for East Ham in Committee. I do not think that it would be sensible to make the provisions subject to the affirmative procedure year in, year out, but it is right and proper that the House should be able to debate them fully when they are first introduced.

[Charlie Elphicke]

I thank the Minister for his important announcement on the use of the affirmative procedure the first time the regulations go through. The process that the Government have taken of consulting informally and sharing the consultation document so transparently, so that we could all sit down and discuss the options for child care, is a great and important step forward. I would have thought that the Work and Pensions Committee would have stirred itself to take a proper look at the document before the regulations come in, and make constructive comments to add to the process of reforming our benefits system.

[Chris Grayling]

My hon. Friend makes an important point. Some of my colleagues and I have been in the House for longer than he has—and when the Labour party was in government, I do not recall once being called in to discuss the policy-making process for one part of a piece of primary legislation. I was not asked to go in and discuss education or health options; the decisions were always just made. What is different is that we have extended the hand of involvement to the Opposition and said, “Please come and be part of the decision-making process.”

[Sarah Newton (Truro and Falmouth) (Con)]

As another new Member, I ask my right hon. Friend to cast his mind back and consider whether the right hon. Member for East Ham (Stephen Timms), when he was a Minister, ever consulted quite so extensively as this Government have with third sector organisations, charitable organisations and other organisations to inform their work in developing the benefits system.

--- Later in debate ---

[Chris Grayling]

I cannot remember the previous Government doing more than we have to engage people in Westminster, people around Parliament, third sector groups and members of the public. We are making a genuine attempt in a number of complex areas to get things right and to involve everyone in the decision-making process, and that will continue. Notwithstanding this afternoon’s amendments, we will continue to be delighted to seek and involve the input of Opposition parties, including the Labour party and the nationalist parties. As the hon. Member for Banff and Buchan (Dr Whiteford) said, it is right and proper that we have full dialogue with the Administrations in Cardiff, Belfast and Edinburgh, and with the Members of Parliament who represent Wales, Northern Ireland and Scotland.

[Stephen Timms]

It is certainly the case that the previous Government never got to this stage in a Bill’s passage with such an enormous hole in the policy as there is in this Bill.

[Chris Grayling]

The technical response to that is, “You wish!” I remember many occasions on which we came to a debate and asked what the Labour Government were planning to do. Did we ever get an answer? Not at all. The right hon. Gentleman and I have different memories of the way things were.

It is important to remember that this Bill creates a structure for universal credit, and that the details will be set out in regulations. The Opposition amendments relate mainly to issues that will be dealt with in regulations, and which do not affect the structure of universal credit as set out in the Bill.

I have accepted certain recommendations from the Opposition. The Bill as introduced provided that the regulations will be subject to the negative procedure. In Committee it was suggested that that would not provide the right level of parliamentary scrutiny and control. The right hon. Member for East Ham identified a number of provisions that he thought should be subject to the affirmative procedure, and I gave a commitment in Committee on 28 April to consider those provisions carefully.

There are two provisions, in clauses 22 and 25, relating to conditionality, for which we do not think the affirmative procedure is appropriate, because they do not introduce new principles. Although we intend that regulations will be much less prescriptive than the current jobseeker’s allowance regulations, the powers in the Bill will be used to create a regime for jobseekers that is broadly similar to the current one. We have therefore formed the view that there is no necessity to subject those two to the affirmative resolution procedure. Of course, it always remains within the gift of Opposition Members to pray against regulations if they want a matter to be debated. They could, of course, do so anyway, but we are making their life a bit easier by providing for the affirmative procedure.

I have thought long and hard, and apart from those two specific provisions I agree with the right hon. Gentleman’s suggestion that regulations should be made under the affirmative procedure in the first instance. I say “in the first instance” because it does not seem sensible to repeat the process year in, year out when the regulations are regularly renewed.

As set out in amendment 14, that principle covers all the key regulation-making powers relating to the universal credit, including the rules on capital, the calculation of income, the treatment of self-employed people’s cases, and the amounts of the elements within an award, including those for disabled children, housing and child care. Opposition Members might say that that is not enough to allay the concerns that they have raised on specific issues, and I shall deal with some of those specific concerns in a moment. However, I made it clear in Committee that we recognised the importance of getting the details of universal credit right. We are working hard to do so in consultation with key stakeholders, and we are listening to their concerns.

The Opposition amendments would pre-empt our considerations and tie the hands of this and any future Government with regard to areas of policy in which it is important to retain flexibility. I believe that it is perfectly reasonable to say that as we reach a final conclusion on what is right, involving Members of all parties, the Work and Pensions Committee, organisations such as the Social Security Advisory Committee, and third-party groups, we will bring regulations to the House by the affirmative procedure. There can then be a full and proper debate in Committee and a vote on Floor of the House.

[Dame Anne Begg]

Clearly the Minister has moved on this issue, but there is still the problem that the affirmative procedure is “take it or leave it”. The Work and Pensions Committee and other Members have no ability to amend regulations, so it is not the same as the line-by-line scrutiny that primary legislation receives.

[Chris Grayling]

I accept that, but that is precisely why we have extended the hand of involvement to the hon. Lady and her Committee and to Opposition Members, so that they can help us shape the details. This is a big complex project and there are challenging issues to deal with, and we want to work on a bipartisan basis and take views from all parties on how best to shape the system. In the end we will have to take a final decision ourselves, but it is our goal and intention to involve all those who wish to be involved in the thought process.

That brings me on to child care, on which we have been seeking to do precisely that. New clause 2 raises important points about how we intend to support people with formal child care costs within universal credit. Hon. Members will be aware that we recently held two seminars on the topic. Members of both Houses attended, and there were interesting and fruitful discussions. There was a follow-up seminar with a group of key stakeholders. I am aware that Members raised particular queries, and we have undertaken to look into them and provide more information. The seminars were part of an ongoing dialogue about how best to structure child care support under universal credit.

For now, I reiterate the point that I made in Committee. The Bill already allows us to include an additional element for child care within universal credit, under clause 12. We have made a firm commitment to provide such an element, but I make no apology for taking time over the details. We must get them right, and to do so we must listen to those with experience and expertise and consider the options.

[Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)]

The Minister will be aware of how important the child care tax credit has been in supporting families’ child care. Will he undertake that people will not be worse off in terms of their child care costs, or is the change really just about saving money?

[Chris Grayling]

As the hon. Lady would have known if she had listened to the debate in Committee, we are putting in place transitional protection for the introduction of universal credit, so that no one will lose out in cash terms as a result of the changes. That is right and appropriate. The problem with new clause 2 is, first, the cost, which the right hon. Member for East Ham did not mention.

