(9 years, 1 month ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
The Minister of State, Department for Work and Pensions (Lord Freud) (Con)
My Lords, this Bill will ensure that the welfare system is put on a sustainable footing, while continuing to support the most vulnerable. It will ensure that work always pays and it will restore fairness in the system.
It is important to remember that this Bill forms part of a broad package of reforms, which includes the introduction of the national living wage, increases to the personal tax allowance and an enhanced childcare offer. Our welfare reforms are focused on transforming lives by supporting people to find and keep work. There is a focus on employment, fairness and affordability, while supporting the most vulnerable.
We have already made some key achievements over the last Parliament: 2 million more jobs have been created; there are 2.3 million apprenticeships; the number of workless households has reached a record low, down nearly 700,000 since 2010; and there are 800,000 fewer people with relative low income. Perhaps most importantly, these achievements came during a Parliament in which welfare spending increased by the lowest rate since the creation of the modern welfare state. But we still have work to do.
We will continue to bear down on the deficit and debt, achieving a surplus by the end of the Parliament. We spend £3 billion on government debt interest payments alone every month: that is £33 billion a year or £1,230 per household. Every pound we spend on paying off the debt is a pound we are paying to others, such as overseas investment funds, rather than spending on public services such as schools and hospitals. We need to end the cycle of borrowing, which is burdening our children with an ever-increasing debt. Eliminating the deficit and paying off our debts is the moral and most effective thing a responsible Government can do for people on low incomes who rely on those services.
This is a Bill for working Britain, underpinned by three key principles: first, that work is the best route out of poverty, and being in work should always pay more than being on benefits; secondly, that spending on welfare has to be put on a more sustainable footing, but in a way that protects the most vulnerable; thirdly, that people on benefits should face the same choices as those in work and not on benefits.
In the past, we have seen that just throwing money at the problem is not the solution—it is much more complex than that. That is why we are bringing in changes to help support people back into work and drive real change in their lives, both now and in the future.
Everyone deserves to have the dignity of a job and the pride that comes with earning your own pay packet. We want to support everyone in society who can and wants to work, and that is why we are committed to progressing towards full employment.
We also need to make sure that today’s young people start off on the right track, with the skills and experience required to open up employment opportunities in the future. That is why we are committed to delivering 3 million more apprenticeships during the course of this Parliament. The measures in this Bill will help to drive these commitments by requiring us to report on each measure every year.
The £26,000 cap we established in 2013 has reintroduced fairness into the system. Most importantly, it has driven meaningful change in people’s lives. The cap has helped get people back into work. Capped households are over 40% more likely to go to work than similar uncapped households. More than 18,000 previously capped households have now moved into work.
The changes to the benefit cap in this Bill are underlined by three basic principles of fairness. First, the cap should be set at a level that ensures it continues to be fair and to provide the right incentives for people to move into work. Secondly, this measure ensures that the cap better reflects the circumstances of working families around the UK. We know that around four in 10 households outside London earn less than £20,000, with the same proportion of households in London earning less than £23,000. Thirdly, welfare spending needs to be put on a sustainable footing.
Let me be clear: we will continue to provide protection and support for the most vulnerable. That is why exemptions will still apply, including those households entitled to DLA, PIP or Armed Forces PIP, industrial injuries benefit, the ESA support group component, and the limited capability for work-related activity component in UC; those moving into work who are entitled to working tax credit; and war widows and widowers. We have provided considerable additional support through discretionary housing payments for those claimants who need temporary financial assistance to adjust to the reforms. This additional funding will continue, and we are making £800 million available for discretionary housing payments over the next five years.
For too long now, this country has been dependent on unsustainable borrowing, with government debt repayments currently costing each household more than £1,200 every year. We simply cannot continue this way. It is not fair to keep borrowing and burdening future generations with even more debt. That is why we are committed to achieving a surplus by the end of the Parliament. During recent years, since the financial crisis began in 2008, benefits have been increasing at a greater rate than average earnings. Between 2008 and 2015, the minimum wage increased by 17%, whereas the main rates of most benefits, such as jobseeker’s allowance, have increased by 21%, and the individual element of child tax credits has increased by 33%.
The Bill will freeze working-age benefits for the next four years, helping to bring welfare spending under control. As part of our commitment to protecting the most vulnerable, benefits reflecting the additional costs of disability are excluded from the freeze. This includes PIP, DLA and the support group component of ESA. Pensioner benefits and statutory payments will also be excluded from the freeze.
During the last decade, growing evidence has shown that work can keep people healthy, as well as helping to promote recovery if someone falls ill. We are committed to ensuring that everyone who is able to has the opportunity to take advantage of the financial, social and health benefits which employment brings. However, perverse incentives in the benefits system and the lack of appropriate support can mean that some miss out. The work-related activity group component of ESA was never designed to help towards the additional costs of disability.
It is clear that the current system is failing claimants. Some 61% of WRAG claimants want to work but only 1% leave the benefit each month. People on ESA receive nearly £30 a week more than those on JSA, but receive far less support to move closer to the labour market and, when they are ready, into work. For new claims, the Bill will end this disparity between what people receive. Current claimants will not be affected, and new funding rising to £100 million a year in 2020-21 will be provided to help new claimants with limited capability for work to move closer to employment. A similar change will be made to the limited capability for work element of universal credit, ensuring that we provide the same level of support under the new system as we do through the current one. We are committed to ensuring that everyone who is able to has the opportunity to take advantage of the financial, social and health benefits which employment brings.
The Bill will also enable the Government to recover the expenses they incur for administrating benefit diversions to the Motability scheme. This is a purely administrative change which will not affect Motability’s users. The change involves less than £1 million a year and has the support of Motability, and I am sure that noble Lords would not wish such a minor issue to occupy too much of the Chamber’s time.
We also want to support parents claiming universal credit to get into and stay in work after having a child. We found out just last month that the number of children living in workless households is at a record low, down by 480,000 since 2010. That is really good progress and we want to build on it. The Government are introducing a far-reaching childcare offer. With universal credit, people will get up to 85% of their childcare costs paid from April 2016, up from 70% under the previous system. Working parents of three and four year-olds will receive an additional 15 hours of free childcare a week, while tax-free childcare will benefit up to 1.8 million working families. In line with that, we think that parents claiming universal credit should be required to look for work when their youngest child turns three, and to prepare for work when the youngest child turns two. In addition, the Bill will create a statutory duty to report on our progress supporting troubled families with multiple, highly complex problems. This will include how we have supported them to move closer to work.
We are also making provision to tackle social rents, which have increased by 20% since 2010. The Bill will reduce rents in social housing in England by 1% a year for four years from April 2016, protecting taxpayers from the rising costs of subsidising rents through housing benefit and protecting tenants from rising housing costs. This will reduce average rents for households in the social housing sector by around 12% by 2020 compared with current forecasts. It will also mean that people who are not on housing benefit and not subject to “pay to stay” will be better off by around £12 per week by 2019-20.
The Bill reforms the way support for mortgage interest will be paid in the future. The current system of providing benefit payments towards the cost of mortgage interest payments will be replaced by a system of interest-bearing loans which are secured against the claimant’s property. Loans will not be repayable until the home is sold. This change will ensure that claimants receive the same level of protection from repossession that they enjoy now, while providing a better and fairer deal for the taxpayer.
We are ensuring that people on benefits face the same choices as those in work and not on benefits. Families in work have to make careful choices about what lifestyle the money they earn can support, and what their income can provide for. People who receive child tax credit should make the same financial choices about having children as those who are supporting themselves through work. Therefore, from April 2017, the Bill will limit the child element of child tax credit to the first two children. A two-child limit will also apply in universal credit in relation to third or subsequent new children in the household, and to completely new claims. Again, we are ensuring that this change is fair, so it will not affect existing claimants at the point of change.
Finally, I turn to how we will tackle the root causes of child poverty and improve children’s life chances. We want to see substantial and sustained improvements in the life chances of our children. The past approach, enshrined in the Child Poverty Act, has focused on dealing with the symptoms of child poverty rather than addressing the root causes. It has incentivised Governments to move families a pound above the poverty line, not to help them transform their lives.
Evidence tells us that worklessness and educational attainment are the factors that have the biggest impact on child poverty and children’s life chances. We want legislation to focus government action where it can have the biggest impact. The Bill will provide a statutory basis for much-needed reform to drive real change to improve children’s life chances and tackle the root causes of child poverty.
The Bill will remove the existing measures and targets in the Child Poverty Act and introduce a new duty on the Secretary of State to report on worklessness and educational attainment. Alongside these statutory measures, we will develop indicators to measure progress against other root causes of child poverty, including family breakdown, addiction and problem debt. Our new approach will drive action which will make the biggest difference to the most disadvantaged children, both now and in the future.
This Bill is an important legislative step. It will ensure that the right support and incentives are in place, so that people are always better off in work rather than trapped on welfare, and it will protect the most vulnerable members of our society. We acknowledge that these are difficult decisions to make, but we think they are the right decisions. They are decisions that put work first, drive sustainable welfare spending and allow us to continue to protect the vulnerable and those most in need. I beg to move.
Baroness Sherlock (Lab)
My Lords, I thank the Minister for that introduction to the Bill and I look forward to the debate, especially to the four maiden speakers.
In his speech to the last Conservative Party conference, the Prime Minister talked of the need to tackle social problems, including entrenched poverty, in our country. Why? He said this:
“So when the new mum looks at her new-born baby—the most precious thing she’s ever seen—and she vows to provide for it, she knows she actually can”.
This Bill makes a mockery of that pledge. It is a sustained assault on low-income families. It will increase poverty, penalise working households and push more families out of their homes and into temporary accommodation, homelessness or on to housing benefit, and the evidence base for it is poor. So often, I am sorry to say, this Government’s cuts to social security end up being counterproductive, adding more to the benefit bill by undermining work incentives or raising spending elsewhere.
A good example is the proposal to cut social sector rents by 1% a year. This sounds great, but, as the IFS points out, it does little for the 93% of tenants who will lose housing benefit pound-for-pound as their rents falls. As the IFS points out:
“The policy largely represents a transfer from social landlords … to the exchequer, rather than to social tenants”.
As the OBR has pointed out, it will mean fewer social sector properties being built. Social landlords risk having their credit ratings downgraded, planned investments are being cancelled and if specified or all supported housing becomes unviable, costs are simply transferred to the NHS and local government.
As the Minister mentioned, the Bill abolishes the scheme that gives help to some people on benefits to pay the interest on their mortgages so that they do not lose their homes and end up on housing benefit. In future, they will be offered a nine-month wait then the option of a loan secured by a charge on the property. Almost half of recipients are of pensionable age, despite the Government’s pledge to protect pensioner benefits. We will seek, as the Bill goes through, to retain support for low-income pensioners, who may never be able to pay off a loan.
The Bill also takes £30 a week, one-third of their employment and support allowance, from the 500,000 sick and disabled people in the work-related activity group. The impact assessment reassures us that if they worked for just five hours a week at the new higher minimum wage rate, they could recoup the money, but these are people an independent assessor has decided are unfit for work. They include people with learning difficulties, mental health issues, Parkinson’s disease or MS. Only 5% of that group will get back to work within a year. We can see no justification for making people poorer to incentivise them back to work they have been deemed unfit to do. How can the Minister justify this, especially in the light of the manifesto commitment not to cut disability benefits?
The other measures in the Bill all hit low-income families with children. Child poverty has already risen by 400,000 since 2010 and is predicted to rise by another 300,000 by 2020. Two-thirds of poor children will have a parent in work. Those figures could explain why the Bill decides to remove the requirement to measure child poverty or to do anything to reduce it. It abandons the internationally recognised benchmark for poverty because the Government have decided poverty is no longer about money. The Bill expunges the word “poverty” from the legislation. We all accept that deprivation is multifaceted. By all means measure other things as well, but the idea that poverty is not really about money is risible. I fear that what is really happening is that the Government are trying to hide the trail of devastation their reforms are leaving in their wake.
Successive government welfare reforms are hitting the same groups of people, yet Ministers consistently refuse to do a cumulative impact assessment, and now they will not even count child poverty. This will not do. The first rule of power surely means that if you will the ends, you must will the means and you must know and take responsibility for the consequences of your decisions. I hope this House will see fit to challenge that proposal as the Bill goes through.
Then there is the benefit cap. When the Government introduced it, their whole argument was that it was set at the level of average earnings. We had a long debate in this House on whether the test was fair. I remember marching into the Lobby behind the much-missed Bishop of Ripon and Leeds, who proposed an amendment to remove child benefit from the cap on the grounds that people would get child benefit as well. We voted for it. Now Ministers have ditched the entire standard and simply plucked figures out of the air. They have simply decided that they are going to cut the cap by £3,000 for families in London and by £6,000 for families elsewhere. In future, Ministers can change the cap at whim by regulation without reference to any external benchmark and with minimal parliamentary scrutiny. The evidence is nowhere near as strong as even the impact assessment has suggested. Housing providers are worried that rent arrears will rise, as will evictions and homelessness. We have heard that £800 million has already been set aside for discretionary housing provision to deal with it. In Committee, we will want to see a great deal more evidence about the cost-benefit analysis of this policy, as well as about the impact on families.
The Minister mentioned that DWP is changing conditionality in universal credit. At the moment, parents are expected to work when their youngest child turns five. The Bill will mean that parents on universal credit will be expected to work when their youngest turns three. They will have to do work-related activity when their youngest is two and when the youngest reaches one, they will be out doing work preparation interviews. If the Government are going to push mothers of very young children and babies into work preparation activity, they need to be a lot more convincing about the availability and affordability of suitable childcare than they have been in this House in recent months when the Childcare Bill was going through.
Then there is the benefit freeze. Previously, the retail prices index was used to uprate benefits. Then the Government came along and decided that CPI was the measure—the only thing that would do—so they changed it to CPI. Then in 2013, they decided it would be reduced to just 1%, as a temporary measure, rather than CPI. Now it will be 0%, whatever happens to inflation during this Parliament. If inflation carries on flatlining, the Government may not get the savings they have been hoping for. There is a real process issue here. This is undermining the long-standing convention by which Ministers are meant to make an assessment annually of what poor households need to live on, come to the House and propose an alternative, and take responsibility for what should happen to benefits. This is moving away from that, which is deeply regrettable.
Finally, there is the proposal the Minister outlined to change universal credit and tax credits to abolish the family premium for all families with children and to limit the amount paid per child to the first two children in a household. This means that 3.7 million households will lose money. The two-child limit will cut payments by up to £2,780 per child per year, affecting 640,000 families by 2021 and 150,000 families with disabled children.
The Government repeatedly stress that the aim of their welfare reforms is to get people into work but child tax credit and universal credit are paid to working families as well as those who are out of work. If the aim is not to get families into work, what is it? The impact assessment said that,
“people may respond to the incentives that this policy provides and may have fewer children”.
