House of Lords

Monday 23rd January 2012 Lords Chamber

Monday, 23 January 2012.

14:30

Prayers—read by the Lord Bishop of Manchester.

Armed Forces: Afghanistan

Monday 23rd January 2012 Lords Chamber

Question

14:35

Asked By

[Lord Lee of Trafford]

To ask Her Majesty’s Government what is their current estimate of the timetable for withdrawal of United Kingdom forces from Afghanistan.

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever)]

My Lords, I am sure that the whole House will wish to join me in offering sincere condolences to the families and friends of Private Matthew Thornton, 4th Battalion The Yorkshire Regiment; Lance Corporal Peter Eustace, 2nd Battalion The Rifles; Lance Corporal Richard Scanlon, 1st The Queen's Dragoon Guards; Private Thomas Lake, 1st Battalion The Princess of Wales's Royal Regiment; Rifleman Sheldon Steel, 5th Battalion The Rifles; Sapper Elijah Bond, 35 Engineer Regiment Royal Engineers; Captain Tom Jennings, Royal Marines; Squadron Leader Anthony Downing, Royal Air Force; Private John King, 1st Battalion The Yorkshire Regiment; and Rifleman Sachin Limbu, 1st Battalion The Royal Gurkha Rifles, who were all killed on operations in Afghanistan recently. My thoughts are also with the wounded, and I pay tribute to the courage and fortitude with which they face their rehabilitation.

UK force levels in Afghanistan will reduce from 9,500 to 9,000 by the end of 2012. By the end of 2014, British troops will no longer be in a combat role and will not be in Afghanistan in the numbers that they now are. Some UK troops will remain after 2014, including in training roles at the UK-led Afghan national army officer academy. The UK and the international community are committed to Afghanistan in the long-term.

[Lord Lee of Trafford]

First of all, I join these Benches in the earlier tribute. It is clear that we have in Afghanistan at present a very substantial amount of equipment. Clearly, some will be left for the Afghan forces, and some will no doubt be retained for our onward training role. However, bringing out the majority will be a major, complex task. Could my noble friend tell the House which routes are planned to be used in this pull-out? What is the speed of the pull-out likely to be? Are we going to hire extra heavy airlift? Finally, is he satisfied that the Ministry of Defence will have the systems and software in place to record all that equipment being brought out?

[Lord Astor of Hever]

My Lords, planning is still at an early stage, and the exact speed of recovery has not yet been set. It is too early to say what equipment we plan to retain, or its value, and what we will gift to the Afghans. We currently use a combination of surface and air routes to support operations in Afghanistan; work is ongoing to increase these to ensure that our drawdown is conducted in good order, and all equipment is consignment-tracked using an asset tracking system.

[Lord Rosser]

My Lords, on this side we also wish to express our sincere condolences to the families and friends of the 10 brave members of our Armed Forces who in the service of our country have been killed on operations in Afghanistan recently. British military personnel will continue to be in Afghanistan in a non-combat role after the withdrawal of our combat forces in less than three years’ time. Who will be responsible for their security, particularly in the light of the recent killing of four French soldiers and wounding of 15 others by an Afghan force soldier, when this was by no means the first such incident of this type? What test will the Government apply to determine whether or not the Afghan national security forces are able to provide the necessary level of security for our non-combat personnel in Afghanistan after 2014?

[Lord Astor of Hever]

My Lords, UK and international forces are helping to build the strength and capability of the ANSF to allow them to lead security across Afghanistan by the end of 2014. They have responded professionally and effectively to several high-profile attacks and are ready and willing to take on increasing levels of responsibility. After 2014, UK troops will continue to support the ANSF by providing training at the new Afghan national army officer academy, and we will work with other NATO nations to ensure that the necessary force protection measures are in place.

[Lord Rotherwick]

My Lords, what is the situation regarding the Danish armour that is supporting our troops in Afghanistan at present?

[Lord Astor of Hever]

My Lords, that is a very important question. The deployment of Danish tanks has proved essential to our activities in Helmand, and the commander of Task Force Helmand cannot sing their praises enough. We and our allies in Regional Command Southwest welcome the Danish decision to retain this tank capability in Helmand until 2014.

[Lord Stirrup]

My Lords, successful disengagement of NATO and partner nations in combat roles depends upon the existence of a political and security situation that can be managed by the Afghan Government. With that in mind, can the Minister say whether the United Kingdom is being consulted on the talks that are taking place between the United States and the Taliban, and if these talks are aimed at an outcome that can be managed by the Afghan Government or are a cover for a precipitate drawdown of US forces before 2014?

[Lord Astor of Hever]

My Lords, we are clear that military means alone will not bring about a more secure country. We have always supported an Afghan-led political process to help bring peace and stability to Afghanistan, and we continue to encourage all parties to take forward reconciliation. We will continue to engage with our US colleagues on these important matters.

[Lord Sewel]

My Lords, given the fragility of state institutions in Afghanistan, does the Minister accept that a likely outcome following the withdrawal of combat troops will be the fragmentation of the state of Afghanistan, with the greatest losers being women?

[Lord Astor of Hever]

My Lords, I think that that is a very gloomy statement, and I do not share the noble Lord’s views on this.

[Lord Dannatt]

My Lords, would the Minister like to comment a little further on some of the equipment issues arising from our withdrawal from Afghanistan, in particular noting that many of the vehicles we use to provide protected mobility have been bought under the urgent operational requirement scheme specifically for Afghanistan? Would he comment about future protected mobility for the infantry in particular, given that the FRES utility programme has slipped from 2012 to about 2022?

[Lord Astor of Hever]

My Lords, there never was an intention to deploy FRES to Afghanistan. The Government have deployed a range of protected mobility vehicles, including the Mastiff, which is highly valued by our troops. The new Foxhound lightweight protected vehicle is being delivered for training purposes now so that those deploying shortly will be able to use it on operations in Afghanistan from the spring.

[Lord Lawson of Blaby]

My Lords, the noble and gallant Lord, Lord Stirrup, asked a rather important question. Would my noble friend the Minister care to give a slightly fuller answer than he has given so far?

[Lord Astor of Hever]

My Lords, I am sorry that my noble friend thinks that it was not a very full answer. I did say that we are in full discussions with our American allies, and I do not think that I can add anything to that.

[Lord West of Spithead]

My Lords, will we be asked to provide any aviation support post 2014?

[Lord Astor of Hever]

My Lords, I know that the Afghans have helicopters which have been very effective. They were deployed in direct support of troops recently in a very effective way.

Aviation: Passenger Duty

Monday 23rd January 2012 Lords Chamber

Question

14:45

Asked By

[Baroness Benjamin]

To ask Her Majesty’s Government what criteria they took into account when deciding to increase the rate of air passenger duty, in particular in respect of flights to the Caribbean.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the new rates of air passenger duty, or APD, which take effect from 1 April 2012, were confirmed in the Autumn Statement following a freeze in APD rates in 2011-12. Over the two-year period 2011-12 to 2012-13 APD rates, including those for flights to the Caribbean, will rise in line with the retail prices index. This increase, which does no more than keep pace with inflation, is necessary if the Government are to meet their overall fiscal projections.

[Baroness Benjamin]

I thank my noble friend the Minister for that Answer, but he is aware that air passenger duty is less if you fly to Hawaii than to Barbados, even though that is nearly double the distance. However, the Caribbean is the most tourism-dependent region in the world and the distortions created by APD rates are damaging to Caribbean countries—loyal friends and supporters of Britain. Would the Government consider amending the rates of APD to the Caribbean islands if they nominated Bermuda, an associate member of CARICOM, as their capital, bringing their banding into line with the US, their major tourism competitor? If not, what plans do the Government have to provide economic support to the Caribbean now that its livelihood is threatened?

[Lord Sassoon]

My Lords, in the current economic climate, air passenger duty is clearly a burden on all businesses whether in the Caribbean, the UK, or wherever else they are based. That is why we had a one-year freeze, although it is right that aviation should make a fair contribution. However a banding structure works, it is bound to have anomalies. It is the case, as many noble Lords will know, that because the banding works in essence on where the capital city is, the anomalies are indeed there, as my noble friend says, but whenever there are bandings there will be anomalies. We listened to the case that was made very well by the Caribbean authorities, including the tourist organisation, during our full consultation last year. We have no plans to make any further changes, other than those set out in the response to the consultation, but I hear very clearly what my noble friend says about how challenging the situation remains.

[Baroness Scotland of Asthal]

My Lords, do the Government accept that the Caribbean now has a number of very fragile economies and that these duties will have a disproportionate, deleterious effect on their well-being, and therefore will in many ways affect the United Kingdom too, which benefits greatly from many of those who hail from that region?

[Lord Sassoon]

My Lords, although I do not underestimate for one moment the effect on the Caribbean, there will be very many businesses located there, here and in other places for which air passenger duty is a burden. The present system of four bands was introduced by the previous Government. We had a one-year freeze in order to recognise the difficult situation in which people were placed by this and we looked at it. However, the fact is that the APD raised approximately £2.5 billion in 2011-12 and is an important revenue-raising duty.

[Lord Campbell of Alloway]

My Lords—

[Baroness Gardner of Parkes]

My Lords, what would be the effect of the suggestion that was made about Bermuda? Would it be possible for the Caribbean countries to reclassify themselves with Bermuda? What would that involve and would it make quite a difference to them, as has been claimed with regard to the United States?

[Lord Sassoon]

That is a hypothetical question because there is no live question about there being a way to reclassify the Caribbean somehow from band C to band B. To illustrate the broader point, however, many of the respondents to the consultation suggested that we should move back from four bands to two, but that would have resulted in all those in short-haul bands A and B paying more, so it would have increased the air passenger duty for 91 per cent of all passengers paying it. There is no easy way of moving places from one band to another.

[Lord Davies of Coity]

My Lords, the Minister has referred to a number of anomalies. Does he accept that the anomalies display unfairness, and what are the Government going to do about them?

[Lord Sassoon]

As I have explained, the previous Government moved from a two-band system to a four-band one, which raised in the order of £300 million when they came into office and, by the time they left office, was raising in the order of £1 billion. These things are not easy. Where there are real difficulties, however, the Government recognise them. For example, special arrangements have been put in place for long-haul flights out of Northern Ireland to recognise its very special circumstances—its land border with a country that has no APD—and to preserve its flights to the United States. We have said that we will also look at the possible devolution of APD to Wales and Scotland.

[Baroness Berridge]

My Lords, one of the ways in which the system deals with anomalies is to divide large countries such as the Russian Federation into two APD bands. Why has it not been possible to have such a solution for the United States and Canada, which remain in one band and which creates the injustice that my noble friend Lady Benjamin referred to?

[Lord Sassoon]

My Lords, after reviewing this question at considerable length, a decision was taken to leave well alone on all this. As I have tried to explain, as soon as one moves one thing, that opens up the question of all sorts of other adjustments to maintain the revenue.

Transport Infrastructure: North-east England

Monday 23rd January 2012 Lords Chamber

Question

14:52

Asked By

[Lord Walton of Detchant]

To ask Her Majesty’s Government whether they considered including in the Chancellor of the Exchequer’s autumn Statement funding for transport infrastructure projects in north-east England in addition to the proposed upgrade of the Tyne and Wear Metro; and, in particular, whether they considered funding improvements to the A1 trunk road.

[Earl Attlee]

My Lords, the Government announced a range of transport proposals in the Chancellor’s autumn Statement on 29 November 2011 for accelerated delivery in this spending review period. Those proposals were selected because they can be accelerated to start construction and make significant progress in the next three years, therefore making the earliest possible contribution to stimulating economic growth.

[Lord Walton of Detchant]

My Lords, I thank the Minister for that reply. Is he aware that almost 20 years ago, in response to questions from myself and the late Lord Jenkins of Hillhead, the then Conservative Minister in this House—the noble Earl, Lord Caithness—made a commitment on behalf of the Government that the whole of the A1 between Newcastle and Edinburgh would ultimately be dual? Is the noble Earl, Lord Attlee, aware that two schemes were in an advanced state of preparation in Northumberland to begin in 2009 but, when the previous Government downgraded that road to one of regional importance, they were postponed? Now that the coalition has upgraded the road to national importance, is it not time that these delayed schemes should be embarked upon and expedited?

[Earl Attlee]

My Lords, the noble Lord is correct in his description of the history of this project. The interim Regional Transport Board for the North East recommended to the Government in 2006 that proposals for the A1 Adderstone to Belford and Al Morpeth to Felton schemes were not funding priorities for the period up to 2016. The department therefore did not have a scheme to consider for the autumn Statement. However, it is good news that the Government have decided that that section of road is of national importance.

[Lord Cormack]

My Lords, as we rightly attach so much importance to the United Kingdom and its preservation, is there not an unanswerable case for making the high road to Scotland, and indeed the high road to England, a fully dual-carriageway road of national importance?

[Earl Attlee]

My Lords, I thought that someone would ask me a devolution question. There are very good road connections from the highly developed conurbation on Tyneside—Newcastle upon Tyne and Gateshead—but that is via the M6 corridor up through Carlisle. The journey time by car is shorter via Carlisle than it is via Berwick-upon-Tweed.

[Baroness Maddock]

My Lords, given that Northumberland is a more dangerous place to drive in than London according to figures released by the BBC on 19 January—32 deaths per 10 million hours of driving, compared with 23 in London—will the Government prioritise the value of road safety in transport appraisal calculations? Also, given that single-carriageway A roads like the A1 in Northumberland have the most serious accidents, does that not strengthen the case for dualling particularly dangerous parts of the A1 such as the Mousen bends, especially as that scheme is ready to go?

[Earl Attlee]

My Lords, first of all, the schemes on the A1 north of Morpeth are not ready to go, because they have been abandoned since 2006. However, my noble friend is absolutely right when she describes the dangers of a single carriageway, and I asked my officials precisely those questions. Interestingly, though, the accident rate for this section of the A1 was 154 per billion vehicle miles. This compares with 306 accidents per billion vehicle miles on all rural A-class roads within England. The rate for the A1, therefore, is approximately half that for rural A-class roads nationally.

[Lord Davies of Oldham]

My Lords, the Minister will appreciate that very significant improvements were effected to the A1 south of Newcastle with the removal of some dangerous right-hand turns and roundabouts and effective control of traffic. All these improvements, however, are a considerable way south of Northumbria and Newcastle. Is there not a case for appreciating that the A1 now does need attention to the points further north, and that in fact he should look at that scheme further?

[Earl Attlee]

My Lords, I re-emphasise that there is not a scheme at present that we can look at. The previous Administration also found, when they carefully analysed the situation, that there was not a business case for spending £10 per man, woman and child to dual all the way from Morpeth to Berwick-upon-Tweed.

[Lord Geddes]

My Lords, in relation to the Minister’s reply to my noble friend Lord Cormack, could I ask the Minister when he last tried to drive from Newcastle to Carlisle and thence to Scotland? I think he will find that it took a very long time indeed.

[Earl Attlee]

My Lords, I did the best research I possibly could on behalf of your Lordships, but I confess that I did not actually drive the route. I did look on the map and I used the excellent AA Route Planner to see what the difference in time for the two would be, whether I went on the M6 or on the single-carriageway A1.

[Lord Brooke of Sutton Mandeville]

My Lords, given that we have run out of questions before time, may I congratulate my noble friend on the comprehensiveness of his replies?

[Earl Attlee]

When my noble friend got to his feet, I thought, “Oh no, he is going to ask me one of those tricky questions to which I will have to agree to write”. On this occasion I shall just thank the noble Lord for his question.

National Planning Policy Framework

Monday 23rd January 2012 Lords Chamber

Question

14:59

Asked By

[Baroness Bakewell]

To ask Her Majesty’s Government what safeguards are contained in the national planning policy framework to protect cultural institutions.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)]

The Government recognise the valuable role cultural institutions, such as theatres, museums and libraries, play in people’s everyday lives. As part of the simplification of planning policies under the national planning policy framework, it was decided to include cultural development under the general heading of leisure and community facilities, rather than setting out a long list of specific categories. Our policies are intended to support local authorities that want to include cultural institutions as an integral part of the vision for their areas.

[Baroness Bakewell]

I thank the Minister for the Answer but she will know that there has been concern for some time that cultural interests are not specifically mentioned in the national planning policy framework; and that last December the local government Select Committee recommended that they should be included. With the Redgrave Theatre in Farnham threatened with demolition and the Greenwich Playhouse closing its doors, will the Minister put on record the Government’s specific resolve to protect cultural interests?

[Baroness Hanham]

My Lords, the Government intend to see protection for all cultural interests but, as I have explained to the noble Baroness, under the draft national planning policy framework, cultural interests have been included under community facilities, rather than under a specific heading of “cultural institutions”. If that needs reinterpreting, it will come about as a result of the consultation on the national policy planning framework that has taken place over the past three months.

[Lord Tope]

My Lords, I welcome the Minister’s statement in recognition of the important role that culture and cultural services play in the nation’s quality of life and well-being. Can she tell us when we will see the national planning policy framework in its final form so that we may judge the Government’s commitment to that?

[Baroness Hanham]

My Lords, the Government are committed to producing the final version by the end of March. It is very much hoped that it will be ready before then. I am sure that the noble Lord will take a lively interest in it when it is.

[Baroness McIntosh of Hudnall]

My Lords, I wonder whether the noble Baroness agrees with me that cultural institutions in most areas represent rather more than just community facilities. In particular, they have been very important in the regeneration of certain key urban areas that have suffered from the loss of manufacturing industries or where other kinds of activity have gone into decline. In view of that, will she consider how the language of the national planning policy framework might be strengthened to give a little more than just a nod in the direction of cultural institutions, as is presently apparently the case?

[Baroness Hanham]

My Lords, there have been representations about this in the course of the consultation and I know that consideration is being given to them. We will see what comes out of the final result.

[The Lord Bishop of Lichfield]

My Lords, will the Minister explain how well assets of cultural, wildlife and landscape value will be protected in those non-designated areas that make up the greater part of the English countryside?

[Baroness Hanham]

My Lords, it is not usual for me to be at a complete loss but I am afraid that I do not understand how the question relates to the Question. May I write to the right reverend Prelate?

[Lord Davies of Oldham]

My Lords, may I ask the Minister an easy question? This is meant to be the year of not just the Olympics but the Cultural Olympiad, with an enormous amount of energy being invested in the development of cultural opportunities across the country. Does it not therefore behove the Government to be somewhat more positive about this aspect with regard to planning?

[Baroness Hanham]

My Lords, the Government are very positive about cultural aspects. At the moment we are discussing whether that is properly put forward within the national planning policy framework. I can assure the noble Lord that it is very much at the heart of what the Government believe to be an important aspect, particularly of the Olympics and of people’s lives. There should be proper access to the institutions of the arts, such as museums and leisure centres, which people in this country value.

[Lord Avebury]

My Lords, is my noble friend aware that many important cultural events are held in Clapham Library, which is now threatened with closure? What help do the Government propose to give to important, historic libraries that are the subjects of national preservation orders, and to the local communities who wish to take them over and look after them?

[Baroness Hanham]

My Lords, the funding of libraries and museums is a matter for, first, the local authority and secondly, by and large, the Arts Council. We have kept the budget of the Arts Council and the grant in aid at a level, with a reduction of just 11 per cent, which is not as much of a reduction as there has been in many other areas, and we expect support to be given. I do not have an answer to the specific matter raised by the noble Lord but, if required, I will write to him.

[Lord Colwyn]

My Lords, is the noble Baroness aware that the Live Music Bill of my noble friend Lord Clement-Jones successfully passed through the House of Commons last Friday, and will certainly go a long way to protecting musical cultural institutions?

[Baroness Hanham]

My Lords, I am delighted to hear it.

[Lord Campbell of Alloway]

My Lords, is not the answer to the Question on the Order Paper “yes”?

[Baroness Hanham]

Yes.

[The Earl of Clancarty]

My Lords, developing on the supplementary question of the noble Baroness, Lady Bakewell, will the Minister take particular note of recommendation number 5 of the Communities and Local Government Committee’s report, which recommends that the framework adopt a more inclusive definition of sustainable development, particularly considering that culture has previously been defined in planning policy as one of the four main components of sustainable growth, alongside economics, social inclusion and environment,?

[Baroness Hanham]

My Lords, the answer to that is yes, again. As I say, the Government are seized of the importance of culture and of its value within sustainable development. There are questions about the interpretation of sustainable development, and that issue is being looked at with regard to the result of the consultation that has just taken place.

[Lord Brooke of Sutton Mandeville]

My Lords, I recall that my noble friend rejected certain amendments to the Localism Bill which included culture and heritage in this context. Does she have a scintilla of sense—? I shall rephrase that. Does she have an inkling that this subject may be returned to quite frequently in the future?

[Baroness Hanham]

My Lords, just that scintilla of sense would tell me that this is likely to reappear.

Protection of Freedoms Bill

Monday 23rd January 2012 Lords Chamber

Order of Consideration Motion

15:07

Moved By

[Lord Henley]

That the amendments for the Report stage be marshalled and considered in the following order:

Clauses 1 to 19, Schedule 1, Clauses 20 to 39, Schedule 2, Clauses 40 to 53, Schedule 3, Clauses 54 to 56, Schedule 4, Clauses 57 to 61, Schedule 5, Clauses 62 and 63, Schedule 6, Clauses 64 to 78, Schedule 7, Clauses 79 to 87, Schedule 8, Clauses 88 to 113, Schedules 9 and 10, Clauses 114 to 119.

Motion agreed.

Jobseeker’s Allowance (Jobseeking and Work for Your Benefit) (Amendment and Revocation) Regulations 2012

Monday 23rd January 2012 Lords Chamber

Motion to Approve

15:08

Moved By

[Lord Freud]

That the draft Regulations laid before the House on 21 November 2011 be approved.

Relevant documents: 34th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 16 January.

Motion agreed.

Special Educational Needs (Direct Payments) (Pilot Scheme) Order 2012

Monday 23rd January 2012 Lords Chamber

Motion to Approve

15:08

Moved By

[Lord Hill of Oareford]

That the draft Order laid before the House on 7 December 2011 be approved.

Relevant documents: 36th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 16 January.

Motion agreed.

Welfare Reform Bill

Monday 23rd January 2012 Lords Chamber

Report (5th Day)

15:08

Clause 94 : Benefit cap

Amendment 58C

Moved by

[Baroness Donaghy]

58C: Clause 94, page 63, line 22, at end insert “except for industrial injuries benefit awards”

[Baroness Donaghy]

My Lords, as I said in Committee, I appreciate that this is by way of an interval in the big picture, but it is on a subject that is work related. There has been insufficient consideration of work-related issues in the Bill and I have consistently raised issues such as: what happens to the self-employed; what happens with the redeployment of 20,000 local authority staff on housing benefits; and, the third area, what happens to those who have worked hard all their lives, have been injured at work and have received an industrial injuries compensation—a civilised scheme that is jointly agreed between trade unions and employers, where it is likely that the benefit cap will affect those in receipt of such compensation.

I think that this is about signals. If the Government want to emphasise that this is about concentrating on people at work and encouraging and giving incentives to those on work-related benefits, consideration should be given to my amendment, which covers those on industrial injuries disablement benefit. After Second Reading and Committee, the Minister was unable to say whether they would be exempt, so as far as we know they would still be included. The only part which would be exempt would be the constant attendance allowance within this benefit. However, that is only 1 per cent of the total figure. Although we are very grateful for that concession, it does not cover many people or much money.

Benefits under the industrial injuries scheme are different in character from the rest of the benefits system. Whereas other benefits are designed to prevent or ameliorate poverty, help people to cope with extra costs or substitute for lost income, the industrial injuries scheme is a system of no-fault compensation. In November 2010, the Industrial Injuries Advisory Council wrote to the Minister to argue that the industrial injuries disablement benefit should not count towards the cap for just that reason. As I said, employers and unions both support the industrial injuries scheme, which eliminates the need for an adversarial approach to compensating a large number of injuries and diseases that are agreed to be a risk of employment. Damages won through civil litigation are a closer parallel to the industrial injuries scheme than disability or other benefits. Including damages awarded by the courts in the total that is subject to the cap would be plainly unfair, but industrial injuries disablement benefit is also a form of compensation, and including it is just as unfair. Payments under the vaccine damages payment scheme are not to count towards the cap, but they, too, are a form of compensation.

The Government have put forward three reasons for the benefit cap, and all of them are weak arguments for including the IIDB. They have said that they are introducing the cap partly to reduce the benefit expenditure, but IIDB accounts for a very small part of social security expenditure: 0.58 per cent of DWP annually managed expenditure last year. IIDB will account for an even smaller proportion of benefit cap savings, most of which will affect large younger families, especially those in receipt of housing benefit. Claimants of benefits from the industrial injuries scheme tend to be older—50.9 per cent of expenditure is on people over pension age—and will therefore account for significantly less than 0.58 per cent of the budget. It is unlikely that counting IIDB towards the benefit cap would save as much as £1 million a year.

The Government’s equality impact assessment states that a further purpose is to “improve work incentives” for those on benefits. It must be emphasised that industrial injuries disablement benefit does not create a work disincentive. Half of all spending on it is accounted for by pensioners, and working age claimants can continue to receive the benefit if they stay in or find work.

Ministers have given greatest prominence to the argument that it is not fair for a workless family to receive more in benefits than an average family would receive in wages. In last year's spending review, the Treasury listed the benefit cap under the heading:

“Fairness … Reducing the deficit fairly while protecting the vulnerable”,

but a working family one of whose members had suffered an industrial disease or injury would not be in a worse position than a workless family; they would have the same right to IIDB.

The Government have not said a good deal about why IIDB should count towards the cap. The Minister has made a distinction between recipients of disability living allowance and IIDB claimants. People do not get industrial injuries disablement benefit to meet extra costs, which can be dealt with by an award of DLA if necessary. He has used this difference to justify excluding DLA but not IIDB. The argument is not a sufficient rebuttal because it fails to address the point that I have made about the nature of the industrial injuries scheme. Furthermore, if having extra costs were the reason for excluding a benefit, how would we explain the decision to exclude retirement pension and pension credit?

15:15

Informally, officials sometimes argue that excluding IIDB would open the flood-gates for a long list of special cases that would complicate the benefit plan. I hope that tidiness is never the deciding factor in matters like this and that simplicity is not a sufficient reason for proceeding with an unfair change. I hope very much that the Government will agree with me that industrial injuries disablement benefit should not be counted towards the benefit cap. I beg to move.

[Baroness Turner of Camden]

My Lords, I support my noble friend in her amendment, and also urge that industrial injuries disablement benefit should not count towards the cap. This benefit is not a cost benefit or an income-replacement benefit; it is a form of no-fault compensation for the victims of industrial diseases and accidents. Counting this benefit and other benefits paid under the industrial injuries scheme towards the cap would, in effect, reduce the compensation paid to the most needy and vulnerable victims. It is no more reasonable than counting criminal victims’ compensation would be, and it should certainly not be included. As my noble friend indicated, many employees who sustain industrial disease or injury often spend a lifetime in pain as a result. It is unreasonable to expect ordinary working people, who are caught in an environment that is not of their own making and in a situation for which they are not responsible, to have their compensation—an industrial injury disablement benefit—counted against the cap under welfare. I fully support everything said by my noble friend, and hope that the Government will respond benevolently to what we are saying.

[Lord Wigley]

My Lords, I rise briefly to speak in support of the amendment. I do so against the background of the industrial injuries and diseases that we are very familiar with in Wales, from coal-mining, slate mining and many other industries. I know that all industrial parts of these islands have similar experience.

If the Government’s line on this whole issue is that it is unreasonable that people who are working earn less money than some people get in benefits and that the changes are justified for that reason, surely this exemption makes all good sense. People have an industrial disease or injury by virtue of the fact that they have been hardworking members of the community and get this as a result of their efforts of working. What is more, in all probability they will not be in a position to return to the workforce, so that argument disappears as well. I realise that special pleading for any one group will cause difficulties—and it may for the rest of today’s debates—but this instance stands out as clear-cut and deserves sympathy.

[Lord McKenzie of Luton]

My Lords, this amendment, moved so ably by my noble friend Lady Donaghy, goes to the heart of fairness. It does not challenge the concept of a cap or indeed the level of the cap. As my noble friend clearly said, it does not undermine the stated aims of the Government for its introduction—whether we agree with them or not. We have heard that the industrial injuries scheme is a system of no-fault compensation. As the noble Lord, Lord Wigley, said, to qualify for the benefit, the claimant must have had a personal injury in an industrial accident or he must have a prescribed industrial disease. That must have arisen when the claimant was an employed earner. The amount of the benefit depends on the extent of disablement. An award is made for a period during which the claimant has suffered or may be expected to continue to suffer from the relevant loss of faculty.

On the rationale for the cap the Government alternate between reducing benefit expenditure and changing attitudes. The cost of the industrial benefits scheme, applicable to working-age claimants, as my noble friend said in moving the amendment, is below 0.5 per cent of DWP AME. As for encouraging the benefits of work, claimants would have had to have been in work in the first place to get the benefit. In a sense, they would have had to have been exposed to both the benefits and the risks of work. This raises broader questions about health and safety, but perhaps that is a topic for another day’s debate. The benefit would be payable to those able to return to or stay in work as well as to those whose loss of faculty prevents it. In essence, the Government are saying that the greater the suffering an individual endures from an accident doing what the Government want—being in work—the tighter the cap should bite. That does not have a ring of fairness.

In Committee, the Minister left the door slightly ajar and indicated the possibility of further consideration. It would be good to hear that the door remains open and that he will be able to make appropriate commitments today or at Third Reading.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, before I speak to the specific amendment, I would like to make some general points about the rationale for the household benefit cap. First, there is a principled point that households should not be able to receive more on benefits than the average working family in Great Britain earns in work. Secondly, people on benefits should face the same choices as working families, including about where they can afford to live. Thirdly, someone in work should always be better off than someone on benefits. The proposed cap of £500 a week is equivalent to an annual salary of £35,000 a year before tax. We have set the cap at the median earned income for working families after tax and national insurance. We think this is a reasonable representation of average household earnings.

I ask noble Lords to consider how well these principles are received by the public at large. They will have seen press reports of a YouGov survey that found that 76 per cent of the public are in favour of the benefits cap. The overwhelming majority of people think there should be a limit to the amount of benefit those out of work can receive. We have received many representations that we are pitching the level of the cap far too high. In fact, only 7 per cent of respondents in today’s YouGov survey think that the cap should be higher than £26,000. Another 9 per cent think there should be no cap, so of the people who answered the survey, 69 per cent thought that the cap as we have set it or below that amount is the right figure. Of those who expressed an opinion, the figure is above 80 per cent, or above four-fifths. The truth is that people do not understand why we pay claimants more money when they are out of work than they could reasonably expect to earn from working full time.

I accept that arguments can be made for special treatment for a whole range of groups and benefit payments. Indeed, many such arguments were eloquently expressed previously in Grand Committee, and this amendment moved by the noble Baroness, Lady Donaghy, is an example. However, we must be wary of such arguments clouding the bigger picture of the need to reform a complex benefits system, which is failing those people on benefit who want to work but, equally importantly, is placing a costly burden on the taxpayers in work who pay for it.

We have today published an updated impact assessment with more detailed and robust estimates for the numbers and characteristics of people who may be affected by the cap. The high-level figures are broadly in line with the figures in the previous assessment, but there are some important differences. In particular, we now estimate that in nearly 40 per cent of households the claimant will be subject to JSA conditionality. We also estimate that the proportion of social rented sector households is 44 per cent, which is substantially less than we thought previously. The new figures are derived from the administrative records held by the department on benefit recipients. Thus, they are much more robust than the previous survey-based estimates. They provide a much firmer basis than before for considering transitional measures. Crucially, the methodology here means that we know who is likely to be affected by the cap and can start working with them and local authorities to minimise the problems for individual households when the cap is introduced.

Amendment 58C would require us to disregard payments of industrial injuries disablement benefits when operating the benefit cap. The noble Baroness, Lady Donaghy, has argued that these payments are worthy of special consideration because they take the form of compensation payments in lieu of injury or disability caused at work. I recognise the nature in which these payments are made, but I am afraid that I do not believe that it should override the need for a limit to the amount of welfare payments households should receive. Disregarding payments of IIDB would serve only to undermine that fundamental principle and create a precedent for others to argue for such special treatment.

We have previously been asked to reconsider the position of IIDB recipients in light of the fact that we have announced that we will fully exempt from the cap recipients of disability living allowance, personal independence payment, attendance allowance and constant attendance allowance. I have to say that I do not find these groups analogous. DLA, PIP and equivalent benefits are paid to people to help with the extra costs arising from their disability. Their receipt provides an appropriate means of identifying those disabled people who should be exempted from the cap. Many people receiving industrial injuries benefits will be exempt because they get constant attendance allowance as part of their industrial injuries entitlement or DLA.

I take the point about vaccine damage payments raised by the noble Baroness, Lady Donaghy. These lump-sum payments will be taken into account as capital and not income in assessing means-tested benefits. In other words, vaccine damage payments are not comparable to weekly income payments through IIDB. But, as has been said in debate today, the basic IIDB payments are compensation payments and do not reflect whether the disability or illness necessarily brings extra financial costs. I cannot agree that there is any reason to provide an automatic exemption in these circumstances.

On the disincentive to work, any IIDB recipient in work who is entitled to working tax credit will be exempt from the cap, as will any households in receipt of working tax credit. The cap of course will not apply to pensioners. I therefore ask the noble Baroness to withdraw her amendment.

