Welfare Benefits Up-rating Bill
(11 years, 8 months ago)
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“Duty on the Secretary of State
Before enactment, the Secretary of State shall lay before both Houses of Parliament a report which states—(a) his assessment of the adequacy of the social security benefits listed in Schedule 1;(b) the principles upon which the future up-rating of all benefits and tax credits covered by this Act will be based.”
Baroness Lister of Burtersett
My Lords, Amendment 11 is in part inspired by the speech made by the right reverend Prelate the Bishop of Leicester at Second Reading. He suggested that this was an occasion for considering,
“the moral responsibility of this House”,
and warned that this Bill,
“looks like part of an ideologically motivated attempt to alter the very nature of the welfare state”.—[Official Report, 11/2/13; col. 469.]
He voiced his fear that we are heading towards a US-style system, where pensions are protected,
“but working-age provision is less generous and more stigmatised, barely providing enough for people to live on without relying on charitable handouts”,
and asked:
“Is this really the kind of society that we want to live in?”.—[Official Report, 11/2/13; col. 471.]
It certainly is not the kind of society in which I want to live.
The purpose of this amendment is to facilitate a debate on that fundamental question of the generosity of benefits for working-age people and their children. The first part addresses the question of whether the social security benefits affected by this nasty Bill are adequate in the first place, and the second the principles that should govern the uprating of benefits in the future once the Bill’s provisions have ceased to have effect. Of course, the two questions are related because the current level of benefit reflects uprating policies over the years.
As the House of Commons Library briefing notes:
“It is a misconception that benefit rates in the UK are based on some regular, systematic estimate of minimum needs”.
In fact, they are not even based on an irregular systemic estimate, for as the briefing points out,
“no government has … attempted any official empirical study of adequacy”,
since a covert study undertaken by the National Assistance Board back in the 1960s, despite countless fundamental reviews of social security, which some of us have lived through to tell the tale.
There are various indicators that we can use to assess benefits’ adequacy. The most basic is whether they are sufficient to keep people out of poverty and, patently, they are not, as so many people living on benefits are in poverty if one uses the relative income and material deprivation measures. The income support received by, for example, a couple with two children or a lone parent with one child is around 30% below the poverty line. Briefings from children’s charities underline the hardship that families already experience as a result. For instance, research undertaken by Barnardo’s among its service users found that two-thirds were cutting back on fuel and half were borrowing money. Three-quarters reported that food poverty was impacting on their children’s health and well-being. Similarly, a Children’s Society survey of teachers found that nearly half of those surveyed are seeing children coming into school hungry. Recent peer research undertaken by five Gingerbread community researchers in partnership with the Poverty Alliance found many lone parents skipping meals to feed their children. As one said, “Occasionally, I’ll miss meals and things like that just to make sure that they get wee bits and pieces. It makes me feel better about them having than me having”. This is an example of a common phenomenon, where mothers deprive themselves of basics to try to protect their children against the worst impact of poverty, as they act as the shock-absorbers of poverty. It is an example, too, of a point made by the noble Baroness, Lady Howe of Idlicote, on our first day in Committee about how women are disproportionately affected by the Bill.
The most sophisticated benchmark of adequacy is the minimum income standard developed by the Joseph Rowntree Foundation. It represents what members of the public through group discussion have arrived at as the minimum acceptable standard of living: what you need in order to have the opportunities and choices necessary to participate in society. I emphasise that it is about needs, as socially determined, rather than about wants.
The latest calculations indicate that a couple with two children, or a lone parent with one child living on the basic safety net benefit of income support, receive only three-fifths of the income needed to meet the minimum income standard. A single working-age person receives only two-fifths. The researchers, who are colleagues of mine at the Centre for Research in Social Policy at Loughborough University, observe that, because increases in costs have not been adequately captured by the consumer prices index, out-of-work benefits fall even further short, providing a lower minimum income living standard for non-pensioners than they did in 2008 when the MIS was first calculated. They concluded, even before this Bill was proposed, that the gap between the incomes and needs of the worst-off households is widening, especially for families with children. While the JRF is not suggesting that benefits should be raised to the level of the MIS, the sheer scale of the shortfall is indicative of how far they fall below the decency benchmark established by members of the public.
Policy has been more successful in ensuring that pensioners can achieve minimum income standards, which is of course a good thing, but according to Professor Jonathan Bradshaw, the decision to uprate pensions by 2.5% and working-age benefits by 1% for three years is going to exacerbate further the absurd differentials in benefit rates that have developed over time. In 1948, a single pensioner received only 10p more than a single person on national assistance. Now, a single female receives £71 per week in jobseeker’s allowance. When they are eligible, they get £142.70 on pension credit. A lone mother with one child gets only £133.21 a week. These differentials, Professor Bradshaw says, clearly have nothing to do with need.
That brings us to the second half of the amendment, on the principles underlying uprating policies. The significance of these policies was underlined in an earlier JRF study. It pointed out that uprating policies have big effects over time. They are among the most significant decisions taken by Chancellors. Their gradual effects seem imperceptible on a year-to-year basis yet they carry immense implications for the future. This year’s decisions will certainly be perceptible, and the implications for the future are even more immense, because, whatever decision is taken by future uprating policies, they will be uprating benefits that have been significantly depressed in real terms over a three-year period.
The report called for a more open debate about this often hidden area of public policy, so that decisions that prevent the poorest members of society keeping up with rising living standards would not be taken in the dark. Unknown to most people, uprating policies have resulted in a significant erosion of relative living standards among benefit recipients over most of the past three decades. Recently, this has been exacerbated by the use of CPI rather than RPI as the measure of inflation, particularly during the period when prices of necessities that represent a disproportionate share of spending among benefit recipients have risen faster than prices generally—a point that we made on the first day in Committee. As Donald Hirsch of the Centre for Research in Social Policy comments, in this context, the index used to uprate benefits has become a highly imperfect mechanism for preserving their real value and a rather arbitrary means of raising benefits by an amount that politicians feel that the country can afford rather than of protecting living standards.
Of course, assessments of affordability cannot be ignored. They can also be contested, as we are doing in relation to this Bill, but looking to the future I agree with Donald Hirsch that there is a need to establish principles linking benefit uprating to some stable concept of what is fair, rather than just ad hoc decisions about what can be afforded. He suggested that, as a start, this might involve reasserting the principle of human decency whereby the real value of benefits is genuinely protected and that, in the longer term, if prosperity starts to grow again, we need to consider how those in greatest need can share in such growth.
I suggest that a report to Parliament that addresses these fundamental questions is the least that we can ask of a Secretary of State willing to preside over a deliberate reduction in the living standards of the most deprived members of our community. I beg to move.
The Lord Bishop of Ripon and Leeds
My Lords, I have put down my name in support of the amendment and am very grateful to the noble Baroness, Lady Lister, for her tabling of it and for her powerful advocacy of it. I have done so because I am repeatedly told by citizens advice bureaux and the like of the uncertainty which is being introduced by this Bill. It is ironic that we have talked so much of certainty in setting the rates for the years up to 2015-16, when those on benefit and providing advice feel uncertain as to its short and long-term effects.
So long as benefits have been uprated by inflation, it has been possible to budget taking them into account. But this cap on uprating is a major and apparently long-term change to the whole principle of our benefit system. Recipients and those who work with them are owed an explanation. I am not looking for commitments from either Front Bench beyond 2015, but I would be very grateful for comment from both of them on whether this is to be seen as a temporary reduction with the aim of restoring benefit values after 2016 so that we ensure a decent living standard for those on benefit—the requirement that has been so ably put by the noble Baroness, Lady Lister. Or is this actually a permanent reduction to a lower level, which will then be stabilised in real terms after 2016, or a continuation of a gradual reduction expected to continue after 2016? None of those options is desirable, but they are very different in the effect that they will have, and a sense of purpose and direction from the Government and Opposition is important in all this. It is important to know just where benefits are anticipated to be going in future, both from the opposition and the government Front Bench. I hope that they can supply that in the debate on this amendment.
Lord Kirkwood of Kirkhope
My Lords, I will make just a short intervention on this amendment so ably moved by the noble Baroness, Lady Lister. I entirely concur with her view and analysis. I want to add, however, the fact that I am now very frightened about what is happening in the short term. There is a complacent view held among policymakers generally that the Work Programme and universal credit are all that need be done. I support both, and will not cast any aspersions on any Governments or make any party political points, but both these important reforms will take at least 10 years to go into steady state and be of assistance to our most hard-pressed, low-income households in the United Kingdom.
If I am right about that, and about the prognosis for the United Kingdom’s level of economy over that period, we face a really difficult period of activity where we cannot rely safely on the Work Programme and universal credit to provide the social protection that this country needs and expects. We need to do something in the short term that seeks to understand what is going on. More than anything else, this is a plea for really rigorous and urgent monitoring of everything going on: every bit of evidence from every constituent part of the United Kingdom. We need to watch carefully what is happening. The noble Baroness is quite right: malnutrition of children will result over the next five to 10 years if we are not extremely careful.
Now, this is no one’s fault. I understand perfectly well the need to get austerity and deficit reduction properly balanced in the nation’s future policy at a financial and fiscal level. But nobody could have foreseen the difficulties or longevity of the recession, or the lack of growth that this country will have to deal with in the short term of five to 10 years. That does not seem like a long time and I do not take anything away from the long-term need to get universal credit and the Work Programme put together and rolled out, but nobody is paying enough attention to what is going on in the short term.
If you refer to the sensible policy professionals who look at this, the Joseph Rowntree Foundation is first among them and there is the work by Loughborough University, Professor Jonathan Bradshaw, and all these experts. We have better professionals in the United Kingdom than any other European country. I say that because I have worked with most of them for the best part of 25 years. The noble Baroness is one of them— she nodded at that point. This is a serious point: we have internationally recognised experts on this yet we are deaf to what they say to us. A growing body of opinion says that something different and more than what has been put in the policy framework to date needs to be done to be sure that we do not face levels of financial adversity with which the public will not be comfortable.
I know that there is a view that people are against welfare spend and we have had discussions over the Welfare Reform Act and this Bill about the language used nationally in the public discourse on this important area of public policy. It is important because £200,000 million a year is spent and it is still creating problems. We need to face up to that. We need to have a much more adult discussion about what is going on.
Certainly, concepts such as the minimum income standards need to be part of that discussion. We need to look at the cumulative effect of everything that has happened since 2010 that has made the circumstances dramatically worse. People know that I am a professional, paid-up pessimist—I accept that—but we have to be very careful about how we assess the evidence.
I want to make a couple of quick suggestions about how we might deal with that in conjunction with looking at the principles in the long and short term and how we perform the monitoring and evaluation. What is happening in the devolved legislatures of the United Kingdom is very important. There are positive responses in Wales, and in Scotland, which I know best, where the need is recognised. We must first promote the need to do things differently. That may mean financing food banks—that is not something that I want, but if the alternative is malnutrition in children, we cannot ignore that. It is easier in smaller countries which have shorter lines of communication and a smaller scale. They can move more flexibly and faster. Working with the legislatures in Cardiff and Edinburgh, I think that there are some quick wins that central Government could help to promote. I hope that we will do that and keep the channels of communication between London and the constituent legislatures throughout the rest of the United Kingdom open and dialogue promoted urgently.
As the second part of that, working with local authorities will be so important. The evidence coming back from housing authorities, particularly in local authorities, presents variable geometry—we are getting different messages from different parts of the country. There is a spatial dimension to some of these issues which we should not ignore. In the past, we have always safely relied on a centralised, unified United Kingdom social security process as the right thing to do. I have less confidence about that working in the next five to 10 years. We need to look much more carefully at how housing and labour markets are aligned in some regions of our United Kingdom and be sensitive to changes happening in those fields.
I think that we need a short-term anti-poverty strategy. The principles covered by the amendment of the noble Baroness are important and must be kept in mind for the longer term, but all my instincts tell me that the next three, five or seven years will be difficult in a way that nobody has previously been able to get a grip on. If we do not respond to that by looking at some of the ideas contained in the amendment, we will pay a heavy price in terms of child poverty, in particular. We have an important amendment coming up next on that subject, and I hope that we will think carefully about that as well.
In strongly supporting the concept behind the amendment, I would like the Committee to consider not just the longer and medium term but some of the emergency state provisions that we as a country will be forced to face over the next five to 10 years.
Baroness Sherlock
My Lords, this has been an interesting brief debate, introduced by my noble friend Lady Lister with her now characteristic blend of expertise and passion. I am sure that we are all grateful to her for opening up the question so well. The quotes that she shared with the Committee about children arriving hungry at school and mothers missing meals and going without themselves to protect their children from the effects of poverty were, on one level, not a surprise to any of us, but they are still shocking. They should be profoundly shocking.
I found the point made by the right reverend Prelate very interesting and I understand why he would like those assurances from both sides of the Committee. My noble friend Lord McKenzie of Luton made Labour’s position clear at the beginning of our first day in Committee. It is this: if we were in government right now, we would be uprating benefits in line with inflation. However, we cannot make a commitment at this stage for the next Parliament. My view is that that is not a good idea anyway. We are fundamentally opposed to the whole principle in the Bill of fixing the levels of uprating for a period. We have perfectly good mechanisms for uprating benefits annually in line with inflation in the light of prevailing economic circumstances. To be honest, I would not want to be tempted into anything other than maintaining that position, but I fully understand why the right reverend Prelate is pressing the concerns that he is pressing.
I also found the comments made by the noble Lord, Lord Kirkwood of Kirkhope, very interesting. He drew in the spatial dimensions of poverty and the wide-ranging regional issues. That is something that we may come back to. I particularly agreed with his point about the need to monitor what is going on. The next amendment that I shall move encourages the Government to look specifically at the impact on child poverty. I also support the noble Lord’s point about the need for a cumulative assessment of all the changes between 2010 and now—a point made very strongly by my noble friend Lady Hollis at earlier stages of debate.
Since the Bill cannot help but drive down standards of living for families, what assessment have the Government made of the likely impact on the well-being of the poorest adults and children of what is effectively a real-terms cut in benefits and tax credits, not just over the year ahead, but over the three years covered by the first uprating and the two years of this Bill? It would be very helpful to the Committee to understand what assessment the Government have made. At a time when three new food banks are opening every week and even families in work are finding it a struggle to make ends meet, the state needs to take particular care to demonstrate that resources are gathered and distributed in a way that is fair to everyone. In the light of that, I shall be very interested to hear what the Minister has to say.
Baroness Stowell of Beeston
My Lords, I am grateful to the noble Baroness, Lady Lister, for moving this amendment and explaining her thinking. Of course, I recognise the serious issues that she and other noble Lords have raised during the course of this debate. I would not claim first-hand experience of living on benefits, so I do not bring to this debate any presumption about those on benefits finding what we are doing anything other than difficult, but is an inescapable fact that when setting benefit levels successive Governments have sought to strike a balance between the needs of claimants, maintaining work incentives and affordability.