I should like to ask the Minister some questions. First, is the objective that people in low-paid work should have fewer children, or is it just to give them less money? What does the Minister expect to happen in the 16% of pregnancies in the UK that are unplanned? What assessment has he made of the impact on adoption and kinship care, especially of sibling groups? Will there not be a disincentive to remarry if a stepfamily would then have more than two children in the household? The equality impact assessment is silent on religion and belief; can the Minister tell the House what work his department has done in assessing whether this policy will be likely to affect people of some religions more than those of others or of none. We are also told in the impact assessment that the Government will exempt women who have a third child as a result of rape. I wonder if the Minister has really thought through the implications of a woman having to prove to the Department for Work and Pensions that her pregnancy was the result of rape.
Even if the Minister could answer all those questions robustly, this policy spectacularly fails the Government’s own family test. There are reasons the state has traditionally helped with the cost of raising children. First, it is to avoid British children growing up in poverty, since child poverty is significantly higher in larger families. The real losers of this policy will be children born into larger families, especially as younger siblings, through no choice of their own. Secondly, it is because children are good for society. Maybe if I use the language of economics the Minister will work with me on this. In economic terms, children are a public as well as a private good. Parents bear the bulk of the costs of raising their children but we all contribute through our taxes because we want to see the next generation thrive and, being practical, as our population ages, we need to ensure that there are enough people around of working age to pay for our pensions, our health service and our social care. Most of all, it is because children are not a luxury. We give child tax credit to families to ensure they can afford to raise their children healthily.
Let us be clear: this is not about the small number of people with lots of children who are not in work. They would be caught by the benefit cap anyway. Shelter pointed out that the benefit cap would kick in for a couple with two children renting a house not in Mayfair but in Leeds or Plymouth. It is not about them. It is about a family with three children who, despite working very hard, are struggling to make ends meet. It is about the mum I met who never thought she would need state help until her husband disappeared and left her with three children. It is about all those people who had children confident they could provide for them, until something happened—perhaps a parent died or became sick or disabled and could not work; perhaps they had their hours cut or got made redundant. These are all things our welfare state is meant to protect us against. When the Minister says it affects only people making new claims, anybody making a fresh claim for universal credit next year will get no help for their third child already in existence.
When Mr Cameron spoke about that mum looking down at her new baby and knowing she could provide for it, the reason she knows that is that she lives in a country that offers the safety net of the welfare state alongside the National Health Service and state education. Our welfare state was never about workers helping workless or rich helping poor. It is about pooling risk across our life cycles and across our population. There are times, such as when children are young, when it is hard to make ends meet even if you are working. The best laid plans can go also astray. Anyone can get cancer, lose their job, lose their spouse or have a disabled child. We will all get old—we hope—and draw a pension. When things go well we pay in, and when things go badly we take out. The Government’s reforms undermine that. They change the way our welfare state works, by undermining work incentives, breaking the link between need and support and refusing to protect the next generation from growing up in poverty. If the Bill goes through unchanged, when that mum described by the Prime Minister looks down at her newborn baby, especially if it is her third child, she can no longer know that she can provide for it because that safety net will have a child-sized hole in it.
Baroness Manzoor (LD)
My Lords, the Liberal Democrats’ approach to this Bill is based on two simple principles. First, the benefits system should encourage people into work whenever they are able and it really should pay to be in work. Secondly, the £12 billion of welfare cuts the Government announced in the Budget are unnecessary to deal with the deficit. They are a political choice based on the Government’s wider political agenda to achieve a budget surplus by 2020, rather than the pragmatic need to eliminate the structural deficit by 2017-18.
While we are not averse to finding savings from the welfare budget, we do not believe that savings of the scale set out by the Government are needed. Cuts of the scale proposed will harm the principles of making sure that work pays and will remove much-needed support to the most vulnerable in society. This cannot be defendable on the grounds of savings alone. Having a job is not just about earning an income. It is also strongly linked to building dignity, self-esteem and improving health outcomes. The social security system must be able to help people avoid the benefits trap and to make work pay by ensuring that there is a more gradual withdrawal of benefits when someone enters work.
There is also a third principle that guides our view of this Bill: Lib Dems remain committed to the framework of universal credit, a project that has the capacity to fundamentally improve the structure and goals of our welfare system. We recognise the hard work and commitment that the noble Lord, Lord Freud, has given to universal credit and we are clear that he deserves significant recognition for this. However, I hope that the Chancellor will not seek to undermine the universal credit framework in the comprehensive spending review to dig himself out of the hole that he has created on tax credits—or, indeed, to introduce new horrors.
Although the Government assert that a central goal of the Bill is to strengthen work initiatives and to encourage households to move out of poverty through employment, many components of this Bill will weaken work initiatives, further negatively impact the most vulnerable, drag more people into poverty and may hinder the United Kingdom’s economic recovery.
There is a fundamental problem with the Bill, in that the worthy aim set out in the first clause—that of achieving full employment—risks being undermined by the subsequent clauses. We are proud that our work in government helped turn the tide on unemployment to the point where more people are now in employment than ever before. But that means that, to take the next step, we need to focus on supporting the hardest to help. That means looking at how we improve the work programme, how we support the disabled and how we provide high-quality training in skills needed by the labour market. Sadly, the Bill does nothing to address these issues. It is not a Bill about work.
The Lib Dem’s biggest concern is around Clauses 13 and 14, which would effectively reduce the amount of money given to claimants in the work-related activity group—WRAG—of the employment and support allowance. It is worth noting that more than 50% of the people in the WRAG have a mental health and behavioural disorder as their primary condition. I cannot see how cutting the amount of money going to people in this group, especially those that the Government’s own work capability assessment has deemed vulnerable, can possibly help achieve the Government’s own target of halving the disability employment gap. Indeed, we are concerned that it will instead push these people further from the job market and it risks aggravating conditions such as depression or eating disorders.
The changes are also likely to increase appeals and intensify high levels of stress. They may have the perverse effect of pushing people from the WRAG into the support group, rather than into the labour market. The Government would do better focusing on providing people with the support that they need to get better and with specialist disability employment advice via the jobcentres to make the transition into work, rather than placing the emphasis on the stick. In its review of the links between disability, long-term conditions and poverty, the Joseph Rowntree Foundation found no evidence that disability employment rates are improved by reducing benefits.
With reference to the proposed benefit cap, while we agree on the need for a cap, we do not see the logic in reducing it to £20,000. Nor do we see the logic behind breaking the link between average earnings and the cap. The real concern here is that the requirement to find affordable housing may force families away from areas where there are high levels of work opportunities, such as London, to places of high unemployment. This would undermine the ultimate aim of getting people off benefits. Will the Minister say whether the Government intend to undertake a distribution analysis of the levels of housing benefit the average person hit by the benefit cap would receive and where they may be able to secure suitable housing?
The Bill also introduces a two-child limit on receipt of the child element of tax credits for children born after 5 April 2017, and the child element of universal credit for families making a new claim, whether or not the child is born before April 2017. The Government estimate, based on the current profile of tax credit claimants, that by 2020-21 640,000 families will lose support as a direct result of this limit.
While it is right that people should take responsibility for the number of children they have, there are a number of cases where exemptions should be made. These are: families fleeing domestic violence; stepfamilies; bereaved families; kinship carers, who, according to the Children's Society, support an estimated 200,000 children across the UK; cases of rape; multiple pregnancies; and where the third or subsequent child is disabled. I would be grateful if the Minister gave an assurance to make exemptions and to review the two-child limit in all such cases.
It is also of concern that the Bill repeals the income targets and associated duties to eradicate child poverty that are set out in the Child Poverty Act 2010. Without question, worklessness and lack of access to employment are key drivers of child poverty. However, while work can be a key route out of poverty, it is by no means a guaranteed one. As the End Child Poverty coalition has shown, the latest government statistics show that 62% of children in poverty now live in working families. This affects 2.4 million children. The changes that the Government plan to make to the support for low-income families is only likely to make this situation worse. Will the Minister look at maintaining income-related measures of poverty among the life chances measures?
We have a significant concern about the decision to reduce social housing rents over four years. This represents, as the Minister has said, an overall reduction of 12% compared to current forecasts. While this may indeed help to reduce the housing benefit bill, and the costs for people living in social housing, we are concerned about the impact it will have on the ability of housing associations to borrow in order to build more homes or to ensure that improvements are made to current social housing stock.
The Government have already decided to keep housing costs for specified accommodation—such as that offered by St Mungo's Broadway, which provides specialist services and housing for the most vulnerable—out of universal credit and benefit calculations. This is very welcome, but by introducing a rent-reduction measure the Government will undo these steps and a vital safety net may be cut. Will the Minister give an assurance that the Bill will be amended to exempt specified accommodation?
Finally, there are a number of areas which are not in the Bill but we believe will further undermine the principle that work should pay and people who are able to work should be supported back into work. In particular we are concerned about the appalling cuts to tax credits, which even Conservative MPs are now in open revolt over; the cuts to housing benefit for those under 21, which will make it harder for young people to move to areas of high employment in pursuit of career opportunities; and the deepening cuts to further education colleges, which make it harder to ensure that young people get the skills they need to become employable. These are all areas in which further work is needed by the Government if they are to be truly on the side of all working people. This Bill is not a Bill for work.
Before I sit down, I wish my noble friend Lady Thomas a speedy recovery from a knee operation after a fall last week. I hope that she will be well enough to join us for the remainder of this Bill.
Lord Patel (CB)
My Lords, four years ago, speaking during the passage of what became the Welfare Reform Act 2012, I highlighted the many issues faced by those in the work-related activity group, or WRAG, on employment and support allowance, and the necessity of them receiving adequate financial support for the period when they are too ill to work. I will focus again on that one cause: people who are too ill or recovering from a debilitating disease. The Minister may well remember that I carried four amendments, but he immediately turned the Bill into a money Bill, so the discussion had to stop. But he came true on that occasion and understood the cause that I was fighting for. He brought in a government amendment to put people with cancer in the support group, and I am forever thankful for that. I am hoping to get the same response this time without having to win any votes.
I am having to repeat many of the same points today which I made at that time. Clauses 13 and 14 would cut the amount that people claiming ESA in the WRAG, and with a limited capability for the work element of universal credit, can receive from £102.15 to £73.10. You may say that £30 a week is not a great deal of money, but for people who are on benefits, it is a great deal. They will receive the same amount of money as those on jobseeker’s allowance yet be unable to work. This is a significant cut for anyone to face to a weekly budget.
Let me highlight briefly the individuals who will be affected in the WRAG. I am talking about people such as cancer patients who have undergone debilitating treatments such as chemotherapy or radiotherapy and are in the process of recovering from their illness. I am also talking about people with other diseases such as Parkinson’s or multiple sclerosis, or who have physical and learning disabilities. Mental health has of course already been mentioned. I want to draw particular attention to people who have had a cancer diagnosis. As the Government have stated, it is true that many people undergoing most types of chemotherapy and radiotherapy go into the support group, thanks to the amendment that the Government brought in. I am pleased that that level of support is not being changed. I welcome that.
However, thousands of others who may be experiencing long-term side-effects as a result of their cancer and treatment, or those living with other comorbidities, are placed in the WRAG. While many of these people will have finished their treatment, they will still be suffering from disability. The side-effects of treatment such as chemotherapy and radiotherapy, as is well known to many Members of this House, can be severe and long-lasting. Ask any who have had such treatment and they will tell you what it feels like and for how long. It also varies from person to person, depending on their cancers and their ability to cope with the therapy. Research by Macmillan and other cancer charities found that one in four of the 2 million people in England alone living with and beyond cancer today face disability or poor health following their treatment. It is not uncommon for a cancer patient still to be reporting pain and extreme fatigue long after their treatment has ended. Many of them will be unable to work as a result. To suggest that these people should be treated in the same way as jobseekers who are fit and able to work cannot be, and is not, right. It is uncompassionate and uncaring.
I am concerned that the Government’s proposals fail to recognise a clear distinction between those on jobseeker’s allowance who are available for, seeking and able to engage in work and those on ESA in the WRAG who have been independently medically assessed as being too ill to work. Most cancer patients want to get back to work. They see that as a recovery from their illness, so they wish to work.
The Government have stated that this move is about providing an incentive for people to return to work, no matter what their condition. However, I have yet to see any evidence to suggest that this is needed, let alone that it will work. If I am wrong, I have no doubt the Minister will correct me with the evidence that he has. What people who are ill need is enough time and the right support to recover and get well. They do not need to be penalised for not recovering quickly enough.
Let me give an example that many of your Lordships may have seen. Stacie, a 43 year-old in remission from leukaemia, recently wrote an article in a leading daily newspaper about her experience of having cancer. She said:
“Throughout it all, I wanted to work. I am still desperate to return to the classroom. My hospital room was wallpapered with cards and pictures from my students and fellow teachers. When I was struggling, I only had to glance up to see the gallery I’d created of children’s artwork. Those crayon suns and stars brightened a very dark time in my life. The idea that I’d need to be further impoverished to be incentivised to return to teaching is not only ludicrous, it’s insulting”.
Stacie’s doctor told her that, because of the effect that cancer and depressed immunity had on her immune system, teaching was for her now,
“more dangerous … than police work”.
This comment highlights what I fear that the Government have failed to consider in their proposals. In order for people with long-term illness, physical or mental, to return to work without further risk to their physical or mental health, they need the right support, and they need time. They should not feel pressurised to return to work before they are mentally and physically fit enough because of financial worries. Doing so could have a significant negative effect on people’s physical and mental health. People could actually require longer-term welfare support: the exact opposite of what the Government are seeking to achieve.
I wonder what, if any, assessment the Government have made of the potential knock-on costs and implications for both the health and benefits systems if people who have been medically assessed as being too ill to work return to work too soon and their health deteriorates as a result. I spoke about people living with cancer, but, as I mentioned, it is not just people with cancer but others with long-term disabilities and other illnesses.
I welcome the fact that no current claimants will lose money, but that will provide no comfort to those who will be placed in the WRAG after April 2017. I, like many noble Lords, welcome the Government’s commitment to provide extra investment in employment support for those in the WRAG. I look forward to the Minister’s outlining more detail about this. If not, then there is a risk that the Government’s proposals will inadvertently move people further away from the labour market as people already too ill to work are made even more ill.
There is a clear link between financial difficulties and poorer health. Four years ago, I was accused of not understanding the need to reduce costs. I said then, and I repeat it now: I clearly understand the need to balance the books. However, it is not compassionate, caring, or a mark of a civilised society to do so by making the sick poorer and sicker.
I know that the noble Lord, Lord Freud, who I know from my previous experience does care, will look at Clauses 13 and 14 particularly in relation to this group of people who are suffering or recovering from cancer, and suggest a way of mitigating the effects of these proposals. I look forward to his comments.