[Baroness Donaghy]

I thank the Minister for that reply. I was beginning to think that he had moved straight to the big picture and that my interval was not even going to be considered—that we were all off buying our popcorn and he had started the big picture. At least the last few minutes of his reply tackled the subject that I have raised. As I have said, this amendment is about signals and hard-working people who, through no fault of their own, have been injured at work and, with the support of unions and employers, have been given compensation. I do not suppose that that would have been easy to achieve or that the bureaucracy is particularly easy. Having achieved that compensation those people will now be told that it will not be exempt from the cap.

With all due respect, I think that the Minister is so concerned about undermining the principle of the big picture that these people are being victimised. I do not believe that any precedent whatever would be set as regards the debates that are going to take place later. They would probably be only too happy to go back to work, having spent their lives in work. If only the YouGov survey to which the Minister referred had asked a question about industrial injuries benefits, we might have got a clearer picture of what people really felt.

I am aware from a previous reply that there will be an opportunity to talk about regulations at some stage. In the circumstances, I shall withdraw the amendment, but we will come back to the issue when it comes to discussing regulations.

Amendment 58C withdrawn.

15:30

Amendment 58D

Moved by

[Lord McKenzie of Luton]

58D: Clause 94, page 63, line 22, at end insert—
“( ) Regulations under this section must provide for an exemption from the application of the benefit cap for vulnerable individuals, and individuals and couples with children, who—
(a) as a result of the application of the benefit cap, the relevant local authority would consider threatened with homelessness and in priority need,(b) are owed a duty to be provided with interim or temporary accommodation under section 188, 190, 193 or 200 of the Housing Act 1996, or(c) which the local authority has accepted as homeless and in priority need.”

[Lord McKenzie of Luton]

My Lords, it seems that we are all, Lib Dems, Conservatives and ourselves, in favour of a benefit cap. Perhaps at some stage in the future, some analyst or academic might look back on these times and determine the origin of these policies, what analysis underpinned them and whether assuaging the court of public opinion played any role. It seems from what the Minister said a while ago that it played quite a considerable role.

But we are where we are. My party supports a benefit cap, but one based on fairness. A particular concern for us, as currently proposed, is its potential to drive increased homelessness, which is a major consequence of the cap—homelessness for vulnerable individuals, homelessness for families and homelessness for children. The way in which the cap is to be applied, albeit calculated by reference to a range of benefits, means that it is an effective second cap on housing support. It is a second cap on top of the range of reductions in housing support already introduced through the move to the 30th percentile of local market rents, uprating by CPI, a cap on rent levels and room sizes, and increases in scope of the shared room rate.

Not only will the overall cap dramatically increase the prospects of people becoming homeless but, in some cases, the Government will miss their target, and local authorities will bear the cost of the benefit cap, not the tenant. It will fall on council tax payers. If a family is already in accommodation provided for them under homelessness duties, no shortfall between housing benefit or housing allowance and actual rent will be payable by the tenant. Increasing the shortfall by the cap does not change this. There may be the opportunity to discharge the duty into cheaper accommodation, but this is increasingly unlikely to be available, certainly without significant migration to elsewhere in the UK, with all that that entails.

As Shelter points out, the reach of the household benefit cap goes way beyond the extreme cases generally associated with London, and it will be difficult for many households to afford to rent both in the private sector and at 80 per cent of market rents in the social sector across much of the south-east. It affects not only households with large families. Families in the private rented sector with just two children will be subject to the cap in all of central London. The DWP estimates that 50,000 households will be affected by this measure—I think that the estimate has been uprated to 75,000 households as a result of today’s news—and lose £83 a week on average, with 90,000 adults and 220,000 children affected by the measures. Fifteen per cent of those households will lose more than £150 a week. The Children’s Society has suggested that more than 82,000 children could lose their homes as a result of the cap. As the Children’s Commissioner pointed out in a recent report, the DWP’s own equality impact assessment sees homelessness, diversion of living costs benefits to housing costs and migration within the UK as primary effects of the cap. In a chillingly bland comment, the DWP states in the original impact assessment:

“The cap is likely to affect where different family types will be able to live”.

Housing benefit may no longer cover housing costs and some households may go into rent arrears. This will require expense and effort on the part of the landlords and the courts to evict and seek to recoup rent arrears. The impact assessment continues:

“Some households are likely to present as homeless, and may as a result need to move into more expensive temporary accommodation, at a cost to the local authority”.

It is an awful admission that by deliberate act of policy people are to be made homeless, are to run up rent arrears and are to be evicted; an admission also that reduced costs for the DWP will add cost to local authorities. Can the Minister say whether these increased burdens will be met by central government?

The Children’s Commissioner’s report concluded that the impact of the cap will be increased child poverty with associated poor health, educational and other outcomes. The report identified that in order to stay in their homes, parents who cannot or do not find work will have to divert large amounts of their living costs, the non-housing element of universal credit plus child benefit, to make up the shortfall. This will have obvious consequences for children’s well-being. For those who cannot bridge the loss of housing benefit, the loss of the family home will be severe. Local authorities may well have an obligation to rehouse but this may be in temporary accommodation and may require a move to cheaper areas, if they exist. As 70 per cent of those affected by the cap already live in social housing—that percentage may have been updated by today’s impact assessment—cheaper housing may not exist. Evicting families from such accommodation only to rehouse them in more expensive private sector or temporary accommodation would only add cost for local authorities.

The impact of such moves on families is traumatic, especially for children. We know that children from homeless and transient families are more likely to go missing from education. Uprooting families from support networks, friends and communities can have a severe impact on the emotional and physical well-being of parents and children, and for vulnerable people especially so.

There are a number of ways in which these dire consequences might be addressed and subsequent amendments cover a series of possible ameliorations. This amendment supports the amendment separately tabled by the noble Lord, Lord Best, concerning those owed a duty to be provided with interim or temporary accommodation as part of the homeless safety net. The amendment refers only to English legislation and I was advised today that it should also be extended to Scotland. We might bear that in mind for later stages. As the noble Lord explained in Committee, temporary accommodation tends to be more expensive than mainstream housing and local authorities will struggle to obtain suitable accommodation for homeless families. Our amendment goes further and seeks exemption from the cap for those accepted as homeless and in priority need and those threatened because of the cap with becoming homeless. This raises points of detail that would have to be settled in regulations.

If the cap was introduced, households for which a homeless duty has been assumed and which are in temporary accommodation face a shortfall in rent as well as council tax. Local authorities must either cover the shortfall from the general fund or secure alternative temporary accommodation elsewhere within the monetary limits. However, it takes a long time to procure temporary accommodation and some local authorities will be in longish contracts with owners. They will need a long transition and so it may not be possible. Any family in private accommodation entered into prior to the introduction of the household benefit cap that falls into arrears and is in priority need and threatened with homelessness will be able to apply as homeless to the local authority which can then discharge its duty into alternative private accommodation affordable for the family. In many areas there are already insufficient private rented homes that are affordable to people on the local housing allowance. But this does not relieve the local authority of its duty.

Any family with a secure assured tenancy and facing a shortfall—whether it is a council or housing association property—would in theory be able to ask the local authority to secure them affordable accommodation if they are threatened with homelessness due to arrears. However, as all local authorities have their own allocations procedure this would inevitably mean tenants in secure social housing exchanging these tenancies for assured shorthold private tenancies in cheaper parts of the country, again if they can be obtained. If not, the local authority will have to fund the shortfall.

What would be the effect of our amendment? It would relieve the pressure on local authorities currently housing homeless families which would face the cost of the shortfall in rent if there was no suitable cheaper alternative. It would avoid costs being transferred to the general fund, potentially costing some hard-pressed councils millions of pounds. It would stop some individuals and families being uprooted from their communities. This protection would apply not only to households with children but to vulnerable individuals; for example, those with mental health conditions, disabled people and people fleeing from domestic violence. It would not stop increased homelessness and migration within the UK driven by cuts already announced to housing benefits but it could help to stop it getting much worse. It would not facilitate people remaining in lavish up-market properties, so beloved of the press. The pre-cap housing support would be determined on the basis of the changes already being introduced.

The Minister will doubtless put another of his costings on this amendment. When he does, perhaps he will make sure that he includes the actual costs to local authorities in meeting rent shortfalls; the implications for a range of services in supporting the migration across the country which will flow from the cap; and, of course, the costs to landlords and the courts in pursuing evictions. Most of all, will he factor in the human misery that the cap will generate?

There are a range of other amendments suggesting carve outs for the cap, transitional measures and refining the basis of calculation which can sit perfectly well alongside this amendment. If for no other reason, this amendment can provide for those who seek, and have the leverage to encourage, concessions from the Government, but its primary purpose is to prevent the slide into further poverty and disadvantage that homelessness can bring and the multiple disadvantages that spring from poor housing to blight lives, particularly those of the young. I beg to move.

[Lord Best]

My Lords, I support the amendment. As we have heard, it would mean that families facing immediate homelessness because of the imposition of the benefit cap would be saved.

A major problem with the cap is that, as well as taking no account of the number of children in a family—a point which a later amendment in the name of the right reverend Prelate the Bishop of Ripon and Leeds and others will seek to address—it takes no account of the level of rent: that is, it takes no account of how much of the benefits within a £500 cap must go to the landlord not the tenant. The £500 cap looks relatively high in areas where housing costs are low. In Committee, I quoted £85 per week rent for a council house in the north-east or south Wales, leaving a headroom of £415 per week for benefits to cover all other expenditure. Indeed, the average cost of housing—the £500 is all about comparisons with average earnings—is some £87.50 per week. However, the same cap applies in all areas, including London and the south-east of England, where housing costs are much higher. I am not talking about the extreme cases of refugee families with 10 children living in Hampstead. A rent for a not very salubrious private sector flat in the east end of London can be £350 a week. A £500 cap will plunge a family with three children living there into poverty, with only, in this example, £150 per week left for food, clothing, ever rising fuel bills and the rest, instead of more than £300 as at present. It is not their fault that rents are so high in much of southern England, but clearly the family will have to move out if the application of the cap is not moderated as by this amendment.

However, it is very uncertain where those made homeless can be moved to. The logistics for local authorities of moving large numbers of families to cheaper areas will be extremely complex and expensive. Finding new homes for them, even in a much lower cost area, will not be easy. Most private landlords prefer not to take on tenants on housing benefit and local housing allowance, particularly those not known in the locality, not least because benefit is now seldom paid direct to the landlord. No one wants to send families to so-called benefit ghettos with the lowest quality housing which is bound to undermine the hopes, aspirations and life chances of those sent there. It should be remembered that the new benefits cap is in addition to the caps on rents in high-priced areas which have already been introduced and are now beginning to bite, as existing tenancies come to an end. Regrettably, we are just beginning to see a return to the use of expensive but seedy bed-and-breakfast hotels as the numbers of homeless families rise. The new cap will considerably compound the problem.

This morning on the radio I heard the Secretary of State, Iain Duncan Smith, suggesting that the definition of homelessness was that children would have to share a bedroom. That is a confusion with an earlier amendment which found favour with your Lordships concerning the underoccupation penalty—the so-called bedroom tax—which was not about homelessness at all. Families are deemed to be homeless if the local authority deems that unintentionally they have no place to go. That can happen if they can no longer pay the rent where they are because their benefits are cut drastically. The council is then required to step in to find them somewhere to live. Amendment 58D would avoid that miserable and expensive outcome for thousands of families and tens of thousands of children who will otherwise have to leave their current homes. Two later amendments in my name address two of the most extreme aspects of the imposition of the new cap. At this point, I am pleased to support Amendment 58D.

15:45

[The Lord Bishop of Ripon and Leeds]

My Lords, I have added my name to Amendment 58D for a number of reasons. The figure of 80,000 people who could be made homeless—really homeless—by the cap must be alarming to us all, not least because it comes when homelessness is, in any case, increasing across our country, partly because of the increase in unemployment at the moment. The number of homeless people in west Yorkshire is rising steadily and churches and others in the county are increasingly involved in providing night shelter accommodation for the homeless. Any arrangement which seeks to find accommodation for people is liable, in practice, to see some of them slipping through the net and finding themselves with nowhere to go at all. Just this weekend, churches in Halifax have begun to offer that particular service but those who are providing the service are frightened that an already inadequate service, as they would say, will be made hopelessly so by extensive homelessness as a result of the cap.

In addition, I support Amendment 58D because, at last, it gets children into Clause 94. I retain that major concern for children whose parents are made redundant and become unemployed. Such children are in danger of losing not only their home, but also their school, their friendship groups and their local contacts. Schools are very concerned about the possibility of children being moved from one locality to another as a result of their parents becoming unemployed and as a result of the effects of the cap. There is not only an effect on those children but also on their friends and the whole life of the school. Later, we shall debate the issue of child benefit, but this amendment will defend a significant number of children. It is those who cannot speak for themselves who are likely to suffer as a result of the cap. This amendment will go some way to preventing a spiral of homelessness and it will relieve the pressure on some of those vulnerable people who are affected by the cap. I hope that noble Lords will feel able to support it.

[Lord Hamilton of Epsom]

My Lords, I find it remarkable that the noble Lord, Lord McKenzie, says that the Labour Party in principle supports a cap, but in this particular instance thinks that somehow it should be alleviated. We face a considerable deficit in this country and the social security bill is certainly one of the largest elements of public spending. If we continue to find all sorts of ways of alleviating measures that the Government are taking, no savings whatever will be made to the social security bill.

This is also an opportunity to change attitudes completely. We are privileged in our House to have the right reverend Prelates on the Bishops’ Benches. I think it was Alastair Campbell who said of Tony Blair, “We don’t do God”, but in this House we do not have to be inhibited in that way. We can talk about the morality of a benefits system that encourages single mothers to have more children, because the more children they have the more benefit they get. Is that moral? I have my doubts. Is it moral for a Somali family to move down from the Birmingham area to Hampstead because they wanted to live in a more salubrious part of London where it was extremely expensive to house them? Is it moral to have a benefits system that pins people in their houses and prevents them going out and looking for work, given that underlying this is the Government’s intention that people should be encouraged to go and find work?

Of course people will have to move, but that is what people in the private sector do. I question the morality of having a benefits system that gives people infinitely more money than the take-home pay of people on average earnings in this country. It is the taxpayers who are paying for these very high levels of benefit. I support this cap and I hope that the House will vote against the amendment.

[Lord Wigley]

My Lords, in Committee when we addressed this question, there was a suggestion that as many as 200,000 people—I have not heard the figure gainsaid—may have to move from areas of high rents to areas of low rents. The noble Lord who has just spoken said that of course people will have to move. But where will they move to? We have heard mention of Middlesbrough in the north-east and Merthyr Tydfil in south Wales—areas where unemployment is high, the chances of getting a job are very low indeed and where local circumstances place tremendous pressures on social services departments. If not just the generality of those who cannot afford the rent in expensive areas such as the south-east but particularly those with special needs covered by the amendment are moved to areas that may not have the resources to cope with them, we will inevitably build up pressures when we should avoid doing so. We will build up pressures in the communities to which those people may move. Even more seriously, we will build up pressures for families who will essentially be forced to move away from their relatives, grandparents and friends in school. Is this really the sort of policy that our Government support? I urge the House to support this amendment.

[The Lord Bishop of Chichester]

My Lords, I am extremely grateful to the noble Lord, Lord Wigley, for responding to the point made by the noble Lord, Lord Hamilton. I was feeling anxious abut what I should say but the noble Lord has largely made my case for me. One of the issues here is not just the moral and philosophical question of whether the benefits system needs to incentivise people to work and to take the initiative in their lives. We can all agree on that. The issue is that the Bill is going through the House at a time of unprecedented austerity when burdens are falling on families who are among the most vulnerable. There are times when one has the luxury of having a big social debate but this is not the time when we should burden poor families with more costs and burdens. We should debate these big philosophical questions on other occasions when we have more leisure to do so.

[Lord Winston]

I had not intended to intervene in this short debate, but I have just heard something that I feel is utterly wrong—the idea that people who are on benefit are having more children and thus keeping themselves on benefit. The evidence shows that this is simply not true. Populations expand when people are poor, women are ill educated and there is a lack of services to families. Surely, that argument cannot be used in this context in this Bill.

[Baroness Walmsley]

Like many of those who have spoken, I support the principle of the cap, and I think that public opinion is right to do so. I applaud the Government for grasping this particular nettle, which is a very difficult one and something that Labour has failed to do over 30 years. However, in my 12 years’ career in your Lordships' House, I have always stood for the interests of children. I am not about to change that position now. In some cases, there is the potential for innocent victims to emerge from the Bill as it stands. The noble Lords, Lord McKenzie and Lord Best, and the right reverend Prelate have put their finger on the really serious issue—that is, homelessness. I am not one who feels that a workless family should never be required to move, because families in work very often move to follow their jobs. However, your Lordships should remember that children in families who are dependent on benefits and therefore are relatively poor, and where there is no work, are already disadvantaged. For those children, changing their school can, in particular, be a lot more serious than it is for any other child, because for many of those children school is the only stable thing in their lives.

There has been a lot of discussion about how much homeless this measure has the potential to create. The Government say zero, because they are going to put plenty of measures in place to make sure that that does not happen—and I do hope they are right. A lot of other people say that there could be a great deal of homelessness. If the Government are right, the measures in this amendment will not need to be called into play at all. However, if others are right, it could cost a great deal of money. Local authorities will have the duty to rehouse those families, which will prevent the Government making the savings that they need to make to tackle the terrible economic situation that we have inherited. Indeed, it could also interfere with the Government’s very important and laudable objective of providing more affordable and social housing—another thing that Labour has failed to do.

It is for these reasons that, unhappily, I find myself having to speak and vote in a way that is at odds with my Front Bench, because I will support the amendment if it is put to the vote. I do not necessarily think that it is exactly the right amendment, but we need to send it back to another place and ask it to think again and tell us a little more about the measures that will be put in place—I hope that they will be, and know that the Government intend that they will be—to make sure that families with children are not made homeless. For those children who, as I said, are already disadvantaged, to be made roofless or overcrowded just adds to their disadvantage. It is going to be very bad for their education and is not going to be good for the Government. A life of dependency on benefits is also not good for those children, so I encourage the Government to do everything that they say that they will do to help workless families to get back into work. However, until those jobs are available and that work has been done, we need to be given more detail. If this amendment goes through your Lordships' House today, I hope that the Government will think carefully and come back to the House with a very clear strategy about what they will do to prevent innocent children being further disadvantaged by the life choices or life circumstances of their parents.

[Baroness Gardner of Parkes]

I intend to support the Government on the amendment, because I really think that the situation is quite unbelievable at the present time. However, I would like the Minister to clarify two things. Those people—I hope there will be few of them, but there will certainly be some—who do become homeless should never be classified as voluntarily homeless. That is very important because if they are classified as voluntarily homeless they have no claim to any help at all with housing, but if they are not, there is a procedure that they can go through. The other thing I hope the Minister will tell us is that there will be sufficient transitional arrangements to cover the circumstances, so we do not have sudden and terrible disruption.

Years ago, when I was on Westminster council, we had an offer from outside London to send people to another area where there was masses of housing, and we gave them the offer. They all agreed to go, but only about two-thirds actually arrived. The other third we never heard from again, so clearly their needs cannot have been as great as they made out. That was a particular instance. No one knows at the moment what is going to happen, but the important thing is that no one should be made voluntarily homeless under this arrangement.

16:00

[Lord Elystan-Morgan]

My Lords, there is nothing inherently immoral or unjust in the concept of a cap. It all depends upon the way in which it is handled. It might be handled in an understanding, intelligent, sensible and equitable way, although it might not be so easy to save money in net terms or indeed eradicate a fundamental injustice; I accept that.

The Minister has quoted the court of public opinion, where there is, I accept, an overwhelming majority verdict in favour of the Government’s attitude to a cap. I say with humility and the utmost respect that this depends entirely on how well founded that decision on the part of the great public was. It is possible, and I respectfully suggest, that it is a fool’s gold concept of justice—and noble Lords will remember what fool’s gold is. As a small boy I remember being handed a large lump of quartz, and inside that quartz was a gleaming vein of dull metal that seemed to be the real thing, but it was iron pyrite—utterly worthless and totally misleading. I ask the Government to consider very deeply whether this is not a fool’s gold kind of justice.

If you deal with families that have arrived at a certain economic situation from very different directions in exactly the same way, are you doing justice? The Government’s policy draws no distinction between a family that is totally workshy and has had no one working for the past quarter of a century, and another family that had an excellent work record until the head of that family, through redundancy and no fault of his own, lost his job in the past six months. A family with a small number of children might not be affected by the cap even though it is totally workshy, while another family with every merit possible in its favour might be totally impoverished. That is the injustice.

I do not know the exact answer, but I suspect it is in this direction: that one should look not just at the totality of income that comes into a household but at how much of that income is disposable. That, to my mind, is a much more real and indeed equitable test. That is why I support this amendment. It may well not be perfect—likewise the other amendments for that purpose—but it has the ring of justice about it.

[Lord Fowler]

My Lords, it is not my habit to trample on the territory of my Conservative social security successors, but perhaps I could just intervene briefly. First, by common consent, we are at a time when public spending needs to be drawn back. The total social security and pensions bill at the moment is £200 billion. The truth is that if the social security budget is to be subject to all kinds of exceptions, we might as well not start the whole process of looking for social security economies. I say this as a former Secretary of State who worked closely with my noble friend Lord Newton, to whom I pay sincere and undying tribute. We spent six years fighting battles on the one hand with the Treasury and on the other with different welfare groups, not always successfully. Rummaging through my desk at the weekend, I found a badge that was distributed when I was Secretary of State, which says, “Action for benefits—more not less from DHSS. Stop Fowler’s cuts”, so this is not remotely the first Government who have sought to limit the social security bill. Nor is it remotely the first Government who have run into flak. I would claim, and I think that anyone with responsibility in a department for social security would confirm this, that it is almost impossible to make changes in the social security budget without running into controversy and flak.

One of the most extraordinary things about the proposal which the Government are now putting forward is that, first, the public seem to be overwhelmingly on the side of making this change. Secondly, on the cap that is being set, £26,000 per annum—the equal of £35,000 a year before tax—is a not ungenerous limit, and most people in this country would regard it in that way. On the cap itself, we tend to get into figures that rather overegg the number affected. I am not going to downplay this, but we should accept that the number is 67,000 households, or perhaps a little more than that on the latest figures: that is, only 1 per cent of the total claimant population.

As I say, everything must be done to prevent hardship to such people. One of the rather irritating things about how this debate is being organised is that the debate on the next amendment will be very similar to this one, so, if I may, I will discuss during the next debate some of the measures that can be taken to prevent that hardship. However, first and foremost, this change will be introduced in 2013, so we have the time to sort out the problems before that change takes place. We really cannot have the situation in which beneficiaries living in houses that they cannot afford, or could not afford when in work, will never be able to get back into work because of that situation.

Perhaps I may say this to the noble Lord, Lord McKenzie, who proposed this amendment. I am rather intrigued by where the Opposition stand on these issues. The noble Lord started with how much he supported the principle of the changes, but ended with words about human misery being caused by them. I had rather gathered from their Commons spokesman that the Opposition supported the changes and did not intend to try and vote them down. I simply point out to the House that they have so far supported amendments that, far from saving money, will cost, I am told, something like £5 billion over the next five years. I do not want to be offensive—or no more than usual—but their policy seems to be one of, “Now you see it, now you don't”, and, frankly, mostly we do not. Goodness knows how much they would have spent had they not supported the principle of the Government’s policies, so it would be fair for us to ask the noble Lord where precisely the Opposition stand on this issue.

Above all, I put it to the House that there is a very great prize in the Government's plans: that of universal credit, which both parties have been seeking to achieve for the past half-century. That prize is something worth fighting for and the benefit cap is a crucial part of it. There is no question that the Government’s own plans allow us to deal with the 1 per cent who will be adversely affected. The amendment should be opposed and the Government’s policy should be supported.

[Lord Newton of Braintree]

Irresistibly, in view of what my noble friend Lord Fowler has said, I find it necessary to make what I hope will be a brief intervention.

This is a rather grandiose claim but I am going to make it: probably I alone, but certainly I and my noble friend together, have more experience of social security and its reform than any other people in history, let alone currently present in your Lordships’ House. We had our difficulties and our rows with the Treasury and, as my noble friend has just said, we would have given our eye teeth to have been able to bring forward this proposal for a universal credit, which is a huge achievement by the Secretary of State and the Minister on our Front Bench together. Everyone acknowledges that and supports it, yet now large numbers of people are trying to shoot it full of holes before it is even off the launch pad. That is not sensible.

I am not going to put a lot of weight on the point about deficit reduction. It is valid but others have made and will make it, and people can make up their own minds about how important it is. Personally, having caused some trouble for the Government on this on a number of occasions, I do not think it sensible or reasonable to go on voting twice a week, in whatever form, to make the deficit worse than it otherwise would be. That is all I will say; if people want to do it, they can.

I have a straightforward social security reason for being opposed to this and every other amendment on our agenda today. It is a great pity, as my noble friend said, that they are being debated in such a disorderly fashion; there are linkages between all of them. For example, the amendment of the noble Baroness, Lady Howe of Idlicote, on regional variations in housing clearly links with what we are discussing at the moment, and it would have been far better if these things had been discussed together.

For a long while as Social Security Minister—I was sometimes attacked for this—I made sure that social security legislation left wide powers in secondary legislation because you would never get it all right in primary legislation and you needed the flexibility to be able to respond to the things that you had not spotted in advance. However much work you do, that will happen. There is no doubt, though, that we have here a series of amendments, designed—some of them pretty hastily and off the cuff—to write requirements and restraints into the primary legislation that would certainly prove a drag when the detailed work was done.

As with the DLA last week, there is a right course for the House to take, and I will join it in taking it. Ministers know from me, privately and publicly, the importance that I attach to transitional measures and protection, but the place for that is in the secondary legislation. If the House wants to vote for enhanced affirmative procedures, as I said last week, I would be inclined to support that so that we would all get a proper opportunity to consider the detail when it had been done. However, I am not in favour of tying the Government’s hands and writing anything into the concrete of primary legislation that we shall regret in six or eight months’ time. I hope that the House will accept that and not vote to put this stuff in, in the way that is proposed today.

16:14

[Lord Ashdown of Norton-sub-Hamdon]

My Lords, I feel that this debate is probably drawing to a close, and I want to address particularly the last point made by my noble friend about transitional measures. I fear that I do not agree with him.

I speak as somebody who has voted consistently with this Government for every single one of the very tough benefit reform proposals. I think that Mr Duncan Smith and my good colleague Steve Webb in the other place are doing something extremely important. They are at last reforming the welfare system root and branch. I agree with the point made by my noble friend that there is a huge prize to be gained here, namely the universal credit and genuine reform. I am strongly in favour of that, as indeed I am in favour of a benefit cap, contrary to what was said in certain broadcasts yesterday which inaccurately reported comments that I had made. It is important and I strongly favour it. But I believe that, before we vote for this, it is important—for exactly the reasons that have been given earlier—to have a look, at least in outline, at some of the transitional mechanisms.

I hope that the Minister in answering this debate will address that, not least because that was what was promised by Mr Duncan Smith in the other place. I shall quote what he said:

“We recognise that there must be transitional arrangements … We will make sure”—

this is his promise—

“that families who need transitional support will receive it”.—[Official Report, Commons, 9/3/11; col. 922.]

When he answers this very important debate I hope that the Minister will tell us whether those measures have been advanced and whether any proposals have been made. If they have not, surely it would have been better to consider this with at least some outline of what those measures—to fulfil a promise made by the Secretary of State himself—will be. If he cannot do that now, will he at least tell us when he will be able to bring them forward?

Like my noble friend Lady Walmsley, who spoke from our Benches a moment ago, I believe that this should be passed. But I cannot pass it without at least some sight of the Government’s outline proposals for those transitional measures. If the Government cannot offer that to us now, let them at least say when those proposals will be published.

[Lord Lester of Herne Hill]

My Lords, may I ask the Minister a couple of questions, as a member of the Joint Committee on Human Rights? As I am sure he will have been briefed, the committee made a report on the Bill in which it raised a couple of questions which are in harmony with the points made by my noble friend Lady Walmsley about the effects on children.

The first proposal was to suggest to the Minister that instead of calculating the cap on the basis of all households, the fairer thing to do is to calculate on the basis of the income of households with children. Since we raised that in the committee, I would be grateful to know whether that idea has been pursued, and if so with what result. This proposal was in paragraph 1.59.

The second proposal that was made was to suggest that, where benefits are earmarked for children, this should be done in order to make sure that they are treated fairly. For example, it was suggested that,

“the Bill could be amended to allow payments intended for children to be labelled as such and be paid to the main carer”.

That was in paragraph 1.82. Again, I would be grateful, on behalf of the committee, to know whether that idea has been pursued.

[Baroness Hollis of Heigham]

My Lords, I will be very brief, but I cannot resist the effrontery of trying to challenge some of the assumptions made by two people whose views on social security I very much respect, the noble Lords, Lord Fowler and Lord Newton.

The noble Lord, Lord Fowler, said that the social security bill is pushing £200 billion and needs to be contained and cut. He is correct, but the biggest single group driving that increase in costs are of course pensioners. There is an increased number of pensioners, who are living longer, sometimes with poor health. These cuts do not—in my view, rightly—impinge on them at all. We are making other people pay for the demographics that are not their fault.

The second point I would like to address comes from the noble Lord, Lord Newton. He says that there is a big prize in this: universal credit. He is absolutely right. I defer to nobody in my support for universal credit and my support for the Minister on the structure of universal credit. However, that structure is being contaminated by where some of the cuts fall. If we can keep those two things separate in our minds, we can fully support the Minister on his structure, as we do, while trying to protect those who are most vulnerable and affected by where the cuts fall.

At the end of the day, it is about political and moral choices. Noble Lords, including the noble Lord, Lord Hamilton of Epsom, said that we face a deficit and must bring it down—these cuts have to fall. May I gently suggest to him that I rather doubt that any of the cuts have affected him? Not one of them has affected me. Indeed, my council tax is being frozen at a cost of nearly £1 billion a year, which is very nice. Over five years, that equates to the very £5 billion that the noble Lord, Lord Fowler, cited. I get my council tax frozen while disabled children, cancer patients and vulnerable children at risk of homelessness carry my bills for me, even though we in this House have broader shoulders on which to carry the cost. It is about choices and the choice of every Member in this House today. I hope they will make a choice that most of us would regard as the decent one.

[Baroness Butler-Sloss]

My Lords, I say bluntly that I came here uncertain as to which way I should vote on this amendment today. I remain uncertain but I endorse the suggestion that the Minister should explain what will be done for the most vulnerable by way of the transitional provisions. Like others, I strongly support the cap. The amendment goes too far in my view but it has a nugget of enormous importance. Like the noble Baroness, Lady Walmsley, my main reason for being here today is because I support children. The transitional provisions may provide the answer but can the Minister tell us how the most vulnerable people will be protected? I should like to know that because it will have an enormous effect on which way I vote.

[Lord Empey]

My Lords, we have to be honest with ourselves in this House. There is no way that you can reform welfare without affecting one group or another in our community. I cannot think of any means or mechanism whereby you can leave people as they are and change the system at the same time.

There is a fundamental double standard running through some of our debate this afternoon. First, the noble Baroness, Lady Hollis, made the point that the demographics meant that older members of the community were taking up a larger slice of the social security budget. That is true. However, many Members here have said that they do not want to do anything to upset the housing situation because of the inevitable disruption that could arise, with implications for children. Yet we have no compunction—the welfare state has no compunction—in sequestrating the houses of older people to pay for their care. I put it to noble Lords that policy in the 1980s encouraged families to buy their homes. Indeed, we made enormous volumes of public sector properties available to encourage people to buy them. People scrimped and saved in the hope of perhaps passing on a small legacy to their children. They lived their lives, worked hard, saved and purchased a property. What are we saying now? “Oh, I’m sorry chaps. Well done. You did that but now that you’re frail and need to go into care, we will pay for that by taking that property and reducing its value by £550 a week until it is £16,000, and then the state will look after you.” What consistency is there in that?

I do not believe that any current Secretary of State has come into office more prepared, and having done more homework, than Iain Duncan Smith. I saw at first hand a lot of his work with his think tank. He went to the States. He studied carefully and learnt the situation on the ground. I therefore believe that the fundamental drive behind this is based not simply on an ideological rant but on experience and a thoughtful purpose as to how we are to improve our community.

The other thing we have to face up to is that we are not as wealthy as we once were and we have collectively allowed the social security situation to grow out of control. We allowed circumstances whereby people could pay unlimited rents for homes and then we throw our hands up in horror and say that perhaps we cannot afford to keep them in these properties any longer. Whose fault is that? It is the collective fault of parties and Governments over decades.

I support entirely the idea of national insurance, whereby we provide a safety net if we are down on our luck. I have so much of it in my own area, where for generations people have not had the opportunity to work, and I know—we all know—that people abuse the system. However, we should not allow that to make our decision for us. The question is: can any Government advance any proposal that will not upset one particular group or another in the community? I put it to the Minister that it cannot be done. You cannot make changes to welfare without upsetting people.

It is also misleading to gross up the total benefits paid and say that that is the equivalent to a salary of £35,000 a year. I disagree with that.