Indeed, the current uprating legislation recognises this explicitly. The Social Security Administration Act 1992 requires the Secretary of State to make his annual review of benefit levels based on the increase in prices. He is then given discretion as to how to uprate certain benefits, having regard to the national economic situation and any other matters that he considers relevant. Parliament therefore requires the Secretary of State to take certain issues into account when considering the level at which the benefits in question are set. In bringing forward this Bill, we have considered these issues carefully and struck a balance between providing a cash increase, protecting certain key benefits and making necessary savings.
Benefit levels also have a significant bearing on work incentives. The complexity of the current system largely arises from successive Governments’ attempts to balance benefit income against work incentives. That is why universal credit is such an important measure as it applies a single set of rules focused on maintaining the incentive to take up work or more work. In response to some of the points made in this debate, I shall say something that I know is shared around the Committee. This Government believe that work is the best route out of poverty, and that is why we are focused on making sure that work pays.
Baroness Hollis of Heigham
Would the Minister agree that the last increase she mentioned has come about by increasing the additional cuts that people will have to face as a result of the bedroom tax?
Baroness Sherlock
I am sure the Minister is aware that the IFS analysed the distributional impact of tax and benefit changes between January 2010 and April 2015 as if universal credit were fully in place. It modelled the real-terms changes in household income at today’s prices with all the measures announced and UC fully implemented. It suggests that a one-earner couple with children will be £64 a week worse off. How does that equate to what she is saying?
Baroness Stowell of Beeston
I have laid out for the Committee the measures that are there and have been put forward by the Treasury. The noble Baroness wants to put forward some alternative statistics. Let me get back to the point I was making about the arrangements that are being put in place to ensure that, when we move into the implementation phase, support is available for those who need it, if there are any people who are not properly covered by the changes that we are making.
The noble Lord, Lord Kirkwood, referred to local authorities when he was talking about this. The local authorities and the Scottish and Welsh Governments would get £178 million to deliver new local welfare provision. They will develop local schemes to help those facing a crisis or short-term unavailable need. On the arrangements for people moving from weekly receipt of payments to monthly receipt, a whole range of different programmes is being put in place to support people in budgeting and making sure that they have the support that they need to manage the changes that are being brought about—changes that we believe will have the right effect in ensuring that this is a much simpler and more effective welfare system.
The noble Lord, Lord Kirkwood, and the noble Baroness, Lady Sherlock, also referred in this context to food banks. I point out to noble Lords that one reason why there has been an increase in the use of food banks is because the Government were clear that we wanted Jobcentre Plus advisers to be able to signpost their availability to claimants. For reasons that noble Lords on the other side of the House will presumably be able to explain, this was not possible before. The Trussell Trust director has said that he thinks that there has been a need there for a while, but the growth in the number of volunteers and the awareness that you can get this help if you need it explains the growth in this area.
Lord Martin of Springburn
Is it not a sad day when a government Minister has to stand up and say that food banks will be made available? Our children should not have to depend on food banks in this day and age.
Baroness Stowell of Beeston
It is a sad fact that people should have to rely on food banks; I absolutely acknowledge that point and do not dispute it at all. The point I am making to the Committee is that Jobcentre Plus staff are now permitted to signpost the fact that they are available, whereas previously they were not permitted to do so. I am not suggesting that the fact that they exist is to be applauded at all, but it would be wrong for Jobcentre Plus staff not to be able to say that they are there to people who might be able to take some advantage of them just because we do not want to make that facility known.
Baroness Farrington of Ribbleton
The Minister is speaking as though the only people using food banks are those who go to the jobcentres. Surely, from my experience and that of other noble Lords, many of the people who are now using food banks are actually in employment. As things like the bedroom tax bite, more people in employment will lose out on what benefits were available to them.
Baroness Hollis of Heigham
My Lords, to add to my noble friend’s point, my obviously localised and limited experience of food banks has been that before about 2010, in so far as they were in play, food banks were mostly drawn upon by young people. These were very often young men aged under 25 who were getting the shared rate for housing benefit in the private rented sector and found, as Shelter and others have told us over the years, that it did not match the rent they were required to pay; it was a very discrete group. They, in my localised experience, often had to turn to food banks to cope. Now the Government have extended that limitation on housing benefit from 25 to 35, while producing additional pressures right across the benefits spectrum, as my noble friend Lady Farrington has said. It is a disgraceful aspect of the fifth-richest nation in the world that so many of our people have to make recourse to food banks because our benefit system does not sustain them in the way it should.
Baroness Stowell of Beeston
My Lords, I do not for one moment suggest that food banks are something on which anybody would want to have to rely. I completely agree with the noble Baroness in that regard. My point is simply that the fact they exist—
Lord Martin of Springburn
I suggest to the Minister that we should be ashamed that this is happening. I was brought up in the 1950s in a family of the poorest of the poor, and my parents would not have dreamt of going to a food bank. All these years later, we are talking of parents and children having to go to a food bank. If this so-called facility exists, the Government should do something to eradicate the need for food banks.
Baroness Stowell of Beeston
My Lords, food banks have existed for a long time. They have not been introduced in recent times—that was the point I tried to make by quoting the director of the Trussell Trust. I am not trying to make any point about this whatever. I do not for one moment suggest that anybody in this House should feel anything other than great disappointment that anybody should have to use a food bank. I am making a simple point. All noble Lords have been clear about their views, and certainly I am not here to disagree with the arguments they made. Let me move on.
The noble Baroness, Lady Lister, while accepting the need to strike a balance, argued none the less that a report into the adequacy of benefit levels would be useful, as it would help people better understand where benefit incomes sit in relation to the rest of society, and so would help inform the debate. This approach relies on the idea that we could produce figures that would concretely situate benefit incomes in relation to an objective adequate level. The desire to draw conclusions on the adequacy of benefit levels has always been fraught with technical difficulties. In 1985, the then Government looked at this issue and concluded that,
“it is doubtful whether an attempt to establish an objective standard of adequacy would be fruitful … all such assessments would themselves include judgements on the standards to be achieved”.
This view was echoed in the previous Labour Government’s consultation exercise on measuring child poverty, which concluded that,
“despite a wide range of research into budget standards, there is no simple answer to the question of what level of income is adequate … Different research methods tend to make different assumptions that are essentially subjective”.
Similarly, during her time as Minister at the Department for Work and Pensions, the right honourable Margaret Hodge said, when asked what assessment the Government had made of the minimum income a household needed to live on:
“Our concerns about research on minimum income standards have been well documented. What people need to live on varies greatly depending on their needs and a range of factors. Different research methods tend to make different assumptions and generate a range of estimates”.—[Official Report, Commons, 7/2/06; col. 1163W.]
The noble Baroness, Lady Lister, also raised the issue of minimum income standards, and suggested that this metric could be used as a measure of benefit adequacy. We will continue to take note and look carefully at the evidence from research on minimum income standards. However, I do not believe that minimum income standards provide an appropriate comparator when considering the adequacy of benefit rates.
The Joseph Rowntree Foundation’s minimum income standard is a relatively new metric—the first report was in 2008—and there is no international consensus on how this should relate to setting benefit standards. Minimum income standards are informed by public perception so can change even if prices do not. For example, the rate for a couple with two children increased by a third between 2008 and last year—more than twice the rate of inflation. Moreover, it is important to remember that most working-age benefits are intended to provide temporary support during periods of interruption to employment, whereas the minimum income standard is focused on more long-term living standards. The Bill does not, of course, affect long-term benefits, such as those paid to pensioners or those relating to additional needs arising from disability.
Baroness Hollis of Heigham
My Lords, the Minister seems to imply throughout her speeches that there is a distinction between those receiving benefits and those who are in work, and that you have to maintain that gap to produce work incentives. That seems to be her argument. However, she knows that two-thirds of the current expenditure on housing benefit and tax credits goes to people in work on the minimum wage to make that wage adequate to enable them and their families to survive. Therefore, will she please refrain from talking about the need to maintain work incentives when the only way that there is an incentive to work is when it is underpinned by benefits?
Baroness Stowell of Beeston
With the introduction of universal credit, we will make sure that that is always the case. Therefore, I do not disagree with the noble Baroness at all.
The noble Baroness, Lady Lister, referred to the Government’s decision to move from RPI to CPI as the appropriate index of inflation. The Government believe that CPI is a more appropriate measure than RPI when considering the impact of inflation on benefits and pensions. It is worth saying that the judicial review of the switch from RPI to CPI found in the Government’s favour and we continue to believe that CPI is a more appropriate index. As an example of the costs involved, uprating the benefits and payments in this Bill by earnings would reduce the savings by £1.8 billion of the total of £1.9 billion in 2015-16 and, if we did so by RPI, would wipe out all the savings and cost an additional £700 million in 2015-16.
As regards paragraph (b) of the amendment, while I cannot predict the decisions that will be made by future Governments, once the provisions in the current Bill cease to have effect, the default position will be for uprating decisions to be made in line with pre-existing legislation.
In referring noble Lords to the comments made by the noble Lord, Lord McKenzie, during last week’s debate, I was going to mention his reluctance to say what his party would do if it was in government. Indeed, he was even more than reluctant; he refused to say what it would do. However, the noble Baroness, Lady Sherlock, has commented on that point today.
For social security benefits and statutory payments, the default position will be for uprating decisions to be made under Section 150 of the Social Security Administration Act 1992, meaning that the Secretary of State will make an annual review of benefit levels to see whether they have kept pace with the increase in the general level of prices. If prices have increased, he will then make a decision about how he should uprate the benefits covered by the Bill, based on the national economic situation and other factors he considers relevant. For tax credits, the default position is that the Treasury is required under Section 41 of the Tax Credits Act 2002 to review the amounts of certain elements of tax credits each year to determine whether they have retained their value in relation to the general level of prices.
Before I conclude, I refer to the question put by the noble Baroness, Lady Sherlock, about an assessment of the changes that we are making via this Bill on the well-being of adults and children. In response—and it was a point that I made in Committee last week—this Government publish cumulative impacts of government policy at every major fiscal event. We did so at the time of the Autumn Statement last year. Those assessments include the effects of any changes in welfare and ensure that the other positive measures being introduced in relation to tax rates and so on are taken into account. That represents an increase in transparency when compared with what was in place hitherto. The assessments are publicly available on the Treasury’s website.
This has clearly been a serious debate and I am grateful for the opportunity to respond. I hope that in future debates I am able to expand a little further on some of my comments because I am concerned that in some of my points I was not as clear as I intended to be. I will ensure that when I speak in later debates I am much clearer about the importance we place on ensuring that proper consideration and monitoring are taking place in the implementation of all these changes. If any additional measures are required to support people who are affected in a way that goes beyond that which we are expecting, we will make sure that they have the support they need.
The Lord Bishop of Ripon and Leeds
My Lords, following the Minister’s final comments, can I check that the default position after 2015-16 will be that there would be CPI increases based on the lower level that benefits will have reached by then?
Baroness Stowell of Beeston
It will be based on the benefits that exist at that time.
Baroness Lister of Burtersett
I start by thanking the right reverend Prelate the Bishop of Ripon and Leeds for supporting the amendment so powerfully. He asked for a sense of direction. I fear that we have a sense of direction but it is not one that either the right reverend Prelate or I feel happy about. I thank the noble Lord, Lord Kirkwood, who, as ever, has brought important issues to light. I also thank my noble friend Lady Sherlock who again made a powerful speech. I also thank the Minister, whose attempt to deal with the issues raised by the amendment I acknowledge and appreciate. She was given rather a hard time but I am sure that she will understand because people feel strongly about the implications of the Bill and the effect it will have on benefits. I should like to address a number of her points.
First, my noble friend Lady Hollis picked the Minister up on this mantra that work is the best route out of poverty. Of course we all agree with that, except that work is not always the best route out of poverty because some people are going to work and are in poverty. As well as the point made by my noble friend, there seems to be an assumption that if we depress benefit levels we are somehow making it more likely that we will push people into paid work. I always remember work on lone-parent families carried out by another poverty guru, Alan Marsh of the Policy Studies Institute. He pointed to evidence that,
“a malign spiral of hardship, poor health and low morale … builds up its own barriers to work”.
He found that those in severe hardship were three to four times more likely to suffer low morale, compared with those who were not in hardship. He very wisely commented:
“It is quite hard to contemplate work if you are that demoralised and hard up”.
That is why we must not assume that keeping benefits low is necessarily going to improve work incentives.
The Minister made a point that I found quite chilling. She said: “It has never been the intention to alleviate poverty through benefit payment”. That is not my understanding: I thought that the whole point of benefits was to try to alleviate poverty. I am dismayed by that statement.
Baroness Stowell of Beeston
What I said was that we believed it was misguided to try to lift people over the 60%-of-median-income line through benefit increases alone, because this would not change their lives or their children’s since it would not tackle the reason they found themselves in poverty in the first place.
Baroness Lister of Burtersett
I accept that, but I wrote down what the noble Baroness said. She said: “It has never been the intention to alleviate poverty through benefit payment”. I wrote it down. If she wants to retract that statement, I would be delighted.
Baroness Hollis of Heigham
I think it was at the point when the Minister said that unemployment benefits were only intended to be temporary while people were in between work, and that therefore they were never expected to address poverty as such. That is the problem that we are worried about.
Baroness Stowell of Beeston
This is a debate about the adequacy of benefit rates, not about benefits in a package of what people receive. The difference here is that if somebody is in receipt of a combination of different benefits—housing benefit, jobseeker’s allowance and so on—I can absolutely see the point that the noble Baroness is making. What I am saying in the context of a debate about how to set the rate of a benefit is that benefits alone do not alleviate poverty.
Baroness Lister of Burtersett
I thank the Minister for her clarification. I think I can take it that it is not the Government’s position that benefits are not there to alleviate poverty; I hope that is right. The noble Baroness must remember that not everybody can take the route into paid work: there are some people of working age who will be on benefits for a considerable length of time and we cannot just say, “Oh well, they don’t matter”.
There was quite a lot of discussion about food banks. It just so happened that I chaired a meeting the other week for a group called Just Fair, where the director of the Trussell Trust was speaking. He pointed out the exponential increase in the number of food banks over recent years. The increase is huge. That meeting was addressed by the UN rapporteur on the right to food. He made it very clear that he did not see food banks as any kind of solution to the problem of food poverty. I accept that the Minister was not saying that she was happy about the spread of food banks, but I think she was, perhaps, underplaying the extent to which they have spread recently. I do not think it is simply because Jobcentre Plus is now acting as a signpost.