Had we introduced new clause 2 with the current 16-hour rule, the cost would be around £200 million to £400 million, which would be additional to current expenditure of around £2 billion. The Opposition have therefore made a clear spending commitment, which appears to be a reversal of their policy—I was under the impression that the Leader of the Opposition and the shadow Chancellor had said, “No spending commitments without official sanction.” Perhaps this spending commitment has official sanction, but, if so, they need to say where the money is coming from.

Two or three Opposition proposals that we will debate today require extra spending. It is incumbent on a party that has just presided over the building of the biggest deficit in our peacetime history to say where the money is coming from if it proposes spending commitments that would take away some of the money that we are trying to reinvest to deal with the deficit. Do Labour Members want to borrow more money? If so, that £200 million to £400 million means extra public borrowing. Alternatively, will they increase taxes? They need to explain where the money is coming from.

[Mrs Madeleine Moon (Bridgend) (Lab)]

Does the Minister understand that many women are frightened by the Bill’s proposals and nervous about their futures—about whether they can continue working and supporting their families? Women who are looking to move into work are not worried about artificial arguments on whether the Labour party has a new spending commitment. They want to know whether the Bill will give them the opportunity to move into work when they are capable of doing so, and whether the Government will give them child care support. In many cases, child care is the only thing stopping them making that step.

[Chris Grayling]

Women and men in this country have realised that the previous Government’s belief that money grows on trees is wrong. They have also realised that the consequence of the previous Government’s policies—they simply threw money at every problem—is that we are faced with the most monumental deficit challenge. If we do not deal with that, we will end up in the same position as a number of other countries. I would not want us to be in that place, because women’s chances of getting back into work would be much diminished by the state of such an economy.

[Mrs Moon]

I appreciate that there is concern about the deficit, but will the Minister assure us that women who are unable to work because the cost of their child care will remove all the benefit of them doing so will not find themselves harassed or pressured by the Department for Work and Pensions to take work that will leave them out of pocket? Will that be taken into account when their capacity to work is reviewed?

[Chris Grayling]

I am not sure whether the hon. Lady was in the Chamber a moment ago when I answered question on child care from the hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne), but the former seems to be forgetting the fact that there is no job search obligation for the lone parent of a child who is below school age. A job search requirement is made only when a child is at school, and the requirement is for a willingness to accept a reasonable job offer that fits around school hours. No draconian measure is waiting to hit a lone parent as their child grows older. Our system is pretty supportive, and we have been absolutely clear that child care costs will continue to be paid through universal credit.

The hon. Member for Bridgend (Mrs Moon) must also understand that our nation’s resources are finite. We cannot just turn on the financial taps because we feel like it. We must take pragmatic decisions on what the nation can and cannot afford. We set out very clearly in our announcement last year that there is a £2 billion envelope to fund child care. Parliamentarians now need to agree how best to spend that money.

[John McDonnell (Hayes and Harlington) (Lab)]

As the Minister knows, I have supported the universal credit system for some while, but each of the proposed amendments address vulnerable people—people on free school meals, people living in near poverty or poverty, children with disabilities, and people who are sick and who incur health costs. Those real anxieties about the introduction of the new system need to be assuaged. When the Minister responds on those issues, could he at least give us some sort of time scale on which they will be addressed, so that those people can have more certainty in the run-up to the introduction of the new system?

[Chris Grayling]

The answer is that we will do it as quickly as we possibly can. We are not in the business of delaying these things. We are doing the consultation on child care now, and I hope that we will reach a resolution in a relatively short space of time. However, I want to take the time to get it right. I do not want to rush through under an artificial timetable something that is not necessary right now. We are still two and a half years away from the introduction of new claims for universal credit. We have got time to get these things right and we are trying to work with a fixed envelope of money for child care—we will talk about some of the other issues shortly. We want to take the time to look at the real costs of child care, the requirements and how we can best deploy the £2 billion available.

[John McDonnell]

I am not trying to catch the Minister out—I am trying to secure clarity on each of these issues. What is an indicative time scale for addressing those anxieties, so that people can have some prospect of being able to calculate their futures in those areas?

[Chris Grayling]

I will endeavour to answer that. On the child care issue, we are in consultation at the moment. I would hope that we will get all the responses that we are going to get by the summer and be able to take decisions quickly after that. That would be my first answer to the hon. Gentleman’s question.

[Mrs Main]

Does my right hon. Friend agree that it is unhelpful for the hon. Member for Bridgend (Mrs Moon) to talk about the Department for Work and Pensions “harassing” women who are considering going back to work? All these measures are an attempt to be mindful of the public purse and to encourage people to go back to work and do the best they can for their families—because being in work is good for their families.

[Chris Grayling]

My hon. Friend makes an important point. The whole purpose of universal credit is to provide assistance to people who are trying to get back to work and to ensure that work always pays. I hope that the women of Bridgend will benefit, like those across the country, from the introduction of universal credit and the extra support that it will provide to ensure that they are better off in work.

[Kate Green]

I noted the Minister’s reminder a few moments ago that transitional protection would also be available in respect of child care costs. Can he confirm that one change in circumstances that can be predicted is that child care costs will vary between term time and school holidays and that that will not trigger a change in circumstances that would lead to the cancellation of transitional protection?

[Chris Grayling]

It is not our intention that routine or minor changes in circumstances would lead to the loss of transitional protection. The requirement for child care clearly fluctuates during the course of the year, but follows a set pattern. It is not our intention for a moment to remove transitional protection in that situation, nor is it our intention to remove it in an environment in which there is an annual increase—RPI or CPI—in the rate of child care. We are looking at material changes in circumstances, and I certainly would not envisage the change from term time to holidays as a material change.

The other issue that I have with the Opposition’s proposals is that they would remove the ability for people to take up mini jobs. For women re-entering the workplace after a lengthy time out of it, there is a bigger barrier than needs to be the case. One of the strengths of the universal credit system is the flexibility for people to take on mini jobs. The level of prescription set out in the Opposition’s proposals would set up unnecessary and inappropriate barriers to getting people back to work.

[Sheila Gilmore]

In Committee, we heard a great deal about these mini jobs. We have just heard the Minister say that we should not be worried about the effect on parents of children of school age because a job could be encompassed within school hours. Why is it so necessary to take money away from people who are trying to improve their families’ prospects of getting out of poverty in order to help people in mini jobs—although I do not fully understand the concept—because surely those would be covered by school hours even more?