[The Countess of Mar]

My Lords, I am sorry to interrupt the noble Lord but he appears to be making a Second Reading speech and this is Report stage. Would he kindly address the amendment?

[Lord Empey]

My Lords, I thank the noble Countess for the intervention, but because of the grouping I had thought that this was like a Second Reading and I am trying to address the issue of housing—the subject of the amendment. I agree with the noble Lord, Lord Newton, that the grouping is unfortunate.

The point that I am trying to get to is: it will not be possible to change the welfare system without upsetting some group or other in our community. I therefore believe that if we put the amendment in the Bill, the Minister and the Government, including their successors, will be hidebound by it. However, the Minister has also heard the widespread view in the House that we are confronted with an area of concern, particularly when children are likely to be moved from their homes, lose their schools and all that goes with that. Secondary legislation is the right place in which to put this issue but, if we believe we can go through a process of changing the welfare system and not affect a particular group in the community, we are misleading it as well as ourselves.

[Baroness Hussein-Ece]

My Lords, I also came to the Chamber intending not to speak but to listen carefully to the arguments. I feel moved to speak because of my personal experience as a local councillor in inner city areas such as Islington and Hackney, where homelessness and poverty have gone hand in hand and where over several decades we have seen the decline of affordable housing that ordinary families can rent. The two previous Governments have to take responsibility for not building enough affordable housing. That is the fact of the matter and the elephant in the room that is not being addressed.

It therefore pains me when I hear people around this Chamber, whom I respect, saying, for example, that families are moving to upmarket areas such as Hampstead in order to live in a better area. I have never seen evidence of that. When families through no fault of their own lose their home, which might be because it has been repossessed or they have been unable to keep up with the mortgage payments, they naturally present themselves to the local authority. The local authority has to take a view in making an assessment of such families and, if the family is not dysfunctional enough, if the children or either parent do not have enough of a disability or they do not have enough points—because it is all done on a points system—there is not much that the local authority can do. Very often, those families or individuals are directed to the private sector. Local homelessness departments will usually give them a list of estate agents where they can go to find somewhere. Often, families who have lost their homes will end up in the private sector. The private sector has filled the gap, certainly where I come from in Islington, between the unaffordable private homes and social housing. It has taken up the slack there. Of course, prices have shot up because of demand. That is not the fault of people who have become unintentionally homeless.

I hear my noble friend saying that 76 per cent of the public support a cap. I do not think that anyone in your Lordships' House would disagree that there should be some form of cap and that it should not be an open-ended provision. It is the implementation, how this will work, that is worrying many of us here. We should not force out families from areas such as mine. People often think that Islington is a very rich area full of wealthy people, which it is, but it has the third-highest level of child poverty. We have the extremes: very rich people and very poor people. The very rich live in the houses that have become increasingly unaffordable for most people, and the rest live in social housing, apart from some in the middle who live in private accommodation. I want to live in a mixed community. I do not want to live in a Paris-style ghetto. I do not want ghettos such as in Paris, where the poorer families have been forced into the doughnut outside the city. We should support mixed communities. We want our children to have a healthy outlook and mix with people from all different backgrounds.

16:30

Where exactly are we saying that people should be moving out to? For example, even the less salubrious areas of Islington and the neighbouring borough of Hackney have become incredibly expensive. That is not the fault of people who still live there, whose children go to school there, whose families are there and who may have lived there for generations. All their support networks are there. We are asking people to move outside London—I have read that more than 50 per cent of those directly impacted would be living in London—but where would they go? They would move outside to areas where, as was said earlier, there is probably not much employment. Over the past 15 to 20 years, as a Londoner I have witnessed people moving to London to find work. Are we now saying that people should move away from any possibility of getting work to areas where there is very little work? That does not make sense. I do not think that the full consequences have been properly examined.

I get irritated when I hear unfortunate comments, such as that families are having children in order to get more benefits. We are talking about people with a lack of education and support. Some of the women from those communities are not in a position to make such choices. It is unfortunate that that has been mentioned. We have poorer families who are entitled to social housing—but there is a lack of social housing—and then we have families who are not. Until we hear from the Government—

[Baroness Garden of Frognal]

I apologise for interrupting my noble friend, but I think that she is trespassing again on a Second Reading speech, and I invite her to bring her comments to a conclusion.

[Baroness Hussein-Ece]

I apologise. Although we have heard the assurances that there will be transitional arrangements, I have not yet heard what those protections will be for the families who will be most affected.

[Lord German]

My Lords, I start by making it clear that the concerns that have been expressed from these Benches are not around there being a cap. It is essential that there should be a cap; people find it manifestly unfair that claimants can receive in benefits more than the average working family gets in wages. The concerns expressed within the amendment are about two crucial issues: homelessness and housing; and the vulnerability of children. We are looking for discussion and reassurances from my noble friend the Minister on the issues raised by the cap. Our concern is about how those policies will be ameliorated—how to find a cap that fits.

I remind my noble friend the Minister that in Committee he said:

“The Government are looking at ways of easing the transition for families and providing assistance in hard cases. We recognise that there are households for which it would be inappropriate to restrict the amount of benefit that they can receive”.—[Official Report, 21/11/11; col. GC 346.]

The Government have already announced in another place and here that transition arrangements are to be made. This is the opportunity for my noble friend to express the Government’s views on those two crucial issues contained in the amendment. These details should emerge at this stage because it is appropriate that people know the Government’s direction of travel. It is not simply a question of us accepting that you need flexibility for the future. I understand that the Government’s regulations will follow from these debates, that there will be affirmative resolutions and that the House will have the opportunity to hear and vote on the detail. We need reassurances now in the broadest terms about the issues raised in the amendment.

I appreciate that by DWP standards—the noble Lord, Lord Fowler has said this already—the numbers captured by this policy are small. However, they are small only in respect of the DWP’s overall workload, not in terms of the 67,000 families or the 220,000 children who will be affected. We cannot put aside the fact that there is personal impact.

First, I turn to the issue of homelessness. I understand—we heard it this morning in a broadcast by the Secretary of State, and it has also been referred to in this debate—that the numbers of potential reported homeless households is based not on rooflessness but on the structure of how this is measured by the Department for Communities and Local Government. I wonder what reassurance my noble friend can give that we will not find families out on the street, that we will find homes for people and that they will be accommodated. If the numbers who are classed as homeless are those who are sharing rooms, which I heard from the Secretary of State, what methodologies and transition arrangements are being put in place? After all, if people are entitled to be classed as homeless by virtue of that definition, and are sharing a room, what is to prevent them presenting themselves to a local authority as homeless, thereby generating further cost to the public purse and creating no savings whatever? What transition arrangements will be put in place to ensure—what this House is asking for—that no one should be made roofless as a result of this policy. Any savings if they were to come by having to throw the balance to another department might be illusory. I am seeking reassurance from my noble friend the Minister. We want to hear the outline of the arrangements to be put in place to ensure that we do not sustain expenditure by simply passing costs from one department to another.

We are told that the department now has extensive information on the households that will be affected by the cap. I seek reassurance that there will always be a property available—not necessarily close to the same street in which the people have lived—for the people who will be displaced and that they will always have somewhere to live. Crucially, what help will be provided in the transitional period between now and April 2013 and perhaps, beyond, given the Minister’s comments in Committee. I also ask him to outline the processes to be put in place during this transition period and to provide the reassurances needed to demonstrate that rooflessness and overcrowding are not options that the Government are considering.

A second issue, which we will come back to in another debate, is that of children. This issue is mentioned in this amendment and has been raised before. It is indeed a powerful statement that children are not responsible for the decisions of their parents, but in workless households the worst disincentive is not to aspire to work. Those of us with experience representing the poorest areas—in my case, the poorest area—within our country know that it is a dreadful stigma which we place upon our young people. I wonder whether the Minister can provide some reassurance and tell us what arrangements he is making. What support will be given to the longer term aspirations towards work for our younger people? Alongside this is the impact of a parent becoming unemployed without suitable transition arrangements.

Perhaps all these issues need to be outlined in principle now, so that my noble friends on these Benches and noble colleagues around this Chamber can decide whether the Government are keen to ensure that the impacts are going to be ameliorated by this cap.

[Lord Freud]

My Lords, the noble Lord, Lord McKenzie, closed his remarks on Amendment 58D by saying that it is designed to prevent a slide into poverty, particularly for those who are young. The benefit cap is about changing psychology. It is about trying to get a change of circumstances in those families. Let me remind noble Lords—I know that they do not need any reminder—that the worst thing for youngsters is to be in a workless household. We need to change behaviours, and this benefit cap is designed to do that.

We need to move towards the cap in a highly organised way, and we will have a year to work with those families that are going to be affected. As my noble friend Lord Fowler pointed out, this affects around 1 per cent of the population that we deal with and we know exactly who they are. In the new impact assessments, we were working on the particular families. We can spend a year with those families making sure that they respond in advance to what the cap implies for them. It is a very simple answer for the bulk of them: we need to get you into work.

[The Countess of Mar]

My Lords, I gather that there are now more than 3 million people unemployed. Something like 72 people apply for every job in some areas. How are the Government going to get these people into work?

[Lord Freud]

My Lords, I will deal with that straightaway because it is a point that has been raised more generally. Two things are confused here. Levels of employment are, regrettably, too high. We as a Government regret that, and we are throwing enormous resources at ameliorating that position, but this is a different issue. This is about people and families who are, and have been, excluded from the workforce entirely. They have been inactive. We need to put in place arrangements to get them able to move back into the workforce. It may take a bit of time for them to get in, but that is a completely different order of issue from helping people who are unemployed and are waiting to get a job. We must not confuse snapshot numbers of vacancies available with flows. The problem is that the flow of people going into work is, on a monthly basis, slightly less than those who are moving out. That is the problem. However, there are still large numbers of people going into work every month and finding jobs. We just need to make sure that the excluded communities become part of that process. This is one of the ways to do it.

We need to make sure that that transition is organised. We need to put jobcentre staff and caseworkers on it to help those families. That is by far the most important thing we can do to make sure that this benefit cap has the effect that it needs to have. Clearly, we need assistance in hard cases, which we plan to have, but that is a second-order issue in terms of trying to work with families to get them back into work. In the Bill, we have all the powers that we need to get into the detailed design of the cap and to make sure that those circumstances are picked up and dealt with.

Let me pick up on the point made by the noble Lord, Lord Best, about benefit ghettos. The reality is that 67,000 families could not create a benefit ghetto in this country. That would be 1 per cent of working-age recipients. We are not talking about massive numbers on any standards.

16:46

The amendment seeks to place in the Bill an exemption from the benefit cap for households provided with interim or temporary accommodation by a local authority. It also gives local authorities the discretion to apply an exemption to people who are either homeless and in priority need, or those who are at risk of becoming homeless and in priority need as a result of the cap. In looking at the wording of the amendment, it is easy to see that any local authority could consider people threatened with homelessness and in priority need as potentially meaning any household with children. In practice, that is the same as not having a cap at all. For that reason, the Government regard this amendment as a wrecking amendment.

In answer to the question on costings asked by the noble Lord, Lord McKenzie, this is not a matter of costing but a matter of rendering the policy in practice unworkable. The Opposition tell us that they support the principle of a benefit cap, but is that the reality? When we have a complicated amendment such as this, which undoes the ability to run a cap of any kind, one is driven to ask what form of cap the Opposition think is appropriate. From what we have heard in debate here and in the Commons, it appears that the only cap that they would consider to be appropriate would be so high or would have such broad exemptions that it would apply only to a few people and most households would be exempt.

As I said in my remarks introducing the first group of amendments, in the court of public opinion—as the noble Lord, Lord Elystan-Morgan, referred to it—only 7 per cent of those polled would set the cap higher than £26,000 a year and only 9 per cent believed that it should not apply at all. The Government are well within the court of public opinion. We are looking at a benefits system that is desperately in need of reform. Many households receiving benefits find themselves trapped in the benefits system because there is little financial incentive for them to move off benefits.

When we moved into office, more than 10.6 million working age people in this country did not work and around 2.6 million people had spent at least half of the previous 10 years on some form of out-of-work benefits. We find that situation unacceptable.

[Lord Ashdown of Norton-sub-Hamdon]

I have listened to the Minister very carefully. I take it from his answer earlier on—he will forgive me for interrupting at this point; I just wanted to wait and see whether anything else was forthcoming—that the Government are not going to say anything more about transitional mechanisms at this stage. Is that correct? If it is, can he tell us when those details will be made available?

[Lord Freud]

My Lords, I was going to come on to what we were proposing with regard to temporary accommodation. That is currently out for consultation and is the particular area which this amendment looks at. We are going through the process and will come up with proposals in due course—I am not sure that I can measure the months too precisely. The general regulations will need to be in the April to May period. That is the time by which we are looking to get our arrangements for temporary accommodation sorted out so that those affected do not find themselves being double hit by going into very expensive temporary accommodation.

We are looking at the very high rental costs associated with temporary accommodation. We are looking at tackling those levels while ensuring that providers’ reasonable costs are met. Temporary accommodation rates, as your Lordships will know, are very often well above the market rate and the LHA rate due to the higher management costs. We are looking at stripping those management costs out of the temporary accommodation rates so that they do not impact within the cap. We have carried out an informal consultation with key stakeholders—local authorities, housing associations, government departments and some homelessness organisations—and their input will feed into the design of those temporary accommodation arrangements.

Perhaps I may pick up on one or two of the extra points that were made. The noble Lord, Lord Wigley, said that 200,000 people would have to move. I do not know where that figure comes from. The total number of households affected is only 67,000 and we do not expect that every household affected by the cap will need to move at all. We are aiming to get all these other options into shape.

[Lord Lester of Herne Hill]

I am sorry that the Minister thinks that this is a wrecking amendment. I thought that it was an amendment to make it easier to pass the Bill. Can he deal with the two issues raised on behalf of the Joint Committee on Human Rights as a means of alleviating the adverse impact on children?

[Lord Freud]

We have looked at the human rights issues, putting particular emphasis on households with children and making sure that the arrangements are effective. I shall speak later about payments for children being earmarked. The structure of the universal credit means that it is an overall payment and that there are not different segments going for different purposes. That will simply not be practicable in the universal credit world whereas it is practicable in today’s benefit world. I ask the noble Lord to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I should like to thank everyone who has participated in this very extensive debate. Given the time, I will not seek to answer each of the points raised but I will try to touch on some of them. I start with the noble Lord, Lord Freud, who talked about a change in psychology. A lot was said about the universal credit in the debate. We have made clear our support for the universal credit given that it can help people into the labour market but it is very unclear what extra benefit derives from this cap. If such a benefit exists, can the Minister explain the psychology that 54 per cent of the people affected by it are going to be in London and only 3 per cent will be in Wales? What is it about the psychology of those in London and Wales that causes such disparity? Is it possibly something to do with the cost of accommodation and nothing to do with a change in psychology?

The noble Lord, Lord German, asked for an assurance that there would always be a property available for someone who was not able to stay in their current home. I do not believe we heard one. I do not know whether the noble and learned Baroness, Lady Butler-Sloss, or the noble Lord, Lord Ashdown, will be comforted by the transitional arrangements; I certainly was not. I thought they were weak and generalised and have not taken us forward at all. I would say to the noble Lord, Lord Empey, that of course changes in the benefit system are bound to give rise to circumstances where somebody loses out. But the question is not whether you can avoid that; the question is who is losing out, is it fair, and is the construct of the change fair? We challenge whether it is, particularly in relation to homelessness.

The noble Lords, Lord Newton and Lord Fowler, focused on the universal credit. I have made our position clear on that. I was going to ask whether there were any spare badges, but possibly not. Of course, public spending needs to be addressed. We have made our position very clear both on that and on the cap. We support the cap and its level but it must be dealt with in a fair manner. We are perfectly entitled to probe when it is not and to challenge and seek change to its application in relation to homelessness.

The noble Baroness, Lady Hussein-Ece, made a very powerful speech which differentiated between what actually happens on the ground and what affects people’s housing circumstances. The noble Lord, Lord Best, gave us the benefit of his huge experience to say what is happening in the housing market and what these changes can give rise to. The right reverend Prelate the Bishop of Ripon and Leeds reminded us that, quite apart from these changes, homelessness is on the increase. Let us be clear. We are dealing with all those housing benefit changes which we have debated previously. This amendment does not seek to challenge those; it seeks to challenge the consequences of the cap in relation to homelessness.

The points made by the noble Lord, Lord Hamilton, were very effectively addressed by the noble Lord, Lord Winston. The noble Lord, Lord Wigley, questioned how it helps the economy if people move to areas that are cheaper because there are no jobs. Part of the problem is that the Government look at only one side of the equation. They look at what they see as benefit savings forgone, not at the costs generated by the policies they seek to implement. That is the fundamental flaw on this aspect of the cap. I have detained your Lordships long enough. I wish to test the opinion of the House.

16:59

Division 1

Ayes: 222

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Labour: 153
Crossbench: 32
Liberal Democrat: 17
Bishops: 5
Independent: 3
Democratic Unionist Party: 2
Plaid Cymru: 2

Noes: 250

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Conservative: 147
Crossbench: 49
Liberal Democrat: 41
Ulster Unionist Party: 3
Democratic Unionist Party: 1
Labour: 1
UK Independence Party: 1
Independent: 1

17:13

Amendment 59

Moved by

[The Lord Bishop of Ripon and Leeds]

59: Clause 94, page 63, line 25, after “benefits” insert “with the exclusion of child benefit”

[The Lord Bishop of Ripon and Leeds]

My Lords, Amendment 59 would allow families whose benefits have been capped to retain child benefit. It would do no more and no less than that. It does not challenge the basis of the cap. It does not challenge the amount of the cap. It is certainly no threat to the very welcome universal credit of which we have spoken a good deal this afternoon, but it would save some 80,000 children, according to government figures, from falling into poverty.

The Government’s assessment of the impact of the cap is that some 67,000 households will be affected. The Minister spoke of that earlier as not a massive number. It is pretty massive for those involved, but the fact that it is not massive in the overall terms of Welfare Reform Bill means that it ought to be possible for us to pass the amendment without seeing ourselves as fatally damaging the Bill itself. Those 67,000 families will lose on average £83 a week. Analysis from the Children’s Society shows that those households contain around 220,000 children. Three-quarters of those affected by the cap are children, yet Clause 94 says nothing about children at all.

The cap as it stands is not just, because it fails to differentiate between households with children and those without. It makes no provision for the additional cost of bringing up children, which is the purpose of our most successful and well targeted provision of family support: child benefit. The Government have decided that £500 a week should be the cap for a couple, and I have no quarrel with that; but if that is right, it cannot be right for the cap to be the same for a childless couple as for a couple with children. Child benefit is the most appropriate way in which to right that unfairness.

17:15

[Lord Mawhinney]

I and perhaps others in your Lordships' House would find it helpful if the right reverend Prelate would tell us the cost to the public purse if this amendment were approved.

[The Lord Bishop of Ripon and Leeds]

Thank you very much. The answer to that question is £113 million, which is a minute proportion of the total cost of welfare benefit addressed in the Bill.

This cap is not simply targeted at wealthy families living in large houses. It will damage those who have to pay high rents, because often that rent has increased substantially in the course of occupancy of that house. An out-of-work couple with four children between five and 12 and with £250 a week rent, which is nothing out of the ordinary in many parts of the country, and £20 council tax, currently has an income under present arrangements of some £373 a week after housing costs are deducted. After the cap, that drops from £373 to £230, or £5.50 per person per day—not the £500 of the headlines that we have been seeing. That is much less than 40 per cent of median household income, and I do not understand what a family in those circumstances is meant to do. I do not believe that a child can have a good childhood in circumstances such as that.

I had a letter the other day from someone who disagreed fairly strongly with me and said that surely £500 a week should be enough to bring up a family in normal circumstances. I would not disagree if we were talking about £500 rather than £230. But those whose benefits are capped are not in normal circumstances; they have particular reasons for being in need. Often that will be a substantial rent, and sometimes there will be several children who may not be their own and who may have been taken into the family to avoid their costs falling on the state.

Child benefit is a non-means-tested benefit paid to both working and non-working families. In setting the cap, it has been ignored by the Government. It should also be ignored in calculating benefit income against the cap. Those who are suffering from the cap should be allowed to retain their child benefit. I know that, from 2013, higher taxpayers will not be entitled to child benefit—that is a different issue—but anyone taking home £26,000 will be entitled to it, as will many of those earning a good deal more than that. The intention of the benefit cap is to promote fairness between working families and those who, however hard they try, cannot find a job.

I admire and salute those who bring up families on low pay. I am very aware of poverty in working families and see it through my own working life. We need to defend the interests of those who are poorly paid, but we do not do so by refusing child benefit to those who are out of work. This amendment declares the importance of child benefit both for working families and for the unemployed. Both should receive state support in bringing up their children. Child benefit is paid for the needs not of adults but of children. It has a massively high take-up rate and is used to benefit children whatever their situation. We are rightly proud of its effect in helping the next generation.

This amendment is a compromise between the present situation and the cap as proposed in the Bill. Child benefit is paid at a rate of £20.30 for the first child and £13.40 for every subsequent child. At present, a child born into a family with benefit income of over £500 a week—that is, income over the cap—will receive £62.40 in benefit support through child benefit and child tax credits. Under the benefit cap as proposed, there is no support for that child at all. This amendment restores only £13.40 of the £62.40. In that sense it is an extremely modest amendment, but it does mean that there will be some money coming in for children in this pressurised and often suffering environment, as we discussed in the previous debate. It means that there is some help for children while maintaining the principle of the cap. All of us who have used child benefit or family allowance know just how crucial it has been in our own lives to bringing up our children. It is entirely inappropriate that the only people not allowed to receive child benefit should be those who are out of work and whose benefits are capped.

Quite a number of people have asked, especially over the past few days, why Members on this Bench have been particularly concerned about the needs of children in these welfare debates. Christianity, along with other faiths and beliefs, requires us to think most about those who have no voice of their own. Children who are in most need are one of the most evident examples of that, and the New Testament shows that Jesus had a very special concern for children. Children have no vote in our society; they probably do not answer YouGov questions.

This amendment goes some way towards protecting children by helping two groups especially. First, for children in families that are struggling to pay rent, it will mean fewer face homelessness—especially but not only in London. Secondly, it will help those in larger families. Children do not choose to be in large families and many are so because parents have taken in, and provided love for, those who would otherwise be a burden on the taxpayer. It cannot be right for someone who becomes unemployed not only to lose their job and have their assessed benefit cut but to be told that their children no longer have a right to child benefit.

This amendment declares our support for children, families and the next generation, and I beg to move.

[Baroness Sherlock]

My Lords, I speak in support of this amendment, to which my name is attached. I am grateful to the right reverend Prelate the Bishop of Ripon and Leeds for tabling it, and I pay tribute to both his and the Children's Society's long-standing work in support of children. My concern about this amendment is that the measure has some very poor consequences, whether intended or unintended. Perhaps the Minister can tell us which they are.

I want to suggest three ways in which this cap, as the Government have put it together, is particularly badly constructed and three problems that it will cause. First, as we have heard, this measure will seriously and disproportionately affect children. A new DWP impact assessment came out today, which significantly changed the figures that we were working with previously. I have been able only to skim read it but I see from the headlines that the official impact assessment says that 220,000 children will be affected, and the losses in income those families will face are not small amounts. Initially, 67,000 households will lose an average of £83 a week, while 17 per cent of those affected will lose more than £150 a week. Those are very significant sums, so the behavioural impacts which the Minister wants to see happen will have to be very big indeed to address losses of that size, and I wonder what we can do about them.

I am not clear what steps those parents are meant to take to be able to avert those losses. That impact assessment says that 44 per cent of households affected are already living in social housing—in other words, in the cheapest accommodation available in their area. These are not families who are living it up in Kensington mansions, sipping cocktails by the pool before dinner. Forty-four per cent of them are already in social housing and most of the rest are in the kind of private housing that the noble Baroness, Lady Hussein-Ece, described earlier. As anyone who has had cause to go knocking on doors in London will know, there is housing out there which is astonishingly expensive but of astonishingly poor quality. The nature of the private sector market in London and other very high-cost areas is such that it is depressingly easy to rack up rents of £350 a week if you have two or three children.

What will happen and what are those families to do? In Committee, I put down an amendment which sought to exempt from the cap specific groups of vulnerable children who, for example, had been the subject of child protection orders, and I asked the Minister what those families could do to avoid being forced to move. He gave me three ways in which families could avoid that. The first was that they could negotiate a reduced rent with their landlord, although he had the good grace to acknowledge that may not succeed. The second way that the Minister suggested was that they could move into work, but when we look at the figures, we find that some 60 per cent of the families affected—a majority—are not required to work, either because they have small children or because they are sick or disabled and have limited capacity to work. In fact the Government's own policy of not trying to push sick people or the parents of young children out into work is now suggesting that they do that, which does not seem like a great idea either.

The final suggestion which the Minister made was that families could use their savings to pay the shortfall. I believe that one of your Lordships mentioned in the previous debate that the average family in Britain had just £300-worth of savings. That would not go very far in paying shortfalls of this nature, and one has to suspect that these families are likely to have less than the average amount of savings. We therefore have to accept that what will happen is that these families will be forced to move.

Many children's charities have made representations to me, as I am sure to many noble Lords, saying that they fear that families would be forced to move not just once but repeatedly. If they move to a cheaper area and rents rise faster than the cap, they have to move again. What are the consequences of that for the children? Again, I looked into this in Committee. The initial DWP impact assessment highlighted the possible damage to children forced to move school repeatedly, and the evidence is quite clear of the impact—the negative impact, obviously—which that has on children's academic achievement. As I also pointed out in Committee, forced moves reduce the ability of child protection professionals to keep track of families where children are at risk of abuse. I asked the Minister to write to me on how the Government would address those particular categories, and he did. I am afraid that it was with no very satisfactory encouragement and, again, I hope to give him the opportunity to be more specific when he responds to this.

In research that looks into the case reviews that follow the serious events that happen to children who have faced abuse and sometimes death, certain themes come out again and again. One of them, and I have heard this said by Members of this House, is that when everyone gathers around the table for a serious case review, someone always says, “Do you know, I wish we’d all talked before. Maybe, if we’d all talked to each other, this wouldn’t have happened”. One of the things that make it less likely that that communication will happen regularly is if the families in question move house repeatedly. Are we really going to force more families to do so? I am very concerned about what will happen in that regard, but I can see no way around it. What else can we do? We have to press on.

17:30

The Minister’s next argument is that he is clear about what the policy is for. I am not at all clear about that. He said in Grand Committee that the purpose of the cap was to encourage work; the Secretary of State for Work and Pensions has said many times in the media over the past 48 hours that he will ensure that people will never be better off on benefits than in work; and I have sat through all the stages of the Bill so far and lost count of the number of times that the Minister has told us that the universal credit will ensure that work always pays more than welfare. If that is the case, will he explain why this additional measure is needed? If work is always going to pay, we do not have a problem—so that cannot be the issue.

My final concern is whether the comparison is fair, a point made by the right reverend Prelate the Bishop of Ripon and Leeds. The Government—unintentionally, I am sure—are misrepresenting the impact of this amendment. They declare that no one should receive more in benefits than the average family will earn, yet surely they are wilfully ignoring the fact that that average family would themselves be entitled to claim child benefit for every child in the household. They are deliberately and intentionally putting child benefit on one side of the equation and leaving it out from the other, thereby constructing a test that cannot be fair. We have tried many times in Grand Committee to get the Minister to explain that anomaly. My noble friend Lady Lister put the point specifically to him on 23 November: how could he justify this? Clearly, she said,

“We are not comparing like with like”.

The Minister said:

“My Lords, I acknowledge that we are not comparing like with like. We are looking at a sensible level at which to put the maximum benefit payment … I think that one can overelaborate the logic, which I will not attempt to do here”.—[Official Report, 23/11/11; col. GC 419.]

There is not much danger of the logic being overelaborated. Rather, we have a logical deficit here, and I invite the Minister to explain it.

Thankfully, we have some mitigation here. The cavalry has appeared cantering over the horizon in the form of the right reverend Prelate the Bishop of Ripon and Leeds, who has put down an amendment that allows us to address all these questions. In particular, he has pointed out that benefits specifically for children such as child benefit—a universal benefit, although recently some but not all families paying higher rates of tax have been excluded from it—are not means-tested. Originally it was a tax allowance, and it was always intended to be a transfer from the public in general to families with children, in recognition of the fact that children are a public benefit as well as a private one. Today’s kids will pay my pension—at least, if I am ever old enough to claim it, although the age at which I will be allowed to is receding into the distance. It therefore seems reasonable that we all make a contribution to that, hence the nature of universal child benefit.

Once we start to decide that some benefits are not really for everyone and that some benefits such as this one are excluded, we have to understand the rationale for that. I struggle to do so. To be in a position where some families earning over £80,000 a year would get child benefit but the families that we are talking about would not is simply unjust.

The Minister has said that this is a matter of principle. Frankly, that is the one thing it is not. He has decided on a cap but he has told us—and we already know—that certain types of payment will be exempt, such as disability living allowance, attendance allowance and some payments to war widows. All we are suggesting in the ame benefit to that list and saying that payments of child benefit specifically should be exempt as well. If we cannot do that for the children of our community, what can we do? I am pleased to support the amendment.

[Baroness Tyler of Enfield]

My Lords, I support the amendment, to which my name is also attached. We have heard a lot today about fairness. It is important that people in work feel that there is fairness in terms of how much money can be received by those out of work and on benefits, and that there is a clear incentive for all those capable of work to do so in order to r themselves and their families. I place on record that I welcome the measures being taken by the Government, such as the work programme, to give intensive help and support to people needing a lot of help to get back into the jobs market.

There is another aspect to fairness, though: fairness to children, irrespective of the circumstances of their birth. I shall run through the reasons why I feel that child benefit should be exempt from the calculation of the benefit cap. First, as we have heard, it is a non-means-tested benefit paid to all households with children. We have already heard this question posed today, but is it fair that children born into small families with earnings in excess of £80,000 a year receive child benefit while those born into larger families with a benefit income of £26,000 a year do not? I do not think that that passes any fairness test.

Secondly, child benefit is paid to assist with the costs of raising children. In my view, it is not about sending signals or penalising adults who do not work—and I add that all adults who can work should do so. Thirdly, this measure would have a disproportionate impact on children. We have heard the figures from the noble Lord, Lord Wigley, and the right reverend Prelate, and I do not intend to go through them again. Fourthly, it is a question of a compromise solution between children in large families receiving the full current level of state support and receiving nothing at all, which I perceive to be unfair. Fifthly, reducing the impact of this policy on large families would reduce the couples penalty that is currently built into the benefit cap.

The reason why I am concerned about the current situation is the issues raised compellingly in the debate earlier by my noble friend Lady Walmsley. This is about families having to move abruptly to cheaper areas and the disruption that that will cause to children’s schooling, often halfway through a school year. It is about families feeling, rightly or wrongly, that they will have to split up because if they created two households instead of one, parents would then be entitled to £26,000 a year in benefits. That cannot be right. Experts in the field have said that there is a substantial couples penalty built into the cap that is completely at odds with my own view, and that of the Government, of the need to support strong and stable families.

I am concerned about the impact on children who might find themselves homeless, perhaps in unsuitable and expensive temporary accommodation. With children and young people’s services already very overstretched, there is a real danger of children at risk simply disappearing from view below the radar, which raises child protection and safeguarding concerns.

I will summarise by saying, as was said earlier today, that children should not be the innocent victims of this policy. The vulnerability of children is very important to people on these Benches, and I look forward to hearing what safeguards the Minister has to offer in this area. I heard him say in the previous debate that he saw the transitional issues as a second-order issue. I do not consider the welfare of children to be a second-order issue at all.

[Lord Greaves]

My Lords, I have not spoken in the Welfare Reform Bill debates so far and I will be brief now. On the specific issue of child benefit, the Government seem to have got it seriously wrong. What is being proposed undermines the whole principle on which child benefit—and before that, as many of us will remember, the family allowance—has been based. If the Government are going to do that, I fear that that is the beginning of a slippery slope, and they will have to explain to us very carefully why they think the basic principles no longer apply.

In illustration, I go back to the example given by the noble Lord, Lord Best, about typical, ordinary—perhaps very ordinary—accommodation in the East End. There has been lots of fancy new development in the East End in the past decade or two, but most of it is still not regarded as being the most desirable part of London. People living in other parts of London in particular usually find themselves paying a great deal more than £350 a week for an ordinary two or perhaps three-bedroom flat. According to the paper today, for a four-bedroom house in the least salubrious part of Kingston—I did not know that such places existed, but it appears that they do—£400 a week is not unusual. That is four times what you would pay for an ordinary, perfectly decent house in my part of the world, but there you go.

If as a family whose benefits are being capped you receive £500 a week, and you are paying out £400 a week for rent, that leaves you £100 for everything else. I challenge any Members of your Lordships’ House to tell us how well they would do at bringing up a family of two, three or four—or perhaps more—children, plus one or two adults in the house, on £100 a week. It can be done, and many people in many parts of the world survive on far less than that, but this country is now almost the most prosperous that it has even been, if you take away the last five years. We are still incredibly well-off. If Members of your Lordships’ House think back—most of us are getting on a bit—to our childhoods and the circumstances that we were brought up in, they will see that this country is now incredibly rich and well-off. To require families to bring children up on £100 a week for everything apart from their rent is unacceptable.