The Lord Bishop of St Albans
My Lords, I will pick up on some of the themes that have been raised by some of my noble friends who have spoken today, particularly on the area of vulnerable adults and those who are disabled. I invite the Government to think about two issues in particular. The first relates to the clause in the Bill legislating for a mandatory 1% annual reduction in social housing rents over the next four years. I, like other noble Lords, understand that the Government have their reasons for introducing this mandatory reduction, not least the considerable savings on housing benefits that such a rate reduction would deliver. I welcome the discretionary power that the Secretary of State will have to waive the requirement for rent reductions. This will go some way to protecting those housing associations which find themselves financially exposed due to circumstances outside their control.
What concerns me most about these measures is the direct and indirect effect that they might have on the supported housing sector, which provides vital accommodation and a degree of independence for vulnerable groups such as the mentally and physically handicapped, the homeless, those with addiction issues and those fleeing domestic violence. While I welcome the DWP’s indication that there will be an exemption from the rate reduction for specialised housing support, that constitutes only a very small subset of the supported housing sector, and I do not believe that the exemption goes far enough.
Because of the various needs of the tenants, supported housing is far more expensive to maintain than standard social housing, creating an extra cost burden on supported housing that is inevitably reflected in smaller operating margins. One supported housing provider has pointed out that its housing is on average 64% more expensive to provide than standard housing, while one large, mixed-sector housing association has calculated that the proposed rent reduction would leave one-third of its supported housing stock making a loss. Given the small margins involved, it seems highly likely that a forced rent reduction in supported housing will endanger the supply of supported social housing in this country. Smaller housing associations which are devoted to the supply of supported housing might be simply unable to absorb the rate cut, while larger housing associations with a variety of housing stock might find themselves forced to get rid of their most unprofitable supported housing. New supported housing developments would inevitably be postponed and, even where supported housing remains viable, it is likely to face staff cuts that would lead to a drop in the standard and provision of care for some of the most vulnerable people in our society.
Any of these outcomes would not only be bad social practice, but be bad economics. Any measure that increases the number of vulnerable people in unsuitable accommodation, or the number of those experiencing homelessness, is only going to increase the wider financial burden on the state. Given that other measures in this Bill are liable to increase the pressure on the social housing sector, such as the benefit cap as applied to homeless households and the proposed changes to the support for mortgage interest scheme, it seems ill advised to place this vital service under undue pressure.
There is, of course, a simple solution to all this, which is to exclude supported housing from the measures in this Bill. Given that supported housing forms only a small proportion of wider social housing—estimates put it at around 4%—the cost of such a measure would be relatively small, and would certainly not prevent the Government from making significant savings on housing benefits. That is one way in which we can seek to ensure that the most vulnerable in our society are properly protected, and I urge this House, and indeed the Government, to consider any such amendments if and when they are brought forward.
I also want to raise a more general point of concern about how this Bill impacts vulnerable disabled adults. The Government have rightly given some protection to the most vulnerable disabled people in protecting the current employment and support allowance support group component from cuts. Yet even this group, which the Government have promised to protect, will face a cut in real terms through the freeze on the basic ESA allowance. The Motor Neurone Disease Association has estimated that the freeze will leave those suffering from terminal and degenerative illnesses over £250 a year worse off by 2020, when the projected rise in prices is taken into account. This is deeply problematic, both in that it is liable to put an extra burden on those who might be nearing the end of their life—and something like motor neurone disease hits people with incredible speed—and in that it sends the wrong message to those who should have our fullest support. I would welcome a comment from the Minister about whether Her Majesty’s Government would consider measures to mitigate the impact of the rate freeze on those in the support group.
I also find myself deeply concerned about the substantial reductions in benefits for those in the ESA work-related activity group. This issue has already been discussed by those far more knowledgeable than me, but I want to make one point before I finish. The work-related activity group is formed of half a million people who, as has already been said, have been medically assessed as not fit for work. This includes those with cancer, mental health issues, musculoskeletal diseases and even progressive and incurable diseases. They are people who are in a deeply vulnerable position. Those who have had members of their own family hit by these illnesses realise just what a huge and devastating impact they make—and how quickly they can hit. In no way should they be treated as your average jobseeker, just because there is a hope that with the right training and support they might one day be able to re-enter the world of work, yet that is exactly what this Bill is in danger of doing. I urge the Government to reconsider this aspect as we go through to the next stage.
Lord Lansley (Con) (Maiden Speech)
My Lords, it is my privilege to address your Lordships’ House for the first time. I beg your indulgence, together with my noble friends who are making their first speeches in the course of this Second Reading debate. It is a privilege to follow the right reverend Prelate and to contribute to this debate.
Coming here, having retired from another place, and not seeking re-election, one is often asked, “What’s the difference? Why did you do that?”. The difference was lost on my 10 year-old son, who said, “So you’re off to the five-star place with the red seats and the gold leaf”. He was literally right, but the metaphorical differences are much more important. I went to the other place as part of a governing majority and—perhaps I am old-fashioned in this respect—with the purpose of upholding that governing majority and securing the Government’s business in what I regard as the determinative House. Here one has a freedom; I come here with the intention of seeking out that freedom—the freedom to take my own view about the policies that have a long-term impact on this country.
I am proud of what we achieved in the coalition Government. People will argue heatedly about whether the things I did as Secretary of State were right or wrong, but from the policy point of view I believed in them and I continue to believe in them. I think they made an enormous difference compared to what would have happened without them in a transition over three years, which was achieved on time and on budget, which saved £5.5 billion off administration costs in the last Parliament, which gave to the NHS an independent voice, which just over a year ago the NHS used for the first time at a general election—its own view of what should happen for the NHS in the next Parliament. We brought waiting times down to their lowest ever level; we kept the NHS out of deficit over the course of that transition; we brought hospital-acquired infections down to their lowest ever level; we virtually abolished mixed-sex accommodation and had a million more people with access to NHS dentistry; and this at a time when the increase in the NHS budget was marginal in real terms, as compared to large real-terms increases in the past.
Policy can change things, but very often the optimum policy and the exigencies of politics are not the same thing. I will not go on at length about the differences—many here realise that entirely. I come here knowing, as a Secretary of State and a Cabinet Minister who had to take Bills through this House, what this House is capable of doing. It is presumptuous of me to say so, but I hope to be part of that. I saw Bills, like today’s Bill, where the prior debate was a reflection of the interests, the stakeholders and the comment that came to this House from outside. To that extent, it started to feel as if it was going to be—how shall I put it?—a rerun of the same arguments. However, what I appreciated as a Cabinet Minister, enjoying all the frustrations of watching this House scrutinise my legislation, was that as time went on more and more Members of this House took the trouble not just to listen to what other people were saying but to read it themselves, to understand it, to see why things were being done in the way that they were in the legislation, and then to propose worthwhile amendments to do those things better, not to try to overturn the purposes of government but actually to fulfil them in a more effective way. I hope that that is what we can achieve here.
From my point of view, I started as a policymaker—I was a civil servant before I was a politician—and I hope in a sense to be a policymaker after being a politician. I should say that when I first came here I was rather surrounded by all my old bosses. When I was a civil servant my noble friend Lord Tebbit was my Secretary of State. I am the first, and thus far I think the only, Principal Private Secretary to a Cabinet Minister subsequently to have become a Cabinet Minister. I am not sure that civil servants should necessarily seek to emulate my path, but there it is. I want to be a policymaker after being a politician, and in this House we can do that.
It is important in the debate on this Bill to realise that its purposes are the right ones. I have never been a fan of declaratory legislation, of simply setting up targets in legislation and imagining that those things will happen as a matter of course. They do not; you have to have policies and substance to make them happen. However, I do not think that legislation can be, as this is designed to be, a mechanism for accountability. Regarding life chances for children and social mobility, therefore, it is important to set out in this legislation what that accountability should look like. For my part, I think this structure is better than the previous Child Poverty Act structure because in the past there was a risk that it added no value—that it was essentially about redistribution. For the benefit of our children we need to add value and ensure that their life chances are greater than they would otherwise have been without our policy interventions.
I look to the Minister and suggest that we look beyond simply key stage 4 educational attainment and reducing the number of workless households, important though both of those are. When I was Secretary of State we supported the work of the Marmot review on the social determinants of health, and there are aspects, particularly for children, such as readiness for school when children first go to school and minimising the number of those who are not in education, employment or training, that in themselves are central determinants of subsequent health and indeed of long-term life chances as well. So we should be looking progressively to see whether we can expand the accountability aspects of the reporting process.
The other thing that we have to do, of course, is recognise that there are two purposes of the Bill that we must see through. The first is the manifesto mandate to reduce the cost of welfare and enable the Government consequently to reduce the deficit, so we have to see where those savings will come. On the first day when I was here after my introduction I listened carefully to the tax credit debate. I heard more about what was wrong with what was being proposed than about how in practice the saving could be accomplished in a way that did not significantly reduce the incentive to work.
My second and final point is exactly that: the Bill is designed around a purpose of sharpening incentives to work. Doing the right thing is often tough. However, it is important to look at the evidence and say, “Is the present structure of work incentives in the employment and support allowance, or in the new structure of universal credit, right yet?”. If it is not right, and if it is not yet delivering the work incentives that it should, we have to support the Government in the Bill in trying to make those incentives much more effective in future. For those reasons, because I agree with those purposes, I for one will certainly be supporting the Bill.
Lord Blencathra (Con)
My Lords, what a privilege to be present today for the maiden speech of my noble friend Lord Lansley. When I looked at the alphabetical list of speakers last week and saw my noble friend’s name, I hoped that I would not be following him since he would show up the gross inadequacies of my contribution. Naturally, my silent prayer to the Chief Whip went unanswered.
We have just seen a splendid example of how this noble House benefits from the addition of Peers such as my noble friend, who are experts in their subject and have considerable experience of government and the other place. My noble friend has told the House that he was Principal Private Secretary to my noble friend Lord Tebbitt. I assure your Lordships that he did not inherit all the views held by that noble Lord. In fact, although my noble friend was the Bernard of his time, rising to become the Minister, he often had to say, “No, Minister”, so he also did a Sir Humphrey act with my noble friend Lord Tebbitt. In addition to what he has told us today, the House will have discovered that my noble friend has brought a disarming and quiet style of delivery. I have always found this to be persuasive in the past and I am sure your Lordships will find it so in the future. We shall all look forward to his further contributions on a range of subjects. However, as a former Chief Whip, I hope my noble friend will not range too widely with the freedom he intends to exercise.
I support the Bill, which has to be seen in the context of what the Government have achieved on the economy since 2010. Employment is now at a record high of over 31 million, up 2 million since 2010. That represents a record employment rate of 73%. Crucially, the number of workless households is at a record low, down nearly 700,000 since 2010. The best thing that any Government can do to help people on welfare is to get them into paid employment and off welfare. I will touch on a few aspects of the Bill, first of which is apprenticeships. I like the idea of reporting annually on this. Apprenticeships are absolutely crucial for individuals and the economy and they are the best way to boost employment chances for young people. I am delighted that the Government have delivered over 2 million new apprenticeships over the past five years and plan to deliver 3 million more over the next five. It was wonderful to read of the brilliant A-level student who turned down Oxford or Cambridge to take up an apprenticeship with Rolls-Royce. Of course, not all apprenticeships are of the calibre of Rolls-Royce and, although we need to make sure that all apprenticeships do offer genuine skills training, we must not let cynics rubbish the less glamorous and technical end of the scale.
I am thinking of catering, for example, which is often scorned as low-grade work. I suppose that an apprenticeship to serve a skinny latte at Starbucks would be a bit thin, but what about the 15 kids Jamie Oliver took and trained to be really good chefs? That was quality training in cooking which we should not scoff at—if your Lordships will pardon the very bad pun. In 1980, when I was Food Minister, the splendid Albert Roux came to see me. He said: “Everyone, especially we French, mock English food as just roast beef and sticky brown gravy; but within 25 years English food will be regarded as the best in the world. We are training brilliant young apprentices who will one day be among the finest chefs in the world, but it all depends on training apprentices”. How right Albert turned out to be.
I welcome Clause 3 and the duty to report annually on the troubled families programme. If we are to add to the 117,000 families already helped by getting children back in school, and significantly reducing youth crime and anti-social behaviour, then we need as much information and as many facts as possible. All the research I have read shows that, when children come from a home with one or more parents who are unemployed or who have a criminal record, or from a home with absent, uncaring fathers where there is no support or encouragement to attend school, the chances of those children going bad are greatly increased. That is not making any moral or social judgment. It is a simple fact that the fewer positive factors are present during a child’s upbringing, the less chance he—and it is usually a he—has to succeed. So information is vital, and then policy can be revised accordingly.
Similarly, I like the clauses on life chances, although the phrase sounds a bit trendy. This reform is long overdue. The existing statutory framework in the Child Poverty Act, set around the four income-related targets, is a nonsensical way to measure real poverty. As the Prime Minister said,
“we are in the absurd situation where if we increase the state pension, child poverty actually goes up”.
If we focus on the number of children living in workless households and their educational attainment by the time they get to 16, and we incorporate family breakdown, problem debt and addiction, we will get a real measure of poverty, will be better informed and will be able to devise proper policies to tackle it.
The benefit cap restores fairness to the welfare system and has incentivised work. I will not bore the House with the statistics; we shall no doubt hear a lot more today. Lowering the cap emphasises the message that it is not fair for someone on benefits to be receiving more than many people in work, and better reflects the circumstances of many working families. Tens of millions of people in work and paying taxes would love to live in a bigger house, in a better street or in a house with a nice garden, but they cannot afford to. They have to settle for what they can afford. No wonder all the polls suggest that they are outraged to see people on benefits being paid to live in housing which they, as hard-working taxpayers, simply cannot afford.
Clauses 11 and 12 will limit child tax credit and universal credit to two children from April 2017. As we have heard, this is controversial, but it has to be right. Families in work have to make tough decisions on how many children they can afford. It is probably the most difficult decision any parent can make. Therefore, families on benefits should be encouraged to make the same financial decisions as families supporting themselves solely through work. It is not fair to the working families who can afford only two children that they have to pay taxes to support those who decide to have more, on the basis that the taxpayer will pay. Some will say that this is inconsistent with child benefit paid for any number of children. Yes, it is, but in politics one has to accept political reality: no Government have dared to tackle it. There are inconsistencies in many policy areas, such as the state pension being paid to the poorest and to multimillionaires, but that does not mean that we should perpetuate, or create new, unfair regimes. We are where we are and must make incremental changes where we can.
Finally, I will mention the welfare budget generally. We have heard a lot, and will hear a lot more today, about those who may have their benefits reduced because of the Chancellor’s Budget. I pay tribute to Gordon Brown for keeping us out of the euro: it was the right decision. No doubt, at the time, he considered his plan on tax credits and child tax credits to be right also. However, that was when it was set to cost £4 billion; but it has rocketed to £30 billion and applies to nine out of 10 households. So who are all the people who were not in his original plan but became included later on? Who were the unexpected beneficiaries? Did Gordon Brown never intend some or all of those who may lose out now to be winners in the first place? I simply do not know, but I cannot imagine that he intended the costs to rocket as they have, and for so many other people to be included.