I was disappointed that the noble Baroness was referring back to quotes from 1985 about the difficulties of establishing the adequacy of benefits. Research has become a lot more sophisticated since then and there is a growing consensus—although clearly not on those Benches—around the work done on minimum income standards. When my noble friend Lady Sherlock asked about impact, I do not think she was asking for the same kind of impact statement that we have been talking about—the numbers and so forth. She was asking for an impact on well-being. Local authorities are now supposed to address the well-being of everyone in their areas. What impact is this Bill—together with all the other things that are happening—going to have on the well-being of children and their parents? This goes back to what the noble Lord, Lord Kirkwood, was saying about monitoring. Monitoring is not simply about numbers: it is about what it is going to mean to the lives of some of the most deprived members of our community.
I am disappointed that the Minister is not prepared to accept an amendment which is not about spending money; it is about trying to let us better understand the principles that should govern our social security system when times are easier. However, I beg leave to withdraw the amendment.
Baroness Sherlock
“Assessment of impact on child poverty
The Secretary of State shall, in making the orders referred to in sections 1(1) and 2(1), publish and lay before Parliament a report assessing the impact of the order on the number of children living in—(a) relative low income;(b) combined low income and material deprivation;(c) absolute low income;(d) persistent poverty;as defined in the Child Poverty Act 2010.”
Baroness Sherlock
My Lords, Amendment 12 is in my name and that of my noble friend Lord McKenzie of Luton. This amendment would require the Secretary of State to publish and lay before Parliament a report assessing the impact of the order on the number of children living in the four measures of child poverty set out in the Child Poverty Act; namely, relative low income, combined low income and material deprivation, absolute low income, and persistent poverty. The aim is very simple. It is to force the Government to face up to the consequences of their actions and to come clean about the impact of these measures on child poverty.
I am sure that the Minister is closely familiar with the coalition agreement. I know that I read it regularly, so I expect no less of him. My favourite bit is paragraph 14, the first bullet point of which reads:
“We will maintain the goal of ending child poverty in the UK by 2020”.
That is rather lovely and has a beauty in its simplicity. I will repeat it:
“We will maintain the goal of ending child poverty in the UK by 2020”.
In keeping with that commitment, the Government have previously published the effect on child poverty of Budgets, spending reviews and Autumn Statements. But in the last Autumn Statement we did not get the kind of detail that we were expecting. Why could that be? We got a hint in a Written Answer in another place from the honourable Esther McVey when she said:
“We estimate that the uprating measures in 2013-14, 2014-15 and 2015-16 will result in around an extra 200,000 children being deemed by this measure to be in relative income poverty compared to uprating benefits by CPI”.—[Official Report, 15/1/13; col. 716W.]
It probably is important to look at the backdrop to this. Since the goal of ending child poverty by 2020 was first announced in 1999, the UK has made real progress. Some 1.1 million children were taken out of relative child poverty between 1998-99 and 2010-11, and 2.1 million children were taken out of absolute child poverty between 1998-99 and 2010-11. But now we are going into reverse. The rise in child poverty likely to be caused by these measures is on top of a net rise in child poverty of 400,000 by 2015 and 800,000 by 2020, resulting from the Government’s current fiscal policies, as seen in the IFS analysis of 2011.
If that is right—the Institute for Fiscal Studies has a pretty good record on these things—that means a rise in child poverty of at least 1 million children under the relative low-income measure is now likely by 2020. However, the relative low-income measure is just one of the four poverty measures in the Child Poverty Act. I should like to ask the Government why Ministers have not given any figures on the number of children who will be pushed into absolute poverty by the Bill, despite the fact that the Government have the same capacity to produce an estimate on that measure as on the relative low-income measure. I look forward to hearing the answer because, as the Minister will realise, the Government have a statutory duty to reduce absolute child poverty under the Child Poverty Act. Therefore, they presumably must be able to measure it to know if they have fulfilled that statutory duty.
Similarly, the Government have given no assessment of the likely impact of the Bill on material deprivation, despite again having a statutory duty to reduce material deprivation under the Child Poverty Act. Even if Ministers did not feel able to produce a numerical estimate, I cannot see any reason why they could not produce a narrative assessment, a point made repeatedly by the Child Poverty Action Group. Finally, and at the risk of being repetitive, we have seen no assessment, not even a narrative one, of the impact of the Bill on persistent poverty, despite the fact that yet again the Government have a statutory duty to reduce persistent child poverty under the Child Poverty Act.
This really is a disgrace after all the careful progress that has been made. The reason the previous Government took child poverty so seriously was that it had risen so dramatically under the previous Conservative Government. The researcher, Jonathan Bradshaw, who has already been mentioned today, found that child poverty increased nearly threefold in the 1980s alone and that the well-being of British children compared unfavourably with that of children in most developed nations. That was the reason the Labour Government acted. It was also the reason why, by the time of the last election, there was apparently cross-party support for that goal of tackling child poverty in Britain. We are now in the position of having to ask what it means for the Government to say that they will maintain the goal of ending child poverty in the UK by 2020.
This is perhaps a philosophical point, but what does it mean to have a goal if one takes no steps towards it? I may say that I have a goal of being a concert pianist, but if I do not take lessons to learn to play the piano and I never practise, no matter how many times I say it, the odds of my becoming a concert pianist must be seen to be slim. In that case, on what basis can Ministers say they are committed to eradicating child poverty in the UK if they keep bringing forward Bills that drive it ever higher? It may be time for them to come forward and say that they do not in fact have any intention of eradicating child poverty and perhaps never did.
The amendment really is for the Government’s own good. If they are committed to the goal of ending child poverty by 2020, they need to understand the impact of their policies on child poverty. Otherwise, they cannot possibly achieve that. If they are not committed to that goal, the nation has a right to know that and still to understand what the impact of these measures would be. That is all the amendment does. It requires the Secretary of State to tell Parliament and the nation what the effect would be of these measures before he implements them. What could be more reasonable than that? I beg to move.
Lord Kirkwood of Kirkhope
My Lords, I hope to make an even shorter contribution to this important debate. I agree that the amendment relating to child poverty is apposite and important. I want to confine myself to seeking further clarification from the Minister, if she has the information to hand. It would be to the Committee’s advantage if we knew more about what we can expect from the Social Mobility and Child Poverty Commission, because it relates directly to the substance of this amendment.
I was pleased that there was a recent change to the membership of the commission and that our very own noble Baroness, Lady Shephard of Northwold, has joined it. I am pleased about that because she is an experienced hand and I trust her judgment. I look forward to seeing the fruits of her work within that commission. It is important to us all. However, I was disappointed to learn recently that the first annual report of the Social Mobility and Child Poverty Commission is not now to be with us before 26 September this year. We were expecting it in May. I make that observation because it is a sign of drift, potentially. If I am wrong about that, I hope that I will be put right.
I was very uneasy about adding social mobility to child poverty. The original terms of reference of the 2010 Bill as put forward by the noble Lord, Lord McKenzie, were the correct ones. The Deputy Prime Minister, of whom I am a great fan, as I am sure people understand, was wrong. Social mobility is a different subject altogether. It is much longer term and in the short term, we are dealing with a situation that is more of an emergency than the aspiration of social mobility, which of course we all accept. We really need to understand what contribution to child poverty this commission will make. If the Front Bench can tell us anything about that in the course of this amendment, that would be very useful.
My second point is that of course we know that there is a consultation on child poverty measurement. I am taxing my memory here, but I think we were expecting the end of the consultation to be earlier this year—some time in February. If that is the case and my memory is correct, I hope we can be told that the Government’s contribution to the further development of child poverty measurement will be vouchsafed to us sometime soon. It will certainly be important to get hold of this around the time of the Budget, if we can. Some of the Office for Budget Responsibility’s assessments of future policy in terms of the Budget should be seen against the background of the Government’s view about how they will treat child poverty measurement in the future.
I am slightly nervous about some of the things that I have been hearing are being factored into the measurement of child poverty in the future. It may be that I am misreading signals but I hope that we do not lose focus on the fact that, at the end of the day, child poverty can be addressed only with money. Regarding any attempt to dress that up and expand the measurements too widely, while I am in favour of having all the data and metrics that we can access, for the reasons I explained on the last amendment we are facing an emergency situation the extent of which I did not anticipate.
The difficulties are mounting up, as we heard earlier. The decisions to be taken by the Government in the near future on measuring the data on child poverty are very important. If the Minister can help us to understand when we might expect information of that kind, it would help the Committee’s consideration of this Bill not just today but over the rest of its proceedings.
Baroness Lister of Burtersett
My Lords, I am pleased to support my noble friends on this important amendment, which has been moved so ably. The Government have still not explained why they did not include the impact on child poverty in the impact assessment for the Bill, as they promised. A Written Answer in the Commons as late as 30 January wrongly stated that the impact assessment sets out the estimated child and adult poverty effects, but it does not. As it is, the shameful figures had to be dragged out of the Government by a Written Question, as my noble friend said. Nor have the Government explained to the Committee how the anticipated increase in the number of children living in poverty thereby revealed is compatible with their obligations under the Child Poverty Act 2010, to which my noble friend referred. I asked this question during Second Reading, but answer came there none.
Instead, the Minister deflected the question with the Government’s usual line that the child poverty measurement indicators are somehow not fit for purpose —picking up on the point made by the noble Lord, Lord Kirkwood. That was followed by a brief discussion about the importance of education, debt and paid work in tackling poverty, but nothing was said about how by enacting this legislation and knowingly adding 200,000 children to the poverty rolls, the Government are fulfilling their obligations under the Act. Those obligations are in addition to the increase in child poverty estimated by the Institute for Fiscal Studies, to which my noble friend referred. I would be grateful if today the Minister could answer the question I asked at Second Reading. What does this mean for the Government’s statutory obligations under the Act? Whatever the Government think about the measures of poverty enshrined in the Act, unless they plan to amend it—perhaps the Minister could tell us if they do—they must face up to their legal obligations as set out in it. What countervailing measures will they take against the increase of 200,000 children living in poverty?
I agree with the Minister that education, debt and work are important factors in any anti-poverty strategy, but it is unclear how reducing real incomes will help with any of them. How, for instance, will making life harder for low-income families enhance the educational chances of their children? Hungry children do not make good learners. Anxious and stressed parents are less able to support their children’s education. Adequate incomes are important to educational chances. Paul Gregg has estimated that around 50% of educational inequalities or attainment gaps between the rich and the poor in the UK stem from differences in income. Similarly, as the Minister said, debt is a major problem for poor families, but I fail to see how reducing their weekly income will reduce that problem. All the children’s charities are predicting an increase in debt as a consequence of this Bill, and a Bill that depresses the incomes of low-income workers is hardly conducive to promoting work as the best route out of poverty. I made the point earlier about what Alan Marsh said: people who are demoralised do not make very effective jobseekers.
As the Government consistently attempt to deflect questions about the impact of the Bill on child poverty by dismissing the measures in the Child Poverty Act 2010 as inadequate I should like to say a few words, if the Committee will indulge me, about their recent consultation on those measures. Noble Lords might have read a letter recently in the Guardian from eight fellows of the British Academy, myself included. The letter argued that the Government’s proposals to measure child poverty in a new way,
“are confused and would meet neither the government’s objectives nor international standards”.
While accepting that,
“it is helpful to track what is happening to the factors that lead to poverty and the barriers to children’s life chances”,
the letter advises that,
“it does not make sense to combine all of these into a single measure. To do so would open up the government to the accusation that it aims to dilute the importance of income in monitoring the extent of ‘poverty’ at precisely the time that its policies will be reducing the real incomes of poor families”.
Lord Bates
My Lords, I rise with trepidation following the noble Baroness, who has immense expertise in this area. Even if I had not intended to speak on the technical aspects of this amendment, the claim by the noble Baroness, Lady Sherlock, whose approach is always sharp and pointed in proposing such matters, that this Government is not serious about tackling child poverty would demand a response. Not only is it there for us to read repeatedly in government statements that this Government, as with their predecessor, are committed to the eradication of child poverty, but when we are tempted to get a little too high and mighty about that, one might look at the targets which the previous Government set in respect of halving child poverty by 2010 and how they performed against that measure—they did not tackle it. The commitment is real and is what is driving the whole argument towards universal credit, the raising of tax thresholds, the freeing up of the economy to create 1 million new jobs—which is a pathway out of poverty—the troubled families programme and the pupil premium. This is an immense drive across all departments within government to tackle what we accept is a shame on a country which is still the seventh-richest nation on earth—that 2.3 million children should be in poverty. I just make that point initially.
Baroness Hollis of Heigham
Given the Minister’s very welcome and obviously understandable sympathies and sensitivities towards the issue of child poverty, does that mean that we can expect the noble Lord to table an amendment at Report stage to protect child benefits, including the child benefits within tax credits, from this Bill altogether?
Lord Bates
I will come to that point in a minute because it is an interesting one about the effectiveness of the cash measure alone in eradicating child poverty. The previous Government failed to meet their target of reducing child poverty by the level they set themselves, despite spending £171 billion between 2003 and 2010. Here, in a sense, is something that almost makes the case for the Opposition, were they to take it. Those of us on the government Benches could stand here and point to the fact that, in 2010-11, 300,000 children were taken out of relative poverty. We could say that, but of course we realise that that is not actually happening on the ground. We recognise that those immense pressures are there. I do not dispute the quotes that the noble Baroness has used in introducing this but the Institute for Fiscal Studies, in its helpful analysis, points to the fact that all that happened with that 300,000 was that you had private sector incomes—predominantly—being repressed or flat-lining. I am trying to follow the gestures of the noble Baroness but being a man I can do only one thing at a time. Private sector incomes increased by 10% over the years 2007 to 2012 while benefit levels increased by 20%. That is one of the arguments that is put. Because it is pitched at median income, you then find that, as the Institute for Fiscal Studies shows in its graph, the measure comes down, the benefits go up and effectively you say, almost like a card trick, “We have reduced child poverty by 300,000”. In fact, you have done nothing of the sort. All that has happened is that, during a recession, private sector incomes have fallen and therefore, as the IFS says:
“If earnings fall relative to benefit levels, then being in work becomes less financially attractive”.
Those are the IFS’s words, not mine.
Baroness Farrington of Ribbleton
My Lords, I apologise to the Committee. I was unable to be present for the beginning and I have obviously missed the explanation of a phrase that I cannot understand. The noble Lord has just repeated that the answer to child poverty is not money. I do not know the explanation for the Government’s view that you do not eradicate child poverty by providing money. I wonder whether the noble Lord could refresh my memory.
Secondly, the noble Lord comes from a different northern region from mine. The biggest problem that people face is poverty when they are struggling to go to work. They are struggling to get extra hours, which the Government are insisting that people have to try to do, when their employers will not give them extra hours; when the only extra hours they can get may be two hours further away from their home and the cost of travel there is impossible. I think that noble Lords opposite are not living in the same world as I am. My only reassurance is that the right reverend Prelate appears to be living in my world.
