House of Lords

Tuesday 14th February 2012 Lords Chamber

Tuesday, 14 February 2012.

14:30

Prayers—read by the Lord Bishop of Lichfield.

“Honour-related” Violence

Tuesday 14th February 2012 Lords Chamber

Question

14:36

Asked By

[Baroness Cox]

To ask Her Majesty’s Government what is their response to reports of increases in “honour-related” violence in the United Kingdom.

[The Minister of State, Home Office (Lord Henley)]

My Lords, the Government condemn this awful practice. We are committed to tackling honour-based violence, and our action plan to end violence against women and girls sets out our approach. This includes working with our partners to identify what more can be done to protect victims and ensuring that the police and specialist prosecutors are trained to improve the prosecution of these crimes.

[Baroness Cox]

My Lords, I thank the Minister for that sympathetic reply. Is he aware of a report by the Iranian and Kurdish Women’s Rights Organisation, which tells that in 39 of the 52 UK police force areas, there were 2,823 incidents of honour-based violence in 2010? The data available show a 42 per cent increase over the previous year, and of course many more cases are never reported because of family and community pressure. Does the Minister agree that it is deeply disturbing and totally unacceptable that so many women and girls should be suffering from this kind of violence in this country, and that a prerequisite for effective action must be accurate information? Will Her Majesty’s Government ensure that all police forces collect data in a consistent form so that appropriate action may be taken to stop this barbaric practice?

[Lord Henley]

My Lords, I am aware of the report and am very grateful to the noble Baroness both for making a copy available to me, which I have read, and for bringing it to the attention of the House. That is very important indeed. I am also aware of the underreporting of this particular crime, which the report draws attention to, and the reasons behind that. It is quite obvious that we need much better information in this field. One of the objectives of the honour-based violence strategy of the Association of Chief Police Officers is for all forces to collect data for honour-based violence and forced marriage in a consistent and considered way. We encourage them to do that because once we have the information, it will be far easier to take action.

[Lord West of Spithead]

My Lords, does the Minister agree that this is so far removed from what we might consider to be honour that perhaps we should find a new word to describe it?

[Lord Henley]

My Lords, before I came here, I wrote down honour-based violence and put inverted commas around “honour”. The noble Lord has made the point exactly for me. It is a strange use of the expression “honour”, but it is the one we have at the moment. Possibly, as the noble Lord says, we ought to find a better expression.

[Lord Lester of Herne Hill]

My Lords, my interest in this comes from originating the Forced Marriage (Civil Protection) Act. We have plenty of criminal law already, and we should be careful before we add any more crimes to the statute book since that could lead to people not coming forward to report these evil and barbaric practices, but does the Minister agree that there might be a case for strengthening it where there are breaches of the forced marriage protection orders?

[Lord Henley]

My Lords, I am aware of my noble friend’s interests in these matters. He will also be aware of my right honourable friend the Prime Minister’s desire to make the breach of a forced marriage protection order a criminal offence. I also understand what my noble friend says about the dangers of adding crimes to the statute book. We should bear that in mind. He will be aware that a consultation is in progress on this subject, which finishes, I think, some time in March. At the end of that period, we will consider the appropriate options.

[Lord Hunt of Kings Heath]

My Lords, I, too, thank the noble Lord for his considered response to this very worrying question and trend. May I ask about the capacity of police forces to deal with it? He will be aware that the reduction in police budgets has had a very bad impact on some of the specialist units in forces up and down the country. Can he assure me that the police are in a position to deal with this matter and give sufficient attention to it?

[Lord Henley]

My Lords, I do not believe that the reduction in budgets, which is necessary because of the situation we are in, is relevant here. It is a matter that the police can deal with in the appropriate manner, but we need appropriate information and evidence before we can act in the proper way. However, it is not just what the police have to do in this area that is important; it is also important, as I said in my original Answer, that we work with all other partners. Therefore, it is not only a question of ensuring that we can prevent this crime; it is also a matter of educating people about the inherent dangers. It is a matter of identifying and recording this, as I said earlier, and, where appropriate, prosecuting.

[Baroness Afshar]

My Lords, in Islam there is no such thing as an honour crime. For 14 centuries, according to Islamic law and Koranic teaching, marriage has been based on a personal agreement between two individuals who have to sign a contract. The parents have no right to dispose of their children in these circumstances or to define whom they marry. It is a matter of choice for the man and woman to decide whether they wish to ask for their parents’ blessing, but it is not a Koranic teaching. Therefore, in Islamic law there is no justification whatever in defining something as an honour crime, and it should be punished accordingly.

[Lord Henley]

My Lords, I am grateful—and the whole House will be grateful—for what the noble Baroness has told us. It is something that we should all fully understand: that marriage is a matter of a contract between two individuals and is not a matter for their parents. I repeat what I said to the noble Lord, Lord West, about the use of the word “honour”. That is possibly something that we want to get away from.

[Baroness Corston]

My Lords, does the Minister agree that one of the challenges that we face is making clear to the heads of such families—usually an autocratic father—that when they come to this country because they want the benefits for themselves of an open and democratic society, such opportunity should also be accorded to their daughters as a matter of law and human rights? All too often, they bring a code of so-called “honour” from their own country that apparently applies to their daughters but to no one else.

[Lord Henley]

My Lords, again, I and the whole House are grateful for what the noble Baroness has said about the challenges we face, particularly about the idea of the autocratic father. Dare I say it, but autocratic fathers can exist in all societies and all cultures. I am not sure I had an autocratic father, but it is something that should be taken very seriously, particularly in respect of autocratic fathers’ relation to their daughters. I speak as a father with one daughter.

[Lord Elton]

My Lords, the noble Baroness, Lady Afshar, has drawn our attention to the effects of ignorance facilitating crime. Is my noble friend aware of the extent of the existence of so-called Sharia courts, which are believed by their local communities to have the full authority of the British judicial system but have none whatever? They also impose on people various decisions that result in violence and crime.

[Lord Henley]

Again, my Lords, my noble friend is absolutely right. Ignorance is something that we need to tackle, which is why I wanted to stress the importance of education. Education is probably the first and most important point to get over, a point that was made very strongly by the noble Baroness, Lady Corston.

Citizenship Education

Tuesday 14th February 2012 Lords Chamber

Question

14:44

Asked By

[Lord Harries of Pentregarth]

To ask Her Majesty’s Government what is their evaluation of current policies on citizenship education.

[The Parliamentary Under-Secretary of State for Schools (Lord Hill of Oareford)]

My Lords, Ofsted reported in 2010 that citizenship education is improving. Our reforms are designed to build on this by giving greater autonomy to schools. The national curriculum review is aiming to prescribe a core of essential knowledge, enabling schools to teach a wider curriculum that meets their pupils’ needs. Our recent publication Positive for Youth will help to ensure that young people have opportunities to realise their potential, including through becoming active and responsible citizens, as will the development of the national citizen service.

[Lord Harries of Pentregarth]

I thank the Minister for his reply and particularly for reporting that citizenship education in schools is apparently improving. Does he not agree, that at a time when the world is so turbulent and our own societies are under such strain, it is more important than ever that our young people should have a solid grounding in the responsibilities and rights of citizenship within a democratic framework? Further to the Prime Minister’s Answer to a Question in the other place on 11 December, what assurance can the Minister give that this can actually be achieved when there is such widespread suspicion that, as a result of changes to the curriculum, citizenship is going to be marginalised and downgraded?

[Lord Hill of Oareford]

I agree with the noble and right reverend Lord about the importance of citizenship. Although the expert panel that reported to us in December suggests that citizenship should form part of the basic curriculum rather than the national curriculum, the first sentence in its report emphasises the importance of citizenship and I very much share that view. The issue—and this is true of a number of subjects that are subject to the national curriculum review—is the extent to which we need to be prescriptive around programmes of study. We will reflect upon what the expert panel has said and take other representations into account, and then bring forward our proposals in due course in the light of that.

[Baroness Walmsley]

My Lords, given that the Secretary of State for Education has said that citizenship courses are pregnant with powerful knowledge, is there any possible excuse for not insisting that every child has the right to study this subject, especially since we are trying to get more of them to use their vote?

[Lord Hill of Oareford]

I agree with my noble friend that we should want every child to be able to study citizenship. One aspect is the importance of knowing about voting, as my noble friend says, but there are many other benefits of learning about citizenship as well. The issue is not its importance as a subject but how it is best delivered in the curriculum.

[Baroness Massey of Darwen]

My Lords, does the Minister agree that there is a severe overlap between personal, social and health education, and citizenship? Where exactly do we stand in relation to the delivery of PSHE and citizenship? How will they both be inspected so that evaluations can be made?

[Lord Hill of Oareford]

I agree with the noble Baroness, Lady Massey, that there is an overlap between the two, particularly at primary level. On where we have got to with our review, I know that she is keen for us to get to the sticking point. However, because of our need to take into account the report from the expert panel, the timescale for responding has moved back a little and we need to dovetail the PSHE review with the overall national curriculum review. We will bring that forward in due course.

[Lord Ramsbotham]

My Lords, what steps are being taken to increase citizenship education in young offender institutions and other places where children are held in custody?

[Lord Hill of Oareford]

On the specific details of what is happening in institutions—I recognise the noble Lord’s concern about that, and I agree with him on the importance of this in prisons and young offenders institutions—if I may, I will follow this up with my colleagues to see if I can help him with some more specific information about those programmes.

[Lord Morgan]

My Lords, is the underlying problem here not the general lack of discussion of citizenship as an idea in this country? Citizenship as a concept is absent from our standard textbooks on the constitution. This is very different from the republics of the United States and France. Is this not a serious matter?

[Lord Hill of Oareford]

My Lords, your Lordships’ House is a good example of an institution where we frequently discuss questions such as the meaning of citizenship and its importance. I know that many Members of this House take part in the Lords outreach programme and explore exactly these issues with children; so far about 30,000 pupils have been seen by Members of your Lordships’ House as part of that programme. We need to explore these issues. The thought at the back of the noble Lord’s mind is probably the distinction between us being subjects and citizens, and I would be happy to explore that with him on another occasion.

[Lord Laming]

My Lords, does the Minister agree that there is a connection between the first two Questions that have come before the House today? Some of the issues that were addressed by the first Question relate to second and third-generation children. Would it be possible to include in citizenship education the rights of children in this country and, more particularly, the ways in which they can get help if they are subject to exploitation or abuse?

[Lord Hill of Oareford]

I agree with the noble Lord that there is a link between the two Questions: they are linked fundamentally by our values as a society and the values that we want our children to have. Part of that can be explored through the teaching of citizenship, part of it is done through civil society generally and part of it through families. Part of the answer to the question—and to the last part of the question about inspection asked by the noble Baroness, Lady Massey, which I failed to answer—is that the requirement to look into the spiritual, moral, social and cultural development of a child through the Ofsted framework provides an opportunity to explore these issues.

[Lord Dholakia]

My Lords, has the Minister undertaken any evaluation of the citizenship ceremonies that take place when people qualify for UK citizenship, which were quite rightly introduced by the previous Administration, and what has been the outcome of that evaluation?

[Lord Hill of Oareford]

I will need to follow up on evaluation with my noble friend. I agree with him that those ceremonies should be able to play an important part in addressing some of these questions. I am not sure what the precise evaluation is but I will ask and write to him.

Wedgwood Museum

Tuesday 14th February 2012 Lords Chamber

Question

14:51

Asked By

[Lord Flight]

To ask Her Majesty’s Government whether they intend to legislate, in the light of the Wedgwood Museum case, to prevent the “last man standing” rule applying to the assets of charitable museums and other charities.

[Baroness Rawlings]

My Lords, the Government have reviewed this case carefully and believe that it would be inappropriate not to apply this rule to charities. Charities should have the freedom to choose pension schemes that suit their needs. These arrangements can be a useful way of managing liabilities and we would not want to restrict this option for charities. We welcome this opportunity to emphasise that charities should seek appropriate advice before making pension arrangements.

[Lord Flight]

My Lords, when the Wedgwood collection has been shortlisted as one of the top 20 cultural assets in the UK, I suggest that it is inconceivable that it should be left to be sold off. What proposals do the Government have for rescuing the collection? Secondly, with regard to charities, the DWP had a consultation last year that recognised the problems with both Section 25 and the “last man standing” rule. A further consultation was promised for this year. When will it start?

[Baroness Rawlings]

My Lords, I agree with my noble friend Lord Flight that one hopes that the Wedgwood collection would not be sold off. I assure him that the Government have had several meetings with the honourable Member for Stoke, Mr Tristram Hunt, and several other people concerned to find the most effective way to save this very valuable collection, which has been nominated by UNESCO as one of the 20 most valuable sites in the UK. Regarding the final meeting, meetings are taking place at the moment, and I will update your Lordships’ House as they go on.

[Lord Howarth of Newport]

My Lords, should we not be cautious about reaching conclusions until we have seen the full written judgment? We will then know whether the predicament of the Wedgwood Museum has arisen because pensions legislation was poorly drafted and scrutinised or, perhaps, because the trustees of the museum were poorly advised when they could have placed the collection securely in trust and beyond the reach of the Pension Protection Fund. Meanwhile, I express unreserved appreciation for the way in which the Minister, Ed Vaizey, has kept watch over the whole situation in regard to the Wedgwood Museum, and helped to bring people together so that they can develop plans for the museum’s archive and collection to be properly preserved for the benefit of the nation. Finally, will the noble Baroness, who is playing such a valuable role in this, ensure that the Minton Archive is not overlooked?

[Baroness Rawlings]

My Lords, the noble Lord, Lord Howarth, has touched on very important points. One is right to be cautious until we get the written judgment, which should come through soon. A difficult situation applied when the trustees were advised. I totally agree with the noble Lord that the Minister, Ed Vaizey, has held several meetings on this matter and has become very involved. The Government have good will in all this and will do all that they possibly can. The Minton archive is very important and is arguably the greatest industrial archive of its kind. I can assure the noble Lord that it has certainly not been forgotten. It is now the property of WWRD UK, the new owners of the Wedgwood Group. The Minister for Culture has spoken to them about this matter. The archive is still safely in storage in Bonhams, which is awaiting a resolution on the future of the Wedgwood collection and the museum before taking any decision about its future.

[The Earl of Clancarty]

My Lords, does not the Minister agree that it is time that the Government took more control of the Wedgwood situation and, indeed, bought the collection? Appeal is in this sense irrelevant. It could be called the National Wedgwood Museum. As such, it would be a huge asset to Britain and a tremendous boost to Stoke-on-Trent. Surely for £14 million or thereabouts, this ought to be a no-brainer.

[Baroness Rawlings]

As the noble Earl, Lord Clancarty, mentioned, this museum is terribly important for the Stoke area and the Potteries. As regards the valuation that he mentioned, DCMS is working on that with the protection fund but we still do not know what it will be. We hope that there will be a fundraising campaign and the collection will be saved sooner rather than later.

[Baroness Sharp of Guildford]

My Lords, is the noble Baroness aware that besides the unique ceramics collections there is also a data archive dating back 250 years of the Wedgwood and Darwin letters, which have great scientific significance? Does she not agree that it is something of a quirk that a quirk of law relating to the financial sector should require us to sacrifice this icon of our industrial heritage?

[Baroness Rawlings]

My noble friend makes a very good point. The archives and the whole collection constitute a most remarkable collection that has been donated by the family over many years. It would be a disaster should it be sold. The protection fund is a very complicated fund which the Government are looking at in great detail. I will not go into all the details of the pension scheme now but I will write to her with those details.

[Lord Cormack]

My Lords—

[Baroness Jones of Whitchurch]

My Lords, may I pursue the whole issue of the “last man standing” legislation with the noble Baroness? I understand that, following the DWP’s review of this policy, it was agreed that there would be a further review. However, I gathered from what the noble Baroness was saying just now that this is not the case. Will she confirm whether this matter is under review, because it seems to noble Lords around the House that it is being used and implemented in a way that was never foreseen, is causing charities—not just the Wedgwood Museum but other charities—considerable concern and disquiet, and has consequences for unemployment in the area as well? Therefore, will the noble Baroness clarify the status of the “last man standing” legislation?

[Baroness Rawlings]

With pleasure, my Lords. We understand that the Wedgwood pension scheme operated on the basis that if any participating employers became insolvent or otherwise stopped sponsoring the scheme, responsibility for the pension scheme fell to the remaining employers. This is what is meant by the “last man standing” rule. As a result, the company of the Wedgwood pension scheme—the museum—became liable for its pensions shortfall. We are awaiting the judgment from the Attorney-General. Then it will be decided where we go to from there.

Youth Unemployment

Tuesday 14th February 2012 Lords Chamber

Question

14:59

Asked By

[Baroness Hughes of Stretford]

To ask Her Majesty’s Government what is their response to the call in the report by the Commission on Youth Unemployment published on 6 February for action to address youth unemployment.

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

My Lords, the Government share a number of the concerns raised in the report produced by the Commission on Youth Unemployment. We are already taking action to address youth unemployment and have a clear strategy to support young people into work.

[Baroness Hughes of Stretford]

My Lords, I thank the Minister for his Answer. However, as he will know, the analysis in the report not only scotches the myth that youth unemployment is being driven up by immigration or the minimum wage; it demonstrates clearly that the Government’s measures, welcome though they are, are wholly inadequate to deal with this rising crisis and prevent another generation of young people, as well as the country, paying a terrible price. Will the Government respond specifically to the report by front-loading the youth contract to double the number of job subsidies this year, extending the work programme beyond the 10 per cent only of young people who are currently on it, and bringing in a specially targeted approach for those 600 hotspots that, the report shows, now have double the national average of youth unemployment?

[Lord Freud]

My Lords, the noble Baroness might have been interested in one of the annexes in that report that indicated that actually there is concern about the national minimum wage. The point that she makes is towards the end of the report. There are a lot of measures to solve youth unemployment. I will pick up some of those that the noble Baroness mentioned. The first one is rebalancing the youth contract, to which she referred. We are already front-loading the wage incentives that we are introducing in April. We are doing more than the average in that period. We are trialling a community action programme for people who have been through the work programme, and we are looking at how we work in areas in an equivalent way to the youth employment partnerships.

[Lord Roberts of Llandudno]

My Lords, what are the Government doing to tackle long-term, structural unemployment? In 2007, 2.4 per cent of our young people were designated as long-term unemployed. Now the figure has risen to 4.6 per cent, and it is going upwards throughout the world. What have we got to offer young people in the long term to deal with structural unemployment? Are we doing anything seriously about that?

[Lord Freud]

First, long-term youth unemployment has not changed a lot. What changed is that youngsters were put on training programmes and, when they came off them, they were called newly unemployed. The underlying position has not changed very much in terms of long-term youth unemployment. I am not saying that that is not a real problem but I am saying that it has not grown as much as one might think, looking at the raw figures. Clearly we need to help youngsters in long-term unemployment, and one of the things that the work programme is specifically designed to do is to get support for youngsters on an individualised basis.

[The Lord Bishop of Ripon and Leeds]

My Lords, what are the Government doing to improve careers advice in schools so that young people can be helped into appropriate employment?

[Lord Freud]

My Lords, we are making it a statutory duty to ensure that schools take up their responsibility to provide careers advice, so that it is supplied at the point it should be, right where it is best received. Existing provision has been much too patchy.

[Lord McFall of Alcluith]

My Lords, the International Labour Organisation has said that youth unemployment is facing the greatest crisis in a generation. The global crisis has added to youth unemployment here. As someone who taught in the Glasgow area in the 1980s, I saw young people leave school and met them 10 years later when they had partners and children, but they did not have a job. Is it not a crying social and economic shame that we do not do more for young people at this stage to ensure that they adapt to the workplace and play a full role in society?

[Lord Freud]

My Lords, a point that I have made here in the past is that we have had a structural issue with youth unemployment for more than a decade, The number of youngsters inactive or unemployed has been growing steadily, right through to the end of the longest boom that we have ever had. My view—and the Government’s view—is that the best way to tackle that is to make sure that youngsters have education that gets them fit for the workplace. That is why this Government have taken on in toto all of Professor Wolf’s recommendations, because they deal with these core issues.

[Lord Forsyth of Drumlean]

My Lords, on that point, does my noble friend not agree that one of the mistakes we have made over the past 15 or so years is to encourage youngsters to go for degrees at university rather than vocational courses that provide them with the skills that are demanded and, indeed, are in short supply in the labour market?

[Lord Freud]

My Lords, the most shocking thing in Professor Wolf’s report was when he said—I shall quote it—

“as a society we are failing at least 350,000 of our 16-18 year olds, year on year”,

because we had been providing them with vocational education that did not lead them anywhere. That is why our strategy to increase apprenticeships and get vocational training back under control is so important for this generation.

Housing (Scotland) Act 2010 (Consequential Provisions and Modifications) Order 2012

Tuesday 14th February 2012 Lords Chamber

Motion to Approve

15:06

Moved By

[Lord Wallace of Tankerness]

That the draft order laid before the House on 10 January be approved.

Relevant documents: 37th Report from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 6 February.

Public Services (Social Value) Bill

Tuesday 14th February 2012 Lords Chamber

Order of Commitment Discharged

15:07

Moved by

[Lord Newby]

That the order of commitment be discharged.

[Lord Newby]

My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move.

Motion agreed.

Welfare Reform Bill

Tuesday 14th February 2012 Lords Chamber

Commons Reasons and Amendment

15:07

Relevant Documents: 21st Report from the Joint Committee on Human Rights.

Motion

Moved by

[Lord Strathclyde]

That the Commons reasons and amendment be now considered.

[The Chancellor of the Duchy of Lancaster (Lord Strathclyde)]

My Lords, I beg to move the Motion on behalf of my noble friend Lord Freud. I also felt that it might be a useful opportunity for me as Leader of the House to say a few words about the relationship between the two Houses and, in particular, the financial privilege of the House of Commons. After all, this being Valentine’s Day, it is not a bad time to talk about relationships.

Perhaps I may begin by commending to the House the statement made by the noble Baroness, Lady Royall of Blaisdon, on 10 February 2009. Everything I say today is based on that material and I am grateful that there is not an inch between us. I also commend the paper on the subject by the Clerk of the Parliaments of 10 February 2009, yesterday’s update by the current Clerk of the Parliaments, and the note published by the Clerk of the House of Commons last Thursday. All three documents are available in the Library and online. They all accord with each other and clearly set out the position, which I shall now try to do with something approaching the same clarity and accuracy.

Even for a Conservative, the financial privilege of the House of Commons cannot be considered new. Its origins lie in the constitutional settlement that followed our civil war. The Commons agreed its first resolution on the subject in 1671, and in 1678 resolved that:

“All aids and supplies, and aids to his Majesty in Parliament, are the sole gift of the Commons; and all bills for the granting of any such aids and supplies ought to begin with the Commons; and that it is the undoubted and sole right of the Commons to direct, limit and appoint in such bills the ends, purposes, considerations, limitations, and qualifications of such grants, which ought not to be changed or altered by the House of Lords”.

That resolution settled the relationship between the two Houses for a long time, until the trauma of the Finance Bill of 1909 when this House rejected Lloyd George’s Budget. That led to the Parliament Act of 1911, which put the legislative relationship between the two Houses on a statutory footing and formally circumscribed our role in Bills which deal exclusively with expenditure or taxation or the granting or raising of loans—Bills referred to as money Bills. For the avoidance of doubt, the Welfare Reform Bill is not a money Bill. It is a normal public Bill, some provisions of which relate to expenditure.

At this point I should make clear that the Commons’ financial privilege has, from its origins, extended to both taxation and expenditure. As successive editions of Erskine May have put it:

“The Commons’ claim to sole rights in respect of financial legislation applies indivisibly to public expenditure and to the raising of revenue to meet that expenditure”.

The idea that it is novel for the Commons to assert its financial privilege for public expenditure as opposed to taxation is simply wrong.

That is the history, but what are the implications for today and thereafter? The position is as it was throughout the 20th century. As the Clerk of the Parliaments put it in his 2009 paper,

“until the Commons asserts its privilege, the Lords is fully entitled to debate and agree to amendments with privilege implications”.

That is what we did in this case; and were perfectly entitled to do. I vigorously defend the right of the House to ask the Commons to reflect, and indeed I did so myself in opposition.

What happens next is entirely a matter for the House of Commons, and I intend to respect the convention that the two Houses do not debate the other’s procedures. I can though direct Members of this House to the helpful memorandum by the Clerk of the House of Commons which makes clear that it is the Commons officials under the authority of their Speaker who determine whether each Lords amendment engages financial privilege before the House of Commons is invited to accept or reject each amendment. The Government have no role in this decision; and the Clerk of the Commons has made that clear.

It should not come as a surprise to anyone that in this case the Commons authorities decided that the 11 Lords amendments which we have before us today engaged financial privilege: their cumulative cost is more than £2 billion. So the idea that this was a knife-edge decision reached only after lobbying by the Government is simply implausible.

It is only after the question of privilege has been determined that the Commons considers whether to agree or disagree with each Lords amendment. If the Commons agrees, it can choose to waive its privilege. But if it disagrees, it must offer a reason, and the only reason it can give is privilege. As the Clerk of the Commons explains:

“If an amendment infringes privilege, that is the only reason that will be given. This is because giving another reason suggests either that the Commons haven’t noticed the financial implications, or that they are somehow not attaching importance to their financial primacy”.

I hope that three things are clear from that summary: first, that the scope and presence of privilege are solely for the Commons; secondly that the Government have no role in designating whether or not a Lords amendment impinges on privilege; and last, that when the Commons disagrees with a Lords amendment found to involve money, privilege is the only reason that it can possibly cite for rejecting the amendment—there is no discretion to give another reason. The whole House should be grateful to the noble Lord, Lord Martin of Springburn, who has twice in recent weeks made these very points to help our understanding.

I think that this notion of discretion is where much of the confusion lies, so I propose now to say a word about the ability of the Commons to waive its privilege. If a Lords amendment which has financial implications is within the existing Commons’ money resolution, the Commons may agree to that amendment and, in so doing, waive its privilege. But if the Commons disagrees to the amendment, the question of waiver does not arise: the Commons must give this House a reason and that reason must be a privilege reason. In other words, the designation of a Lords amendment as privileged does not preclude the Commons from accepting it. In fact, the only question for the Commons is whether to accept or reject each Lords amendment on policy grounds. If it accepts the amendment, privilege is waived; if it rejects it, privilege cannot be waived.

15:15

On the Welfare Reform Bill, the Commons authorities found that privilege was engaged in 46 of the 110 Lords amendments. The Government asked the Commons to agree to 35 of those 46 amendments and to reject the remaining 11. In agreeing to those 35 Lords amendments, each a concession to this House, the Commons waived its financial privilege for more than £300 million of public expenditure. Therefore, we are really talking only about the remaining 11 Lords amendments, which, on policy grounds, the Government could not accept and which they asked the House of Commons to reject. When the Commons voted to reject each of those amendments, the only reason it could cite was privilege.

There is a further reason why privilege reasons should not surprise us: we receive them regularly and have long received them regularly. Earlier this Session, the Commons asserted its financial privilege when rejecting Lords amendments to the Identity Documents Bill. It did the same in the previous Parliament on Bills as varied as the Counter-Terrorism Bill and the Personal Care at Home Bill—a telling statistic, given the vast sums of public money that were then being spent. Of course, it also did so when Mr Blair was Prime Minister, and it did so in the 1980s and 1990s when the Conservatives were last in office.

I hope that that deals with the facts and the precedent in this area. I shall now briefly try to explain the options for this House today. The Companion makes it clear that:

“In such cases the Lords do not insist on their amendment. But they may offer amendments in lieu of amendments which have been disagreed to by the Commons on the ground of privilege”.

I respect, and would defend, the right of this House to propose an amendment in lieu when the Commons has rejected our original amendment on grounds of financial privilege. However, I should remind the House that the Joint Committee on Conventions reported in 2006 that:

“If the Commons have disagreed to Lords Amendments on grounds of financial privilege, it is contrary to convention for the Lords to send back Amendments in lieu which clearly invite the same response”,

and this House “took note with approval” of that report in 2007. As the Clerk of the House of Commons recently put it, a privilege reason,

“does not exclude a second try by the Lords”,

but if the Commons has asserted privilege, there is simply no point in this House persisting with amendments in lieu which invite the same response.

That is not closing down debate or rendering our work pointless. There is full debate in both Houses. We have asked the House of Commons to think again. The only effect of the privilege reason is to send the signal that it is unprofitable for the Lords to persist with amendments in lieu on the same lines as the original. I think we need to look at today’s Marshalled List in that light.

I urge the House not to test our longstanding relationship with the other place. It is perfectly in order to debate the amendments on the Marshalled List today but it is simply unprofitable to send back to the Commons any of those amendments which invite the same privileged response from the Commons.

Despite those dangers on the Marshalled List, I think that today we find ourselves in a rather good position. I do not want to pre-empt my noble friend Lord Freud but I think that he will have some useful things to say from this Dispatch Box in a few moments.

My intention this afternoon has been to clarify the long-standing position on financial privilege and the relationship that exists between both Houses. I urge your Lordships to listen to my noble friend Lord Freud to see whether, irrespective of privilege and legislation, he can offer the assurances and reassurances which many Members are seeking on the substance of the policy that this Bill seeks to introduce. On that basis, I beg to move that the Commons reasons and amendment be now considered.