When the media are encouraged, I have to say by some politicians in this country, to rant and rave about how these people are getting £26,000 a week and that everyone ought to be able to live on that—I apologise, £26,000 a year; some people are on £26,000 a week, but they are rather different—the debate really ought to start at what you have left after your rent. The state of the private housing market, and indeed rents in the public sector, is not the fault of people who have to live in these houses. There is a scandalous situation in which commercial landlords are ripping off people—indeed, they are ripping off the state, if people are getting housing benefit—by charging ludicrously high rents that are not justified by the cost of maintaining those properties but that are what the market will bear. If the Government and the rest of us want to do something about the state of the private housing market, we should look at housing policy and perhaps at the way in which the private housing market works. But that is a different issue all together. It is not the fault of the people. To try to do this—to try to force rents down or to try to regulate the markets and move people around the country by capping the benefits of the people living in those houses so that they can no longer live there—is penalising the tenants when the people who ought to be penalised are the landlords.

I have digressed a little from child benefit. I apologise for that. Child benefit, as my noble friend and others have said, has always been a non-means-tested benefit that goes as of right to families with children. It has always been paid on a per capita, per child, basis. That is a fundamental principle. The first child gets more nowadays, then each child after that gets the same, in order to assist the work of bringing up that child. To abolish child benefit, which is what is actually being done in this Bill, for people who are at the benefit cap and who are getting other benefits that take them up and beyond that cap, as is highly likely, is a fundamental attack on the whole principle of child benefit.

This ought to be resisted. Your Lordships ought to resist it, and we really ought to ask the Government very seriously to think again on this particular issue.

17:44

[Baroness Meacher]

My Lords, I had not planned to speak in this debate, but the noble Baroness, Lady Grey-Thompson, put her name to this amendment, but has been detained and so cannot be in the Chamber. I think it is important to make the point that there is Cross-Bench support for this amendment.

I want to make one point. The Minister has made a great deal of the importance of fairness between those in and out of work. We know that there are problems in this Bill such as issues of fairness across geographical areas or between different sizes of household. I shall simply focus for a second on the fairness between those in and out of work. One thing that puzzles me is that not only will those who are in work get their average earnings—let us say, of £26,000 a year—they will of course also get child benefit. As I understand it, they will also, if they have three or four children, receive housing and other benefits under universal credit. The cap will not apply to those in work, so there is a discrepancy not only in that child benefit will go to those in work but not to those out of work but because it will be at the same level of net income. This applies to other benefits too.

I certainly do not want the cap to apply to those in work, but one does have to consider this. Presumably the argument for not applying the cap to those in work is that those families are really struggling—the so-called middle earners or middle-income people. It is very tough to live with three or four children on average earnings. Therefore, they need a whole range of benefits. If they need a whole range of benefits, it is very difficult to see how the Government and the Minister justify excluding any reference to all the benefits that those in work will have, and arguing that those out of work should be able to live on a level of income that no one in work would be expected to live on.

If you assumed, as I sometimes get the feeling the Government do, that anyone out of work can get back into work, and you really could find and get a job within a week, or two or three weeks, you could just about justify this. However, so many people who are on benefits are going to continue to be on benefits, and they have a range of disabilities that will not even entitle them to PIP in the future, because things are going to become very tough. The Minister knows the group of people I am most concerned about: people with a range of mental health problems. It is very difficult for those people to get any employer to take them on, yet they are going to be expected to live on a level of income that people in work will not be expected to live on. I would like to hear the Minister’s response on that point.

[Baroness Butler-Sloss]

My Lords, I totally understand why the Government require it to be said that not everyone should get child benefit. There are two groups of those who are not employed and to whom the cap will apply about whom I am particularly concerned. I should declare an interest as the president of the Grandparents’ Association.

A considerable number of grandparents, particularly grandmothers, have been in perfectly good employment over a number of years and then for one reason or another find themselves obliged to take on the care of children, who are sometimes extremely young, in addition to their own teenage children. As well as grandparents, there are also other kinship carers, as they call themselves, who take on the care of other people’s children, usually their nephews and nieces and sometimes their great nephews and great nieces. They give up their jobs. They have to, because they cannot care for these young children, who have in a sense been dumped on them without any prior warning on some occasions. They will give up their jobs for the care of their grandchildren or other kinship children, then find themselves in real difficulties with this cap.

We are not just talking about one or two children—this is my second point. There are families with a considerable number of children, not all of whom are their own. There are single mothers who have gone through a number of different partners by whom they have had a child. They end up sometimes with five different successive partners, and with more than five children. How on earth will that group of families cope if they are unable to have additional child benefit? I can understand their coping perhaps with one or two children but not three, four, five or six. Such families make up a smaller percentage; the figures were given in our previous debate. However, they do exist and they will be in real difficulty. Unless there is some sort of hardship allowance for families who cannot cope on this £26,000 cap without child benefit, I fear that I will go the way I would prefer not to go—against the Government.

[Lord Kirkwood of Kirkhope]

My Lords, this is a very important subject and this is the most important amendment as it seeks to deal with some of the problems that will flow from Clause 94.

I want to make it clear that I am implacably opposed to a household benefit cap in principle. People’s eyes glaze over when I try to explain my main reasons. I tried it in Grand Committee and by the end people looked at me as though I was possessed. However, there is a point that has not been made and it is very important. I am talking to my own side as much as to anyone else. I have spent my entire life fighting for benefit entitlement to be enshrined in law. That is to say, if you meet the eligibility criteria you get the amount due. That has been hard fought for and it is a very important part of our social security set-up.

Clause 94 changes that. It is a ministerial override. The Chancellor of the Exchequer or the Secretary of State for Work and Pensions will decide, arbitrarily in my view, although the Minister says that it is to do with mean or median average income. These are not figures that are easily pinned down in our systems of legal entitlement in social security Acts. A Minister of the Crown now says that he can, by regulation, override who gets child benefit if it is counted in a cap and if they are over the arbitrary limit. That is a change. We are giving powers to Ministers that I do not think it is safe to grant them.

If the Government think that housing benefit is too high in some circumstances, let us reform housing benefit. I would be up for that. We have heard powerful speeches. My noble friend Lord Greaves just made a very powerful speech about the amount of money that is being diverted to landlords. It is £2 billion a year in housing benefit. Anyone sensible would want to take a look at that, but this is looking at it over too short a period and doing it in a technical way that strikes at some of the protections that we have in Parliament. When we set entitlements in the uprating Statement every year, we can be confident that if people meet those entitlements they will get that money. We cannot say that any more because a cap may be applied. Look at the regulations and look at Clause 94; it is very general. This is a very targeted debate, which it should be as it is about child benefit. I say to noble Lords that, in future, child benefit amounts can be attacked in a way that we will not be able to control. Local authorities will have to reduce child benefit entitlements to enforce this cap. That is not something that this House should accept casually.

What I should really like to do with Clause 94 is vote against the whole thing. However, my noble friend Lord German and one or two others took me into a dark room, sat me down and said, “That wouldn’t be sensible because the great British public know the square root of next to nothing at all about the detail of the technicalities”. He has persuaded me that I should mitigate Clause 94, and I am prepared to do that. This amendment is the best form of mitigation because it protects a universal benefit that people earning just shy of £80,000 a year will qualify for until we look at that. The Government say that they are on the case. Those people will get that benefit, while people subject to the housing cap in future may not. I do not see the equity in that situation and it would not be safe for us to run with the clause if unamended. I am grateful to my noble friend Lord German for showing me the error of my ways in getting the mitigation.

I want to say two other things as well. This does not attack universal credit. If I believed that the amendment did that, I would certainly vote against it. Why do I not believe that? The amendment is to Part 5 of the Bill, whereas universal credit is in Part 1. If this is an essential part of universal credit, why is it not in Part 1—in the first 43 clauses? It is not. It is there only because of something called the Treasury claw-back, which we discussed at great length in Grand Committee. I was absolutely persuaded that I would die in a ditch to save universal credit. I pay credit—universal and otherwise—to the Minister for achieving it. As someone said earlier, it is an achievement. It will transform and improve dramatically the way that the welfare and benefits system is rolled out. We will certainly be in a much better place when the economy recovers.

However, the Treasury claw-back is £18 billion over the CSR period. The amendment, give or take the new version of the impact assessment, which I have not yet studied, will save £113 million. My point is simply this: the deal was done by the department in 2010, when it was absolutely reasonable to expect that the green shoots of the economy would start to be seen in 2014. Is there anyone in this House who now believes that that will happen? The circumstances of 2010 are now changed, so we are not lashed to the mast. If you want to give some protection to the people at the lower end of household income distribution, this is the amendment to mitigate that affect.

There is a lot of misunderstanding in this debate about the difference between a poverty indicator before housing costs and a poverty indicator after housing costs. After housing costs, the families that will be hit by this household benefit cap will be as poor as church mice. When you measure the amount of income available to a household and divide it by the number of people in it—these are big households—they will get tiny sums of money. I saw an article in the Guardian today that referred to 62p per family member after the household benefit cap in one case that had been worked out. What are we doing here if we are approaching that kind of thing?

The Government will not be able to control this. The child benefit that will be withdrawn will be withdrawn by local authorities. Once the regulations are passed, we will lose control of what will happen to these households. I contrast that. Colleagues may know that the DCLG is running a very interesting programme on troubled families. The Prime Minister tells us that there are 120,000 troubled families—I am sure there are—just in England. We are spending just shy of £450 million on getting alongside them, getting them back into work and getting their kids into school. That is a much better way of dealing with some of this stuff. Why, on the one hand, are we helping troubled families? People who are hit by the housing benefit cap will very quickly become troubled. Maybe they will get help from this left-handed scheme. Meanwhile, they have to face the reductions that are being made by the right hand of the Government.

I am very worried about this. Child benefit is a universal benefit and a mitigation that is essential to protect the interests of children. It does not affect universal credit. If it did that, I would not vote for it. However, if it is pressed, I will vote for this amendment with enthusiasm.

18:00

[Baroness Corston]

My Lords, I want to speak briefly about child benefit. I was very proud of the fact that in 1977 the then Labour Government, under Jim Callaghan, brought in child benefit. At the time, there was a huge campaign saying that it was taking money out of the wallet and putting it in the handbag. We said, “Yes, that’s exactly what it is going to do and it is exactly what it should do”. My noble friend Lady Gould, who was my boss at the time as chief women’s officer for the Labour Party, and I played our part in making sure that Jim Callaghan knew what the women of the Labour Party thought about child benefit.

I want to address my comments to a particular part of this argument about child benefit being a benefit that is paid to the carer of the child. It is money that goes to women. In my work with women in prison, I have more than once come across a tragic phenomenon where a woman shoplifts. I know of a case in the south-west of England where a woman shoplifted 99 times in a year, each time for food for her children. Her husband had control of the family income—whatever that family’s income is, and it might be benefits. The only money she had was the child benefit and all of it went on feeding her children, but it was not enough and she therefore stole food. I say to the Government: you think very carefully about the effect that any incursion into child benefit—as a universal benefit payable to the carer of the child, irrespective of income—will have, and that is a hugely important principle. If people do not need the benefit, then use the income tax system to make sure that there is a redress, but please do not, without thinking very carefully, attack a benefit that is the only means whereby some women can feed their children.

[Baroness Lister of Burtersett]

My Lords, the noble Lord, Lord Hamilton, asked questions about the morality of the current situation. I should like to ask this House, following the point made by the noble Lord, Lord Kirkwood: is it moral that we are deliberately pushing families with children below the level of income that Parliament has decided is necessary to meet their most basic needs? Research shows that that money is not sufficient to meet those basic needs, as determined by the wider population.

A number of noble Lords, including the noble Lord, Lord Fowler, on the government Benches, have asked questions about costs—I had a wonderful vision of the noble Lord wearing his “Action for benefits” badge in front of the mirror. In the other place, the Minister said that this is not primarily a cost-saving measure. What is it? He said it is primarily about changing behaviour, but my noble friend Lady Sherlock pretty well demolished those arguments.

The Minister also said that this is about restoring the credibility of the welfare benefits system. However, that credibility is being undermined by the misinformation being put out by Ministers about that system—in particular, the way that they slide between talking about average incomes and average earnings as if they are the same thing, when they are not. The median family in work receives £33.70 in child benefit as well as various other in-work benefits. The point was made that child benefit replaced child tax allowances. If that had not happened and we still had family allowances and child tax allowances, the median earnings of the average family would be that much higher because of the effect of child tax allowances. It is therefore really unfair that we are not comparing like with like and, as my noble friend pointed, when the Minister was pushed on this issue in Committee regarding how he could justify the fact that we are not comparing like with like, he simply did not have an answer.

[Baroness Wheatcroft]

My Lords, I did not join your Lordships' House in order to kick the underprivileged, particularly children, but I did believe that the Government were committed to healing the broken society. I do not think that any of us can doubt that society is broken, and we would all agree that there is a need to heal it and that dealing with the dependency culture is an important part of that. That is something that I believe in absolutely. That is at the heart of this legislation. To my mind, the worst sort of child poverty is poverty of aspiration.

[Baroness Whitaker]

I apologise for interrupting the noble Baroness, but she used the term “broken society” and said “I think we all accept that it is”. I am really surprised to hear her say that. Can she give us her evidence for the broken society?

[Baroness Wheatcroft]

I would refer only to the recent riots as evidence of a society that was not entirely at ease with itself. If the noble Baroness is content and happy with the state of society, I am happy for her. I have qualms myself, particularly when I look at the number of children who have no aspiration to education or a career. That is one of the things that I believe the Ministers who are pushing this legislation through are committed to.

As I said, the worst sort of child poverty is poverty of aspiration, and in this country there are many households with no experience of paid employment. That is a terrible condemnation of what has been allowed to grow up in the name of a welfare system.

One of the greatest welfare benefits that we can bestow on children is an aspiration to acquire education and then a career. Growing up in a household where the concept of working for a living is understood and embraced is important for starting youngsters on the right path. A cap on benefits is a sensible step towards encouraging people into work. If we are going to have a cap, in the end we have to have a cap. There is no saying where child benefit is spent. It may go to the women but, I am afraid, not every woman devotes her time to spending her money on her children. That is what we might like to think, but there are others who have drug habits to fund and so on. Women are not infallible and I would be the first to agree with that.

The Government have assured us that they are not approaching welfare reform in a truly one-dimensional way. This is not just about cuts and saving money. The problem households that are locked in a cycle of benefits dependency are known to the authorities. We are told that the authorities are ready to work with those households between now and when this legislation comes into force. They can produce results. I can believe the Government when they say that they are committed to doing that. If they do, and they produce long-term benefits for children in those households, it will be a far more caring result than just handing out cash.

[Baroness Farrington of Ribbleton]

My Lords, I also had not intended to speak in this debate, but I have just been reminded that we are celebrating the work of Charles Dickens. I do not know why that came into my mind in the last few moments. Is it the deserving poor or the undeserving poor?

In answer to the noble Baroness, I actually stand in the middle as regards the broken society. To me, as an individual, parts of our society are broken, and the ones that are the most broken are those who lack empathy for those less fortunate than themselves. That is the root of our problem: whether the lack of empathy is the teenager who is incapable of understanding that the pensioner at the bus stop whose handbag he tries to take is a human being like his mother or grandmother; whether it is someone who has made it in life and believes, “It is all due to me and other people could be like me”; or whether it is the elderly person who says—and we are all in danger of doing this—“It was not like this when we were young”.

When I fought against the threat to what was then family allowance many years ago, some of the people who said, “I don’t agree with you, Josie”, were people who said, “I didn’t get it when my kids were young”. They then went on to tell me about the miseries they went through because they did not get it. Today, we are debating family needs and the issue of what makes a good society. I cannot understand how, on the same weekend when this debate was around in the media, someone suggested that we should give a new tax allowance to people who were working, given that any tax benefit, any cut in taxation, benefits those who earn most at the expense of those who have least.

We have a Prime Minister who has talked about the importance of marriage. That is a matter for him. To me, the important issue is that of families with children: how we provide a society in which the next generation has more empathy. I know that I am not alone in coming from a large family. There is among large sections of this country, certainly in focus groups, the view: “Why did they have all those children? They didn't need to”. Among some people, there is prejudice that there is something morally wrong about having children. You can argue that case, but the child born into the large family should not be penalised. My work as a councillor leads me to know that there will be those who will blame their children for the fact that their income has gone down. They will say, “If I had not had you little devils, I would have had more money to spend on us”. That is the harsh reality of some children's lives.

I cannot understand how the Minister is talking about fairness. We need to be fair to families with children. Anybody who believes, as was hinted at on the radio this morning by a member of the Government, that people have children in order to get money, has never brought up a child. Child benefit does not cover the cost, however little you give those children. We are facing a system that will penalise children to appease those who think that the children ought not to have been born. There, I have said it. That was what made me remember Charles Dickens. He knew that there were huge sections of society who believed that the undeserving poor ought not to have children.

The Minister has told us that large chunks of the people who will lose their child benefit are people who cannot work, by the Government's own admission, yet sweeping changes will affect them. I appeal to everyone who knows what is fair and what is right. We did not fight the issue of income tax allowance; we must fight to keep child benefit. We know that we are not dependent on those children for our old age, because they are too young to be supporting us; most of us will be long gone; but we need them for a good future and we do not want to inculcate in them grinding poverty, and grinding poverty is what we will be condemning them to. I remember in my childhood that the best meal of the week after Sunday was Tuesday night, when the family allowance was paid out. That was a very common experience. We need to ensure that those people who have children can provide the basic necessities—they are basic necessities—and support the right reverend Prelate the Bishop of Ripon and Leeds.

18:15

[Lord Newton of Braintree]

My Lords, I had not intended to speak again, having had my say earlier, and will not repeat what I said, although I cleave to the view that this is not a sensible way to deal with these problems; they should be dealt with in secondary legislation. In that, I embrace the comments made by the noble and learned Baroness, Lady Butler-Sloss, about people taking in other people's children and the need to be sensitive to issues that could arise there. Indeed, I remember noticing while I was in not another place but another location during the first week of discussion on the Bill that a lady in Huntingdon, I think, was reported to have taken in five children of friends of hers, both of whom had died in a short space of time. Others may have noticed the story. Such a case, and others raised in an amendment by the noble Baroness, Lady Drake, need consideration in detail, but we cannot do that on the Floor of the House in discussing amendments to primary legislation.

I need no encouragement in willingness to hold Ministers’ feet to the fire about addressing some of those detailed problems, but I question whether it can be done in this way. My noble friend Lord Kirkwood is a real friend. I cannot remember the last time that I disagreed with him. He is clearly out to be more reverend than the Bishops’ Bench in his defence of no benefit cap at all. He makes his case. He suggests that it is not incompatible with his support for universal credit. Fundamentally, his position is hostile to the intention of universal credit, which is to diminish the number of people who cannot afford to work.

I must say to the right reverend Prelate that the basic point about the amendment is that it raises the level of the benefit cap. There may be an argument for that, but that is what it does. There is a knock-on effect of that. It must increase the number of people who cannot afford to work. That is a matter of logic. It must do. The more children you have, the less likely it is that you will be able to afford to work, because you will not necessarily be able to command earnings which will replace the benefit. That is the core of the problem that we are seeking to address.

The right reverend Prelates may want to do that; they may think that it is right; but it needs to be straightforwardly stated, in the context in which many people have said—I do not make a judgment on this—that the worst thing that can happen to children is to be trapped in a household which cannot afford to work, in which they have never known anyone in the household in work. Keith Joseph used to have a phrase for that: the cycle of deprivation. We are not free of it. We need to take account of it. People can draw their own conclusions about the right level, but we need to know what we are doing.

As I said, I hesitate to challenge the right reverend Prelates, but they are making life easier for some in financial terms but worse in what I would regard as a sensible way to approach social policy. They may have put figures on that; they may not; but that is my view.

[Lord Greaves]

Does my noble friend accept that the logic of what he is saying is that child benefit should be abolished for everybody who does not have a job?

[Lord Newton of Braintree]

I meant to say at the beginning, but I do not think I did, that if anyone can be held responsible for the continued existence of child benefit in this country, it is me. In the late 1980s, it had not been uprated for two or three years. I became Secretary of State for Social Security. I fought tooth and nail to reintroduce the uprating of child benefit.

I had a lot of battles with a lot of colleagues and managed to do it in the form of introducing the increased rate for the eldest child—the first child—which was laughed at at the time but appears again to have stood the test of time. I yield to no one as a defender of child benefit and I certainly do not want to abolish it. I have reservations about the Government’s proposals on taxing it—they will come up at another time—but I will not be accused of being hostile to child benefit. I am simply saying that I support it but I also support the objective of ensuring that children are in households where it pays for the people involved to work if possible.

[Lord Ashdown of Norton-sub-Hamdon]

I am most grateful to the noble Lord for making the point. Indeed, he deserves all the credit for child benefit—he does not claim it as he is not an immodest man—and millions in this country owe him a great debt. The question that puzzles me, and perhaps he can help, is: how is it right, morally or otherwise, to deny child benefit to somebody on £26,000 a year when they get it on £80,000?

[Lord Newton of Braintree]

The issue is at what level the benefit cap should be set, and whether to set a different level that automatically puts people with children, depending on the number, in a position in which fewer of them can afford to take jobs at the rates they are likely to be able to command. It is a matter of judgment not of fact. It is an issue that cannot be evaded, but it has been evaded in a lot of the discussion we have had tonight. I will not vote for the amendment but I will not dismiss the concerns, particularly those addressed by the noble and learned Baroness, Lady Butler-Sloss. They need to be addressed by Ministers in working out the detail. I repeat my phrase that I will join in on holding their feet to the fire but I will not join in on this rather hasty and ill considered amendment today.

[The Lord Bishop of Chichester]

My Lords, I was very tempted to intervene in the middle of what the noble Lord, Lord Newton, was saying when he accused the Bishops of suggesting that we wished to have no cap at all. I have not heard one of us say that, but I am glad that I did not intervene as he then admitted that he did not really mean that and talked about us trying to raise the level of the cap. I am glad that I was patient.

I do not want to intrude on what my friend the right reverend Prelate the Bishop of Ripon and Leeds will say later, but I want to address something that has not come up yet. Quite a lot has been said about the popularity of this Bill, particularly the cap. One has to be fairly careful about being too quick in response to vox pop when making legislation. If we were debating capital punishment, for example, I suspect that many of the same things would be said. If we were to tease out what public opinion was concerned about, I suspect that we would probably find a remarkable unanimity of view within the House about the end we want, but the question of limitation is important. There have to be limitations on benefits and there have to be limitations on all sorts of other things, such as rents, but that point has already been made. I suspect that there would be a remarkable degree of agreement about the need to incentivise people to work and encourage a culture in which society as a whole sees the point of work, and particularly that young people are educated with a vision and the desirability of a career.

Finally, I suspect that there would be considerable sympathy and recognition of the dependency culture that we have inadvertently allowed to develop, and out of which we need to enable society as a whole to grow. The question is: who bears the price of that change and in what time does it change? I agree entirely—I suspect that I have the mind of my colleagues on this—that we need to change the mind of society on how we address a number of things. This Bill, properly refined, could well contribute towards that. We also have to help to educate public opinion in the way in which it responds to vox pop surveys. I suspect that another thing on which people would agree—we might find a high degree of popular agreement—is that in the provision for children in their homes, their education, and the stability of their family lives lie the best possible foundation for the future. If you ask people that question rather than some others that get knee-jerk reactions, I suspect that we would find much greater unanimity in the country about what we are trying to achieve. I suggest caution on having too easy a reliance on popular opinion polls.

[Lord Brooke of Sutton Mandeville]

This will be not a Second Reading speech but a Second Reading remark, I hope said quickly enough to save my noble friend the Whip getting up gently to rebuke me. It would not have been relevant on the previous amendment but it is on this one.

The noble Lord, Lord Best—I almost called him my noble friend—indicated that homelessness was already on the rise. This debate is about homelessness as much as it is about fairness to children, and will be used as a quarry for homelessness policy in the future. Homelessness can still occur under this amendment in the future where the previous amendment sought to prevent it.

I shall make a counterintuitive comment. For 24 years I represented in the other place what was almost certainly the most poverty-stricken Conservative seat in the country by the proportions of standard household criteria. A lot of my homeless constituents were moved from hotel to hotel, frequently outside my constituency, and often from constituency to constituency. I do not recall anyone talking before about this diaspora but there is no policy, no rule and no mutual convention as to who their MP is as they move to different places. If MPs are not agreed about who their MP is, the poor homeless family cannot be expected to know. In the process, beyond the price their children pay educationally and socially by moving, the whole family pays a democratic price in not knowing who represents them. Believe me, as a former inner-city MP, I know that they stand in considerable need of representation. As a London Member, the present Secretary of State can almost certainly recognise this problem but I reward my Whip’s silence by saying that I am in favour of the cap.

[Lord McKenzie of Luton]

My Lords, this is an important amendment that we can wholeheartedly support. I pay tribute to the right reverend Prelate for his leadership and support for this proposition that has come from many quarters, especially the faith communities. Far from being out of touch, we know that it is the faith communities that so often reach the most disadvantaged people and that statutory services, for all the want of trying, simply cannot reach them.

The debate is fundamentally about fairness. I do not propose to repeat or answer all the points that have been raised. That is the Minister’s job but I agree with the noble Lord, Lord Kirkwood, that if this were about undermining universal credit we would not support it. That is not what it is about; it is a completely separate issue. It has become very confused in the debates we have had both before and now.

I shall speak a little about the dependency culture issue. As I said before, I thought that universal credit was the mechanism to encourage people into work, into the labour market, and to make it clear that being in work paid. That was the key government policy. If that is not sufficient and if it is a deficient policy that needs another component, as said by my noble friend Lady Sherlock, perhaps the Minister can explain that. If this is to drive everyone who is caught by the cap into employment, how does the Minister deal with the point that fewer than half the people on the updated analysis of those who will be caught by it are, on the Government’s own assessment, not required to work, not fit for work or have responsibilities for young children that place them outside the properly constructed category of those who should be expected to work and not rely on benefits? Does the Minister say that somehow the broad policy and all the assessments that have been put in place as a result of universal credit have to be torn up and rewritten for this specific category of 75,000 households? If so, perhaps he can tell us precisely why.

18:30

The new impact assessment, which we received just a few hours before this sitting, sets out the choices people must make: work more hours, even though most of them are deemed not fit for work; reduce their non-rent expenditure; or reduce their rent expenditure. We have just debated how, in large measure, reducing rent expenditure is not an easy option or an option at all for most people. What about reducing non-rent expenditure and what does that imply? Does the Minister accept that that concept means spending less on children too? As the new impact assessment identifies, the number of children to be affected by the cap is 220,000 by 2013-14. A third of those affected will lose £100 a week or more, so can the Minister tell us what sort of items he thinks can be excluded from the family budget to save even the average of £83 a month? Would he accept that, particularly as the cap will bite hardest on large families, children will be affected and caught up by that? What is his understanding of how these families affected by the cap spend their income? Where does he see the scope for this massive saving that is needed if this cap proceeds as is recommended? Removing child benefit from the cap would at least preserve a stream of funding for families and a source that is supposed to be focused on the needs of children.

As the right reverend Prelate has explained, this amendment would not remove all the savings that the Government wish to make from the cap. It does not fatally undermine the thrust of the Government’s argument, whether one subscribes to it or not, but it would provide some protection for children who are most affected by this measure. It would introduce greater fairness in the construction of the cap. It is not in conflict with a range of other amendments that we have yet to consider, but it will be supported with enthusiasm both by the Benches behind me and by my colleagues on the Front Bench.

[Lord Freud]

My Lords, the right reverend Prelate the Bishop of Ripon and Leeds made the point that the job of a member of the church is to look after children in need, but one needs to ask the question about children in need at a slightly different level. For instance, if we leave families with rents that they could never afford in work, what does that do for the children? What does it do for the children in those families when there is no working role model in them? We know what happens to those children. What does it mean to leave them in workless families given the much higher level of poverty that we know exists in them? What does it mean for the generational worklessness that we see in those families? The question that, from a religious point of view, you need to come from is much wider—what is the best thing for those families?—rather than looking at it from a narrow financial basis.

Let me supply the figures because they were just slightly misquoted. We estimate that the savings generated by the cap will be £120 million in 2013-14 and £130 million in subsequent years. I think I heard £113 million. Putting those figures to one side for the moment, the reality is that the savings on this measure are not the core point. We are trying to change behaviours. If we do not cut the benefit bill by the amount we have in the estimate, that is a good thing because we will have got people into work and changed their behaviour.

This measure does something different: it cuts the number of families affected by the cap from 67,000 to about 40,000. That is the real cost of this amendment. It takes the pressure away from those 20,000 families that will go on in the same way that they have been going, and we will not have the behavioural change that we want and need from those families.

[Lord McKenzie of Luton]

The Minister is not dealing with the point. On the latest updated assessment, something like a quarter of the people who will be caught by this cap are on employment and support allowance. Depending on which category they are in, it requires people to move closer to the labour market, but does not require them to work. Why are the Government using this leverage on people in that group? Thirty-eight per cent of them are on income support, which is again a category of people who, for all the reasons we have debated, are not required to work. For people on JSA, you could see this might be an extra spur, but why does this measure cover those people who, under the Government’s assessment and on the basis on which they are going to construct universal credit, are not required to work?

[Lord Freud]

My Lords, on the figures in that new impact assessment, the majority of people have full or partial conditionality in ESA, given the proportions of ESA. Most people on ESA in the support group will, in practice, be on DLA and therefore will not be affected by this cap, so we can look at the majority looking for work. Even if there is no formal conditionality, the message to families is that work is a solution in this circumstance. I need to remind the House that the coalition Government firmly believe that there has to be a limit on the overall level of benefit it is appropriate for the state to provide for those who are not working. Let me be absolutely clear about the structure because this is a point raised by several noble Lords. The noble Baroness, Lady Corston, made the point most emphatically. The structure of this does not take money out of the carer’s pocket because we are not stopping payments of child benefits. Those families will still continue to obtain their child benefit, and there is an offset in the other benefits to get the cap to work. It will not work through child benefit. I know all money is fungible and households will operate within the same overall money, but there is no need for this concern that the money is taken away from the carer directly.

[Baroness Farrington of Ribbleton]

My Lords, will the Minister just give a categorical assurance to the House that those affected by this government proposal, who the Government assess as not able to work at that time, will keep their child benefit? Then we can all go home.

[Lord Freud]

My Lords, I am obviously not going to make that commitment because that is not how this cap is structured. It is based on the premise that payment at unrestricted rates ultimately serves nobody. It does not serve those who are paying the taxes to fund it, and it does not help those who are trapped in dependence by providing little or no incentive to move off the benefit.

Let me answer a point about how it works that was raised by the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie. They asked why we need it when we have universal credit. Universal credit is designed to provide an incentive to get people back into work or to reduce the disincentive. The cap does two things. While UC is the carrot, the cap is the stick, but it also provides the message to people much more widely than the families that are affected that a life dependent on benefits is not the way to go. There are other solutions, work being the main one.

It is vital that the benefits system is seen to be fair. We do not believe that households getting out-of-work benefits should receive a greater income from benefits than the average weekly net wage for working households. That is why the cap is set at £26,000 a year net or £35,000 a year gross. Even there, significant amounts of financial assistance will be available from the state.

Like other welfare benefits, child benefit is provided by the state and funded by taxpayers. Therefore, we believe it is right that it is taken into account along with other state benefits when applying the cap. The effect of excluding child benefit would simply be that families on benefit would have an income higher than average earnings. There would be no upper limit to the amount of benefit a household could receive. Clearly, that would depend on the number of children. My noble friend Lord Newton hit on the head the point of why one would want to tell people that that is not a solution to a life on dependency.

We are trying to achieve a simple rule for the level of the cap and a simple set of exemptions. We have already recognised that there are some households for whom it would not be appropriate to restrict the amount of benefit that they can receive; that is, households in receipt of DLA, constant attendance allowance and PIP when it is introduced. We will also exempt war widows and widowers. These households do not need an exemption for child benefit as well.

For other households, work should be the way out of the cap. We have said that we will exempt households entitled to working tax credit and that there will be a similar exemption for working households on universal credit. This will encourage people who could be capped to seek work, reinforcing the improved incentives that will come with universal credit. Excluding child benefit will only dilute our aim that being in work, even part time, must always pay better than relying on benefits alone.

I want to pick up the important issue of kinship carers raised by the noble and learned Baroness, Lady Butler-Sloss. In Committee, I made clear that I am looking at kinship carers in the round. In practice, the numbers affected are pretty small. In dealing with those issues, clearly, we need to get it right in regulations. The most effective point made by kinship carers, at least where I am concerned, is that when you take on a child or children, there is quite a period—a year is suggested—during which a big adjustment factor goes on because many children being taken on are quite troubled by the time they are transferred. I am very conscious of that issue, which needs addressing generally. That is what we propose to do.

When we introduce the cap we intend to use a method which looks at median earned income after tax and national insurance for all working families. We believe that this will strike the right balance between providing support for families, promoting fairness between those out of work on benefits and those in work, and ensuring clear financial incentives to work. In summary, I repeat the fact that this is the kind of figure that the general public see as appropriate.

18:45

My noble friend Lady Tyler raised family breakdown and splitting up. One of the key drivers of family breakdown is long-term unemployment, which puts considerable pressure on vulnerable families. One of the most supportive things we can do for these families is to make sure that work always pays and that the transition to work is as smooth as possible.