There have been intriguing suggestions about where the Chancellor could get alternative funding so that there are no losers. However, the whole point is that welfare spending is out of control and has to be cut. Taking away what has been given, even if it was not justified or intended in the first place, is never easy but we all know what the long-term sustainable solution is. It is a big hike in the minimum wage until it eventually becomes the real living wage. We cannot reduce welfare dependency while large multibillion pound companies are paying poverty wages and depending on the taxpayer to pay their employees what they should be paying them in the first place. I make no apologies for returning to this theme for the fourth time this year. We have the fastest growing economy in the G8. Business is flourishing and businesses should pay their workers a lot more than the present minimum wage. I urge the Chancellor to increase the rate still further next year and ignore the usual sob stories of the CBI. We will reduce the welfare bill when people working 40 hours per week get sufficient pay on which to live, without other taxpayers having to top it up. We have a long way to go but the Bill is another step in the right direction, and I commend it to the House.
Lord Layard (Lab)
My Lords, I will make just one, completely simple, point. If you are on ESA because of mental illness, you are sick. If you are sick, you ought to be in treatment. It is an astonishing fact than under half of the people on ESA by virtue of mental illness are in any form of treatment: a crazy situation. If we really want to get these people back into work, the most important thing would be to help them get better. They should be in treatment and the purpose of the Bill should include the effort to get them into it.
So how can this be done? The vast majority of mentally ill people on ESA are suffering from depression or anxiety disorders. For all these conditions, NICE recommends the offer of psychological therapy. For severe depression and some anxiety disorders, it also recommends medication, but we know from the evidence that most patients would prefer psychological therapy. However, until 2008, NICE-recommended psychological therapy was hardly available at all on the NHS to this group of patients. Since then, however, the Improving Access to Psychological Therapies services have become available nationwide—partly due to the efforts of the noble Lord, Lord Lansley—and in the past 12 months these services saw nearly a million people.
Incidentally, the services have different names, and your Lordships may not always realise that what they are talking about and seeing is an IAPT service—I will just use the term IAPT. The key step, therefore, is to ensure that every person with depression or an anxiety disorder who is awarded ESA is referred to an IAPT service. I am planning to move an amendment—I hope in agreement with the Minister—to ensure that this happens. It should happen as automatically as possible, although we should allow the claimant to decline. We should make sure that this is an automatic part of the procedure.
The first step would be to get the claimant an assessment of his health problem. Your Lordships may not be aware of the extraordinary situation that, when people come on to ESA with depression or anxiety disorders, the vast majority will never have received a diagnosis of what is wrong with them and will have no specialist assessment of what their problem really is. They will have seen their GP, but for most of them that will be all, unless they have been referred to an IAPT service. What we need is a mechanism whereby all those coming on to ESA are automatically offered an assessment by the IAPT service locally and, following that, suitable psychological therapy. Ideally, this could all be arranged on the first day after the award of ESA, when the claimant is called to the jobcentre to be allocated to the Work Programme. Next they would be invited to go along the corridor to see Mrs or Mr So-and-so. This has to be the way to go.
By contrast, it has sometimes been suggested that we should create a separate system of psychological therapy for people whose mental health problems are affecting their employment. However, it would be extremely costly to build up a separate system; and when we have one system that is working well, that is what we should build on and use. But of course it needs improving. In particular, it needs to include professional employment support for those looking for work or at risk of job loss. This was a central feature of the original design for IAPT, which, in fact, prescribed one employment support worker for every eight therapists. Unfortunately, the Department for Work and Pensions objected to this suggestion by the Department of Health and said it was its own job to do it, but then it failed to get the money and the job did not get done at all. This is, roughly speaking, what has continued to the present day.
Fortunately, the Government—led by the Minister—have now piloted a system of individual placement and support, which will be introduced within the IAPT services. That is excellent news. Obviously, the best location for employment support workers is within the therapeutic team so that they can exchange their understanding of the claimants’ problems. However, for any of this to work, the claimants must first be referred to an IAPT service. As I said, half of them are not referred to anything and are in no treatment of any sort, so the key issue is to make that happen. But could the IAPT services cope with the extra numbers of people? The answer is yes, if the resources are provided. Of course, no alternative system could cope either without the resources being provided.
Where we are now is that the IAPT services are seeing 15% of all the adults in the community with depression and anxiety disorders. The Department of Health has proposed to the spending review that this should rise to 25% by 2020. In my view, expansion on that scale is vital, on the grounds of parity of esteem for the claimant and of simple, common-sense economics. When people recover from depression and anxiety disorders, there are massive savings in reduced welfare payments, increased tax receipts and reduced costs of physical healthcare. Our calculations are that if the proposed expansion from 15% to 25% is allowed to happen over the next five years, the public debt in Britain in 2020 will be £1 billion lower than if we did not have the expansion that we need to have. This is because clinicians recognise employment issues as an indicator of clinical priority. Work can be a major therapeutic agent. We can confidently say that the IAPT services would respond if they were given the job of treating this group of patients. The bigger doubt is about the willingness of the jobcentres to refer people; we have had a lot of trouble trying to make that happen. That is why we need legislation to ensure that a rational system of referral is put in place.
I know that the Minister is very interested in this issue and I hope that he can help us to devise a practical solution for the present absurd situation. What we have is taxpayers paying billions of pounds to people who are unable to work due to a treatable condition, for which they are not being treated. This cannot make any sense. It makes no sense for the people themselves, for whom it results in terrible hardship, or for the Exchequer. It is time that these people got the treatment that they desperately need.
Baroness Doocey (LD)
My Lords, the Government's pledge to halve the rate of unemployment for disabled people is very welcome, but I question whether their proposals will deliver that promise. The Bill requires the Secretary of State to report back to Parliament on progress towards full employment, apprenticeships and work with so-called troubled families, but there is no mention of reporting back about progress on halving the disability employment gap. Why? What of the action the Bill proposes to support disabled people into work?
The biggest barrier to overcoming the disability employment gap is employer attitudes. Most disabled people lose out on a job because of the way employers perceive their disability. Employers may sign up to the guaranteed interview scheme for disabled people, and I recognise that the public sector leads the way on this, but real-life experience suggests that this is all too often a tick-box exercise that simply raises false hope.
Take the example of a young man I know who is blind. He left university with an excellent degree. His interpersonal skills and his writing ability are second to none, and he has excellent computer skills, yet he has spent much of the last 12 years searching for paid employment. He could paper the walls with the rejection letters he has received in that time. His experience in interviews has left him convinced that even the most enlightened employers see disabled applicants as simply too risky. The Bill does nothing to tackle the discrimination that people like him face when looking for work.
The second barrier to work for disabled people is inadequate support to help them find work. The Work Programme has a very poor record of supporting disabled people to find work, and the feedback that I have received from disabled people suggests that disability advisers at jobcentres—if available at all—are less than good. The majority of employers are small enterprises, which will not necessarily have practical adaptions such as disabled toilets or lifts, which are essential for people with disabilities. Employers who employ disabled people therefore need to be certain that specialist support and accurate practical advice are available from government, easy to access and professionally delivered. A poor experience will simply reinforce employment prejudices against disabled people. Without a coherent, consistent and locally tailored service to support disabled people into and in work, Ministers will fail to make real progress in cutting the disability employment gap.
Not only does the Bill not do enough to tackle the barriers that disabled people face in finding work, it does nothing to fix the woeful record of the work capability assessment. The failure of the assessment has been bought home to me by the experiences of a close friend. Injured in a motoring collision, my friend Ann has endured years and years of successive operations and chronic back pain. Her pain clinic judged her unable to stand for more than three minutes at a time, yet, despite that, she was classified by the government system as fit for work until her consultant was so concerned that he waded in and helped to get her reassessed.
While doing nothing to confront the frequently inaccurate assessments, the Bill does address those who are considered unfit to work now but who may be fit to work at some time in the future—the work-related activity group. For the sick and disabled people in this group, Ministers plan a £30 a week cut in the employment and support allowance, claiming that this will incentivise them to find work. If the Government’s tough, not to say harsh, assessment regime has judged them unfit to work, what do Ministers expect the £30 a week cut to do? Do they think it will act as some kind of miracle cure for their illness or disability?
The language of the Bill, and that used by Minsters, in talking about incentivising disabled people to work is patronising in the extreme. Disabled people want to work; disabled people do not need to be incentivised. What disabled people need is for government, and society as a whole, to work at removing the barriers placed in their way—barriers that hundreds of thousands of disabled people who are in work overcome every day, often with Herculean effort, energy and patience.
The Bill as drafted will move disabled people further away from the workplace and act as a disincentive for people in the work-related activity group. In addition, it does not answer the fundamental question: what do the Government plan to do to educate non-disabled employers and recruiters about employing disabled people? I look forward to addressing these issues further in Committee.
Lord Rix (CB)
My Lords, first, I must apologise for being absent from your Lordships’ House for the last 18 months, but a touch of cancer, a pleural effusion and other ghastly things which can happen to people approaching their 92nd birthday have, understandably, kept me otherwise occupied.
It is of course people with a learning disability with whom I am most concerned. While there are some things to welcome, a number of clauses in the Bill will hurt many people with a learning disability, together with their families and carers. There are 1.5 million people with a learning disability in the United Kingdom and, while we have come a long way in building a more inclusive society, understandably many are on the margins, few are employed and many live in poverty or close to it. The Government have said that they will protect vulnerable and disabled people, and indeed it was clear in the Conservative manifesto that that was their intention, but I fail to see how the Bill meets that commitment.
One should of course give credit where credit is due, and it is extremely welcome that the Government have chosen to protect the disability living allowance and its replacement, the personal independence payment, from these cuts. Many people with a learning disability rely on these payments to make ends meet. However, those with mild and moderate learning disabilities are not always in receipt of DLA and PIP and so would be adversely affected by the benefit cuts and benefit freeze. The majority in this group are on employment and support allowance, a benefit specifically for people found unfit for work on account of their disability or illness.
Regrettably, the Bill also proposes cutting employment and support allowance for new claimants in the work-related activity group by around £30 a week. Currently, there are half a million sick and disabled people in this group, almost a quarter of a million of whom have mental health problems, autism or learning disabilities. These are people found unfit for work, albeit encouraged to take steps towards work, training and the like. Cutting their benefits from £102 to £73 a week is going to have a huge impact on this group. Fewer than one in 10 people with a learning disability are in work and are reliant on this much-needed income in order to make ends meet.
The Government have stated that the cut is to remove financial disincentives to work. This seems to imply that people with a learning disability are living a life of luxury on benefits, free from the desire to work. This is, frankly, insulting. There are of course barriers to work for people with a learning disability, ranging from employer attitudes to a lack of support in finding work, integrating and staying in work. The Government have pledged additional money to support people into work by the end of this Parliament, which is a welcome commitment. I hope that the Minister can confirm that a proportion of this money will be spent on those with significant barriers to overcome, including those with a learning disability.
I look forward to Committee on the Bill. Alas, I do not know how much of a role I will be able to play in the House over the coming debates, but I certainly hope that my colleagues will speak on behalf of those with a learning disability if I am unable to do so.
In conclusion, I wish to ask a question to which the Minister may find it a little difficult to give an honest answer. Where is the evidence that cutting benefits results in more people with a learning disability getting a job? I rest my case.
Lord Lupton (Con) (Maiden Speech)
My Lords, it is a great honour to stand here as a Member of this House and to speak for the first time. I begin by expressing my thanks to noble Lords on all sides of the House for the warmth of the welcome I have received. The huge amount of support available to newcomers such as myself from your Lordships, the doorkeepers, the clerks, the Library, the IT support staff, the Pass Office, the dining rooms and all the members of staff have greatly eased the rites of passage, and I thank your Lordships and them warmly.
I should also like to thank my supporters for their advice and encouragement: the noble Baroness, Lady Kennedy of The Shaws, whom I first met three years ago when I joined the board of trustees of the British Museum—an arrival she immediately celebrated by announcing her departure—and my noble friend Lord Rose of Monewden, who has been a business friend for many years. I could have no finer supporters, spanning, as they do, my interests in business, the arts and the not-for-profit sector.
Finally, I give thanks to my noble friend Lord Borwick, who has approached his duties as mentor with exemplary zeal. Two weeks ago, I made the mistake of mentioning to my noble friend that I was about to spend an early Friday evening with my pass and a map familiarising myself with this building. Within minutes, I received an email from him listing six obscure rooms that I had to find—a very upmarket sort of treasure hunt.
I am glad to make my maiden speech on a subject so vital as the Welfare Reform and Work Bill. I support the Minister’s aims for the Bill, and in particular I want to highlight the work of the troubled families programme, which the Bill seeks to enhance. Based on my family’s active interest in the welfare of those children right at the bottom of the social pile in the UK, I feel that the troubled families programme is on the right track but still has a lot to do. I suggest that more focus be brought to the needs of the most troubled children in our society.
I should like to put my speech in context. My two brothers and I grew up in a beautiful part of north Lancashire, where my father ran our long-established textile engineering business from a dark, satanic mill in Accrington, until the de-industrialisation of our UK cotton industry put it, and its many employees, out of business some years after my father’s retirement. We were brought up in an environment where love and mutual respect were strong; where hard work was expected; where ambition and, yes, competition were encouraged; where knowledge was held precious; and where the concept of community service was regarded as the expected norm. We lacked for nothing but we were taught not to want everything. It was a perfect childhood, and it gave me the foundation and all the tools to make the best of my life. Would that every child in Britain should be so lucky.
That brings me back to the Bill. It is right to highlight that income may be important in measuring poverty, but it is not the only measure. The Centre for Social Justice report, Reforming the Child Poverty Act, highlights the five measures of worklessness, family breakdown, educational failure, addiction and serious personal debt as elements of an interconnected problem that income-only based definitions of poverty fail to cover. To end poverty in this country, we cannot afford to just play with statistics; we have to strike at its underlying causes.
That is what makes the work of the troubled families programme indispensable. This programme aims to identify families in difficulty who have complex needs at a local level, and to intervene to help them directly. Three years ago, the Prime Minister set local councils the challenge of joining up services to help 120,000 such families. By now, 116,000 such families have been helped, but we simply cannot stop here. In its 2012 report, the riots panel estimated that there are around 500,000 “forgotten families” experiencing multiple disadvantages that require intensive intervention. This is a major problem of our age and of our society.
I want to go further: I have a concern that there is a whole class of young—sometimes very young—damaged children effectively growing up alone, in that they are not even part of what we think of as a family. They are not in families at all. I have met teenagers with six siblings, each from a different father. I have met children who have been physically and emotionally abused by their mother’s boyfriends. I have met children who have been excluded from school aged 13 because they have never been given a concept of boundaries and acceptable behaviour, and children who have turned to committing sexual acts on the street at that young age to fund their mother’s heroin addiction.