[Baroness Royall of Blaisdon]

My Lords, I am grateful to the Leader of the House for his rather wide statement, especially for his remarks on issues relating to the Welfare Reform Bill. Since the Speaker in the other place indicated on 1 February that amendments to the Bill carried by your Lordships’ House could attract House of Commons financial privilege, we on this side of the House have been pressing the Government to give some indication of the procedural impact on the Bill of this designation.

We will deal with the procedural points, which the noble Lord has mentioned, as we consider the amendments before us today. They are important amendments that deserve proper consideration, and I do not wish to take time away from discussing them today or otherwise detract from the importance of the issues involved. However, the application of Commons financial privilege to a number of key amendments of the Welfare Reform Bill has prompted widespread comment in legal, constitutional and political circles, not only on the Bill but on the implications that might now be there for future legislation. Peers from all sides of the House have been in touch with me about their concerns on this point, some of which—but only some—were indicated in our brief discussions in the Chamber on this matter.

Commons financial privilege is a matter for the Commons, as the noble Lord said, and operationally for the Speaker of the Commons and senior clerks in the Commons, as the helpful note on the matter, issued yesterday by the Clerk of the Parliaments in this House, together with the similarly helpful note from the Clerk of the House in the other place, makes clear. However, once Commons financial privilege has been indicated, it is for the Commons to decide whether to waive its financial privilege.

The Government’s majority in the Commons means that politically in practice the Government have a huge influence on whether the Commons waives its financial privilege. It is therefore appropriate for this House to consider these issues and the issues arising in relation to the role of this House in the legislative process. However, I suggest that today is not the time to have such a discussion. I know that many Members from all sides of your Lordships’ House—very much including those on the government Benches—are concerned about these wider matters and want to debate and discuss them. I know this because many noble Lords have come to see me about this issue.

In light of these widespread concerns, I formally request that the noble Lord the Leader of the House makes provision to come to the House, perhaps on the basis of a short Statement, to enable the House to debate the application of Commons financial privilege in a way which a number of expert commentators have suggested is unprecedented and considerably extends the use of Commons financial privilege. In view of the seriousness of the issue, I request the noble Lord the Leader of the House to make time available for the House to consider these matters very early in the week beginning 27 February, as soon as the House returns from recess. I do so because such timing would allow the House to consider these matters well in advance of the House considering a similar policy Bill, the Legal Aid, Sentencing and Punishment of Offenders Bill, which is due to have its first day of Report in your Lordships’ House on Monday 5 March.

I believe that these are incredibly important issues for the House to consider and I know that a large number of Members of this House believe that strongly too. I therefore urge the noble Lord to make time available, perhaps on the basis of a short Statement, to enable the House to debate this issue in the week beginning 27 February.

[Lord Tyler]

My Lords, I have a genuine respect for the noble Baroness, Lady Royall of Blaisdon, but I am bemused by the position she seems to have adopted. I hoped she was going to clarify her position this afternoon. I read with concern the report of her views in the Guardian last Wednesday, which stated:

“She attacked the way in which the government was trying to neuter debate on current controversial bills such as the welfare bill by claiming financial privilege, a means by which the Commons can order the Lords not to pursue an amendment because it has financial implications beyond Lords' powers”.

From what the noble Baroness has just said, I think she may regret having stated that. Perhaps she has been wrongly reported. I thought there was a common view about the use of the financial privilege circumstances—when the Commons can assert its privileges. I have experienced both ends of the House. I thought we knew where we were. There were many occasions, for example in the last Parliament, when much more minor issues came up that had financial implications and she, when she was on this side of the House, and her noble friends, defended the right of the Commons to assert its financial privilege on much smaller sums of money than we are considering this afternoon.

As we were told, the 11 amendments under consideration on which the Commons has asserted its privileges cost in total something in the region of £2 billion. I draw the attention of the noble Baroness in particular to an occasion on 24 November 2008 when she and her noble friend Lord West of Spithead, who has left his place, defended the use of the financial privilege assertion by the Commons. She stated:

“Having said that, I realise that the reason given for privilege is precisely because it is a financial privilege. I hear what the noble Lord says, but I am informed that we are acting in accordance with the proper procedures”.—[Official Report, 24/11/08; col. 1294.]

The matter concerned a very small sum of money to be spent on DNA procedures under the Counter-Terrorism Act—far smaller in significance than the amendments that we are considering today. Therefore, I am bemused. I do not understand what the noble Baroness’s position is now. Is she trying to change the commonly accepted meaning of financial privilege, or is she going back on what she said to the Guardian last week? I hope she will clarify her position because it will do the House, and indeed her position in it, no good if we adopt an apparently selective procedure concerning financial privilege.

This afternoon is probably not the occasion to debate this in detail. However, I am very disappointed that the noble Baroness did not re-establish the point that she made when she was on this side of the House. There are long-standing conventions, nothing has changed and the very small number of amendments that have received this treatment from the Commons is in direct contrast to the many occasions when she asserted that privilege when she was in government.

[Lord Laming]

My Lords, I do not wish to get caught up in a cross-party dispute on these matters, which are very serious indeed. I am extremely grateful to the Leader of the House for his very helpful statement. I will also associate myself with the point that he made about the noble Lord, Lord Freud, who has been assiduous throughout the Bill in the way in which he has listened and responded to the concerns of the House.

The House has a proud record of scrutinising legislation and, if I may say so, improving it. However, in the circumstances in which we find ourselves, I will make a request to the Leader. Sometimes when amendments go to another place there is a temptation for the House to be portrayed as troublesome. I hope that in these special circumstances the Leader of the House will assure noble Lords that what has happened on the Bill is part of normal business between two Houses, and that we will continue to conduct business in this proper way to secure the best possible legislation.

[Lord Morgan]

My Lords, I will just say that I am afraid I do not agree with my noble friend Lord Tyler on this.

[Noble Lords]

He is not your noble friend.

[Lord Morgan]

Well, sometimes he is—but the view that we heard is historically flawed. The idea that there has been a seamless web since 1671 is quite unsound. As we know, the Parliament Act defined money Bills very precisely. It did so in the spirit of the resolutions of the 1670s. Distinctions were drawn between where the money came from, which was spelt out very clearly, the intended objective and the issues governing its expenditure. It was confirmed in 1911 by the great Prime Minister Mr Asquith that the money Bills provision applied to what he called “all matters of pure finance”. There was agreement across the House that it would not be applied to financial privilege more generally, particularly where issues of social policy were concerned. This is why very often House of Lords amendments had waivers in the House of Commons on many things—including, recently, university tuition fees, the savings gateway and child trust funds, all issues that I discussed myself. The principle that this should now be extended to any implications for public expenditure is far wider than the Parliament Act 1911, and adds a new and unwelcome principle to our unfortunately unwritten constitution.

15:30

The other point I would like to make briefly is that the idea that this is decided by the Commons as though it was some kind of Athenian assembly is absurd. It is obviously decided by the majority, which is controlled by the Government. Compared with 1911, and with everything that has happened since 1911, I think the Government are trying to impose a view of a single-Chamber Government upon the country, which would in many ways make the existence of this noble House pointless, and I think they are politically and historically mistaken.

[Baroness Boothroyd]

My Lords, it is obvious that the Leader of the House recognises the disquiet in many parts of this House about recent operations of the financial privilege. I welcome that, and the explanation he has given today.

I certainly do not challenge the primacy of the elected Chamber and its control over financial policy. Neither do I intend the role of this House to be neglected as the revising Chamber with special responsibilities for the scrutiny of the legislation that comes to us.

The constitution of our country operates by convention. The Leader of the House talked about relationships on this special day, but I remind him that this is a bicameral Parliament; it operates by negotiation, by the ways and means of getting things done. Where were the usual channels during all this? The usual channels assist good relations not only between political parties but between the two Houses. By goodwill and by negotiation, they might have arrived at some compromise on the amendments to this Bill rather than have the Government behave in what I regard as the very heavy-handed manner that we witnessed the other week.

In an effort to resolve this matter, the noble and learned Lord, Lord Mackay of Clashfern, made the point that, in future, to avoid wasting scarce legislative time on the Floor of this House, amendments to which the Government might object should be flagged up in advance. I have huge respect for the noble and learned Lord; we worked in tandem for many years. However, I fear that predicting the future in that way would be nearly impossible and even if it were not so, would it not mean asking Lords authorities to interpret Commons privilege, or asking Commons officials to advise your Lordships? That does not seem a very practical way forward.

My concern is about the near future, about the Bills that will come before this House in the remainder of this Session and in the next Session. I ask the Leader of the House to state in his response, unequivocally, that the Government have no intention of threatening the role of this House in its responsibilities of scrutiny and revision by the increased use of financial privilege. Further, I ask him to speak frankly with some of his colleagues in the other House about how the relationship between the two Houses is currently practised and how it might be improved upon. We have the need to know what the future holds for this House for the remainder of this Session and the Bills that we are dealing with, and for the coming Session.

[Lord Fowler]

My Lords, perhaps I might make a brief intervention as a former Secretary of State for Social Security.

This is not the first time that a Government have been defeated in the Lords on a social security Bill. My 1986 Social Security Bill was defeated three times. The question arose what to do about it, so I went to see the late Lord Whitelaw and he in very typical form said, “We’ll put two of them back but you’ll have to give them the third”.

I actually thought that the fact that the present Government were riding roughshod showed a weakness in their position, but then I went back to the debate itself and saw that my noble friend Lady Trumpington—who I do not think is here, which is probably just as well because she might make some sort of gesture at me—

[Noble Lords]

Ha!

[Lord Fowler]

She introduced the Lords amendment that justified the disagreement thus:

“Because it would alter the financial arrangements for housing benefit made by the Commons, and the Commons do not offer any further Reason trusting that this Reason may be deemed sufficient”.—[Official Report, 24/7/86; col. 416.]

Therefore, this is not a new position. Obviously we can argue about all the amendments that have been negatived in that particular way. However, given the financial position, and the amount of money that is at stake here, it is justified.

However, I would like to add two further points. The noble Baroness, or perhaps it was my noble friend, said that we do not want to get into a debate about procedures in the other place. We would have a great deal more confidence in the parliamentary process if everything in the other place was not guillotined and timetabled. The trouble is that so much comes here that is half digested, and some of it has never been considered at all. If we are to have consideration, that should be it.

The second point—and I realise that I am slightly chancing my arm here—is about the future. Does my noble friend think that things are going to be quite as easy with an elected House of Lords as they are with us? Does he not think perhaps that elected Peers might say, “My vote is as good as yours in the House of Commons”, and that the result will be exactly the kind of situation that my noble friend is trying to prevent?

[Lord Naseby]

My Lords, as the 58th Chairman of Ways and Means, I have to say to the noble Lord opposite, who is a great historian, that the point of being appointed Chairman of Ways and Means was created by that Act in the 17th century, because the then Members of Parliament did not trust the then Speaker with ways and means—in other words, with money. That is why, even today, the budget of this nation is taken by the Chairman of Ways and Means. Therefore the historical analysis that the Leader of the House gave us is absolutely correct, and that is the situation as of this moment. I would just say that the points made by my noble friend Lord Fowler are two additional points that the House may well wish to reflect on as we move forward in the future.

[Lord Hennessy of Nympsfield]

My Lords, I have immense respect for the noble Lord, Lord Strathclyde. Would he accept that bicameral legislatures work best in conditions of respectful mutual restraint? If one or the other Chamber pushes its powers to the maximum, it tends to produce a spiral of escalation that leads to Parliament becoming much less than the sum of its parts. It would be impossible for your Lordships’ House to serve as a Chamber of what Walter Bagehot called “respected revisers” if the other place pushed its undoubted financial privilege to the maximum in anything but the most exceptional circumstances. We have, very neatly, great wisdom from the past on this from a remarkable Liberal Prime Minister, Mr Gladstone, who said of the British constitution that nowhere in the wide world does a constitution presume,

“more boldly than any other the good sense and the good faith of those who work it”,

and I underline the verb “work”.

[Lord Higgins]

My Lords, it is extremely helpful of the Leader of the House to set out the position so clearly, and it is what I have always understood it to be. May I make one practical point? The amendment comes back from the other place, privilege having been claimed. The convention is that one does not send back an amendment which is likely to invite the same response. The trouble is that the simple point which is made when they claim privilege is “We can’t afford it”, and one might send back an amendment which costs somewhat less. We do not know whether they “can’t afford it” to the extent that such an amendment would be acceptable. Therefore, it may be quite reasonable for this House, if it gets back an amendment that has been rejected on grounds of financial privilege, which effectively says that we cannot afford it, to send an amendment back that would cost less than the one that was originally proposed.

[Lord Strathclyde]

My Lords, I am very pleased that I have taken the opportunity this afternoon to clarify something that I know a lot of Peers feel strongly about, particularly former Members of another place. Given that since the general election more than 100 Peers have joined this House, it is worth from time to time re-explaining some of the reasons behind the relationship that exists between the two Houses. I say respectfully to the noble Lord, Lord Morgan, with all his historical perspective, that he may well be right that it has not been a seamless web since the 17th century. But the settlement has been very much recognised and has worked respectfully between the two Chambers over the past 100 years, not least during the course of the Labour Government since 1997.

I agree with the noble Baroness, Lady Royall, as Leader of the Opposition. I understand that there has been widespread comment in legal, academic and constitutional circles, although it has not always been accurate. But I hope that part of what I have laid out today will help those outside commentators to understand the position as I see it and as I believe the House of Commons does. It is a long-standing convention, for reasons which are entirely obvious, that the two Houses do not debate each other’s internal procedures. I am not entirely sure what would be gained by having a further debate on this. After all, today we have a very full House and we have had a useful and interesting debate on this issue.

In everything that I have said and that we are doing this afternoon, there is no extension to the issue of legal privilege. As I said in my opening remarks, the situation is exactly as the noble Baroness, Lady Royall, when she was Leader of the House, laid out in 2009. Nothing has changed. That is why I join with my noble friend Lord Tyler in being somewhat bemused about the noble Baroness’s view on House of Commons privilege. I was rather hoping that she would leap to her Dispatch Box and agree with every word that I had said, at least on the basis that I had agreed with everything she had said. I am very grateful to the noble Lord, Lord Laming, the Convenor of the Cross Benches, for his important intervention.

Let me clarify one aspect of this. As the Clerk of the Parliaments put it in his 2009 paper, until the Commons asserts its privilege, the Lords is fully entitled to debate and agree to amendments with privilege implications. It is right that we should have the ability to do so, not least because it allows the Minister to give the Government’s point of view. That will continue and rightly should continue.

It is always good to hear from former Speakers of the House of Commons and I am indebted to the noble Baroness, Lady Boothroyd, who harked back to an age when there was clearly more flexibility and more discussions in the usual channels in the 1990s. Of course, my noble friend Lord Naseby explained about the ways and means.

Perhaps I may confirm to the noble Baroness that there is no threat to this House in terms of its powers and role. To respond to my noble friend Lord Fowler at the same time, the only purpose in having the Bill on reform of the House of Lords and debating that reform is that this House should be reformed only if it can be more assertive, stronger and better able to hold the Government to account and if it can challenge the views of the House of Commons. Otherwise, why on earth would we bother with all of this?

[Noble Lords]

Oh!

15:45

[Lord Strathclyde]

My Lords, my noble friend Lord Fowler, with his tremendous memory, harked back to 1986. He complained about the Commons using programme Motions more than they did in the past, and that is true, but of course it is up to them. However, I can confirm that the House of Commons discussed and debated each of these amendments in full before passing them back.

I can tell him my noble friend Lord Higgins that my noble friend Lord Freud will be able to explain the Government’s position on each of these amendments, but he will not be able to confirm what position may be taken by the House of Commons because that is a decision for the Speaker on the advice of his Clerks. However, I should like to repeat the really important thing in all this. Some 35 of the 46 Lords amendments to the Welfare Reform Bill that were designated by the House of Commons as privileged were subsequently accepted by that House. That must be an indication that we did a good job and we did it well.

I hope that I have answered all the questions put to me. If not, I shall reply in writing, but I hope that we will now be able to continue.

[Lord Stoddart of Swindon]

My Lords, I am much obliged to the Leader of the House. I do not really believe that he has dealt satisfactorily with the points raised by the noble Lord, Lord Fowler. He said that this House would be strengthened by the Bill that apparently is to come before us in the next Session, but if it does not provide the same financial powers as those of the House of Commons, we will be in no different a position from that in which we are at present, which we are discussing. Unless that Bill can be amended to give the House of Lords the power to make amendments that may indeed put up expenditure without being told by the Commons that we cannot do so, then what is the point of us?

[Lord Strathclyde]

My Lords, I have long believed that there are adequate powers in this House, many of which we do not use, partly because we are an unelected and appointed Chamber. When and if we are ultimately elected I expect that, over time, those powers will evolve. I have no idea how they will evolve, but if a Bill for an elected House is presented, this is an issue that we shall debate long and hard, and I look forward to the noble Lord’s amendments.

Motion agreed.

Motion A

Moved by

[Lord Freud]

That this House do not insist on its Amendment 1 to which the Commons have disagreed for their Reason 1A.

LORDS AMENDMENT 1

1: Clause 10, page 4, line 34, at end insert “, such additional amount to be paid at either a higher rate, or a lower rate, which shall be no less than two-thirds of the higher rate as may be prescribed”

COMMONS DISAGREEMENT AND REASON

The Commons disagree to Lords Amendment No. 1 for the following Reason—

1A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

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

My Lords, before I go into this Motion, I would like to pick up some of the points raised by my noble friend the Leader of the House about how what we are considering today is impacted by the ping-pong process that we are going into. The question asked by my noble friend—

[Lord Laming]

My Lords, I am sorry. This is a really important statement that we are all terribly keen to hear but are unable to do so amid all this noise. Perhaps it is my position in the Chamber, but I wonder if the noble Lord could start again.

[Lord Freud]

My Lords, I apologise, I was keen not to waste time. I want to pick up on the comment made by my noble friend: why would we bother with all this? I am considering all the work that has been done on this Bill, and as I look around noble Lords I can see that the most astonishing amount of energy has been put into this Bill through its Committee and Report stages; I am the first to register that. I want to assure noble Lords that the debates we have had have been heard, that I have represented the points made with great vigour in government, and that I have seen a lot of changes in this Bill as a direct result of that work. I shall name a few of those changes because it is easy to forget what we have done with this Bill.

On ESA time-limiting, we accepted the need to make amendments to protect those with degenerative conditions. On the benefit cap, we have put in a nine-month grace period and exempted those in the support group of ESA, again in response to debates in this House. On PIP, we have made a number of changes to the required-period condition and have restored the mobility component for those in residential homes. Within universal credit, we have put in £300 million a year to afford additional childcare. That all added up in this spending review period to £638 million. Looked at as an ongoing cost when universal credit is introduced, it amounts to an extra £518 million per annum in a steady state. Each of those concessions was made as a direct result of the debates that we had in this House. I think, bluntly, there was a point at which the Government decided they could not afford any more. The cost of the amendments that we sent through would have been £2.1 billion in this spending review period and another place decided that that was more than could be afforded. I think that we reached the limit and the way to interpret what has come back from another place is that we cannot afford any more. Despite that, I want noble Lords to know that I am going on listening today and I hope that there will be several areas where I can move things along in a way that is helpful to the mood and views of many Peers.

I turn to the Motion. Noble Lords will remember that this is about having just two rates in universal credit for disabled children which align with adult rates. Our objective is to distribute resources fairly and simplify the current systems of support. The idea is to target the money on need and not on age, because of the problem of when people move from the child system to the adult system.

We are absolutely committed to supporting disabled people, to improving their quality of life and to tackling poverty at its root. We need to assess how to invest scarce resources in the most effective way. It is clear that this has been a matter of great concern to noble Lords. I have been exploring that concern and trying to get to its root. The concern lies in whether we are channelling the money to the right children. At the moment, children are passported from DLA and the question is whether we have the right definitions. I understand that concern and am taking steps, subject to your Lordships’ response, to do something about it.

If we are going to have a system of alignment between children and adults, and make sure that that works effectively and that we minimise disruption, then we have to be certain that the categorisations are consistent through that age gap. This is not an easy thing to do, because at the moment the definitions in these areas are linked to DLA for children. We need to be careful not to pre-empt any decisions on the future applicability of that, because we may be looking to change from DLA for children to PIP for children. We need to spend a considerable time to get that move—if it happens—right. Children are different from adults and have different needs from them at different times in their lives. Just as for adults, we need to have a system that is fair and consistent for children.

We need to learn from the introduction of PIP for those aged 16 to 64, which will start in April 2013 and continue through to 2016 as people switch over. We need to build learning from that process. We are also looking at moving towards a single assessment process for children’s social care, health and special education needs. By the start of 2015, we should have gathered sufficient evidence to be able to consider our future approach.

On the basis of that timing and on the basis that the noble Baroness, Lady Meacher, withdraws her new amendment, I am therefore happy to give a commitment to the House that, by the end of 2015, we will review the current definitions, working carefully through the issues with disabled people and disability organisations, so that we have a gateway in place that ensures that the most severely disabled children get the right support.

Before noble Lords say that 2015 is a long way away, I point out that it is not quite as far as it seems. Universal credit will start to roll out in October 2013, and we will migrate claimants into it slowly over the next four years. In practice, people with disabled children are likely to be towards the end of that migration queue anyway. In addition, we have transitional protection for the existing groups. In practice, the timings would mesh quite elegantly. It would mean that the commitment is there to either look at it in the context of a move to child PIP or to have a proper look at it anyway within the context of DLA.

I hope I have been able to demonstrate to the House that we are taking this issue very seriously. It is an important issue that has been raised, and it is one we have thought about very deeply, in order to get this process right. I therefore urge the House not to insist on Amendment 1. I beg to move.

Motion A1 (as an amendment to Motion A)

Moved by

[Baroness Meacher]

As an amendment to Motion A, at end insert “but do propose Amendment 1B as an amendment in lieu”

1B: Page 4, line 34, at end insert “, and such additional amount to be paid at a higher rate, a middle rate or a lower rate; and the middle rate shall be no less than two-thirds of the higher rate as may be prescribed; and the lower rate shall be no less than one-third of the higher rate”

[Baroness Meacher]

My Lords, before I say anything else, I will say two things. First, I was somewhat surprised that this particular amendment was dismissed in the other place on grounds of financial privilege, because I presented this as a revenue-neutral amendment. We were looking at ratios of benefits. As the Minister agreed in discussion, one could of course shift the higher rate in relation to the lower rate without spending any more money. We were not arguing in favour of spending more money, but about the cliff edge between the higher rate and the lower rate. I challenge the other place, if I am permitted to do that from this vantage point. Secondly, I express my personal gratitude to the Minister for the concessions and changes he has driven through as a result of the wonderful work done across all sides of this House. It is a credit to the House—we can feel proud of the work of the House—but also a great credit to the Minister.

16:00

The aim of this amendment is to ensure that the structure of disability additions for children more closely reflects the real needs and costs of the families affected than is the case in the Government’s proposals. The arguments supporting an amendment at Third Reading on the same issue were comprehensive and powerful, and I thank noble Lords from all sides of the House who contributed so effectively to that debate and to the successful vote on that amendment. I also thank Sue Royston of the CAB service, who supported me throughout this Bill, in view of my other commitments.

I will not repeat the Third Reading arguments today, but I point out that the Minister in that Third Reading debate acknowledged that,

“we also need to get severely disabled children, who will move into adulthood still needing to be supported, to this higher rate and not have this cliff edge”.—[Official Report, 31/1/12; col. 1465.]

The Minister thus accepted that there really is a problem with the higher rate and other rate as now envisaged. There are families with severely disabled children who should not be granted additions of only £27 a week. We have a common understanding that that is not acceptable, and for that I am grateful.

The reason I have come back with this amendment is that at Third Reading the Minister was not in a position to give an assurance to the House that the DWP would definitely take action, or to say what action would be taken and when. It seemed to me that we owed it to the families across the country who were genuinely fearful—they are very frightened—about the implications of this Bill to seek clarification as far as we possibly could achieve that.

It was also important to point out that the issue identified by the Minister was not the only one needing to be addressed. Probably most of the children whom we are talking about here will remain severely disabled into adulthood, but that is not the only point. The additions we are talking about here need to reflect the impact on the families of these children of those disabilities as the children grow up. They need to reflect the severity of the disability and the enormity and cost of the care they need probably throughout their childhood. We are not really talking about when they become adults; we are talking about what happens while they are children.

Universal credit, as the noble Lord has said many times, is designed above all else to provide an incentive for claimants to go back to work. The Minister did not explicitly accept at Third Reading—and I hope he will be able to make explicit his understanding of the point today—that we are talking in this amendment about parents for whom work is but a distant dream. These parents do not choose not to work. The only hope for these parents to provide the opportunities their disabled children need, and the only hope of avoiding years—decades—of abject poverty, is if the benefit system is fair and reasonable to those families. That is the essence of what this debate is about.

The other point here is that the cost of not supporting these most disadvantaged families will be substantial because of the unacceptable emotional and financial pressures on these parents. If nothing is done through this review, we can expect without doubt that we will have more severely disabled children placed in care, and more of these mothers and fathers suffering with depression in hospitals. My trust in east London will be having these mums and dads coming in; we do not want to have that happen. These adults cannot cope with the extraordinary demands upon them in a state of abject poverty. It is not right in a rich country that we submit these families to that kind of a life.

I thank the Minister for his commitment on the Floor of the House to a review of the current definitions of disabled children for the different levels of additions, and for his agreement to work with disabled people and disability organisations on this issue. I think that is fundamentally important. I also thank him and his officials for the time that they have already spent looking into this concession; I am really grateful for that.

I shall finish by setting out some of the issues that I hope will be included in the review. First, there are the relative costs of caring for children with different disabilities. The emotional and financial costs of caring for a severely autistic child, for example, may be even greater than caring for a doubly incontinent, wheelchair-ridden child. I would not like to make that comparison myself—this is a very complex matter—but I am asking the review to be sensitive to the very different emotional needs and financial costs of very different disabilities.

Secondly, there are the costs of specialist childcare for children with different disabilities at different ages. It probably costs more if your child is doubly incontinent at 15 relative to seven. These things change over time, and all this needs looking at.

Thirdly, there are the costs of giving children with different disabilities the opportunities they need to develop their potential. Again, with some disabilities there is probably a lot of potential that you could develop at some considerable cost, but that all needs to be looked at as well.

Fourthly, there is the potential of families with severely disabled children to use family members as carers. In some situations, maybe that is a little more possible than others.

Fifthly, there is the question of nature of the children’s disabilities in the 37 per cent of such families where no adult has a full-time job. I would have thought that that would illuminate some of the issues that prevent parents from ever getting work; if they do not have work, you can be sure that there are probably good reasons why.

I am grateful to the Minister for his commitment to consider the particular barriers to work and the cost implications of a disabled child for single parents. We discussed this when we met. It seems that so many of these single parents have been abandoned by—I am afraid that I have to say it—the father, generally speaking, often within months of the birth of a severely disabled child. Those single parents have particular and enormous demands upon them of every conceivable kind—emotional, social and financial. I am grateful that that will be looked at. I am also grateful for the Minister’s commitment to pay particular attention to the special situation of parents with two or more disabled children. Again, if you have two or more somewhat less disabled children, you surely need to be considered for the higher rate.

I agree with the Minister that the needs of children will differ at different stages of development—I think that he said that in his remarks. I understand from him that families with disabled children will be brought within the universal credit towards the end of the period 2013-18, and I trust that that will be the case. I am deeply worried about the provision coming into place before the review is completed and changes can be made because, frankly, that is unacceptable and, in my view, cruel.

There are things that I thank the Minister for but there remain considerable concerns. I await his response to these remarks.

[Lord Wigley]

My Lords, as the Minister will know, I have a considerable interest in this matter. We have debated it long and hard over recent weeks. I would like to take up the points made by the noble Baroness, Lady Meacher, about the substantial effect that these changes could have on those who are in dire poverty. I would like to add a dimension to that: the position of those who may be in circumstances of uncertainty. The uncertainty regarding the benefit that may be available to help disabled children may in fact compound the difficulties faced by those families.

In those circumstances, I would like to press the Minister—while recognising the efforts that he has undoubtedly made to try to meet us on some of these points, despite the constraints of finance—on whether he can give any indication of the likely timing and mechanisms of these changes taking place. He referred to the fact that it will be 2015 before all the associated changes are in place. I am not sure whether to interpret that as an indication that the timescale may be so long that it will be 2016 before the changes are implemented. If I am wrong about that, what is the purpose of his flagging up the facts that we will know in 2015? If I am right about the implication of his statement being that there will be a delay until 2015 or, more likely, 2016 before the impact of these changes is felt, it would certainly give people time to start making adjustments, and the Government and this Chamber time for further consideration. If that is the intention, what would be the mechanism in 2015 or thereabouts to implement the changes that the Minister has in mind? If the mechanism is to be by order—that is, unamendable—that always causes misgivings in this place and other places. If it were possible at that stage to have a more general debate before an order was brought forward, it would give us an opportunity to pursue these matters in detail in light of what happens between now and then. I do not know whether these suggestions are in line with what the Minister indicated or whether I misunderstood what he said. However, I would be grateful if he could address these points when he responds.

[Baroness Wilkins]

My Lords, it was shocking that the other place left so little time for the important amendment concerning the disability addition for children. It received scant debate. I strongly support the current amendment for the reasons that I gave at Third Reading, and trust that the Minister now understands the damage that the Bill will do to disabled children unless action is taken.