In this debate, we have talked a lot about children. I want to re-emphasise the point that children already have their life chances and opportunities damaged as a result of living in households where no one has worked for years and where no one considers work to be an option. Over the years, we have paid these families large and increasing amounts of benefit with the result that they have become dependent on the state to support their children and see no advantage to going out to work and supporting their children themselves. The cap, and the assistance to find work we will give households in the year leading up to the cap, will help towards freeing people from this benefit trap and giving their children a positive example. We will spend the next year putting an enormous amount of effort into helping these families move on and move out of dependency.

I know that the right reverend Prelate feels strongly on this issue but I would urge him to withdraw his amendment.

[The Lord Bishop of Ripon and Leeds]

My Lords, I am grateful to all those who have contributed to this debate and to the Minister for his comments. This amendment is not simply or even primarily concerned with generations of workless people. It will affect a significant number of people who have been put out of work in recent years, months and days. At times, it almost sounded as if the Minister thought that it was a bad thing to bring people out of poverty. But we are talking about children, and child benefit remains one of the great anchors, as the noble Lord, Lord Newton, reminded us, of the whole way in which we work with children and families.

I do not think we have heard any real response to the basic point that the Bill means that a childless couple has the same cap as a couple with a number of children. It does not seem logical to say that we have to put a lot more pressure on families with children than on those who do not have any. I was grateful to the noble Lord, Lord Greaves, in particular, and others, for speaking about the importance of universalism in terms of child benefit. We have ranged widely during these discussions but this matter is about children. As the noble and learned Baroness, Lady Butler-Sloss, and the noble Baroness, Lady Corston, said, this amendment is about children and the women and carers who care for those children. It is those who will be helped if noble Lords are prepared to back this amendment.

On that basis, I appeal to noble Lords to support the amendment or, if they cannot do that, at least to abstain. It would help children and I believe that it is right to test the opinion of the House.

18:49

Division 2

Ayes: 252

---

Labour: 170
Crossbench: 37
Liberal Democrat: 25
Bishops: 5
Democratic Unionist Party: 3
Plaid Cymru: 2
Independent: 2
Ulster Unionist Party: 1

Noes: 237

---

Conservative: 151
Crossbench: 41
Liberal Democrat: 38
Ulster Unionist Party: 2
UK Independence Party: 1
Independent: 1

19:03

Amendment 59A

Moved by

[Baroness Flather]

59A: Clause 94, page 63, line 41, at end insert—
“(ea) make provision so that, prior to the application of the benefit cap, should the relevant amount include an award of universal credit under section 10(1) then the amount included for—(i) the third child shall be reduced to 75 per cent; and(ii) the fourth child shall be reduced to 50 per cent,of that included for the first child;”

[Baroness Flather]

My Lords, this is a very strange juxtaposition of amendments, because your Lordships have just had your heartstrings pulled at over children and here is my amendment, which suggests that there should be fewer benefits for children for various reasons that I shall try to explain.

I should like to make two apologies, with qualifications. The first is to the noble Lord McKenzie of Luton, who said that he did not want to hear about this matter again in this Chamber. Well, I am sorry, but he will have to. I would also ask him, with respect, to look at what is going on in Luton, since it forms part of his territorial designation. There are a lot of things to be looked at in Luton and I hope that he will do so.

My other apology is to Pakistanis and Bangladeshis, because I mentioned only them in my Second Reading speech. I did not mention many white families or many single mothers; nor did I mention the Somalis. There are people in this country who have many children, and it is innocent to think that they would keep having those children were they not helped by the benefits system. They might not stop having children, but they would certainly not have as many if they were not sure of getting the money to look after them. It is extremely important that children are brought into this world because they are wanted and not because it is convenient, because you get a bigger house and because you get more money, which it is absolute nonsense to think is not happening. Your Lordships are kind but also very innocent if you do not know what is going on in this country.

One of the reasons why I moved this amendment is the support I have received from ordinary working people. I have had so much mail—e-mails and letters—asking me to suggest that benefits should stop after two children, not after the fourth. They say, “We cannot afford to have more than two children; we are working and can just about manage. We care for our children, we care about their education, we care about their future and it upsets us greatly to see others having seven or eight. Would these people continue to have so many children if the state did not provide for them?”. It is a matter that should be seriously considered. The cap will take care of some of that, and I am pleased to say that it is time that it did so. I know there are many noble Lords, especially on the opposition Benches, who are against the cap and believe that we are moving in the wrong direction, but we have made this a country of people who rely on handouts and it is about time we stopped.

I was very pleased to hear the noble Lord, Lord Freud, talk about role models. There are no role models in families where there are six or seven children. There is no one who has worked and no one is expected to work. A lot of those parents do not even know which school their children go to; they do not know what they are doing at school. We have large numbers of young unskilled people, especially in places such as Yorkshire and Lancashire, and especially the boys. It is the boys we need to worry about; they need to be skilled and to attend courses that will teach them basic skills such as plumbing, electrics or carpentry; they must become skilled at something. They are neither educated nor skilled and they have no future. They will not work, their children will not work either, and it is very important that the cycle is broken at some stage. If we are to listen to people in this country, the sooner this happens the better it will be. Working people are fed up with the way some people manage to live on benefits.

In my Second Reading speech, I pointed to one other area that is not in this amendment: people being given money to pay for their drugs. That is disastrous. If you give money to people for drugs, why would they want to work? They are disabled because they use drugs, but they get money to buy their drugs, so why would they ever want to get off them and return to work? We are talking about getting people into work and I think we should look carefully at every area.

There is also a huge rise in polygamy in some Pakistani families. I was interviewed about this amendment on the radio and during the broadcast one man said that he had three wives. The interviewer asked him how he managed and he said, “On a rota basis”. I am afraid that a lot of men have more than one wife. The latest fashion is to go to southern Spain, cross over to Morocco and bring back girls. They marry according to Sharia law and the wives live as single mothers in homes of their own. We need to look at what we are doing to this country. How do they get away with it? They have three or four wives and they presumably visit them—as this man said—on a rota basis. This should not be happening. We do not need this kind of behaviour in this country.

Some people seem to think they have no choice when having children: that they just have them. Children are a choice and a responsibility. They need to be looked after and they need to be brought up. Not only that, there has to be fairness between those who work and those who live off taxes. This drastic situation calls for action. I hope the Government will take action and discourage people from having large families unless they are in a position to look after them.

I was privileged to receive a letter from the Prime Minister two days ago. I wish it had arrived earlier. It states that this issue will be looked at under the provisions of the cap. I knew the cap was coming but I did not know exactly what was likely to happen. I wrote to the Secretary of State for Work and Pensions but he did not reply. However, I sent a copy to the Prime Minister and he did reply—I felt very privileged by that—and he has put my mind at rest about the issues that are important to the people of this country.

The sooner we tackle this kind of disadvantage—and it is a disadvantage for these children—the better. If you have five children, and even if you get benefits you do not look after them and do not give them education, they are disadvantaged all the way through and they will never work.

I leave your Lordships with two comments that you might like to think about. First, the recent British social attitudes survey is very much against the benefits system. There has never been so much disquiet about the benefits system as there is this time. Secondly, the last time the children being born in this country were counted, 50 per cent were born to mothers born overseas. We need to think about that very seriously if we do not want this country to change totally in its attitudes. I beg to move.

[Baroness Howe of Idlicote]

My Lords, we are back again to groupings and, like the noble Lord, Lord Newton, I am very much in favour of them. Sadly, in this case it has meant that my amendment has been somewhat delayed. If it had been in the first group of amendments it would have been well and truly dealt with by now. However, I am pleased now to be in a group.

I listened with interest to what my noble friend Lady Flather has said and, although I cannot say that my sympathies are in the same direction, nevertheless it is her view that if you are paid less for the more children you have that will lead to a happier lifestyle. She may be right, but I do not agree with that approach.

[Baroness Flather]

I did not say that. I said that if people know that they will not continuously keep receiving benefits they might decide not to have so many children, and that if the benefit cap was to come, it would not come as a retrospective.

19:15

[Baroness Howe of Idlicote]

I am grateful for being put right. However, I still have differences of opinion with my noble friend Lady Flather.

However, my amendment was very much part, alas, of all the other amendments that have been debated. I have listened very carefully and, having had the benefit of being in the Chamber the entire time, I have been fully appraised before deciding which amendment to support and which not. The general impression that I have got from these debates is that there is a great feeling about families and about doing the best for children whatever household they are in. It is for that reason that I was happy to table the amendment for London—London Councils kindly provided me with the material—because London is such an obvious area where you have extremes of very expensive accommodation and fairly poor areas where it is not as easy to survive if you are living on benefits and are among some of the more disadvantaged and disabled.

All three of my amendments relate to the same issue which is why it is better to address them all together. If the Government want a benefit cap that fairly reflects average earnings, it would be logical and just for the cap to reflect geographical variations, not only in wages but in other important living costs such as those related to accommodation and childcare. The amendments would require the Secretary of State to take account of these variations: the average weekly cost of private rented accommodation, the average weekly cost of childcare and average weekly earnings.

By way of background, the most recent evidence regarding these factors shows that, as regards accommodation, London has the highest average private sector rents in the country at £222 per week. That is more than 36 per cent higher than the national average. Childcare in London and the south-east is at least 20 per cent higher than the national average. For example, a nursery place for a child costs an average of £113 per week in London and the south-east compared with the national average of £94 per week. Earnings in London are £31,935 compared with £26,133, a 20 per cent difference.

What would be the impact of the Government’s proposals on the benefit cap? Independent research by Navigant Consulting, commissioned by London Councils—I should emphasise that London Councils is a cross-party organisation speaking on behalf of all London boroughs and the City of London—has estimated that the impact on London of the proposed universal credit cap would be as follows. A total of 73,000 workless households would experience a shortfall in their benefits against living and housing costs. In aggregate, the cap would produce a loss of £8.2 million per week for workless households and more than £427 million per annum across London. There would be a significant impact on families with children and on larger families in particular. While less than 3 per cent of households without children will find their accommodation unaffordable, that rises to more than 30 per cent for families with children. The average weekly loss across London for households affected by the cap is £105.

The majority of the London boroughs are already reporting that a significant number of households are having to move home as a result of changes to housing benefit caps. That has led to an increase in the number of homeless households placed by boroughs in bed-and-breakfast temporary accommodation. The use of temporary accommodation recently reached a three-year high after 25 quarters of reduction since 2003. Now almost 1,500 families are living in bed-and-breakfast accommodation in London. That effect will be replicated elsewhere and will undermine efforts to retain and build sustainable mixed communities, a point that has been made very effectively by others in other debates. There is a genuine concern that reductions in benefit entitlements for workless households may lead to an increase in child poverty and safeguarding issues. With children and young people's services already stretched, the fear is that vulnerable children might slip through the net.

The Government have argued that they need to cap household benefit entitlement in order to reduce the £20 billion deficit bill and to return fairness to the welfare state. Of course, both of those objectives are laudable and entirely understandable. However, simply fixing a national limit and attempting to apply it across all households, regardless of variation in individual circumstances, is not only unfair but it is also likely to usher in a host of unintended consequences. We have heard about many of them in previous debates so I shall not go into the detail of those.

The cost of life's essentials varies from place to place and family to family. One does not expect to pay the same to rent a two-bedroomed home as a four-bedroomed home. One does not expect to pay the same to rent a home in the south-east as one might in the north-west. If the welfare system is genuinely to support people and households, surely it is only fair that any support matches, in so far as it is possible, the scale of the challenges facing households, which, so often, through no fault of their own, find themselves in high-cost areas. I hope that the Government will agree to these very reasonable amendments.

I would like to stress that I hope that the Minister will agree to meet London Councils and go through some of its real concerns about this issue. That would reflect on whether I might wish to bring this matter back at Third Reading

[Baroness Tyler of Enfield]

My Lords, I would like to add some of my concerns about the impact of the benefit cap in London. The noble Baroness, Lady Howe of Idlicote, has set out very clearly and eloquently all the facts and figures and I certainly do not wish to repeat them. I shall pick out one which is particularly relevant to me.

The level of rents in London means that families with just two children will be subject to the cap in many parts of inner London and also in some parts of outer London, including Newham, Haringey, where I live, and Hounslow. I am concerned about the impact of this on mixed communities, or looking at it the other way, one might refer to social segregation as poorer families are moved out of expensive areas. This is a very particular issue in London in terms of social cohesion. It also puts pressure on public services. I think that London Boroughs is right to be worried. The migration and concentrations of workless households in some areas will potentially have significant implications for the full range of local authority services. Boroughs with an inward migration of households are likely to face significantly increased service pressures very quickly and with very little time to plan for them in relation to unemployment, poverty, housing and so on. On the other side of the coin, boroughs that experience reduced demand for such services—again very quickly and without time for planning to adjust—will certainly face challenges and costs in adapting to different, if reduced, demands.

Families, particularly larger families, will be very much affected. In London it will also affect families with two children. I share the concerns that have already been voiced by the noble Baroness opposite. I also hope that there will be an opportunity to meet the Minister and London Councils to discuss further the sort of measures that could be put in place to mitigate some of the harsher implications that I have just set out.

[Lord McKenzie of Luton]

My Lords, I start with the amendments of the noble Baroness, Lady Flather. I find them confused on a number of levels. I should explain that during Second Reading—the noble Baroness referred to my comments about not wishing to hear what she said again—she said that Pakistani and Bangladeshi communities have lots of children because of the money. I objected to that and I thought I objected in about as gentle a way as one can, without being rude, and that is consistent with how we do business in this House.

The noble Baroness has just made reference to Luton and supposed problems there. I know Luton well; I live there. One of the strengths of Luton is its great diversity. We have a range of communities and—I almost called him my noble friend—the noble Lord, Lord Hussain, would attest to that as well. Having diversity brings challenges but also joy and I believe that is a great strength of Luton. I do not believe the proposition that people in any community, particularly the Pakistani and Bangladeshi communities, have lots of children because they believe it will be beneficial in terms of child benefit. If people had children only on the basis of a cost benefit analysis, I suppose there would be no children at all, given all the challenges that come with them. My experience of communities in Luton, particularly the Bangladeshi, Pakistani and Indian community, is that there is great aspiration for their children. If you sit down with people, you hear them speak with pride about their children just having qualified as a doctor, or a lawyer, or even some as an accountant, which brings particular pleasure. I honestly do not see the picture painted by the noble Baroness.

Technically, it seems to me that the amendment that she moved is flawed. As I understand it, the “relevant amount” is that which is based on estimated average earnings and effectively sets the level of the cap. It does not, therefore, specifically include amounts in respect of children. If it were based on income, rather than earnings—depending on the definitions—of course it would. It could, for example, involve child benefit, but this is not how the Government wish to proceed and it is not how they have constructed the cap.

Universal credit will be, as we have discussed, an in-and-out-of-work benefit and we still do not know what the cut-off point will be for those treated as in work. Perhaps the Minister can give us an update on that. Presumably the calculation of earnings would not include any amount of universal credit. If the noble Baroness is arguing that an award of universal credit should involve reduced amounts for third and fourth children, in terms of the cap, of course, that would clearly lessen its impact. However, the family cap of £26,000 applies regardless of the number of children in the household, so larger families are likely to be particularly affected, as we have just discussed. Estimates are that 80 per cent of the households likely to be affected by the cap will include three or more children. We know from the DWP impact assessment—certainly the original one—that children from BME groups are more likely to be disproportionately hit by the cap. It would seem that what the noble Baroness intends would drive these families further into poverty and that is not something that we could countenance or support in any way.

The noble Baroness, Lady Howe, introduced some interesting amendments. Certainly the issue of the impact on London, particularly of high rents, featured in our earlier discussion and that is recognised. The broader issue of whether one could have benefits constructed on a regional basis is a very wide debate—we would be unwise to tick that through tonight—although we should recognise that it is done, for example in local housing allowances done on a local basis, structured by reference to local market areas.

19:30

I repeat that we support the cap. We support the £26,000 level, but the way it operates brings some perverse consequences, and high rent levels in London are a particular driver of some of the unfortunate outcomes. I think that I would just hang on to the point, to which the Minister has not given us an answer, that if this is about changing behaviours, what is it that makes proportionately more people in London—this is what the data show—in need of changing behaviours than people in other parts of the country? We know that is not to do with changing behaviours; it is about rent levels and how those impacts on the cap. The noble Baroness, Lady Howe, has advanced some interesting ideas and arguments, but before we embark more generally on a regional benefits system, we need a lot of discussion.

[Lord Freud]

My Lords, the effects of Amendments 59A and 61A would be to reduce the level of universal credit awarded in respect of children in larger families who would be subject to the benefit cap. Under this amendment, families who would not be subject to the cap would be able to receive the full amount of the child element of universal credit for their third child and any subsequent children. We recognise that families with more children do require more support and we believe that it is right that this is recognised in universal credit. However, as I have said, we also believe that there should be a limit to the overall amount of financial support that households on out-of-work benefits can expect to receive in welfare payments. That is why we intend introducing the benefit cap. We believe that this is the most appropriate way to address this issue as in future people will have to understand that there is a limit to the amount of benefit the state can afford to pay them.

I move now to Amendments 61ZB, 61ZC and 61ZD. These would require us to replace the national cap based on median earned income earnings with regional caps based on the local average weekly costs of private rented accommodation, the local average weekly cost of childcare and the local average weekly earnings. Given that we will not take childcare payments into account, this part of the amendment is obviously unnecessary. More generally, while the Chancellor may be asking the independent pay review bodies to consider how public sector pay can be made more responsive to local labour markets, we do not have a regionalised benefits system and it would not make sense to regionalise the cap without that. In addition, the approach suggested by the noble Baroness would be extremely expensive to administer, add considerable complexity to the benefits system and would be a recipe for confusion for claimants and staff.

On my noble friend Lady Tyler’s point that the cap disadvantages people living in London, given that many working age households with adults in work cannot afford to live in central London—or, indeed, central-ish London—it is not right for the taxpayer to subsidise households on out-of-work benefits who do so. In answer to the point raised by both my noble friend Lady Tyler and the noble Baroness, Lady Howe, on whether I would see London Councils, I would be happy to see London Councils if it asks to see me—if it wants to see me—although it would probably be best to meet in the context of discussing the regulations that will implement this measure.

Both these sets of amendments are about how we set the maximum amount available to people. We believe our approach is fair and simple. When we introduce the cap, we intend to use a method that, by looking at median earned income after tax and national insurance for all working families, will strike the right balance between providing support for families—promoting fairness between those out of work on benefits and those in work—and ensuring clear financial incentives to work.

Before I ask the noble Baroness to withdraw her amendment, I would like to make it clear that the Government see Amendment 61A as directly consequential on Amendment 59A and Amendments 61ZC and 61ZD as directly consequential on Amendment 61ZB. So, if we divide on Amendment 59A, a further Division would be required should the noble Baroness wish to press Amendments 61ZB, 61ZC or 61ZD to a vote. I ask the noble Baroness to withdraw her amendment.

[Baroness Flather]

My Lords, I will just say a few words about what has been said about my amendment. I was very surprised to hear the noble Lord, Lord McKenzie of Luton, say that the Pakistanis, Bangladeshis and Indians all have the same aspirations. I am sorry to say that I do not agree with that. I am afraid the aspirations of Indians are very high, but the aspirations of Bangladeshis and Pakistanis do not come up to the same level, as they do not have as much interest in education as in Indian communities. The Indian communities are mostly in work—more in work than any other community except for the Poles. A survey by Channel 4 said that the highest number of taxpayers of the immigrant communities were the Indians and the Poles. I would like there to be a little more consideration of the fact that Pakistani and Bangladeshi communities in Tower Hamlets, in Yorkshire and in Lancashire are not doing well. Whatever way could be found to help them to do well would be a good thing.

[Lord McKenzie of Luton]

: My Lords, I do not wish to be unkind, but we do not have to subject ourselves to this nonsense, do we? This is absolutely outrageous.

[Baroness Flather]

My Lords, forgive me, but I thought I was a Peer here, and being a Peer means being equal.

Amendment 59A withdrawn.

Consideration on Report adjourned until not before 8.38 pm.

Aviation: UK Civil Aviation

Monday 23rd January 2012 Lords Chamber

Question for Short Debate

19:38

Asked By

[Baroness Gibson of Market Rasen]

To ask Her Majesty’s Government what are their plans for the future of the United Kingdom civil aviation industry.

[Baroness Gibson of Market Rasen]

My Lords, I am very pleased to introduce this short debate this evening on this important and indeed timely topic. I thank the Airport Operators Association for its assistance with my speech.

[Lord De Mauley]

My Lords, will noble Lords leave the Chamber quietly so the noble Baroness can make her speech?

[Baroness Gibson of Market Rasen]

My Lords, in my capacity as a council member of the Air League, in my work with Youth in Aviation, as president of an air training corps, and as a member of the Air Cadet Council, I take a close interest in all matters relating to aviation. The civil aviation industry in the UK employs around a million people—352,000 directly, a further 344,000 people indirectly, and many more in its vital role in inbound tourism. It also contributes £50 billion to GDP and more than £8 billion to the Exchequer, according to a report published last year by Oxford Economics.

We are world leaders in designing and building aero-engines and airframes, in the design, construction and operation of airports, and in the safe and efficient management of scarce air space. Aviation is vital to any country and to any economy. However, it is especially vital to the United Kingdom for two clear reasons. First, and most obviously, it is because we are an island. It is the most efficient and sometimes the only way in which goods and people can get to and from the United Kingdom. Secondly, it is because we are and have been for many centuries a trading nation; a full 55 per cent of all our exports beyond Europe are carried by aeroplane, and we are all aware of the importance that the ever growing BRIC economies will have in the recovery of our nation.

All the nations and regions of the UK rely on good air links to connect them to the emerging world markets. Inward investors also need good air links not just to fly in essential parts and equipment but to ensure that their senior managers, executives and technicians have ready access to their offices and plants in the UK. Access to an airport with good global connections is vital, and there is another reason why we need to maintain and expand our aviation connectivity with the world. Tourism is already an important industry for the UK, with over 2.5 million jobs and £115 billion of GDP dependent on it. Shortly after he came to power, the Prime Minister expressed as one of his ambitions to make the UK one of the top five tourist destinations in the world. Given our heritage, our global positioning and the quality and quantity of the visitor attractions that we have to offer, this should not be an overambitious target. Indeed, the Tourism Alliance believes strongly that there is a need for aviation capacity to be expanded. It believes that that would support the goals that the Government have set for tourism growth, which should include consideration of current capacity, mid-term growth and an infrastructure for delivering long-term capacity.

Two big issues are preventing the aviation industry from playing its full part in helping to expand the economy and create more jobs. The first of these is taxation. I understand that the UK already has the highest level of aviation taxes in the world. The government standard or top rate of air passenger duty is up to 8.5 times the EU average, and the Chancellor has said that he proposes to raise it yet again by twice the rate of inflation during his Budget in March. This is at a time when aviation has just entered the EU Emissions Trading Scheme, which will add another layer of cost and complexity.

I urge the Government to think again about this tax rise. In the short term, it may raise extra revenue for the Treasury, but in the medium and long terms it will scare away airlines and routes and damage employment prospects for thousands of people. Other EU countries are lowering or scrapping their domestic aviation taxes as the EU Emissions Trading Scheme is phased in, and the Government should seriously consider doing the same.

The other big issue that is having a highly detrimental effect on UK civil aviation and preventing it playing its full role in boosting the economy and creating jobs is capacity. The whole of the UK and its regions rely on good air links to attract inward investment to facilitate the efficient deployment of key personnel, to open up access to new markets and to facilitate the export of goods. Airports are privately funded; they are looking not for government money, just for government support and permission to grow as and when extra capacity is required.

We are all aware that it is in the south-east of England that the problem is most acute. As European airports expand and plan for four, five or even six runways, Heathrow—currently our only hub airport—is stuck on just two. All three main parties have set their faces against additional hub runway capacity, but it is up to the Government to come up with a viable solution. There are a number of schemes requiring consideration relating to Heathrow, Gatwick and Stansted, through to a brand new airport in the Thames Estuary or, indeed, elsewhere. There are pros and cons associated with every solution and tonight I do not have a firm proposal to make. However, it is the job of the Government to examine all these options and come up with a speedy solution. The alternative will be that Schiphol becomes the UK’s hub airport, just as Europort became our capital’s seaport by default. This would result in the loss of tens of thousands of jobs and many billions of pounds of revenue, and all with no benefits to the environment.

Currently, flights and emissions are being displaced rather than obviated. Indeed, as people take connecting flights to Europe to avoid air passenger duty, the impact on the environment can be considerably greater. The Government need to take the lead on this issue, which is why the announcement last week that they will consult on the options for the creation of a new hub airport is welcome. A rapid and firm decision is needed that will ensure that the UK has a world-class hub airport fit for the 21st century.

We must support the UK’s aviation sector, in which we are world class and which employs so many people, contributing so much not just in GDP and tax but in what it enables other key sectors of the economy to do. Finally, I ask the Government again not to bring in further swingeing increases in air passenger duty and make the highest aviation taxes in the world even higher. Failure to address these issues—taxes that are too high and airport capacity that is too low—will send a sad signal to the world that we are not truly open for business.

19:47

[Baroness McIntosh of Hudnall]

I congratulate my noble friend Lady Gibson on introducing this debate. She is a very fine advocate for what we must all agree is a very important industry. That is about as far as she and I are going to agree in the course of this debate. Before I come to my rather more disobliging points, I recognise that a lot of what she says about the challenges facing the aviation industry and the necessity for government to be clear about its policies is absolutely right.

I have no expertise in aviation whatever, but I have some experience of the ups and downs of aviation policy, having serially harassed my own Government on the subject of airport capacity for a number of years, chiefly on environmental grounds, which my noble friend touched on, about which there is a great deal to say—but not by me in the little time that we have available this evening. I want to make just one point, or to ask one question of the Minister.

Despite welcome assurances from the Government early in their life that there would be no further runways at Heathrow, Gatwick or Stansted—and I declare an interest as a long-term supporter of the Stop Stansted Expansion campaign—runway capacity is still a major live issue, as my noble friend said, and an important matter for the civil aviation industry. The credibility that is suddenly now being accorded to the proposal for a new airport in the Thames Estuary is interesting for a number of reasons. Although there are many attractions to a solution to our capacity problems that envisages most approaches and take-offs being over water, I am tempted to say to supporters of that scheme, “Good luck with that one, but if you think that the human population of Heathrow was a problem, try the birdlife of Kent”.

My reason for being intrigued by the timing of this latest proposition to build a whole new airport comes from my experience that Governments of all persuasions have, I am afraid, a tendency to speak with forked tongue on the matter of airport expansion. I mean no offence to present incumbents when I say that. I am not a natural conspiracy theorist, but I can see the possibility, once the estuary plan has once again bitten the dust, as I fear it will—or sunk under the waves—of whoever is then in power shrugging a collective governmental shoulder and saying, “Oh well, then, we’ll have to go back to Stansted, or Heathrow, or Gatwick, or maybe all three”. The problem is that if I can see this, so can the airport operators—notably BAA, which has spent a great deal of time and money in its so far unsuccessful efforts to get new runways at Heathrow and Stansted. In doing so, it has effectively blighted whole communities by buying up land and properties, most of which it retains, despite, in the case of Stansted, being under instruction from the Competition Commission to sell the airport.

My question to the Minister is this: when the Government say no more runways at Heathrow and Stansted, what do they mean: no more for 30 years, for 10 years, until the end of this Parliament, or just until we change our minds? I am sure the Minister would accept that uncertainty about this question still hangs over communities in these areas, which are grateful for the reprieve they have had but nervous that it may only be temporary. I would be very grateful if the Minister could put them out of their misery.

19:51

[Baroness Kramer]

My Lords, my noble friend Lord Bradshaw had hoped to speak on this issue and the House would have been very interested to hear him because he is clearly one of the leading experts in this field. I regret that I am only the understudy since he is unable to be here. I must also declare that I am a member of HACAN, the protest group that is made up primarily of residents but is now fairly international, which opposes further expansion at Heathrow and works closely with those of a similar view at both Stansted and Gatwick.

I am very pleased that the Government will be consulting, hopefully in the spring, on a sustainable framework for aviation, but it is absolutely crucial that green and environmental issues are at the forefront of that conversation. This House will be very aware that since 1990 the proportion of total UK carbon emissions from aviation has doubled and that we have serious climate change targets. Whether or not it is within the context of those targets or a broader context, climate change must surely be a real concern, and if we do not manage capacity in aviation as we look at those climate change issues, surely we make a mockery of being committed to the climate change problem at all. I stress that when we talk about airports, we are talking not just about carbon emissions from aviation itself but about the travel to and fro, which is overwhelmingly by car—and anyone who thinks that you can completely switch that in any circumstances to public transport has not looked at the behaviour of those who regularly use London’s current airports and who insist, when they have many bags, on using road services.

In reference to some of the comments that have been made on tax, surely now of all times, when we are all under pressure, aviation ought to be carrying more of its own weight. The very favourable tax climate that aviation enjoys dates back to when it was a new industry. Those new industry tax breaks, given a generation ago, in essence remain with aviation today and are only gradually being countered. Like many others, I would much rather that we were not doing this on a per-passenger basis and I hope very much that the Government will achieve their goals in Europe of shifting to a per-plane basis and getting the tax associated with the emission levels for each plane. The very notion that we should be giving further tax breaks to an industry that is already paying less than other transport rivals strikes me as absolutely extraordinary.

Perhaps I can join some of those who see the estuary airport as something of an election ploy. I suspect that this project will bite the dust by the time we get to mid-May, but I will make a couple of comments on it because it addresses one of the issues raised: that of capacity. Even in their most aggressive forecasts, the Government are basically saying that 470 million passengers will be flying by 2050, but the estuary airport plans and similar raise that capacity to 700 million—way beyond even the most aggressive forecast. If you are looking at this from a climate change perspective and you want both to shift to rail and to eliminate unnecessary travel through the use of new technology, some would say that 380 million passengers per year is a much better target to work towards. We are looking at a lot of capacity around the UK, not at places such as Heathrow, but we are a country not simply a city, which I think people sometimes do not notice. As we look at putting in new capacity, here we are talking about rebalancing an economy that is looking to the north to rebuild its industry, jobs, prosperity and growth. Yet how can we look seriously at a mechanism that seeks to put all that additional capacity back down into the London area? I would argue that that is illogical.

I will not even talk about the price because no one, I think, is able to put a price on it yet, but we have issues of safety such as bird migration and the wreckage of the community that currently serves Heathrow and that is based around Ealing and Harlesden. All those people will be unemployed or will perhaps move to some new city out near the new airport. There are all those issues, as well as the environmental ones.

I realise that I am running up against my four minutes, so I simply say this: most of the problems that people have with aviation are to do with the fact that some airports, and Heathrow is one of them, are not passenger-friendly or very well run, and you cannot get through immigration. That is what drives everyone absolutely insane. The better operation of what we have and making innovations in aircraft—these are the things that would make a real difference.

19:56

[Lord Monks]

My Lords, I start by declaring an interest as president of the British Airline Pilots Association, which organises for about four out of five of Britain’s pilots. Of course, the debates about civil aviation are very much moving centre stage in many ways. We have heard different views from different corners of the House during this debate. I put myself on the side of those who say this industry is a success story for Britain, or it has been so far. It represents 2 per cent of GDP and something like half a million jobs directly and indirectly depend upon it. When it is not working properly, whether that is due to snow or Icelandic volcanic eruptions, you can see the effects on our national life. My question to the Minister is: what more can be done to recognise the importance of the industry?

We know about the capacity constraints, which my noble friend Lady Gibson referred to. I am afraid that those who are opposed to airport development have got to recognise that the demand for air travel is going to grow substantially over the next period. Capacity is going to grow either here or in Amsterdam or maybe Paris or Frankfurt. Those airports are gearing up for this growth and are no less environmentally conscious than we are—probably more so, particularly as far as Schiphol is concerned—so let us not think that they are polluters or carefree people who would besmirch the environment. It is very important, in this exercise that the Government have started, that we get a clear idea of the timetable for decisions soon. Whether they are in favour of expanding Heathrow, which I tend to favour, or building a new airport elsewhere, the key thing is that somebody has got to bite the bullet and take decisions.

The other point I would like to make briefly is concern about pilot fatigue. As the pressure for turnarounds and on planes and crews becomes greater as demand for air travel grows, airlines are putting pressure on some staff, particularly the pilots at present. As some of you will know, proposals from the European Aviation Safety Agency on pilots’ hours would relax the present UK standards, which are pretty strict and I think exemplary, and align us with American standards. Usually I am on the pro-European side of these arguments, but on this particular one I do not want to see any watering down of the standards that have applied in Britain rather well. Pilot fatigue is still a problem. You hear some horrific stories when talking to pilots, and it is important that we take this issue seriously. I am interested in the Government’s view on these EU proposals and how the EU can be persuaded to level up rather than down.

20:00

[Lord Soley]

My Lords, in congratulating my noble friend Lady Gibson on securing this important debate I want to move on to make a prediction, if I may, which is that in due course the Government will reverse their position on airport expansion in the south-east. It is a matter of time. I do not expect the current Minister to do it today because he will stick rigidly to the government line, which I have discussed with him a number of times, but increasingly the Government are concerned about it. They ought to have been concerned about it before making that foolish promise before the election not to expand Heathrow, as the problem for Britain is now acute. Amsterdam, in effect, is our hub airport. Frankfurt is taking all the work from India and China. Madrid is taking it increasingly from South America and will increasingly move it from North America, which is why British Airways will eventually move more of its operations there than it has already. The situation is really serious.