[Chris Grayling]

The changes we made last year—the reduction from 80% to 70% support—merely returned us to the situation that applied before 2006. On the mini jobs, I want us to spend the money we have on supporting people from deprived backgrounds and in the most deprived situations into the work place so that they can make the most of their lives. The mini job is a perfectly reasonable way of doing that. I also happen to think that for many lone parents, a mini job during schools hours is a perfectly reasonable alternative that might mean that the need for child care is not great. None the less, the option should be there. We should not be writing—this is the key point about some of the Opposition amendments—into primary legislation rules that cannot be undone for two or three years, while we wait for a parliamentary slot. Instead, we need to set out straightforwardly a situation in regulations that can be amended if the situation requires. I could not possibly accept an amendment from the right hon. Member for East Ham that would write into primary legislation actual amounts of benefits that should be paid. The Labour party would never have done that while in government. It would not have happened, and I am not going to tolerate the idea now.

[Charlie Elphicke]

The detailed and comprehensive information that the Minister and the Department for Work and Pensions shared with members of the Bill Committee and the Work and Pensions Committee sets out clearly that joint working is the norm for couples in this country. In most families, mine included, with young children, both spouses or partners work. I, for one, resent the idea among some older people that mothers just sit at home and have primary responsibility for child care. Society has changed, and it is time people moved on from being old-fashioned and out-of-date and accepted that the reality of modern Britain is that both parents play a key role in bringing up children.

[Chris Grayling]

My hon. Friend makes his point in his usual forceful and inimitable way. He highlighted how Labour Members struggle to move on from traditional ways of things. Listening to the right hon. Member for East Ham, I am still not sure on which side of the argument he falls. Does he think that we are doing the right thing, but want to fine-tune it a bit, or is he trying to distance himself from the Bill, so that on Wednesday the Opposition can vote against it and so say to the pressure and lobby groups, “We are on your side”? I am genuinely not sure which is the case, although if they do vote against it, I will love it. I will look forward to arguing up and down the land that this Government have got it right on welfare reform, and that the Opposition have not. I wait with interest and enthusiasm to discover how they vote.

New clauses 3 and 4 provide an amount for school meals and health costs in universal credit. It is absolutely our objective to ensure that people on universal credit will continue to receive appropriate support for school meals and health costs, and that this support is withdrawn gradually to avoid damaging the incentives to work. However, entitlements to passported benefits are the responsibility of other Departments and devolved Administrations. We have been working closely with those responsible to consider the options, and we have commissioned the Social Security Advisory Committee to review passported benefits and how they interact with universal credit. The review was announced in a written statement on 23 May, and a copy of its terms of reference has been placed in the Library. To answer a question put to me earlier, I should say that the Committee will produce its interim report in September and a final report by January. The Committee provides a good way of considering this challenging and important cross-governmental issue. We are certainly well aware of the potential for a large cliff-edge reduction in a person’s income, if support for school meals is withdrawn completely when they reach a certain level of earnings, and we are working closely with other Departments on the matter, as well as on the review.

On health, we aim to ensure that passported benefits are awarded to broadly the same number of people as now. However, passporting is not the only source of help with health costs. Income-related help is also available through the NHS low-income scheme, which can be claimed by anyone on a low income who has capital of less than £16,000. For people on medication, pre-payment options can also significantly reduce the cost of recurring prescription charges. With a 12-month pre-payment certificate, the maximum cost of a prescription is £2 a week, although of course that is an issue only for England; for those with constituencies in Scotland, there are no prescription charges.

[Stephen Timms]

The Minister made an important point a moment ago. He said that he agreed that support for free school meals and prescriptions should be tapered away. That is different from the proposal in the White Paper to have an income threshold and no support. Is that a change in Government thinking?

[Chris Grayling]

That is precisely what we have asked the Social Security Advisory Committee to examine for us: how best we deal with that cliff edge. We accept that it is there. How do we tackle it to maximise the likelihood of people moving into work?

In most cases, health charges will be one-off or occasional costs that are unlikely to weigh heavily in people’s perception of the financial gains from working. However, for some disabled people in particular, there may be a more significant factor. The current passport from working tax credit together with the separate NHS scheme for people on low incomes should mean that health costs are not, in theory, a disincentive to work, but we know that the reality is often dictated by perceptions and issues about access. We will work to get that right for universal credit. However, we await the Social Security Advisory Committee’s recommendations with interest and we believe that it will be necessary to consider them with other Departments. We need to find a way in which to address the matter that maintains support without creating insuperable barriers to returning to work. It is a complex subject, which falls beyond simply decision making by our Department because we are not responsible for much of it.

New clause 5 would ensure that claimants understand how the amount of universal credit that they receive is calculated. I share that goal, but we do not need primary legislation to achieve it. We are designing universal credit to ensure from the outset that people have the information that they need in an accessible form that is clearly set out. We intend to provide a clear record of any award when it is first made and of subsequent changes, ensuring that claimants are always up to date with the latest position.

Universal credit will be a digital service by default that claimants will predominantly access online. However, we recognise that not all universal credit claimants have access to the internet and we will continue to provide notification through other channels. We are also working with the Government Digital Service—as well as other partners—to help people get and stay online by providing more reliable internet access and training in communities. Of course, we put in place some of the measures to increase digital access when we debated the appropriate regulations last week.

The hon. Member for Stretford and Urmston (Kate Green) was concerned that one part of the benefits system going wrong would bring down the whole deck of cards for a family. She is wrong in thinking that, simply because we have multiple channels, the system somehow works well at the moment and will be much more vulnerable under universal credit. The current system does not often provide that security. Outstanding questions can affect a wide range of existing benefits, particularly at key points of transition, such as moving into work. Many people do not even claim everything to which they are entitled. Rather than a patchwork of provision, with people thinking, “Have I got everything I’m entitled to? If I don’t know a particular answer, everything gets delayed”, a single point of entry, a single point of access and a single system of paying benefits makes it less likely that somebody will get into difficulties and not receive all the money to which they are entitled. I do not therefore believe that the hon. Lady has got that right. We are confident that universal credit will not have the effect that she suggests—it will make it easier to access benefits. Of course, we intend to introduce a system of payment on account, which will allow some payments to be made even if all the details of the claim cannot be sorted out straight away.

Amendment 26 on reporting would make it a legal requirement that we assess and report on access to welfare advice, including advice for those unable to use the internet, before we introduce universal credit. Universal credit will be a simpler system than we have today. It will be easier for potential and existing claimants to find out relevant information online, and easier for advisers to understand and advise.

Welfare advice is already provided by Jobcentre Plus, Her Majesty’s Revenue and Customs and local authorities through a variety of means—over the internet and via other routes.

[Dame Anne Begg]

Even if universal credit fulfils what the Minister describes—he says that it will be simpler, and although it will certainly be simpler superficially, in practice it may be more difficult—with any move from an old system, it takes time for people such as advisers to become familiar with the new system. Advice will be crucial at that pinch point. Will the Minister ensure that the organisations that provide advice are properly funded in that transitional period?