[Lord Peston]

I start from the position that when your Lordships pass an amendment, it is for the Commons to consider it reasonably and make up its own mind. I am coming up to the 25th anniversary of my being here and my experience is overwhelmingly that that is what happens. It happens for one very good reason—namely, courtesy.

For most amendments, once is enough. For rather more important amendments, the Commons may come back with a reasoned argument and we may decide that we need to argue it through a second time. Overwhelmingly, I take the view that for virtually everything, except matters that would subvert our constitution, twice is absolutely enough. In all cases, I expect a reasoned, thoughtful reply from the other place. I hope that is not an oxymoron. When I was told what was happening over the amendments that we are currently debating, at first I just did not remotely believe that the Commons would behave in such a way. I regarded it as an insult to your Lordships’ House that the Commons had behaved in that way. The Leader of the House did his best somehow to persuade us that there was no other way. I sat here listening and thought, “How do I feel about this?”. I felt and feel as though I was being bullied. Those of us who have some experience of bullies know that there is only one way to deal with them—to fight back. That is why I sit here, not as an expert on constitutional matters but simply as a Member of your Lordships’ House, as we debate an amendment that is of great ethical importance, as I pointed out last time. The Minister has certainly said that he would like to respond positively if he possibly still can. I think I am right; perhaps he will nod if that was his intention to get that impression across to us. However, I do not remotely see how he can do that, given the way in which the Commons has responded. The Commons has not responded in any way in which reason was uppermost in its mind. Reason was the last thing on its mind. Essentially, the Commons stamped its foot and said, “No way”. I cannot advise the noble Baroness, Lady Meacher, on what she ought to do. I just got up to place on record—on a matter that is of the utmost ethical importance, as I explained when we debated this previously—that, in getting its own way, the other House has chosen a means that we should not lie down and accept.

16:15

[Baroness Thomas of Winchester]

My Lords, having spoken on this matter at all previous stages of the Bill, I would like to add a few words now. I am extremely grateful to my noble friend for saying that he will look very carefully in future at the three care components. I am very grateful to the noble Baroness, Lady Meacher, for giving us the opportunity to allow him to say this in terms.

I hope that I may remind your Lordships what this is about. There are three care components in disability living allowance. Under universal credit, there are only two and children on the middle and lower rates of care will not get the higher additional rate. This will particularly affect children on the middle rate of care who do not need care all through the night. If they have more severe disabilities, they will get the higher rate. However, those who do not need significant care through the night can still be very severely disabled.

As noble Lords have said at all previous stages of the Bill, families with disabled children need all the help they can get. This is particularly true of families where there is a genetic likelihood of children inheriting a particular disease such as muscular dystrophy, which is the disease I have. In these families there is often more than one disabled child and, sadly, often only one parent. This is why many families with disabled children are disproportionately likely to live in poverty. Therefore, I am extremely grateful to my noble friend for saying that he will look very carefully at these three care components and how they will fit into universal credit, because that is what we are talking about. I do not think that the noble Baroness, Lady Meacher, needs to press her amendment because the noble Lord has said that he will undertake to do what we want.

[Baroness Hollis of Heigham]

I am very glad to follow the noble Baroness, Lady Thomas. Obviously, we all welcome the Minister’s commitment to undertake a review. It would have been very helpful if we had had this promise earlier in our discussions as it would have enabled us to shape much more thoroughly what might go into that review. However, what concerns me is that I still think the Minister missed the key point in his introductory comments. If I have misunderstood him, I would be grateful if he could correct my misunderstanding and make his position clear to the House.

The issue is not whether the right number of children is above the line in terms of severe disability, and where that line is drawn, as he seemed to suggest. That is not the issue, although the Minister seemed to suggest that it was. The issue is the fact that children who are deemed to have a lesser disability still have very substantial care needs. Indeed, their care needs may be more expensive than those of a bed-ridden child who may be more severely disabled but has less demanding care needs. We are concerned about the ratio of financial support for the less disabled child vis-à-vis that for the more disabled child. Therefore, it is not a question of whether more children should go into the higher rate category rather than the lower but of the relationship in financial terms between the lower rate and the higher rate given that the degree of disability does not translate into the need for extra financial support because of additional costs. That is the issue we wish the Minister to grasp, not whether the lines in the sand are drawn differently between groups of children but to recognise that the financial support for less severely disabled children should be pegged pretty closely to the rate for more severely disabled children because costs do not follow the level of disability.

[The Countess of Mar]

My Lords, like my noble friend Lady Meacher, I am a little puzzled as to why this amendment was rejected on financial grounds. I know that the Commons Reason given is that,

“it would alter the financial arrangements made by the Commons”,

and it does not need to offer any further reason. However, in this particular case, we have no estimate of the fiscal impact of these measures from the Department for Work and Pensions, so how can we know what the financial impact is going to be? Perhaps the noble Lord will make clear what the financial impact is going to be, particularly as the noble Baroness, Lady Meacher, presented her original amendment as being financially neutral?

[Baroness Howe of Idlicote]

My Lords, I, too, would like to press the point about the neutrality of the cost that the noble Baroness, Lady Meacher, has stressed. If I may say so, I think that we all owe the noble Baroness, Lady Meacher, a huge debt for the way in which she has pursued these issues and, equally, for the way in which the Minister has responded. I hope very much that when he is considering again, he will bear in mind the number of women—and it is women, I am afraid—who are on their own left to cope with children in this situation. That is a particularly important point, I would argue.

[Lord Walton of Detchant]

My Lords, I had not intended to contribute to this debate, but I wish to speak briefly. As a neurologist with a long experience of caring for children with many forms of disability, I am fully aware of one important issue: that the nature of the disability may be relatively non-progressive—for example, in patients with cerebral palsy. The needs of children with cerebral palsy vary and change as they grow older. The problems faced by their carers—often a single parent, or both parents—become more demanding as the child grows older and is heavier and more difficult to manipulate.

As the noble Baroness, Lady Thomas, said, think again about patients with muscular dystrophy of the most severe kind. Boys with Duchenne muscular dystrophy, by the time they are seven, eight or nine years of age, are still mobile and still go to a normal school but walk with increasing difficulty. By the time they are 10 or 11, they are often confined to a wheelchair. In past years, many of those boys died in their teens. Nowadays, with vastly improved care, with improvement in their respiratory support and so on, they pass through that period of transition from childhood into adulthood, where their disability is greater and more demanding. Unless they are given proper support by carers and the support that they need in terms of respiratory support and suchlike, the demands on their parents become much greater. Furthermore, it is important to recognise that proper care and support in the home prevents a large number of emergency admissions to hospital, with major burdens on the National Health Service.

I was reassured at the beginning by what the Minister said. Can he assure us that the actual mechanisms of these three grades of support, and that important change from childhood into adulthood, are properly met by the provisions of this Bill? Will he also assure us that the recognition that disability is not static and that demands on the carers vary is fully taken account of in the decisions that are being made?

[Lord Newton of Braintree]

My Lords, I had not intended to intervene either. I will do so very briefly because I have made my points at earlier stages of the Bill. My principal point, as I said to the noble Baroness, Lady Meacher, at the end of last week, was that I did not expect to be able to vote for her amendment because, while I thought that the cause was good, writing this kind of thing into primary legislation was not. That is reinforced by the points that have just been made. I see the noble Lord, Lord Walton, nodding; I am not sure that the noble Baroness, Lady Hollis, will be nodding. The very point that the degree of disability does not directly relate to the costs incurred is actually a point of not trying to write all this stuff in concrete into primary legislation, together with the variability to which the noble Lord, Lord Walton, has referred. So I very much hope that the noble Baroness will not press her amendment to a Division, even though I strongly support the general aim that she has in mind. I want to pay my own tribute to the part that she has played in focusing on this issue.

[Lord McKenzie of Luton]

My Lords, like other noble Lords, I think we should be grateful to the noble Baroness, Lady Meacher, for keeping us focused on the issue of disabled children, and to all noble Lords who have spoken in this short debate with a great deal of expertise and knowledge on the subject. They reminded us that even in this rich country there are people and families who still live in poverty and are challenged by poverty. The deliberations that we bring to bear through legislation may seem somewhat detached from that, but that legislation has a real effect on real people’s lives.

Like my noble friend Lord Peston and the noble Baroness, Lady Howe, I was a bit confused as to how this amendment became caught up in the issue of financial privilege because I thought that the Minister was on record as saying that this was not an issue of money. Indeed, the noble Baroness, Lady Meacher, confirmed that. I did not intervene in the earlier exchanges on this issue but I am somewhat concerned about aggregate figures of costs flying around, whether we agree with them or not, and tagging on to them a provision that has no cost implication at all. If that is permitted under these arrangements, it is a bit of a slippery slope.

However, we should be grateful to the Minister for his engagement running right across the Bill, particularly on this issue, and for his promise of a review on definitions and access to the various benefits. I hope that he will take account of the point made by my noble friend Lady Hollis and others that the issue of costs does not correlate exactly with severity of disability. If I have to take issue with the Minister, I wish that he had not said that his commitment to undertake this programme was conditional on the noble Baroness withdrawing her amendment. Frankly, if it is right to do it, it is right to do it.

Perhaps I may pursue one point with the noble Lord. He previously stated that families would obtain the benefit of transitional protection so that the cash amount of support under universal credit would not reduce. That would not of course protect the position in real terms but perhaps we can at last understand a little more—on the record, I hope—about how transitional protection will work. Is it to be applied separately to the differing components of universal credit or will it be looked at in aggregate? Could an increase in the housing amount, for example, mean an effective reduction in the protected disability addition? Can we also get some clarity around changes of circumstances and what types of situation would cause the transitional protection to be removed? What about, for example, a move in accommodation that might have been caused by the underoccupation provisions that we debated previously and will debate again shortly? Could that represent a change of circumstances that could cut off that vital transitional protection?

I do not wish to go over all of our powerful debate on this issue. I acknowledge the commitments that the Minister has made but repeat that we should be thankful to the noble Baroness, Lady Meacher, for keeping us focused on this important issue.

[Lord Freud]

My Lords, many specific points have been made and I shall try to deal with them. We have debated this issue a lot and perhaps I may gently remind the noble Lord, Lord Peston, that we actually voted both ways on very similar issues. I recall that we had a plus two and a minus 16 on this issue—I think it was this issue. When we talk about the message coming from the Lords to the Commons, there were a number of votes in this area.

[Lord Peston]

Is the noble Lord saying that we are being unreasonable for expecting some reasonable arguments from the other place?

16:30

[Lord Freud]

Gosh, that is a good question. I had better hold my counsel on that.

The amendment inserts a third rate for disabled children. It sets fixed relationships between those rates. With our primary structure, we are trying to have two elements—for disabled children and adults—aligned at the same rates, which are principled changes so that we have some consistency and make the system simple and fairer. I am trying to take out complexity from a system that, if your Lordships remember, is falling down because it is so complex. So simplicity has a value in itself. If the amendment went through, we would have different rates and a mismatch within the structure of universal credit.

I have been asked a lot of questions about the amount of money. The noble Lord, Lord McKenzie, will be pleased to know that I did not include this figure in the £2.1 billion that I cited earlier. To maintain the level of £77, under the original amendment, would have cost £200 million, which is why the Commons attached financial privilege to it, in answer to the question of the noble Countess, Lady Mar. To answer the noble Lord, Lord McKenzie, the reason why it is conditional is that there is not much point in having all the paraphernalia and trauma of a review if we have an amendment of this nature where we are locked anyway. That is why I made it conditional.

To answer the questions of the noble Lord, Lord Wigley, about how it would work, we start the universal credit timeline in late 2013, collecting information up to 2015, so we will have the information to undertake the review in 2015. The changes that the review will presumably recommend can be incorporated from then on.

[Baroness Meacher]

This is an important point. Can the noble Lord make clear that, having undertaken the review, the Government could adjust the rates for disabled children with different disabilities within the current legislation so that we would not have to wait for new legislation? If we had to do that we would be talking not about 2015 but an uncertain date in the future.

[Lord Freud]

It will depend on what comes out of the review. If it concerns child PIP, which it may very well be, which is a recasting of the whole structure, we may need primary legislation; but if it is an adjustment of DLA, I think we may not. It will depend on the outcome of the review, which will be serious and substantial. One issue that noble Lords are raising is that there is dissatisfaction with the way that we are applying these rates. There is general dissatisfaction about whether we are using the right criteria. We have one rather simple criterion at the moment. Building that review of how we do it will be a substantial exercise. The interesting thing about this debate is the general level of dissatisfaction about whether we are using the right definitions to get to the right children and the right families. Funnily enough, that has been one of the main things driving us to make this commitment.

We have here a commitment that either we are going with a major review of the child PIP or, if not, a fallback where there will be a review anyway, albeit within the context of the DLA. That is the commitment, and I can tell your Lordships that it has been somewhat hard fought.

[Lord Wigley]

I am grateful to the noble Lord for the clarification, which is very helpful. With such an important review, would it be reasonable to assume that, in the normal way of things, there would be opportunities to debate the outcome of the review here in the Chamber before orders were drawn up to implement any of the conclusions?

[Lord Freud]

I think that we will be discussing this a lot in the years to come—it is not a dead issue. When you set up such a review, it generates its own momentum. Noble Lords know how powerful a review in this kind of area is. Once you have a review like this and the momentum that follows from it, something happens reasonably rapidly. I do not think that you have set it in absolute terms because it becomes an irresistible force. Therefore, I do not think that that is a concern. The exact nature of what we then do begs a lot of questions that we simply do not need to ask. However, with regard to how we carry out the review, the involvement of this House will be taken very much into account.

[Baroness Meacher]

I really do not want to hold up the House at this stage but this is such an important point. My understanding is that the details are going to be in regulations. If that is the case, a review will be undertaken and I have no doubt that it will show that these rates are unfair. Why cannot regulations be changed within current legislation to achieve a fairer distribution of additions? That is my only question.

[Lord Freud]

I am saying that that may be one outcome but there may be a much more radical outcome in the introduction of PIP for children. The question is: are you better off doing that or adjusting DLA with the passporting arrangement? That is very difficult to prejudge when we have not done the review. Therefore, there is method in the, or perhaps I should say there is some method behind—

[Noble Lords]

Oh!

[Lord Freud]

Nearly. I hope that I have made it clear that I really understand the concerns being expressed not just by the noble Baroness but right around the House. I think that our commitment to carry out this review—it is a significant review that will look at the issue properly—is the right way of approaching the matter. It is far better than adding an unnecessary and untested complication to the design of what is meant to be a universal credit system which people can instinctively understand. If it is an offer, I urge the noble Baroness to accept it and withdraw her amendment.

[Lord McKenzie of Luton]

Before the noble Lord sits down, will he write on the issue of transitional protection and changes of circumstances?

[Lord Freud]

Yes, my Lords. I am sorry; I forgot to answer that. At this stage, I am not in a position to lay out transitional protection because we are currently looking at how it will work. However, it will be a bundled up protection. The work in progress effectively involves taking someone’s existing entitlement, comparing it with their universal credit entitlement and paying the difference as a lump sum, which is then maintained. However, in the context of what we are talking about, the migration process is rather more important than the transitional protection. In the vast bulk of cases, it is when those families move on to universal credit that will matter more than transitional protection, which will be towards the tail end of this period, if at all.

[Baroness Meacher]

I thank the Minister for his response. I accept what he says about the simplification of the system. That is absolutely right. However, I do not accept the suggestion that this system—certainly in this part of the Bill—is fairer. The fact is that it is not; it is deeply, deeply unfair. I find myself in a situation where we are either going to have the Minister’s acceptance—I think we do have that—that this is unfair and needs a full-scale review, or we have nothing. As the noble Lord, Lord Peston, indicated, maybe we are being bullied. My sense is that there are perhaps some rather large, old, hefty powers from another place leaning on us. Therefore, I would not wish to allege that the Minister is bullying us. I accept that if one has a full-scale review, there is a momentum and we will be there to see what happens and to try and make sure that the right thing does happen.

Disabled people and the disabled organisations who will be involved in the review will be on the case. Therefore, I feel reasonably confident that we will get there. My biggest worry concerns the timeframe and the need for further legislation. I still hope that if the Government get to the right answer in terms of the allocation of benefits to families with disabled children they could make adjustments to regulations while we await new legislation. That matters a great deal. We should not leave families newly coming on to these benefits severely damaged and, I think, cruelly treated. With that, I beg leave to withdraw my amendment.

Motion A1, as an amendment to Motion A, withdrawn.

Motion A agreed.

Motion B

Moved by

[Lord Freud]

That this House do not insist on its Amendments 2, 3 and 26 to which the Commons have disagreed for their Reasons 2A, 3A and 26A.

LORDS AMENDMENTS 2, 3 AND 26

2: Clause 11, page 5, line 2, after “credit” insert “, subject to subsection (3A),”

COMMONS DISAGREEMENT AND REASON

The Commons disagree to Lords Amendment No. 2 for the following Reason—

2A: Because Lords Amendments Nos. 2 and 3 would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

3: Page 5, line 21, at end insert—
“(3A) In relation to a dwelling of which the landlord is a local housing authority or a registered provider of social housing, and no suitable alternative accommodation (as defined in regulations to be made under this section, and provided by any such provider) is available, regulations under this section shall not permit the housing cost element of the universal credit to be less than the actual amount of the liability in a case where a household has no more than one spare bedroom.”

COMMONS DISAGREEMENT AND REASON

The Commons disagree to Lords Amendment No. 3 for the following Reason—

3A: Because Lords Amendments Nos. 2 and 3 would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

26: Clause 68, page 52, line 36, at end insert—
“(4) After subsection (7) insert—
“(7A) In relation to a dwelling of which the landlord is a local housing authority or a registered provider of social housing, and no alternative accommodation (as defined in regulations to be made under this section, and provided by any such provider) is available, regulations under this section shall not permit the AMHB to be less than the actual amount of the liability in a case where a household has no more than one spare bedroom.””

COMMONS DISAGREEMENT AND REASON

The Commons disagree to Lords Amendment No. 26 for the following Reason—

26A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

[Lord Freud]

We have debated this measure at length and I am grateful for the intensity and conviction of those who have spoken both in support of the measure and those who have challenged the Government. I acknowledge that the noble Lord, Lord Best, remains concerned about our proposals to reduce housing benefit and universal credit for working-age claimants living in social sector properties who are under-occupying their accommodation. Before I go into the detail, I remind noble Lords that we have announced an additional £30 million of funding for discretionary housing payments from the 2013-14 period, aimed at those living in adapted accommodation—disabled people who need those adaptations—and for foster carers.

I remind noble Lords of the core argumentation. We do not think that taxpayers should be expected to meet the cost of somewhere approaching 1 million spare bedrooms, a cost of around £0.5 billion every year. Clearly this is unfair, or certainly different, to those in the private rented sector who receive benefits based on their household need. Based on our estimates, the original amendments could potentially reduce those savings by around £300 million, in addition to the £30 million to which I referred. That is real money. Maybe I should—or should not—remind noble Lords of the message from Moody’s. One of the things they make clear is that the Government’s “necessary fiscal consolidation” is key in stopping that potential downgrade.

16:45

We in the House have had many discussions about the behavioural response of claimants to the measure. Clearly it is too soon to know what they will do. Some may decide to downsize. Others will decide to continue to live where they are and to cover the shortfall through other means. One thing that is interesting and different about the social housing sector is how little mobility there is. The figure runs at around 5 per cent per annum. The size criterion is potentially the kind of thing that will start to make people think about what accommodation they need to live in, and how much they can afford. If it does, it will start to free up properties for the 250,000 or so families who are living in overcrowded accommodation, as well as for those living in expensive temporary accommodation. One could see it as a nudge to help drive some of the outcomes intended to be realised through the Localism Act, which will allow landlords to use their existing housing stock more efficiently.

One thing that people will be able to do is offer spare rooms to lodgers, which in some cases will be a sensible option. There will be a double benefit from that, certainly before universal credit comes in, because the room will not be considered to be a spare room, and the first £20 of weekly income from the lodger will be disregarded when calculating benefit entitlement. There has been misunderstanding and confusion about taking in lodgers. The confusion is between what a lodger is and what subletting is. It is worth pointing out that all social tenant residents can apply to their social landlord for permission to take in a lodger. We will expect social landlords to take a pretty liberal line on this. Some may have a policy not to allow it, but they will have a keen interest in reviewing the position, given the context of what we are doing here.

We are emphasising the point to social landlords as part of our implementation work. The Chartered Institute of Housing is developing a toolkit for the implementation of the measure that will include this advice. Of course, there are other actions that claimants and landlords can take in response to the measure. Just a few hours' work may help some of those affected cover the shortfall, particularly where there is a disregard such as the £25 weekly earnings disregard for lone parents in work. Recent research from the Housing Futures Network showed that almost 30 per cent of claimants affected would look at increasing their earnings through work.

One aspect that has not been explored in our debates is the response from social landlords. The rent they receive reflects the size of their property. If there were, for example, a very small room such as a box room that the landlord called a bedroom, they might reconsider, if they have not done so already, whether to count that room when deciding on the number of bedrooms that should be written into the tenancy, as well as on the rent associated with it. The designation of property size is another area where there may be flexibility. We are exploring this with social landlords as part of our implementation work.

As we introduce the measure, we will also look at ways of minimising the risk of claimants falling into arrears. No one wants this to happen. Landlords have a key role to play and we are looking at how to support them in that role, and how to help them manage the possible risks.

Finally, I need to emphasise that, despite some assertions that I have seen and indeed heard, we are not going to require what has been called “an army of snoopers”. As now, we are going to rely on claimants to report their household circumstances to us.

The original amendment could have cost in the region of £300 million every year. We have been clear that this is unaffordable. We have done what we can and will continue to do what we can to support these two important groups of people—disabled people and those who foster—through this change. I ask noble Lords not to insist on this amendment, and I beg to move.

Motion B1 (as an amendment to Motion B)

Moved by

[Lord Best]

As an amendment to Motion B, at end insert “but do propose Amendments 3B and 26B as amendments in lieu”

3B: Page 5, line 21, at end insert—
“(3A) In relation to a dwelling of which the landlord is a local housing authority or a registered provider of social housing, and no suitable alternative accommodation (as defined in regulations to be made under this section, and provided by any such provider) is available, regulations under this section shall not permit the housing cost element of the universal credit to be less than the actual amount of the liability in a case where a household has no more than one spare bedroom, and—
(a) the claimant is subject to no work related requirements in accordance with the provisions of section 19;
(b) the claimant, or a child or a young person for whom either or both the claimants is responsible, is in receipt of disability living allowance, or personal independence payment, or attendance allowance or an increase of disablement pension where constant attendance is required; or
(c) the claimant is a war widow or widower; or
(d) the claimant routinely provides foster care placements.
(3B) In subsection (3A), “claimant” means a single claimant or joint claimant.””

26B: Page 52, line 36, at end insert—
“( ) In relation to a dwelling of which the landlord is a local housing authority or a registered provider of social housing, and no suitable alternative accommodation (as defined in regulations to be made under this section, and provided by any such provider) is available, regulations under this section shall not permit the AMHB to be less than the actual amount of the liability in a case where a household has no more than one spare bedroom, and—
(a) the claimant is subject to no work-related requirements in accordance with the provisions of section 11D of the Welfare Reform Act 2007;
(b) the claimant, their partner or a child or a young person for whom the claimant (or their partner) is responsible, is in receipt of disability living allowance, or personal independence payment, or attendance allowance or an increase of disablement pension where constant attendance is required;
(c) the claimant is a war widow or widower; or
(d) the claimant or their partner routinely provides foster care placements.”

[Lord Best]

My Lords, this combined amendment seeks to achieve a compromise on the so-called bedroom tax, the underoccupation penalty that reduces the housing benefit entitlement—later the universal credit entitlement—for those of working age in a council or housing association property.

Perhaps I might recap on the position we have reached on this measure. I have argued since Committee that the Government should stay with the current definition of underoccupancy from the Department for Communities and Local Government, which allows a household one spare room, which may actually be a room that is occupied all the time; for example, where children are not sharing because one has a disability or because a teenager wants a separate bedroom to do her homework and so on.

Requiring people settled in their council or housing association homes to move or pay a fine of what will now be £728 per annum on average seems very harsh. The housing benefit of these tenants will be cut by this amount so they will have to find the bedroom tax out of other benefit income. For an unemployed separated father who has a spare room so his children can stay, this represents a cut of nearly 20 per cent in his income from jobseeker’s allowance. Even though £14 a week may not seem a huge sum to most of us in this House, it means a very significant reduction in living standards for all households affected.

Your Lordships will recall that the earlier amendment on this theme was carried in this House with significant support from all parts of the House. It did not go so far as to allow families one spare room, but it changed the position so that the penalty would only become payable if the tenant refused an offer of a smaller, suitable flat. This amendment would still require all 670,000 households—rising to 740,000 households as the pension age rises—to move if they were to avoid paying the tax, but no one would have to pay until they had been offered and had turned down an alternative tenancy. This took away the surely inequitable requirement to pay the penalty for staying put even where there was nowhere else to go.

As your Lordships know, the majority of council homes built from 1920 onwards have three bedrooms. Requiring a move to a two- or one-bedroom flat can mean waiting for vacancies for some time; for example, in rural areas there are places where all the council houses have three bedrooms so if the tenants are to downsize they must leave the village, perhaps after living there all their lives. Some urban councils purposely avoid putting families into tower blocks, so singles and childless couples have been allocated larger flats there. To suddenly impose the underoccupation penalty on all these households before they have any chance to move elsewhere seems most unjust, and your Lordships voted for the amendment that would provide some relief for this problem.

It is important to note that the earlier amendment did not abolish the bedroom tax, and the penalty would still kick in for those who felt that they could not accept the alternative flat offered to them. Their reasons for refusing to downsize might be very compelling, but regardless of those reasons, the amendment—the compromise from the position of permitting a spare room—meant they would still have to pay if they did not accept the offer of the smaller accommodation.

This Lords amendment was rejected in the other place, though with a relatively small majority of 42, and with support from the amendment from all parties, including 12 Liberal Democrats and two Conservatives. This gives me some hope that if an amendment that cost half as much were to be presented to the other place, it might indeed gain acceptance there.

I am therefore bringing forward an even more modest amendment, in the hope of salvaging something here. The new amendment confines the postponement of the imposition of the bedroom tax to certain categories only, rather than to all tenants. I deeply regret abandoning hundreds of thousands of households who, even if this amendment is approved, will still be caught by the penalty charge on the 1 April next year. Even if they are willing to move, they will be trapped where they are because there are no smaller flats available. However, needs must, and the new amendment reduces the cost in the early years from perhaps a maximum of £300 million by around half, a far cry from the billions referred to in earlier debate. In due course, the Government will collect the great majority of the tax if, as gradually some people are offered a smaller home and do not take up the offer, they are then required to pay up. The cost implications are not, I suggest, too frightening.

Therefore, for the categories spelt out in this new amendment, no fine, penalty, tax, or housing benefit cut would apply unless and until they turned down an alternative offer of something smaller that is defined in regulations as “suitable”. The categories given relief in the amendment are: first, claimants who are not required to work for reasons already set out in the Bill in Clause 19, including those with,

“regular and substantial caring responsibilities for a severely disabled person”,

or for,

“a child under the age of 1”.

These are households for whom pressures to take a job—which, as the Minister has explained, is a key policy driver for the Government—are not relevant. For these people, the penalty simply represents a substantial loss of income with no escape. If the household felt that they could not accept an offer of an alternative flat, they would still have to pay, but only after that offer had been made.

Secondly, the amendment covers claimants who have already been exempted from the household benefits cap, mostly because they are disabled, but also including war widows. These are people who the Government recognise as having extra costs. My amendment simply replicates the categories which the Government have acknowledged should not be penalised by the benefits cap. Many of the 70 charities that are urging parliamentarians to accept an amendment on this issue represent people with disabilities, who are particularly badly affected by having to share bedrooms. Again, I fear that these would not be exempt from paying the tax unless they moved out, but the tax would not be payable until they turned down another home, deemed to be suitable, but smaller.

Each household would still have a very tough decision to take. For one it would be, “Could we move and put our disabled child with his special bed into the same room as his sibling, or should we take the cut in our living standards and stay in this house with a separate bedroom?”; or, for an older couple, where one is under pension age—under 61 years and 5 months next April—the choice could be, “Should we move from our two-bedroom flat to a one-bedroom flat, even though we often sleep apart when my husband is ill, and we frequently use the other room when my daughter comes to give me a hand for a few days?”; or, “Must we move, because £14 per week off my husband’s state pension would be just too much?”. I fear that these difficult choices would still have to be faced even if the amendment is carried, since the amendment only postpones the moment of truth until an offer of a suitable alternative flat is made. Thirdly, this concession would apply where the household regularly takes in foster children. Barnardo’s and other children’s charities are keen to see the nonsense of taxing foster parents removed.

What are the arguments against my case for a now extremely modest element of relief from the proposed underoccupation penalty? It cannot be said that granting this relief takes away the pressure on scroungers—people able to work but not working—since the revised amendment does not cover anyone required by the benefits system to seek work. Can it be argued that the Government have already announced a sufficient safety net to cover the most extreme cases? They have made available £30 million against the expected savings of £470 million, which the bedroom tax would yield, for discretionary housing payments which local authorities can use to cover the tax for deserving cases. The Government have mentioned two groups in particular to be helped by local authorities; namely, those living in homes that have been specially adapted and for whom downsizing would require the smaller home also to be adapted, no doubt at considerable cost, and households with foster children where the underoccupying rule is particularly inappropriate.