Why would children as young as 12 or 13 be on the street alone? Because they may have been excluded from school for their almost feral misbehaviour, caused by their lack of any upbringing. The school will have complied with DfE guidance by notifying a parent of their exclusion, whether or not any mother, father or guardian was capable of picking them up, due to their own inadequacies. Surely, that is a case where the law is failing in practice in its primary duty of care to the child rather than the school.
One might consider such a child to be beyond hope. However, it is remarkable how the human spirit can overcome impossible obstacles in the desire to survive and thrive—given help. I saw this last Friday afternoon, when my wife and I visited the Mulberry Bush School near Oxford. I declare an interest, as our family charitable foundation has recently made a small initial grant to the school. We saw first-hand the inspirational help that that school gives to some of the most damaged children in the UK, from the ages of five to 13. These are children who, in the school’s own words, have,
“been so constantly deprived and frustrated that they are full of helpless rage, which one day will manifest as panic, violence and destruction, and we must find ways to intervene early to break this destructive cycle”.
I ended our visit to the school having a conversation about shifting continental tectonic plates with a lively 12 year-old boy who only two years ago could not read or write a word; nor could he express himself intelligibly.
A good upbringing is not available to all children because, as the CSJ says in its report:
“Many of these parents received poor parenting themselves when they were children so the cycle continues unless the right intervention is given”.
We have a moral, social and economic need to intervene.
The children I describe seem, through no fault of their own, to fall between the lack of statutory duties of the DfE after they are excluded from school and the DWP, because of their young age. That is why the troubled families programme is so vital. It specialises in a whole-family approach, it cuts through jurisdictions and statistics, and it helps people who need it most. It uses many different models to fill the gap that I describe.
My point is that the new reporting requirements for the troubled families programme as set out in the Bill are a useful step in the right direction. But there is so much more to develop, not least whether there are more relevant ways to measure success so that the payment-by-results approach can be applied to greater effect and children who somehow survive in what is anything but a family unit are scooped up into the care net.
We owe it to the legion of “lost families” and “lost children” to intervene. I applaud the direction of travel of the troubled families programme, especially the renewed investment of a further £200 million to add to the £448 million already invested in this programme. I finish by quoting what Confucius is credited with saying some 2,500 years ago:
“The strength of a nation derives from the integrity of the home”.
Some things, my Lords, do not change.
Lord Borwick (Con)
My Lords, I first must congratulate my noble friend Lord Lupton for an outstanding maiden speech, in which he has carelessly set the bar very high indeed for his future performances. I have known the noble Lord for some years, and I know that he is widely respected in the City of London and by his colleagues. To have that combination of wisdom and friendliness is an awesome mixture, which will encourage no end of requests for him to volunteer to help in this House. I predict that we will hear from him those words often muttered in this House, “I wonder why I volunteered for that”.
My noble friend Lord Lupton is clever enough to actually understand the welfare system, while not actually needing it. I recently saw a video on YouTube making the point that it would take the world’s fastest speed-reader more than five days straight to read through the entire UK tax code. The regulations and guidance on the myriad benefits that are available to claim may pose an equally difficult challenge, so much so that I am sure that the ability to really understand the benefits system is a skill that would make anybody employable at a very high level.
I noticed that the benefits cap puts a cap on a total of 14 different benefits. We have a structure so convoluted that I am not sure that anybody who administers it can really control it. Universal credit will do much to simplify the system but there are still dozens more benefits, which keeps things complex.
Perhaps much of the complexity came from a previous Chancellor, Gordon Brown, a man who is reputed to believe that anybody can understand this composite cat’s cradle. I am not sure how many claimants get all 14 benefits, but the sooner we get a simpler system in place, the better.
So, the benefit cap—at £23,000 in London and £20,000 elsewhere—has to be a step forward. I wonder, though, whether future claimants will regard it as a new measure of success to get the maximum rather than anything less. I am sure that we can rely on the benefits system to retain enough complexity to keep people employed.
I wanted to talk about Clause 20, an important clause which manages to take up 38 lines without using the one word which describes the subject of that clause—Motability. Clause 20 takes up those 38 lines, and only manages to improve the Government’s deficit by charging Motability a sum of about £1 million. Every million pounds counts, we are told.
The Motability scheme has been a great success over very many years. Founded by my noble friend Lord Sterling, it has enabled millions of disabled people to get a car—which would otherwise have been impossible. Indeed, it has provided finance to a group who may be described as being about the only big group in our society unable to obtain finance. This is partly because of the well-known fact that poverty is inextricably linked with disability. The regular stream of income from welfare payments is irrevocably diverted to the Motability scheme for the length of the finance term. Because of this, Motability has been able to obtain catering quantities of finance to lend to disabled borrowers. It has then been able to use its buying power, as the largest individual purchaser of cars, to obtain discounts unavailable to other people. Of course, there is a further enormous difference in the VAT position. VAT is not charged on vehicles purchased by Motability, but a second-hand car is generally sold without VAT.
I may have a certain advantage over other noble Lords in that I had the privilege of running a portion of the Motability scheme. That involved financing wheelchairs and scooters, in partnership with a great charity called the Enham Trust, for a period of seven or so years until we sold it back to Motability Finance. So I have no interest to declare, but I do have a certain amount of out-of-date knowledge and a lot of respect for the people who run the Motability scheme. When I took over the powered wheelchair finance scheme, I little realised that I was entering a trade that made the fictional Arthur Daley look like an angel. The scams, rip-offs and downright fraud, with disabled people as the victims, were amazing. We sorted out the book and got rid of most of the bad dealers, promoting the good ones and serving the customers much better.
One thing always puzzled me about the car scheme—the way that the scheme provided the same sort of car, including insurance, everywhere in the UK. That was because the level of benefit was identical throughout the UK, despite car insurance varying widely in price depending on where you lived. Essentially, then, disabled customers in countryside areas, or perhaps with small mileages, were subsidising disabled customers who lived in London or Northern Ireland—places with historically higher insurance rates.
Given the immense problems which disabled people generally face, perhaps one group of disabled people having an unfair advantage over another is not the worst problem that can perplex noble Lords who are trying to do the right thing. Maybe we should try to do something about why disabled people are generally poor, or why poor people have a greater chance of becoming disabled. There are difficulties with both, but I feel that the problems of cross-subsidies could perhaps be ameliorated by the structure hinted at in this Bill—that of introducing more competition into the Motability scheme. If there were a choice of finance providers, such bias in the system would soon disappear. There is a king-sized danger of vulnerable customers being mistreated, as there is in any finance scheme, but competition and good regulation have a way of driving out the bad guys.
The great success of the Motability structure over the last 40-odd years of its existence is that it has really changed the market. It has moved disabled drivers from those horrible three-wheeler Invacare trikes, known to most people as Noddy cars—and usually mistaken for Reliant Robins—into a system where, if you were looking for the group with the highest percentage of new cars, it would probably be younger, mobility-impaired, disabled people. That they have more new cars, financed at cheap rates, is a triumph. So this partnership between a charity and a finance company is a powerful structure.
Why do we limit it to things with wheels? Could it not be widened to embrace parts of the health service and benefit distribution as well? Noble Lords on all sides of this House would encourage the Government to do more of what they do well. Noble Lords on this side would like to stop the Government doing things they do badly. Surely the Motability system is one of the best organisations that we have, so we should look at ways to widen the range of things it might do. I wholeheartedly welcome Clause 20 of this Bill, but I ask the Minister whether it could not go further forward on this point.
Baroness Hollis of Heigham (Lab)
My Lords, the wind-up speech on Third Reading of this Bill by the Minister of State at the Department for Work and Pensions, Priti Patel, in the other place on 27 October was remarkable. Much of it was echoed today by the noble Lord, Lord Freud. I believe that almost all her assertions were false, apart from the fact that she supported the Bill. Priti Patel said that welfare spending was out of control; she said it was “unaffordable” and that we needed to make cuts which were “fair to taxpayers”.
That is false. Tax credits did not rise from £1 billion to £30 billion, as was parroted down the other end, but they built on the almost £5 billion base we inherited from the admirable family credit of the noble Lord, Lord Fowler. Some 50% more lone parents entered work with the help of tax credits, and the income support bill fell from £15.7 billion to £2.9 billion between 1996-97 and 2012-13 as women transferred from out-of-work benefits to in-work benefits—tax credits. Add the fact that more than two-thirds of the jobs created between 2008 and 2013 were for people in self-employment with a median income of £10,000, who needed tax credits to survive, and that broadly explains the cash rise. Have we been told that at any point? Oh no, my Lords.
None the less, is the welfare bill unaffordable? No, my Lords, false again. The Office for Budget Responsibility report, Welfare trends, of October 2014, shows that welfare benefits, including pensions, as a share of national income —GDP—which is surely the true test, were 12% in 1983-84 and 12% in 1993-94, and are 12% now. They have not raced away, but have been broadly steady, fluctuating only a little in times of recession. Have Ministers told us that either? Oh no, my Lords.
The Minister in the other place says that we must be “fair to taxpayers”. This assumes that there are two tribes—benefit recipients and taxpayers. We heard something about this today. Professor Sir John Hills’ research shows that even the poorest pay for half the benefits they get back through their national insurance and taxes, especially indirect taxes. The mirror-opposite is true: most of us get back most of what we pay in over our lifetime. As my noble friend Lady Sherlock said, social security smooths out and supports us. This happens if we have children, through child benefit; if we experience a broken marriage, unemployment or under-employment, disability, caring responsibilities, bereavement or old age. Speaking personally, while paying taxes every year, I have also received benefits to help smooth five of those seven life-changing circumstances. That will be true for many of us here. Indeed, over the course of 18 years, half the population has needed and received a means-tested benefit. There are not two tribes of taxpayers and benefit takers. It is a fact that almost all of us are both, often at the same time, one with another. Shame on those who deliberately inflame social hatreds with such malevolent fictions.
The Minister in the other place also claimed that she was part of the “one nation Government”. Equally, the Prime Minister has talked about “compassionate Conservatism”. Really, then why are we loading these expenditure cuts on the backs of the poor? Why push the poor into debt to help the Government out of it? Compassionate Conservatism? We have heard about ESA. Disabled people want to work, but DWP work programmes have failed, so now the Government are going to press them into work by cutting their benefit by £30 a week to JSA levels. Most of them will not work because they cannot. Instead, they will appeal, as nearly 40% of them do now, and more than half will win those appeals. They will move further away from work into the long-term support group of ESA instead.
Compassionate Conservatism? Let us take the benefits cap. Half the 120,000 affected families, larger families living in the private rented sector, will lose more than £50 a week. The Government cut local housing allowance because a couple of years ago the noble Lord, Lord Freud, believed, against all the evidence, that this would bring down private sector rents. He was wrong; it has not and it will not. Only an increase in the building of new social and affordable rented homes will check rents. Instead, with its 1% cut, the Bill does exactly the opposite. You could not make it up. It will remove around 19,000 prospective local authority homes and probably even more housing association homes from potential construction. Norwich, Milton Keynes and Cambridge are cities with high housing demand, but they will cut back their supply. From next April, a capped family of four will not get enough housing benefit to pay for any private rented home in London. I am told that a capped family of five will not be able to pay for a three-bedroom housing association property anywhere in the country. One nation? There is not even one city as the poor are moved on and out, destabilising the very family life that Mr Duncan Smith calls for.
Finally, in the name of compassionate Conservatism, let us take children. The Prime Minister and the Chief Whip told the country during the election that child tax credits would not be cut, but in fact they will be. In addition, the Government will remove funding of £3,325 from the family element for the third child and more, even if that child is disabled—from Catholic, Jewish and BME children; from families who have offered kinship care; from one in seven families. We do not refuse the third child his school place or her hospital visit because every child matters—except to the DWP. We do not even deny better-off families child benefit for the third child. Most European countries actually increase support for larger families because they care about child poverty, but not this Government. Suffer the little children in larger families—and they will indeed suffer, to our shame.
The Minister, Priti Patel, went on to say:
“This Government are committed to working to eliminate child poverty and to improving life chances”.—[Official Report, Commons, 27/10/15; col. 305.]
That is impossible. Every measure in this Bill will increase, not eliminate, child poverty. No doubt that is why the Government will no longer count the numbers; it is too awkward. Instead, we get “life chances”, allegedly determined by worklessness and educational attainment, along with addiction and other issues thrown in. This is grotesque.
Worklessness? Some two-thirds of children in workless families are not in poverty, while two-thirds of children in poverty are in working families. The research is unambiguous. Life chances are determined by income, not, as the Secretary of State seems to believe, the other way around. In the 19th century there was a belief that if you could only remoralise the poor, there would be fewer of them, or possibly none of them. A few sentences later in the same debate, the Commons Minister insists that the Government,
“are absolutely committed to protecting the most vulnerable in society”.—[Official Report, Commons, 27/10/15; col. 306.]
Unless, of course, they are disabled and in a WRAG, or vulnerable children.
That brings me to the Government’s final claim: that they are the workers’ party. It is a pity, then, that working families on tax credits and UC will be poorer in the future. MPs swagger down at the other end, telling them to work longer and harder, but for what? After tax, national insurance, and HB and council tax tapers, low-income families on tax credits will lose 96p in the pound for every extra hour they work. They will keep 4p. Even with UC, which I support, the same family will keep just 19p in the pound. Does 4p in the pound per hour really make work pay? Would any lone parent, mother or indeed any of us trade an hour caring for our children to earn 4p an hour? I would not. Or does the DWP propose to sanction her into it? As the Spectator said, these are battles of choice by the Government, not battles of necessity. They do not need to do it. Please spare us unctuous phrases like, “difficult decisions” and “hard choices”. For whom, exactly? They are not for Government Ministers. The hard choices and harder lives will fall on the working poor, on disabled people in WRAG and on children as people struggle to avoid debt, arrears and eviction, as their health deteriorates and their families break up. That is the offer in this Bill from a self-professed one-nation Government. We can surely do better than this.
Lord Low of Dalston (CB)
My Lords, here we go again with another round of ideologically driven cuts to welfare. I say “ideologically driven” because we do not need all this austerity. This is not the moment to argue the point, but we do not. Even if we did, requiring the poor to bear the brunt of it reflects a highly retrograde sense of priorities. Be in no doubt: this Bill represents a clear government decision as to their priorities, which could have been otherwise. It is the brainchild of people who are on a mission to shrink the state. Welfare can disincentivise work and keep people in a state of dependency, and that is rightly being tackled, but overwhelmingly, welfare benefits are paid to people in need and are the product of a society which increased prosperity and increased state provision has made increasingly civilised. The Bill legislates for a raft of cuts to meet the Government’s target of cutting £12 billion from the welfare budget. That cannot but have a devastating impact on poor people who depend on benefits. We should remember that Tony Blair was reputed to have asked what you had to do to save £1 billion on welfare. He was told that 1 million people have to lose £1,000, so 12 million people will have to lose £1,000, which is an awful lot.