Baroness Hollis of Heigham
My Lords, perhaps I may add to my noble friend’s comments. The noble Lord perfectly accurately described what was happening to the 300,000 children who were lifted out of poverty because the median income line fell by virtue of the recession and the downward pressure on incomes. Of course, he is completely right, but the other way of stating that was that as a result of what the previous Government did, the incomes of those children—the poorest of the poor—were protected against the effects of the recession, for which most of us are grateful and appreciative, including the noble Lord, I am sure.
Lord Bates
I accept that point. On the first point made by the noble Baroness, Lady Farrington, of course I am not saying that child poverty has got nothing to do with money. It is vastly to do with money, but is that the only thing that impacts on child poverty? If we want to impact on child poverty, do not the quality of housing, the quality of education and the opportunity to work have some bearing on the fact? Does the fact that the parents are in debt or are drug-dependent or alcohol-dependent have any bearing on it? Does living in a one-parent family or with two parents make any difference to the life chances of the child in poverty? One would probably have to say: yes, to a degree. I am simply saying that there is more to this.
That fact is borne out by international comparisons. I found a report card of child well-being, which was produced while the previous Government were in power. It was undertaken by UNICEF and it is an international comparison. Yes, it looks at cash, although interestingly it looks at 50% of the median, not 60%; it also looks at health and safety, educational opportunities, work opportunities, family and peer relationships, behaviours and risks, and subjective well-being—a broad range of indicators in a basket of trying to assess international child well-being. By the way, if the party opposite is interested, it actually came last: 18.2 was that Government’s average ranking position out of the most advanced countries in the world, but that is not my point.
My point is that we must come back to the median income. The median income is worth looking at in itself because that is the test that we are using to measure all benefits. It relates to a level of income—not an average income but a median income, the most frequent across the distribution. The latest figures I could find on the ONS website showed that median incomes vary quite substantially across the United Kingdom—nothing unusual there; you would expect that to happen. For example, in London the median gross wage is £651.80 per week, but in the north-east the figure is £451.80 per week. These are the latest figures; I accept that there might be a shift slightly in one direction—well, upwards only.
There is a difference of 44% across the range. Therefore, when we are applying a national target of 60% of the median, we need to examine whether that is giving us an accurate reflection of child poverty levels in all parts of the country. It might be that we are understating it in parts of the north, Wales and the south-west; it may be that we are overstating it in London—I do not know. None the less, using that as the sole measure to test median income across a national rating by which we actually assess those in child poverty is worth taking a more careful look at.
Lord McKenzie of Luton
Does the noble Lord accept that the Child Poverty Act was not looking at just the metrics of the targets? Section 9(2)(b) talks about ensuring that,
“as far as possible that children in the United Kingdom do not experience socio-economic disadvantage”.
We had big debates about that. The Act requires strategies for,
“the promotion and facilitation of the employment of parents or of the development of the skills of parents … the provision of financial support for children and parents … the provision of information, advice and assistance to parents and the promotion of parenting skills … physical and mental health, education, childcare and social services, and … housing, the built or natural environment”.
It was not looking at just those targets; there is a whole range of strategies that this Government should be adopting if they are signing up to this Act.
Lord Bates
That is a more reflective point; it is just not exactly what the amendment before us today actually refers to. It refers to the financial measures of “absolute low income”. Is that the one that is based on 1998-99 and uprated for inflation in a direct line?
My point is that there is an absolute crying need, of which we are all absolutely aware. There is child poverty out there and we need to strain every sinew to ensure that we tackle it. Also, we have no doubt that on the current measure there is no question that it is going to increase. The Office for Budget Responsibility’s figures forecast that as the recovery gets under way, private sector earnings will increase by 4.6% per annum. It does not take a great mathematical mind—which is fortunate for me—to figure out that with what we are dealing with today, as well as the likely increase in private sector incomes, we are going to see the gap rising and almost an inversion of what has happened over the past few years happening in the future. But there are more indicators that need to be examined to give us a holistic picture and to ensure that we target scarce resources where they are needed most.
Lord Newby
My Lords, this proposed new clause would require the Secretary of State to lay a report in each of the years in question, assessing the impact of that year’s uprating order on child poverty based on the different measures contained in the Child Poverty Act. I absolutely understand noble Lords’ concern to ensure that we are tracking progress and impacts on child poverty. However, I do not believe that this new clause is necessary to do that.
The Government already publish child poverty figures every year using the households below average income series, which is usually published in May or June and includes details on the areas listed in the amendment: namely, the number of children,
“living in relative low income … combined low income and material deprivation … absolute low income … persistent poverty”.
Moreover, later this year, we will see the first of what will become an annual report from the Social Mobility and Child Poverty Commission, chaired by Alan Milburn. It will report on the Government’s progress towards reducing child poverty, in particular meeting the targets in the Act and implementing the most recent UK strategy.
The noble Lord, Lord Kirkwood, asked a number of questions about that commission. He asked where it had got to and what it was going to say. The answer is that the Government do not know what it is going to say because it is an independent commission. We await its report eagerly, but we are not attempting to pull it up by the roots to find out what it is going say as it is in the process of undertaking its work. I can reassure my noble friend that there is no drift in the work of the commission. It is a very substantive piece of work and it is therefore not surprising that it cannot do it very quickly. We expect that its report will be available in the late summer. It will report to Parliament and I am sure that we will give considerable scrutiny to it in your Lordships’ House when the time comes—we are already looking forward to it on these Benches, I can tell you.
I strongly believe that it is only through such comprehensive reporting, looking at poverty issues in the round, that we can have a meaningful debate about child poverty. As noble Lords have mentioned, we published in response to a Parliamentary Question in another place the expected impacts on child poverty of the uprating measures that we have announced. An additional 200,000 children will be in that category by the end of the period covered by the Bill as a result of the measures in it.
The noble Baroness, Lady Sherlock, asked whether we would publish other impacts of the measure. We do not think that it is possible to derive estimates of all the measures in the Bill. For example, impacts cannot be modelled for the persistent low income poverty measure because impact assessments are based on cross-sectional data rather than longitudinal data. In addition, measures based on an estimate of material deprivation are technically complex to model because material deprivation relies on more factors than just income, so impacts have not been modelled for these measures. The noble Baroness asked also about the absolute poverty figure. If she will forgive me, I shall write to her on that separately.
As we have said previously, we believe that we need to be cautious about setting too much store by such individual assessments of impact. These are not predictions of how the child poverty figures will change in the future, as they do not take into account all the other variables which exist. For example, our estimates will change as forecasts of economic growth and average earnings change, and they do not take account of policies which cause child poverty figures to move in the other direction such as universal credit. Universal credit, which has not played much of a part in our debate today, is of course expected to lift up to 250,000 children out of poverty depending on the effect of the minimum income floor. I believe that we can have a meaningful debate about poverty, as we have started to do in the latter part of this debate, only when we accept that poverty goes wider than the measures contained within the Child Poverty Act.
The noble Baroness, Lady Lister, asked a number of questions about the work that we are doing on defining poverty and on the consultation. The consultation is finished. She is quite right that a number of people have been very critical of what the Government are proposing and we are now considering how we respond to those criticisms. It is not the case that the Government have made up their mind about the outcome and are going to ignore everything that has been said—that would be ridiculous. I can give the noble Baroness an assurance that we are analysing all the submissions, of which there have been a number, and we will produce our response to the consultation in the summer.
Baroness Lister of Burtersett
I am sure that the Minister is about to say this, but the assurance that I was seeking was that all the responses would be published on the web. I do not question the fact that the Government are analysing them all—I am sure that they would not ignore any of them—but the public need to know what people were saying about it.
Lord Newby
I am happy, I think, to give that assurance. I say “I think” only because I have not talked to officials. That is the standard practice and, unless somebody for a reason that I cannot immediately think of has said that they do not want their comments to be published, I would expect the department to publish all the comments and representations that we have received.
I want to clarify a few matters that have been put to us on several occasions by noble Lords. First, the Government are committed to the Child Poverty Act; secondly, we are committed to eradicating child poverty; and, thirdly, we strongly believe that income matters and will remain a central part of any new measures of child poverty. Our discussion is about what else one needs to do both to measure and deal with child poverty so that all children have a better opportunity when they are living on very modest means.
A number of noble Lords have cited figures from the IFS and the Child Poverty Action Group which suggested that child poverty levels would rise by between 800,000 and 1 million by 2020. I really would caution against setting too much store by those figures. First, child poverty forecasts are an inexact science. For example, the numbers that the IFS produces do not account for future changes to government policy. It is measuring change at a time of immense fiscal challenge for the Government but cannot know what government policy will look like in four or five years. The IFS core numbers also do not take fully into account the dynamic and behavioural changes that will result from the Government’s reforms. Moreover, even in the short term, child poverty forecasting has proven difficult to get right. The IFS, which I accept is a leader in this area, made predictions in October 2011 of a fall of 100,000 in the figure for relative child poverty for the year 2010-11. In reality, the figure fell by 300,000. It is therefore an inexact science and it is very easy for numbers produced by it to be spectacularly wrong. This does not of course detract from the importance of taking action to reduce the level of child poverty, but it serves as a reminder that we should proceed with caution in making forecasts of child poverty, whether based on measures in isolation or changes over the longer term.
It is important to remember that many figures on poverty are based entirely on tax and benefit changes feeding entirely into the relative income measure of poverty. This measure does not capture the full range of issues that poverty involves. It captures a lot, but it does not capture them all. It will not tell us how many children’s lives will have been changed by 2020 but only how many children have circulated around the poverty line. One way of tackling child poverty is to focus on this line, pushing up benefit incomes to lift people from just below it to just above it. We already know that focusing on the relative income line alone yields perverse results, and people have referred in this debate and earlier debates to the fact that, in 2010, 300,000 fewer children were set to be in poverty because the recession had caused median incomes to drop. Children were set to be pulled out of poverty not because anything had changed in their lives but because the rest of society got poorer.
The alternative path that we are trying to follow in government focuses on the interventions that transform lives. That is why we have protected spending on the education budget; that is why we have invested £2.5 billion in the pupil premium for disadvantaged pupils; that is why we are spending £1.2 billion on capital investment in schools; and that is why we are investing in making work pay through the universal credit, sending out a clear signal that we believe that work is the best route out of poverty for parents and their children. As part of the universal credit, we are spending an extra £200 million to support families with childcare costs and, for the first time, this support will be made available to families who work fewer than 16 hours a week. This will mean that 100,000 working families will be helped with their childcare costs.
As I have said, the Government are currently analysing responses to their consultation on new measures of child poverty, measures which will attempt to capture the wider reality of poverty in the UK today. The Government already produce a number of detailed reports on poverty. I hope that this will reassure the Committee that we will continue to publish vital information around child poverty and to take our obligations around child poverty seriously. This proposed new clause would therefore be an unnecessary addition to the Bill.
Baroness Sherlock
My Lords, I thank all noble Lords who have spoken in this debate, which may be an interesting precursor to the kind of debate we may have when the commission finally reports. I am particularly and genuinely pleased to hear the Minister say two things—first, that the Government remain committed to eradicating child poverty and, secondly, that income matters. They are both important statements, and I welcome them and am very pleased to have them on the record. I thank the Minister for making them so clearly.
The noble Lord, Lord Bates, with whom it is always a pleasure to do battle, took me to task for saying that I did not somehow accept that the Government made clear their commitment to eradicating child poverty. What I was challenging was not that commitment but whether or not the actions were being taken that would make it a reality. That was the point that I was trying to make, and I apologise if that was not clear. My question was really about what one does to make a difference.
A lot has been said about the nature of the measure. I have never thought that the well-being of children was about only money. However, the reason why this amendment is about money is because the Bill is about money; the amendment is about the impact of the Bill, and the Bill is solely about what happens to the tax credits and benefits that go out to people—in this case, children. So it makes no sense for it to be any broader than that.
The second thing that is worth saying is that I made it clear that the relative income measure was, deliberately, only one of four income measures in the Child Poverty Act, and that was for a reason. The Government of the day recognised that we had to take a 3D approach to understanding what poverty was, and no single measure alone would be able to give us all we needed. However, those four points of perspective between them give a pretty good idea of what is happening to incomes across the UK. That is something that we need to understand.
The noble Lord, Lord Bates, commented on the regional variation of median income. That is true, but the cost of living also varies. As he and I both know, the cost of living in Durham is significantly different from the cost of living in London. So although wages may be different, so too is income—and the measure relates to median incomes.
It is also worth reminding ourselves that the Child Poverty Act does not—
Lord Bates
That is quite an interesting point, if the noble Baroness is prepared to expand on it on the record. I think that she accepts that it is true in Durham, a city that we both love greatly, that median incomes—or, rather, average incomes—are significantly lower, by 44% according to my figures, and that the cost of living is different and lower. So in those circumstances —putting the two together by using a national measure and putting 60% of median income—you would perhaps overstate the level of child poverty in Durham. Does she accept that?
Baroness Sherlock
It might be worth the noble Lord and me sitting down together with the Child Poverty Act. He might find that many answers to his questions are in there. As well as giving the Secretary of State a specific duty to address income measures, because tax and benefits are in the gift of central not local government, with the exception—reprehensible in my view—of the recent move to localising council tax support, the strategy places a duty on local authorities and other players to engage in issues around child poverty, specifically because they have competence in those areas. So if the noble Lord goes back to read it, he will find that there is an awful lot more in it than he perhaps remembers. We may have to come back to that.
It is also worth coming back to the idea that it is not just about money—but it is also not not about money, a point made very clearly by my noble friend Lady Farrington. The noble Lord, Lord Bates, said that the fact that the Labour Government did not meet their target for child poverty reduction means that the measure does not work. I do not think that it means that at all. I pick up again a point that the Minister made. I fully accept that no forecast is a precise measure and no measure is precise, but one reason for keeping a long-term target of 2020 is that what really matters is direction of travel. Over time, how does the income of the poorest relate to the income of the country as a whole? On that, I am proud that our Government lifted 1.1 million children out of poverty. If I had to stand up and say that we had pushed 1 million children into poverty, I would be ashamed of that, and I am very glad that I am not in that position.
If the Government come forward with other measures, we will happily debate them. I am always open to any conversation that focuses the attention of this House and the nation on the well-being of the poorest families, and I am very happy to have the conversation when the commission reports about what that means and what the best means is to assess the impact of policies on that. However, at the moment, the Child Poverty Act is law, and it puts an obligation on the Government—a statutory duty—to address child poverty in all these areas. Unless they measure that, I simply do not see how it is possible to satisfy themselves that they have done it.