[Chris Grayling]

My view is that our partner organisations, such as Citizens Advice, need to be involved and informed of all the changes. We need to continue to be able to offer the valuable advice that they give to individuals. We provide quite substantial blocks of Government funding to Citizens Advice and similar organisations, and it will be for them to decide how best to use that financial support. In what are straitened financial times, I would hope that those organisations would see their priority as sending as much of that money as possible to front-line advice services, and spending as little as possible on central administration, central marketing activities and other head office functions. I would like those organisations to focus on providing every spare bit of cash that they can for front-line advice services—as well as finding ways of generating more spare cash for that purpose—because after all, that is where the money is most effectively and valuably spent.

We will seek to provide guidance, training and advice for advisers on the universal credit and the implications thereof. There is always a willingness on our part to talk to groups of advisers, including at some of the big conferences that Citizens Advice organises. I have not been able to do so yet—I have offered to do so on other matters—but we are always willing to provide such input to those organisations.

[Yvonne Fovargue (Makerfield) (Lab)]

Does the Minister accept that the money currently given to Citizens Advice is spent centrally on vital services such as training advisers, the information system and support for those agencies? In fact, none of the money goes to local bureaux, which are extremely concerned about the effects of the cuts in 2013.

[Chris Grayling]

Every organisation has to look at how it operates in tougher times financially, and at how best to spend the money that it has available. I am sure that Citizens Advice will be no different in that respect.

Amendments 23 and 24 deal with the capital limit and propose that for claimants who work, the universal credit assessment should ignore savings that they hold in individual savings accounts up to a prescribed maximum of no less than £50,000. We fully understand the importance of saving. Working families should seek to provide for their future needs and larger purchases. However, families with substantial savings should draw on those reserves when their incomes fall, not look to the taxpayer for support. Our analysis suggests that in 2014-15, there will be up to 100,000 households on tax credits with savings over £16,000 who could be affected by the capital rules in universal credit. However, transitional protection will ensure that there are no cash losers at the point of the transition to universal credit where circumstances remain the same.

However, it is important to be fair to the taxpayer. Although nearly one in three pensioner households have savings in excess of £16,000, only 13% of households with a working-age adult in them have that much in savings. A typical working-age household has only £300 in savings. It cannot be right that people with significantly greater savings than the average family can claim universal credit. A maximum limit of at least £50,000 in ISA savings, as proposed by the right hon. Member for East Ham, is a large sum to be excluded from the capital ceiling. We are striking the right balance between protecting people with modest savings and placing responsibility for their own support on those with substantial resources. Once again, we are talking about an uncosted spending commitment. The right hon. Gentleman said that it would cost £70 million a year to uncap totally, but not that many people on universal credit would have savings of more than £50,000, so the majority of that £70 million would be spent on his measure. The reality is that this is a multi-tens-of-millions-of-pounds spending commitment. Once again, we have not heard from the right hon. Gentleman where the money would come from.

Amendment 30 to clause 10 would mean paying at least as much in the additional elements for disabled children as we did in benefits and child tax credit prior to the introduction of universal credit. As we announced in policy briefing note 1, “Additions for longer durations on Universal Credit”, we will retain two levels of payment for disabled children in universal credit. The higher element will be payable to more severely disabled children receiving the highest rate of the care component of disability living allowance. The lower rate will be payable to children receiving the other rates of the disability living allowance care component. The higher rate will be increased by £52 a year, with eligibility extended to children who are severely visually impaired, who currently receive only the lower entitlement.

The key change is that we propose to align the elements for disabled children and disabled adults. That means that the lower rate would be around £26.75 and the upper rate £74.50 a week in current figures. The lower rate for a less severely disabled child in universal credit would be less than now, but we have pledged that where universal credit entitlement is less, transitional protections will be put in place. Our aim is to simplify and align the additional elements for disabled children with those for adults. We do not think it right that when a young person claims benefits in their own right, the extra amounts payable for disability are different. We also want to focus resources on the most severely disabled children and adults. Savings from abolishing the adult disability premiums and changes in the child rate are not going back to the Exchequer. This is not a cutting exercise; it is about recycling that money into higher payments for more severely disabled people.

Amendments 27, 28 and 29 to schedule 1 relate to the regime for self-employment in universal credit. As I told the right hon. Gentleman many times in Committee, we are committed to ensuring that people in self-employment have the financial support that they need. Amendments 27 and 28 would take a power to allow “accruals accounting” of profits and losses from a trade to be used in the reporting of earnings from self-employment. Strictly speaking, that is unnecessary, as the power taken by paragraph 4(1)(b) of schedule 1 already permits such a regulation. Amendment 29 would limit the application of the power taken at paragraph 4(4), which allows for a minimum level of earned income from self-employment to be set. It proposes that the minimum level would not apply where the claimant’s business was conducted on a commercial basis with a view to the realisation of profits.

We recognise that self-employment is a vital element of the economy and will be an important contributor to the sustained recovery from recession that we all want. It is also an important route into work for many people. We are therefore giving careful consideration to the conditions that we set for people claiming universal credit who seek to make their living from self-employment. The enabling framework provided by the Bill allows the treatment of income from self-employment, including the definition of earnings to be taken into account, to be set in regulations. We therefore do not need to decide this question today; we can work to get it right. However, as I have said to the right hon. Gentleman previously, we have to deal with the issue carefully. It is not the intention to make it impossible for people to get into self-employment, particularly in the first few months, when they have difficulties and money does not come easily. However, in the current system, people can report no or very low income from their business activity and continue to receive the bulk of their benefit or tax credits entitlement. We want people to become progressively less reliant on benefits and universal credit. At the end of the day, we cannot have the taxpayer funding someone who is notionally self-employed—and on whom there is no job search requirement—but who generates little or perhaps no income at all from that self-employment. We have to apply a threshold to determine whether someone is credibly in self-employment or whether they are using self-employment as a reason for not looking for other job alternatives. We have to get this right.

[Mrs Main]

My right hon. Friend makes a valid point about people who are considered self-employed. Does he have any view about those who are considered self-employed who sell magazines such as The Big Issue?

[Chris Grayling]

My hon. Friend makes an important point. That is something that we need to address, because the current situation is not right. We need to ensure that the system is fair and justifiable in the eyes of taxpayers and other individuals. I share some of her anxieties, and although it is not in my remit to pursue the issue, I am sure that she will make her representations elsewhere in Government. It is not that we want to do anything that undermines that publication or others in a similar position; rather, we want to ensure that the position is not only fair and equitable, but defensible and justifiable.