These cuts are likely to have a disproportionate impact on disabled people, which I begin by highlighting. Here I declare my interest as a vice-president of the RNIB. The Government have made a welcome commitment to protect DLA and its replacement, personal independence payment, from the proposed cuts. However, the Bill cuts a number of working-age benefits that disabled people are disproportionately likely to receive, such as ESA, JSA, housing benefit, tax credits and the new universal credit. Households with disabled members in receipt of DLA/PIP or who are in the ESA support group are exempt from the benefit cap. However, many disabled people do not fall into these categories. In particular, those in the ESA WRAG group would be subject to the cap, despite being found unfit for work and despite DWP research showing that only half of those in this group were also claiming DLA/PIP.
The Bill freezes a number of key benefits that many disabled people receive, such as JSA, housing benefit and universal credit. Those on DLA/PIP are exempted from the four-year freeze, but specific elements targeted at disabled people, such as the basic rate and work-related components of ESA, housing benefit and the limited-capability work component of universal credit, are frozen. These are clearly matters we will want to pursue in Committee. I merely flag them up. I do not propose to pursue the impact on disabled people further this evening because, along with the noble Baronesses, Lady Meacher and Lady Grey-Thompson, I am carrying out a review, supported by a number of disability charities, of the impact of the cuts in ESA for those in the WRAG group and it is best that I do not anticipate the review.
Instead, I want to talk about two issues in the context of the Bill: first, how claimants might get the support and advice they need to adjust to the changes; and, secondly, how to protect against the worst effects of sanctions hitting the most vulnerable. For the past three years, I have been chairing a commission on the future of advice on social welfare issues, which has highlighted these issues for me.
Starting with information and advice, every time we debate new measures on welfare in this House, we find that the complexity of the regulations and rules around things such as conditions of entitlement, contributory and non-contributory elements, time limits, disability benefits assessment descriptors and differential withdrawal tapers baffle even the most expert. How much more baffling must the system be to claimants who have to grapple with long and unclear forms, technical language and shifting entitlement rules? For those in insecure employment or in and out of low-paid work, just calculating income accurately can be a nightmare. Even when claimants get all their information right, the system is prone to error. DWP estimates that just as a result of simple administrative errors, claimants are underpaid by £1.4 billion and overpaid by £2.4 billion. Then there is the vast number of decisions that DWP gets wrong. The success rate on appeals runs at more than 56%, despite the introduction of mandatory reconsideration.
Universal credit claims to tackle, and eventually remove, many of the system’s complexities, but, as it proceeds laboriously through stage-by-stage implementation to absorb new rules and aggregate different benefit entitlements, new complexities emerge. For example, there is a misunderstanding of the rules or gateway conditions governing who is eligible to claim universal credit in the first place and whether tax rebates count as earnings under universal credit, and the regulations now differ significantly between digital trial areas and elsewhere. New residency rules and interaction with child benefit and child tax credits are a further source of confusion.
Universal credit implementation and the ongoing impact of the 2012 reforms affecting disabled people’s transition into either the new ESA or PIP regimes are generating additional pressures on advice agencies as more people seek support on how to claim, how changes to benefits calculations affect their household income and how to challenge decisions through the tortuous reconsideration and redress process. All but second-tier appellate tribunal issues have been taken out of the scope of legal aid and local government funding for welfare rights advice has also taken a massive hit. The availability and quality of advice has been adversely affected as demand has rocketed. More than one-third of the issues that present to the CAB network concern welfare benefits. Last year, there were around 1.8 million issues spread over nearly 650,000 clients, overtaking debt as the largest category of individuals that CABs deal with. Our commission argues that a new strategy for advice should be put in place on an invest-to-save basis and on the basis that early preventive rights-based advice, provided through CABs and other agencies, can save resources in other parts of our public sector welfare and support systems as well as in health and criminal justice.
Cabinet Ministers appear to recognise that intermediaries and advice can play an important part in the welfare system. As part of universal credit delivery, local authorities are expected to play a key support role by arranging provision for face-to-face services for those claimants unable to manage their benefit claim electronically or for those with more complex and multiple needs. The universal credit local support services framework, agreed between DWP and the LGA, has followed from a number of pilots. The model is based on partnership working between DWP and jobcentres, local authorities and contracted providers, such as housing associations, including in the voluntary sector, and with money advice agencies as key delivery partners. There is also some specific outcome-based funding support from DWP to local authorities for the programme, which I hope will be protected from the Chancellor’s cuts. Overall, this initiative is very welcome, although the stress is on financial capability, that is to say budgeting on benefits-supported lower incomes, and on supplementing back-to-work support rather than welfare rights, income maximisation and related social need.
How much help is this programme really delivering? How many delivery partnership agreements have been signed? So far the Minister has announced only 11 local partnerships, the same partnerships that were piloting this approach before. If this is the scale of the scheme, then it hardly qualifies as universal support. The Bill should address whether the information and advice support services’ framework for welfare reform should be put on to a statutory and less discretionary footing or should at least form part of DWP’s statutory guidance, perhaps linked to the information and advice strategies that local authorities are having to prepare to meet their obligations under the Care Act 2014. This statutory guidance approach could also make it clear that expectations around delivery must be factored into local commissioning or grant-making arrangements that councils use to support their local advice sectors. The whole universal support process should be one of co-production between statutory agencies and the independent advice sector to underpin the proposed delivery partnership agreements.
The second issue is the growing concern about the use of sanctions in our benefits system. There are protections or safeguards in DWP guidance dating back to 2000 to prevent automatic sanctions applying to vulnerable claimants or to claimants with complex needs, based on social services data and mental health status and, if necessary, home visits. However, as legislation and regulations have become more complex while, at the same time, reinforcing conditionality and sanctions as approaches to encouraging work-seeking behaviours, this guidance is becoming increasingly outdated and weak. This is especially the case in respect of universal credit claims, new JSA claimants and clients of Work Programme providers. There is also often a lack of awareness of the safeguards among DWP and Work Programme provider staff. The Work and Pensions Select Committee report on sanctions after the Oakley review recommended that safeguards should be included in legislation. This Bill gives us the opportunity, and I shall be bringing forward amendments to bring that about.
Earl Cathcart (Con)
My Lords, this is the first time I have spoken in a welfare Bill. What caught my eye was the clause on social housing rents, under which the social housing sector, which provides affordable housing, must reduce rents by 1% a year for four years. My initial response was that it might cause some controversy, but I see that the social housing sector has increased its rents by 20% since 2010, which is more than double any increase in the private landlord sector. As a private landlord, I do not see how the social housing sector managed to get away with that. It is unfair on its tenants and, indeed, the taxpayer, who has to pick up the tab for these increases—so much for affordable housing. I support this measure.
Private sector landlords play an increasingly important role in the rented housing market. The number of properties rented by private landlords has doubled in the past 10 years and they now account for 4.2 million properties for rent, more than half the total rental stock. Private sector landlords also play an increasingly important role in housing those in receipt of benefits. According to Department for Work and Pensions statistics, as of August, around 32% of all housing benefit claimants lived in private rented accommodation.
As the market tightens due to increased demand, it is important to encourage and support landlords to house those in receipt of universal credit so that they are able to access accommodation, otherwise they will find themselves at the back of the queue. It is vital that landlords have full confidence that they will be paid in full and on time if vulnerable tenants are to have access to the rented homes they need. This is especially important since the Government took away the option for tenants to ask that the housing element of universal credit be paid directly to the landlord, as was formerly allowed under housing benefit, even though many tenants want to do this. In October 2012, a survey of more than 1,000 landlords carried out by the Residential Landlords Association and the Scottish Association of Landlords found that more than 91% of landlords were less likely to rent to tenants on benefits as a result of the decision not automatically to make payment of the benefit direct to the landlord, even when a tenant reaches eight weeks’ worth of rent arrears. It would be good if the Government brought forward an amendment allowing the housing element of universal credit to be paid directly to the landlord. That is my first point.
There are two other measures that should be included in the Bill to assist with giving landlords the confidence they need. The first is that landlords need information on payment of universal credit. Landlords need assurances that tenants have the funds available to pay their rent. Without these, renting to them becomes a risky proposition. Currently, private landlords have no information about the level of payment of universal credit to tenants or about when it will be paid. To provide confidence to a landlord, tenants should be allowed to give their consent to their landlord accessing a limited amount of information to confirm that a universal credit claim has been made and to check the status of that claim. I understand that social landlords are able to gain such information, so why not private landlords? For tenants in work, landlords always ask for a reference from employers to establish their income to ensure that funds are available to cover the rent. It must surely be common sense for landlords to be able to do likewise for those in receipt of housing benefit. I hope that in Committee the Government will bring forward an amendment that will ensure that there is a clear legal power, where the tenant provides written consent, for the Department for Work and Pensions to disclose to a landlord information on the housing element of a tenant’s universal credit claim, including the amount and when it is paid.
My last point concerns universal credit claimants’ rent arrears. As benefit claimants may often move home, including to seek work, landlords need the security of knowing that tenants in receipt of universal credit cannot simply stop paying their rent and leave their property. Currently, rent arrears can be recouped where a benefit claimant is still living in the house to which the arrears apply. There is, however, little or no opportunity for landlords to recoup them when such tenants move house unless they are prepared to go through a lengthy and probably costly court process. It is important that measures are put in place to give landlords more confidence that they will not be left facing rent arrears. Knowing that the landlord could recover rent arrears from an ongoing universal credit claim, even after a tenant has left the property, would be a strong disincentive for a tenant to rack up arrears in the first place. I hope the Minister will bring forward a measure in the Bill that will ensure that rent arrears follow a tenant in receipt of universal credit, and that landlords affected have a clear route to reclaim the lost rent in such circumstances. I hope the Minister will look favourably on my three points, but I shall not hold my breath.
Baroness Bakewell (Lab)
My Lords, in considering the implications of this Bill for our society, I invoke the judgment of Adam Smith, author of The Wealth of Nations and acclaimed founder of the economic theory that gave birth to economic liberalism and the free market economy, who is a hero in many people’s eyes. Adam Smith was not just an economist; he was also a philosopher. In his work The Theory of Moral Sentiments he expressed concerns that man in society had obligations other than to give free rein to his ambitions and self-interest. He wrote:
“How selfish-soever man may be supposed, there are evidently some principles in his nature which interest him in the fortune of others, and render their happiness necessary to him”.
From this sprang what is called caring conservatism, a concept already referred today by my noble friend Lady Hollis. It has had a good run for its money, finding expression in Disraeli’s one-nation politics and, in our own day, in David Cameron’s big society.
That very concept is currently being gouged out and hollowed by the cruelties attendant on this Bill. We have been living for some time within a sea change of outlook on the part of our Governments to the public realm and the obligations of the state to care for its citizens. We have seen its impact on civic society. Even the Prime Minister has noticed. In his letter to the Conservative leader of Oxfordshire County Council, he expressed his concern at the cuts to services: elderly day centres, children’s centres, libraries and such. In response, the council leader, a Conservative, wrote:
“I cannot accept your description of a drop in funding of £72 m or 37% as a ‘slight fall’”.
Other local councils are similarly up in arms at the scale of what they are having to cut: libraries, museums, galleries, sports facilities, parks and playgrounds, children’s centres, youth clubs, after-school and holiday clubs, health and safety inspections. All and more are being stripped from the public realm.
Now with this welfare Bill claiming to promote employment we see real cruelty in dealing with people. In the service of whatever ideology or economic imperative these policies are promoting, their scale is now indefensible. This Bill deliberately hits those who are already poor, disabled or young. I ask the Minister to explain in what way this does anything to eliminate the prevailing direction of our society towards ever-greater divisions between rich and poor and how that is defensible in the name of caring conservatism.
Let me now refer to another ideology altogether. I was part of a cultural delegation to China in 1983 when the diktats of Chairman Mao were in full swing, including the one-child family policy. A Chinese friend I met there took me aside and explained that he and his wife had defied the ruling and had two children, for which he had been demoted and financially penalised. Our delegation was scandalised. I little thought that some decades later a Bill before Parliament would be discriminating between the worth of one child and another in the same family. I am equally scandalised today and I am not alone. Faith groups across the country —Baptist, Jewish, Church of England, Church of Scotland, Quaker, Methodist, the United Reformed Church and the Caritas Social Action Network, which is the Catholic bishops—have expressed concerns about Clauses 11 and 12 limiting financial support to the first two children in any family. The government assessment estimates this measure will affect 640,000 families by 2020-21, which will mean at least 2 million children will be affected. We are not China but we are seeking by economic policies to limit family size.
Clause after clause of this Bill attacks the vulnerable. Clauses 7 and 8 lowering the benefit cap will affect 120,000 households forcing—so leaked DWP documents suggest—40,000 children below the poverty line. How can we then reduce poverty and its damning statistics? Clauses 6 and 4 will take care of that, by repealing the existing income-based measures of poverty and replacing them with so-called life chance indicators.
The whole area of disability and assessment, as we have heard from the noble Lord, Lord Low, will need to be carefully scrutinised. While welcoming certain aspects of the Bill’s intentions, Parkinson’s UK is worried, as are many charities, about the impact assessment for Clause 13 to cover the known problems with work capability assessment. We can begin with Clause 1 and ask that the reporting obligations are confirmed.
The Bill flies defiantly in the face of caring conservatism. Its measures, meant to promote employment, need to be scrutinised clause by clause against the damage they will do to the well-being of all our citizens.
Baroness Maddock (LD)
My Lords, I have three relevant declarations of interest. I am vice-president of the Local Government Association, vice-president of National Energy Action, which is a fuel poverty charity, and vice-president of the Sustainable Energy Association. I will confine my remarks this evening to two main areas—the almost wholesale repeal of the Child Poverty Act 2010, and how the fuel poverty strategy put in place during the coalition Government interacts with this Bill.
First, I have a general comment. In another place, the Secretary of State for Work and Pensions, Iain Duncan Smith, said:
“This is a Bill for working Britain … work is the best route out of poverty … being in work should always pay more than being on benefits … spending on welfare should be sustainable and fair to the taxpayer while protecting the most vulnerable”.—[Official Report, Commons, 20/7/15; col. 1258.]
Many of us might agree with quite a lot of that but, when we examine the Bill closely, we find that it does not quite live up to those aims. This is particularly so when we look at the sections on child poverty and life chances. The Bill removes the four poverty targets set out in the Child Poverty Act 2010 and thereby the Government’s duty to meet those targets. Under this Bill, the Secretary of State will have only to report annually on the number of children in workless households and educational attainment at the end of key stage 4. Other noble Lords commented on this earlier. Gone are any targets on income and material deprivation. I recognise that, during the previous Parliament, coalition Ministers called for improved measures of child poverty that would better reflect the causes of poverty but we seem to be—and I apologise for this phrase but I could not find a better one—throwing the baby out with the bath water.