I would simply say to the noble Baroness, Lady Kramer, who to my mind has always had her head in the sand on this, that when I spoke at a meeting in her then constituency there were a couple of hundred people, mainly from the Green Party, the Liberal Party and the Conservatives. As she will know, I was not given a welcome when I was speaking in favour of the expansion of Heathrow but the chairman, to his infinite credit, suddenly asked everyone to indicate who had flown from Heathrow that year— and everybody put up their hands. That is the hypocrisy which lies behind this. I say to the noble Baroness and to other people, yes, we have to address the environmental issue—I will touch on that in a moment—but remember that all the polling in the 12 local authorities around Heathrow shows a much more divided opinion about whether people are in favour of or against expansion. Why is it divided fairly evenly? Precisely because so many people work at Heathrow: 76,000 on the airport and another 100,000 dependent on its remaining a premier hub airport. However, it is no longer a premier hub airport. It is great that Heathrow can fly you to seven British regional cities, but Amsterdam will fly you to 21.

People say to me, “Well, we are going to have the high-speed link”, but remember that the high-speed link is not coming until the end of the 2020s. Tell me what is environmentally good about producing millions of tons of concrete to create that line, each tonne requiring the production of one tonne of CO₂, and what is environmental about knocking 20 minutes off the journey time to Birmingham. I am in favour of the high-speed rail line, but do not kid yourself that it is an answer to the environmental issues or to the problem of airport expansion.

Let us come to the environmental issue. Aviation was slow to respond to the pressure. One of the things I said when, many years ago, I took on the job—which I no longer have—of campaign director for Future Heathrow was that unless people upped their game on the environmental issue, they would not win on this case. They needed to up it and they have. As I have reminded people before, we would not know half of what we know about climate change if it were not for the aerospace industry. How do your Lordships think we measure it, and why is Britain so advanced in climate change science? Because we have the aerospace industry, the second most advanced in the world, producing the technology that tells us about it. What is the answer? It is already happening. Most of our new airliners coming on-stream are better not only environmentally—much better in terms of fuel efficiency—but in terms of noise. I still have a room in London, not far from Kingston. When the A380 flies over my old constituency, where I have lived for 30-odd years, why is it so much quieter? You can hardly hear the A380 when it goes over, whereas you could really hear the old ones. They are getting quieter and more fuel efficient.

This is my final point. As the Minister knows, I referred him to the new developments in fuel. Algae is a hopeful one. Virgin airlines, New Zealand airlines, American Airlines, British Airways and a host of others are flying now with a fuel mix. They do not use kerosene. The noble Baroness is out of touch on this. Most of the United States Air Force in Afghanistan uses algae as a fuel in its aircraft. Why? It is because it has strategic needs for it. There are scientific answers to this problem, and if we do not use them we will throw thousands of people out of work just to satisfy some people who will want to go on flying and still complain about the noise or the pollution.

20:04

[Lord Empey]

My Lords, I congratulate the noble Baroness, Lady Gibson, on securing this debate this evening. It is very timely.

First, I agree with the noble Lord, Lord Monks, about pilot fatigue. I have a son who is in that sector and his schedule over the past month frightened me. I have been in contact with the department on this issue for some months and I hope that when the EASA is considering this, it will not only follow much more closely the CAA guidelines but take into account the representations of the people who actually do this job, not the people who simply treat it as theory.

With regard to what the noble Baroness, Lady Kramer, said, I would say to her that it will be the Thames estuary or Heathrow. We are not going to get both because airlines are not going to split their bases, their engineering, their back-up and so on. I suspect that they will be either at one or the other.

Following on from my introducing the Airports (Amendment) Bill to this House in December 2011, I want to draw the attention of your Lordships to the connectivity issues that exist in the United Kingdom, and to ensure efficient communications between our major regions and cities. We debated this issue in Grand Committee on 15 November, and I believe that there is a lot of support in this House to draw attention to the fact that, if you do not have adequate connectivity, it is not going to be possible significantly to build up your business efficiency and attract investment to the regions.

It is no use saying, “We can fly you to an airport in the basic region of the south-east or in London”, which under European directions you can give a public service obligation to do. It has to be between the major cities in the region and the hub airport, wherever that may be. The issue for me at the moment is that my Bill would give the Government a power which they currently do not have: to ensure that the CAA can pass judgment. I hope to go to Brussels next month to see the chairman of the transport committee of the European Parliament and to lobby there, because there is a significant European dimension to this.

Like the noble Lord, Lord Soley, I had a hub airport in what was my constituency and I have had issues with it over its opening hours and various other things, but we all use it. The fact is that the issue is not only the airport itself; it is how that airport is connected to the major centres of population. Unless you can get from the regions to the major hub airport, which for the foreseeable future is Heathrow, then we are doing a disservice to our country. We put large amounts of money, as does the European Union, into regional development. One of the key issues there is aviation connectivity. In Northern Ireland, for instance, we do not have a realistic alternative. We do not have rail connections. Yes, we have a ferry, but, realistically, that is not going to do the job.

As we move forward, I hope that the Minister will give us some guidance as to whether the Government will seriously consider the regional connectivity issue in the forthcoming consultation and the legislation that will be before both Houses later this year.

20:09

[Lord Lea of Crondall]

My Lords, I, too, congratulate my noble friend Lady Gibson of Market Rasen, on initiating this debate at this opportune moment. The decision to look at expansion, including the “Boris Island” project, and to exclude a third runway at Heathrow, is the most disgraceful piece of misgovernance that I can remember in transport economics in my lifetime, and I did postgraduate work in transport economics after doing economics at Cambridge and have worked for the World Bank in this field.

With no cost-benefit or origin and destination analysis, this is banana republic demotics. Suddenly you have a so-called review of hub airports without being able to expand Heathrow. This is a disgraceful way to conduct business, and I ask the Minister how he can possibly justify it. Will he take note of some of the things that have been said in this debate that make it clear—if I can mix my metaphors—that this is no way to run a railway?

I have no axe to grind for the British Airports Authority, but Mr Colin Matthews, its chief executive, hit the nail on the head the other day when he said that London cannot have two hubs. How, other than by closing down Heathrow, can you say that Boris’s island is going to be the hub? It is absurd, ridiculous—I do not know how many more adjectives one needs to use to get the absurdity of this understood.

This is not a question of transport and economics versus the environment. I am going to be personal: I have always been involved both in transport economics and in the environment—I started a sustainable environment project—and for many years I have tried to see how the two can be reconciled. I think it was my noble friend Lord Soley who made the point that many people make these “green” remarks about terrible things going on with planes in the sky, but it is exactly like the car—when you ask people, “How many miles did you drive last year when middle-class people were opposing a bypass?”, the answer is normally 10,000 miles. That is how things are; there is a lot of middle-class versus working-class nimbyism regarding Heathrow and Richmond going on here.

My final remark is about how a proper inquiry should be carried out. The costs that have been mentioned in the press would mean that if the Government are going to claim—as a Conservative Government believing in the market economy—that we should have regard to commercial principles, how is it that they are not having regard to commercial principles about how to make a profit rather than trying to subsidise the outcome, if you are going to have a Thames estuary site with a cost as high as £70 billion, without any clue why these so-called sovereign wealth fund investments are more than just wishful thinking? Will the Government reconsider the basic fallacy of having two hubs or closing down Heathrow, and will they, even at this stage, put Heathrow and the expansion of its third runway—Schiphol and so on, as my noble friend Lord Monks and others have said—back into the mix?

20:13

[Baroness Dean of Thornton-le-Fylde]

My Lords, I, too, thank my noble friend Lady Gibson for initiating this important debate at this time, particularly in view of the state of our economy. I also declare that I am a board member of NATS air traffic control, although obviously I am not speaking for it today.

We talk about aviation as though it is something that belongs to the industry, but actually our aviation policy is for our economy. It is the conduit through which we have been able to carry our exports. We are an island—nothing will change that—so we need aviation. We are a trading nation as well; over one-third of our exports by value go by aviation. That helps our economy.

Heathrow has been mentioned a number of times today. It is our pre-eminent airport, and until recently it was regarded as number one in the world. Other nations have caught up with us, though, and a number have overtaken us. Schiphol now proudly presents itself as London’s fifth airport, with the runways that it has. Heathrow’s Terminal 5 was first talked about 25 years before it opened. What happens in France, Germany and Amsterdam and across Europe? Within five years they conceive of an idea and they build it.

There is no doubt that our economy needs our aviation, especially environmentally friendly aviation. I would go so far as to suggest that the airlines have gone a long way to try to meet that; indeed, British airlines led the discussions in Europe on emissions trading, which has been a substantial help.

It is important that we recognise where we are. The Government’s announcement about consulting on the proposed new airport in the Thames Estuary and on aviation is an important measure, and I welcome it for considering our long-term policy. However, with Heathrow working at in excess of 90 per cent of its capacity, I suggest that we cannot sit back and wait for the outcome of that commission’s work. When we get the consultation document in March, will it contain what the Government propose regarding the protection of our economy, our jobs and our exports for the short term? We need capacity expansion in the UK in the short and medium term, and we cannot wait another 20-odd years to get a long-term policy in place. I ask the Minister that direct question.

The third runway at Heathrow has been mentioned and it will not go away. We saw in excess of 30 Conservative MPs last week in another place sign a paper complaining about their Government’s policy. I join them in complaining about my own party’s policy; we, too, pulled away from a long-standing agreement that the third runway at Heathrow would be seriously considered. However, that would not provide all the capacity that we need. We have heard about Stansted, but what about Gatwick and Luton? I do not think that there would be opposition in Luton to expansion there.

We need a government policy that will answer these issues, not for the airline or airport industries but for our economy and our jobs. Two weeks ago the Chancellor of the Exchequer was in China. He wants us to do business with that country. In 2010, 3 million Chinese visited Europe. Do you know how many came to the UK? Four per cent. Therein we have the problem. Europe has direct flights from 22 cities to emerging markets; the UK has none. If we do not grasp this problem and do so quickly, we will see our economy go further into the mire. Aviation could certainly be a way of helping to pull us out of it.

20:18

[Lord Spicer]

My Lords, I had not intended to join in this debate, but I would like to make one point. As has been said already, Heathrow has, for the past 40 years—certainly since I was Minister for aviation—been the number one international interchange airport in the world. Gatwick, as it happens, has been number three for some time. Heathrow is now full up. There is no doubt about it. It is full. The only question before us is what we do about it.

Various ideas have been put forward. One is to run trains to Birmingham. That will take a bit of time, if it comes about, and is not going to do an awful lot for international travel. Heathrow is an international hub interchange airport. The idea that the noble Lord, Lord Lea of Crondall, called “Boris’s island” is a wonderful one, but has been around for the past 40 or 50 years. Maplin was the first attempt at it. Even if it is a good idea, it is going to mean a decision about shutting down Heathrow—the noble Lord was absolutely right about that—and it is not going to happen for the time being. It is not going to happen for another 30 or 40 years.

The solution to Heathrow, which is an immediate problem, has to be found pretty well immediately. The only solution available—and I have put this to Ministers in Questions several times in the past year or so—is that of a third runway. There is no alternative. I was the Minister who laid the first sod at Stansted. We attached to Stansted a 20 million air traffic movement condition, so Stansted is not available. Anyway, airlines do not want to fly to Stansted. They want to fly to Heathrow and change there.

The issue is, do we have an asset which is going to grow with the market, or do we allow ourselves to have the competition from Schiphol and all the other places that people have talked about? This is an immediate decision. It needs to be taken straight away and there really is no way round it, other than making a decision about the third runway.

20:20

[Lord Rosser]

My Lords, I also extend my thanks to my noble friend Lady Gibson of Market Rasen for securing this all too brief debate on the future of our civil aviation industry, a subject which has been thrust back into the limelight by the Government’s announcement of a consultation looking at options for maintaining the UK’s aviation hub status, including the possibility of a major new hub airport in the Thames estuary.

It is an interesting announcement, since, assuming its birth was not related to the forthcoming London mayoral election campaign, it represents a considerable potential U-turn from previous statements of no new runways at any of the three largest airports in London and the south-east, and a lack of enthusiasm for an airport in the Thames estuary. The Government’s failure to set out a strategy for aviation which addresses capacity issues, among other things, is now putting jobs and growth at risk. The Government’s call for airports to be “better not bigger” is a slogan, not a policy. The Government have no established policy around the future of the UK’s civil aviation sector beyond a statement in the coalition agreement that the Government will refuse permission for new runways to be built at Heathrow, Gatwick and Stansted. Perhaps the Minister could tell us when he responds whether, in the light of the consultation just announced, that is still the Government’s policy or not.

What we need is a strategy that works for the south-east as well as for our network of regional airports which are so crucial to our economy. The Government should have accepted our offer to work together on a cross-party basis to agree a long-term strategy for aviation. Setting an agreed long-term strategic direction for aviation is vital, particularly bearing in mind that our hub airport, Heathrow, is already working to virtually maximum capacity, that we are falling further behind our EU competitors, passenger numbers are projected to grow significantly, the industry needs to be able to plan with certainty for the future—not least to deliver investment to provide additional capacity—and the UK has 11 per cent of Europe’s airspace and 25 per cent of its traffic.

Any new capacity must go hand in hand with tougher targets on reducing CO₂ emissions from aviation to tackle the industry’s contribution to climate change. The industry can be proud of the huge advances that have been made in this direction already. However, with the significant growth in air passenger numbers forecast, we will not achieve, by 2050, the broader 80 per cent cut in emissions on 1990 levels to which we committed in the Climate Change Act 2008 without aviation playing a greater role. Future aviation growth must, we believe, go hand in hand with a greater cut in aviation emissions than we agreed, when in government, of reducing to below 2005 levels by 2050, a target to which the present Government have not affirmed their commitment. The industry’s own sustainable aviation road map makes clear that, by 2050, it is possible to get absolute levels of emissions down to levels seen at the turn of the century, even as passenger numbers are projected to grow very significantly, so there seems to be a measure of agreement that it is possible to do more.

The aviation industry contributes more than £11 billion to the UK’s gross domestic product. It supports up to 200,000 jobs directly and up to 600,000 indirectly across the UK. It is deeply worrying to the industry and the business world, among others, that while we know what the Government are against, there is still no credible strategy for aviation even on the horizon, which sets out the approach that this Government favour.

20:24

[Earl Attlee]

My Lords, I start by congratulating the noble Baroness, Lady Gibson, on securing this evening’s debate, in which we have heard articulated wildly opposing views. As all noble Lords know, aviation makes a huge contribution to our economy and our society as a trading nation, as pointed out by the noble Baroness. It generates economic output of up to £9 billion a year. The noble Lord, Lord Rosser, suggested that it was £11 billion; I do not know which of us is right. It supports thousands of jobs, drives our tourism sector and gives British businesses a vital gateway to the global marketplace. If this country is to grow and prosper in the future, aviation must be able to grow and prosper. I think all noble Lords are agreed on that.

Aviation provides regular connections not only to today’s major world economies but to the emerging economies. However, we recognise that there is a price to pay for every flight—a price that is measured in noise, local air pollution and carbon. To continue enjoying the benefits of a growing aviation sector, we need to make sure that growth is sustainable. That is exactly why the Government are developing a new sustainable aviation strategy. However, in answer to the noble Lord, Lord Rosser, we cannot do this overnight. From the very start, the Government made clear that unsustainable aviation growth was unacceptable. We have maxed out on what the people surrounding Heathrow Airport can tolerate.

Instead, we have been working hard to make our airports more effective. We have a range of initiatives under way to deliver that ambition. For example, last week the Civil Aviation Bill was introduced to Parliament. This will give the CAA more flexible powers to respond to passenger issues and better target issues such as airport resilience. Our South East Airports Task Force, which was set up to improve operations at major airports, has explored measures for improving punctuality, tackling delay and strengthening resilience at Heathrow, which are being trialled. It has also endorsed plans to improve the current aviation security regime, on which we have consulted and are developing. We are also looking at how we can tackle delays and reduce the need for aircraft stacking through the CAA’s Future Airspace Strategy and the Single European Sky.

As well as these initiatives, we still need to address the bigger question over future demand and future connectivity. The National Infrastructure Plan we published last year was clear that we must maintain the status of the UK as an international hub for aviation. We recognise that it is vital to maintain the UK’s connectivity to improve our links to the emerging economies and promote inward investment and inbound tourism. That is why we are planning to launch a call for evidence on options for maintaining the UK’s hub status alongside our draft framework. Through this we aim to reach an evidence-based conclusion on how to meet the UK’s long-term connectivity needs. The noble Baroness called for rapid and firm decisions. However, the Government will consider these matters very carefully and make the right decisions, not necessarily rapid ones.

In the shorter term, we welcome the recent launch of new routes from Gatwick to Ho Chi Minh City and Hanoi, and the announcement that Air China will launch a Gatwick-Beijing route. These are the sort of global connections that British businesses need, and not just from London. We know how crucial our regional airports are in helping to balance growth across the country and to relieve crowding, where possible, at our south-east airports. We also recognise the importance of connecting the regions to London by air and rail to maximise the benefits.

To make this growth sustainable, we need to find new ways to decarbonise aviation. We will work with the industry to boost investment in and research into low-carbon technologies and fuels. For example, we welcome the research that countries such as the US have done in the use of algae-based sustainable fuels. Developing innovative fuel sources will be the key to enabling aviation to grow in a sustainable and successful way. We want to see Britain at the forefront of delivering greener air travel. The inclusion of aviation in the European emissions trading system from 1 January was an important step. Now we need to push for international agreement in ICAO on aviation emissions to get the level playing field that will ensure that aviation is able to grow globally in a balanced and fair way.

The noble Baroness, Lady Gibson, urged the Government to reconsider the issue of aviation taxation. The Government accept that the current economic climate is very challenging both for consumers and the aviation sector. However, if the Government are to meet their overall fiscal projections, we must balance the risk of growing competition from abroad with the Government’s need to raise revenues from the sector. The rise in APD rates announced in the Autumn Statement does no more than keep pace with inflation and will give certainty to the industry for the two-year period to 2013. It is also worth remembering that it is important to look at the country’s taxation as a whole. Unlike other countries in the EU, the UK charges no VAT on flights. My noble friend Lady Kramer talked about the favourable taxation status of the aviation industry.

We continue to believe that tackling climate change is one of the most important challenges we face and that all sectors, including aviation, should contribute globally to the 2 degrees Celsius goal. The Government continue to support emissions trading as one of the key instruments for reducing CO₂ emissions from aviation.

Many noble Lords talked about the proposal for a Thames estuary airport. We are interested in innovative proposals for maintaining the UK’s aviation hub status and we will consider all proposals submitted that meet the criteria set out in our call for evidence. A new airport in the Thames estuary is one idea that has been put forward in response to our recent scoping exercise, but we need a much more detailed level of evidence, in particular on costs, funding and wider impacts, before we are in a position to develop which approach the Government should support. That is why we need the call for evidence.

[Lord Lea of Crondall]

I am most grateful to the Minister for giving way, but I take it that he is not going to leave this point before answering the question: how can he possibly justify a review of the hub in Britain while excluding Heathrow? Is that not rather like, as someone said, reviewing the expansion of supermarkets without including Tesco?

[Lord Shutt of Greetland]

My Lords, the noble Lord has made his question clear.

[Lord Lea of Crondall]

I have and I am sitting down.

[Earl Attlee]

My Lords, first, I have explained that we have already maxed out on what the local people around Heathrow can tolerate.

[Lord Lea of Crondall]

That is not true.

[Earl Attlee]

Secondly, this Government have an open mind, which is the right way to go into a consultation. The noble Baroness, Lady McIntosh of Hudnall, effectively asked whether we are going to do a U-turn on Stansted. The commitment in the coalition agreement still stands.

[Lord Rosser]

In the light of what he said about the Government having an open mind, will the noble Earl confirm that the previous government statements about no new runways at any of the three largest airports in London and the south-east no longer stand?

[Earl Attlee]

Definitely not, my Lords. The noble Lords knows perfectly well that that is in the coalition agreement and will stay.

The noble Lord, Lord Monks, asked me what more can be done to support industry and its people. The Government recognise the value that the aviation industry brings through supporting a network of highly skilled workers that adds value to the economy. The sector is at the forefront of technological progress, delivering R&D projects and large-scale investments that drive industry and the economy forwards. It is important that the trade union sector fully engages in the consultation process. The noble Lord also touched on the important issue of pilot fatigue. On the matter of flight-time limitations, we will support the proposed requirements only if the Civil Aviation Authority determines that they provide an appropriate level of protection against crew fatigue.

The noble Lord, Lord Soley, touched on the 76,000 employees at Heathrow, plus those in related service industries. We have to take their position into consideration as well. The noble Lord also talked about biofuels. The Government are clear that sustainable biofuels have a role to play in reducing CO₂ emissions from transport, particularly in sectors such as aviation where there are limited alternatives to fossil fuels. In recent years, the aviation industry has conducted research and carried out flight tests to help provide information on different fuels. This work has demonstrated that biofuels for aviation are technically feasible. However, there are currently a range of barriers to introducing biofuels, including sustainability, scalability of the feed stocks and commercial viability. The Government will continue to work with European partners, the wider international community and industry to explore how to bring about a significant increase in the use of biofuels in aviation. Advanced biofuels, such as those derived from algae, when commercialised, could offer particular advantages, such as reduced land use impact.

On UK connectivity with China, the Government recognise the importance of developing and maintaining good links between the UK and emerging economies. That is why this March we are calling for evidence on options for maintaining the UK's hub status. Heathrow currently has fewer scheduled flights to mainland China than Paris or Frankfurt, but more than Amsterdam. However, if flights from Heathrow to Hong Kong are included, there are more flights from Heathrow to China than from any other EU hub. Hong Kong serves around 45 destinations on the Chinese mainland.

The noble Lord, Lord Empey, raised the issue of connectivity with the regions, particularly Northern Ireland. The Government recognise the vital contribution that air connections make to regional economies and acknowledge Northern Ireland's concerns about the air service between Northern Ireland and Heathrow should BMI be sold to British Airways. However, airlines operate in a competitive commercial environment, and it is for individual airlines to determine the routes that they operate. The options for supporting regional air services to London are limited. Member states can impose public service obligations to protect air services to remote airports, which could permit slots to be ring-fenced. However, they can be imposed only between specific cities, not specific airports, a difficulty identified by the noble Lord, Lord Empey. We have written to the EU Commission on that point, but there is no other mechanism for the Government to intervene in the allocation of slots at UK airports. The noble Lord introduced the Airports (Amendment) Bill, which would provide for the protection of air services between Heathrow and the UK regions. The Government are considering in detail the measures included in the Bill.

The noble Lord, Lord Lea, got quite excited about a number of points. Although we are committed to not authorising additional runways at Heathrow, Gatwick and Stansted, we are looking at our aviation policy framework with an open mind. The aviation industry is vital to our country. Our next step is to publish the draft aviation strategy and call in March for evidence on hub connectivity. With that strategy, we want to move away from the polarised opinions that have dominated discussion in the past and develop a broader consensus for change.

[Baroness Dean of Thornton-le-Fylde]

I will detain the Minister for only a short time. Can he answer my question? Will the consultation document contain the Government's proposals for dealing with the short and medium-term issues on capacity?

[Earl Attlee]

I will have to write to the noble Baroness on that detail.

With the strategy, we want to move away from the polarised opinions that have dominated discussion in the past and develop a broader consensus for change, one that recognises aviation’s integral role in generating growth and jobs, in providing the global connections on which businesses rely, but also acknowledges the real need to address the impact of flights on local communities and on climate change, a consensus that supports both a flourishing and responsible UK air transport industry.

Welfare Reform Bill

Monday 23rd January 2012 Lords Chamber

Report (5th Day) (Continued)

20:38

Amendment 60

Moved by

[Lord Best]

60: Clause 94, page 64, line 5, at end insert—
“( ) Regulations under this section shall provide that the benefit cap shall not be applied for the first 26 weeks from the date on which the claimant’s total entitlement to welfare benefits exceeds the relevant amount.”

[Lord Best]

I shall speak to Amendments 60 and 61, which would constrain two of the more extreme aspects of the benefit cap proposed by the Bill. Your Lordships will not be surprised to hear me say that I note that most of those pushed over the cap are in that position because of their housing costs. They are paying high rents in London or the south of England. Why the Government's effort to change people's behaviour and psychology is concentrated almost exclusively on this part of the UK remains a mystery.

Let me take the amendments in turn. First, Amendment 60 would provide a period of grace of 26 weeks for those suddenly affected by the total benefit cap. The noble Lord, Lord German, said in Committee:

“People need the breathing space to be able to find a new job and get themselves back into work. The rationale behind this Bill is making work pay ... giving people time to find another job … should be a first and not a last resort.—[Official Report, 21/11/11; GC 344.]

Such a breathing space is currently the pattern before housing benefit/local housing allowance is curtailed in other circumstances. If, by contrast, the new £500 cap kicks in instantly, the household will run into serious financial problems as soon as any savings they have are exhausted. Rather than having savings, many families may have loans and debts. Because of the new cap, many families in privately rented accommodation—or even some housing association accommodation—across the south of England who encounter unemployment or family breakdown that means loss of a breadwinner will run into difficulty immediately. They will find the safety net of benefits—the social security they have been paying for in national insurance contributions—is no longer there to see them through the transition. Without a period of grace, the cap will mean that the rent can no longer be paid and they are likely to face the prospect of having to leave their current home precipitously.

If people become homeless in this way, the savings the Treasury seeks will swiftly be absorbed by the extra costs for local authorities in finding them somewhere else, which, as we discussed earlier, will not be easy. If they are moved away to a low-cost area, say from Brighton to Bradford, job opportunities are likely to be few and far between. Long-term unemployment becomes much more likely than if they had had the chance to get a job in the locality they know. The move will disrupt children’s education, cut helpful links with grandparents, and all the other disadvantages we have heard of in earlier debates. The harm done can continue for another generation, all because of impatience in imposing the new cap too rapidly. Finding a new home, even in a cheaper area, will not be easy and it takes time to secure a rented property even if the council is trying to help. Surely the best approach is for the DWP to hold back on imposing the new cap long enough to enable the family that has run into difficulties to get back on their feet, rather than forcing them into a crisis with the double trauma of losing their job and losing their home in rapid succession.

I heard the Secretary of State say this morning—we hear it first on the “Today” programme—that hard-working families trying to get a new job would not be penalised. The Minister has dropped many hints that something will be done. I am hopeful, therefore, that the Minister will be able to accept Amendment 60. Colleagues from different parts of your Lordships’ House have told me that in today’s job market 26 weeks is not a long enough period of grace. They have urged me to press for 52 weeks before the total benefit cap takes effect. I have, however, stuck with 26 weeks in the hope that it will give the Minister less trouble. But, a shorter stay of execution would not seem either humane or sensible.

Amendment 61 also seeks to take the edge off one of the most extreme aspects of the total benefit cap. This amendment would exclude from the cap families placed by their local authority in temporary accommodation—normally a private rented flat when the council has struck a deal with the landlord. Rents for temporary accommodation, even though many local authorities send the homeless family some distance to the cheapest neighbourhoods they can find, are high and the housing benefit has to encompass an extra charge to cover the administration of the arrangements. A total bill for a family of three children could be £440 a week in London, even though a central London borough has despatched the family to the lowest-priced accommodation it can locate. If £440 goes on rent, a total benefit cap of £500 obviously leaves practically nothing for all the family’s other costs, as the noble Lord, Lord Greaves, noted earlier. There is no prospect of them surviving on the remaining income within the cap, but the family concerned cannot do anything to rectify the situation. They have not chosen the accommodation but have been sent there by the council because nowhere else can be found for them. Yet, if they stay there, and pay the rent, they face destitution. We could bring back the bed-and-breakfast hotels that are becoming extinct, not least because they are so much more expensive than keeping people in rented homes, or we could revert to building hostels for these households, separating women and children from the men in the true “Cathy Come Home” style once again, but I know the Government are not thinking in such draconian terms, and anyway the problem would hit us long before we could recreate such hostels.

20:45

By definition, temporary accommodation is a short-term solution to a crisis and has always been treated separately from payment for other accommodation. The restrictions of the cap should surely not be imposed in these circumstances, hence Amendment 61. In Committee, the Minister gave us some encouragement on both these issues. He told us that he would be looking at transitional arrangements and at ways of dealing with hard cases. He told us that he was exploring options for the treatment of housing benefit—help with housing costs within universal credit—for people sent to live in temporary accommodation. I was reassured by those remarks, and I am very hopeful that today he will be able to make an announcement, perhaps two announcements, about the idea of a period of grace of 26 weeks and about the exclusion from the cap of those placed in temporary accommodation. The noble Lord, Lord Newton, of whom I am a great admirer, thinks such matters should be dealt with through secondary legislation. If the Minister can be clear that such secondary legislation will be brought forward covering the points, as in these amendments, we would all be very much encouraged. I beg to move.

[Baroness Drake]

My Lords, I support Amendment 60, to which my name is attached. It would support hard-working people and their families with a clear work ethic to manage the challenges of today’s flexible labour market and the consequences of losing their job through no fault of their own by allowing a transition period of 26 weeks before the benefit cap is applied. In integrating in and out-of-work benefits, universal credit has to be applied to two different constituencies: those who are out of work for long or sustained periods and those who are regularly in work. A single system has to provide an experience fit for both. I accept that a modern welfare system has to incentivise people to work and to address benefit dependency, but it also has to support hard-working people with a clear work ethic and their families in managing difficult economic circumstances. A benefit cap immediately applied can have a very negative effect on hard-working people and their children when the wage earner loses their job or work involuntarily, even more so where the loss of work happens quickly.

The Government have made clear that a driving principle of the Bill is that work should always pay more than out-of-work benefits and that a benefit cap is, first, a clear message that there is a maximum level of financial support that claimants can expect and, secondly, necessary to provide incentives to work and to reduce benefit dependency. When my noble friend Lord McKenzie questioned the Minister in Committee about whether, if it were established that the cost of the cap outweighed the benefit savings, he would still support the cap, the Minister replied:

“Clearly the message that we are trying to get over is a behavioural one much more than a cost-based one”.—[Official Report, 23/11/11; col. GC 421.]

What is the change in behaviour that the immediate application of the cap is designed to achieve in hard-working people who have lost their job and are desperately seeking another one? Where someone has a clear work ethic and a clear pattern of working and is desperately seeking another job, a grace period of 26 weeks will give them a fighting chance of re-entering the labour force before the weight of penalties comes into play and the cap bites. When faced with job loss, normal working people do not clap their hands and say, “Oh goody goody, I'm off to a life on benefits”. They are more likely to be stressed, anxious and worried about their home, paying bills, their children and their future while they rush around trying to find another job, probably fighting feelings of depression while they do so.

It is higher housing costs that are most likely to push families over the cap. As the noble Lord, Lord Best, said, without a period of grace, many families in private rented accommodation, particularly those with children and living in the south, will see the benefits for their housing costs cut, potentially forcing them to look for alternative housing elsewhere.

The Government’s impact assessment of the cap said that those affected will need to choose between taking up work, reducing non-rent expenditure or cheaper accommodation, but where someone who loses their job is clearly choosing to take work, they need time to do that. Finding a new job rarely takes days. It is most likely to take quite some weeks and even longer in difficult economic circumstances. The welfare system should provide this safety net, otherwise at the very time when a person needs to put all their efforts into finding another job, their efforts may be redirected to relocating to cheaper accommodation and relocating their children to different schools. In moving, they may lose, as has been said, their contacts, their local knowledge and their networks—all the routes that would most frequently take them back into work. The ultimate irony is that lone parents could face having to relinquish their childcare arrangements—their nursery place or their childminder—just as they need to keep them in place so that they are available to make an early transition back to work.

Currently, approximately 50 per cent of people on JSA get back to work within six months, 75 per cent in nine months and 90 per cent within a year. They clearly want to work. I accept that these figures might have been overtaken because of the rise of unemployment that we are now experiencing whereby 10 people are chasing every job in London, but the underlying argument holds good. They are chasing them because they want to get back into work.

The immediate application of the benefit cap would penalise those who have just lost their jobs—decisions about their rental costs or family size were made while they were employed—before they had even been given time to find another job. Rather than penalise people who are trying to make a rapid return to employment, universal credit should be supporting them. A grace period of 26 weeks does not contradict the simple message, as expressed by the noble Lord, Lord Freud, who said that,

“in the end, there is a limit to how much the state is prepared to support someone”.—[Official Report, 23/11/11; col. GC 422.]

Rather, a transition period would ensure that hard-working people faced with an involuntary loss of work are assisted in making an early move back into the labour force and getting their family’s lives back on track before the cap bites. That seems to be a fair, reasonable and decent thing to do.

The Government want to see an increase in private sector employment relative to the public sector to increase flexibility in the labour market through a reduction in employment rights and regulation, but they appear reluctant to transition the benefit cap to help hard-working people manage today’s labour markets and economic realities—realities that will become harsher as global competition intensifies. As currently drafted, the benefit cap would undermine the expectation that if you work hard, pay into the system and play by the rules, there will be a safety net available to you if you hit hard times so that you have a chance to recover.

This Bill also sets the welfare rules for people who have no record of benefit dependency and are paying their national insurance contributions. When I made that point in Committee, the Minister commented:

“I shall bear that point very much in mind as we go through the next stages”.—[Official Report, 23/11/11; col. GC 427.]