[Mr Christopher Chope (Christchurch) (Con)]

My right hon. Friend knows that I have expressed some concerns about this issue in the past. Can he give us an assurance that self-employed income will be based on actual income, rather than deemed income? Linking self-employed income with an assumption that people are earning the minimum wage would effectively put most farmers in this country the wrong side of the line, because probably most of them earn less per annum than they would if they were paid the minimum wage for the hours they work. The same goes for young barristers, lots of people in the carpentry and building trade, and others building up businesses. Surely the system should be based either on actual earnings or on something else. If it is based on something else, that surely needs to be spelt out clearly, because there are rumours circulating that we are effectively imposing a minimum wage by the back door on self-employed people.

[Chris Grayling]

My hon. Friend makes a good point, underlining the complexity of these issues and why I believe it inappropriate to set hard-and-fast rules in primary legislation. If we find that we have not got it right the first time around, or if things need to be done to remove anomalies, which they might well be, it makes no sense to have written the fine print into the detail of primary legislation, therefore making it more difficult to adjust accordingly. This is one reason why it is important to maintain as much flexibility as possible.

[Stephen Timms]

The hon. Member for Christchurch (Mr Chope) referred to rumour, but the White Paper said that self-employed people would be deemed to have earned at least the minimum wage for each hour of employment. Can we take it from what the Minister is saying that the Government are reconsidering that White Paper decision?

[Chris Grayling]

As I said to the right hon. Gentleman in Committee, we are looking at the best way of doing this. We cannot have a situation in which people who are receiving an entitlement to the universal credit while generating no income at all over long periods of time still say that they are self-employed. We must ensure that that does not happen, and we are looking for the best way of doing it. If we wrote the rules into primary legislation, we would not be able to take decisions and fine-tune on the basis of experience, as we would have to come back to primary legislation every time. That is why I think it inappropriate to accept the right hon. Gentleman’s amendments.

Let me make some further progress. Amendment 33 seeks to remove the restriction on eligibility for pension credit for couples where one member is below and the other is above the pension credit qualifying age. Suffice it to say that although someone over the retirement age should be able to receive benefits for the household under the pension credit system, someone under the retirement age being able to receive the benefits of a means-tested system without having to go out and look for a job is just plain wrong. I am afraid we disagree on that, and I am comfortable with the changes. They are set out in legislation, which is where one would expect them to be set out. I am disappointed at the right hon. Gentleman’s disappointment that we have not issued a press release on the subject, but I do not think that this is the kind of change that would command the front pages of any newspaper. It seems perfectly reasonable to set out proposed changes in legislation, given that it is legislation that is laid before the House with accompanying explanatory notes that Members can read and discuss and into which they have an input.

Amendment 68 would add additional provisions for carers to paragraph 4(4) of schedule 1. It is not necessary to set a minimum level of payments to carers. The risk is that the incentives for carers to get into work are blurred by the automatic payment of an amount that does not relate to their personal circumstances. We all agree that work, not benefits, is the best route out of poverty, and we must ensure that payment levels are not set so high as to undermine that.

Amendment 61 takes us back to an issue that was extensively debated in Committee in respect of the payment of universal credit. Opposition Members suggest that that default position should be that payments made in respect of children are routinely directed to the carer. The amendment would provide powers to specify other circumstances for paying a portion of the universal credit award to a particular individual.

We have published a policy briefing note setting out our intentions for payments. We have already said that couples will be able to choose which of them receives the award and they could direct it to a joint account for both to access. It is a core principle of our approach that individuals are best placed to make choices about what is best for their own circumstances. There will, of course, be some exceptional circumstances and there are powers within the Bill to amend the Social Security Administration Act 1992 to allow the Secretary of State to pay all or part of an award to another individual. We do not need this amendment to ensure that. However, the default position should be that we make payment to the person chosen by the couple, not by anyone else.

Many of the concerns raised in this debate are, of course, about the possibility that universal credit might be less generous to some people than the current system of benefits and tax credits. We propose a radical reform and a simplification of the welfare system. In that situation, it is not possible to replicate exactly every aspect of the current system. That is why we will introduce a system of transitional protection to ensure that there are no cash losers as a result of the move to universal credit.

[Dame Anne Begg]

Will the Minister tell us how much will be available for the transitional protection? The figure of £2 billion was mentioned, but that included all the changes, all the administration and IT as well as the transitional protection. What is the spending envelope? How much will cover the transitional arrangements?

[Chris Grayling]

The £2 billion contains sufficient money for us to be able to deliver the transitional protection and the various changes. I do not have the numbers in front of me, but I will happily write to the hon. Lady to give her the more detailed figures we have published so far. We have given a clear commitment to transitional protection. It costs what it costs, but we have made a sensible projection of what we believe it will cost, which is contained in the budget for the spending review period. It is important to ensure that there are no cash losers as a result of the transition, but it is impossible to make a big change of this kind without finding that people in subsequent years are in a different financial position from their counterparts in previous years. Inevitably, some will move one way; others will move another. The only fair and proper way of dealing with the situation is to ensure that everyone is protected in cash terms.

We think that we have put together a framework in part 1 that will give us the flexibility to introduce the universal credit and to fine-tune the proposals as necessary so that if we do not get everything quite right at the start, we can fine-tune as we go by, and that a future Government will have the flexibility to do that. We have made absolutely sure that we have the appropriate protections in place so that there is an element for child care, for parents, for those with disabilities, and so on and so forth.

We think we have created a sensible framework of the kind that in different areas of policy and in different ways were created through primary legislation by previous Governments, including the last Government. I do not believe for a second that it would be prudent to write into the Bill the sort of amendments that the Opposition have tabled. I have responded to their wish to see more measures brought forward on the affirmative rather than the negative procedure, which I think is right and proves that we will listen and make amendments where it is sensible to do so. I am afraid that the Opposition are seeking to write the sort of detail into the Bill that they would never have put in legislation when they were in government; they would never have followed that approach themselves. That is why I cannot possibly accept their amendments and why I ask the House to accept the Government new clauses and to reject the Opposition amendments.

[Sheila Gilmore]

The debate we have had—in Committee and this evening—shows some of the pitfalls of saying, “We are going to simplify benefits.” The Minister and his colleagues have said to the country generally, “We're going to simplify benefits. This is a simpler system, so it must, by definition, be a good thing.” They expected and, indeed, got from many people the answer, “We agree that benefits should be simplified.” The problem is that when dealing with real people and real situations it all becomes much more complicated, as our debates tonight and on previous occasions have demonstrated quite clearly.