The funds for this discretionary power to bail out some hostels is confined to these special cases. If something was left over, it would leave local authorities with an invidious task; that is, how to assess the relative hardship of the bedroom tax in each of the other 670,000 cases where the discretionary housing payments are available to help only one in 16 of those affected.

Nevertheless, I confess to having been thankful for this small mercy—until I learnt that the £30 million for these discretionary housing payments is to be paid for not by the Treasury accepting any reduction in the gains achieved through the bedroom tax but by increasing the tax for the other tenants by another £50 per annum from the previous £13 per week to the new £14 per week.

What about the argument that those on very low incomes could find the money to pay the penalty charge from their savings? I fear that it is more likely that such households will be struggling with debts, perhaps depending on payday loans and even resorting to the loan sharks, rather than sitting on a pile of savings. While older tenants may have put aside a bit, few will be able to cope when faced with a new tax of £728 every year on top of the rises in their heating bills and other costs.

One other remedy suggested by the Minister is for these households to take in lodgers. That is certainly to be strongly encouraged, although the current disregard as to the amount that tenants are allowed to keep without losing benefit has not proved a sufficient incentive to date. Obviously, however, taking in lodgers is not appropriate for most of those in the priority categories of the very vulnerable and disabled people now covered by this new amendment. By all means promote lodgers’ schemes among those not helped by this amendment but it seems unrealistic to expect this idea to be of much help for those singled out in my new amendment.

I hope that since the earlier, more expensive amendment gained such a high level of support from all parts of this House, this lesser version will be acceptable. As noble Lords know, there is backing for any such measure. It comes not just from the many charities concerned with children and disabled people but from the social landlords—the councils and the housing associations. These social landlords have expressed grave concerns, not only on behalf of their tenants but because of the administrative and financial problems that the Government’s proposals will create for them.

The landlords will be asked to be the tax collectors of the £14 per week from each liable tenant to make up the weekly deficit on the rent that the penalty will create. They know that they will have a huge job identifying who may be eligible. I am grateful for the reassurance from the Minister that there will not be an army of snoopers to check on whether a young person has left home or is away for just a few weeks. But landlords will have the problems of collecting the £14 per week or £25 per week if there are two rooms. That will not be covered by housing benefit any more.

Even if the housing benefit is paid directly to the landlord because the tenant is classified as vulnerable or has run up arrears, the extra sum—the penalty charge—will still have to be collected directly from the tenant. This will not be easy. A gradual accumulation of rent arrears seems inevitable, meaning in turn evictions in due course and less money for renovations, new homes or regeneration. The gain to the Treasury is likely to mean losses for housing, as well as the misery of loss of income for those unfortunate tenants who have to pay up.

This will be a particularly painful levy on communities in the north-east and the north-west where 45 per cent of the relevant tenants will be hit, and in Northern Ireland, where rather higher standards have justifiably applied, 68 per cent of these tenants will be affected. In this House we are not troubled by postbags full of protests from aggrieved constituents, as I strongly suspect will be the case in the other place, but I know that many of your Lordships feel strongly that we have a role in restraining government where measures seem excessive or unfair. Even though this amended, amended amendment is now providing much less relief than I feel the situation requires, it nevertheless draws a line by mitigating at least some of the hardship for at least some of those on the lowest incomes, and now exclusively for those who are not in a position to go out to work because they act as carers or are disabled themselves, I hope very much that noble Lords’ support for these households will be sustained.

I pay tribute to the Minister who has worked extremely hard and effectively on this important legislation. I congratulate him on the changes he has achieved, but I know that he feels the hot breath of the Treasury on his collar. I therefore ask him to feel emboldened by the strength of feeling in your Lordships’ House to accept this very modest new amendment. I beg to move.

[Baroness Hollis of Heigham]

My Lords, universal credit is about using benefits to encourage behavioural change, and above all to encourage people to seek work by reducing its risk and increasing its reward. Like most people in this Chamber, I am deeply supportive of that, as the Minister knows. The House is extremely grateful to the Minister for the care and attentiveness with which he has introduced the changes made by universal credit through the stages of this Bill.

However, this amendment in the name of the noble Lord, Lord Best, has nothing to do with universal credit, nothing to do with behavioural change and nothing to do with urging people into work. It is simply a means of making savings that will come from cuts which will fall on some of the poorest. The Minister has already said, by referring to Moody’s, that we cannot afford to lose those savings, yet none of them falls on me although they could do so. I would be happy to indicate to the Minister, if he so wishes, where they might. In my view, this is about political and moral choices. Do I pay or should a disabled child suffer?

I want to make three brief points. First, I believe that at the core of the policy on underoccupation is a fundamental dishonesty. I do not accuse the Minister of this, but the position is a dishonest one. That is because it states that people of working age must downsize if they have one spare bedroom but, as the Government acknowledge in their own impact analysis, those smaller flats and houses to which people should move do not exist. The Government acknowledge that 85 per cent of people will therefore have to stay put. If they do not, and instead move into the more expensive private-rented sector, the savings will not be made. Let us think about this. The Government are publicly requiring people to downsize and then, knowing that the stock is not there, they hope and expect that people will ignore what the Government are telling them to do—otherwise they will not make the savings. The Government are calling for one outcome but want people to do the exact opposite. We are asking the House not to collude in that false choice.

Secondly, the Government’s position, as has been well outlined by the noble Lord, Lord Best, is deeply unfair to particular groups of people. I shall take just one: the couple with disability who need a bedroom each on occasion. He may have early prostate cancer and be going to the loo half a dozen times a night; she may have a respiratory problem and cough heavily through much of the night. On most nights, they need a separate bedroom otherwise one is being required to go without sleep or the other to sofa-surf in her own home night after night—a 60 year-old woman is being asked to sleep on a sofa night after night because of the change.

The same problems apply to disabled children being expected to share bedrooms with their siblings. If those disabled children need regular night-time care, their siblings are going to go to school without enough sleep, tired and upset, and almost certainly underperforming. Do we really believe that such families should carry the cuts on behalf of us all? I think not.

The third and last point is the consequences for housing associations such as my own—I declare an interest as chair of Broadland Housing Association, half of whose housing is in rural Norfolk. I cannot currently rehouse pensioners in rural Norfolk who want to downsize because I do not have the stock in the villages in which they want to live, yet it is among pensioners that underoccupation is most common. In future, the disabled family which does not want to move will be required to move, while to the pensioner who wants to move we will have to say, “You’ll have to stay put”. Can your Lordships think of a more foolish as well as—in many ways—more selfish policy, whereby people who do not want to move are made to move, and those who do want to move cannot, even though the costs of the one and the other would balance out? That cannot be right.

What will we do? As the noble Lord, Lord Best, said, families who cannot move, including those with a disabled child, will have to take a hit on their housing benefit through no fault of their own because they cannot move, and they will within weeks fall into arrears. What do we then do in a housing association? Either I evict a family with a disabled child into temporary accommodation or bed and breakfast—how I can do this to them?—or they stay put and arrears mount. I have already trebled the amount in my accounts for increased arrears. As the noble Lord rightly said, the money is not available to pay the debt charges of new building, which alone will solve the problems of getting our stock right in the longer term.

The Minister says that such people may make a contribution out of their benefit, by which he means, frankly, that they must either eat less or heat less. A disabled child and their family are being asked to eat less or heat less in order to bridge the gap between their housing benefit and the home in which they live.

I return to my opening point: we do not have to do this. It is about our political and moral choices. Families with a disabled child will lose £14 a week, while most of us enjoy a tax-free winter fuel allowance or find for the second year running that our council tax has been frozen. Not a penny of these cuts is falling on me or, I suspect, on very many of your Lordships, yet we are asking disabled families and families with disabled children to carry those cuts for us. I hope that your Lordships will put themselves on the side of the very modest amendment moved by the noble Lord, Lord Best, put themselves on the side of disabled children, disabled people, war widows, foster carers and kinship carers, and support the noble Lord’s amendment.

17:15

[Lord Newton of Braintree]

My Lords, having been a serial good-behaviour person this week, I thought that I ought at least, in fairness to myself and the noble Lord, Lord Best, to join in on this, as I was in my serial offending mode at the time the previous amendment was discussed. I am not going to repeat everything I said then, but I am tempted, not by every line of argument that the noble Baroness, Lady Hollis, or indeed anybody else, deployed, but by two of the points. First, part of the problem here is that we have not got enough social housing, which is highly relevant to this. I declare an interest in that my wife is responsible for it in Braintree District Council—for action on housing, not for the shortage. The effect in rural areas was the main point of my speech on the last occasion, and it has been well illustrated by points made by the noble Lord and the noble Baroness in the past few minutes.

I am not sure that the amendment, because of its genesis, is the right way now to tackle this. I am reserving my position on that until I hear the Minister. However, I do think, as a practising politician and as an MP who used to have constituents complaining about this kind of thing, that the Government are playing a very dangerous political game, without quite knowing what will hit them when this comes into force. I will give some possible illustrations. I do not know the answers for any of them, but the Minister might like to bear them in mind. For example, a 16 year-old in north London is killed, by a bullet or a knife, by a gangster. His parents have a spare room, and soon after the inquest, somebody turns up and says, “You’ve got to move. You’ve got a spare room”. A carer looks after an elderly parent for 20 years. The parent dies and somebody turns up and says, “You’ve got a spare room—here’s the penalty” or, “You’ve got to move”. We can think of a lot of such potential cases. My concern is that the Government should not charge down this path in a mechanistic way without thinking what they are going to do at the point of transition and in relation to the numerous hard cases that will arise. Otherwise, as I said in my previous speech, this will not last five minutes. I would like to hear the Minister on those points.

I am slightly scarred by one bit of experience. As part of the social security reforms in which I played a modest part alongside my noble friend Lord Fowler in the mid-1980s, we proposed some fairly draconian changes in housing benefit, which were, to be blunt, forced on us by the Treasury. They were introduced happily. Two years after I ceased to be Minister for Social Security, I was Minister for Health—another bed of nails. In my recollection, although I have not checked the books, the impact of those changes was such that the then Prime Minister ordered their reversal within a month because the flak simply could not be withstood. That is the risk the Government are running here, and I hope they will think about it very hard.

[Lord Kirkwood of Kirkhope]

My Lords, the noble Lord, Lord Newton, has made a very important point about the lack of social housing. Amendments and policy changes of this kind should only really be—and can only be—safely embraced if they are taken in the context of a wholesale housing policy review for this country. That will take some time and it needs to be started. It should have been started earlier. In the context of that, it is possible to deal with some of the anomalies and contradictions that we now have in our housing benefit system. There is no doubt that it needs to be reformed, but I have serious doubts about it being reformed at this scale and at this rate because I think it will hurt people. It will hurt people for one reason more than any other: it all happens at once.

On 1 April 2013, everyone who is caught by this will be looking for smaller properties which in many cases do not exist. It is worse than that, because there is a geographical and spatial dimension to this policy which must not be underestimated. It was the noble Lord, Lord Best, who pointed out that in the north of the country underoccupation is prevalent in a way that we all understand. I come from a social background in which I was raised in a council house and someone made a point about Northern Ireland. There is an in-built residual and unavoidable underoccupancy. On 1 April 2013, people are going to be hit and they are going to be hit hard.

I understand the concessions that we have been able to suggest to the Minister. The £30 million of discretionary housing payment is welcome, although I did not know that it was being found by topping up the housing benefit cut. That is news to me, and not particularly welcome news. With the discretionary housing payment of £30 million applied even to the north of the United Kingdom—the north-east, the north-west, Scotland and Northern Ireland—I do not think we have begun to look at the difficulties that this policy will face in year one. I assume the £30 million is annually recurrent, but I do not know the answer to that. Certainly, if it is not annually recurrent, then we will have even bigger problems in year two.

There is another difficulty that lies behind the policy which concerns me greatly. It will disrupt social and family ties in a way that it is impossible for local authorities receiving or trying to downsize people or social landlords to deal with. Unless folk are moving across the street or moving around the block or moving in the same village—it is admittedly working-age populations that we are talking about here as people beyond the state retirement age are not included—they will have a different set of problems to face outside their envelope of family, friends, doctors and all the rest of it. The effect particularly on disabled people was referred to in the powerful speech made by the noble Baroness, Lady Hollis. She drew my attention to this; I had this as a lower priority when we started this process. In parentheses, I think the 17 sessions of Grand Committee were one of the best periods of my parliamentary experience in terms of developing the points and getting ministerial responses. To say that I enjoyed it would be a slight exaggeration , but it was valuable time because we had a Minister who knew what he was doing, who listened, who was accessible and who was able to respond. I know why he cannot respond to this today, because this is Treasury clawback. This Bill is a perfectly good Bill and it will serve the country well in the fullness of time, but the Treasury clawback that has been demanded by Ministers in another department is potentially going to cause the reputation of the incoming reforms to be tarnished by measures exactly like this.

This is a modest amendment proposed by a man who knows more about housing than anyone else in this House. Speaking for myself, I will trust his judgment, and if he thinks that he gets a ministerial response that enables him to withdraw this amendment, I will say amen to that; but equally, if he gets a ministerial response that he does not think measures up to this modest amendment, I will happily follow him into the Lobby.

[The Lord Bishop of Ripon and Leeds]

My Lords, I support the amendment. I thank both the noble Lord, Lord Best, for his persistence and the way in which he has dug deep into the issues concerned with the bedroom tax, and the Minister for the way in which he has listened and responded.

I want to contribute to the debate because of the danger sometimes that, amid the plethora of words, we will cease to be moved by the situation of and the fear felt by those who will suffer because of elements of the Bill, particularly those with disabilities and those who care for children with disabilities. The day before yesterday could be observed as Autism Sunday, an observance that is apparently supported by the slightly curious trio of the Prime Minister, the Pope and Sir Cliff Richard. That occasion gave me the chance to listen again to those who are fearful about the results of the Bill’s dealing with the bedroom tax. People spoke to me of the way in which their disabled children and their whole family life would be affected by the bedroom tax. They have come to contribute to our society by caring for their own disabled child, perhaps with a disability that many would not regard as being one of the most serious that people face, but nevertheless one that for people in that situation can be a very frightening experience as their young people grow up.

This modest amendment would not solve all the problems of those who came to talk to me on Sunday, those who go to their parish priests with the issues of looking after children with disabilities or those children themselves, who are often members of our congregations. I hope that we shall be able to hear their voice as we respond to need in this area. I look forward to the Minister’s response, and hope that he can find a way through this tangle. Then I, too, will be reliant upon the skill and experience of the noble Lord, Lord Best, as we consider whether and how to vote on the amendment.

[Lord Wigley]

I support the noble Lord, Lord Best, and thank him for the tremendous work that he did in Committee, on Report and in other contexts relating to housing matters. I shall emphasise three aspects relating to the people who will be hit unless amendments such as these are carried or other provisions are made. First, we have heard a lot about disabled people. We cannot apply the provisions of the Bill as it stands to disabled people without potentially doing enormous harm. Secondly, we should consider children in vulnerable families. Thirdly, the noble Lord, Lord Newton, touched upon this aspect and I emphasise it too: rural areas.

In rural areas such as those that I am familiar with in rural Snowdonia and the Llyn peninsula, but I am sure that this is equally true in Cornwall, the Lake District and other parts of these islands, there are people living in villages in rented accommodation. If they have to move out of their accommodation—these are often three-bedroom houses, as has previously been mentioned—there are just no other rented houses available anywhere near the communities. We may be talking about them having to move 20 or 30 miles away to find somewhere. People might think that at one time there were two-bedroom council houses in some of these villages. However, they were a minority that were quickly sold off; and rapidly, with the cycle of the years, became second homes in the private sector for people who went on holiday to those areas. Rent in the private sector is prohibitive because of the rent that can be secured in the holiday season. As a result, often only winter lets are available for six months outside the holiday period. In those circumstances in such areas, it is not reasonable to apply this law in a blanket fashion to vulnerable people who may find themselves with one bedroom more than they need.

The amendment would not go all the way to meeting all the concerns that many of us raised during earlier stages of the Bill, but at least it would start to ameliorate them. Some step has to be taken. We cannot allow this to go on to the statute book with the effect that it will have on rural areas, disabled people and children. What the position of disabled children in rural areas will be, goodness only knows.

17:31

[Baroness Howe of Idlicote]

My Lords, I shall be even briefer in supporting my noble friend Lord Best. My noble friend Lord Wigley has pointed out the vulnerable groups that will suffer from this provision. My noble friend Lord Best has made an effort to concentrate on the groups that will suffer most. Therefore, I very much hope that these groups will be excepted by the Minister. Given the regional differences in the price of housing and all the other problems, without this sort of amelioration it is too worrying to think of the consequences of wanting to claim this sum of money from the people least able to pay it.

[Lord German]

My Lords, before I raise a number of issues that the Minister considered on Report, I shall just say a word about some of the conversation that there has been on behavioural change in this debate. If we pause for a moment to think of the 1.8 million people on the waiting list for social housing and the number of empty rooms, and put the two together, there is something dysfunctional about our housing sector. We have people living in overcrowded conditions who are waiting for social housing. Around 700,000 of those people fall into the vulnerable categories.

Wherever I go, the answer is always to build more homes, which is obviously part of the solution. However, for as long as there is that dysfunction and a shortage of funding and land to build more housing on—and a resistance to building more housing in some rural areas—people will continue to extend that waiting list. It is important that we do not miss the opportunity to change that dysfunction in some way. That is part of the issue that is being addressed. However, there are difficulties over the transition and how it will affect people. It is not something that is done lightly; nor is it easy to do.

There are questions that I should like to pose to the Minister. In answer to me on 14 December, at col. 1302 of Hansard, on the additional £30 million that would be used for DHPs to make up for the difficulties faced by two specific groups, he said that it would, “assist around 40,000 cases”. Is that simply a division of the amount of money available by the numbers that are predicted, or is it a fundamental assessment of those who live in adapted accommodation or are foster carers? I know that many noble Lords have made significant contributions to the debate on foster carers, both in Committee and on Report. It is of great concern because it has a very wide impact. Therefore, is the amount of money that is being made available sufficient to cope not only with the existing flow of foster carers but with the additional numbers that we need in this country to satisfy a very broad demand?

The second issue that arises from the Minister’s statement on Report relates to the other group that will be assisted by the discretionary housing payments—disabled people who have significantly adapted accommodation. I recall that in Committee we talked about several examples of people who had had very expensive changes made to their accommodation at public expense. That public expense would be duplicated if they had to move to other accommodation. Will the Minister explain to the House what “significantly adapted accommodation” is? Is the definition to do with whether it would not be cash-worthwhile, or does it go beyond that and relate to the nature of the adaptation that has been made?

One issue relates to equipment. Some equipment for disability is very cumbersome, large and bulky and would not warrant being moved. It would probably have been built into accommodation. For example, does this apply to a home where a disabled person requires ground-floor accommodation and where the expense of building a ground-floor extension to a property means that there is an empty bedroom upstairs? Will we still require that sort of change?

This whole transition, which must be effected through regulations, will undoubtedly be the source of some detailed conversations about these matters. Therefore, will the Minister give us some indication of whether the DHP that will be applied will be sufficient to tackle the two specific groups in all circumstances; and what he expects to be able to afford to do in the transitional arrangements that he may bring forward in regulations?

[Lord McKenzie of Luton]

My Lords, the Government have moved in a number of ways on the issues that have been returned from the other place. Along the way, they have also accepted a number of other changes that were pressed on them by your Lordships’ House. However, the Bill remains unchanged in some of its most unacceptable provisions, not least of which are those relating to underoccupancy. That is why we support the amendment in lieu, which was moved with such precision and expertise by the noble Lord, Lord Best. As we have heard, the amendment is less ambitious than that previously accepted on Report, reflecting our obligation to take account of the financial strictures of the Government. However, the amendment is not cost-free and cannot be if it is to provide protection for hundreds of thousands of households that, on average, could see their income fall by £14 a week.

It is clear that, under the guise of addressing underoccupation, the Government seek to make further savings on housing benefit on top of the multiplicity of restrictions—the CPI uprating, the 30 per cent percentile, the rent and size caps and the shared-room rate—that are already in play. Savings from some of these are being made in parallel with the benefit cap. The Government’s stated aims for the underoccupation rules are to encourage greater mobility within the social rented sector; to make better use of the available social housing stock; to improve work incentives; and to curtail housing benefit expenditure. The amendment in lieu addresses each of these issues. It is clear that, should a suitable offer of accommodation be forthcoming, there is an expectation that an underoccupying tenant should take it up, whether or not they have only one spare bedroom or fall into any of the exemption categories listed. If they did not, the housing benefit reduction would ensue. What is suitable would have to be defined in regulations and would have to reflect the circumstances of the household, including its need for adapted property, transport links, access to support services and appropriate schooling.

However, there is no merit at all in an economic incentive to move to smaller properties when there are no smaller properties to which people can move. Therefore, the amendment provides that, with no suitable alternative offer, the underoccupation deductions—the room tax, in the terms of the noble Lord, Lord Best—would apply unless there was no more than one spare bedroom and one or more of the other exemption criteria applied. As for improving work incentives, this can surely have no application for those who have no work requirement placed upon them, for example because of a severe disability. These are people who the Government themselves recognise cannot work and should not be expected to work, so what is the purpose of an economic work incentive for them?

We know that disabled people face extra costs in their daily lives and that it is harder for them to take the hit of reduced housing benefit. Indeed, the Government have already recognised this in the benefit cap by exempting certain categories of individuals from loss of housing benefit or universal credit. These are the self same categories listed in paragraph (b) in the amendment, mainly those on DLA or PIP. War widows or war widowers are similarly included in the exemption to parallel the arrangements in the benefit cap—no more, no less. The noble Lord, Lord Best, referred to the sources of funding on offer to deal with foster caring. It is hoped that the Minister will be able to dispel any suggestion that the new money to which he referred is just being cynically recycled. The Government’s other solution is for people to take in paying lodgers. Perhaps the Minister can say what assessment has been made of this possibility.

We agree that underoccupation in the social housing sector should be addressed and clearly the lack of social housing and the need to build more is part of that, but it is clear that the Government do not see these provisions as a route to doing so. Their assumption is that most people will not move and will take the hit and that is how the Government will get their savings. These amendments would stop them getting those savings from the most disadvantaged in our country. We support them.

[Lord Freud]

My Lords, the amendment in lieu of the noble Lord, Lord Best, seeks to exempt certain categories where the tenant underoccupies by one bedroom and no suitable alternative accommodation is available, those not required to seek work, carers, disabled people, war widows and foster carers. Our estimate of the cost of this amendment is slightly lower than that of the noble Lord. He suggested that it was £150 million. We estimate that it would cost up to around £100 million in 2013-14. We have already announced an increase of £30 million in the discretionary housing payments aimed at some of these categories—those living in adapted properties and foster carers. Others in vulnerable situations can also apply to the fund where they have difficulty meeting the shortfall.

I say to my noble friend Lord Kirkwood that that £30 million is an ongoing rate. The amount will be kept under review to see whether it is meeting the level of demand in different areas. We set the amount at £30 million based on the numbers likely to be affected by the measures. We think that the £30 million could help about 40,000 cases based on the average reduction of £14 a week. That figure is based on the group of 35,000 potentially affected claimants who are wheelchair users and live in accommodation that has been adapted to suit their needs, although, of course, not all of these would need to apply for a discretionary housing payment. We estimate that around 5,000 foster carers, including those in between assignments, could be affected by the measure.

My noble friend Lord German referred to the type of housing that would be affected by the measure. We decided to tackle this matter through discretionary housing payments, as introducing exemptions and classification is very difficult in practice. Therefore, we are leaving it to local authorities to make some very tough judgments on where it makes sense to offer that support as they have a lot of local knowledge. Regrettably, £100 million is a lot of money in the present climate, even though it is less than the £150 million figure estimated by the noble Lord, Lord Best. Clearly, it is difficult to agree amendments and send them to another place when they have such significant costs attached to them.

In summary, we believe it is right and fair to proceed with the measure as it is in the Bill. We will apply a percentage reduction of 14 per cent for those underoccupying by one bedroom and 25 per cent for those underoccupying by two or more bedrooms. That comes in in April 2013. The noble Lord, Lord McKenzie, asked me to disavow any cynical recycling. I am in a position to do that, as we announced a range of these reductions of between 10 and 15 per cent for one room and 20 to 25 per cent for two rooms. When I fixed the rates in December, I was able to do that within the bands that we had set.

[Lord McKenzie of Luton]

Is the noble Lord saying that those rates would be lower if the £30 million had not been made available?

17:47

[Lord Freud]

My Lords, we have to look at these things in the round, as we did with the Bill. The reality is that we had a range and we set the provision at an affordable level within that range. Noble Lords may argue that saving money is a cynical thing to do but, as I say, we had a range and we set the provision within the range. We have found the money to ameliorate the measure through the discretionary housing payments process.

My noble friend Lord Newton made an important point about changing circumstances. We have rules within housing benefit to protect people when their circumstances change. Among those changes are going into hospital, being on remand and the death of a member of a household which would result in a reduction in housing benefit. Those same rules will apply in the social rented sector and provide protection for such claimants. For example, housing benefit currently provides 12 months’ protection from rent restrictions where there is bereavement, so there are ways of dealing with such circumstances.

The noble Baroness, Lady Hollis, referred to couples who have health problems. I re-emphasise the point that they would not be pensioners by definition as they are excluded from this measure, so we are talking about couples of working age. Clearly, if there is real difficulty in that regard and separate bedrooms are required, where discretionary housing payments would be considered, and where the couple required an overnight carer, whether non-resident or otherwise, the size criteria would be increased to provide additional room. However, we should consider what happens to people who are renting in the private sector. These situations are already faced by more than 1 million people—I think it is 1.3 million people—renting in the private housing sector.

This is part of a package of reforms to keep the housing benefit bill under control. I have never tried to disguise that in any way. This is a way of trying to control the housing benefit bill that is moving up towards £26 billion, if we do not take the £2 billion of savings across the piece as we are planning to do. That is the saving that we are trying to make within the social rented sector as opposed to the private sector. We are trying to sort out our budget deficit, and we need to make sure that we spread that load right across society in as fair a way as we possibly can.

We realise, obviously, that we need to support tenants, their advisers and housing providers in preparing properly for what is a very substantial change happening in April 2013. Work is well under way to support social housing providers, local authorities and other government departments. An important point raised by my noble friend Lord Kirkwood is the impression that it is all happening on one day. It might be happening on one day, but in practice there is a year before it culminates in which we are aiming to get a very smooth implementation process. We are working closely with the stock team, which is part of the Chartered Institute of Housing, funded by the GLC. We are putting a tool-kit out for local authorities, which involves working on who will be affected; advice on data sharing; allocations policy; tackling worklessness; taking in lodgers; letting spare rooms; reducing arrears; national home-swap schemes; affordable rents; and alternative housing options. We are working on all those areas.

A behavioural response is required right across the piece on something like this. We are looking to help claimants. Those who can must look for a job. Those who are in work can increase earnings by getting more hours. We have discussed taking in a lodger, moving to a smaller property or moving into the private rented sector. Landlords need to have responses. They need to give permission to accept lodgers, identify those affected, communicate changes, train staff, review their allocation policies, look at where the discretionary housing payments need to be made, and so on. There is a range of things on a substantial scale that need to happen, just as the Government have to do a huge amount of work to ensure that they do happen.

We are not expecting the 670,000 people who are affected to move. As I have tried to describe, there are a number of ways in which claimants can make up any shortfall and stay where they are. So I ask the noble Lord to withdraw his amendment.

[Lord Best]

My Lords, I am extremely grateful to people from all parts of the House who have joined in this debate. My thanks go to the noble Baroness, Lady Hollis, who has been tireless in supporting this amendment and so many others during the course of this Bill; to the noble Lord, Lord Newton, who has been a hero in bringing common sense and good judgment to this Bill at all kinds of stages; to the right reverend Prelate the Bishop of Ripon and Leeds for his support; and to the noble Lord, Lord German, who raised a number of important points. Perhaps I could respond to his point that 1 million bedrooms—I am not sure whether he actually quoted this number—are underoccupied in the social housing sector, and that it would be good if we could get those used. In this country there are, I think, 6.8 million empty bedrooms in houses where there is already one spare room. We have lots and lots of spare rooms, but they are in the owner-occupied sector, and nobody is suggesting that we levy a bedroom tax on the occupiers in the owner-occupied sector—quite rightly; I absolutely would oppose that. However, on council estates now, people who have exercised the right to buy and are homeowners are living next door to tenants in identical circumstances. One of them will be penalised and one of them will not.

I am also grateful to the noble Lord, Lord McKenzie of Luton, for his contribution and indeed to the noble Lord, Lord Wigley. I single out the noble Lord, Lord McKenzie of Luton, because he has brought the expertise of a previous Minister on this key issue to all of our debates and has been more than helpful to me in my formulation of the amendments that we have before us today.