We are at the “next stages” and I encourage him to put flesh on that consideration. This amendment does not pose a principled challenge to the cap; it poses a 26-week transition for people who are rushing around urgently trying to find another job before the cap is imposed. I accept that the Minister has made a major contribution to welfare reform but I ask him to accept the case for a safety net. As I have said, that seems to me to be a fair, reasonable and decent thing to do.

[Lord Skelmersdale]

My Lords, would the noble Baroness, Lady Drake, accept that she is talking about those who have been earning more than cap and fallen on hard times rather than those with whom much of the legislation is involved: that is, those who in employment have been earning under the cap?

[Baroness Drake]

The Bill sets the welfare rules for people who do not have a record of benefit dependency. In the national insurance contribution system, one is trying to design something that gives people a cushion. Sometimes it will be because they will be earning higher than the cap; on other occasions it is because of the nature of their accommodation. Either way, instead of having a cushion so that they can concentrate on getting back into work as quickly as possible, which it is clear most of them want to do, there is a danger that the immediate way in which the cap will operate means that they will have to take defensive measures to bring down their level of expenditure rather than putting all their efforts into finding a job.

[Lord Stoneham of Droxford]

My Lords, I have a lot of sympathy for the amendment of the noble Lord, Lord Best. It is largely about the transitional arrangements, on which we are still working towards having more information. It would be helpful if the Government could spell out exactly how they are going to deal with the problem of the flow after April 2013—because everyone will have a year’s transition. If they become unemployed after April 2013, they will in certain circumstances be hit by the cap. I think that there is some sympathy in the House for people who have not had a history of benefit dependency. We are not trying to achieve behavioural change with them. How are we going to help them back into work when they are suddenly faced with high housing costs and a cap being imposed on them?

In our debate on children, insufficient attention was given to the fact that one of the biggest problems is the differential in housing costs between certain areas. Fortunately, those who have the highest housing costs will normally be in areas where they are likely to get a job quickly, rather than in areas where housing costs are lower. Even so, it takes much longer to get a job these days, particularly in this market, than it has in the past. People need some help with that transition.

We need more information from the Government on the transitional arrangements, which we on our Benches are concerned remain imprecise. This particular issue highlights that.

[Baroness Hollins]

My Lords, I shall speak to Amendment 60A, which is perhaps slightly oddly grouped with the amendments proposed by my noble friend Lord Best. The amendment would prevent carer’s benefit claimants being subject to the proposed household benefit cap by exempting households including a carer’s allowance claimant and carers in receipt of the carer premium in universal credit.

There can be no doubt about the contribution made by carers in unpaid care—indeed, there was considerable discussion about this at a previous stage of the Bill and last week. Their contribution has been valued at some £119 billion by Carers UK and is of immeasurable value to the people they care for. Peers from all sides of the House have recognised this contribution with personal accounts of experiences of caring and moving stories from families struggling in what are often very difficult circumstances.

Carers’ contribution and the challenges they face set them apart as particularly deserving of support from the benefits system and as clear candidates for exemption from a cap which the Government have said is designed to penalise individuals who are failing to play a full part in society.

21:00

The Government have already outlined exemptions to the proposed household benefit cap for disabled people in receipt of disability living allowance. However, this will not protect certain groups of carers. Not only does it seem fundamentally unfair for carers to be affected by the cap, but it is at odds with the Government’s commitment to protect families affected by disability from the cap.

So which carers will be affected? The DLA exemption protects households including a DLA claimant, but what is considered to be a household for the purposes of universal credit includes children under 18 and partners and not adult children or other adult relatives. This will deliver some real inconsistencies. Families caring for disabled children under 18 will therefore be exempt from the cap, but those caring for adult disabled children will be subject to it because the DLA claimant, as an adult, will no longer be considered to live in the same benefits household even if they live together. Those caring for a disabled partner will be exempt, but people caring for other working-age relatives—siblings, cousins, neighbours or friends—will be subject to the cap. In addition, all carers supporting an elderly parent or other older relatives in receipt of attendance allowance—the equivalent benefit to DLA for older people—will also be subject to the cap.

It is disappointing that carers do not figure in the impact assessment for the cap, so we cannot know how many of the 560,000 carers in receipt of carers’ benefits might be affected. We can, however, know what the financial impact might be. Carers UK modelled what the impact would be on a single mother with three children, caring full-time for her elderly mother who has dementia and lives with them. She would currently receive carers’ allowance at £55 a week, child benefit and child tax credit totalling £204, housing allowance and council tax benefit totalling £362 and income support at £42. Technically, she does not live in the same household as a DLA claimant so she will be subject to the cap. Her income of £663 a week will be capped at £500, resulting in a loss of £163 a week, or £652 a month. I should say that these figures are based on estimates for somebody living in a four-bedroom house in London in council tax band C. Needless to say, this will be devastating. For many families it could lead to a breakdown in family care with huge personal costs to those families and great financial costs to local authorities who will have to step in to provide support. Given these risks and inconsistencies, to ensure that carers are not left potentially hundreds of pounds a month worse-off it is crucial that carers’ benefits act to exempt carers from the cap. Can the Minister explain the inconsistencies in the groups of carers who would and would not be affected?

[Baroness Lister of Burtersett]

I will speak briefly in support of Amendment 60A. The noble Baroness, Lady Hollins, has probably not had a chance to see the latest impact assessment, which hit our e-mail accounts only a few hours before this debate. There is now a section in it about carers and I would like to add to what she said. The assessment said that 5,000 carers are expected to be affected by the cap. It is a small number but it is 5,000 too many, in my view. The mean reduction in benefit as a result of the cap is £87 a week; the median is £65 a week. That is a lot of money for carers to lose. Can the Minister tell us what behavioural change the Government are looking for among carers?

[Baroness Thomas of Winchester]

I have a more specific question about disability living allowance and I think this may be the right place to ask it. If someone living in a high-cost rental area on local housing allowance has a serious accident or is diagnosed with a serious long-term condition, perhaps next March, and is placed in the ESA work-related activity group, they might apply for disability living allowance. They might have had a stroke that was not bad enough to take them out of the jobs market for a very long term but that would require them to take a long period of recovery, and they might have been quite badly affected. This person will have to be assessed and then wait for a qualifying period of three months. If during those three months the person in the household falls foul of the benefit cap, will they be penalised immediately or will their application for DLA be taken into account, which of course will then exempt them from the cap? This is an important matter which we have not heard anything about. It might be part of the transitional arrangements that we hope we will hear about, but I would hate that person, with all their difficulties, to have to think about having to look for another place to live when they are trying to recover from quite a serious illness.

[Lord McKenzie of Luton]

My Lords, Amendment 60A seeks to protect carers from the impact of the benefit cap in cases in which they are not living with the person for whom they care. On the last day on which we debated the Bill, the Minister told us of the value that the Government place on carers and their work. However, the Bill is drafted in such a way that this work will be valued only when the carer lives with the person for whom they care and thus excluded from the benefit cap by virtue of that person’s eligibility for DLA or PIP. Carers who are not part of the DLA claimant’s household, as we have heard, will be subject to the benefit cap. They are therefore likely to lose their carer’s allowance, suggesting that the Government place no value on their care.

As we have heard, the latest impact assessment estimates that 5,000 carers will be affected by the cap—that is the number provided by my noble friend Lady Lister—and yet not only does such care save the taxpayer thousands of pounds but the carer will be almost unable to work—or at least full time—by virtue of their caring. So they may face the choice of ending their care role in order to live. This is not theoretical. One in six carers has made the difficult decision to give up work to care, leading to an average loss of £11,000 a year. Many such families struggle to make ends meet as they cope with both a drop in income and the increased costs of caring—for example, through buying extra support and equipment and travelling to hospital and doctors’ appointments.

The impact of the cap will be to make this struggle significantly more difficult. Carers affected could lose £87 a week. Indeed, it may mean that some carers are faced with a tough choice between giving up caring—imposing significant costs on health and social care services—or taking a significant financial hit.

The Secretary of State for Work and Pensions told the BBC on Friday that people were “not suffering” as a result of his welfare reforms. Perhaps he would like to reconsider whether carers are likely to suffer if the amendment is not passed.

The Secretary of State might also consider the case of some of our service personnel. War widows are excluded—quite rightly—from the benefit cap, but should a mother helping to look after her son, injured in Kabul or Iraq, and claiming carer’s allowance for this, still be subject to the cap? Is that fair? I look forward to the Minister’s response.

Amendment 61, which relates to temporary accommodation, was to a degree dealt with in the first amendment we discussed today. It was a component of that broader amendment. We certainly support the amendment. I took it from what the Minister said in response to that general debate that something was afoot to address this issue but, without having had the chance to read Hansard yet, it was not totally clear what. Perhaps he will take the opportunity of saying it again, expanding, promising to write or whichever of those options he feels appropriate. It sounded as though there was a recognition of the need to address the issue that has been raised by the amendment. I certainly support the fact that there should be a move to address this and I look forward to receiving further information.

We very much support Amendment 60 and a period of grace. We would have been happy to support 52 weeks, but if 26 weeks is what the noble Lord, Lord Best, is pressing for, we would certainly support that should he wish to press the matter.

I say to the noble Lord, Lord Stoneham, that there are two things here. There are issues around transition. I see that the Lib Dem Benches are placing great faith in what might flow from transition and the offers that might come. However, I think that is different from an ongoing period of grace. The purpose of this, as the noble Lord, Lord Best, and my noble friend Lady Drake have enunciated, is to help people who fall out of work and to allow them a period of adjustment or a period of grace before the cap hits. There might be a transitional component to that, but this needs to be something of a permanent feature of the arrangements to make sense.

I suppose that six months corresponds with the contributory JSA period. My noble friend Lady Drake may be more up to date than I am on the data. It used to be 50 per cent back in work in three months and 75 per cent in six months. The data may have moved on. Certainly, given the unemployment figures that are around, I think even the longer period suggested by my noble friend must be somewhat difficult. The arguments in favour of a period of grace seem to be overwhelming. For someone to have to cope with all the traumas of losing their job and at the same time have to face changes in accommodation and moving to a new area, which could be a direct consequence of the cap, would be unforgivable. I hope that the Minister can say something positive on that as well.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, Amendment 60 would require us to provide for a period of 26 weeks during which we could not apply the benefit cap. The period would start from the date that a claimant’s welfare benefits first exceeded the level of the cap. It would therefore not only apply to new claimants, but also to existing claimants who have a change of circumstance that results in the level of the benefits that they receive exceeding that of the cap. We have said all along that we would look at ways of easing the transition for families. We do not want families to be taken by surprise by the cap or to create problems that people can avoid by taking appropriate steps. We want to ensure that people who might be affected by the cap know what to expect and can consider the options open to them.

There has been a lot of speculation in the press about whether a grace period is what the Government have in mind. Clearly, a grace period could be a way of easing transitions, especially for people who have recently been in work and can be expected to return to work within a short period. A grace period would mean that their benefit entitlement would not be affected when they first leave work. This would avoid the risk that they would be prevented from looking for work because of the need to adjust their circumstances because of the cap. That point has been made in the debate.

However, people who have recently enjoyed a high income are better able to deal with temporary shortfall and can and should be expected to have made their own provision if they know that there are limits on benefit entitlement. A grace period also carries the risk that people are likely to stay on benefits for longer than they would otherwise simply because a higher rate of benefit is temporarily available to them, so while the grace period approach is clearly one possible approach, it needs careful consideration. Issues with run-ons and things like that would need to be looked at very carefully. We also need to consider whether other approaches may be just as effective or indeed more effective for some groups. What I can say today, as I said in Grand Committee, is that we are well aware of the issues, we are confident that we have the powers we need to ease transitions and we will consider the case for a grace period along with the other options that might be available.

Amendment 60A seeks to exclude carers from the benefit cap. For carers the benefit system is designed to provide financial support where caring responsibilities prevent carers working full time and, as such, carer’s allowance should be treated in the same way for the purposes of the cap alongside other income maintenance benefits. However, households which include a member who is in receipt of DLA, PIP on its introduction, attendance allowance or constant attendance allowance, will be exempt from the impact of the benefits cap. Households where a member receives carer’s allowance but no members receive DLA, attendance allowance or constant attendance allowance, will not be so exempt. As the noble Baroness, Lady Lister, who is a fast reader, pointed out, the revised impact assessment states that 5,000 claimants fall into this group. One of the reasons that the number is rather less than one might have expected—or that I suspect the noble Baroness, Lady Hollins, expected—is because we are looking at two benefit units, so the disabled person retains all their disability benefits and the rest of the benefits are received by the other householder. That is one of the reasons why the figures net down to rather a small number.

21:15

I acknowledge and re-acknowledge the vital role that carers fulfil, but I must return to our belief that it is not right that those on benefit can receive more than the average family wage. In response to the question on behavioural change from the noble Baroness, Lady Lister, one thing we are not looking to encourage is a change in the carer’s behaviour so that they stop caring. That is absolutely not where we want to go. However, if the person being cared for is in a separate household, there is no obvious reason why the cap should not apply. Many carers of working age want to retain a foothold in the labour market where possible, not just for their financial well-being but to enhance their lives and the lives of those for whom they care. Universal credit will provide support for carers and improve their opportunities to maintain links with the world of work. Carers who move into work and become eligible for working tax credit will be exempt from the cap.

Amendment 61 seeks to place in the Bill an exemption from the benefit cap for households who are provided with interim or temporary accommodation by a local authority. I have already said in my response to Amendment 58D that it is too early to say how we are going to treat people in temporary accommodation for housing costs purposes in 2013 and beyond. Following our informal consultation with key stakeholders last year, we are considering the policy design for temporary accommodation and will share more details about our plans before too long.

[Baroness Hollis of Heigham]

Can I ask the Minister whether “before too long” would be before Third Reading? We have had lots of debates in Committee on the words “too long”, “too soon”, “soon”, and “very soon”. Could the Minister help us? What sort of timescale does he have in mind on that?

[Lord Freud]

No, that will be beyond the Bill becoming an Act, so we are looking at how we do this in regulations.

[Baroness Hollis of Heigham]

Given that we are expecting a localism Bill next year—I guess—would it be incorporated in that, so the House would have a chance to amend? The trouble with regulations is that you cannot amend, whereas with primary legislation you can.

[Lord Freud]

My Lords, we are going to spend a lot of time on getting this right. It is not something we want frozen in primary legislation. In fact, it would be very uncomfortable to freeze these items in primary legislation. Regulation is the right place to do these things. We have a consultation paper out on how we may move forward with temporary accommodation. There are some very obvious solutions within that—I touched on them earlier this evening—comprising separating out service charges and housing costs rather than bundling them up; that is where the temporary accommodation becomes so expensive. We need to get a solution to this so that we do not have a ludicrous go-round of people moving into expensive temporary accommodation which they can no longer pay for because of the cap. We are absolutely aware of this and have measures in train to get a solution in the round to that issue. However, it is not a simple set of issues.

[Lord Greaves]

On the same point, the Localism Act 2011, which we recently passed, means that in many cases local authorities will carry out their duty to find accommodation for homeless families by putting them into privately rented accommodation, where they will have to pay the rent. How will that tie in with a benefit cap that might apply to the accommodation, to which the local authority directs them in order to fulfil its homelessness duty? Will the local authority be under some obligation to top up the rent, or something like that?

[Lord Freud]

My Lords, one can very easily see circumstances in which a local authority considers that to be a very sensible use of the discretionary housing payments. That is one reason why we have ramped up that amount. I am not saying that it will be every time, but that might be a solution. We are looking to redesign the process of finding temporary accommodation, which is the immediate problem that local authorities are faced with, so that we do not get caught in some Catch-22, which would obviously not be smart at all. That is where we are with that; we are very conscious of those issues and very comfortable that we have the legislative powers to develop effective solutions.

I pick up the important point from my noble friend Lady Thomas on the DLA and how the cap interacts with it. The DLA is there for those in receipt of DLA. That is how we have worded the illustrative regulations. A person whose DLA award is pending and who is serving what is now, and will remain, a three-month qualifying period, would not be covered by the exemption. That is the point in the question raised by my noble friend. It shows why this issue and other similar issues need to be dealt with in secondary legislation, so that we do not have the inflexibility that we would have if it was in primary legislation.

We are conscious of the concerns around the introduction of the cap. I can assure noble Lords that we are listening. We have said all along that we will introduce measures to ease the transition for families and provide assistance in hard cases. We are still considering our plans, and it is essential that we get them right. The clause has been drafted so that we have all the powers that we need to ensure through regulations that we provide the appropriate protections. I hope that that gives the noble Lord, Lord Best, a measure of reassurance.

Before I ask the noble Lord to withdraw the amendment, I would like to make it clear that the Government do not consider Amendments 60A and 61 to be directly consequential on Amendment 60. Further Divisions would be required should noble Lords wish to push those other two amendments in the group to a vote. I apologise for spelling that out, but we had a small frisson the other week. I ask the noble Lord to withdraw the amendment.

[Lord Best]

My Lords, I am sure talk of further Divisions will be unnecessary at this late hour. I am very grateful to many noble Lords, including the noble Baroness, Lady Drake, for supporting my amendment on the 26-week period of grace. She made the point that we cannot possibly require behavioural change from people who are already desperately seeking work, which is what we want them to do. I was also grateful for the support of the noble Lord, Lord Stoneham of Droxford, in backing this amendment. People with no history of benefit dependency should surely be given a period of grace to find work.

The noble Lord, Lord McKenzie of Luton, made the point that perhaps 52 weeks would be better than 26 as a period to allow people to get back into work, especially given the statistics we heard—that 50 per cent of people who go on to jobseeker’s allowance find a job within six months, but if we want to get 90 per cent back into work it may take a year in the current job market.

This remains a very important ingredient in the use of the cap. The Minister has promised that finding a solution is a priority and that a period of grace to ease the transition is one way of handling this, but there may be an even cleverer way. The Minister says that the issue still needs to be looked at very carefully but is confident that a way will be found. I must take this on trust, but with the expectation that there will indeed be measures that handle this transition and satisfy the House when the regulations, although those cannot be amended, are brought before us.

I am also grateful for noble Lords’ support on the amendment to make sure that temporary accommodation does not become a Catch-22 situation whereby homeless people are sent somewhere by the council, only to find when they get there that they are not able to pay the rent because the benefit cap has kicked in. That would be a calamity for them. I was grateful to the noble Baroness, Lady Hollis of Heigham, for weighing in on that one and to the noble Lord, Lord McKenzie, for asking for further clarification.

The Minister explained that we need to find a way, and he is confident we shall find one, of handling this exemption or exclusion, or in some way treating temporary accommodation differently and in a satisfactory way. I trust him to be as good as his word and I have pleasure in withdrawing these amendments.

Amendment 60 withdrawn.

Amendment 60A not moved.

Amendment 60B

Moved by

[Baroness Drake]

60B: Clause 94, page 64, line 5, at end insert—
“( ) Regulations under this section must provide for an exemption from the application of the benefit cap for family and friends carers where—
(a) the child comes to live with the carer as a result of plans made within a section 47 of the Children Act 1989 child protection enquiry or following enquiries under section 53 of the Children (Scotland) Act 1995 and the local authority states that the child cannot remain with the parents in the current circumstances;(b) a child comes to live with the carer following a section 37 of the Children Act 1989 investigation and the local authority states that the child cannot remain with the parents in the current circumstances;(c) a carer has secured a residence order, including a residence order under section 11 of the Children (Scotland) Act 1995, or special guardianship order to avoid a child being looked after, and there is professional evidence of the impairment of the parents’ ability to care for the child;(d) the carer has a residence order, including a residence order under section 11 of the Children (Scotland) Act 1995, or special guardianship order arising out of care proceedings;(e) the carer has a residence order, including a residence order under section 11 of the Children (Scotland) Act 1995, or special guardianship order following the accommodation of a child; (f) the carer has a residence order, including a residence order under section 11 of the Children (Scotland) Act 1995 or special guardianship order following the death or serious illness of a parent;(g) the carer is an approved kinship carer under Part V of the Looked After Children (Scotland) Regulations 2009.”

[Baroness Drake]

My Lords, I rise to move Amendment 60B, the purpose of which is to exempt from the benefit cap family and friends carers who are bringing up children whose parents cannot do so. These are children who would otherwise be in care and this community of carers is looking after a population well in excess of 200,000 children.

Family and friends carers may be disproportionately affected by the benefit cap as they are likely to be living in larger households because of taking in a sibling group, particularly if they have children of their own living at home. It is not uncommon for a kinship carer to be looking after four, five or six children. As a result these families could immediately be up against the cap. Grandparents Plus research finds that 10 per cent of kinship carer households consist of five or more people. While in most of the country carers receive benefits that are less than £500 a week, in parts of London people with larger families are already paying upwards of £400 a week in rent. The cap would leave these future kinship carers with less than £100 a week to cover all their family’s, including their new family’s, needs.

Around one in three kinship carers gives up work to care for children when they move in. Almost half of these children have emotional and behavioural problems or other special needs or disabilities. In about half of cases their parents are misusing drugs or alcohol. Bringing up someone else's children is enormously emotional and a big financial commitment, yet only a minority of carers—around a third—receive an allowance from the local authority. In the present financial climate, local authorities are even more reluctant to pay kinship carers allowances.

No one sets out in life to become a kinship carer. People do it because they do not want to see their grandchildren, their younger siblings or their nieces or nephews, or children who they know well, taken into care. Often, giving up work is not a choice for them. They are told by social workers or by other authorities that the children will be put in care or placed for adoption if they do not do this. Children who are cared for can be of any age, not just in their early years. Kinship carers are not entitled to an employment break when a child or children first move in and can face significant financial disadvantage as a result of having to give up work. If they are older, they may find it difficult subsequently to re-enter the labour market.

An unintended consequence of the benefit cap is that fewer family and friend carers may volunteer in difficult circumstances, increasing the number of children taken into care as a result. This would be more expensive from the point of view of the state and certainly not in the child's best interest. It costs £40,000 for one child to be in an independent foster care placement for one year and I understand that there is already a shortage of 10,000 foster carers.

The argument that imposing a benefit cap on larger families will discourage people from having more children has no resonance or behavioural leverage for family and friend carers, who are taking on other people's children. A benefit cap can have no positive incentive at all. Rather, it is a disincentive to kinship carers, who save the state significant amounts of money and provide a better solution for the child. Which of the three choices identified in the impact assessment do kinship carers take to mitigate the impact of the cap? Do they go to work, reduce their expenditure or move to cheaper accommodation?

Kinship carers may have to give up work as a condition of assuming responsibility for the child. Grandparents Plus has many examples of grandparents being told by social workers that unless they give up work, their grandchildren will be taken into care. They cannot mitigate the cap by going to work because they then hurt the child. Often, kinship carers want to stay in work, but this may not be an option if they want to take over the responsibility for the child. They may have their own children to support and moving to cheaper accommodation would seem to punish those who voluntarily embrace the responsibility for somebody else's children, often in difficult circumstances.

Children moving into kinship care because of serious family difficulties need stability, and if the carer has to move house to reduce housing costs that will be highly disruptive and mean that children have to change schools. It may mean that the local support networks, on which the kinship carers rely, will also be disrupted. This places further strain on carers, who are already under enormous stress because of the family difficulties that the children they are taking on have endured. Even more than for other parents, community links with families, neighbourhoods, friends, churches and community groups provide vital support to carers who are often bringing up children who may be traumatised.

The amendment covers only carers who are looking after children who would otherwise be in care and under a relevant order. There is no possibility that exempting these kinship carers would result in any sort of perverse incentive for people to go round sweeping up children in the hope of claiming that they are caring for them and accruing additional benefits.

At the risk of repeating myself, I will go back to what I said in Committee and quote the Secretary of State, Iain Duncan Smith. If his words are compelling, as I said in Committee, why should I use alternatives? He said:

“The state has become ambivalent about the importance of family structure … the role of the extended family … in a context of growing family breakdown, it is all the more important that we continue to support … and hold together these wider relationships”.

Unless family and friends carers are exempt from the effect of the cap, the state will move from ambivalence to antipathy. In referring to exempting people from the cap, the Minister said in Committee on 23 November:

“We have … been very careful in providing exemptions and deliberately kept the list short”.—[Official Report, 23/11/11; col. GC 415.]

I simply ask that the short list includes family and friends carers. That protects the children and certainly makes fiscal sense.

I acknowledge that the Minister has recognised the valuable role that kinship carers fulfil and that he has committed to looking at a range of issues affecting this group—an important commitment that I accept and I know that he will keep to it. But it remains uncertain as to what the noble Lord intends and this may be my last chance to argue the case for this community before the Bill leaves this House. It is important that a decision on whether individual carers are exempt from the cap should not be left to local discretion. People who are thinking of taking on something as significant as the care of vulnerable children need a degree of certainty about the support that they can expect.

In response to the noble and learned Baroness, Lady Butler-Sloss, the Minister used words to the effect that, “Kinship carers are a special case and we need to get it right in regulations. Families need a period to adjust to looking after troubled children”. I would like to push him on that sentiment. As I said, this may be my final chance to argue the case for the valuable job that this community of carers delivers. Will he accept the amendment or agree to include an exemption from the cap for family and friends carers under regulation? Not only is the case for the carers and the children compelling, but it also makes fiscal sense to exempt them.

[Baroness Tyler of Enfield]

My Lords, I support the amendment that has just been moved so powerfully and comprehensively by the noble Baroness, Lady Drake. Having myself moved a similar amendment in Committee, I do not wish to go over the same ground that she has, save to say that there is a powerful case for providing an exemption from the cap for grandparents, older siblings, aunts, uncles and other family members who are raising vulnerable children because of very difficult family circumstances such as parental death, alcohol or substance misuse, imprisonment, severe illness, disability, abuse or neglect—the list goes on and on. Children living in the care of family and friends are often exceptionally vulnerable and have already suffered huge disadvantages and traumas in life.

As the noble Baroness clearly put across, one consequence of the benefit cap that I am sure is unintended is that fewer family and friends may step forward as carers in these difficult circumstances, and the cost to the state, particularly if more children go into care as a result, would be considerable. To amplify that point, I shall mention a few statistics that the Family Rights Group was good enough to share with me from an internet survey that it has just conducted—the largest survey of family and friends carers in the UK—with 500 respondents. The survey’s findings show that: more than 16 per cent of respondents were raising three or more children, both kinship children and their own; 11 per cent of respondents were in private rented accommodation and 28 per cent in housing association or council rented accommodation; 29 per cent received housing benefit; 31 per cent had given up work permanently when taking on kinship children while 14 per cent had given up work temporarily; and 20 per cent of the children that they were raising had previously been in an unrelated foster care placement. I think this puts some flesh on the bones of this particular issue.

I know that my noble friend the Minister was very sympathetic in Committee to this issue and has written in very sympathetic terms to the charities which are most involved. I very much hope that he has some reassuring words to give us tonight.

[Baroness Hayter of Kentish Town]

My Lords, rather like the amendment which we discussed earlier on carers, this amendment will, as has been spelt out, protect another unappreciated group: grandparents and other family members or friends who take on the care of children. As the noble Baroness, Lady Tyler, has just told the House, we know that the Minister is sympathetic to this group, which includes many children who have experienced significant traumas before their move to a new caring family.

The Who Cares? Trust estimates that a quarter of these children have lived with abuse, neglect and violence, and a quarter will have been deserted by their parents, often after drug and alcohol abuse. About 60 per cent go to grandparents after family breakdown, one in 10 after a parent’s illness—often mental illness—and one in 10 after the death of a parent. Applying the benefit cap to these families may leave them facing the difficult choices, of which we have already heard, about whether they can simply afford to carry on taking care of the child or children.

As we know, the impact assessment tells us that a family will lose about £93 a week. That is a substantial chunk of income. That may not be very much to Sir, or Mr, Fred Goodwin, but it is a fortune to some of these families. Should any of them decide that they can simply no longer afford to continue looking after the child, that will, as we have heard, create significant costs for the state. With regard to kinship carer allowance, there are estimates that if just 5 per cent of those currently in the care of family or friends were in formal foster care, that alone would add £500 million a year to the cost that the Minister would have to justify to his friends in the Treasury.

The Minister has spoken many warm words about the role played by kinship carers. He has also told us that the benefit cap is primarily intended not as a deficit reduction measure but to change behaviour. Indeed, his right honourable friend the Secretary of State told the BBC that the cap was aimed at making lives better by reducing dependency. We are not talking about dependent claimants here. We are talking about dependent children, who, after some great trauma or difficulty with their own parents, desperately need the kindness, care and homes offered by these grandparents, siblings, aunts or friends. We should be very careful that the Government’s laudable desire to reduce dependency for one group does not have dire effects on the well-being of another.

Given that the cap is not about deficit reduction, so we are not sending the Minister off to arm-wrestle with Her Majesty’s Treasury, we hope that he will try to turn those warm words into concrete protection. It has been suggested earlier this evening that maybe there is a little bit of movement to come. I look forward to hearing from him.

[Lord Freud]

My Lords, I ought to pick up the initial remark by the noble Baroness, Lady Hayter, that this amendment was to protect another unappreciated group. I emphasise that, from my perspective, this is a most appreciated group. This is an amendment that I listened to with great interest.

It would require us to exempt all family and friends carers from the benefit cap where they have assumed care for a child in the circumstances set out in Amendment 60B. There are two main groups: those formally approved as a foster carer and those providing care on a more informal basis. As noble Lords will remember, in Grand Committee I discussed and recognised the valuable role that kinship carers fulfil. I have had some very useful and valuable meetings with organisations that represent kinship carers to try to get a handle on their priorities. As I said earlier, one of the main issues they are concerned about is that crucial initial period when a child joins a household. In many cases the carer needs to take time off to help the child settle into their new circumstances.

21:45

On the formal number in foster placements, figures from the Department for Education show that there are approximately 7,500 children in those placements. Although we do not have a precise number for how many of those might have their benefits capped, we believe that it will be very small. These carers are able to receive support for the children in their care through the benefits system since, unlike approved foster carers, they have access to child benefit and child tax credit on the same basis as parents. Any additional payments that they receive from the local authority are then disregarded as far as the cap is concerned. However, the parity of treatment with parents will continue with the introduction of universal credit. Kinship carers can expect equal treatment to parents from the benefits system, but that does not mean that I will not look very closely at the position of kinship carers in the benefits system as a whole to ensure that they are recognised and supported in the most appropriate way.

In the previous debate we discussed one of the options—that of a grace period in the transition. Clearly, as we develop those protections and transitional approaches, we will bear very much in mind how they affect kinship carers. Therefore, rather than have a specific exemption for a very small number in this way, we need to design something. It is not appropriate to put this into primary legislation. The trick will be to design the overall structure in a way that gives kinship carers the kind of protection that they need and deserve. However, as I say, my main interest here is in looking at how we can best fit kinship carers into the benefits system so that they slot in beside formal fostering arrangements and what we do for parents, including single parents.

[Baroness Hollis of Heigham]

If the noble Lord were to combine child benefit, for example—given today’s decision by this House—with the guardian’s allowance, having each of those as a per capita sum for each child coming in through kinship caring, and take that out of the benefit cap, it would get him there.

[Lord Freud]

My Lords, as always, I am incredibly grateful to the noble Baroness for her suggestion. I am thinking of offering her a job. However, let us not redesign the benefits system on the Floor of the House, although we have gone into it on many occasions. Let me ask the noble Baroness, Lady Drake, to withdraw her amendment.

[Baroness Drake]

My Lords, I thank noble Lords for their support and the noble Baroness, Lady Tyler, who also argued the case for family and friends carers in Committee. I accept that the noble Lord has shown a commitment to looking at the needs of this group and I think the charities would accept that.

My anxiety and that of the charities that articulate the interests of family and friends carers is that the Bill is going through the House without one having achieved clarity over the kind of protection that this community will get under the legislation. The Minister said that this community would be supported in the most appropriate way, and that it was necessary to get it right in regulation. It would be helpful if he confirmed that there will be regulatory provision to protect this group, notwithstanding what the precise solution may be, rather than leave the protection to discretion. It would be helpful if the regulatory route was being taken. I thank my noble friend Lady Hollis, as ever, for coming up with an excellent suggestion.

[Lord Freud]

Perhaps I may answer that straight on. I hope I made myself clear that when we get the regulations on handling the transitions and the options around it that we discussed earlier, we do it in a way that looks after this group. I am not committing here to specific exemptions for this group, but I am saying that we are looking at how to do it so that we meet its requirements, of which I am very conscious.

[Baroness Drake]

I thank the noble Lord for that response. In the earlier stages of the debate on this community, my particular concern was that the protection necessary for it is not dealt with solely as a matter of discretion and that there is clear guidance—whether or not as a consequence of dealing with the matter as part of a wider resolution—that it is not left solely to the individual discretion of advisers. I take the response of the Minister as meaning that it will not be left in that way. He is nodding.

[Lord Freud]

Hansard needs more than a nod. Without elaborating on a lot of transitional arrangements, I am not quite sure how this will work. I am not sure that I can give absolute assurance either way, although I would lean towards setting these things out formally without discretion; but I am not in a position to give any kind of assurance either way. There might be elements of discretion in any set of protections that we develop.