The Government’s defence has also partly been that the measure is meaningless. It may be worth reminding ourselves even of the relative income measure. The Child Poverty Action Group reminds us that a relative low-income poverty line is, typically, around £12 per family member per day for all spending needs after housing costs. It notes that many families in poverty will be far below that—because that is where the line is, and many families are way below the line. The point of having four measures is to try to understand the impact of policies such as this on all those measures. I accept that other measures are going on. I accept the point that the noble Lord, Lord Bates, made—and he has engaged with the arguments from this side of the Committee most comprehensibly—that other measures are happening and that there are time lags. However, it is impossible to ignore the fact that a Bill that sets out deliberately to cut in real terms the incomes of poor and middle-income families will do anything other than increase child poverty in real terms. That is a real increase—it is not a statistical anomaly.
I do not want to delay the Committee much more, but I remind noble Lords that the amendment simply invites the Government to report before they enact this Bill on what the impact will be on child poverty, using measures already in statute to reflect a duty that the Government already have in statute. That is all that it does; it could hardly be less radical. However, as I am interested in returning to this at a later stage, I beg leave to withdraw the amendment.
The Lord Bishop of Ripon and Leeds
My Lords, the three amendments in this group have two specific aims, and both concern the treatment of children under the Bill, which we have discussed under Amendment 12.
Amendment 14 seeks to remove child benefit from the Bill and Amendment 19 does the same for child tax credit, while Amendment 17 concerns the child additions within universal credit. I shall return to Amendment 17 later with regard to children with disabilities.
Amendment 14 concerns child benefit. Time and again in these debates on welfare reform, we face the challenge that our reforms have a disproportionate effect on children. Overall, some 30% of households are affected by this Bill. Of those with dependent children, 87% are affected; of lone-parent households, 95% are affected. For example, a single nurse on average earnings for her profession of £530 a week would lose nothing at all as a result of the Bill. If she had two children, she would lose £424 a year in 2015-16. Families with lower incomes are those who end up being the worst affected, whether by reductions in housing benefit or the freeze on child benefit, and so on.
I do not for one moment believe that it is the Government’s intention to target children, but it is the result of much that we do in welfare reform, and that is a matter of choice. The most powerful speech at Second Reading was that of the noble Baroness, Lady Hollis, when she spoke of the way in which she and I and the vast majority of Members of this House were not affected by the responses that we make to our fiscal challenges. We could be: my personal allowance, winter fuel allowance or bus pass benefits could be withdrawn or taxed if we took a different line. In this Parliament, £9 billion has been spent on the increases to personal allowances and £4.7 billion on fuel duty—an effective cut by not increasing fuel duty.
When we discuss matters here, I am always deeply impressed by the expertise brought on health matters by doctors and NHS trust chairs, on higher education by university professors and academics, and on defence by senior military officials. When we wrestle with issues of poverty, there is no one experiencing deprivation to tell us what it feels like. Many of us know, because of other people whom we talk to, of the pressures, especially on those in work with low incomes, but we do not experience that deprivation for ourselves.
The extension of the threshold for the personal tax allowance in 2013-14 leaves basic rate taxpayers £47 better off. If you do not pay tax, that clearly has no effect. If you are a working family eligible for both housing and council tax benefit, you will lose benefit so that your net gain is not £47 but £7 in 2013-14. There are alternatives to the pressure on the most deprived families.
I am particularly concerned about the continued chipping away at the value of child benefit. This has been frozen for three years and is now to be capped at 1% for two further years. That is a total increase of 2% compared with an estimated 16% in CPI. Again, the issue is the cumulative effect of the reductions. This is in addition to the cuts in other benefits experienced by those on low incomes. The impact assessment shows that some 60% of the savings from this Bill come from the poorest third of households, with 3% from the wealthiest third. These three amendments would mean a substantial decrease in the 200,000 children pushed into poverty by the below-inflation increases in children’s benefits and tax credits in this Bill.
I wonder whether we realise, and get hold of well enough, the considerable extent to which child benefit in particular is regarded in most families as being specifically for the children concerned. My experience in West Yorkshire is of families on low pay struggling to make ends meet but quite clear that child benefit is to be used not for the general household expenses but by the mother to help her children. The points made persistently in debates on this Bill and on the Welfare Reform Act by the noble Baroness, Lady Howe of Idlicote, speak of the way in which it is women—often mothers—who are most disadvantaged by the measures we are taking because they are concerned particularly with the specific help of their children. Child benefit reduction fails to take account of the cultural and social support for children that this benefit provides, in addition to its financial obligations.
Reduction in child benefit specifically is also a disincentive to seeking work, so it is a direct challenge to the Government’s own desire, put forward powerfully by the Minister, to encourage people to return to work. Child benefit, rightly, is disregarded both from household income and in calculating the applicable amount before housing and council tax benefit are reduced. The result is that a low-income working family living in rented accommodation loses both the £4.80 a week in child benefit and a further estimated £4.10 a week because of the disregard rules. A loss of some £9 a week is a serious blow to working families, and that child benefit reduction in particular works against the Government’s aim to get people back into work.
Lord Low of Dalston
My Lords, the amendments would remove the benefits paid on behalf of children from the scope of the Bill because that disproportionately hits children and families. That is why I have added my name to them. Where 30% of all households are affected by the Bill, nearly nine out of 10 families with children are affected, including 19 out of 20 lone-parent families.
In total, the Children’s Society has estimated that about 11.5 million children are affected by the Bill. As the right reverend Prelate explained, Amendments 14 and 19 would together remove child benefit and child tax credit from the scope of the Bill. That is made particularly necessary by the fact that child benefit has already been frozen for three years before the measures contained in the Bill take effect. That means that child benefit will increase by only 2% over the course of half a decade. Over the same period, prices as measured by CPI will have risen by more than 16%. I say that that justifies the removal of child benefit from the scope of the Bill but, in truth, it would be unjustifiable not to remove it.
These benefits are paid to working families from all walks of life, as well as non-working families. The Children’s Society’s benefits uprating cap impact calculator shows that a couple with two children with one earner working as a primary school teacher and earning £600 a week would lose £424 a year by 2015. A couple with three children and one earner, a corporal in the Army, say, earning £619 a week, would lose £552 a year by 2015, so we can see the impact of having extra children.
As we have heard, Amendment 17 would remove the 1% uprating cap from the lower child disability addition under universal credit. That is particularly justified by the fact that rates of support for children in that group are already intended to be halved under universal credit. At present, families with a disabled child for whom they are in receipt of some level of disability living allowance, may be entitled to receive support through the disability element of child tax credit, currently worth £57 a week. Under universal credit, that support is to be provided through disability additions within household benefit entitlements, but it is proposed to cut that support in half to just £28 a week. That change will affect all families with a disabled child unless the child is receiving the higher rate of care component of disability living allowance or is registered blind.
The review of the noble Baroness, Lady Grey-Thompson, Holes in the Safety Net, of the impact of universal credit on disabled people and their families surveyed 1,400 families with disabled children about changes to support under universal credit. The evidence received suggested that, for those likely to be affected by the cut, the impact could be disastrous. Two-thirds of those likely to be affected said that if they received £30 a week less in benefits for their disabled child, they would have to cut back on food. At this point, I cannot resist asking: if the Minister shares other noble Lords’ disappointment at the greater resort to food banks, what does that say about her view of the government policy that she is supposed to be defending, as it is government policy that is leading to people’s greater resort to food banks?
Returning to the review of the noble Baroness, Lady Grey-Thompson, more than half of those surveyed said that the changes would lead to them getting into debt, more than one in 10 that they might even need to move home. One parent told the inquiry:
“My child would have little quality of life and would lose much of the social interaction he needs. It would be like a prison sentence”.
Another simply expressed their desperation, saying:
“This would have such a huge impact on us I really don’t know what we would do”.
The Bill will further compound that cut. For a family with one disabled child, the impact of the change in uprating would be about £42 a year. It should be noted that that impact is on top of changes to the uprating of other benefits received by the family.
The Children’s Society estimates that the cost of uprating the lower child disability addition would be only £2.4 million in 2014-15 and £4.2 million in 2015-16. All this hardship for such a paltry saving. The disproportionate impact of the Bill on children cannot be overstated or justified. It is not the first time that austerity measures have had a disproportionate impact on children and families. In fact, as the noble Baroness, Lady Sherlock, told us, the Institute for Fiscal Studies found last year that, even with universal credit fully in place, taking together all the tax and benefit measures introduced or to be introduced between the beginning of 2011 and April 2014, families with children will lose a higher proportion of their income than either pensioner households or working-age households without children across the whole income distribution.
We have heard a lot this afternoon about the measurement of child poverty, but the IFS estimate of a growth in the number of children living in poverty of 400,000 between 2011 and 2015 and 800,000 by 2020, has been referred to more than once. The noble Lord, Lord Newby, said that we cannot set too much store by such predictions because we do not know what direction government policy may take. All I know is that the last time I heard, the Government intended to take a further £10 billion out of welfare. The Bill can only serve to increase the level of child poverty. Indeed, as the noble Lord, Lord Newby, acknowledged, it will add 200,000 to the number of children in poverty; 100,000 of them will be in working households.
Children do not have a vote. If they did, it is impossible to believe that they would be voting for the Bill as it stands.
Baroness Grey-Thompson
My Lords, my name is also attached to all three amendments in this group. I thank the right reverend Prelate the Bishop of Ripon and Leeds for explaining the amendments.
First, I will cover Amendments 14 and 19 together. Households with children are much more likely to be affected by the Bill than households without children. Many families with children will be affected even when someone is working full time. A single person or couple with children obviously have much greater costs than those without dependent children. For this period of their life, the income they need to meet the basic living costs of their household is clearly greater. That means that the amount someone can be earning and still need extra financial support from benefits and tax credits stretches much higher up the income scale than for those without children.
The level of childcare costs and of rents—especially in the private rented sector— combined with the lack of a living wage means that people who can only find work at or near the minimum wage cannot escape from needing that extra financial support, for however much time they work. If they work more hours, they need more help with childcare. Many are already struggling to manage.
For example in a local paper in the north-east of England, where I live, Pauline Chambers, chief executive of Sedgefield and District citizens advice bureau in County Durham, said that the team had encountered levels of hardship not seen for 21 years. Telephone inquiries have increased by 100 per cent in the last two months, with many people struggling to pay for basic food and utilities. That view is repeated up and down the country. Julia Cornelius, manager of Luton CAB was quoted in a different paper. She said:
“Every day we see people who are struggling to keep a roof over their heads or put food on the table as wage squeezes, price rises and benefit cuts wreak havoc on household budgets”.
Those in work and on benefits gain little from their earnings increasing. A single person earning £250 a week who receives a £2.50 rise in their earnings will keep about £1.70 of the increase after deductions for tax and national insurance. If they have children, and so need to rely on benefits and tax credits, they will reduce as their income rises, so they will be left with a net gain of 10p from a rise in earnings of £2.50.
Lord Touhig
My Lords, these amendments, to which I have added my name, are essential to protect the basic well-being of the very poorest children. Those seeking to justify restrictions to our social security system have continually argued two things: first, that we must fairly distribute the burden of national economic hardship, and secondly, that we must take tough decisions in order to ensure a sustainable future. Yet driving down the value of child-related benefits achieves neither of those objectives. Instead, it unjustly shifts the burden onto the most vulnerable section of our society and damages the future prospects of hundreds of thousands of young people.
The Government’s own impact assessment highlights that the Bill as it stands will disproportionately affect families, with lone parents experiencing the most significant real-term cut to their income of £5 per week. Noble Lords might think that £5 is not much, so let us put that figure into context: it is the equivalent of half an average weekly heating bill or two lunches for a child. The loss of it is a significant challenge to the increasing number of parents currently struggling to cover utility costs or turning to local food banks for their children’s meals. In practice, the actual shortfall is likely to be larger still owing to above-inflation rises in the cost of necessities such as groceries, fuel and gas and electricity. The net result will inevitably be more child poverty and greater family suffering, making a mockery of any notion that this is a fair or just mechanism for securing cost savings.
As Helen O’Brien, the chief executive of Caritas Social Action Network, said recently,
“it is absurd to suggest that a child going to school hungry or coming home to a cold house is shouldering their fair share of austerity measures; rather they are being deprived of a basic standard of living to which all children are entitled”.
Removing child-related benefits from the scope of the Bill will not completely prevent or reverse this hardship, as low-paid and unemployed families will still face a rapidly widening gap between their outgoings and their core benefit income. However, specific parts of the safety net designed to cover essential costs of caring for their sons and daughters will be crucially safeguarded if these amendments are agreed.
This is particularly important given that the relentless squeeze on the support available for poor families has already left considerable numbers of children not only without the facets of a good childhood but growing up in simply unacceptable living conditions. Reflecting on cuts to local housing allowance and the pending introduction of the household benefit cap, Alison Gelder, chief executive of Housing Justice, recently noted that,
“across the country we are seeing increasing numbers of children suffering from a life in sub-standard housing and being forced into overcrowded accommodation”.
Taken in conjunction with this April’s intended ending of council tax benefit and the imposition of social housing underoccupancy penalties on approximately 220,000 families with children, these measures are putting the income levels of the poorest parents under unprecedented strain. On top of this, child benefit is already subject to a three-year freeze, which stands to create a further annual real-term loss of £130 by 2014.
More than ever the most vulnerable families require protected child-related benefits in order to mitigate the most damaging effects of this rapid and extensive cut to their income. At the very least, the Government should allow sufficient time for the impact of recent and pending benefit changes to be properly examined in relation to child poverty. The result of committing to another three years of real-term cuts before many key restrictions have even come into force will be disastrous for children whose parents are struggling to keep a roof over their heads and food on their table.
Ultimately, increased levels of child poverty are not only devastating for individuals and families but stand to have a profoundly negative effect our society. One of the most significant risks is to children’s education, an issue previously recognised in the DWP’s impact assessment on restrictions to housing benefits. It stated that overcrowding resulting from the cuts could hamper children’s ability to do homework and affect educational attainment. Last year, more than half of teachers surveyed reported that financial hardship among families had resulted in children arriving at their classes hungry, with significant consequences for concentration and behaviour. A report from the Children’s Food Trust last week reinforces the picture of children going to school hungry. Of 250 staff surveyed, 84% said they had seen children without enough to eat and 68% said they had seen an increase in this over the past two years. If child-related income is driven down further this is only likely to worsen, jeopardising the potential of even more young people and undermining the prospects of the next generation.