I was greatly encouraged when the Minister said that the cost of this has come down from the earlier amendment, which found favour with your Lordships and did not do so badly in the other place. The cost has come down from some £300 million to about £100 million. I think the Minister said up to £100 million. This, I agree, is serious money, but it is set against the savings in housing benefit that the Minister mentioned again that he is seeking to achieve of over £2 billion. The £100 million is for particularly vulnerable and low-income households. I was not convinced by the argument from our earlier debates in Committee for the increase in the amount that will be charged each week. It will rise from £13 per week to £14 per week, which happens to be the amount required to find a further £30 million of discretionary housing payments. That, I fear, has meant that we are robbing Peter to pay Paul. We are charging another 50 quid to everybody else to pay for the ways in which we can exempt certain people, people in houses that have been expensively adapted, and indeed those who regularly have foster children in the home. That is excellent, but it is being paid for by pushing up the total bedroom tax for everybody else to £728 a year. That is three-and-a-half times the winter fuel payment, for example. That is a serious amount for people on the lowest incomes to find.

I do understand the pressures on the Minister to help the Government achieve deficit reduction, but I see it as incumbent on us in this House to take a stand, even a modest one, to draw a line where deficit reduction is at the expense of many thousands of the very poorest households. We have to say: so far, and no further. Applying the bedroom tax to these vulnerable groups, set out in this amendment, where there is no opportunity for those on very low incomes to avoid the tax, is going too far. I wish to test the opinion of the House.

17:58

Division 1

Ayes: 236

---

Labour: 159
Crossbench: 54
Liberal Democrat: 6
Independent: 4
Bishops: 2
Ulster Unionist Party: 1
UK Independence Party: 1
Plaid Cymru: 1

Noes: 226

---

Conservative: 151
Liberal Democrat: 59
Crossbench: 12
Ulster Unionist Party: 2

18:13

Motion C

Moved by

[Lord Freud]

That this House do not insist on its Amendment 4 to which the Commons have disagreed for their Reason 4A.

LORDS AMENDMENT 4

4: Clause 11, page 5, line 23, at end insert—
“(4A) Regulations shall not permit any reduction of housing benefit or amounts included for accommodation in an award of universal credit in respect of under occupation, deemed or actual, where—
(a) the landlord is a local authority or a registered provider of social housing, and
(b) any such landlord is not able to offer suitable alternative accommodation which would not cause a person to under occupy.
(4B) Regulations may make provision for determining when accommodation is suitable for the purposes of these provisions.”

COMMONS DISAGREEMENT AND REASON

The Commons disagree to Lords Amendment No. 4 for the following Reason—

4A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

Motion C agreed.

Motion D

Moved by Lord Freud

That this House do not insist on its Amendments 15 and 23 to which the Commons have disagreed for their Reasons 15A and 23A.

LORDS AMENDMENTS 15 AND 23

15: Clause 51, page 36, line 16, after “2007” insert “, and subject to section (Condition relating to youth (No. 2)),”

COMMONS DISAGREEMENT AND REASON

The Commons disagree to Lords Amendment No. 15 for the following Reason—

15A: Because Lords Amendments Nos. 15 and 23 would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

23: Clause 52, leave out Clause 52 and insert the following new Clause—

“Condition relating to youth (No. 2)

In paragraph 4 of Schedule 1 to the Welfare Reform Act 2007 (condition relating to youth), after sub-paragraph (1)(d) insert—

“(e) after the assessment phase has ended, the claimant has limited capacity for work-related activity.””

COMMONS DISAGREEMENT AND REASON

The Commons disagree to Lords Amendment No. 23 for the following Reason—

23A: Because Lords Amendments Nos. 15 and 23 would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

Lord Freud: There have been considerable extensive debates in both Houses on the ESA provisions for young people. I recognise that noble Lords have pursued their concerns about this measure constructively.

Our proposed changes to the condition relating to entitlement to ESA on grounds of limited capability during youth are part of our principled approach to reform. We want to modernise and simplify the current welfare system, focus support, avoid duplication of provision and redefine the contract between the state and individuals, in advance of the introduction of universal credit.

I understand the point made by noble Lords on more than one occasion: that the social security system has provided a non-contributory, non-means tested incapacity or invalidity benefit for many years. However, we are trying to simplify and rationalise the support provided by the system which has been recognised as complex and difficult to understand. That is the reason for the introduction of universal credit.

We do not believe that it is right, for example, that where a claimant has qualified for contributory ESA under the youth provisions and, some years later, they inherit a substantial sum, they should be able to continue to receive unlimited contributory ESA without having paid any contributions.

We estimate that about 90 per cent of those who presently receive ESA on youth grounds will be eligible for income-related ESA. So just 10 per cent will not qualify and that is because they have other means available to them—either a partner in full time work or, more likely in practice, capital of more than £16,000.

I know that there was confusion in the other place on this point, which I need to clear up, about when young people were entitled to its benefit. Once a young person has left education and child benefit is no longer payable, the young person is free to claim income-related ESA in their own right and their parents’ income and capital will not affect the young person’s benefit entitlement, because they are no longer regarded as dependent on their parents.

Another important point is that eligibility to income-related ESA also provides automatic entitlement to passported benefits such as free NHS prescriptions. As many noble Lords will be aware, many stakeholders have called for this change, which means that the present process of separate applications will no longer be required. As noble Lords will be aware, I have asked the Social Security Advisory Committee to provide advice about how passported benefits will be provided in future. We are working with other government departments and the devolved Administrations to prepare our response to the advisory committee’s report. That response will be published alongside the final report by the end of April.

In this, we are targeting the support that the Government can provide to where it is needed most. We simply do not think that someone who has independent capital or income should benefit from indefinite entitlement to contributory ESA. We have, however, as part of the process, listened to concerns and made amendments to the Bill that allow claimants to re-qualify for a further award of contributory ESA after their ESA has ceased as a result of time-limiting and they are later placed in the support group because of a deterioration in their health. That applies equally to ESA youth claimants.

One of the hidden aspects that we are trying to deal with here is benefit tourism. We are trying to make sure that our benefits are paid only to people who have a legitimate link to the UK and who meet the same conditions of entitlement as those who normally live in this country. We have a strong view that the Government of the United Kingdom are responsible for determining entitlement to UK benefits. There are a number of ongoing cases where the Government are doing all they can to defend this fundamental right, which allows us to decide who should be eligible. I know that there is widespread support for this view across the House and in the country. The Stewart case is just one example of the challenges that we are facing in defending this position, and I shall touch on that in a second.

We do not think it is right to distort our social security system to fit European rulings. We are defending this position in the courts, both domestically and in Luxembourg and Strasbourg. In Strasbourg, my right honourable friend the Minister for Employment has been discussing with his European counterparts whether we can find a more pragmatic and sensible approach to European regulation.

Perhaps I may touch again on the Stewart judgment, given by the European Court of Justice in July. The effect of this judgment is that someone living abroad could qualify for benefit without having to satisfy the past presence test. In other words, they could get benefit where they could demonstrate a genuine and sufficient link to the United Kingdom. In relation to Ms Stewart herself, the Court determined that she could arguably demonstrate a link with the UK because she was in receipt of another UK benefit, she was dependent on her parents, who were UK pensioners, and she had spent a significant part of her life in the UK. We want people to qualify only where they have lived in the UK recently prior to the claim, but we also have to satisfy our EU obligations by taking account of the Court’s judgment with regard to where we can still operate such a past presence test. We strongly disagree with the European Court of Justice’s ruling.

The effect of the judgment is that under EU law we cannot have a blanket past presence test of this kind for benefit claimants. As a result, the ESA youth provision is potentially more widely available than intended. As we are bound by EU law, there is nothing we can do by way of domestic legislation, even primary, to change its effect, short of abolition.

As usual when we introduce policy changes, we will be reviewing the changes to make sure that they work as intended and do not have unintended effects. Although I recognise noble Lords’ concerns, I believe that abolition of the ESA youth provision for new claims remains the best option to close the door to people from overseas while also simplifying and modernising the support to be provided in the future. I beg to move.

Motion D1 (as an amendment to Motion D)

Moved by

[Baroness Lister of Burtersett]

As an amendment to Motion D, at end insert “but do propose Amendment 23B as an amendment in lieu”

23B: After Clause 53, insert the following new Clause—
“Condition relating to youth: review
In section 1 of the Welfare Reform Act 2007 (employment and support allowance) after subsection (3A) there is inserted—
“(3B) The Secretary of State shall conduct a review of the impact of the provisions of subsection (3A) on such persons as are affected by those provisions.
(3C) The review under subsection (3B) shall commence twelve months after subsection (3A) has come into force; and a report of the review shall be laid before both Houses of Parliament within three months of the review commencing.””

[Baroness Lister of Burtersett]

My Lords, I admit that this is not the amendment that I had wanted to move but I have been prevented from moving that one by the—and I hope that this is not unparliamentary language—sneaky amendment that the Government passed on the evening of 11 January, which ran contrary to the earlier decision made by your Lordships’ House to protect the ESA youth provision. This amendment simply calls for a report on the impact of its abolition so that the young people affected are not left completely in the lurch.

Noble Lords will recall that we are concerned here with the abolition of a provision which has been an accepted and uncontested part of social security legislation since 1975. It enables young people who have been disabled from birth or childhood to access contributory employment and support allowance without having paid the necessary contributions on the grounds that they cannot be expected to have paid them.

I shall not go over all the arguments that have already been made but I want to pick up one point that the Minister made—that young people who do not qualify for income-related ESA have independent means. I find it strange that the Government, who have such concern about so-called welfare dependency on the state, do not seem to understand that in the 21st century an adult who has to depend totally economically on another finds that demeaning. It is not right.

The abolition of the youth ESA provision was originally justified on the grounds of administrative simplification, as the noble Lord has said. That argument did not stand up well to scrutiny, so the Government shifted their ground and argued that its abolition was necessary to protect against the effects of a European Court of Justice decision in the case of Stewart, as the Minister has explained. This decision is dated 21 July 2011. The Grand Committee discussed the youth condition on 8 November—three and a half months later—yet the Minister did not mention it. If the implications of the decision were so significant, surely someone in the DWP would have noticed them during those three and a half months. The first that noble Lords heard of it was in January. Interestingly, in January the department was also rebuked by the UK Statistics Authority for rushing out figures on benefit tourism with insufficient regard to weaknesses in the data. The National Institute of Economic and Social Research argued that these same figures disproved ministerial claims about benefit tourism. I raise this only because I wonder whether the ESA youth condition has not become the victim of a moral panic in the DWP about the much exaggerated problem. That is not to say that I am defending benefit tourism, where it happens.

More importantly, I have received advice from Dr Charlotte O’Brien, a law lecturer at the University of York. She is an expert in this area and I am very grateful to her. She disputes the department’s interpretation of the implications of the Stewart case. In her view, the Government’s “claim that ‘we could end up paying this benefit, on a long-term unconditional basis, to more people who have never lived in the United Kingdom but who can simply demonstrate a link to it’; and the suggestion that the ruling makes ESA in youth much more widely available are not supported by either the rules on social security co-ordination or by the wording of the judgment”. I shall not wear the patience of your Lordships’ House by going into detail. I just wish to say that it is unlikely that in many such cases the UK will be the “competent state”—a necessary condition of entitlement. However, where it is, it is still open to the UK Government to apply a “real link test”, which would not be deemed to be arbitrary in the way that the residence test was in Stewart. When I put it to Dr O’Brien that it would appear that the Stewart judgment had been seized on as a pretext, she agreed, adding, “I think it is a very flimsy pretext”.

If, however, the department’s interpretation were correct, it might also raise questions about entitlement to DLA/PIP and attendance allowance. Can the Minister please give the House a firm assurance that there will be no attempt in future to abolish those payments using the same pretext?

Finally, I come to the question of money. The impact assessment for this measure did not include financial savings in its list of policy objectives, yet Ministers have subsequently used these savings as an argument to justify it. What savings are we talking about? The amendment overturned by the House of Commons would have cost a mere £17 million by 2015-16. That is a cumulative cost. It would be really helpful if the Minister could stick to annual costings, or are they so minimal as to be unquantifiable on an annual basis? Surely it is an abuse of financial privilege to slap it on an amendment, the cost of which falls easily within the normal margin of error.

I do not blame the Minister, but in both Houses Ministers have tried to justify the abolition of youth ESA as part of what they have called the Government’s “principled approach to reform”. I believe that this mean-minded little measure and the justifications put forward for it, together with the application of financial privilege and the manner in which the Government moved their own amendment on Report, are totally unprincipled. I beg to move.

18:30

[Baroness Hayter of Kentish Town]

My Lords, as we have heard, without our amendment, the Bill will deny thousands of disabled people aged under 20 the right to a non-means-tested ESA when they reach working age. These young people are exactly those whom we discussed in the first amendment—disabled since either birth or childhood. When they grow up they will no longer be entitled to a benefit in their own right but instead will have to rely on means-tested benefit, depriving them of an independent income as an adult. As it stands, even those young people unlikely ever to be able to work will never be entitled to non-means-tested benefits as they will never have the chance to build up a national insurance contribution record. That means that those with early-onset conditions will for ever be disadvantaged compared with those who become disabled later in life and have therefore had time to build up enough contributions to receive non-means-tested benefits.

Clause 52 abolishes the right of people under 20 with work-limiting conditions to be treated as if they had met the NI contributions. I wonder whether our colleagues in the Commons really meant to reject our amendment in the knowledge that it affects young people, some with profound disabilities from childhood, and those with the greatest disadvantage in the labour market. The Bill removes their access to an independent income and reduces their chance of achieving independence. As my noble friend Lady Lister said, it was not to save money—at least that was not listed as a policy intent in the Government’s paper. Therefore, it can only be about changing behaviour, but how do these youngsters change their disability? Most of them would love to work but it is the behaviour of others, particularly understanding employers, which will be the biggest determinant of whether they can find work.

As my noble friend Lady Lister said, these changes are, for the country, tiny—£17 million cumulative—but the impact on young disabled people will be huge. On average, 70 per cent will lose about £25 a week, but 10 per cent of those 15,000 youngsters will lose entitlement altogether, because they have either savings or income from another family member. The Minister spoke earlier about inheritance. I do not know people who go around inheriting lots of money; maybe he does. The idea that because some people may inherit, everyone should be denied access to benefit, I find very strange.

The impact assessment also does not look at the effect on other family members. The introduction of a means test will undoubtedly decrease the incentive for anyone living with a young disabled person either to work or to build up savings. Indeed, these young disabled people will actually have a huge negative dowry to bring into any relationship, because the earnings of the person whom they would love to move in with will immediately kick in against the means-tested benefits of these young disabled people.

We do not know—we cannot work it out from the income assessment—exactly which people will be affected. However, the figures for those under 16 claiming DLA show that 41 per cent of them do so in relation to a learning disability. It is reasonable to assume that a large proportion of the people affected will also be in this group. As my noble friend has said, this is not the amendment she wanted to table. While we must accept that the Commons has given its decision on this provision that removes the right from these people, we ask the Government to monitor its impact, if only to assure both Houses that our fears for these young people are not justified.

The Minister has said that he will review all such policies and impacts of the Bill. We hope as we begin the ending, if you like, of this period of the Bill that the Government can say yes to this very small amendment, which only writes in that such a review should take place.

[Lord Freud]

My Lords, the short answer is that we will monitor it. However, I do not accept the amendment and I will explain exactly why. It does not work in the way that is intended. It is designed for us to have a full formal review. As noble Lords will recognise, we do have reviews and we treat them very seriously. If you look at the example of the Harrington review of the WCA, you see that they can be of immense value in the development of policy.

The way this one would work is that we would have a review one year after the measure came into force. The amendment would require that that report—a big formal report—is laid before the Houses of Parliament within three months, an incredibly rapid timescale as I am sure that the noble Baroness will recognise. We will monitor this and use evidence from a large number of sources on the experiences and outcomes of those affected. We will use DWP administrative datasets to monitor the trends in both the caseloads and in the level and distribution of benefit entitlements.

I want to put into context the huge paraphernalia that this amendment would require in practice. We are looking at the region of 15,000 claims to ESA youth every year. We expect 10 per cent of those not to qualify for ESA—not to be in the system. That is 1,500 people. It is not appropriate to have on the Bill a major Houses of Parliament review when the numbers are so small. The timing is not right. One does not look at a policy like this only once; one needs to keep it under review and look at it over a number of years, not do it in an inflexible way. I am trying to say that I buy the point that we need to watch it, but I do not think this amendment works. We can evaluate detailed specialist research. Broad surveys will be useless. It is too small and we will not pick up anyone if we do it on the FRS. It will be five people if we do it like that. We will have to review it very differently and then use it to inform how we guide our future policy direction and, potentially, operational improvements.

I do not wish to row about benefit tourism. The reason that it came through late, to be blunt, is that my blood was chilled towards the end of last year when I started working through some of this stuff. That is why I missed it in November. I had not really absorbed the implications. I do not think I would call it a panic—

[Lord Lester of Herne Hill]

I was troubled when the noble Baroness, Lady Lister, alleged that the use of EU law was a pretext—I think she said pretext—which means it was a kind of sham. May I take it that the analysis given about the decision of the European Court of Justice was based on legal advice and that what has been said explaining EU law is the Government’s understanding on the basis of EU advice as to what that judgment means and its effect, or is it some kind of political pretext?

[Lord Freud]

No, my Lords. The department has an international wing that monitors this matter very closely and is on top of it. It has lawyers and also takes advice from lawyers—although formally I am not allowed to say that we ever consult lawyers internally for advice. I think that is the position. All I can say is that there are many ramifications to this. I am not playing games. I am quite worried about the implications for our whole benefits system.

[Baroness Hollis of Heigham]

In my experience in the department, over eight years and with a dozen Bills, the legal advice was usually gold-plated. When I scratched it, I realised that we were going over the top. Most outcomes that were predicted on such things as pensions did not occur. I urge the Minister to adopt an appropriate degree of scepticism toward the legal advice that comes his way.

[Lord Freud]

My Lords, I am always delighted to take the advice of someone who occupied my room in the department for so many years—although I think that there is a progression and that ignoring it early on does not mean that it will not come back. I will not go into this in too much detail. I am sure that the noble Baroness did not mean to say that I was making it up, because I was not.

[Baroness Lister of Burtersett]

Before the noble Lord moves off the point, will he give us the assurance I asked for that, whether or not this is a pretext this time, the argument will not be used to bring forward proposals to abolish attendance allowance, DLA or PIP on the grounds that it is the only way to deal with such cases?

[Lord Freud]

My Lords, that is an enormous question. In this context, I am in no position to give the undertaking. We will have to look very carefully at how we frame our benefits if we do not want them all to be very freely and widely used. That is all I am saying. How we will frame them in the years ahead I do not know. I have not started to think about it. Clearly, we are going through a huge exercise to introduce PIP and it is very unlikely that anything will reverse it for many years. I cannot answer the question because it is too big. However, these are real concerns.

I will go back to a narrower point. We want to modernise and simplify the welfare system. We want to avoid duplication of provision, and to redefine the basis of the contract between the individual and the state. We need to do that in advance of universal credit coming in. We want to place claimants on the same basis as everyone else. All those who do not qualify for contributory benefits will qualify for income-related benefits. The effect in practice will be a streamlined system for these youngsters to receive passported benefits.

The amendment does not work, but I take the point. We will monitor this very closely and keep the outside world, including the Chamber, informed.

18:45

[Baroness Lister of Burtersett]

My Lords, I am grateful, first, to my noble friend Lady Hayter of Kentish Town for her very helpful and supportive speech. I also thank the Minister. Of course he is right that the amendment in its current form is not appropriate. As I said, it is not the amendment that I wanted to table. However, it has done what I hoped it would do. It has elicited from the Minister a commitment to monitoring. That is very welcome.

The Minister has acknowledged that monitoring cannot be simply statistical. I hope that it will pay particular attention to the nine out of 10 people who will qualify for income-related ESA. We will want to know how much money they will get relative to what they would have received under a contributory scheme. As my noble friend said, the income assessment suggested that there would be an average loss of £25 per week for some young and vulnerable people. That is a lot of money for them. We will want to know about the situation of the one in 10 who will not qualify. Will it be because of the great inheritance they have received? Or will it be the case, as I suspect, that their parents have scrimped and saved to ensure that when they die, their son or daughter has a financial cushion—as a result of which they could lose all entitlement to benefits. I cannot believe that the House would want that.

I hope that the monitoring will look at that and will include research to find out how young people feel when they have a partner and no entitlement and so come to depend economically on their partner, on whom they may already depend for physical assistance. Their dependence will become total. I hope that the Minister will discuss with researchers and others—perhaps including Members of this House and the other place—the appropriate monitoring that will take place. I very much welcome what he said about monitoring, and the fact that he will report to the House and to the other place. The time period of three months is too short and we do not want just a one-off report. I hope that there will be a mechanism for enabling us, on a regular basis, to hear what is happening to this group of young people. As my noble friend said, they are very vulnerable.

One thing I found worrying in the Minister's reply was that he was not able to give the assurance that I asked for about the other benefits. I thought that I was asking for a simple thing. It makes me worry about whether there is a plan—I will put on the record that the noble Lord is shaking his head to indicate that there is no such plan—to abolish these benefits. However, I would have felt much happier if we had had a clear assurance that it simply would not happen and that the Government's interpretation of EU law would not be used in that way.

It is not with a heavy heart that I withdraw the amendment because I completely accept, as the Minister said, that it is not terribly good. However, it is with a heavy heart that I feel that we in this House and the other place have let down young disabled people who look to Parliament to preserve their independent income. I feel disappointed that we have not been able to protect that group of people. Having said that, I beg leave to withdraw the Motion.

Motion D1, as an amendment to Motion D, withdrawn.

Motion D agreed.

Motion E

Moved by

[Lord Freud]

That this House do not insist on its Amendment 17 to which the Commons have disagreed for their Reason 17A and do agree with the Commons in their Amendment 19A.

LORDS AMENDMENTS 17 AND 19

17: Clause 51, page 36, line 19, leave out “365 days” and insert “a prescribed number of days which must be at least 730”

COMMONS DISAGREEMENT AND REASON

The Commons disagree to Lords Amendment No. 17 for the following Reason—

17A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

19: Page 36, line 30, at end insert—
“(2A) The period for which a person is entitled to a contributory allowance by virtue of the third condition set out in Part 1 of Schedule 1 (youth) shall not exceed a prescribed number of days which must be at least 730.”

COMMONS AGREEMENT WITH AMENDMENT

The Commons agree to this Amendment with the following Amendment—

19A: Line 4, leave out “a prescribed number of days which must be at least 730” and insert “365 days”

[Lord Freud]

My Lords, there has been extensive debate in both Houses on ESA provisions. Many points were made and we made a number of changes as a result, which I know that noble Lords acknowledge. Amendments 17 and 19 would increase the time limit for claimants receiving contributory ESA in the work-related activity group from the proposed 365 days to a minimum of 730 days. This would have to be prescribed in regulations. I fully recognise the concerns expressed by noble Lords who supported the amendments, in particular their concern for claimants suffering from cancer. We will debate the cancer point again in a while. On time limiting, I stress again that it will affect only contributory ESA claimants in the WRAG who would normally expect to be able to return to work with appropriate support. Time limiting will not apply at all to claimants who are placed in the support group. They will continue to receive unlimited support for as long as they need it.

We will come on to this in detail later, but I should briefly add that around two-thirds of those with a primary diagnosis of cancer who complete their WCA are placed in the support group and would therefore be unaffected by our time-limiting proposals. Additionally, claimants with the lowest incomes will be in receipt of income-related ESA and would therefore also be unaffected by this measure.

We have had a number of debates about whether the time limit is arbitrary. I do not accept that it is. A number of countries apply a similar limit to that provided by this Bill. The Government need to strike a reasonable balance between the needs of sick and disabled people claiming benefit and those who have to contribute towards the cost—which I acknowledge includes disabled people who pay their taxes. I believe that a time limit of one year strikes the right balance between restricting access to contributory benefits and allowing those with longer-term illnesses to adjust to their health condition and surrounding circumstances; it is double the time allowed for contributory JSA in recognition of that fact.

There is, of course, a strong fiscal case for this change. We estimate that this amendment would reduce the total savings by around £1.6 billion by 2016-17. We have discussed this again and again, but this is a very substantial figure, and this is one of a number of very difficult decisions the Government have had to make in order to stabilise the financial position. I beg to move.

Motion E1 (as an amendment to Motion E)

Moved by

[Lord McKenzie of Luton]

As an amendment to Motion E, leave out from “17A” to the end and insert “and do not agree with the Commons in their Amendment 19A but do propose Amendments 17B, 17C, 17D and 19B as amendments in lieu of Amendments 17 and 19A”

17B: Page 36, line 19, leave out “365 days” and insert “the relevant maximum number of days”

17C: Page 36, line 21, at end insert—
“( ) In subsection (1) the “relevant maximum number of days” is—
(a) 365 days, or
(b) if the Secretary of State by order specifies a greater number of days, that number of days.”

17D: Page 36, line 36, at end insert—
“(1A) In section 25 of that Act (regulations)—
(a) in the heading, after “regulations” there is inserted “and orders”;
(b) in subsection (1), after “regulations” there is inserted “or an order”.
(1B) In section 26 of that Act (Parliamentary control), at the end there is inserted—
“(3) A statutory instrument containing an order under section 1A shall be subject to annulment in pursuance of a resolution of either House of Parliament.””

19B: Line 4, leave out “a prescribed number of days which must be at least 730” and insert—
“(a) 365 days, or
(b) if the Secretary of State by order specifies a greater number of days, that number of days.”

[Lord McKenzie of Luton]

My Lords, Amendments 17B, 17C, 17D and 19B relate to the time limit for the contributory employment and support allowance, and recommend that this can be increased by secondary legislation in the future.

The time-limiting of contributory ESA to just 365 days for those in the work-related activity group is one of the most indefensible provisions in the Bill. It is all about saving money and will bring what my right honourable friend Stephen Timms referred to in the other place as,

“a financial catastrophe for a very large number of people”.—[Official Report, Commons, 1/2/12; col. 836.]

I remind noble Lords that the number affected will rise by 2015-16 to something like 700,000, 40 per cent of whom will not be entitled to income-related ESA. It will hit some 100,000 claimants in a matter of a few weeks when they see their ESA disappear literally overnight, with losses in income of up to £90 a week and over half of those affected in the lowest three income deciles. The very manner in which this is being introduced, including the assessment period and time already on the clock, demonstrates that this is not about fairness but about money.

The arguments against this one-year limitation have been well rehearsed and I do not propose to develop them in detail again this evening. They were subject to a powerful amendment moved by the noble Lord, Lord Patel, on Report. The restriction has no credible evidence base, it undermines the contributory principle, it creates another couple penalty, and it simply fails to take proper account of the time that many will need to overcome their illness or disability so as to be able to access employment. The policy potentially overrides the WRAG conditionality, and the noble Lord, Lord Patel, is rightly pursuing the situation for cancer sufferers. We look forward to supporting him in his endeavours shortly.

Noble Lords sent a strong message to the House of Commons seeking a minimum of two years for the restriction, and for the restriction to be embodied in secondary legislation so that an evidence base could be brought to bear. That message fell on stony ground and the Government have brought the shutters down on our original amendment by claiming financial privilege. Of course, they did this with the full support of the Lib Dems, despite their party policy to oppose arbitrary time limits, but this is a reality that we have to face, if not forget.

In proposing this amendment in lieu, we do not abandon our determination to see this policy based on evidence; nor do we accept the 365-day arbitrary limit. Securing that an upward revision of this limit can be achieved by secondary legislation at least keeps the cause alive. The Minister has claimed international precedents—as he did a moment ago—as part of the evidence base for this policy. Perhaps we can ask the DWP to publish that research so we can share the benefit of it.

Nevertheless, I have some expectation that the Minister will feel able to accept this amendment and I thank him for his consideration if this is the case. For us, this is not the end of the issue.

[Lord Freud]

My Lords, Amendments 17B, 17C, 17D and 19B, tabled by the noble Lord, Lord McKenzie, mean that although a time limit of 365 days will still be applied to contributory ESA claimants in the WRAG, including those claiming under the youth provision, there would also be an order-making power that would allow the number of days to be increased in the future.

I thank the noble Lord, Lord McKenzie, for his amendment as this has given me the opportunity to consider again an order-making power for time-limiting. We have discussed at length our rationale for setting the time limit at 365 days. We have listened carefully to noble Lords’ concerns about this time limit. We have always said that, for clarity, we believe it is right to have the number of days specified in the Bill and that the time limit should not be subject to secondary legislation.

However, this amendment achieves an excellent balance of the two. A time limit of 365 days is still specified in the Bill, but with the added flexibility to increase the number of days by order. We welcome this amendment and I commend the noble Lord, Lord McKenzie, for tabling it.

To sum up, we have listened to the concerns raised by noble Lords and have made amendments to ensure that disabled people whose condition deteriorates are able to re-qualify for contributory ESA if they would be placed in the support group. This demonstrates our continued commitment to supporting those with the most severe health conditions or disabilities.

The noble Lord, Lord McKenzie, has tabled very well considered amendments, so I urge noble Lords to accept them. However, I need to make clear that accepting these amendments in no way changes the Government’s policy on the time-limiting of contributory ESA. The limit will remain 365 days. These amendments simply mean that a future Government—of any hue—would be able to change the limit by order, as well as by further legislation.