The Government’s evidence review, published in January 2014, indeed showed that long-term worklessness had a very high bearing on the ability of children to exit poverty, as did low earnings. It also showed that low educational attainment had a major effect on the likelihood of poor children becoming poor adults. It was also clear from the review that income levels affected many of the areas that keep children in poverty and lead to poor life chances. There are so many factors that affect children’s ability to do well educationally—not just housing but life experiences and the food they eat, which affects their health. All these are affected by levels of income.
I know that free school meals for all young children, which was pushed against the wishes of some of my Conservative colleagues when we were in coalition, have made a huge difference, not only to family incomes, particularly in my area of north Northumberland, but also to levels of attainment in those children. We have heard rumours that the Government want to close the scheme down. Can the Minister tell us whether this is true or merely a rumour?
In drawing up this Bill, how much attention have the Government paid to duties under the Fuel Poverty (England) Regulations 2014, particularly the legal requirement for the United Kingdom Government to declare how they will reach the new fuel targets in England within six months of the most recent general election? To date, this has not been done and the Energy and Climate Change Committee has already pointed out that the current resources are less than half those required to meet the targets set in that strategy. Has the Department for Work and Pensions looked at how its proposals will affect the numbers in fuel poverty? We know that reduced incomes will send more people—more families, more children—into fuel poverty. Has the Department for Work and Pensions looked at the interaction between any change in the warm home discount and its proposals, particularly any changes to the incomes of low-paid working families with children?
The warm home discount scheme provides automatic electricity bill support for low-income older-age house- holds. For other vulnerable and low-income electricity customers who are not of pensionable age there is a one-off payment of £140. This is not paid automatically but is available to people if they apply in the summer. The policy is paid for through a levy on energy consumers and delivered across Great Britain by obligated energy suppliers. Without an extension this scheme will expire in 2016. It is important to know how these measures will interact with each other. Can the Minister tell us whether his department has taken account of such matters? I realise that it is not directly his responsibility but we urgently need to know what plans the Government have for the warm home discount scheme.
In conclusion, we can all agree that the strategies put in place after the 2010 Act have not led to the level of changes that we would have liked, particularly around child poverty. We all want better results. We have had two strategies with a review in between and now drastic changes to the 2014 strategy. I wonder if the Minister—I am sorry he is not in his place but I understand it is a long time to sit there—can tell us why he thinks we are going to do so much better with the proposals here today. Many think they do not reflect well enough what the 2014 review actually showed. They will certainly help the Government by reducing targets but will they help reduce child poverty? Will they improve the life chances of children in poverty? Having listened to contributions this evening I am quite sure we are going to have robust discussions in Committee and I sincerely hope this will lead to an improved Bill. I hope that we can look further at the issue of fuel poverty.
Baroness Lister of Burtersett (Lab)
My Lords, the title of this Bill is a misnomer. It will not enhance welfare in the true sense of, to fare well. Instead, it will undermine the welfare of families with children in particular—already hit hard by a succession of social security cuts—because, unlike the last welfare reform Bill, which included some genuine reform alongside cuts, this Bill does not. In so far as it promotes work, it does so through the punitive Poor Law “less eligibility” principle and the devaluation of unpaid care work. A truer title would be the “denial and aggravation of child poverty Bill”. It effectively erases child poverty from the legislative lexicon, while together with other measures it could mean a further 600,000 children in poverty by 2020, according to the Resolution Foundation. The Joint Committee on Human Rights, of which I was a member, recommended that the Government should assess the impact on child poverty of any new law, as well as its compatibility with the UN Convention on the Rights of the Child. There is no such assessment, and that with regard to the rights of the child is written in a rose-tinted font.
Instead, as we have heard, the Bill removes all the statutory measures, duties and targets that underpinned this country’s child poverty strategy, which, under the last Labour Government, led to a significant reduction in child poverty. How will the Government now be held accountable for meeting their manifesto pledge to,
“work to eliminate child poverty”?
As for measures, the 2012 consultation balanced a preference for a multidimensional measure, with the statement:
“The Government is not playing a zero-sum game with child poverty measurement”.
This is from the coalition Government, but led by a Conservative in the DWP:
“There can be no doubt that income is a key part of our understanding of child poverty”.
The Government are playing a zero-sum game now. The 2012 consultation demonstrated overwhelming support for the retention of an income measure, as analysis of the responses by Kitty Stewart and Nick Roberts, of the LSE’s Centre for Analysis of Social Exclusion, demonstrates. They found general agreement that low income/material deprivation are the only factors that are reliably able to distinguish those in poverty from those who are not. In evidence to the Public Bill Committee, respected academics branded the proposal as “silly” and warned that we are in danger of becoming “an international laughing stock”. A systematic academic review by CASE demonstrated unequivocally that family income is a key driver of children’s development and opportunities. As a CASE blog observed, not measuring income poverty while professing concern about life chances is little short of bizarre.
The Social Mobility and Child Poverty Commission called for,
“a clear commitment to maintain the centrality of income in measuring poverty”.
Perhaps that is why it is now going to lose child poverty from its remit. Will the Minister explain why that is the case? Given the replacement of the Child Poverty Act with a life chances Act, would it not make sense to call it the “life chances commission”, which would signal a broader remit than the narrow, meritocratic concept of “social mobility”?
Why, when the majority of children now live in households with a parent in work, is there to be no measure that can capture this alongside worklessness? Perhaps one reason is that some of the Bill’s measures, together with other tax credit cuts, are likely to aggravate in-work child poverty. In particular, families “supporting themselves through work”, to quote the Minister, could be hardest hit by the removal of means-tested financial support for third and subsequent children because of the interaction with the benefit cap for out-of-work families. The Children’s Commissioner is one of many who have voiced concerns, pointing out that this does not take account of the way family circumstances can so easily change. Yet, when introducing universal credit, Ministers placed such emphasis on the need for a dynamic understanding of family behaviour. Overall, children in black and minority ethnic families are likely to be disproportionately hurt. Their already high risk of poverty will increase, as will that of disabled children.
Another measure that will bear down particularly hard on larger and minority ethnic families is the reduction in the benefit cap. Now that it is being decoupled from average earnings, the rationale for its level is unclear. The original arguments against the cap have even greater force. As I argued when we last discussed the cap, it is unfair deliberately to reduce the amount of money some families will receive to well below the amount Parliament has determined is the minimum required to meet their needs.
It is even more unfair when, as my noble friend Lady Sherlock pointed out, the Government do not compare like with like when contrasting out-of-work and in-work incomes. No account is taken of the in-work benefits received on top of the comparator earnings, in particular child benefit and child tax credit, yet these benefits are included in the cap. This was pointed out in a recent Supreme Court judgment. Three out of five of the judges believed that the cap is not compliant with the UNCRC’s requirement to treat the best interests of the child as a primary consideration. Although the appeal was not allowed, the hope was expressed that the Government would address the implications of this finding when they review the cap—some hope.
One of the justifications for the cap is to increase work incentives, yet the House of Commons Library observes that,
“there is no general consensus”,
that it is,
“proving an effective means of moving claimants into work”.
Instead, a Community Links study found that when you force people into what they call “survival mode”, it can make finding and keeping a job harder and less of a priority because all you can think about is trying to get by. Also, 6% of those already capped are claiming carer’s allowance. Carers UK warns that many,
“are not in a position to pick up work or further work without reducing or withdrawing the care they provide”.
It asks, as the Government have said that it is not their intention to encourage people to stop caring and go into work, why this policy applies to carers. I hope the Minister has an answer. Also, is it reasonable to expect the 15% of capped lone parents who have a child aged under one to work when they are not required to do so even under the Bill’s further extension of conditionality?
Finally, the benefits freeze comes on top of existing cuts in their real value, which is particularly marked for child benefit and has been described by the IFS as “highly regressive”. The impact assessment notes that women are more likely to be affected than men, which is true of many of the measures. Moreover, as the main managers of poverty, women will bear much of the burden, at the expense of their mental and physical health.
I end with two questions. Will the Minister explain how the family test—which the noble Baroness, Lady Altmann, assured your Lordships’ House would be “strictly applied” to “all new policies”—is applied to a Bill that will spell disproportionate hardship for families with children? Will he explain how this damaging and punitive Bill, which will increase child poverty, is compatible with the Prime Minister’s pledge of,
“an all-out assault on poverty”?
Baroness Hollins (CB)
My Lords, the Government have ambitious aspirations to halve the disability employment gap, to achieve parity of esteem for mental and physical health conditions, and to improve children’s life chances. My remarks will be particularly relevant to Clauses 1 and 13, and are intended to highlight some risks in the Bill and to propose some changes and different approaches.
Clause 1 obliges the Secretary of State to report on progress made towards full employment, but this full employment reporting obligation does not include a breakdown to show whether any progress is being made towards halving the disability employment gap. Such a breakdown would maintain focus on the Government’s welcome manifesto commitment. Does the Minister agree that the reporting duty in the Bill would be strengthened if it included progress towards their wished-for reduction in the disability gap?
The employment rate for people in all disability groups between July and September this year was 47.6%. The gap between unemployment for disabled people and the rest of the population has remained stagnant at 30% for a decade, although it seems to be beginning to grow. People with certain specific disabilities are further underrepresented in the workplace. For example, just 15% of adults with autism are in full-time paid employment.
I have an interest and expertise in learning disability. There are 1.5 million people with a learning disability in the UK. As my noble friend Lord Rix mentioned earlier, fewer than one in 10 adults with a learning disability are in work. Supporting people with a learning disability back to work requires specialist skills. A number of approaches are known to help people with learning disabilities into work. These include skills development; buddying schemes and mentoring; improved access to apprenticeship schemes, especially traineeships and supported internships; and breaking down the structural and societal barriers that prevent people with learning disabilities entering or returning to work. Dr Knight, a psychiatrist colleague and researcher who has helped me with this speech, recently saw three patients with a learning disability. Each of them wanted to work and had experience as a volunteer. None of them, however, has been able to progress to paid employment. The workplace is where efforts should be focused to get people with learning disabilities into work. A good example of that is the recent announcement by NHS England that NHS employers will become model employers of people with learning disabilities. I shall watch that with interest.
The Work and Pensions Committee report Welfare to Work highlighted the ineffectiveness of the current work programme in supporting disabled people into work. It called for a separate, specialist employment programme for disabled people. Scope has produced a range of proposals for what specialist employment support for disabled people could look like. Will the Minister commit to developing detailed plans on specialist employment support for disabled people? The Government have committed an additional £100 million to support people into work by the end of this Parliament, and I join my noble friend Lord Rix in hoping that the Minister will pledge a proportion of the money to getting people with learning disabilities into work.
Clauses 13 and 14 propose to cut the money that new claimants receive within the employment and support allowance work-related activity group, to encourage them to seek work. This group includes more than 490,000 disabled people, the largest group of them having serious mental illness, learning disabilities or autism. Being in this group means that they are not currently fit for work. This might be because of frequent and uncontrollable episodes of aggression or disinhibition; an inability to travel independently outside their home; an inability to learn anything beyond a simple task, such as setting an alarm clock, or an inability to cope with a minor planned change.
The Royal College of Psychiatrists has pointed out that only 8% of people with mental health problems have been helped into work, compared to 24% of those who do not have a health problem. Furthermore, a survey by Rethink found that 78% of respondents said that they would require more support from their GP, community health services or in-patient mental health services if their benefits were cut. A survey by the Disability Rights Coalition found that almost seven in 10 disabled people say that cuts to employment support allowance will cause their health to suffer. Between 2010 and 2013, just over 1 million recipients of the main out-of-work disability benefit had their eligibility reassessed using a new functional checklist, the work capability assessment.
Although reviews of the functioning of the work capability assessment have led to changes in the way that mental disability is assessed, the reviews have not looked at the mental health effects of such reassessments. Doctors and disability rights organisations continue to raise concerns that they have had an adverse effect on the mental health of claimants, but until now there has been no population-level study exploring the health effects of this policy. However, a new study by Dr Barr at Liverpool University was published online yesterday in the Journal of Epidemiology and Community Health. The researchers adjusted for factors known to influence mental ill-health and for baseline conditions. They looked for any association between the reassessments conducted and changes in local rates of suicide, self-reported mental health problems and anti-depressant prescribing rates, in 149 local authorities in England. The researchers found that for each additional 10,000 people who were reassessed there were an additional six suicides, 2,700 cases of reported mental health problems and 7,020 anti-depressant prescriptions, all in working-age adults, and this trend has continued after the economic recovery.
A report of this study in the Guardian today quoted a DWP spokesperson as saying that the researchers did not know how many of the suicides were by people who had had an assessment. This seems to me, however, to miss the point. It is, in the first place, a population-level study—a large epidemiological study. The whole system, however, puts additional mental stress on an already disabled and vulnerable group, and the anticipation of reassessments may be too much for some. The researchers concluded:
“This policy may have had serious adverse consequences for mental health in England, which could outweigh any benefits that arise from moving people off disability benefits”.
These important new findings add weight to the demands from a number of disability charities that Clause 13 should be left out of the Bill altogether. Does the DWP intend to link benefit data to mental health data, including suicide, and how and when will such information be made public? I also agree with the noble Lord, Lord Layard, that being assigned to the ESA WRAG group should trigger referral to IAPT for psychological therapy.
The Bill in its current form has missed a number of opportunities. A focus on welfare rather than help to get back into work misses the opportunity to deliver on the commitment to halve the disability employment gap. There is a missed chance to design proper support to get the 250,000 people with mental health problems who are out of work back into employment. In his eloquent maiden speech the noble Lord, Lord Lansley, suggested that critics of legislative proposals should suggest alternative ways to achieve their goals. I suggest that specialist employment support for disabled people would be more cost-effective than the non-evidence-based so-called financial incentives proposed in this Bill.
Baroness Browning (Con)
My Lords, it is always a great pleasure to follow my noble friend Lady Hollins. I hope that I will not repeat too much of what has been said. I refer the House to the register and my declaration of an interest as vice-president of the National Autistic Society.
I want to focus on the change to the work-related activity group ESA. One group of people has not been mentioned at all so far: the support group, who have been independently assessed and deemed not to have to apply for paid work, and the WRAG group, as we shall call them. For a year, they are required to attend interviews—they are not just left alone, they must attend interviews—but the activity side of it is meant to involve getting back into work. We have heard from across the House today: from the noble Lord, Lord Patel, speaking very knowledgably about cancer patients; from the noble Lord, Lord Layard, speaking about mental health; and from my noble friend, who spoke about learning disability. In that very large WRAG group are a considerable number of people on the autistic spectrum. I pay tribute to the Minister for the interest he has shown in and the time he has devoted to the problem of getting people on the autistic spectrum into paid work. I know that he cares about this issue and has put a lot of time into it since becoming a Minister. I hope he will not think me presumptuous when I say that, to judge by our conversations about this, he knows just how difficult that is.