When parents struggle to afford basic necessities for children, there is also the very real risk of running into long-term personal debt. The shocking findings by the magazine Which? last year showed that payday loan companies now spend over half a million pounds targeting cash-strapped mothers and fathers by putting their adverts on television during children’s programmes. This is indicative of the increasingly desperate situation that so many families now face. A growing number of parents are turning to these lenders, while some 25% now use credit cards to meet everyday living costs. The abolition of community care grants and crisis loans in April only stands to deepen this problem by closing the door to interest-free emergency funds.
It is difficult to see how pushing even more parents into debt by slashing the value of child-related benefits will contribute in any way to our future economic recovery; yet increased levels of debt are precisely what will result from this Bill. Children still need healthy meals, warm houses, winter clothes and new shoes. When parents are faced with a real-term cut in child benefit and tax credits, alongside above-inflation rises in the prices of these goods, they will have to turn somewhere to make up the shortfall. It is as simple as that.
These amendments are not only right, but imperative. Capping up-rating of child-related benefits at 1% for the next three years will exacerbate the already unsustainable pressure that parents are under. It will cause serious damage to our communities in the long run and, most critically, it will drive down the living standards of millions of children. Protecting the basic level of income required to meet young people’s most intrinsic needs is a fundamental test of our society and one that we cannot afford to fail.
At the general election, the leader of the Opposition, Mr Cameron, now the Prime Minister, said that we lived in broken Britain. I paid little attention to him at the time because I believed he was wrong. However, after two and a half years, we live in a Britain where multi-millionaires are about to receive thousands of pounds a week in tax cuts; we live in a Britain where corrupt bankers who fiddled the LIBOR rate are rewarded with pay-offs when they should have gone to prison; we live in a Britain where those who operate our transport system cannot run the trains on time but get big bonuses; we live in a Britain where energy companies have more than trebled their profits yet require pensioners to pay an extra 6% for gas and electricity; and we live in a Britain where hard-working low-income couples with children will now see their weekly income slashed, the unemployed and poor will have their benefits cut and disabled people will see what help they get now cut or taken away altogether. Now, in 2013, I have started to understand what Mr Cameron meant by broken Britain.
Baroness Massey of Darwen
My Lords, I want to make some very brief comments on the amendments, mainly to follow up some things I said at Second Reading. As my noble friend Lord Touhig just said, these amendments are imperative, crucial and brilliant, and I congratulate the movers on putting them so powerfully. Any amendments that will mitigate against benefits having a negative impact on children are very forceful and follow very well from earlier, powerful speeches about child poverty.
I suggested at Second Reading that anything that might increase child poverty should be removed from the Bill. I say that again and support these amendments. The Government should really think about listening very carefully to the organisations and experts who work closely with children and families and who understand child poverty. These organisations and experts have pointed out the negative implications of this Bill. Surely their analyses should be taken very seriously.
The Government have already announced that the Bill will directly increase relative-income child poverty by 200,000 children, of which 100,000 will be in families in work. Nearly all the highly vulnerable children that Barnardo’s works with are receiving in-work or out-of-work benefits. This Bill will impose a real-term cut to their income. One in 10 families will be affected by this Bill, the poorest families most.
Baroness Sherlock
My Lords, we have heard yet again some very powerful and persuasive speeches and it is a very interesting argument. I commend the right reverend Prelate the Bishop of Ripon and Leeds for provoking such a good debate on so important an issue. As we have heard, this amendment would remove child benefit, child tax credit, and the child addition to universal credit from the scope of the Bill. Since we on these Benches would like to remove all benefits and tax credits from the scope of this Bill, we are pleased to support it
As we have heard from the right reverend Prelate, the noble Baroness, Lady Grey-Thompson, and others, the Bill has a disproportionate impact on children and families. The Government’s own impact assessment shows that two-thirds of affected households are families with children. As the noble Lord, Lord Low, noted in a very powerful speech, the Children’s Society says that while 30% of all households are affected, 87% of families with children are hit.
On one level this is because families with children receive more in state support—of course they do. As the noble Baroness, Lady Grey-Thompson, pointed out, a household without children is rather cheaper to run than one with children; not to mention a great deal quieter. However, while most parents rightly bear the lion’s share of the cost of raising their children, the state has always contributed—not just in extreme cases to try to protect children from the misfortunes that befall their parents but also because, in general, it is always recognised that children are a public as well as a private good. We all have a stake in seeing the next generation thrive.
Many noble Lords have rehearsed—and I will not repeat them—the concerns expressed to all of us about the impact of these measures on families with children. We have all had briefings from Save the Children, the Child Poverty Action Group, the Children’s Society and others making those points. These are very difficult times to be raising children, as my noble friend Lord Touhig noted in a very powerful speech. As the costs of food and energy have soared, more and more parents are struggling to make ends meet as they spend more of their money on these basic costs.
The right reverend Prelate made a telling point, I thought, when he reminded us that, unlike other areas, we do not have people in here with direct expertise of the matters under consideration. To that end, I liked the quote from Rosemary Keenan, the chief executive of Catholic Children’s Society (Westminster), when she said:
“It is hard for many of us to imagine what it is like for a mother to only have £1 left and know she still has to feed her children before the next payday. Families facing in-work poverty rely upon Working Tax Credits and other benefits to help make ends meet, and will face serious hardship as a result of these restrictions”.
Indeed they will. As we have heard from a number of noble Lords, the Bill comes on top of a series of cuts in the value of other tax credits and benefits. As well as the headline cuts, there have been a series of hidden cuts affecting, for example, tax credits for families with children by changes to taper rates, the treatment of income and the freezing of allowances, all of which sound technical but have in fact saved billions. However, it is not of course money that has been saved, but money that has been taken way from low-income families with children.
I seem to recall that the Government suggested at earlier stages that one of the reasons that so many families are affected is that tax credits go too high up the income scale. The implication, I suppose, is that people would not miss the money. However, the noble Baroness, Lady Grey-Thompson, described some figures from Citizens Advice. It has given us case studies showing that a couple with two children, where one parent is working full-time on just over minimum wage—getting £13,000 a year—will gain just 76 pence from the personal allowance. As a result, however, they will lose £3.46 a week net. By April 2015, that family on £13,000 a year with two kids will be £12.79 a week worse off. Even if we go nearer to average earnings, Citizens Advice suggests that a family earning £26,000 in similar circumstances will be over £12 a week worse off by April 2015. The sums may not sound like a lot, but they are significant to families on those kinds of incomes.
The Bill, as we have heard, will affect primarily working families with children. I was pleased to hear my noble friend Lady Massey of Darwen reiterate the impact of the Bill on child poverty, although I hope to hear something specific about this. I feel that I have probably done it to death, so I shall stop saying it now.
To come back to our core concerns, the Bill is a completely inappropriate way to address the up-rating of state support for families. We have perfectly good mechanisms in place to do that on an annual basis in the light of prevailing economic conditions. To come to the specifics, in trying to circumvent those annual mechanisms, the Government have left me slightly confused. I therefore have two questions for the Minister. First, can he tell the Committee what plans are in place for the up-rating of those benefits, tax credits and allowances which are not included within the scope of the Bill? This was raised at an earlier stage, but I do not think that we got a full answer; if we did, I apologise and will look it up. If the Minister does not know, would he mind writing to me before Report stage?
Secondly, other than those mentioned in the schedule and the universal credit work allowance mentioned in the Autumn Statement, are there any other benefits or allowances which the Government intend to up-rate by 1%? Those two questions together sound quite boring but, in fact, their answers will enable us to understand the parameters of the Bill’s impact. Unless we can get that detail, the Committee cannot properly understand its consequences.
Coming back to our core objections, these are poor choices for the Government to be making. The families who will be hit are not responsible for the economic situation, for the banking crisis or for the failure of the Government to get the economy growing again. They are just doing their best to manage in difficult times. Yet the Government are planning to cut the value of the help they get from the state in order to fund a tax cut for nearly 13,000 people earning £1 million a year. We should not be doing this and are pleased to support the amendment.
Lord Newby
My Lords, I absolutely understand and appreciate the desire of the right reverend Prelate and other noble Lords who have spoken on these amendments to protect and support children; of course, we all want to do that. However, our view is that supporting children is not just about increasing benefit levels. One of the most important things that we as a country can do to support children is to tackle the deficit and restore economic growth. In doing so, we create a future of prosperity, opportunity and jobs for the parents of those children in the short-term and for those children as they grow up. Taking benefits out of the Bill, as proposed by the right reverend Prelate, would take away some of what we consider to be the vital savings required to do this.
The amendments which we are debating now would remove from the Bill the child element of tax credit, child benefit and the lower rate of disabled child addition in universal credit. I assume that the right reverend Prelate’s intention in removing those elements is that they would be up-rated with prices, as was the case previously. If that were the case, I need to remind the House that the savings delivered by the Bill would be reduced by nearly £1 billion. In our view, those savings simply have to be found. If we did not do it through the Bill, they would have to be found from somewhere.
I was extremely grateful to the right reverend Prelate for the fact that, unlike the Opposition, he at least set out how he would raise the money. It was a long and credible list. However, it is not a list with which the Government agree. The Government’s view is that tax credits and child benefit account for over 40% of working-age welfare expenditure. It is not realistic to think that they can be excluded from the need to make savings.
We are attempting to prioritise resources into reforms which can help children in a variety of ways. To repeat some of the points which I made in my earlier speech, I hope not too tediously, we have since September 2010 entitled all three and four year-olds to 15 hours per week of free early education. This is being delivered flexibly to meet parents’ needs. It will be extended to 260,000 disadvantaged two year-olds from September 2013. We are also helping 100,000 more working families with their childcare costs by spending an extra £200 million in universal credit.
To deal with a point made by the noble Lord, Lord Touhig, we are taking action to deal with exorbitant practices by payday loan companies and loan sharks. One thing that we are grappling with, with which any Government would grapple, is that many families on low incomes have got very high levels of personal debt. This is not new. When I was Treasury spokesman for the Liberal Democrats about seven or eight years ago I appeared, somewhat implausibly, on the steps of the Treasury with my right honourable friend Vince Cable, bearing an outsized cheque at the point when personal debt in the country reached £1 trillion. Most of this, I accept, was mortgage debt; it is not the debt that we are talking about today. However, some of the biggest increases in personal debt over the past decade have been among people on low incomes. This growth in personal debt was not effectively recognised or tackled in the past. Indeed, our appearance bearing this cheque just guaranteed a huge amount of ridicule for Vince Cable and myself, rather than anybody, including the previous Government, taking the slightest notice of it, which was deeply distressing—or, more importantly, taking the slightest action to deal with the culture with which we are now grappling.
However, both in terms of loan sharks and payday lenders, I hope that we are taking more effective measures, not least through the amendments during the passage of the Financial Services Act, to ensure that people requiring access to short-term loans can, at the very least, do so with companies which will treat them half-decently. The other area which we protected, which is vital to families and benefits those at the poorer end at least as much as those at the upper end, is the support they get through the schools system and the NHS, where the budgets are protected.
The right reverend Prelate spoke about child benefit, which he is anxious to protect. I remind the House that, even after the changes that have been made to child benefit, nine out of 10 households are still covered by it. We are taking the entitlement away only right at the top end. Child benefit continues to be paid to many households which are by no means on low income.
Baroness Hollis of Heigham
My Lords, two sentences ago the Minister said that one of the reasons for bringing the rate of £57 down to £28 was in order not only to align it with the adult rate but to increase simplicity. Will he explain why halving the amount increases simplicity, as opposed to hardship?
Lord Newby
My Lords, that was not the point I made. I was talking about aligning the uprating of the adult and child rates, not the halving of the amount. I was making a different point.
The noble Baroness, Lady Sherlock, asked about plans to uprate benefits. Benefits not covered by this Bill are subject to existing legislation, so the Secretary of State will review social security benefits annually, after publication of the relevant price figures. He will therefore decide what uprating will take place when he has that information in the normal way. I will write to the noble Baroness with the details of other benefits that are to be uprated by 1%.
As I have said before, the welfare system provides vital support for many families with children. However, government support for children must be about more than benefits. Securing the economic recovery matters to every household in the country, and only by doing that can we create a stable and thriving future for our children. I hope that I have also been able to provide some reassurance to the Committee that this Government are continuing to take action to support families—action that will change the lives of families with children.
The Lord Bishop of Ripon and Leeds
My Lords, I am very grateful to all noble Lords who have taken part in this debate, and not least to the Minister for his response. I am disappointed that he was not able to respond more to Amendment 17, because it is not an expensive proposal. It will help a significant number of children—real children with real disabilities. I know that money is being provided for disabled people in the greatest need, but the disabilities that are felt and known by those who would benefit from Amendment 17 are real. To accept the amendment would provide real support for a large number of children who could thereby have been enabled to play a greater part in our society, both for their benefit and for the benefit of the rest of us.
I accept that together, the amendments in this group would cost a significant amount of money at £0.9 billion. However, it is not fair to argue that welfare benefits cannot be excluded from the work that we have been doing in order to respond to our fiscal crisis. Welfare benefits have been tackled extensively through the whole welfare reform process. This comes over to me as twisting a knife in a wound. I regret that the Government have felt that this is the area where they have to find that £0.9 billion. I will not repeat the argument that there are other areas where we could have found it.
I am very grateful to all noble Lords who contributed examples of a wide range of people: the corporal in the Army with three children, who will lose £520 a year, the primary school teacher, the nurse, and so on. They showed that a wide range of people will be affected and damaged by the Bill. I am grateful to the noble Baroness, Lady Massey, for stressing the organisations that support children. It is good to have all the statistics produced, but however many of them there are, the reality comes home to me, not when I read the Children’s Society’s statistics, but when I go to see its work in Leeds and its projects with children who are hungry, who have to cut back on food, as the noble Lord, Lord Low, said, and whose future prospects are being damaged, as the noble Lord, Lord Touhig, said. We need to do something to look at the ways in which we disadvantage children in practice by so much of the work we are doing.
I hope that we will come back to this issue on Report to see whether there is not something we can do to set down a marker and make a real contribution to the lives and vitality of children in our society. However, for the moment, I beg leave to withdraw the amendment.
Baroness Sherlock
Baroness Sherlock
My Lords, this amendment is in my name and that of my noble friend Lord McKenzie of Luton.
The Telegraph online ran a story on 6 December 2012 headed “Autumn Statement: Osborne Attacked over ‘Mummy Tax’”. The article stated:
“Hundreds of thousands of new mothers will be almost £240 worse off after George Osborne announced cuts to maternity pay”.
A similar story was run in the Mail in January under the headline “True Cost of ‘Mummy tax’”. It is fair to say that the inclusion of statutory maternity pay in the scope of this Bill has not been universally well received. The Telegraph story quoted the founder of Mumsnet and I think it is fair to say that she was pretty unhappy with it. Why are the Government including statutory maternity pay in the Bill? The Telegraph had an explanation. It said:
“The Prime Minister’s official spokesman said it was ‘a personal choice’ for parents to decide whether to return to work after having a child or to stay at home”.