[Lord McKenzie of Luton]

My Lords, I am very grateful to the Minister for his acceptance of those amendments. He helped to draft them so he should accept them! I hear what he says about the Government sticking to their 365-day limit, but we will continue to work on him and his colleagues and hope to change their minds before we have a next Government.

Motion E1, as an amendment to Motion E, agreed.

Motion F

Moved by

[Lord Freud]

That this House do not insist on its Amendment 18 to which the Commons have disagreed for their Reason 18A.

LORDS AMENDMENT 18

18: Clause 51, page 36, line 21, at end insert “except—
(a) where a person is receiving treatment for cancer when entitlement shall continue for so long as the person has (or is treated as having) limited capacity for work; or
(b) the person has (or is treated as having) limited capacity for work as a consequence of a cancer diagnosis.”

COMMONS DISAGREEMENT AND REASON

The Commons disagree to Lords Amendment No. 18 for the following Reason—

18A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

[Lord Freud]

My Lords, I beg to move Motion F. If I can just get to the right place—

[Baroness Hollis of Heigham]

Do the acceptance speech.

[A noble Lord]

Take your time.

[Lord Freud]

Thank you very much. I was about to launch into the wrong thing. This is about the ESA provisions for people with cancer, which has been a very sensitive issue. We have listened very carefully to those concerns and made a number of changes to clarify our policy intent to ensure that vulnerable people, such as those with deteriorating conditions, are protected.

The intended purpose of Amendment 18 means that no time limit would be applied to contributory ESA claimants who are receiving treatment for cancer, or have a diagnosis of cancer, for as long as they have limited capability for work as a result. This is clearly a sensitive topic, and we have said all along that we want to do the best for individuals suffering from cancer.

I have to repeat something I said a few minutes ago: that most individuals with cancer are placed in the support group at the outset of their treatment. This recognises the serious effects that cancer treatment can have on individuals.

We have been working closely with Macmillan to improve how the WCA assesses individuals who are being treated for cancer, and we are now consulting on our proposals. While it is important that we do not pre-empt the consultation, I can assure noble Lords that our abiding aim is to ensure that individuals undergoing or recovering from cancer treatment are not subject to unnecessary assessment. A process is in place to ensure that appropriate evidence is gathered to allow those who are unable to work due to the effects of their treatment to access the support group. In this way I believe that we can ensure that people with cancer are treated sensitively and receive the support that they need. I beg to move.

19:00

Motion F1 (as an amendment to Motion F)

Moved by

[Lord Patel]

As an amendment to Motion F, at end insert “but do propose Amendment 18B as an amendment in lieu”,

18B: Page 36, line 35, at end insert—
“( ) In calculating for the purpose of subsection (1) or (2A) the length of the period for which a person is entitled to a contributory allowance, days in a period during which a person is receiving treatment for cancer or suffering from the effects of treatments for cancer are not to be counted.”

[Lord Patel]

My Lords, before I start, I would like to record my most sincere gratitude to the Minister for the courteous way in which he has engaged with me on many occasions to discuss all my amendments, but particularly this one. I found that our meeting was courteous, and he showed a clear understanding of the issues, so I thank him for that.

I was, of course, disappointed that the other House decided to overturn my amendment, particularly one that I thought was fairly modest, as Amendment 18 simply sought to protect cancer patients from the impact of time-limiting employment and support allowance. If the impact of the time-limiting proposal on cancer patients is to be mitigated, the Minister’s words in his summing up today will be of particular interest.

During the previous debate I indicated very briefly what it is like for patients to be on chemotherapy for prolonged periods of time, sometimes for as long as two years. I could not do enough justice to the description of how a patient feels, so I would rather use the actual words of a patient.

Jenni Russell, a reporter, wrote an article in the Sunday Times, and she had this to say:

“Everyone knows that cancer patients are likely to spend a lot of time being made to feel really … ill … I almost died of malaria in my twenties”—

I had malaria in my teens, and I can still remember what it felt like—

“but I have never felt as appalling as I did on chemo. The point of chemotherapy is to load the body with sufficient poison to kill the cancer without … killing the patient. It is crude medicine and, because we understand so little about genes or cancer pathways, it is unpredictable. I had assumed I would overcome it with a bit of willpower. Instead I had vomiting, nausea, headaches, muscle weakness and an inability to tolerate bright lights. For the first four days in every fortnight’s treatment, I couldn’t eat, speak, read, listen to the radio or get out of bed. My white blood cell count sank so low that I needed injections to boost my bone marrow production. For the next six days I was too weak to want to walk upstairs. There was no fight left in my body. … I could not conceivably have held down an ordinary office job over those months”.

This is despite the fact that she had had a lot of support. She goes on:

“The fact that working was a choice, not a fearful necessity, made a huge psychological difference. … I have no problem with the principle that people who can work should work”.

I think she is right. The vast majority of people with cancer who are out of work because of their condition want to work. For cancer patients, getting back to work is a crucial step forward in getting their lives back after cancer, but people with cancer often experience debilitating physical and psychological effects from the disease and its treatment. As I have described, these can be quite severe. For the majority of people with cancer who need ESA, 12 months is simply not long enough to return to work.

We hope there is consensus that cancer patients awaiting and undergoing cancer treatment should be in the support group. The Minister already referred to this, and I am grateful for that. I understand that following my discussions with the Minister and others, the Government are in discussions with Macmillan about how this process can be reviewed. Progress is being made, and I appreciate that very much. However, the primary concerns about the impact of time limiting on cancer patients have been that those who still experience the long-term effects of treatment will lose their benefit before they are ready to return to work. I hope the Minister will say something about that.

I am glad, however, that the Government are seeking to ensure that these people are given more time in the support group, where they will not be impacted by the time limit. If we are to protect cancer patients who are suffering from the debilitating side-effects of their treatment through the work capability assessment, it is crucial that the views of healthcare professionals—the oncologists, the GPs and the specialist nurses—are taken on board, and their evidence ought to suffice.

I hope that the Minister will refer to that. Patients often deteriorate after treatment is completed, hence my amendment, which says that those suffering from the effects of treatment should not be included. A system would be based on the presumption—and that word is important—that the cancer patient leaving the treatment phase would remain in the support group of the benefit if they needed it. Evidence from a healthcare professional would consist of confirmation that the cancer patient continues to experience side effects that limit a claimant’s capability to work, and therefore should be placed in the support group. I agree that this assessment could be reviewed after a suitable period—even after six months—to see how the claimant’s situation has changed.

I therefore sincerely hope that the Minister will be able to think of ways of meeting this amendment, and I look forward to hearing them.

[Baroness Morgan of Drefelin]

My Lords, I support the Motion of the noble Lord, Lord Patel, and in so doing I remind the House of my interest as chief executive of Breast Cancer Campaign. In particular I congratulate the noble Lord, Lord Patel, on pursuing his amendment and on articulating so clearly the concerns of cancer patients. I also congratulate Macmillan on the work that it has been doing very determinedly to raise these important issues on behalf of cancer patients, and I thank the Minister for listening and for being very careful in his response, as I am sure he will be.

I do not want to repeat the arguments that have already been made in this House on Report, but I would like to be very clear that I believe this House has made its intention very clear—with an alternative amendment—on the need to provide cancer patients with the security of having treatment without the pressure of potentially losing their benefit added to it, an issue that I suggested here today and that I would like to hear from the Minister on.

I would specifically welcome hearing from the Minister about the position of cancer patients who, by April 2012, will have been in the work-related activity group for 12 months. Will he clarify for us, in the light of his new thinking, whether this group of patients will no longer be eligible to receive contributory ESA? I know that the Government are consulting, and I understand that the Minister will not want to pre-empt the outcome of that consultation, but it would be very helpful for those who have received notice that their benefit will come to an end after 12 months to know, as cancer patients, what their position might be.

[Lord Avebury]

My Lords, perhaps I may intervene briefly and question the noble Lord, Lord Patel, about the breadth of his amendment. He spoke about those people who are receiving treatment for cancer and described vividly the ordeals that they go through when receiving chemotherapy. Of course, we all have knowledge of that kind of treatment, not from personal experience but from our relatives and friends who have been through those procedures. But not every cancer patient has to be given chemotherapy or radiotherapy. Some cancers can be treated with medication. I was speaking particularly about myeloproliferative disorders, which can be treated in the early stages with medication.

The wording of the amendment as regards “receiving treatment” is too broad and should be confined, for example, to those receiving chemotherapy or radiotherapy. In that way, the provision would be limited to those people who are so physically affected by the treatment that they are receiving that they would be incapable of working or unlikely to be capable of working until that treatment ceases.

[Lord Patel]

My Lords, it is true that some cancer patients may not need any treatment after surgery. But many others need therapy and my amendment refers particularly to those who cannot work because of their treatment or their suffering from the effects of the treatment. My key point is that those people want to work. As Jenni Russell said in her article, they are not skiving. They want to work. If the amendment is defective in that area, the purpose is not.

[Lord McKenzie of Luton]

My Lords, when our amendments were considered in the other place, the Minister, Chris Grayling, emphasised that the scope of the support group had been increased for cancer patients and that the consultation, following work with Macmillan Cancer Support and Professor Harrington, carried a presumption that someone with cancer will be in the support group. In an exchange with my right honourable friend Stephen Timms, the Minister also confirmed that it was planned to have a simple system that enables a medical professional to indicate whether someone has sufficiently recovered to make a return to work. That obviously is to be welcomed. It clearly goes with the grain of the amendment in lieu in the name of the noble Lord, Lord Patel, which has our support. He has set out the arguments clearly and the support of noble Lords would bring relief to up to 7,000 people who have or have had cancer.

We recognise that the Minister cannot pre-empt a consultation, but we hope that the Government can accept the thrust of what the noble Lord, Lord Patel, proposes. If he cannot, we hope that the noble Lord will test the opinion of the House. Bringing relief to some 7,000 cancer sufferers is a worthy endeavour. Of course, it does not of itself provide help to the hundreds of thousands who are adversely affected by the arbitrary time limit in contributory ESA but that should not prevent us bringing some relief to this group where that is possible.

[Lord Phillips of Sudbury]

Did the noble Lord say that this would apply to 7,000 people?

[Lord McKenzie of Luton]

I understand that 7,000 is the figure. The noble Lord, Lord Patel, is nodding in assent.

19:15

[Lord Freud]

My Lords, I need to start by paying tribute to the noble Lord, Lord Patel, who has done some astonishing work in this area in bringing the issues vividly to life. We certainly have learnt and have appreciated some of the things that he has said. I hope that I will be able to give him and the House some reassurance about the progress we have made on this.

As noble Lords will know, we are committed to improving the WCA so that it accurately identifies the individuals who should be in the support group where there is no time limiting and no questions. That is why we asked Professor Harrington and Macmillan Cancer Support to look at the way in which individuals being treated for cancer are assessed. That is why we have proposed changes and those changes are what we are consulting on now.

The intention of our proposals is to introduce a presumption that most people being treated for cancer should be in the support group unless the evidence indicates that, exceptionally, the debilitating effects of treatment are likely to be more limited. We would expect this to increase the number of individuals going into the support group and to reduce the number of people called to attend a face-to-face assessment. We have been working closely with Macmillan Cancer Support as part of the consultation and to understand if, following the consultation, there are further areas where improvements need to be made.

I can report to noble Lords that our discussions with Macmillan Cancer Support have been constructive. As a result we have reached agreement in the following three areas, which I hope will deal with some of the searching questions raised by the noble Lord, Lord Patel. First, we have agreed that following the consultation we will work with Macmillan Cancer Support to develop the detailed guidance that underpins the regulations. Our aim is that the guidance should clearly specify the evidence required from a healthcare professional that would confirm presumption and allow immediate access to the support group without a face-to-face assessment. In our initial discussions we have agreed with Macmillan Cancer Support that evidence would be accepted from an oncologist, a GP or a specialist cancer nurse.

Secondly, we have agreed to review the guidance and process for people who are in the work-related activity group but whose condition deteriorates or relapses during the course of treatment so that they can access the support group quickly and smoothly. We would expect this to speed the process and reduce the need for face-to-face assessments. Thirdly, we have agreed with Macmillan Cancer Support to review the guidance for people who are in the recovery period following cancer treatment. That will ensure that individuals can remain in the support group for as long as appropriate during their recovery. Combining those three proposals will greatly improve the way we assess and support individuals suffering from cancer and reflect the particular challenges they face as a result of both the condition and the treatment.

As a result, we would expect that the majority of cancer patients are likely to be placed in the support group for the first six months while they undergo treatment. Following this, many are likely to have a further period in the support group while they recover from the residual effects of treatment. It could easily be up to a year therefore for many people with cancer before the clock starts running in relation to time-limiting. I know that the chief executive of Macmillan Cancer Support has welcomed these proposals and we look forward to working with his organisation following the consultation to help implement our proposals and to support people with cancer, where appropriate, to return to work.

Finally, in response to the noble Baroness, Lady Morgan, on the WRAG, we are looking at this in the round and it would be unwise to pre-empt the consultation. But, clearly, we would want to be in a position where those in the WRAG are genuinely able to do work-related activity. As I have said, we now presume that most people will end up in the support group for an extended period. On the basis of what I have said, I hope that the noble Lord, Lord Patel, will feel able to withdraw his amendment.

[Lord Patel]

My Lords, I thank the Minister for his very positive response. Like the noble Baroness, Lady Morgan, I pay tribute to the work Macmillan Cancer Support has done for cancer patients. To summarise, the Minister has been clear in accepting that the WCA assessment will be improved, that there will be a presumption that cancer patients in treatment will be in the support group, that discussions with Macmillan will continue following the consultation, and that guidance will be developed based on evidence from healthcare professionals to allow cancer patients either to remain in the WRAG or to go into the support group. He has also agreed to review guidance for patients in the WRAG so that if they deteriorate they can access the support group and to review guidance on the period of recovery following treatment. I have to say that it must be quite unusual to be content with the outcome on amendments on two successive days before two different Ministers. I thank the Minister very much for his summation. Cancer patients will be relieved. I am happy to withdraw the Motion.

Motion F1, as an amendment to Motion F, withdrawn.

Motion F agreed.

Motion G

Moved by Lord Freud

That this House do not insist on its Amendment 47 to which the Commons have disagreed for their Reason 47A.

LORDS AMENDMENT 47

47: Clause 93, page 62, line 19, after “benefits” insert “with the exclusion of child benefit”

COMMONS DISAGREEMENT AND REASON

The Commons disagree to Lords Amendment No. 47 for the following Reason—

47A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

Lord Freud: My Lords, by now the House will be well aware of the Government’s reasons for introducing the benefit cap. It is about incentivising work and promoting fairness. Since we last debated the Bill, I have had a number of meetings with noble Lords and right reverend Prelates where concerns have been raised about the tone of the debate, and especially some of the language used in the media coverage of this issue. I would like to take the opportunity to make it clear that it is not my aim or that of the Government to demonise people who are on out-of-work benefits. I have to confess that while I seem to be responsible for quite a few things at the moment, running the press is absolutely not one of them. So let me make it clear: we agree that benefits have an important role to play in providing financial support for people who are unemployed, looking after children, or ill or who have a disability.

At the same time, I think we all agree that people who can work should be expected to do so and that the benefits system should encourage, not detract from, individual responsibility. There has to be a balance between the responsibility of the state and the taxpayer and the responsibility of the individual. Members of your Lordships’ House know that the current benefits system does not have the balance right. All too often individual responsibility is undermined and, effectively, people are trapped on benefits. That is what we mean when we talk about welfare dependency—I know that “welfare” is not liked all around the House; we have had that discussion. This, above all, is what we are trying to achieve with the introduction of universal credit.

But the benefit cap is also a key element of our reforms. We firmly believe that it is a serious flaw in the current system to pay some claimants more money when they are out of work than they could reasonably expect to earn from working full time. It is clear that the vast majority of the public believe that too. The core principle of the benefit cap is that people should not receive more on benefits than the average weekly wage for working households. That is why we have said that for families and lone parents, the cap should be set at £500 a week, £26,000 a year, equivalent to gross earnings of £35,000 a year. We estimate that this is the amount that is equivalent to the average wage for working households. The original amendment to exclude child benefit and the new amendments tabled by the noble Lord, Lord McKenzie, effectively say that £26,000 a year is not enough. At this point, I should say that I shall confine my remarks to what is in the original amendment because I am curious to learn what the new amendment really does say. By setting a clear limit through the cap, we will shift people’s expectations and change behaviour. In future, people will know what they can expect from the benefits system and take decisions accordingly.

Much of the concern in our debates has been about people who have already taken decisions that they could not easily reverse, or have decisions forced upon them by circumstances beyond their control. From the outset we have been clear about the need for appropriate exemptions and transitional measures, and we recognise the importance of getting these measures right. We have taken time in our deliberations. We have listened carefully to the debates here and in the other place, and we have met individuals and organisations representing vulnerable groups to discuss their concerns. We have used departmental data to improve our understanding of the potential impacts on households and their characteristics, and those are the figures that we have set out in the revised impact assessment.

On 1 February, during the Commons’ consideration of the Lords’ amendment, the Minister for Employment announced details of our proposals for a package of transitional measures and support that we believe will provide the necessary safeguards for households. We have always accepted that there are certain groups for whom it would not be appropriate to apply the cap. We had already said that we would exempt households which are in receipt of disability living allowance, personal independence payment, attendance allowance or constant attendance allowance, as well as households entitled to working tax credit and war widows and widowers. We have now announced that we will also exempt the small number of households with someone who is in receipt of the support component of employment support allowance, but not in receipt of DLA. In practice, in many cases this is probably more an issue of timing. This will ensure that the cap affects only people who, taking account of their health and any disability, can reasonably be expected to do work or work-related activity.

We do not want to penalise those who are in work and are doing the right thing, and therefore we will be putting in place a nine-month grace period for those who have been in work for the previous 12 months and lose their job through no fault of their own. This will allow people time to find alternative employment or consider alternative options to avoid the cap. The grace period will also help people who have to stop work for a while because they have suffered a bereavement or have taken on kinship carer responsibilities. In the latter case, it will help the kinship carer who has to take time off work to help children settle into their new home.

I know that the noble Lord, Lord McKenzie, has a specific concern about whether the grace period will apply to people who lose their job before the introduction of the cap, and in conversation he put that question to me very directly. Indeed, I think we can give credit to this House, because as a direct result we are refining these proposals. We have looked into this and we agree that it would be unfair if the cap applied immediately to those who have only been out of work for a month. In practice, therefore, we will look at the whole period, so the nine-month cap will look backwards in that way. In the case of somebody who finishes work this month, the cap would not apply until November, a full nine months later. I am sorry, let me get the dates right because I seem to be in a different year. If someone loses their job in February 2013, the cap would not apply until November 2013.

An essential part of our plan is to use scans of our databases to identify cases early, give people information and help them work through the options available to them. We have details of the cases that are already in payment. Regular scans will identify new cases as they arise, enabling us to let people know when the cap will apply to them. Once identified, all cases will be closely controlled and progress monitored. From April this year, we will provide support from Jobcentre Plus and the work programme to households who might be affected by the cap. We have more than a year to work intensively with those households so that they understand the implications of the cap and are given help to move into work and so avoid the cap wherever possible. We will also engage across government, with local authorities and teams such as the Troubled Families Unit to ensure that households get the other forms of assistance that they might need.

19:30

We will ensure that there is transitional support to help manage families into more appropriate accommodation. This will include additional money to enable local authorities to make discretionary housing payments to help hard cases. This mirrors the steps that we took last year to provide safeguards following the introduction of the housing benefit cap. We will ensure that resources are provided to the areas where they are most needed and are available to help families deal in the short term with a variety of challenges they might face. We are talking about up to £80 million in 2013-14 and a further £50 million in 2014-15. That is just within this SR; it does not mean that we might not look yonder. There is no presumption that it is a cliff edge.

We believe that these transitional arrangements, taken as a whole, will strike the correct balance between providing people with the help they need to move into work and ensuring that hard cases get the most support while they adapt to the introduction of the cap. Finally, we have said that we will lay before the House a report on this policy’s impact after a year of its operation, which will allow a review of how successfully we have met these objectives.

Given all these assurances, I hope that your Lordships will agree that the Government have listened to the concerns expressed in this House and elsewhere about the impact of the benefit cap. I hope, too, that your Lordships will agree that targeted exemptions and support are a much better way of ensuring that the cap operates fairly than structural changes that would alter its whole nature. I beg to move.

Motion G1 (as an amendment to Motion G)

Moved by

[Lord McKenzie of Luton]

As an amendment to Motion G, at end insert “but do propose Amendment 47B as an amendment in lieu”

47B: Page 62, line 40, at end insert—
“( ) Regulations under this section shall provide that the benefit cap shall not be applied in prescribed circumstances, for the first 39 weeks from the relevant date.
( ) Such prescribed circumstances shall include—
(a) a claimant leaving work as a result of being made redundant or becoming disabled; and
(b) the requirement for the claimant to have been in work for a prescribed period prior to the relevant date.
( ) The relevant date is the date from which a claimant is treated as not being in work for the purposes of this section.”

[Lord McKenzie of Luton]

My Lords, I shall speak also to the amendments in Motion G2.

I accept absolutely the Minister’s assurance that he would have no part in seeking to demonise people on benefits. I have never thought that of him and I think that we would all accept that to be the position. In moving Amendment 47B in lieu, I should welcome the improvements to the working of the benefit cap which the Government announced in another place. While they might protest otherwise, it is clear that they recognise some of the unacceptable consequences of the cap which they are now seeking to ameliorate. This amendment goes with the grain of the Government’s thinking and announcements, and provides an opportunity clearly to embody that recognition in the Bill before it goes on its final journey. It sits alongside our further amendment which focuses on how the cap might anyway be constructed.

The amendment encompasses the concept of a period of grace of nine months before the cap bites for somebody who has become unemployed and it enables the detail to be set by regulation, which will enable the Government to specify their announced requirement of 12 prior months of work for the grace period to run.

When debating this exemption in the other place on 1 February, the Minister, Chris Grayling, also announced further exemptions in the ESA support group which the noble Lord, Lord Freud, confirmed a moment ago. These exemptions add to the existing list, which includes those in receipt of DLA, PIP, attendance allowance and, as we have heard, a war pension for surviving dependants when that is in payment. Further, we know that non-cash benefits such as free school meals, council tax benefit in its localised form and the childcare element of universal credit are to be ignored in what is included in the total benefits for the purposes of the comparison with average earnings—perhaps the Minister will confirm that to be the case.

Moreover, again as we have just heard, there is the announcement of more money, £160 million in total, for the first two years to top up discretionary housing payments to help those facing particular challenges. Whether this will be enough remains to be seen. So far as it goes, it is all well and good, although having lectured us on there being no money, perhaps the Minister can tell us where this funding has come from. Is it new money, or has something else been cut and, if so, what?

The cap will still hit tens of thousands of families hard, but the issue of who is in and who is out, and what is in the calculation, is at least a little porous under what the Government now propose. When announcing the period of grace, the Minister in the other place stated that it was always his intention to introduce this measure. One can only conclude that he went to some effort to disguise it. It did not appear in the impact assessment, including the updated document of 23 January. Indeed, on the basis of a response to an amendment tabled on Report by the noble Lord, Lord Best, pressed also by my noble friend Lady Drake, it seemed to be far from certain that a period of grace would be accepted. The Minister said then:

“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”.—[Official Report, 23/1/12; col. 892.]

One reason for highlighting this issue in this way is to get on the record how the grace period is to operate. It is understood that if somebody becomes unemployed after or at the time that the benefit cap comes in, the nine-month period will run. I think that the Minister has now confirmed that the period will run also if somebody loses their job before the introduction of the cap, so somebody being made redundant in September this year will still get the benefit of three months’ easement from the cap until June 2013.

Moreover, can the Minister confirm that the period of grace will operate when somebody has their hours reduced so that they fall below the threshold for the number of hours necessary to be considered in work and thus falling within the scope of the cap? Can he also confirm that, for so long as the prior-employment requirement is met, an individual may benefit from the period of grace more than once? What is the position where a couple claims universal credit? Will just one of the joint claimants have to satisfy the conditions for the period of grace to operate? What assumptions underpin the estimate that the period of grace will reduce savings by £30 million? I should make it clear that we support and have argued for a period of grace, and the amendment seeks clarification as to how it will work in practice. We are pleased that it will help to ameliorate the misery that the cap will bring and we want the period of grace to be meaningful and not just a gesture to get the Lib Dems on board.

I turn to Motion G2. We support a benefit cap but do not consider the manner in which it is to be introduced by the Government to be sensible. As we did in the other place, we take the opportunity to set down our view of how a cap could operate. Our amendments approach the benefit cap in a different way. It is different because of the difficulty in particular in seeking to create a one-size-fits-all cap which could lead to at least 20,000 families becoming homeless, wiping out any of the £270 million savings that the Government have said their benefit will produce. Indeed, it would lead to the very consequences which the Government have had to recognise in providing the additional £160 million of funding announced on 1 February—which we have just discussed. They are the sort of consequences which the Government have recognised in a series of exclusions for individuals and exemptions for certain types of benefit from the calculation.

The concept of a cap might be superficially very straightforward and, indeed, attractive: no household should get more in total benefits than the average net-of-tax-and-national-insurance earnings of those in work. A nice round sum of £500 a week for some might seem generous given that, for many, it is more than a family has to live on.

We risk creating the impression that everyone on benefits is getting £26,000 a year; and, by dealing in generalities, we risk ignoring the differing circumstances that families face. Although only 1 per cent of benefit claimants may be caught by the cap, this still amounts to some 67,000 families. The sum of £500 a week might get you a one-bedroom apartment in London, but in Rotherham in Yorkshire it would get a six-bedroom, detached family house. Given that the largest single benefit received by those set to be affected by the cap is housing benefit, one cap, set nationally, cannot be fair. This is particularly—but not exclusively—a London phenomenon, as illustrated by the Government’s own impact assessment. Over half of those affected by the cap currently live in London, with 3,300 in Brent alone set to lose under the cap, so it is no wonder that Lib Dem MPs reputedly went walkabout when the vote came up in the Commons. We believe that our amendment in lieu offers a better way forward. The cap should recognise different housing costs, especially in London. As noble Lords will know, recognising different housing costs has been a localised part of the benefits system for over 70 years.

Moreover, if a benefit cap is to become part of the benefits landscape, there is a case for appointing an independent body to advise on what the appropriate levels for the cap should be. The benefit cap is—or has certainly become—an emotive issue, but it would be bad policy if the structure of the benefit system were driven by public sentiment rather than evidence and analysis. A requirement for an independent body to have regard to safeguarding against homelessness should not be contentions. It is what the Government have just done in pumping £160 million into the system and would help avoid local authorities racking up millions of pounds of costs at a time of austerity. However, it does not mean that somebody should never move, nor does it give anyone licence to occupy the extravagant, upmarket properties so beloved of the media. Neither should this approach negate the Government’s belief that part of the rationale for a cap is to change attitudes. Having regard to child poverty targets is not just about income transfers, it is about a range of building blocks, including accessing the workplace, for those who can.

We seek to support a cap that better reflects reality than that promulgated by the Government. We are of course dealing with some of the most vulnerable families in our country and we owe it to them to construct policies that are not driven by short-term political expediency. I beg to move.

19:45

[The Lord Bishop of Ripon and Leeds]

My Lords, I have listened very hard to the Minister as he has sought to explain the rejection of your Lordships’ amendment on children and the benefit cap. I remain regretful at the loss of the principle of child benefit for all and especially for those in most need. It is sometimes said that, although in this House we have a good many experts in fields such as health, education and the Armed Forces, we lack experts on poverty, because so few of us are actually in a position now of poverty. Maybe some of us can throw our minds back to times when we were not as comfortably off as we are now and remember the importance of child benefit in our own lives. My own experience was certainly that it was a lifeline in bringing up our own children. I have seen this repeated time and again in my ministry—both for those in employment and for those who have the misfortune to be unemployed. The almost total take-up of child benefit demonstrates for me the value of a benefit that is available for all and can carry no possible stigma for those in need of help.

I also remain puzzled at the failure to understand that children are expensive. Bringing them up costs money. Whatever the rights and wrongs of the particular levels of the cap—and the figure of £26,000 was never a part of our amendment; it was always a government figure—it seems self-evident that the cap should be higher for a family with children than for a childless couple. I presume that we are not saying that a young couple who are not able to find work should be barred from conceiving any children. However, they—and they alone—will receive no child benefit if they have a child and their benefits are to be capped.

All of that said, I am very grateful to the Government in general, and to the Minister in particular, for listening so carefully to the concerns of this House on the effect that the cap is likely to have on those in most need. I am grateful for the transitional arrangements that the Minister for Employment has announced. The nine-month period of grace, costing some £30 million, for those who lose their jobs is extremely welcome and should reduce the numbers of households capped by some 10,000. I am not quite sure whether Motion G1 is another example of sweetness and light between the two Front Benches, but they seem to be saying exactly the same thing on this matter and so I rather take it that the Minister is likely to accept Motion G1.

Then there is the additional discretionary housing payment for local authorities of up to £80 million for 2013-14 and £50 million for 2014-15. That is also extremely welcome, as is the assurance that claimants made homeless by the cap will not be considered intentionally homeless. I am grateful for the way in which in Motion G2 we have at last in today’s debate tackled the question of homelessness. We have not actually talked about this before, but it is one of the key elements in deciding how a welfare system should work. Already in Yorkshire—no doubt in Rotherham as well as in Leeds—there is an increasing amount of homelessness on the streets. That can only get greater as a result of increased unemployment and we need to be very careful in this Bill that we are not increasing the amount of homelessness.