The details of issues such as school meals, health charges and the even bigger matter of child care are extremely important, and will have a real impact on whether the new system works for people, will make them better off, and enables them to get into employment, stay in employment, improve their circumstances and get out of poverty. We all agree that, except for those who suffer from real and deep health problems, employment is the best way out of poverty. If, however, such an important element as child care is left so undefined, we cannot know the answer to that question.

Frankly, we are being asked to buy a pig in a poke. We are told, “If you don’t accept it, don’t vote for it or don't agree with it, you are throwing over the whole issue of welfare reform.” I do not accept that. Nor do I accept the Minister’s view that he was given that sort of response by the previous Government and that there should be simply a framework—an empty bookcase, as he was wont to say in Committee—as there was before. It seems to me that if he thought it was wrong then—and it sounds as if he did—it may still be wrong now. As I said in Committee, people should not be asked to buy that empty bookcase without knowing whether it contains classics or cheap comics.

--- Later in debate ---

20:20

Division 288

Ayes: 215

---

Labour: 205
Scottish National Party: 5
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Democratic Unionist Party: 1
Alliance: 1

Noes: 293

---

Conservative: 244
Liberal Democrat: 48

Clause 5

--- Later in debate ---

20:36

Division 289

Ayes: 217

---

Labour: 204
Scottish National Party: 5
Democratic Unionist Party: 3
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Alliance: 1

Noes: 299

---

Conservative: 250
Liberal Democrat: 48

Clause 11

--- Later in debate ---

[The Minister of State, Department for Work and Pensions (Steve Webb)]

The hon. Lady was present at oral questions this afternoon, when I tried to link the situation of 25 to 34-year-old single people who will be looking for shared accommodation with that of social tenants who have a spare room. Is she interested in the idea of social tenants, be they local authority or housing association, renting out spare rooms, thereby covering a shortfall in housing benefit and helping young single people at the same time?

[Ms Buck]

That is a reasonable option to allow people to take, but I seriously doubt whether it is an answer to the problem, for a whole host of reasons. In particular, there is a striking imbalance between where the social housing occupation is and where the demand for private rented accommodation is.

Many things worry me about what the Minister has just said, because here we are on Report, months after an impact assessment set out what the proposals are likely to mean, and suddenly an option as to how the Government think that the penalty might be avoided is thrown in. Let us sit down and have a proper impact assessment—a proper review. Let us see, for example, how any income from rental would be treated in the benefits system, because that could become subject to the same rules as non-dependant deduction, which would not leave people better off at all. Before the Minister asks me to regard it as a serious option, let us see exactly how it would be workable as regards the match between demand and supply and how it would be treated for the purposes of tax and other benefits.

--- Later in debate ---

[Ms Buck]

To be absolutely clear to the hon. Lady, I am not talking about the overall benefit cap. [Interruption.] No, it is a benefit cap. It is a benefit cut.

[Steve Webb]

You are confusing people.

[Ms Buck]

I am not confusing anybody. It is a cut in housing benefit of up to 23% for 670,000 households, of which, according to the Government’s own impact assessment, 400,000 include a disabled person and 108,000 are in adapted properties. Most of those people will have no means of avoiding the cut in their housing benefit, because there is nowhere for them to go. Even if there were, the Government do not want some of them to go there, because then they would not meet their own savings targets.

--- Later in debate ---

[Ms Buck]

My hon. Friend is absolutely right. The scheme is not voluntary. Voluntary downsizing has a proud history. Good local authorities and housing associations provide voluntary downsizing, which is sensible. The Government’s measure requires 108,000 households whose properties have been adapted for disabled purposes to take, within the next 18 months, a significant cut in their housing benefit, or to move, regardless of the value of that adaptation. The Minister implies a mammoth bureaucratic exercise to evaluate every one of those adaptations, and to establish individual cost-benefit analyses in every case, in the hope, which I suspect will be a forlorn one, that an appropriate property will be available for people to move into when they fall foul of such analyses. That appropriate property does not have to be within the local authority area or even the region where those people have family, friends, support and, in some cases, employment.

Those two concerns, of the many that the Opposition have on housing costs, are the subject of the amendments that we have tabled. I hope that the Minister, who has made sympathetic noises on both issues in Committee, goes a little further tonight, and gives us solid and binding reassurances that there is a way of resolving the benefit trap that will catch so many people, in order, as Ministers have frequently stated in the media, to deal with a very small number of high-value claimants who dominate the media agenda. It is not fair to capture 108,000 disabled people and 750,000 claimants of local housing allowance, all of whom will be affected by the housing benefit cuts, in order to deal with a small number of extreme cases, on which we could otherwise have had a sensible debate about attempting to resolve.

[The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)]

I thank the hon. Member for Westminster North (Ms Buck)for taking the time to talk to us about her amendments today. When I heard some of the reports on the radio this morning I thought that today would be a big day, when we would really be able to understand the Opposition’s approach to welfare reform—but on the basis both of Question Time and of the debates on the Bill, many of us feel that there is a lot more work to be done.

Today was an important opportunity for Opposition Front Benchers to set out their amendments and how they would change the Bill, to show how they would deal with housing benefit. I have listened hard, but there is still no clarity. In fact, what we have heard is more and more contradictions from the hon. Lady. In her opening remarks she said that she did not want the housing benefit bill to rise, and she did not agree with housing benefit taking the strain. However, the amendments run completely contrary to those objectives. Amendment 31 would significantly erode the savings that the Government propose, and amendment 32 would draw the exemption so wide that it would be far broader than anything recommended by the specialist organisations. That is a concern.

Nor are we any wiser as a result of the Opposition Leader’s speech today, which did more to create further confusion in this area. He talked about supporting people into housing as a result of their volunteering or working. That may sound familiar, but if the Opposition seek to link volunteering and work with housing, we hope that they do not intend to undermine eligibility for lone parents when it comes to their housing needs. It is difficult to comprehend how the hon. Lady will achieve her objectives with her amendments.

[Sheila Gilmore]

I am fascinated by the Minister’s suggestion that people who volunteer cannot be lone parents, as she has just contrasted one group with the other.

In relation to housing, it could be suggested that amendment 31 would not achieve the results that the Government want. Having made one change—reducing the local housing allowance to the 30th percentile—are the Government really suggesting that they would be happy to see it move far beneath that if a gap appeared between that percentile and rent, if uprating were only in line with the CPI? Rents were previously uprated according to the movement of the market.

[Maria Miller]

If the hon. Lady recalls our debates in Committee, she will know that I have already made this very clear. The Government will keep such matters under review. Of course we want to ensure that things work as they should. What is important to me is that the Opposition have not set out in these amendments the principles that they would follow in this area. Do they want to continue to see spiralling rents in the private rented sector? Would they leave that unchecked? Do they want to see people on housing benefit being able to afford rents that those in work could never afford? Are the Opposition content to leave 250,000 social housing sector tenants in overcrowded accommodation when we have 1 million spare rooms paid for by housing benefit? The Opposition have failed to address those issues in their amendments today. In fact, they have gone further—

[Sheila Gilmore]

Will the hon. Lady give way?