[Baroness Drake]

Obviously it would have been preferable if the Minister had said unequivocally that this matter will not be left to local discretion, but it is clear that I am not going to get that reassurance. However, the noble Lord has said quite a lot on record that he is committed to trying to resolve the needs of this particular group. Perhaps I may borrow a phrase from the noble Lord, Lord Newton, in a previous debate: I will hold the Minister’s feet to the fire on this issue. On that basis, I agree to withdraw the amendment.

Amendment 60B withdrawn.

Amendment 61 not moved.

Amendment 61ZA had been retabled as Amendment 58D.

Amendments 61ZB to 61A not moved.

Clause 98 : Payments to joint claimants

Amendment 61B

Moved by

[Baroness Meacher]

61B: Clause 98, page 66, line 18, at end insert—
“(b) to determine that payment should be made to whichever of those persons is the responsible carer (as defined in clause 19(6) of the Welfare Reform Act 2011) in the case of any benefit awarded in respect of responsibility for children or young persons or any childcare element, or”

[Baroness Meacher]

My Lords, the amendment would ensure that within universal credit the elements of benefit awarded for children or young persons, and any child carer element, will be paid to the parent or person who is the primary carer of those children. The amendment is supported by Oxfam, Women’s Aid, the Children’s Society and Platform 51, whose experience makes clear that for millions of people living in poverty the way in which benefits and tax credits are paid is vital in enabling them to keep food on the table for their children day by day.

Recent government research shows that benefits that are labelled as being intended for children are much more likely to be used for that purpose. A study by Hall and Pettigrew for HM Revenue and Customs showed that child tax credit, for example, is commonly identified as money for children and is spent accordingly. A recent study of winter fuel allowance by the Institute for Fiscal Studies, published in 2010, also found,

“robust evidence of a behavioural effect”,

of the labelling of that benefit. A study for Save the Children, HelpAge International and the Institute of Development Studies, published in 2005, points to the value of targeting and delivery mechanisms.

Labelling is currently absent from the new system of universal credit. The amendment would rectify that apparently small but profoundly important fault in the system. I and many other noble Lords on all sides of the House have made clear that we support many of the principles behind universal credit. The amendment neither challenges those principles nor would increase the cost of the system, other than marginally, to cover the administrative costs of making two payments to some households or to those with children. I understand that all the amendment would require is a change to a few lines of code in the current IT system to mirror what already happens with child tax credit. It will be much cheaper to do that now, while the IT infrastructure is being constructed, than to leave it until much later to be dealt with under regulations.

Without the amendment, the universal credit system would deter couples from forming long-term, stable relationships, which I think the Minister would accept is an important point. For many single parents considering whether to form a joint family with a potential new partner by living together or getting married, the prospect of the entire benefit for the whole newly formed family being paid into one account will be a strong disincentive to forming a single unit, but the formation of such families holds out the best hope for those benefit claimants coping well with their children, becoming self-sufficient and coming off dependence on the taxpayer.

Another concern is that, once money reaches the household, it is often unequally distributed, particularly in low-income households, as the DWP and Ministers have acknowledged and as the research shows very clearly. Emergency powers in the Bill enable payments to be shifted in the event of abuse. That will not be a sufficient protection. Abuse is often hard to prove; it is often hidden within families and hard for the state to identify. In view of the pervasiveness of the financial vulnerability of primary carers, the aim of the system must surely be to prevent abuse, where it can, to protect children.

The Minister’s budgeting products, including jam-jar accounts provided by the financial services industry, might help with different problems, but they will not resolve the problems addressed by the amendment. We are trying here to deal with common family problems where the primary carer repeatedly finds themselves without money to feed the children. As the DWP knows from its research, many parents suffer from alcoholism, drug addiction and gambling addiction, and far greater numbers suffer from unhappy and often abusive relationships. In all those situations, the risks of the primary carer not receiving the money with which to feed and clothe the children are real. Those primary carers will continue to receive child benefit, but for them to receive the child elements of universal credit as well would go a long way to reducing their vulnerability in violent or otherwise abusive marriages.

The Children's Commissioner has expressed concern about the new single lump-sum payment arrangements. The amendment is not about the sex of the primary carer. A growing number of fathers take responsibility for children’s welfare if a mother is the one who is abusive, mentally ill or otherwise unable to take the primary carer responsibilities. I make the point that this is not about men versus women or women versus men.

The Government argue that putting universal credit into a joint account could guarantee access to both partners. That is not the answer. Of course, not all couples have joint accounts, especially those who might not have been together very long. In fact, joint savings, investments and debts are decreasing. Often, couples will have individual accounts and will have to opt for one or other for the payment of universal credit. That is our concern. In many cases, a joint account does not guarantee equal access to money for both partners anyway. Often one partner dominates the joint account, and there might be only one chequebook.

It is difficult to imagine that the Minister would disagree with the proposition that the payment of benefits for children to their main carer would be the best way to ensure that the money is spent on the children. I should be grateful if the Minister could confirm his view on that matter. Further, does the Minister agree that for new couples where one or both partners has at least one child and one partner would have responsibility for housing costs—which is likely to be the case if the couple get together—the payment of the whole universal credit to one bank account is likely to be a disincentive to the partners to come together?

Again, I endorse the Government’s objective to simplify the benefit system and I realise that this is a tiny fly in the ointment of that simplification process. I hope that the Minister will recognise, however, that the costs and benefits of this amendment would come down very solidly on the side of our proposed small change to the Bill, and I hope that in view of that the Minister will be willing to table his own amendment—no doubt this one would not be perfect—on this apparently small but fundamentally important matter. I beg to move.

22:00

[Baroness Lister of Burtersett]

My Lords, I rise to speak in support of Amendment 61B, to which my name is attached, and to Amendment 61C in my name. The amendments have a particular resonance for me. One of my clearest memories when I worked at the Child Poverty Action Group was sitting below the Bar during the passage of the then social security Bill under the Fowler review, of which we heard earlier, and literally jumping for joy when the Minister announced that the then Conservative Government would withdraw their proposal to pay family credit through the wage packet. I was given a severe warning by the attendant.

During my subsequent academic career I conducted Joseph Rowntree Foundation-funded research with Jackie Goode and Claire Callender that demonstrated the importance to the well-being of both children and women of paying benefits for children to the mother who was in all those families the parent with main responsibility for the day-to-day care of the children. This research helped to persuade the previous Labour Government of the error of their ways when they proposed to pay working tax credit through the wage packet. Now here we are again having to persuade the Government why it is so important to pay money for children direct to the parent who has the main responsibility for the day-to-day care of the children and for day-to-day budgeting. This time the stakes are higher, as the noble Baroness, Lady Meacher, has made clear because universal credit wraps up so much in it, including housing costs. The noble Baroness, Lady Meacher, has already made the case very powerfully for why what is colloquially known as “wallet-purse” is such a crucial issue, particularly for children and women.

I want to pick up a couple of the arguments made by the Minister in Committee, some of which I have to admit I was not convinced by. First, I make reference back to a point made by the noble Lord, Lord Lester, earlier when he talked about the report of the Joint Committee on Human Rights, which came out after our proceedings in Grand Committee. It commented on the reduction in the financial autonomy of women, resulting from the payment of universal credit to only one member in the household. In order to address that, the Committee suggested that the Bill could be amended to allow payments intended for children to be labelled as such and to be paid to the main carer.

One of the points made by the Minister was to try to reassure the Committee that making universal credit as a single payment will not now be a problem because the Government are committed to ensuring that people can access support to manage their payments and help them to budget effectively, including access to budgeting products, such as jam-jar accounts, as mentioned by the noble Baroness. I put that argument to an expert who understands jam-jar accounts much better than me, and who shares the Minister’s enthusiasm for them. Her response was that it was a bit of a smokescreen as there is no coherent link between budgeting accounts and the decision as to whom the benefit is paid. Moreover, what is at issue is not budgeting capabilities but financial autonomy. It is about ensuring that the parent with the every day care of children has control over the money allocated for them.

That brings me to another argument used by the Minister that the Government want to enable couples to decide where their payments should go. It is not for the Government to dictate how a family arrangements its finances. The only decision that the couple can make is between payment into one or other single account or a joint account. As the noble Baroness has already explained, joint accounts are not necessarily the answer. Research by Fran Bennett of Oxford University and others shows that the existence of a joint bank account does not guarantee access by both partners to the money held in it.

While I agree that it is not for the Government to dictate how a family arranges its finances, is it not the case that their belief in the power of nudge might point them to supporting this amendment? Presumably, the Government want the money allocated to meet the needs of children to be spent on children. As the noble Baroness pointed out, that is much more likely to happen if the money is clearly labelled for children.

If the Government refuse to countenance that approach, then I suggest that Amendment 61C might be the answer. It provides for a couple to choose for the payment to be split between accounts without earmarking any of the money for specific purposes. This would meet the Minister’s concern that universal credit should be seen as a single payment. In this case, it would be a single undifferentiated payment, but split between the two bank accounts when the couple so wished. It would allow for the variety that exists in the ways that couples organise their finances. I acknowledge that it is not a perfect solution for, as the Minister observed earlier in our proceedings, effective choice exists only when the balance of power is equal, and the gender balance of power is still often very unequal, but it would be more consistent with the Government’s position on choice and would be better than the only choice offered in the Bill, which potentially puts all the money into the hands of one partner.

As the noble Baroness emphasised, neither of these amendments would cost money, but they would help millions of women and children and address the very real problem of hidden poverty which can result when resources are not shared fairly within families.

[Lord Kirkwood of Kirkhope]

My Lords, I shall add a few comments to the speeches of the noble Baronesses, Lady Meacher and Lady Lister. I learnt the importance of this subject a long time ago when I was involved in consistorial legal work in a provincial legal office in south-east Scotland. I was surprised by the importance of financial autonomy to people within quite troubled and tense family contexts, as the noble Baroness, Lady Lister, mentioned. I was then persuaded yet again, academically, by the exemplary work that she has done ever since with Fran Bennett and others to make this case consistently over the years. It is as apt in this benefit reform as it was in the Fowler reforms or at any time since. I guess I could be persuaded that this is a debate that needs to be conducted at regulation level and I am certainly up for continuing an interest through the primary legislation until the regulations are tabled. I will be happy to contribute to those discussions.

There is a real question that I want to be clear in my head about. We had some interesting discussions in Grand Committee and I am certainly sympathetic to the Minister’s search for innovative financial products. I think it is absolutely correct. However, if you separate out the politics from all this, I would like to understand whether it is factually possible for the agile computer system that we are developing with such care in Warrington to deliver the device suggested in Amendment 61C. That is a separate question from whether the Minister is prepared to deliver it. I want to know that we are not blocking off—this is the point that the noble Baroness, Lady Meacher, made—the opportunity to come back to this. If we cannot persuade the coalition in the short term, either tonight or in regulations, that this is the right thing to do, which I believe it is, it would comfort me if the Minister were able to say that the Government do not believe that this is right because there are other ways of dealing with it. I would go to my bed this evening and rest slightly easier if he were able to say that it is still possible and we would not need to buy a new computer system if we wanted to do this in future.

[Baroness Hayter of Kentish Town]

My Lords, I am looking forward to the Minister’s reply, otherwise we will worry about the sleeping patterns of the noble Lord. These amendments, as has been clearly set out, seek to mitigate the risk of paying the entirety of universal credit to one person and, in particular, to provide protection for women who are more likely to be the main carer in a couple and less likely to have the power in the relationship to determine how money is managed.

The Government’s proposals suggest that universal credit payments would not, other than exceptionally, be split between a couple. Instead, they would be paid, as we have heard, entirely into one bank account. The DWP briefing note states that,

“the Government wishes to place responsibility for household budgeting with the household. It is not Government’s role to dictate how a household spends their money”.

However, these amendments are not about how households spend their money but how they receive it. They are about allowing households to decide to whom the money should be paid. This principle is long established in social security policy. Households receiving child benefit can nominate a main carer and those receiving working tax credit can receive child tax credit in the bank account of the main carer and working tax credit in the bank account of the other partner.

Concerns about the shift in policy from this have been voiced by a wide range of organisations, all of which have presented strong arguments in favour of ensuring that the part of universal credit intended for children is paid to the person who has the main care of them. As has already been spelt out, we know that benefits labelled as intended for children are more likely to be used for that purpose. This amendment would enable the Government to identify the parts of the credit intended to help with the costs of children.

Research for HMRC shows that child tax credit is commonly identified as money for children and more often spent accordingly. Again, as has been said, we know that money within the household is frequently unequally distributed, particularly in low-income families. An Oxfam study of black and minority ethnic women in low-income couples revealed cases where,

“women had so little access to money that their husbands were effectively in control of key aspects of their lives”.

Benefits for children are sometimes the sole source of independent income for vulnerable women.

As the Women’s Budget Group points out,

“putting benefits together is key to the design of UC; paying it into one account is not”.

There can already be exceptions. Sometimes, for example, there will be rent for certain categories of recipients. Support for mortgage interest may be paid to lenders and, as the Women’s Budget Group states,

“a sanctioned claimant could lose their UC, and the remainder … paid to their partner”.

The DWP briefing acknowledges:

“There may, however, be exceptional cases that require alternative arrangements: to ensure safeguards. The Government intends to retain powers to split payments between members of a couple in joint claim cases”.

I think that the noble Lord, Lord Kirkwood, will be able to sleep easy in his bed because it seems clear to me that the technology will exist to enable the Minister, if he so desires, to accept either or both of these amendments; that is, either paying the child elements of universal credit to the main carer or, in line with the Government’s assertion that they wish to enable choice, allowing families to choose to split their payments.

Resistance to these amendments would suggest that administrative simplicity is seen as more important than either ensuring that women have an independent income or encouraging money which is intended for children to reach them. I hope that the Minister will feel able to accept the argument for these changes.

[Lord Freud]

My Lords, under universal credit, couples will make a joint claim for benefit payment. We have been clear that claimants will receive universal credit as a single payment, which will ensure that claimants can clearly see the effect of their decisions about work on total household income. The House debated this issue extensively in Committee. We also discussed direct monthly payments in another context when the House accepted the principle of a single payment. Couples will be able to choose which bank account the total universal credit award should go into. Once universal credit has been paid into that account, claimants will have the freedom to manage their money how they wish. They will have the opportunity to transfer some of that money into another account, or they may choose to have the universal credit paid into a joint account in the first place.

Giving people these choices to manage their money is in line with evidence that suggests that, in today’s world, the majority of couples pool their resources—

22:15

[Baroness Meacher]

I apologise for interrupting the Minister. How does he feel that that will work if the partner into whose bank account the money is paid is an alcoholic and likes to spend most of the money, on a Friday or whenever it is, on alcohol, or a gambler, or somebody with mental health problems who is controlling and dominant and therefore gets the money paid into their account?

[Lord Freud]

I was going to say that 7 per cent of cohabiting couples and 2 per cent of married couples manage their finances completely. However, we recognise that there are cases—the noble Baroness mentioned some of them—which will require alternative arrangements. The Government intend to retain powers to split payments to couples as a safeguard. We are looking at the precise circumstances of where and how that split will be made and we will produce further detail as we develop the regulations. The obvious example, as the noble Baroness has said, is where there is proven abuse of the money by one partner or where children are considered to be at risk. But there will be other circumstances as well. That general point is accepted. Where an intervention by the state is required, we will make it to ensure that money goes to the right people or is split in the right way.

However, in circumstances where a universal credit award is split, neither party will receive specific elements such as that for child care. They will receive a proportion of the total award and be responsible for their own budgeting. Therefore, in practice, the amendment tabled by the noble Baroness, Lady Lister, Amendment 61C, is much closer to how we will manage such situations.

Universal credit is replacing a benefits system which in practice undermines personal responsibility by separating a person’s income into different streams for different circumstances. This does not reflect the world of work or encourage financial responsibility. We must trust that people know what is best for them and for their families, with the exception of those individuals and families who cannot handle that responsibility. In respect of those who can, it is not for government to dictate how a family manages its money. However, we are committed to ensuring that people can access support to manage their payments and help them budget effectively.

We are looking at a wide range of support. As noble Lords may remember, I think that one of the most exciting opportunities offered by universal credit is to enlarge the scope for financial inclusion which has been so lacking for many benefit recipients. We are looking at access to nationally available advice and guidance and at locally delivered, targeted support. We are talking to local authorities, housing associations and other stakeholders about how best to deliver this support. We are talking to the financial services sector about widening access to basic, including joint, bank accounts and developing improved budgeting accounts to help benefit recipients manage their money. We are looking to create valuable support mechanisms for a part of our community that simply has not had them. My aim is to have some quite specific new products that slot right under universal credit and give families much more flexibility to manage their money. I look forward to sharing more detailed proposals with your Lordships in due course.

With regard to my noble friend’s sleeping patterns, I think I can allow him to sleep at night. If we find that we need to make more splits than anticipated, the computer system will allow us to do that. We are designing that in. If he is right and I am wrong we will be able to make those changes, albeit more in the pattern of Amendment 61C than Amendment 61B. I can also assure him of a commitment to conduct intensive research on how universal credit works. We will make sure that what we are doing optimises the position for families. I hope with that second commitment my noble friend will not only sleep but sleep like a baby. With these explanations, I urge the noble Baroness to withdraw the amendment.

[Baroness Meacher]

I thank those who have contributed to this debate and thank the Minister for his reply. I am interested in his suggestion that we are dealing here with normal families who are perfectly capable and reasonable about the allocation of their money. When I ran the Child Poverty Action Group campaign for the introduction of child benefit 40 years ago, I received 2,000 letters, most of them from normal families. The letters were from the wives of all sorts of people—vicars, doctors and members of the Army—whom I would have considered very normal. However, they wrote to say that they depended on family allowance, which was only some ridiculous amount like 90p for the first child, and would often have to survive on it for a week because their doctor husband or their vicar husband gave them nothing, having drank their money away or whatever else they were doing with it. There are too many “normal families” that one might see walking up and down the street who do not treat their other half in a normal and acceptable way, so I am very relieved to hear from the Minister that there will be a computer system that will enable more splits and more complexity and sensitivity in this system. I am absolutely sure that it will be necessary, not only for a handful but for vast numbers of people across this country.

I am also relieved that the Minister will look closely at not only how universal credit in general will work but how it will work in this particular regard. I think I understood him to say that, and I very much hope he will pay great attention to this issue. I am absolutely certain it is terribly important for an awful lot of families. After my experience of 40 years ago—and I do not think human nature changes in 40 years—I really believe that is the case. I very much respect his new products and I think they will be splendid, but they will not deal with the sort of issue we are throwing up in this debate. I am sad to withdraw this amendment, but I am pleased to have had some assurances that this issue will not be lost.

Amendment 61B withdrawn.

Amendment 61C not moved.

Amendment 62

Moved by

[Baroness Meacher]

62: After Clause 99, insert the following new Clause—
“Benefits payments to prisoners
(1) Regulations shall provide that a person undergoing imprisonment or detention in legal custody who, at the time that imprisonment or custody commences, is in receipt of any of the qualifying benefits, shall be assessed, during his time in imprisonment or custody, for eligibility for those benefits at the time of his release from imprisonment or custody.
(2) For the purposes of this section, the qualifying benefits are—
(a) universal credit;(b) jobseeker’s allowance;(c) employment and support allowance;(d) income support;(e) personal independence payment, to the extent provided for in regulations made under section 84 (prisoners) above; and(f) any other benefits provided for in regulations made under this section.(3) Regulations made under this section shall provide that the assessment required under subsection (1) shall commence as soon as a person is received into imprisonment or custody.
(4) Regulations shall in particular provide that a person appointed by the Secretary of State shall record, at the time a person is received into imprisonment or custody, details of any qualifying benefits which are in payment at that time, together with any personal information needed to establish the person’s identity, including but not limited to their national insurance number.
(5) An assessment of eligibility under subsection (1) shall be completed in such time as to ensure that the person assessed receives payment of any benefits for which he is assessed as being eligible no later than one week after his release from imprisonment or custody.
(6) Regulations under this section shall be made by the Secretary of State and shall be subject to the affirmative resolution procedure.”

[Baroness Meacher]

My Lords, I rise to move, very briefly, Amendment 62 on behalf of my noble friend Lord Ramsbotham, who apologises to the House for not being able to be in his place. As noble Lords will know, he generally speaks with little in the way of notes, so I shall do my best.

The purpose of the amendment is to ensure that regulations will provide for prisoners who were receiving benefit at the time of their imprisonment to be assessed during their time in prison or custody for their eligibility for benefit on their release from custody. I passionately agree with my noble friend Lord Ramsbotham that the amendment has huge merit. In Grand Committee the Minister outlined the arrangements that have been made to cover those who claim jobseeker’s allowance, which my noble friend accepts, but the Minister did not accept my noble friend’s proposal that all prisoners should have claims to other benefits processed before release.

Last week my noble friend had an extremely useful meeting with officials in the DWP, with whom he discussed the situation, reaching the following conclusion—that my noble friend Lord Ramsbotham would now table an amendment to the Legal Aid, Sentencing and Punishment of Offenders Bill, putting the onus on the Ministry of Justice to confirm a prisoner’s national insurance number and current entitlement to benefits on reception into prison. Before release, these should be processed in time for suspended benefits to be resumed and necessary arrangements made to cover the gap before any payment could otherwise be made, subject to payment in arrears. This will require protocols between the DWP and the MoJ to be established. The question is whether the Minister will be prepared to support this proposal.

The arguments in support of the amendment were put by my noble friend Lord Ramsbotham most forcefully in Committee and I shall not repeat them. I beg to move.

[Lord McKenzie of Luton]

My Lords, I shall speak briefly. The thrust of what the noble Lord, Lord Ramsbotham, is trying to achieve has considerable merit. I wonder how some of the detail in the amendment about assessments when people start their sentence would work in practice, particularly if someone is likely to be in prison for some while.

We dealt with regulations about a fortnight ago on the importance of people being able to get into the work programme on immediate release from prison. However, I was a little disturbed that, as the Minister explained, applying for JSA was voluntary but that once on JSA there was an inevitable path into the work programme. That of itself is fine, except that it may not take account of many good programmes that are already around in prisons where people are supported sometimes before they leave prison and certainly supported when they do. The route via the work programme might pre-empt and override all of that. The noble Lord, Lord Kirkwood, was involved in that debate.

The thrust of trying to get as many benefits as possible sorted out for individuals before or at the point they leave prison must be helpful to them. The opportunity for them to have resource—presumably under the advance payment arrangements if it happens immediately, because typically benefits would be payable in arrears—is fine, but there is a concern about potentially damaging those good programmes in prison, where they exist, which help people to adjust to the world of work before they formally finish their sentence.

22:30

[Lord Freud]

My Lords, it is a shame that the noble Lord is not here to move the amendment. I thank the noble Baroness, Lady Meacher, for moving it so ably. The noble Lord, Lord Ramsbotham, was pretty surprised and somewhat impressed as he heard the developments that we are making in this area. He has been a long-term campaigner in this area. I think he was worried about the bits that we had not yet caught. I was not able to have a meeting with him on this matter, but he met with my officials, as did his colleagues from Unlock, and we were able to provide a lot of reassurance about positive intent to keep going in this area. There are some differences, which is the reason why we cannot support the entirety of this new clause. That is not because we are in any way against helping in the rehabilitation of prisoners and other detainees but because we are moving along with our own programme. We think that that will prove more beneficial in the long run than introducing this structure, which we think would be expensive and resource, intensive in prison assessments.

[Lord Kirkwood of Kirkhope]

Perhaps I could concur with the point made by the noble Lord, Lord McKenzie. I support these amendments. As I said in Grand Committee, the key thing—I am a non-executive director of the Wise Group and we run one of these projects very successfully—is that the people who do the work are ex-cons themselves. My suggestion is that more Jobcentre Plus staff should be recruited from ex-convicts in future so that these programmes can be run positively. That is a facetious way of putting it, but this is a serious point.

[Lord Freud]

My Lords, it is a real point because we know that virtually all addiction treatment centres are manned by people who have gone through the experience of addiction. That is one of the reasons why they are able to help people. There is probably a very similar argument for convicts. Given the way in which we have incentivised the work programme, I would expect that that fairly basic knowledge will be picked up. I am in no position to instruct any work programme to do anything, but I hope that the way in which this has been structured financially will drive that logic.

[Baroness Meacher]

The Minister was talking about being unable to accept this amendment in full and referred to alternative arrangements. The whole point of this amendment tabled by my noble friend was to have clarity on the Floor of the House about acceptance of it. As I understand it, it seeks to ensure that the processing of claims goes on while prisoners are in custody so that when they come out the benefits can be paid very quickly. The idea is to avoid such people running straight off to recommit crimes. There is tremendous power behind this—logic, sense, cost-saving and so on—in terms of criminal justice costs. Perhaps the Minister could spell out what in the amendment the Government cannot accept and what the Government would put in instead. That would be very helpful.

[Lord Freud]

Last week, I think, we had a regulation on this. Time does not fly for the noble Lord, Lord McKenzie, as he thought it was weeks ago. We have already announced that we are processing all JSA claimants in prison. It is hard to process everything. Clearly, housing cost is one element that is not there. I know the noble Lord is concerned about what we do with ESA claimants. The issue becomes real because as we move from universal credit, it is not just a question of not having JSA claimants but having universal credit claimants; we also have to look at how we will do that. We have to do that anyway. However, at the moment we have done JSA claimants and we have the issue of housing. We have support at the prison gate. When we discussed it in Committee, the noble Lord seemed almost shocked that we were doing that. We are moving very fast now. For the record, we will continue to work with the Prison Service, the Ministry of Justice and the other agencies to ensure that prisoners have all the necessary information about claiming benefits on release, and that benefit payments are made as quickly as possible on release. With these assurances, I urge the noble Baroness to withdraw this amendment.

[Baroness Meacher]

I would like to thank the noble Lord, Lord Kirkwood, but also the Minister for that very helpful reply. It seems that the Government are doing everything they can to resolve what has been a ridiculous situation of prisoners coming out of prison and having virtually nothing to live on for some time. With that, I am happy to withdraw the amendment.

Amendment 62 withdrawn.

[Baroness Anelay of St Johns]

My Lords, I think that everybody is trying to be very constructive tonight. I see that the noble Baroness, Lady Lister, is ready to move her amendment. It may help the House if I indicate that there is an agreement that we need to be swift to ensure that the House concludes quickly. Therefore, I wonder if the noble Baroness on the Woolsack, the Deputy Chairman, might call Amendment 62ZA. That will, I hope, then be the last amendment and be concluded quite briefly.

Clause 100 : Power to require consideration of revision before appeal

Amendment 62ZA

Moved by

[Baroness Lister of Burtersett]

62ZA: Clause 100, page 67, line 24, at end insert—
“( ) After subsection (8)(b) there is inserted—
“(c) shall consider the extent to which a claimant falling under section 22 of the Welfare Reform Act 2012, and upon whom a sanction has been imposed under section 26 or 27 of that Act, had guaranteed and predictable access to childcare meeting the needs of any child for which the claimant was the responsible carer at the time when the decision appealed against was made.””

[Baroness Lister of Burtersett]

My Lords, in moving Amendment 62ZA, I shall speak also to Amendment 62B. These amendments focus on the issue of sanctions, in particular where a claimant with a dependent child faces sanctions because they are unable to access work or work-related activity or to sustain work due to a lack of suitable childcare which meets the needs of any child for which the claimant is a responsible carer. Amendment 62ZA seeks to ensure that the appeal tribunal takes into account the extent to which a claimant with a dependent child had access to appropriate childcare when the decision was made to impose a sanction under Sections 26 or 27. Amendment 62B also focuses on this issue and would guarantee that a claimant would not face sanctions and the loss of benefit where they are unable to access work or work-related activities or to sustain work due to a lack of appropriate childcare.

These amendments are supported by more than 40 very widely spread organisations. The recent child impact assessment statement from the Children's Commissioner for England stated that sanctions should never be imposed on the main carers of children under Clauses 26 and 27 of the Bill, unless accessible, affordable childcare was available that would allow them to take up offers of work or training or attend interviews. These amendments would meet the commissioner’s concerns. Providing such safeguards would be consistent with the approach taken in the 2009 welfare reform legislation where at Report, my noble friend Lord McKenzie of Luton confirmed in response to a similar amendment tabled by the noble Lord, Lord Kirkwood of Kirkhope, that the then UK Government would introduce regulations to provide that claimants with a dependent child would not face sanctions in these circumstances.

Most lone parents want to have the opportunity to combine paid work with the vital job of being a parent once their children are old enough, but the Welfare Reform Bill fails adequately to recognise the significant barriers to paid work which lone parents often experience, in particular the availability of appropriate childcare. In Committee, the Minister outlined the kind of safeguards which would be put in place to protect lone parents from sanctions where they are unable to access childcare. I will not reiterate them now. Unfortunately, I have a whole lot of examples which I cannot now read out because of the time constraints. However, in those examples it is clear that lone parents are being put under pressure to work hours which are not consistent with their childcare responsibilities. I believe that the organisations have written to the Minister and I am very happy to provide those examples outside these proceedings.

I know that the Minister will say that it is not appropriate to put in the Bill the safeguards being sought to ensure that no one is sanctioned because of lack of available childcare. I am sure that the House would be very grateful if he could therefore give a commitment on the record to bring forward regulations in the same way that my noble friend Lord McKenzie of Luton did to provide safeguards for lone parents who are doing a very important job raising their children. I beg to move.

[Lord Kirkwood of Kirkhope]

My Lords, I concur with the noble Baroness, Lady Lister.

[Lord McKenzie of Luton]

My Lords, for the sake of brevity, I can say that I also concur with my noble friend and with the noble Lord, Lord Kirkwood. My noble friend is simply seeking to have the issue on the record.

[Lord Freud]

My Lords, I shall speak to Amendments 62ZA and 62B. I could almost do so like my noble friend Lord Kirkwood, but I will speak at slightly greater length.

I would like to assure noble Lords that we are in agreement on the need to ensure that a claimant’s childcare responsibilities are taken into account when setting work-related requirements and when determining whether a claimant has good reason for failing to meet a requirement. For the record, let me set out how we intend to do this.

The legislation will provide clear safeguards. When a child is under one, support will be unconditional. When a claimant’s child is under five, we will ask the claimant only to attend work-focused interviews. If claimants fail to meet this requirement for no good reason, they will be subject to the lowest level sanction; the sanctionable amount for these claimants will be limited to 40 per cent of the sanctionable amount for other claimants.

Secondly, advisers will take childcare responsibilities into account when setting work-related requirements, and we intend to set out some specific safeguards on this issue in regulations. Regulations will prescribe that claimants with a child under 13 will be able to limit their work search to jobs that fit around their children’s school hours. This is key. The best way to prevent the inappropriate application of sanctions is to ensure that requirements are reasonable in the first instance.

Amendment 62B seeks to introduce a blanket exemption from conditionality sanctions for claimants who can demonstrate that they did not have guaranteed and predictable access to suitable childcare. We do not think such a legislative exemption is needed. As I have previously explained, when a claimant fails to meet a requirement, a sanction will be imposed only if the claimant does not demonstrate that there was a good reason. In considering whether there is good reason, we will consider all relevant matters raised by the claimant, which could include the availability and cost of suitable childcare. This flexible, case-by-case approach is the right one, but to be absolutely clear, when a claimant demonstrates that a lack suitable childcare meant that the claimant was unable to meet a work-related requirement, a decision-maker should determine that the claimant has good reason and a sanction will not be applied.

Noble Lords have previously raised concerns about where the responsibilities lie in relation to the provision of good reason. I would like to take this opportunity to clarify the position. We have a responsibility to ensure that claimants understand the decision-making process and that they have an opportunity to explain the reason for a failure to meet a requirement. The onus is then on the claimant to tell us the reasons and provide supporting evidence where necessary. The department must then determine whether the reasons raised are relevant and whether any of those reasons constitute a good reason. The current practice of visiting ESA claimants with a mental health condition or learning disability before the application of a sanction is a good example of the proactive process required to collect evidence of good reason in some cases. I can assure noble Lords that we will review our approach to collecting evidence of good reason for all claimants to ensure that we get this process right.

The final safeguard is the appeals system. Any decision to reduce an award as a result of a sanction can be appealed to the First-tier Tribunal. Amendment 62ZA seeks to require the tribunal to consider whether the claimant had guaranteed and predictable access to childcare. We do not want to go down the route of prescribing specific matters to be taken into account by an independent body; the existing legislation is clear and sufficient. The First-tier Tribunal must consider any issue or circumstance raised by the claimant that is relevant to a valid appeal, so in an appeal against a decision to reduce an award of benefit because of a sanction where a claimant cites lack of suitable childcare as a good reason for failure, this should be considered by the tribunal because it is plainly relevant to whether the award ought to have been reduced.

Given the safeguards we have in place and the commitment I have made to reviewing our processes for collecting evidence for good reasons, I hope I have provided the assurances on the record that were required by the noble Baroness and I urge her to withdraw this amendment.

[Baroness Lister of Burtersett]

My Lords, I am very grateful to the Minister for his full response, given the lateness of the hour. I should have thanked One Parent Families Scotland for its help with this amendment. As this organisation has written to the Minister, if there is anything that it wishes to follow up, I wonder whether he would be willing to meet representatives of this and other organisations that have written to him just to go through in more detail what he has so kindly said to the House. I beg leave to withdraw the amendment.

Amendment 62ZA withdrawn.

Consideration on Report adjourned.

Live Music Bill [HL]

Monday 23rd January 2012 Lords Chamber

Returned from the Commons

The Bill was returned from the Commons with amendments.

House adjourned at 10.47 pm.