I look forward to more detail on the ring-fencing of the £80 million, including on how that support is going to be delivered and whether families will be able to apply directly for that support. I hope that this provision will enable there to be real support for those in most need. I am very grateful for the Government’s expression of support and the financial commitment to the poor that it involves. However, I have to say that it still seems odd that the Government were so opposed to your Lordships’ amendment on financial grounds, when the cost of their provision is apparently almost identical in 2013-14, at £110 million rather than £113 million, or whatever the figure was that we were using in relation to our earlier amendment.

I remain concerned about kin carers. I have not yet heard a satisfactory explanation of how we avoid the burden that the cap puts on those who take other people’s children into their homes. This happens time and again in our society, for a whole host of reasons, such as the death or illness of a parent, or the parents’ inability to bring up children. Carers are often grandparents. Kin carers preserve family life for children in distress and save the state a considerable amount of money—maybe some £119 million a year, according to a Children’s Society estimate that has been given to me. It would be tragic if people were discouraged from this selfless contribution to family life because there was inadequate funding for them. I look for reassurance as to how this issue is being tackled through the various provisions dealing with the cap.

Finally, but importantly, I am very grateful for the Minister’s assertion of the importance and value of the benefit system and for his rejection of any demonising of those who are on benefit. This debate about the cap on benefits has produced, in some sections of the press and maybe of society more generally, an apparent assumption that those on benefit are deliberately sponging off the state. In a few often-quoted cases, that is no doubt true, but already those who are unable to work because of disability are reporting that they are being regarded as work-shy, when they would desperately love to work if they were able. It is crucial that we affirm the importance of the benefit system in providing support for those unable to work. The numbers who cannot find work are rising and there will always be those who are not capable of paid work because of illness or disability. It is crucial that we do nothing to exacerbate suspicion between those in work—often low-paid and struggling—and those who cannot find jobs.

I hope that the Minister in his response will be able to renew the conviction that benefits for those in need are crucial in a civilised society to provide for those who have fallen into hardship as a result of illness or disability or simply not being able to find a job, which is tragically not uncommon in some of our cities now. Many of those on benefit contribute to our society—as kin carers, for example, or in encouragement of those who are disabled, or in voluntary work, which helps to create a good society. Benefits are not a drain on society but a contribution to the common good. I hope that the Minister will be able to affirm this.

I am very grateful for the substantial government response to the earlier amendment, not least for that promise of an evaluation of the cap after a year of its operation. I look forward to that report in 2014, to a serious examination of any unintended consequences and to the continued work by the Government to do all that they can to protect children from damage at a time of financial stringency. I am happy to support Motion G1.

[Lord Kirkwood of Kirkhope]

My Lords, I would like to intervene briefly in this debate. I think that a household benefit cap is a wholly reprehensible policy device. I am absolutely and implacably opposed to it. However, I know when I am licked and I think that the Government have come a huge way in easing the path of the 67,000 families, although I still have fear and concerns for them. My purpose in intervening is to ask my noble friend to assist me by reassuring me that, with the extra spending envelope, he now has the capability—working closely with local authorities and Jobcentre Plus—to track the destinations of these families over the next few years. Colleagues who have been following debates on social security internationally know that, in America, the changes made in 1996 by President Clinton meant that people fell off the lists in droves and no one could find out where they went. The social security system then spent years trying to pick them up.

The fact is that 67,000 is 1 per cent of the case load; it is not a big number of people. I am reasonably assured now that, with the finances available to local authorities and Jobcentre Plus, it should be possible to get a report. When we get this important report—and I, too, agree that that is an important concession—the House will be able to be confident that none of these families has disappeared. I do not want any of these families to be “disappeared”. I hope that my noble friend can give me that assurance.

I do not want this benefit cap to be anything like an accepted part of the landscape in future. I think that it is a sticking plaster and that an entitlement override is wholly wrong. However, I have enough confidence in my noble friend to know that if we get universal credit up and established and running well, and if he switches his attention—as I hope he will—to housing benefit in the context of a proper housing policy, and I would support him in doing that, we can trade our way out of needing a benefit cap. That is the way forward. I accept, however, that in the short term we are stuck with this. I hate it and will be pursuing it in regulations as aggressively as I can. However, as I said at the beginning, I know when I am licked and I hope that the Government will get on and do this properly.

I hope that the noble Lord, Lord McKenzie, will not press this idea of having an independent body on the benefit cap. I want nothing to do with independent bodies or anything else of any kind that has to do with the household benefit cap. Therefore, if he presses his amendment, he will find me—unusually, perhaps, in this case—in the opposite Lobby.

[Baroness Butler-Sloss]

My Lords, I would like briefly to take up a point made by the right reverend Prelate the Bishop of Ripon and Leeds in relation to kinship carers. I spoke previously on this and I remember that the Minister was sympathetic. I would be very glad to get some reassurance as to where his sympathy lies and how he proposes to endorse it.

[Lord Newton of Braintree]

My Lords, I am intervening only briefly, partly because I do not want to attack the right reverend Prelate, who seemed to be in a much less militant mood than he was on the previous occasion. I will, therefore, not repeat the remarks that I made then, when I made the point that what he was asking for was an increase in the benefit cap. I refrained from saying at that time—and the House ought to bear this in mind when thinking about all of this—that child benefit for the first child is now worth about £1,000 a year tax-free. For every other child it is a bit less than that. Bearing in mind that it is tax-free and that we are talking about a benefit cap of £26,000 net, which is said to equate to £36,000 gross, if you put child benefit on top you are looking at a position in which you would have to be a higher-rate taxpayer in order to hit the benefit cap, in terms of what you would have to earn. People ought to bear that in mind.

My main point is to express some reservations about the amendments tabled by the noble Lord, Lord McKenzie. What do we mean by “local area”? He really needs to answer that. My noble friend Lord Fowler and I—and I have already referred to some of our travails over housing benefit in 1986 to 1988—looked at this question of localisation and regionalisation. It is intractable, because housing costs do not vary on a regional basis or even on a district or city or borough basis; they vary on a street-by-street basis. Is that what the noble Lord has in mind? If so, it would become a complete administrative nightmare. He needs to think very carefully before pressing this particular line, whatever its intellectual attractions.

20:00

[Baroness Drake]

My Lords, I support Motion G1. I am conscious that I have entered the debate several times on the matter of the grace period before the weight of penalties comes into play and the benefit cap bites for those who lose their job through redundancy or some enforced reason. I apologise today if I sound a little repetitive, but it is something about which I feel most strongly. A modern welfare system, while addressing benefit dependency, must also support those hard-working families with a clear work ethic in managing today’s flexible labour market. It must not fail to support responsible hard-working people and their families managing today’s economic realities. There is a danger that this dimension has lost some focus in the current debate on the Bill.

The Bill writes the welfare rules for those in work and for those who have no record of benefit dependency. There are millions of people in this country on modest and low incomes who are hard-working, take the hard knocks that life hands out to them and fight to stay on course, so I welcomed the comments from the Minister, Chris Grayling, in the House of Commons on the 1st of this month that the Government would put in place a period of grace of nine months for those who have been in work for the previous 12 months and have lost their job through no fault of their own. The Government’s recognition of the case for a period of grace is most welcome, but I remain anxious.

We know that the Government want to see increased flexibility in the labour market, including, if I may speculate, revisions to employment laws on redundancy consultation and no-fault dismissal for SMEs for up to two years—we await their proposals on these matters. This desire, taken together with the realities of today’s labour market and the intensity of competition, makes a powerful case for inserting into the Bill the provision that regulations will provide for a period of grace in the circumstances where someone faces forced job loss. The provision of a period of grace for a fair period should be hardwired into the welfare system—an integral part of the definition of fairness—and not too easily reserved to the Secretary of State’s discretion, which is why I feel that the amendment is correct.

Ever one who is keen to build on progress to see if there is any more progress to be made, I would like to clarify a matter with the Minister. Experience since 2007 has revealed that some employers have been more creative in responding to downturns than by using the traditional laying off of workers and redundancies. We have seen reductions in working hours and we have seen unpaid sabbaticals—that is, extended periods of non-payment and no work, where, through agreement and to avoid compulsory redundancy and to assist the company, the employment contract has stayed in place but the flow of wages has been suspended or reduced. I hope that the Minister will agree that positive and innovative employment practices to ride out a recession are to be encouraged; they can be good for productivity, employment and the speed of competitive response. However, that raises a question: in such situations where hours fall to a very low level so that they are below the threshold and work conditionality kicks in, or where any payment of wages is suspended for a significant period, will the period of grace apply? In such a situation, the people affected may not strictly have lost their job, because the employment contract remains in place, but they have lost their wages through no fault of their own.

I repeat that hard-working families have paid their dues but will need support in managing their way through a difficult labour market. A period of grace is of itself fundamentally fair. After all, for hard-working people who have lost their job and are desperately seeking another one, which most of them do, what change of behaviour can the immediate application of the cap be designed to achieve? Rather, it would have the perverse effect of undermining their efforts to get back early into the labour market because they were rushing around trying to find affordable accommodation, move their children into new schools or whatever. While I welcome, in the statements from the Minister today and from Chris Grayling, that they have accepted the argument for a grace period, in my view that argument is so compelling that it should not be a matter of discretion but should be enshrined in the Bill. Could that period of grace be applied in a way that fits in with trends in the modern labour market?

I would like to make a final comment. I had not intended to do so but have been prompted to by the comments of the right reverend Prelate the Archbishop—sorry, the Bishop of Ripon and Leeds; I accidentally promoted him there—on kinship carers, a matter on which I myself have tabled several amendments. The Minister has given us his promise that he recognises the contribution of kinship carers, who keep 200,000-plus children out of care, and that he is on the case. I trust him on that; I trust him to honour his promise. I hope that he can reassure the right reverend Prelate that he will hold to his promise, even if today we cannot get the details of how he will do so.

[Lord Empey]

My Lords, I have some remarks on Motion G2. I recall vividly that in the Autumn Statement there were indications that regional pay was to be examined and the Chancellor had asked regional bodies throughout the United Kingdom to report to him by next July on the issues of regional pay. From a regional perspective, I have to say to the noble Lord, Lord McKenzie, that I have great reservations about his proposals. While a cap is by definition a blunt instrument, and there always has been a specific London issue in pay for as long as I can remember anyway, if we go down the route of establishing a body to run around the regions—as the noble Lord, Lord Newton, has pointed out with his usual typical incisiveness, the variation is not only between regions but within regions and within cities, streets and districts—then I fear that we open the Pandora’s box not only of regional pay but of regional benefit, and sooner or later some people are going to say regional taxes. I fear that the amendment could inadvertently have a perverse effect on all of us, particularly in the regions. I understand that there is very much a London issue, but within regions there are vast variations.

If you want to encourage people to move to where they are more likely to get work, that tends to be in densely populated areas—that is just the reality of life. This measure, however, portends a reality where you could discourage people from going somewhere that they are more likely to find work. I fear that if we go down the road of the amendment, we could open up a range of issues in the regions relating to pay, benefits, taxes and the whole relationship that exists there.

When I heard the noble Lord’s colleague announce this policy in the other place some time ago, I was greatly surprised. Many of his colleagues spoke to me after I had made the point about regional pay and said, “Yes, we can see this is coming”. However, this would actually accelerate the process, so I hope that the noble Lord might not move his amendment and might instead reconsider the policy as it might apply to the regions.

[Lord Freud]

My Lords, in my opening remarks I described the measures that the Government are putting in place to ensure that the cap operates fairly. I explained that the exemption of people in the ESA support group ensures that the cap affects only people who, taking account of their health and any disability, can reasonably be expected to do work or work-related activity. I explained that the nine-month grace period will ensure that those who have been in work for 12 months or more will have time to find alternative employment or consider alternative options before the cap applies.

I have been asked a series of questions and I shall try to deal with them rapidly. On the question where the money is coming from, I think we shall leave that to the Budget.

Where one member of a couple satisfies the criteria for the grace period, yes, it will apply. The grace period will apply where either member of the couple meets the criteria.

I was asked which payments would be ignored. The noble Lord, Lord McKenzie, went through what I said in Committee and I do not think there is any reason to change any of that. We have to work out the exact nature of the work exemption but, in principle, I see no reason why the grace period should not apply when hours are reduced.

The question of the noble Baroness, Lady Drake, is so detailed that we need to wait for the regulations. That is a very good reason not to put some of this stuff in primary legislation.

An important point was raised by my noble friend Lord Kirkwood about monitoring people. We will monitor these cases very closely and keep track of their destinations. We already know who they are and will engage proactively with them from now on.

The right reverend Prelate the Bishop of Ripon and Leeds and the noble and learned Baroness, Lady Butler-Sloss, raised a question about kinship carers. In practice, the grace period is particularly helpful for kinship carers. We have the conditionality issues. Having this £80 million on a discretionary basis means that we can target those families of exactly the kind that will need such support. Therefore, the way that we have done it is rather more satisfactory in that area.

The right reverend Prelate raised the question of what a benefits system is for. We are constructing the universal credit to make a modern benefits system that does what we need it to do. He can take that as read.

Amazingly, I think I might have answered all the questions. The right reverend Prelate mentioned sweetness and light in relation to Motion G1. Fundamentally, I think that there is sweetness and light. I hope so, in that we are providing a grace period through regulations. We have all the powers that we need to do it, so in practice this amendment is unnecessary. It is sweetness and light in that sense and I hope the Motion will be withdrawn.

To be absolutely honest, there is less sweetness and light over Motion G2. I am resisting having some political knockabout on this. I know that it is not proper in this Chamber; let us leave that to another place. However, I find it very hard to think about having regional limits set by a new quango. My noble friend Lord Newton and the noble Lord, Lord Empey, have made the point that this could be very confusing and complex. If the noble Lord were sitting on my side of the Table at some future point, I would give him some advice: “You don’t want to do this”. Looking at it with a slightly stricter hat on, if we were to vote the Motion through it would mess up and delay the application of the cap. We are talking there about real money. We simply could not make the saving of £200 million a year because it would be such a complicated thing to introduce. Therefore, I hope that Motion G2 will be withdrawn. My mouth will be open if it is not.

There is an important principle in this debate. It is not fair that families on benefits receive more than the average working family. It is not fair to taxpayers. Indeed, it is not fair to benefit recipients who are trapped in a cycle of welfare dependency. Therefore, I urge the noble Lord not to press either Motion G1 or Motion G2.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his detailed responses, as ever. It is all sweetness and light as far as Motion G1 is concerned. It was tabled to get the very detailed answers that we got from the Minister and I thank him for that. I thank all other noble Lords who have participated in this debate. It is always good to hear from the right reverend Prelate the Bishop of Ripon and Leeds, who brings us back to issues of homelessness and vulnerable people. It is all too easy for us to forget about them in this environment.

The noble Lord, Lord Kirkwood, expressed his view that he was less than pleased with the benefit cap. I am well aware that he is not alone in that view. Interestingly, he referred to the cap as a sticking plaster. There is an interesting issue over whether the Government see it as a continuing part of the benefit system. We took it that they did, which is why we made some of our proposals, but maybe it is just a short-term measure.

I thank my noble friend Lady Drake for her support. The noble Lord, Lord Newton, asked about how local we would get in all this. Fundamentally, Motion G2 tries to highlight that rent is the big issue in all this. There are big disparities, particularly the London phenomenon, and rent will never be equalised across the country. I see and understand the potential risks in that, to which the noble Lord, Lord Empey, and others, including the Minister, referred. However, the intent is to focus on rents and that huge disparity. In the instance that I cited, the disparity is so big that how you make one cap fit all on an ongoing basis, without having to pile in more money every year to deal with the effects, is a real issue. The Government will have to face that in the months to come.

However, I should make clear that it is not my intention to press the amendments in Motion G1. On Motion G2, I am bound to say that my colleagues in the other place were denied the opportunity to vote on this. Therefore, I intend to test the opinion of the House.

Motion G1, as an amendment to Motion G, withdrawn.

Motion G2 (as an amendment to Motion G)

Moved by

[Lord McKenzie of Luton]

As an amendment to Motion G, at end insert “but do propose Amendments 47C to 47H as amendments in lieu”

47C: Page 62, line 40, at end insert—
“( ) Regulations may provide for the benefit cap to be applied to the welfare benefits to which a single person or a couple is entitled according to the local area in which they are ordinarily resident.”

47D: Page 63, line 1, leave out “reference to estimated average earnings” and insert “the Secretary of State upon receipt of recommendations from the Independent Body on the Benefit Cap”

47E: Page 63, line 3, leave out subsections (7) and (8)

47F: Page 63, line 8, at end insert—
“(7) Before making the first regulations under subsection (5), the Secretary of State shall refer the matters specified in subsection (8) to the Independent Body on the Benefit Cap for their consideration.
(8) Those matters shall include—
(a) the need to safeguard against homelessness;
(b) the targets in sections 3 to 6 of the Child Poverty Act 2010;
(c) the differences in housing costs between London and the rest of the UK.
(9) Where matters are referred to the Independent Body on the Benefit Cap under subsection (7), the Body shall, after considering those matters, make a report to the Secretary of State which shall contain the Body’s recommendations about each of those matters.
(10) If, following the report of the Independent Body on the Benefit Cap under subsection (9), the Secretary of State decides—
(a) not to make any regulations implementing the Body’s recommendations, or
(b) to make regulations implementing only some of the Body’s recommendations, or
(c) to prescribe under subsection (5) a relevant amount which is different from the rate recommended by the Body, or
(d) to make regulations which in some other respect differ from the recommendations of the Body, or
(e) to make regulations which do not relate to a recommendation of the Body,
the Secretary of State shall lay a report before each House of Parliament containing a statement of the reasons for the decision.
(11) If the Independent Body on the Benefit Cap fail to make their report under subsection (9) within a time to be specified in regulations (which shall be no less than 9 months) any power of the Secretary of State to make regulations under this section shall be exercisable as if subsection (6) had not been enacted.”

47G: After Clause 93, insert the following new Clause—
“Independent Body on the Benefit Cap
(1) There is to be a body called the Independent Body on the Benefit Cap.
(2) The functions of the Body are those conferred on it by or under this Act.”

47H: Clause 94, page 63, line 37, after “year” insert “refer to the Independent Body on the Benefit Cap for”

[Lord McKenzie of Luton]

I beg to move.

20:17

Division 2

Ayes: 134

---

Labour: 126
Crossbench: 5
Independent: 1
Plaid Cymru: 1

Noes: 223

---

Conservative: 138
Liberal Democrat: 66
Crossbench: 11
Ulster Unionist Party: 2
Bishops: 2
UK Independence Party: 1
Independent: 1

20:23

Motion G agreed.

Motion H

Moved by

[Lord Freud]

That this House do not insist on its Amendment 73 to which the Commons have disagreed for their Reason 73A.

LORDS AMENDMENT 73

73: Clause 131, page 101, line 27, at end insert—
“(3) In section 6 of the Child Maintenance and Other Payments Act 2008 (provision to allow charging of fees by the Commission), after subsection (2) there is inserted—
“(2A) Nothing in regulations under subsection (1) shall impose a liability on a parent with care for the payment of fees to the Commission where that parent has taken reasonable steps to establish whether it is possible or appropriate to make a maintenance agreement (within the meaning of section 9 of the Child Support Act 1991), and where, having taken such reasonable steps, it is either not possible or not appropriate for the parent with care to do so.””

COMMONS DISAGREEMENT AND REASON

The Commons disagree to Lords Amendment No. 73 for the following Reason—

73A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

[Lord Freud]

My Lords, clearly I am very aware of the strength of feeling that has featured in previous debates on child maintenance, and I look forward to hearing the views of noble Lords today.

Perhaps I may start from a rather different position from the one I took in the debate when we last looked at this issue. I shall quote the right honourable Frank Field, who is an acknowledged expert in this area. Even though he sits on a different side, he makes a point that is absolutely smack-on. He said:

“Is not the really big change that we are discussing the fact that when the CSA was first established, the maintenance moneys went to the Treasury to offset what taxpayers were putting up because, generally speaking, fathers were not prepared to do so, whereas now that money remains with the family? Is it not reasonable, in such circumstances, if people are going to get a top-up to their benefit that they should contribute to the cost of gaining that extra money? On the timing, should we not charge people once they are getting the money, not before?”.—[Official Report, Commons, 1/2/12; col. 910.]

That quote highlights the central point to the debate. We need to look at the proposed charges in the context of all the other financial support that the Government provide for lone parents. Child maintenance is only one aspect of that support.

I have made some rough calculations to give noble Lords a sense of the relative orders of magnitude involved. In the 12 months to December 2011, the CSA collected or arranged maintenance of more than £1 billion. However, by far the largest amount of money going from the Government to support lone parents is through the benefits and tax credits systems. The benefits system provides well over £5 billion of support to lone parents, and the Government provide more than £10 billion of further support through tax credits. Thereby, the total support going to lone parents—a few lone parents are bereaved but the bulk, 95 per cent, are not—in either direct state funding or with funds from state mechanisms is well over £16 billion.

Let us now look at the other end of the telescope. What are we asking the parent with care to pay for collecting that extra money? By the end of the next spending review we will collect each year between £50 million and £100 million in collection charges from parents with care. Those figures are based on the 7 per cent to 12 per cent range of collection charges set out in the Green Paper.

Let us take the figure of £75 million and compare it to the £16 billion of support that is being provided to this group, either directly or through the state. That ratio works out at less than one half of one per cent. I do not think that Barclaycard or other credit cards charge as little as that.

[Lord McKenzie of Luton]

To clarify the figures, is the £16 billion to which the noble Lord refers payable just to parents with care who are using the statutory CSA system, or to lone parents generally?

[Lord Freud]

This is paid over to lone parents as a group. That is what we are paying over to lone parents. Some of them have been bereaved, but the bulk of them have not. All of them could look to get support from the non-resident parent, whether or not they had lived with them at one stage. That is the figure I am trying to explain. All of them could look to get some maintenance.

Is it unfair or unreasonable to ask for a small contribution to the cost of running a child maintenance system against a backdrop of that financial support? I remind noble Lords that, as Frank Field said, there is no offset any more; it is money on top; it is disregarded. A lot of the debate we had when CSA started in the 1990s and was so controversial, and in the early 2000s, was framed by the concept that it was money going from the non-resident to the Treasury. Between 2000 and 2010, we moved to a 100 per cent disregard. That is the fundamental difference of which I remind noble Lords.

The next point is that we have committed to reviewing the charging powers and laying the review before Parliament 30 months after introduction. That is to ensure that we are able to test properly whether the intended incentive effects of the charges are realised and that we get the behavioural impact of the charging regime.

Again, simply, we are looking at a 1:2 charging regime in round terms, which is intended to incentivise both sides to reach agreement between them rather than going through the state system as the first option. One reason that it is so important that we encourage both sides to go independently is because research tells us that the children are better off if the parents can agree between them rather than using the state system.

I, and the Government, have the utmost respect for my noble and learned friend, Lord Mackay, and the intention behind the original amendment laid on charging for child maintenance services. The problem of asking for a test to establish when the parent with care has gone through a process is that it may not be a real test—anyone can say, “Yes, I have been through a process”. If that is the case, we will end up with everyone using the system as the first option. If it is a real test, we will have to go through all the work of checking whether they have made efforts and the rights and wrongs, and we will be pulled down the slippery slope that we are so keen to avoid. Because we would be pulling people into the system, that would have a substantial cost because of the pure volumes.

Charging must have a role in the new system to ensure that we do not repeat the failings of the CSA. The proposed charges create an incentive for parents to collaborate and take responsibility.

As a direct result of the concerns expressed in this House, we have also changed the fees to enter the system, to avoid the parent with care being deterred from using the state system. We have announced that we are reducing the maximum charge from £100 to £20 across the piece to ensure that it is not a potential barrier to entry. We are offering a very good service for that £20 in that we will be looking at the non-resident parent’s earnings, and that will be a real benefit for the parent with care.

With regard to reducing the maximum charge and completing the review, when we know how the system has shaken out we can ask whether we have got the figures right and whether the charges are right. That is the point of the review: we can ask whether we are getting the behavioural responses that we need. I hope that I have laid out the issues adequately. I beg to move.

Motion H1 had been substituted by Motion H1A.

Motion H1A (as an amendment to Motion H)

Moved by

[Lord Boswell of Aynho]

As an amendment to the Motion that this House do not insist on its Amendment 73, at end insert “but do propose Amendment 73BA as an amendment in lieu”

73BA: Insert the following new Clause—
“Fees
In section 6 of the Child Maintenance and Other Payments Act 2008 (fees), in subsection (2)—
(a) in paragraph (d), at the end there is inserted “(including provision for the apportionment of fees and the matters to be taken into account in determining an apportionment)”;
(b) in paragraph (g), “waiver” is repealed;
(c) after paragraph (g) there is inserted—
“(h) about waiver of fees (including the matters to be taken into account in determining a waiver).””

[Lord Boswell of Aynho]

My Lords, in moving this amendment in lieu, I am all too painfully conscious of the unavoidable absence of my noble and learned friend Lord Mackay of Clashfern. I am equally aware that on the occasion when he moved his amendment, which was dramatically endorsed by this House with an eloquent and decisive majority, I myself was unable to attend, not as a matter of self-absenting but because I was then engaged in Strasbourg on parliamentary duties with the Council of Europe. I seek to rectify that omission not only by studying the past amendment but by returning to the case which was so eloquently put by my noble and learned friend on an amendment to which, for the record, I had been a co-signatory. We have subsequently discussed the course of events. I also say for the avoidance of doubt that I have no difficulty at all with the alternative amendment in lieu, which is being put forward by the noble and learned Baroness, Lady Butler-Sloss.

This is one of the most difficult areas of social policy. Successive Secretaries of State, from my noble friend Lord Newton of Braintree—whom I have known for many years and with whom I have discussed this matter in extenso—onwards, regardless of their politics, have been united in their inability to find a satisfactory answer to situations where parental relations have broken down or where any suggestion of maintenance is aggravating that breakdown. We are all trying to find an approach which overcomes this. I say to the higher students of these matters that this is now my third version of an amendment in an effort to get some thoughts right. We want to meet the case of substance: how to help parents with care and their children. At the same time, we do not want to impose significant strain on the public finances or, taking up the point that the Minister made in explaining the case tonight, to set any perverse incentive towards intransigence on the part of either parent concerned. I know that Ministers are as anxious to avoid that as we all are.

20:45

The case for excluding any charge on parents with care in cases where collaboration is clearly impossible was summarised by my noble and learned friend Lord Mackay of Clashfern in a single sentence:

“I do not believe that it is fair to require them to pay charges when they are not responsible for creating the need for the use of the service”.

He continued by explaining:

“The obligation to maintain children … subsists for so long as the child needs maintenance and the parent lives”.—[Official Report, 25/1/12; col. 1090.]

He added that this is a completely separate issue from other matters; for example, the issue of contact. I should also like to pick up the words of my noble friend Lord De Mauley, the Minister, who said:

“At the heart of the new scheme will be tough enforcement and collection measures when parents fail to pay maintenance”.—[Official Report, 25/1/12; col. 1083.]

I add to that my gloss that he was emphasising the parental failure to pay maintenance, not the failure to receive maintenance.

The emphasis rightly of this House and its thinking is on pursuit of the delinquent absent parent, not on imposing charges on parents with care, which would therefore be netted off against their children’s maintenance entitlement. To some extent I agree, as I did at the time, with the Henshaw report’s recommendations on charging for what is a very expensive public service. However, I am anxious to spare those who suffer from non-compliance rather than those who perpetrate it. That is quite separate from wider issues about who was responsible for the failure of the relationship or other matters that are, if not responsibility of the courts, then maybe of the sociologists—so I shall leave that aside. This is simply about who is paying or not paying or complying with the system.

It follows that the Government, frankly, need to make a clearer case than they have done for their reason for proposing charging a collection fee—we are no longer talking about the gateway fee where they pay in advance—on the parent with care as well as the parent who is due to pay maintenance. At the very least, even if the principle were conceded, why should such a fee be set at a substantial indicative level? The suggestion, although it is not set in stone, is that it should be in the range of 7 to 12 per cent of the available maintenance. It is self-evident that on the kinds of sum involved this is a matter of several hundred pounds a year knocked off. The danger as I see it is that either the charge will be set so high as materially to affect the maintenance payable or conversely, if we argue it down, so low as not really to be worth charging in the first place.

I should like to offer the House a number of detailed points on this matter. First, I understand that maintenance direct—not a concept well understood other than by experts—which is clearly a better idea all round is nevertheless adopted by less than 20 per cent of agency cases. In addition, there are all the private arrangements that can now be made and are clearly desirable. However, within the statutory system only 20 per cent of the case load is going through the automatic, no charge, maintenance direct payment. I hope that with improved publicity and the advice structure that is being put in place, we could at least make a start on getting this figure up materially, although one is dealing with some people who have set their minds against this.

Secondly, I understand that there would be an option for people to switch in and out of maintenance direct depending on what happened in the course of the maintenance payments. This will need to be very carefully controlled because there could be unscrupulous, absent parents who would use it for future manipulation to the detriment of the parent with care.