[Maria Miller]

Will the hon. Lady forgive me for making a little progress? Many other hon. Members want to come in on this debate, and I want to set out my response to the amendments before we run out of time.

Before I turn to the specific amendments, I want to pick up on what the hon. Member for Westminster North said about rising homelessness. I am sure that she believed in the effectiveness of the previous Government, but she cannot expect the sort of impacts on homelessness that she implied after just one month of a policy being in place. I do not accept that the policies we are advocating will have the impacts on homelessness that she talked about. She has to get real: these policies have only been in place since April, and could not be driving the sorts of changes that she mentioned by this stage.

The hon. Lady said that her premise was affordability and access to housing. May I remind her that, given that 40%—and in some areas, including coastal towns, 70%—of those in the private rental market are in receipt of housing benefit, it is critical that we keep control of the amount of money going out in housing benefit? That way we can help the very first-time buyers whom she purports to want to help, who are finding it so difficult to get into the purchase market at the moment, and who need to go into the rental market. The previous Government let those people down by not keeping control of housing benefit rents during their tenure.

[Ms Buck]

The statistic that 40% of the market is subsidised by the local housing allowance is central to the Government’s argument. Will the hon. Lady finally, helpfully source that figure? Figures released in the English housing survey last month confirmed that only 24% of those in the total private rented sector in England were on LHA. Although there are regional variations, it would be helpful if we could finally and definitively have the source for that 40% claim.

[Maria Miller]

I thank the hon. Lady for her question. I shall be happy to write to her with the full details, and to remind her that the proportion is only 40% on average; as I said, it is 70% in some coastal areas. That is a significant issue that helps to determine the rental rates that many people—[Interruption.] I think I just said that I would write to the hon. Lady with the details. I do not have them to hand now.

The important matter to which I now turn is my response to the two amendments tabled by the hon. Member for Westminster North and the one tabled by my hon. Friend the Member for Cardiff Central (Jenny Willott) for us to consider today. We said in the universal credit White Paper that an appropriate amount would be added to the universal credit award to meet the costs of rent for claimants. We also said that levels of support for rent would be broadly similar to the support provided through housing benefit at the time that claimants began to move on to universal credit. In the private rented sector, we will build on the local housing allowance approach, incorporating the reforms that we are making over the coming year. This will give private rental tenants access to about 30% of the rental market in their areas, including most of London.

We also need, however, to do more to constrain the growth in rents, which is why increases will be limited in line with the consumer prices index. This will ensure that we continue to put the sort of downward pressure on rents that is so important to keeping control of our budgets and to affordability for those not in the housing benefit market.

[Mr John Leech (Manchester, Withington) (LD)]

May I offer an alternative solution for keeping rents low? How about building more council houses and housing association houses, and getting the construction markets on the go as well?

[Maria Miller]

I would not want to incur the wrath of Mr Speaker by going into such issues, which are more to do with my colleagues in the Department for Communities and Local Government. Certainly, however, my Department has a responsibility to ensure that we apply that downward pressure on rents in order to ensure affordability for people across the board.

[Dame Anne Begg]

The housing associations in my area are saying that because they are likely to have people defaulting on their rents, such housing will no longer be a good investment, and for that very reason further building programmes are likely to be curtailed. That is the result of the Government’s policies.

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[Maria Miller]

I know that that issue has been brought up, and we will work on it with the landlords concerned. Obviously, we do not want that to be the position: we want to ensure that there is no problem with the money that flows to landlords. We will work hard to address that.

[Mrs Louise Mensch (Corby) (Con)]

Does my hon. Friend share my amazement, and that of hard-working people in my deprived constituency of Corby, that the Opposition—the Labour party—are trying to prevent us from maintaining downward pressure on rents?

[Maria Miller]

My hon. Friend is right to be incredulous about the Labour party’s position. She should also express incredulity at the fact that the Labour Members do not seem to have a policy—apart from opposition to the proposals.

I remind hon. Members that the restriction will apply only in areas where local market rent increases at the 30th percentile exceed the annual rate of increase in the CPI. We have said that we are committed to making savings from that measure, but if it becomes apparent that the LHA rates and rents are out of step, that can be reconsidered, as I said in Committee.

Let me briefly consider amendment 72, which raises an important issue for us all. We want to ensure proper and accurate monitoring of the impact of the introduction of our policies. Indeed, we have put that in place for the work capability assessment and our reform of DLA. My hon. Friends the Members for Cardiff Central and for Redcar (Ian Swales) are right to highlight the importance of having an accurate method of assessing the impact of our policies. That is an important and prudent part of Government policy. I hope that my hon. Friends will be reassured that we have already commissioned independent external research to evaluate the impact of the housing benefit reforms that we announced in June 2010 in the Budget and in the spending review. The review will be comprehensive and thorough and presented to both Houses, together with a ministerial statement. We intend to make final findings available in 2013, with initial findings available in 2012.

[Jenny Willott]

There is a huge range of issues that we clearly cannot cover this evening in the time available to us. However, I would be grateful if the Under-Secretary ascertained whether one matter in particular could be included in the review: how foster children are covered. As I understand it, foster children are not counted in the allocation of bedrooms. The way in which the measure is implemented could have a significant impact on local authorities’ ability to recruit foster carers, and on the care that can be provided for foster children. That has not been covered in the debate so far.

[Maria Miller]

My hon. Friend makes an important point, which has been raised with me on a couple of occasions. I remind her that currently there is no additional allocation of housing for families with foster children. There is an accrual within the payments that are made to cover additional housing costs. However, she makes the important point that, whatever our housing policies, we should not disincentivise or put unnecessary barriers in the way of foster carers who do so much to give children who cannot live with their own families the sort of start in life that they need.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

Does the review—or any of the reviews—include the further point about which the Secretary of State said he wanted to be helpful—ensuring that there is a possibility that broad market rental areas become more coterminous with local authorities? Will the review cover where people might move to, so that they are not obliged to move out of their natural communities, which in most cases in London would be the local authority area where they currently live?

[Maria Miller]

I thank my right hon. Friend for that comment. I am not aware that the research will cover that at this time, but perhaps I could consider that in more detail. He has raised that point in the past.

[Mr Alan Reid (Argyll and Bute) (LD)]

Will the Under-Secretary give way?

[Maria Miller]

Would my hon. Friend mind if I made a tiny bit more progress on the amendment, and tried to deal with some of the others?