So there you have it—it is a personal choice; at least, presumably it is if you can afford it. But surely it is slightly more than that. Do we not all have an interest in making sure that people have a real choice when they have a baby? Is not one of the reasons the state pays statutory maternity pay that it is seen to be good for babies to have their mothers at home, breastfeeding them where possible and bonding with the child? Therefore, is there not a genuine public policy interest in making sure that we do not unnecessarily make it any harder for women who want to stay at home when they have a new baby?
The growing concern about this and other cuts affecting new mothers prompted this amendment, which seeks simply to remove statutory maternity pay from the scope of the Bill. It is worth rehearsing very briefly how SMP works. SMP is payable only to women who have just had or adopted a baby, or who will do so shortly. They must be in paid work. Indeed, they must have been continuously employed by an employer liable to pay national insurance contributions for them for six months before the 15th week before their expected date of confinement. They must have had average gross weekly earnings at least at the level of the lower earnings limit for national insurance and they must have stopped work in order to have or care for the baby. In other words, this is a contributory benefit paid to working women who have stopped work only to give birth or to care for a new baby. SMP gives them 90% of their average weekly earnings for the first six weeks and then, at the current rate, £135.45 a week for the next 33 weeks.
According to a Written Answer from the right honourable Maria Miller in another place on 30 April 2012, at col. WA 1322, the Government estimate that some 232,000 families will claim SMP in 2012-13. Those families could find themselves being seriously short-changed. Using the Government’s own inflation forecasts, the Children’s Society calculates that in 2015-16, SMP will be £145.15, if inflated by CPI. However, the impact assessment indicates that the likely rate is just £139.58—a difference of £5.57 per week. To put that in context, if a woman were on maternity leave now with her first child and had her second child in 2015, she would find that she got about £184 less in real terms during her next maternity leave than she would during this maternity leave. If her earnings were below the flat rate level for SMP, that figure rises to £217.
The period after a birth is a particularly tough time for parents. The Money Advice Service estimates the average cost of essentials for a new baby as some £3,700 over their first year. Of course, just as costs rise, income falls because of maternity leave, and parents are time-poor as well. The £200 may not be much to some people but it is enough to buy a cot and bedding and 17 value packs of newborn nappies.
This amendment focuses on SMP for two reasons. First, I simply do not think we can allow this Bill to go through the House without noting all the impacts on mums of new babies that have happened since 2010. Just since 2010, the Government have done the following: abolished the health in pregnancy grant; abolished the Sure Start maternity grant for all but the first child; abolished the baby element of child tax credit; cancelled the planned toddler element of child tax credit; abolished the Government’s contribution to the Child Trust Fund; frozen child benefit for three years and removed it from higher rate taxpayers; cut the percentage of childcare costs parents can get back through working tax credit; and legislated to introduce hefty charges for using the CSA. Some of those cuts are very severe. House of Commons Library research shows that low-paid new mums are losing £1,300 during pregnancy and the baby’s first year just from cuts to maternity pay, pregnancy support and tax credits, and are losing more from child benefit.
The second reason for tabling this amendment is that during the Second Reading debate, I raised the issue of SMP. I did it specifically to try to find out how that fitted with the Chancellor’s claim that the reason this Bill is needed is to ensure the welfare state is fair to working people, not, you may recall, to those who lie in bed with their blinds down, sleeping off a life on benefit, while others go out to work. However, on the face of it, it is hard to see how targeting a payment made to someone who has just had a baby after being in continuous employment for the requisite period at a level which triggers national insurance contributions fits with that narrative. Indeed, I am sure that the Government have a good reason, and I hope it is better than simply saying, “It’s a choice”. However, given that we are in Committee and this amendment is about SMP only, I look forward to hearing the Minister share that reason with us. I beg to move.
Baroness Stowell of Beeston
My Lords, I start by making it absolutely clear that, contrary to what the noble Baroness, Lady Sherlock, has just said, the United Kingdom has a strong and effective maternity and parental regime. The UK is significantly more generous than the requirements of the EU pregnant workers directive. The directive says that a woman should benefit from 14 weeks’ paid maternity leave; we provide 39 weeks. It also says that a woman should receive at least the amount that would be paid for sickness; our standard rate of maternity pay and maternity allowance is £135.45. This compares very favourably with the current statutory sick pay rate of £85.85 per week.
In addition, the latest available data from the OECD from the previous financial year show that the proportion of our GDP spent on maternity and parental pay is higher than in Germany or France. Moreover, in the past decade, the standard rates of statutory maternity pay and maternity allowance, which is the allowance that is paid to women who are not in work who have children, or who were not in work prior to the birth of their child, have increased by more than 35%, from £100 a week in 2003 to £135.45 currently. So while I accept that the decisions we have taken on statutory maternity pay will mean a slightly smaller increase for people over the next few years, the UK’s strong and effective maternity architecture will remain firmly in place.
The noble Baroness, Lady Sherlock, referred to what she described as a mummy tax and to media reports on it. I am slightly surprised that she referred to Mumsnet because when her honourable colleague Rachel Reeves published an article on Mumsnet on what she described as a mummy tax back in December last year, the blog attracted a lot of comment. It is worth highlighting some of the points that were made. Most of the contributors were at pains to say that they were not supporters of, or spokesmen for, the Government, or supporters of either of the two parties in government. One contributor said:
“I despise this latest Labour ‘Mummy Tax’ campaign. For one, the name ‘Mummy tax’ is hugely patronising and sexist for people in a relationship as my husband benefits from maternity pay just as much as me as all our household income is pooled. And let’s be clear although there is a real terms cut due to the rate of inflation, this change is not a tax”.
The comments continued and attracted quite a lot of support. Another contributor responding to the post on Rachel Reeves said:
“I’ve had no pay rise for the last 3 years and we are getting nothing this year and told to expect the same for the next 2-3 years—is that a tax? No, it’s just the real world and I have to get on with it. I’ve had a child during that time and we had to work around what we could afford with regard to length of maternity leave and to be honest £180 would have made no difference whatsoever. I despise the term ‘mummy tax’—it’s a patronising media friendly sound bite, which creates a hugely distracting perception of the middle class having to cut back on cappuccinos whilst on maternity leave which removes debate from the real issue. I would like to see the labour party setting out what it would do in power and challenging the government instead of wheeling yet more spin and inaccurate bluster”.
Baroness Lister of Burtersett
I am sorry to interrupt the noble Baroness. I accept that that must have been said on Mumsnet and I have to admit that I do not particularly like the term “mummy tax” either, but does she accept that while it is the case that the mother who posted on Mumsnet pooled her income, research that I and others have carried out shows that for many women having a benefit in their own right is important to them psychologically? They receive money over which they have control, whether or not they then pool it in the household. Not all households pool their incomes. Some do and some do not.
Baroness Stowell of Beeston
That is a fair point. The people who were posting on the internet at that time were responding to the comments of Rachel Reeves about the proposals having a disproportionate impact on women, and only women.
Away from the debate on Mumsnet, the Government are committed to make this architecture for women stronger. The provisions in the Children and Families Bill, which had its Second Reading in another place last week, will allow working parents to choose which parent takes parental leave and pay to care for their child in the early years. This will give mothers real choice over when and whether they return to work. This is helpful in two big ways—where the woman is the higher earner and in starting to chip away at the inequality that some women face at work just because it is assumed that they and only they will take a break in their careers to have children. Our proposals will start to make a big difference.
It is also important to remember that the Government have introduced other reforms that will help to offset the impacts of these changes. For example, a woman working full time at national minimum wage for six months of the tax year, who then receives statutory maternity pay for the next six months, will still be better off overall as a result of changes to the income tax personal allowance. The introduction of universal credit will also provide a big boost for many mothers and lone parents, with 2.6 million women and 700,000 lone parents expected to gain through increased take-up and improved financial incentives to work. In addition, as part of the introduction of universal credit, £200 million extra is being spent to support families with childcare costs. For the first time, this support will be made available for families who work less than 16 hours a week. This will mean that 100,000 more working families will be helped with their childcare costs. That is important, because it means that even if someone is able to take on only a small amount of work, they will get that support for childcare costs to which they previously would not have had access. In another move that will be helpful to mothers and parents, as my noble friend Lord Newby mentioned, we have committed to introduce 15 hours a week of early education for 40% of two year-olds, starting with the most disadvantaged.
The Government will also continue to make extra support available for mothers on low incomes to buy the basic goods that they need. We have a programme called Healthy Start, and the Sure Start maternity grant—a lump sum payment of £500—is available to help parents with the costs of having a new child. I know that the noble Baroness, Lady Sherlock, said that this is now available only to parents who have a child and no other child under the age of 16. However, this support is additional to the money that parents receive through their statutory maternity pay. Bear in mind that if there is another child in the home, some of the initial substantial expenses of having a family often are not repeated if they have a second child.
The amendment would reduce savings from the Bill by around £50 million in 2015-16. None of the decisions contained in the Bill are easy. I recognise that the noble Baroness, Lady Sherlock, would prefer that we did not include statutory maternity pay in the Bill. I would like that, too. I would love it if we could say, “Let’s exclude this or that”. However, as my noble friend said in our previous debates, every time we say that we will not include something in the Bill, we have to look somewhere else for the money. That £50 million is not a small sum and is equivalent to more than 20,000 part-time nursery places for three to four year-olds. This is money that will cover substantial support that rightly we provide to mothers and families in other ways.
I hope that I have been able to demonstrate that there is a strong architecture to support women when they have children. I therefore hope that the noble Baroness feels able to withdraw her amendment.
Baroness Hollis of Heigham
My Lords, the Minister regularly makes the point that if we do not have these savings the money must come from somewhere else, such as nurses’ salaries, teachers, the NHS, schools or whatever. I hope that she appreciates that most of us on this side believe that the Government are making a political policy choice. It does not have to fall on children, disabled children or statutory maternity pay. As some of us argued at Second Reading—there were different shopping lists—we are spending £32 billion on tax relief for private pensions, of which £8 billion goes to subsidise the tax relief that higher-rate taxpayers currently enjoy. To continue that is a political policy choice. The money would pay for most of these cuts twice over.
Baroness Stowell of Beeston
As I have said on several occasions, these cuts are necessary because of the financial situation that we found ourselves in. They are not something that we want to have to do, but we believe that these are the right cuts to make because we have made sure that we have, wherever possible, protected those who are least able to increase their income by different means. While these are not cuts that we want to introduce at all, we think that we have done so sensibly and by addressing people in the right way, as anybody would expect us to do. That is the situation that we have found ourselves in and the decision that we have made.
Baroness Hollis of Heigham
My Lords, I do not think that anyone doubts the Minister’s good will, integrity or concern about these issues. That is not the issue. All that I am saying—and she has not answered this—is that those cuts could fall elsewhere, and she, on behalf of the Government, is choosing for them not to fall elsewhere on people who could afford to pay for them.
Baroness Stowell of Beeston
I would say to the noble Baroness that while she and the right reverend Prelate are willing to put forward their alternatives on where they would target cuts if they were in a position to make those decisions—and I respect them for doing that—her colleagues on her own Front Bench have so far refused to do so. We have made these decisions in this area. We have done so in a way whereby we have protected those who are most vulnerable. We would much rather not have to do this but we believe that it is necessary because of the economic situation that we find ourselves in and because we think that this is, in the end, the right thing to do to secure a strong economy for the future.
Baroness Sherlock
My Lords, I thank the Minister for her reply and my noble friend Lady Hollis for her telling interventions. I cannot help noticing that the Minister did not answer one of my two main charges. She began to answer the first charge, where I had listed a whole series of benefits and payments—specifically for mothers of children—that had been cut. I was grateful to her for at least recognising that offering up in her defence a benefit that the Government have decided to withdraw for second or subsequent children was at least slightly less effective than it might otherwise have been.
I am more concerned that she simply has not addressed my second charge at all. One reason why I put this amendment down was because of the words from the Chancellor of the Exchequer when he introduced the Autumn Statement, explaining specifically why this Bill was needed. I read them out at Second Reading but to remind noble Lords, he said that the Bill mattered because,
“we have to have a welfare system that is fair to the working people who pay for it”.—[Official Report, Commons, 5/12/2012; col. 877.]
According to the Guardian, he told the “Today” programme:
“It is unfair that people listening to this programme going out to work see the neighbour next door with their blinds down because they are on benefits”.
It is clear that the Bill was intended to penalise those out of work to be fair to working people. Why, then, is there included in the scope of the Bill a benefit that is payable only to women who have given up work to have a child or look after a child? The Government do not have an answer to that. I suspect that the noble Baroness would not have expressed it in those terms and therefore is not in a position to defend it.
Finally, in relation to the charge being thrown back at us, I was trying to avoid rehearsing the whole Second Reading, but we have made it very clear that we simply would not have made the choices that the Government have made. We would not have set out to give a tax cut to people earning £150,000 a year or more, which will be worth £100,000 to those who earn more than £1 million a year in order to be able to ensure that they benefited, and to cut benefits to the poorest families to do that. I fully accept and understand that she takes a different view. However, it is not reasonable to say that we have not explained where the money would come from. We have clearly made our case; these are not the choices that we would have made. I very much hope the Government will think again, specifically in relation to statutory maternity pay. In the light of those comments, I beg leave to withdraw the amendment.
Baroness Lister of Burtersett
My Lords, in opposing the question that the Schedule be agreed, I do not wish to reopen the debates we have already had about the damaging impact it will have on some of the most deprived members of our community. I hope I can take it as read that I oppose this schedule in the same way that I have opposed the clauses. Instead, on the helpful advice of the Public Bill Office, I wish to use this debate as an opportunity to draw attention to the needs of an even more deprived and vulnerable group who cannot even count on a miserable 1% increase in benefits, and that is asylum-seeking families reliant on asylum support.
The right reverend Prelate the Bishop of Ripon and Leeds and I raised this issue briefly during Second Reading. The Minister responded, correctly, that asylum seeker benefit rates are a matter for the Home Office and are not within the scope of the Bill. He kindly said he would draw our remarks to the attention of colleagues in the Home Office. We are, of course, aware that asylum seeker benefit rates are not within the scope of the Bill; that is the very reason why we raise the question. They should be part of its scope and treated in the same way as other social security benefits when it comes to uprating policy. As I have given the Minister’s office notice that I planned to raise this issue in this context, I hope that the Minister will be able to address the substance of our remarks when she comes to respond.