Thirdly, I am worried about what one might call, from the constituency experience that many of us have had, parents who are outliers—whether they are parents with care or absent parents—and who will want to use the substantial charging system as a further vehicle for their intransigence and as a way of imposing further burdens on their hated ex-partner, even if it is to their detriment as well.

Fourthly, I will pass on a thought. Occasionally one’s past experience is useful. As an employer I had once to operate a deduction from earnings order for a civil debt in relation to an employee. In the paperwork, I was surprised to find that I was entitled to—although I never claimed—a modest fee for handling the collection of this sum week by week. Of course, the charge was not imposed on the creditor. It may be that a system whereby the debtor pays for the service but the creditor does not pay to receive the sum owed has some moral bearing on the equity of the case.

The amendment in effect offers a new clause that is tied to regulations covering fees charged for the service. The effect would be to provide for the apportionment of fees on a basis to be determined. I have already made my preference clear. It will be for the Minister to argue his case for a split. It would continue to provide an opportunity for fee regulations to enable a complete waiver, so a parent might not pay anything in certain circumstances. This would provide a basis for further discussion.

I should like to put on record how much I have appreciated the discussions I have had with the Minister on this issue and how much I have appreciated the general progress of the Welfare Reform Bill. We have been very well served by the dialogue that we had. We have also had the promise of a review in 30 months’ time of how the system is operating. I say to the Minister, with an emphasis on the regulations, which will have to be approved by both Houses, so we are not up against the privilege issue again—this is a free-standing chance to get it right—that I do not want us just to look at this in 30 months’ time and see whether we have it right; I want us to use the process and the time that we now have for intensive discussions and consultations in the run-up to the regulations, in the hope that we can produce, as we have done in other cases, a broad consensus or agreement on how to balance the interests of the various parties. That kind of approach, taken outside the Chamber and at slightly more leisure, will be the best way to serve the interests of innocent parties and the paramount interests of children. Frankly, that is where most of us involved with the amendment started—and it is the clear view of the House. In that spirit, I beg to move.

[Baroness Butler-Sloss]

My Lords, I put my name to Motion H2—which is linked to Motion H1—and will speak to it now. The amendment was drafted by the noble and learned Lord, Lord Mackay of Clashfern, who is, as I am sure noble Lords will know, away on a well deserved holiday. He is very sad that he cannot be here today; I am literally standing in for him.

The noble Lord, Lord Boswell, has reminded us of 25 January on Report when there was overwhelming support for the amendment put forward by the noble and learned Lord, Lord Mackay of Clashfern, demonstrated by the very large vote in this House. Of course, that has been reversed by the Commons. This amendment is, quite properly, not a replica of the earlier one. The earlier amendment referred to the payment of fees to the CSA by a single parent claiming maintenance from the other parent for children living generally with her rather than with him. I welcome the Government listening about the cost of the initial charge, and the very substantial reduction of the charge to £20. They are very much to be congratulated on that.

This amendment has a much more limited function and deals with a much more limited situation in which all efforts have been made to obtain payments by the other parent and it is necessary for the single parent to use the CSA statutory mechanism. If money is received from the other parent by that method, there is a collection charge, which provides a deduction to be made from the maintenance received. As the noble Lord, Lord Boswell, has already said, that seems to be a levy of between 7 per cent and 12 per cent of the money collected from the parent with care of the children.

I take on board the points made by the Minister, and what Frank Field said, as well as the help given to single parents by state aid and the fact that a review of this charging regime is promised. However, I make no apology for repeating the quotation made by the noble Lord, Boswell, of the noble and learned Lord, Lord Mackay, who said:

“I do not believe that it is fair to require them to pay charges when they are not responsible for creating the need for the use of the service”.—[Official Report, 25/1/12; col. 1090.]

I would like very briefly to make a few more points. The money is to help in the upkeep of the children and not for the parent. Many highly regarded charities support this limited amendment—time does not permit me to say which they are but there is a considerable number of them. We are looking at parents in the poorest section of society who may receive a very small amount of money from the other parent and upon whom the major financial burden of the care of children rests.

I understand that—unlike the Government’s view—most cases are not very expensive, costing £350 a case if managed through the main computer system and £600 a case if managed off the main computer system. Of course, there are cases that cost significantly more, and sums of up to £25,000 have been mentioned, but I am informed that they are the exception, not the rule. According to the Government’s own impact assessment, the future average cost of processing an application is expected to be about £220.

This amendment, if accepted, would have limited financial impact on the CSA for the majority of applications but would make a significant difference to this deserving group of single parents. I urge the Minister to think again.

[Lord Newton of Braintree]

My Lords, I am intervening—as usual, you might think—for two reasons. First, on the previous occasion I sat down there and declared that I was standing shoulder to shoulder with my noble and learned friend Lord Mackay of Clashfern, which indeed I was, and I was therefore part of the vote that has caused us to be having this debate this evening. I will say something about that in a moment. Secondly, when this got to the Commons, a person who I do not know, described as Mrs McGuire, who I take from the context is a Labour Member of Parliament, read out the list of Conservative former Cabinet Ministers who had voted, including my name, and went on to say:

“I do not think that any of these people were fully paid up members of the liberal tendency”.—[Official Report, Commons, 1/2/12; col. 926.]

If it were not for parliamentary privilege, I would sue her! I just wanted to get that off my chest.

21:00

Coming back to the Commons debate that I have just read, I could make several comments about some of the lines of argument there. I could also make several comments about the extensive discussions that my noble friend and I have had about this with the Ministers, up to the level of Secretary of State, but I am not going to because it is not productive. The hour is late, I am tired of having been good all day, and I believe that the House wants to come to a conclusion. I should make clear that, just as I operated in cahoots with my noble and learned friend on that occasion, I have operated in cahoots with my noble friend Lord Boswell on this occasion. His was the second name on the earlier amendment, even though he was not able to be here, and I was pleased that he was willing to take the lead on this occasion.

At the same time, however, I would like to thank the Minister, even though I did not agree with everything he said when he argued with me in private, for being very constructive about this, and not least for indicating that this amendment was one that he felt he could smile favourably on. Indeed, he has given us some help in making sure that it was absolutely right compared with our first draft.

However, the key point that I want to make is that at the end of the day, this is our judgment call about the best way to keep this issue on the table for further discussion, with full and proper consultation, for the regulations that must follow. All I can do is give the House my best judgment on that judgment call: that to press the matter further—certainly in the terms of the original amendment, or indeed probably, I say to the noble and learned Baroness, Lady Butler-Sloss, even in the terms of her more limited amendment—is almost certain simply to provoke the Commons to send it straight back again.

This is not something that the Commons did not debate; it did debate it, however scrappily. It is not something that it did not have a vote on, and it was a pretty decisive vote. We need to recognise that. More importantly, I must say that from my discussions with the Ministers involved, I see absolutely no prospect that the Government will back off, and another round will therefore mean that this House will have to back off with nothing more to show for it, if we abide by the usual conventions.

If the noble and learned Baroness wanted to press her amendment, I would obviously be pretty torn about what to do—it might be quite hard to vote against her. However, I am confident that she will not wish to press it, and that is a great relief to me. I am clear that in practical and realistic terms, my noble friend’s amendment is now the best way forward, and I hope that the House will endorse it.

In saying that, and in conclusion, I would say that I have pressed my noble friend on the Front Bench to make absolutely clear, or as clear as he can, that this is not just going to be a set of regulations shoved in front of the House, with a yes or no answer at some point in a few months’ time. We need an assurance of a proper consultation. I have not sought to achieve this mechanistically by an amendment but by a proper consultation and a willingness to go back to a first draft of the regulations as a result of that consultation—something more elaborate and participative than we usually have with statutory instruments. That is important, and it would help me enormously if my noble friend could make it clear that that is the way he will proceed. Subject to that, I hope very much that the House will go along with my noble friend’s compromise amendment this evening.

[Baroness Howe of Idlicote]

My Lords, I am another of those who very much backed the amendment in the name of the noble and learned Lord, Lord Mackay. I was amazed and encouraged by the immense cross-party support for what he aimed to achieve. I remind noble Lords that the majority was, I think, 142 votes. However, I find this situation difficult. I certainly have been briefed again by Gingerbread and other organisations, which very much support the amendment in the name of my noble and learned friend Lady Butler-Sloss. She has told us that she will move the amendment on behalf of the noble and learned Lord, Lord Mackay.

Looking at the scene as it is now, the statutory maintenance scheme exists because it is in the interests of society that all children are properly supported by both parents, including when they separate. It is right to encourage and support parents to do the right thing and to make the arrangements, which of course we have all heard about, as a means of people sorting out their own affairs. It is equally right for the state to step in to secure maintenance for children—the emphasis is on the children—if the non-resident parent, despite being given every chance, still fails to pay of his own accord.

With something like 46 per cent of parents with care receiving less than £20 per week in maintenance—I find that figure slightly at odds with the enormous figures that the Minister has given us today on the amount that will go to children and single parents—the risk is that those likely to receive only modest amounts of child maintenance will look at the collection charges and decide that it is hardly worth all the hassle from the non-resident parent to insist that CMEC collects the maintenance. However, is it in the best interests of the taxpayer if such parents are priced out of the system or money for their children is reduced by collection charges? Making children poorer in this way surely will not benefit children or society in the long run. It is all likely to cost us more, as we probably all recognise.

I have had an indication from my noble and learned friend Lady Butler-Sloss that she is unlikely to press her amendment. I must admit that my concern, and the concern of most of us, is for those families who are on their own and where possibly, if not certainly in too large a number of cases, there has been violence at home and the family is perhaps living in dread of any form of contact with the father. However, they are still expected to pay—what is it?—a 7.5 per cent or 7 to 12 per cent continuous fee as long as the money is collected. I really do not like that situation.

I have to admit that if there was a Division, I would certainly vote for the amendment moved by the noble and learned Baroness, Lady Butler-Sloss, but if there is to be no vote, I cannot exercise my right to do that. I think that I have said enough.

[Lord Higgins]

My Lords, after almost 10 years on the opposition Front Bench as spokesman on social security, and despite the attractions of debating intellectually with the noble Baroness, Lady Hollis, who was the Minister throughout the period, I decided never to speak on the subject again, but I fear I am provoked. Like others who were involved with the then Child Support Agency, I bear quite a number of scars. On one occasion I invited all those who had written to me about it in a constituency to come to a meeting. I must say that I have rarely experienced such bitterness as was expressed by a second wife who was determined that the husband should not pay anything either to the former children or to the former wife. This, I am afraid, underlies much of the problem.

I want simply to say a word or two in the context of the statement made by the Leader of the House earlier today with regard to parliamentary privilege. I think that I agree with absolutely every single word he said, but none the less it left a degree of ambiguity because he pointed out that amendments in lieu to a Commons amendment should not be put forward if they are likely to invite the same response. The problem with that, if the privilege amendment is claimed in the other place, is that it is essentially about quantity and money—and here we really do not know. Clearly if the amendment in lieu costs even more than the previous amendment, it is not likely to be accepted and therefore is probably inappropriate. On the other hand, if the amendment costs somewhat less, we really do not know whether it would actually be regarded as invoking the same response. Basically, we are in that situation this evening.

No one is more determined than I am to cut the government deficit; I think that that is crucial. The argument that we are going too fast and doing too much is simply not the case. Many of the proposals for cutting expenditure have simply not happened yet. It was estimated the other day that only around 20 per cent have taken place, so that is very important indeed. Having said that, we have to beware of the Treasury going for cuts which are in fact not likely to affect the economic situation or, as was suggested the other night on a trivial amendment from the Front Bench, which would result in our borrowing costs in international markets going up. We need to assess things within a reasonable range on the basis of the quantities involved.

I would be grateful if my noble friend the Minister could say what the loss to the Revenue would be if the amendment put forward by my noble friend Lord Boswell were to be accepted. I get the impression that there would be no costs at all, in which case it would certainly be a legitimate amendment for us to make. It is more difficult on the other amendment, so it would be helpful to have some figures on that. But I suspect, as my noble friend Lord Newton has said, that in the present economic situation we are likely to find that this will come back yet again, and I am not sure whether that is something we ought to undertake. Given that it is a difficult situation, it would be helpful to have a factual statement from my noble friend on the actual quantities involved.

21:15

[Baroness Sherlock]

My Lords, I remind the House of my interests—which are in the Register—as a former non-executive director of the Child Maintenance and Enforcement Commission and a former chief executive of One Parent Families. I feel that I need to place on the record, irrespective of what the amendments’ movers decide to do, a response to the argument that the Minister has made today.

This House voted decisively in favour of a previous Motion; indeed, as we left the Chamber that day, I heard a Conservative Peer express a complaint to the noble and learned Lord, Lord Mackay of Clashfern, that he just had stolen his record for the biggest ever defeat inflicted on the Government. It was a very big defeat indeed. So what has changed? The Minister has told us, first, that single parents get a lot of money from the state so it is not unreasonable to expect them to pay to use the CSA; secondly, that when the CSA was introduced, all the money went to the Treasury, whereas it now goes to the children, so the situation is different and parents should pay for it; and, finally, that charging is needed to deter parents from using the CSA when they can perfectly well make their own arrangements.

Allow me briefly to pick off each of those arguments. In the first case, yes, it is true that many lone parents get lots of money from the state. However, could the Minister tell the House what proportion of those lone parents who use the CSA are on out-of-work benefits? The briefing that I received from Gingerbread told me that the figure is 30 per cent, so 70 per cent of lone parents using the CSA are in fact in work. How does the distribution of that work? Are some people getting most of the money from the state and another in-work, poor, low-paid, low-income group making the payments? They may be a large group, but they may not be the same people.

Secondly, it is worth saying that when the CSA was introduced, the Government of the day made a decision that if somebody was on benefit, all the money would go directly to the state. However, it is my understanding that child maintenance has always been ignored for tax credits purposes and that a similar rule was introduced for out-of-work benefits in 2008. So there is a very clear, established principle that out-of-work benefit should not be treated in the same way, and the very good reason for that was that it was a dual measure to tackle poverty and encourage work.

Finally, it is argued that charging is needed to deter lone parents from using the CSA when they could perfectly well make their own arrangements. The problem is that the amendment tabled by the noble and learned Baroness, Lady Butler-Sloss, is targeted specifically at those lone parents who cannot make those arrangements because their former partner will not co-operate. It is designed precisely for those people who are not able to do the very thing that the Minister wants them to do. That leaves a position of rather rough justice. Those people must pay the price to enable the Minister to encourage other people to make their own arrangements when they can.

I am a new girl around here and do not even pretend to understand how financial privilege works—having listened to some of today’s debate, I am frankly none the wiser. But the one thing that I do know about is the amount of money involved. The Minister has said that he would expect to save only between £50 million and £100 million over a period which I am afraid I did not write down quickly enough. I would be grateful if he could explain to us what he thinks he will bring in on a recurrent basis in a year. Will he also tell us what savings the Government expect to make in their running costs as a result of deterring parents from the system in the first place? This is very important, because there is a nasty suspicion out there, as I seem to recall mentioning in Committee, that the Government’s main objective is not to raise revenue from parents but to save money by driving people out of the system. Let us suppose that that were to work; let us suppose that the effect were that far fewer people used the CSA. If a significant number of those make no arrangements at all, is there not a broader cost to society? Is there not a moral hazard question? Have we not moved into a position which the CSA was designed to address? Are we saying to people, “I’m sorry, you may leave your partner, but you may not leave your children and the state expects you to pay up”? Is there not a price to that, too?

[Baroness Anelay of St Johns]

My Lords, I hesitate to interrupt at this point and it is extremely unusual to do so. I do so with no hostile intent. There has been extremely generous use of time today on the important subject of the Welfare Reform Bill, on which some progress has been made. The generous time taken by the House on this matter, when we knew that the Scotland Bill had been programmed to start after it, has put those who have been waiting some time for the Scotland Bill in some difficulty. I know that the whole House will apologise to colleagues who have been waiting.

I have had a discussion in usual channels and it has been thought a better way of treating those who are awaiting the Scotland Bill to announce now that it would be better if the business on Scotland did not proceed this evening but continued as scheduled on Tuesday 28 February. Therefore, once the business on the Welfare Reform Bill has concluded, the House will rise. I know that, with the help of the Clerk of Parliaments, that information will be put on the annunciator. I apologise again for intervening at this stage.

[Lord Kirkwood of Kirkhope]

My Lords, I am sure that is for the convenience of the House and I am grateful to my noble friend for making that clear. I could see the long faces on some of my Scottish colleagues getting longer by the moment. It is only fair to them that I apologise to them, because I have an interest in the Scotland Bill as well. However, I am sure it will wait until next Tuesday.

At this time of night I want to make a suggestion rather than a speech. Before I do that, I will say that I agree with the analysis of the noble Baroness, Lady Sherlock, about the money. I was a little dismayed at the way my noble friend opened this debate, because dealing with quantums of money and global amounts does not make an awful lot of sense unless there is some context. I much prefer to look at percentage shares of the benefit spend over time, and look at trends, rather than global amounts, because they sound like colossal sums of money. I agree with the noble Baroness on that point. It does not help the debate, because any of us who have been studying these things know that many single parents struggle on low incomes.

That point has been made and I will not pursue it, but I want also to make clear that in terms of the budget impact—which we have seen and which was referred to a moment ago—only 20 per cent of the cuts have attached themselves to household domestic spending and income. That will get worse. The Institute for Fiscal Studies, which has been quoted, has done some valuable modelling work that suggests there is going to be downward pressure on household incomes in single-parent families in future. That has to be borne in mind. Indeed, the Government’s own impact assessment on the ultimate rollout of universal credit from 2013, as I read it, shows that 500,000 working single-parent households will have a lower entitlement under universal credit. It is wrong to say that we are dealing with a category of rich people. There is a mixture, which I want to come on to in a minute in the main question I want to ask.

I have always been against charging. I was against it when the noble Lord, Lord McKenzie, was considering it. Along with the noble Lord, Lord Skelmersdale, we spent many a happy hour trying to resist charging, simply on the basis that it is a disincentive. I still believe that is likely to be the case. All developed western European nations now have various iterations of state-sponsored collection and enforcement services. We should—and will—have a new one, and one that will actually be cheaper as we will be using HMRC data. As my noble friend said, the service will be better and more efficient. There will be annual reviews and the data will be cleaned up as people are asked to come off the existing system and reapply—although that will be a much bigger undertaking than I think people imagine, and I hope that the department is prepared for that. However, it will be a cheaper and better service—£93 million cheaper, if my memory serves in respect of the impact assessment statement and other bits of information. It is important that we cherish the role that it plays and the impact that it has on lower-income families.

Looking at the figures, there are two dimensions to this—the low-income one and the high-income one. I remember an exchange when we last discussed this and have been reflecting on it since. The Government’s position is absolutely arguable for those who have an income of £50 or more per week via Child Support Agency maintenance. Twenty-two per cent of the case load gets 50 per cent or more, per week, of the maintenance delivered through the CSA. That is a big amount of money and gives us some options. Those kinds of families and households have much more flexibility in terms of options and choices. In those circumstances, it is perfectly reasonable to try to affect behaviour. The point I want to make is that 40 per cent of single parents receiving maintenance via the CSA receive less than £10 per week.

It is that category of transfer payment recipients that I am really concerned about. They do not have any options; they are in a very difficult place. The Government’s attempt to get behavioural change is much harder to argue reasonably in that context. I support the amendment of the noble and learned Baroness, Lady Butler-Sloss, but if we are stuck with charges and are reviewing them in 13 months’ time, would the Minister look urgently and robustly at the case for variation in the charges? If somebody is getting £10 per week, 12 per cent of that is quite a load of cash. If there were some way of getting the £75 million that the Government believe they need to fund the system going forward from fees, then they could do that by taking a little bit more out of households and families with a better take and a better return from the CSA than those who are at the bottom of the income distribution pile. If some thought could be given to that—and it is a bit of an ask at this time of night to get a reaction to that idea without notice—or even if the Minister were prepared to say that he would take it away and consider it in the course of the review, I would be happier about the results of the debate. If the noble and learned Baroness is thinking of taking her case to a vote—and that would also be a difficult ask at this time of night—her case has merit and I would support it. If we are stuck with charges, however, we should be looking at variations to try to cushion the effects on some of the low-income households that I think will suffer as a result of the imposition of these charges as currently cast.

[Lord McKenzie of Luton]

My Lords, I shall be brief. I agree with pretty much everything my noble friend Lady Sherlock said about the proposed charging arrangements. We certainly support the amendment of the noble and learned Baroness, Lady Butler-Sloss, because it does the right thing. It is dealing with those people who have no choice but to use the statutory system and cannot now use maintenance direct of their own will, because that depends on the non-resident parent applying to use it and on compliance by the non-resident parent. They have no other choice, and it is therefore wrong that they have to suffer a collection charge.

Will the Minister confirm—in respect of the reduced application fee of £20, which is welcome—that it is not going to be recycled to produce increased collection charges from mothers as well? It is important that we have clarity on that. To the noble Lord, Lord Newton, I would say that we will be in touch with our honourable friend Anne McGuire and tell her that she has misunderstood you. I am sure she would welcome that. The noble Lord, Lord Higgins, said that he thought the amendment of the noble Lord, Lord Boswell, had no cost. If that were right, I would be very worried about it because it presumably means that it is not going to affect the proposed arrangements, and I would not agree with that.

I say to the noble Lord, Lord Boswell, that I am disappointed in a sense with the proposition before us. I understand it is done with good intentions; I accept that because I know his commitment to these issues. However, if at the end of the day that is what is on the table, then that is what we would go with.

I say to the Minister that I do not think it was helpful to have some of those early statistics. Comparing the figure of £16 billion, which I understand is benefits and tax credits paid to all lone parents, with the fees that might be derived by those who use the statutory system of CSA is a nonsense idea. It does not make any sense at all. It is almost as though the assumption was that maintenance was money provided by the state. Maintenance is money that flows from non-resident parents—and we hope in increasing amounts in the future—to the parent with care. It is their money, not money provided by the state. So we probably have limited choices before us tonight. I hope the noble Baroness will feel able to press her amendment, but understand if she does not. If she does not, with a degree of reluctance I think we would support what is on the table from the noble Lord, Lord Boswell. Looking at it, though, I am not sure that it actually achieves anything that cannot be achieved from the existing framework of regulations. If it does, perhaps the Minister can tell us, but if we did not have that amendment, I am not sure that anything the noble Lord seeks to do under it could not be done anyway under the 2008 Act.

21:30

[Lord Freud]

My Lords, I shall start by addressing Amendment 73C, tabled by the noble and learned Baroness, Lady Butler-Sloss, which relates to limiting collection charges for parents with care. This is a substantial amendment that is similar to my noble and learned friend Lord Mackay’s, and it would represent a similarly substantial level of cost.

Before I get into the figures—I know that my figures have not been popular today—I want to highlight an element of the proposed charges that I do not think we have conveyed with sufficient clarity to noble Lords: parents have the option of avoiding collection charges altogether by using maintenance direct. My noble friend Lord Boswell asked a series of questions on this.

[Lord McKenzie of Luton]

Is it not right that under the new proposals the non-resident parent makes the decision to use maintenance direct but that is no longer available to the parent with care? The parent with care cannot opt for that arrangement.

[Lord Freud]

I think it is clear that the way that maintenance direct works is that the two parents have to agree on it. That is the point of maintenance direct. Under that system the Government calculate how much child maintenance is payable, but the payments themselves are made directly by the non-resident parent to the parent with care. If the payments are made in that way, no collection charges apply. It is a mutual decision.

The Government will ensure that a service is provided that enables maintenance direct to be used without the need for any contact to be made or personal information to be divulged. By using this system, the parent with care has the security of knowing that where it is established that payment has not been made in full and on time by the non-resident parent, the case will be moved into the collection service and swift action can be taken to reinstate payments. They can switch back and forth into that system. I take my noble friend’s point that there is a lot of attraction in that system and it may be underpublicised. To the extent that it is, we need to do something about it.

Where the payments move back into the collection service, charges will then be imposed for its use and they are heavily weighted on the non-resident parent. That acts as a real incentive for non-resident parents to pay in full and on time, and indeed by the charge-free method of maintenance direct. On the question of some non-residents wanting to go on punishing their ex, the parent with care, that would be a very expensive way of doing it—it costs the non-resident roughly twice as much as it does the resident.

I want to come back to the noble Baroness, Lady Sherlock, who said that she would deal with my argument piece by piece. I did not particularly agree with her. I was adding up the benefits system but also the tax credits system, which presumably many of the others who were not on the benefits system would have been on. Tax credits were invented in the early 2000s. I am talking about what it was like in the 1990s. The process by which the state supplied money for lone parents grew gradually through the 2000s until there was a total disregard. Early on, that was in the form of tax credits. From 2008, a proportion was in the form of benefits. The full disregard came in 2010. Therefore, I do not particularly buy the dismantling of the noble Baroness, Lady Sherlock.

I want to go into the costs. We estimate that the cost of Amendment 73C would be around £190 million, although it would depend on the exact level of the collection charge. There are assumptions around that. Therefore, in response to the question of my noble friend Lord Higgins, I say that it would be only a little less than the cost of the original amendment tabled by my noble and learned friend Lord Mackay, which was £220 million.

I also acknowledge the serious and considered concerns that have been set out by noble Lords both today and in our previous debate on this. I am prepared to make some specific commitments to the House on the development and oversight of the regulations, along the lines suggested by my noble friends Lord Boswell and Lord Newton. Later this year we will bring forward the regulations. At that point, other Ministers and I would like to offer Peers the opportunity to meet in a special session in Parliament to gather their views. We envisage an agenda based around the regulations, covering those that relate to the key concerns expressed during the passage of the Bill. I will of course take direction from interested Peers—there are a lot of them—as to the structure of that session. We will set that up as required.

We will also conduct a public consultation on the regulations. Following the finalisation of regulations after consultation, we will bring them back to the House. At that point, we will again offer a session for Peers to complement consideration by the committees of the House. That will not be the last time that the House debates charging; we will bring the affirmative regulations forward for debate.

We also acknowledge the need to evaluate and review constantly the impact of charges on parents. In respect of that, we have already amended the Bill to ensure that the review is published within 30 months of its introduction. Again, I here commit that we will seek the input of Peers during the course of that review in advance of a report being laid before Parliament.

Let me also be specific about what we intend to look at as part of that review. We will want to look at the impact of the application and collection charges on the behaviour of both parents and at the outcomes in terms of establishing effective maintenance arrangements. In our report to Parliament, we will make clear our intentions, including a specific view on the position of the poorest parents.

[Lord Newton of Braintree]

Briefly, may I just—in the form of a question, as I think is appropriate—ask my noble friend whether he is aware that I think that is a significantly generous response to my request for proper, genuine consultation and a real opportunity for the House to have a say?

[Lord Freud]

I am very grateful to my noble friend for that. In that spirit, I turn finally to my noble friend Lord Boswell’s Amendment 73BA. In doing so, I thank him for his contribution to today’s debate, which, as one would expect, was thoughtful and wise, as many other contributions have been, even those I have not necessarily agreed with.

We absolutely acknowledge the concerns around vulnerable groups, particularly parents with care. Although we will not further amend our current proposals, we want to ensure that, going forward, especially at the time of the review, we have the powers to evolve charges in line with evaluation. As I have stated, we especially want to consider the behavioural responses of parents and the outcomes they reach as part of our review. If in the light of evaluation and review we need to change our approach, I believe that Amendment 73BA clarifies that we would have the ability to do so under the 2008 Act. Therefore, I welcome Amendment 73BA and the Government wish to accept it.

[Lord Boswell of Aynho]

My Lords, in view of the tenor of this debate, and specifically what has just been said, I can be very brief and merely express my thanks. Our thanks go first to all those who have participated in this debate and to the non-government organisations and other interested parties that have briefed us and encouraged us on our way. We are grateful to the Minister for the way in which he has set out a response to my noble friend Lord Newton in relation to the consultation exercise and, more specifically, because he has gone even further than his earlier “sweetness and light” and has now actually accepted an amendment from the Back Benches. I am very grateful to him for accepting my amendment. It is not something I do very often, or at least I do not succeed in getting an amendment accepted, although I may try.

There is a real concern about getting this matter right and not disadvantaging vulnerable parents or children. We need to have a fairly intense dialogue about that and a much clearer understanding of the rationale of what is being done. We want to make sure that we do not do the wrong thing and then regret it later because that has been—with respect to all those in this Chamber who have been involved—something of the history of the CSA and CMEC to date. We have a chance to build on that. We start in a very good spirit. We have even had the indulgence of the usual channels and the Scottish interests in enabling us to prolong not just our consideration of this amendment but our detailed consideration of all these Lords amendments.

In conclusion, I wish to say two things. First, I approached this issue by putting a pair of gloves in my pocket which I was prepared to leave on the Bench as a gesture of dissatisfaction if we had to fight our way through to the regulations. I have now metaphorically repocketed them because I think that we can now have a constructive discussion which will lead to a satisfactory outcome. Secondly, and finally, I express my thanks to my colleague in this endeavour—the noble Lord, Lord Newton of Braintree. I dedicate this minor success to our noble and learned friend Lord Mackay of Clashfern in his absence. He took the House with him and got something done, for which we are very grateful. In that spirit and to enable a positive response, I commend the amendment.

Motion H1A, as an amendment to Motion H, agreed.

Motion H2, as an amendment to Motion H, not moved.

House adjourned at 9.44 pm.