In that spirit, we are considering the most effective way of monitoring and evaluating the housing support measures. That will enable us to understand the effectiveness of the measures in the same way as we will understand the 2011 measures. However, reviewing the operation of the changes in the first year will be too soon—something that I have also considered in relation to other measures in the Bill. We need to ensure that the measures have time to mature and bed in, so that their effectiveness can be properly evaluated. I am not sure that I agree with my hon. Friends that conducting such a review after the first year would be the best way to assess the effectiveness of our policies. Therefore, I cannot commit to the timetable that they propose, even if we are attracted to the idea of conducting comprehensive research. However, I can reassure them that we are looking at ways of funding an external review—this time on the measures in the Bill—and that we will consider that in some detail in the coming months.

Amendment 32 was also tabled by the Opposition. I am sure that Members are aware of the pressures that we face in social housing; indeed, there are some facts that we have to consider before we can look at the amendment in any detail. We know that less than 5% of social tenants in England move each year in the social housing sector. That is not helpful, given the 250,000 overcrowded households waiting for a suitable property to meet their needs. There is also limited social housing stock, with waiting lists of 5 million people, 250,000 tenants in overcrowded housing and almost 1 million spare bedrooms being paid for through housing benefit. There is a mismatch in the market. I am quite astonished that the hon. Member for Westminster North spent no time talking about that or showing her support for the action that we are taking to put it right.

[Sheila Gilmore]

It is important that the Minister establishes whether the Government’s proposal is intended to solve the problems of under-occupancy and over- occupancy or simply to save money. Even if the changes that she wants are achieved, there will be no saving in the housing benefit budget, on the assumption that many of the people moving into the houses thereby vacated will also be on housing benefit.

[Maria Miller]

It is absolutely not fair that we have 1 million spare bedrooms being paid for by housing benefit. It is not right—many taxpayers would never be able to afford a spare bedroom in their properties—nor is it fair for those living in overcrowded or poor housing conditions, waiting for long periods for the opportunity to live in a home that is decent or that actually reflects the size of their family. I would ask the hon. Lady to consider that.

Amendment 32 would provide an exemption from the social sector size criteria measure for disabled people living in adapted accommodation. The intention is to ensure that where people have significant or extensive adaptations, they do not have to move and have a new property adapted, which would result in additional costs. I assure the House that I fully understand those arguments. I agree that it might not make sense to move someone from their home if they have already had significant adaptations. Replicating such changes would impose unnecessary costs. We are not interested in shifting costs from one budget to another. However, as we previously set out, we cannot take the broad-brush approach that amendment 32 would allow for. The amendment talks about a property that is

“specially adapted or particularly suited to…the needs of that person.”

This means that the provision would be drawn very widely drawn indeed, covering any adaptations.

Some adaptations, such as a handrail in a bath, may be so minor that exempting the tenant on the basis of that adaptation alone would simply not be justifiable. The provision would also cover a property that had been adapted for someone’s past needs, and would require local authorities to exempt those whose accommodation was particularly suited to meet their needs—perhaps those in a ground-floor flat or a property with a limited number of stairs to climb. We do not have the data on how many such cases there are, but it seems likely that many would fall into such a broad category. Again, that would prove very expensive—something that the hon. Member for Westminster North seemed to ignore. It is not clear what evidence would be required or who would be responsible for the decision. The amendment refers to the provision of

“certificates, documents, information or evidence”,

which, as the hon. Member for Westminster North said, also suggests a degree of administrative intervention. She made a valid point in Committee, but I am surprised that she is pushing it even further. I think that many stakeholders would rightly be concerned about the potential cost of her proposals and about the additional burdens such bureaucracy could load on to landlords and others.

The National Housing Federation estimates that about 108,000 tenants in adapted accommodation are likely to be affected by the introduction of the size criteria to restrict housing benefit. The NHF has kindly shared its data with us and I understand that our officials have met the federation since Committee and are continuing to explore the data in some detail. However, as well as looking at the available data, we want to talk to housing providers, but that will take some more time.

Funding for adaptations can come from a number of sources, one of which is the disabled facilities grant. Some 44,000 awards were made in 2009-10 in England and the average award was some £7,000. However, many of these are paid to owner-occupiers, not to those living in social rented houses. Research published by the Office of the Deputy Prime Minister in 2005 showed that about 70% of all adaptations were for less than £1,000 and that only 19% were wholly funded from the disabled facilities grant. In England, the maximum grant is £30,000, but there are discretionary powers to enable local authorities to meet costs in excess of that. Adaptations of this magnitude would be substantial, potentially involving the construction of a single-storey or double-bedroom extension, together perhaps with the installation of a toilet or en-suite shower. Figures from the same source indicate an average cost of about £2,000 for the installation of a stairlift. We will consider the evidence further, but it is important for the House to look at the facts and realise that many of these adaptations are at a much lower level than the hon. Lady indicated in her comments.

As I said in Committee,

“it is not our intention to put something in place that would have a disproportionate impact on disabled people. If someone has had their property adapted because of their disability, it makes no sense to move them to a different property and spend more money on costly adaptations.”

I concluded that a “blanket exemption” was not the best approach and that we would need to consider

“how we can best target the help at people, while keeping in mind the practical difficulties of identifying…where accommodation has been adapted”.––[Official Report, Welfare Reform Public Bill Committee, 3 May 2011; c. 687.]

We acknowledge the concerns that have been highlighted, but this amendment goes much further than was suggested even by the sector itself. I hope that, in the light of my comments, hon. Members will look again at the amendments and agree to withdraw them.

[Mr Reid]

I shall have to be brief. Much of the Bill will be implemented through regulations. Much of the debate has been about London and big cities, but I want to draw the Government’s attention to another part of the country—the highlands and islands of Scotland, where communities live large distances apart. My right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) referred to community, and if people live on an island, the island is the community, yet it often has limited housing stock.

As a result of this Bill—either because of the 30th percentile provision or because they are under-occupying—some people might have to move house. When the regulations are being drawn up, I urge the Government to take the sparsely populated parts of the country into account. If people are going to have to move, they should be able to do so within their community. If they live in mainland villages, the next village might be 10 or 20 miles up the road; if they live on an island, the community is the island.

The regulations are to be subject to a negative resolution, but I urge the Government to use the affirmative resolution so that they can be properly scrutinised here. I urge the Government please to take into account the needs of the sparsely populated parts of the country as well as the cities.

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22:01

Division 290

Ayes: 213

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Labour: 199
Scottish National Party: 5
Democratic Unionist Party: 3
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Alliance: 1

Noes: 304

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Conservative: 254
Liberal Democrat: 48

The Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).