The right reverend Prelate and I, together with the noble Lord, Lord Avebury, remember the all-party parliamentary inquiry into asylum support for children and young people, set up by the Children’s Society. I would like to put on record my thanks to the Children’s Society for all the work it has done on this important issue and for its briefing for today’s debate. That briefing draws on the findings of our inquiry. We found that the current asylum support system is forcing thousands of children and young people seeking safety in the UK into severe poverty. We were shocked to hear of instances where children were left destitute and homeless, entirely without institutional support, and forced to rely on food parcels or charitable donations. This cannot be right.
It is estimated that there are 10,000 children living on asylum support. The panel heard powerful evidence of the reality for those living on as little as £5 a day, whose parents are forced to skip meals to feed their children and are unable to buy warm clothing in the winter. Some families find current levels of support particularly difficult, including pregnant women and lone mothers with young children—and families of a disabled child, because asylum support does not offer families any standard additional support when a family member has a disability. With regard to pregnant women, one particularly shocking example brought to our attention was a mother having to walk home from hospital in the snow with her newborn baby in her arms because she had no money.
Just last week, Maternity Action and the Refugee Council published a report which gave more examples of the problems faced by pregnant and nursing women who had insufficient money to meet their most basic needs. Most asylum-seeking parents are not allowed to work, leaving families totally reliant on state support; paid work is not a route out of poverty for them. Asylum support levels differ significantly from income support and other mainstream benefit levels. Until 1999, asylum support was set at 90% of income support, after which levels of support were reduced to 70%, with the justification that asylum seekers in accommodation no longer had to pay utility bills. There is currently no statutory provision to make an annual uprating of levels of asylum support in line with increasing costs of living. I acknowledge that the previous Government did not set a good precedent on the uprating of asylum support. I therefore hope that my own party will at least be open to rethinking our policy on this.
Asylum support rates have not been raised in 2012-13, so they have effectively been frozen without any announcement to justify this. When I asked a Written Question about this, the Answer was that there was not only no statutory obligation to carry out an annual review but no obligation even to make an announcement. There should be, in both cases. As it is, I was told:
“There are no current plans to change asylum support rates”,
although the Government,
“will continue to keep them under review”.—[Official Report, 15/1/13; col. WA 121.]
If the rates are frozen for a second year in succession, that will mean a cut of 6.2% in relation to income support payments over the last two years, making it even more difficult for families to survive. Can the Minister please explain which factors are taken into account when keeping asylum support rates under review? What is the actual process for deciding how and when they will be uprated?
The inquiry recommended that asylum support for families also provided with accommodation should be aligned with mainstream benefit rates paid for living expenses. Where accommodation includes utilities, which would normally be expected to be paid from living expenses, it is appropriate to make a deduction. However, such a deduction must be reasonable. The inquiry argued that the rates of support should never fall below 70% of income support. As it is, asylum support now bears no relation to income support.
The inquiry was particularly concerned about the situation of families on Section 4 support, which may be provided if a child is born after an asylum claim had been refused but where the family are, for some reason, unable to leave the UK. Almost 800 children are being supported under Section 4, some for many years. Under Section 4, the amount provided is even lower and the use of a cashless system—the azure card, as it is called—can be degrading and wasteful because it can be used only in certain designated shops. The inquiry recommended that this particularly inhumane form of asylum support be abolished entirely and replaced with a single cash-based support system for all children and their families who need asylum support while they are in the UK.
Given that asylum support rates were not increased in 2012-13, they should be raised as a matter of urgency for the 2013-14 financial year and thereafter increased annually, at the very least in line with income support, along with other benefits in the schedule. I would be grateful if the Minister could explain the rationale for treating asylum support differently from mainstream social security benefits when it comes to annual upratings. Ministers frequently refer to the Government’s ongoing review of asylum support when questioned on these issues, including recently in response to a Written Question from the noble Lord, Lord Hylton, which referred to our all-party inquiry. In his Written Answer, the noble Lord, Lord Taylor of Holbeach, said that the Government would consider our findings as part of this ongoing review. Will the Minister please tell us whether the Government will respond to the all-party inquiry’s report? How long will this ongoing review go on, and when can we expect an outcome?
I would argue that a review of the treatment of one of the most deprived groups in our community should be treated with a little more urgency. It is shameful that we are willing to allow children and their parents who are seeking asylum in a rich country such as ours to continue to suffer in this way.
Lord Avebury
My Lords, I agree with the noble Baroness that the payments made to people who have applied for asylum should be treated in the same way as any other benefits and should be subject to review by your Lordships. Instead, as the noble Baroness explained, there is no obligation to uprate the benefits or even to make a statement, nor, in particular, for the Government to explain whether they believe that the payments made to asylum seekers should bear any relationship to those on income support, or whether the two calculations are to be performed on an entirely different basis. If so, what is the underlying rationale behind the amounts paid to people on asylum support?
As the noble Baroness has already said, with her I was a member of the cross-party parliamentary inquiry organised by the Children’s Society into asylum support for children and young people, under the very able chairmanship of my honourable friend Sarah Teather, the former Minister for Children. I join the noble Baroness, Lady Lister, in expressing the concern and dismay that we all felt when listening to the stories of suffering and destitution of asylum seekers. The worst-off were those supported under Section 4 of the Immigration and Asylum Act 1999, many of whom were failed asylum seekers who could not be returned to their country of origin because it would not accept them. Under that provision, people have to live in housing and accommodation provided by private agencies, the standard of which often is grossly deficient and lacking in ordinary facilities.
I could not help noticing the contrast with the Statement made earlier today about the arrangements being made for our forces returning from Germany. Quite rightly, £1 billion is being spent on 1,900 new houses for those families, when nothing whatever is spent on the accommodation of people who have applied for asylum.
Section 4 provides support in the form of vouchers which can be redeemed only at certain shops. The value of the azure card, which is intended to provide for all essential living needs, is £70.78 a week, compared with income support for a couple with children of £123.35. Because they have no cash, as the noble Baroness has explained, the recipients cannot do many ordinary things, such as buying stamps, taking a bus or making a telephone call. She gave a particularly lurid example of evidence that we heard about a mother who had to undertake all sorts of physical arrangements with her small child as regards apparatus that was needed. My noble friend Lord Taylor of Holbeach said, in his brief answer to a question on asylum support on 24 January, that he was surprised to find that there were two levels of benefit within the asylum system. Indeed, one cannot imagine the motive for building this level of complexity into it.
The Lord Bishop of Ripon and Leeds
I simply want to express my support for the arguments put forward by the noble Baroness, Lady Lister, and the noble Lord, Lord Avebury. Being part of that inquiry was indeed a harrowing experience, although nothing like as harrowing as it is for those who have been on asylum support for two, four or six years and who cannot return to the countries from which they have come. The Government accept that they cannot return to those countries, so the argument that asylum support has to be kept very low in order to discourage people from staying here did not appear to have any weight at all in terms of the evidence that was presented to us.
I was grateful to the noble Lord, Lord Newby, for his promise at Second Reading to pass on the concerns about asylum child support to the Home Office. Have the Government received any response to that request to the Home Office and do they agree that we need to have some idea of what is happening to support the 10,000 children who are on asylum support?
I was grateful, too, to the noble Lord, Lord Taylor of Holbeach, for the expression of his own surprise at the bizarre nature of the provisions being made for that support. The noble Lord, Lord Newby, likes simplicity. I do not know whether you could find anything more bizarre than the provisions under Sections 4 and 95 of the Immigration and Asylum Act 1999. If we could simply move to some way of linking that support to the benefits that the Government believe are rightly paid to those in need, that would be a major act of concern for those who are in the most need of all within our society.
Lord McKenzie of Luton
My Lords, I thank my noble friend Lady Lister for displaying yet again her knowledge of and passion for a very important subject and I pay tribute to all noble Lords who have spoken in this debate for their work on the cross-party inquiry. Some important issues have been raised, such as that of asylum seekers not being able to access paid work as a route to dealing with the circumstances they find themselves in, worrying reports about 10,000 children and extra costs that are imposed on public services such as the NHS, which were identified by the noble Lord, Lord Avebury. Clearly, that report is a telling report but it is a report currently for Government. However, we, too, will have to reflect on it as well.
The principle here is that we must be able to provide support to those in genuine need but must do so in a way that minimises incentives to economic migrants who could undermine public support for genuine refugees. There is an issue here that we need to be frank about. There is a balance between dealing with the issue of benefit tourism and separating that out from the needs of genuine asylum seekers. It complicates the picture. An important issue has been raised today and an important report has been prepared. It is currently for the Government to give their views on it, but we will have to reflect on its contents.
Baroness Stowell of Beeston
My Lords, the purpose of this schedule is to set out benefits, payments and tax credits to which the Bill provisions apply. Paragraph 1 refers to sums of social security benefits, payments and child benefit covered by Clause 1. Paragraph 2 of the schedule sets out the relevant amounts of tax credits covered by Clause 2.
The debate has of course been about asylum seeker benefits. As the noble Baroness, Lady Lister, acknowledged in her opening remarks, asylum seeker benefits fall under the remit of the Home Office and the UK Border Agency and are not part of this Bill. As has been said, there is an ongoing review of our approach to asylum support. In response to a question as to when this will conclude, we expect to finish conducting our inquiries before the end of the financial year. As the review is ongoing, there are some questions that I will not be able to answer, but I am none the less grateful for this opportunity to lay out how support for asylum seekers is provided.
As noble Lords have acknowledged, there are two types of support. First, there is support provided to those people who have made an application for asylum that has not yet been decided. That is provided under Section 95 of the Immigration and Asylum Act. People in that context are usually described as people under Section 95. Secondly, there are people who have been found by the UK Border Agency and by the courts not to need protection in the UK, but who cannot return home due to a temporary problem. They are provided for under Section 4 of the Immigration and Asylum Act. That is the Section 4 to which several noble Lords have referred today.
As noble Lords are aware, the support provided is expressly intended to meet people’s essential needs. By that we mean their food, toiletries and clothing. As an example, a family of four receiving Section 95 support while the decision on their application is pending is given £178 per week to cover these essential costs. The same family receiving Section 4 support is given £151 per week. The levels of support provide for the fact that asylum seekers have, as has been acknowledged by noble Lords, fully-furnished, rent-free accommodation with household equipment, utilities and council tax included. This support is temporary in its nature. It is true to say that the allowance is less than income support equivalents but that is because the recipients do not have to pay for other things such as utility bills or other costs associated with running a household.
Likewise, new mothers receiving asylum support do not have to buy a cot or things of that kind because sterilising equipment and such things are provided. They are given a grant to help pay for a pram and clothing. Healthcare and schooling are also provided. In addition to the weekly subsistence rates, families receive the following benefits. A single one-off payment of £300 may be provided to asylum seekers to help with the costs arising from the birth of a new baby. This is different from the maternity grant provided by DWP as recipients will not need to cover the costs of a new cot, stair gates and sterilising equipment. Pregnant women and young children aged between one and three each receive an additional £3 per week, and babies under one receive an additional £5 per week. Assistance with travel costs to medical appointments is available on application.
For those receiving Section 95 support, children receive between 80% and 90% of the equivalent mainstream benefits. Children on Section 4 support, which is intended to be temporary while their parents arrange travel home, receive over 60% of equivalent mainstream benefits.
Lord Avebury
This is the third or fourth time that my noble friend has mentioned that the arrangements under Section 4 are temporary, but will she acknowledge that some people remain on them for many years? In one case that we were told about, I think it was seven years.
Baroness Stowell of Beeston
I was going to refer to the complaints that have been made about delays in dealing with Section 4 cases. These problems have been acknowledged by the department. Efforts have been made to address the causes behind those delays and there have been some improvements.
The noble Baroness, Lady Lister, said that disabled people receive no additional support. If asylum seekers have higher needs, they are supported by their local authority under an old Act, the National Assistance Act 1948. My noble friend Lord Avebury asked whether disabled children would receive higher value support. Again, that is a matter for individual local authorities, which will have considered the needs of the child and conducted a relevant assessment. My noble friend also asked whether these arrangements are compatible with the UN Convention on the Rights of the Child, and the answer to that is yes. The UK Border Agency is bound by its Section 55 duty to consider the best interests of children. As I have said, fully furnished free accommodation, education and healthcare are provided, plus an allowance to meet the need for food, clothes and other essential items.
Although I acknowledge the strength of feeling that has been expressed by noble Lords about the difficulties that inevitably are faced by people who come to this country seeking asylum, when comparing asylum support rates across Europe, our research shows that the UK is comparatively generous in family cases, providing more to an asylum-seeking family of four than countries like Sweden or Denmark. Further, as I have mentioned, there is an ongoing review of our approach to asylum seeker support and we expect to finish conducting our inquiries shortly. We are taking account of the views of partners, including the recommendations of the Children’s Society. We will want to ensure coherence with the mainstream benefit system and the financial constraints being faced. The noble Baroness, Lady Lister, asked for further details about the evidence that is being considered in the course of the review. I shall see whether I can write to her with further details on that.
It is worth saying that there is no statutory obligation to carry out an annual review of asylum support rates. Instead, Parliament has set a clear benchmark that the support provided must meet the “essential living needs” of recipients of Section 95 support and that it must provide “accommodation” to recipients of Section 4 support. It would be wrong to raise expectations in this area given the current constraints on the funding available, but we are committed to an approach to asylum support that is fair, reasonable and balanced. No one who has sought our protection need be destitute while waiting for an application to be decided, but if the application is refused and the decision is upheld by the courts, we expect people to return home. Perhaps I may add that if someone is granted asylum, if they are in need of benefits they will transfer on to the domestic regime, which ensures that they receive the same benefits as anyone else in this country under the normal rules that apply.
If I have failed to address all of the detailed questions put by my noble friend Lord Avebury and, indeed, if there are any others, I will follow them up in writing. I am grateful to the noble Baroness, Lady Lister, for the opportunity to set out the support that is provided and I hope that I have been able to reassure her and other noble Lords that the Government continue to take this matter very seriously. I hope that she will withdraw her objection to the schedule.
Baroness Lister of Burtersett
My Lords, I thank the noble Lord, Lord Avebury, and the right reverend Prelate for their powerful support in this debate, and I thank my noble friend Lord McKenzie for accepting that perhaps our side will have to reflect on the findings of the inquiry. That was very welcome. I also thank the Minister for her full reply and for the good news that the review is expected to conclude by the end of this financial year. That is one good piece of news. When she writes to noble Lords, perhaps she will also say whether the review will be published so that we can read the full results.
I want to make only one point because I am conscious that noble Lords are waiting for the next debate. I turn to the question of “temporary”, which was picked up by the noble Lord, Lord Avebury. I would point out that a Written Answer in the other place last week stated that the average time spent on Section 95—not Section 4—was 525 days. That is a long time to be living on such a low income.
It has been useful to have this debate. Although I cannot welcome everything the Minister has said, I do welcome her acknowledgment of the importance of these issues and the fact that the review is about to conclude. I do not intend to oppose the schedule.