The point about people on the autistic spectrum is that I know of no other group with disabilities who are so passionate about wanting to take their place in society and become independent, even if it is only working on a part-time basis. They are passionate about wanting to earn some money and be just like everybody else. This is not a group of shirkers or people who are “working” the system. It is not just children who are being newly diagnosed with autism; a lot of quite mature adults are still being diagnosed with it, very often because crisis points develop. I wonder what it is about people on the autistic spectrum which means that in 2017, they will be deemed to live on £30 a week less than the group who have been independently assessed as currently unable to work because of their disability or illness.
The impact assessment, which has been referred to today, is available in the Printed Paper Office. It says that the reduction in the WRAG level of payment will,
“remove the financial incentives that could otherwise discourage claimants from taking steps back to work”.
That is printed in a government document. I have to say to my noble friend Lord Freud that I am disgusted with those words. I am disgusted that they were repeated down the other end and I hope that when my noble friend speaks, he will not in any way pray in aid that concept. We have heard about people such as cancer patients and many people with behavioural problems, autism or mental health problems—and people with complex problems whose disability is often a mixture of more than one of those. Those are very difficult people to help back into work. It is not always impossible but it is difficult. Where is the evidence for that statement in the impact assessment? What evidence have the Government identified from the people in the current WRAG group, who have already been independently assessed and put into the group? What is it about them that has given the Government sufficient evidence to change a policy in such a dramatic way? In 2017, this will almost certainly affect that whole raft of people we have heard about today, whether they are cancer patients undergoing chemotherapy or people newly diagnosed on the autistic spectrum.
I have a feeling that the reason why the Government have gone in this direction is not as obvious as the Treasury putting the DWP’s arm up behind its back and saying, “This is what you are going to do”. Everybody who has served as a Minister will sympathise with my noble friend Lord Freud, because we all know the Treasury’s ability in the art of arm-wrestling. However, the Government need to take a clear look at how they see disability, and to look first of all at the individual. It is quite striking that disability issues, and the Office for Disability Issues, are placed within the DWP—the Minister’s own department. That is considered the right place for them to be. Can the Minister perhaps share with the House in due course what exactly the Office for Disability Issues does? Is it looking across the piece and beyond that important point about getting people into employment, which I do not disagree with? My noble friend will know that I have banged on his door many times to talk about getting disabled people back into work, or into work for the first time. But what is the Office for Disability Issues meant to do?
If we are concerned about disability, surely we are interested in the individual in a holistic way—not just their employment opportunities but the help they receive, their well-being, their housing, their ability to take their place in society and their social environment. Surely that covers almost every piece of legislation dealt with by almost every government department. I wonder whether placing that responsibility in the DWP has made it become narrow and channelled. Perhaps it fails to look outwards at what the real, day-to-day living needs of disabled people are across the piece, particularly those with complex disabilities whom it is not so easy to get into work.
I have been so impressed by companies such as BT, which has made it its mission actively to employ people with mental health conditions. It has done a fantastic job. Right the way through that company’s culture, it now actively looks to employ people with mental health conditions. I have been impressed by what I have seen in some areas regarding the employment of people on the autistic spectrum, but it is patchy. It is hit and miss, unco-ordinated and not really as serious as it should be. I do not in any way hold my noble friend Lord Freud personally responsible, but I do believe that the Government have lost their way in making assumptions about people with disabilities and generalising about what living with a disability really means.
Lord Smith of Leigh (Lab)
My Lords, this has been a wide-ranging debate on a wide-ranging Bill, but I intend to concentrate on two aspects which I think I know something about from my experience, so I declare my interests as being leader of Wigan Council and a vice-president of the LGA. The two areas that I want to concentrate on are troubled families and social rents.
The House may be surprised to hear that I am a great supporter of the Government’s troubled families programme. If anything, it is too timid, but the principles are the right way forward. Led by the rather formidable Louise Casey, the programme has assisted 120,000 or so families and helped to turn them around. It has worked as a cross-departmental scheme and it has worked well with local government. The investment of just over £400 million has, according to the Prime Minister, produced savings of £1.2 billion—and who am I to question the Prime Minister’s comments? There have been significant savings through the programme, as we know in my own authority. There are a lot of sceptics around who say that local authorities are in the troubled families programme because there is payment by results or because they have fiddled the figures. When we were asked to turn around exactly 755 families, they asked how we could achieve exactly that number. The answer is that we worked with more than 1,000 families to make sure that we had the 755. We did not charge for the others but made sure that we could charge for them.
The programme has worked because there is an emphasis on prevention and getting in there early, working with families to make sure that we can do it. It is a slow process because you need to get families’ confidence. Frankly, some of these people are used to having men in suits come around—people like me, as they told me—to give them advice, but not necessarily the advice that they need or want. I was pleased to see that a phase 2 is going on but perhaps not so pleased that the money is not there. I hope that in the Autumn Statement, a real amount will be invested in this programme because it is about investing in people.
I was surprised to agree with a comment that the noble Lord, Lord Lansley, made about school readiness in his interesting maiden speech. School readiness really is a factor that determines life chances. In my authority about a third of kids come to school when they are not ready, but in deprived areas it can be more than 70%. We need to turn that around. I am hopeful that in the Autumn Statement, the Government will start to reverse some of their changes to Sure Start schemes and early years work because that is where we need to put a lot of attention.
In a parallel universe, today in the Moses Room we have been discussing an education Bill. I am disappointed that that Bill does not recognise—as far as I can see, as I was not able to take part—the really important role that schools play as community assets. We need to use schools to work in our communities. Where we have done that, we have even helped people to get jobs simply because they trust what goes on in schools, they trust head teachers, and so on.
In Clause 3, we are expected to agree a typical Westminster or Whitehall reporting obligation on troubled families. That is pretty weak. I hope that the Minister can assure us it is not just making sure that my officers, who are engaged in this work, have to spend more time reporting in. We want it to be a way that innovation and good practice can be spread around so that we can get this working properly across the country.
Clause 21, as a number of noble Lords have mentioned, implements the Government’s policy on social rents—a reduction of 1%. Again, as my noble friend on the Front Bench said: how can you be seen to be opposing this, opposing a reduction in the rents roll? The answer is that, for councils, it is a reversal of regular practice, it is reneging on a policy the Government agreed to only three-and-a-half years earlier.
Three-and-a-half years earlier, the Government said to local councils, “We need to review housing finance, and we need to localise it”. So we went through it, and a big exercise was done by the Department for Communities and Local Government. It came up with a booklet of which I have only the front page, The Housing Revenue Account Self-financing Determinations. As an integral part of this, some councils had to borrow money. They said that in 30 years’ time the accounts looked as though they needed to borrow money. Some actually got paid money back. The total amount borrowed was £13 billion; £6 billion was paid back. So there is a net benefit to the Treasury there of £7 billion.
My local authority was encouraged to borrow a significant amount: £98 million? Why would we do that? The Government said, “Don’t worry. Under the scheme, you will be allowed for 10 years to have a 1% increase in rents to pay for the additional servicing of the debt borrowed”. Within three-and-a-half years, that deal has been reneged on, as I said, by the Government, so in fact we have a financial deficit in my authority of probably about £35 million. What do we do? How do we cover that? We cannot raise the rents. We cannot subsidise—not that we have any money anyway. The only way to recover that debt is to reduce activity, reduce the repairs, reduce the maintenance on the property or—probably more likely, of course—reduce house building, stop doing that.
So here is a policy that the Prime Minister was announcing at the conference, a crusade to get more houses built, and in one swoop they have cut off the building of council properties. It does not take long, does it, to change minds? Of course, the beneficiaries of this rent, as my noble friend said, are not the tenants; about 70% of tenants are on housing benefits. Actually, the social housing authorities, the LGA reckons, are paying about £2.6 billion a year into the Treasury coffers.
A local authority obviously meets at the front door, as it were, the consequences of some of the welfare changes. Unlike some authorities, I can assure the noble Lord, Lord Low of Dalston, that we have maintained our welfare advice sector. The Minister has been to Wigan and seen this for himself, but it would be instructive for other Members—we are always talking about theories in here—to come to see what we call the crisis desk in Wigan.
Over the past 11 months, to give the most recent figures, we have had more than 4,500 people coming to that crisis desk in Wigan. Seventy percent of them said that they had no money. It is a complicated thing. Most of them were referred to food banks. Most of them were given support. Often, of course, DWP issues have caused them to have no money—benefits not being agreed or refused, sanctions or slowness in dealing with cases. Really, we need to change that.
We have devised a programme—unfunded, but we do it—which we call Living Well. We are trying to understand what we can do to help people. The complexity of issues that people have prevent them from getting work. Really, the DWP does not always help. We have one young man who is homeless. I would have thought that the best thing for that young man would be to try to find him a roof over his head, but the DWP keeps telling me that he has to get 10 job interviews a week. He said that, really, he just wants to get a home.
There is a toxic mix of people who have mental health problems, probably suffering from domestic abuse and other issues. We need to resolve that. If we are going to solve poverty in this country, the DWP needs to become part of the solution, not one of the main causes.
Baroness Meacher (CB)
My Lords, I will explore just some of the concerns about this new wave of welfare cuts. We need to consider these cuts in the context of the £21 billion of cuts implemented in the last Parliament. Under this Government, we are witnessing the most dramatic rolling back of the role of the state and the deepest reductions in the security floor for our most vulnerable citizens ever seen, in my view, in the UK.
The Minister said, I think, three times that the Government will protect the most vulnerable. My Lords, I have to say that is not my perception. What, for example, will this Bill mean for disabled people? The Government’s justification for the cuts is, of course, that they want to make sure that work pays and to end benefits dependency as far as possible. This is certainly a fine theoretical position—no one could disagree with it—but it does not work for people with a disability or long-term sickness who cannot find an employer willing to take them on. This is the bit of the jigsaw that is missing in this Bill: the probably perfectly realistic position of employers. Whom will they employ? They will not employ some of the people who are going to be affected, and the results could be catastrophic.
Can the Minister inform the House whether his department has assessed the likely impact of the benefit cuts on the demand from disabled people for mental health services—for example, a bed in a psychiatric hospital or social services? The Royal College of Psychiatrists has expressed some concern about what that effect could be. In my view, it could be very worrying. The key issue is that if the DWP succeeds in cutting its budget, all that happens is an increase in the budget for the NHS and social services. Then, the Government’s objective of a smaller state will not be achieved. I really would be grateful if the Minister addressed that point in his wind-up speech.
There are many, many causes for concern, but the cut I find most cruel—other noble Lords have mentioned this—is the cut of nearly £30 per week for sick and disabled people placed in what is commonly known as the WRAG: the ESA work related activity group. These people—as, again, other noble Lords have pointed out—have been assessed by an independent assessor as unfit for work. The Government argue that the extra £30 disincentivises sick and disabled people from working. The noble Baroness, Lady Browning, mentioned those on the autistic spectrum. I have worked with people with a variety of mental health problems and people with learning difficulties. In my experience, all these people desperately want, more than anything else, is to be regarded as normal. What does that mean? It means being able to go to work. They really do not need this sort of incentive or disincentive.
About half those in WRAG are entitled to DLA or PIP. These are people with serious disabilities who will find it very hard to find work or to keep a job if they get one. Does the Minister not find it appalling that people with Parkinson’s and multiple sclerosis—progressive illnesses, of course—are included in the WRAG because they are unfit to work now, and they will be subject to this £30 a week cut? If they are not fit for work now, the chances of an employer’s taking them on in the future, as their symptoms get worse, are surely remote. Will the Minister ensure that such groups with worsening symptoms, assessed as not fit for work, are in future placed in the support group, whatever happens to the WRAG group?
Further, over 50% of people affected by this cut will suffer from mental and behavioural disorders. These people long to be accepted. Their families, who themselves may be on benefits, will have to pay for their food and heating. Is the Minister aware that 70% of respondents to the Disability Benefits Consortium survey said that the cut would in fact mean a return to work later, rather than sooner? Obviously, that is a judgment, and it may be wrong—but job hunting costs money, including money for transport and clothes, since you cannot go to work or an interview without appropriate clothes. That is probably particularly true for disabled people. If a claimant cannot afford the fare to attend an interview, how will that promote his employment prospects? Does the Minister have any evidence of the likely consequence of this cut on the employment prospects of sick and disabled people?
The Disability Benefits Consortium welcomes the commitment in the Conservative manifesto to halve the disability employment gap. Again, we are all behind such an objective, but depriving disabled people of essential resources will simply not achieve it. A specialist employment support programme has been mooted, which really could make a significant difference. Again, it would be good if the Minister advised the House about progress in developing that proposal.
The exemption from the benefit cap for claimants of DLA, PIP and the support group level of ESA is very welcome. However, many sick and disabled people will be subject to the cap, along with a small but significant number of carers of those defined as non-dependants in the benefits system, such as carers of adult disabled sons or daughters. The four-year freeze of benefits, including JSA, ESA, WRAG, housing benefit and universal credit, will also severely affect many disabled people, so there are multiple cuts coming along for particular families.
Perhaps the most extraordinary fact, if I am right about it, is that the most drastically affected claimants are families with disabled children. As a result of a cluster of cuts to child tax credit, the disability component and the introduction of the two child limit, a new universal credit claimant would have a maximum annual entitlement of just one-quarter of their current entitlement in the tax credit system. Will the Minister inform the House whether that is correct? Do the Government really want to penalise such families with a disabled child more than anybody else? I find that quite difficult to believe. What action are the Government taking to assess the impact of these cuts on those people? I would be grateful to know about the evidence behind that.
There are many other serious concerns, including the impact of the reduction in social housing rents on the provision of supported housing for a number of vulnerable groups, as explained by the National Housing Federation. On housing, it seems that there is one real opportunity for the Government to save billions without hurting anybody, which I have mentioned before: by releasing 10% of the greenbelt around the major urban areas. That would transform the cost of land, housing and housing benefit. Yes, we love our greenbelt, but we go walking in the greenbelt regularly, and there is never anybody there.
In conclusion, the level of anxiety among sick and disabled people and others about this onslaught on their modest standard of living is unimaginable. The future for them is truly frightening. I hope that, through debating this Bill, we can truly mitigate the effects of the Government’s plans.
Lord Polak (Con) (Maiden Speech)
My Lords, it is a great honour and privilege to sit in this House and to follow the noble Baroness, Lady Meacher. I am deeply grateful to my supporting Peers, the noble Lords, Lord Sterling and Lord Grade—both fine men with outstanding records in industry and public service. The noble Lord, Lord Sterling, has been and continues to be a source of wise advice and the noble Lord, Lord Grade, has been a great friend and is by far my favourite after-dinner speaker. I am grateful, too, for the courtesy and kindness of so many in this House: from fellow Peers, Clerks, Doorkeepers, restaurant and bar staff—in fact, everyone has been enormously welcoming.
At my introduction to this House just three weeks ago, so many thoughts and emotions were running through my mind. How did this sport-loving Scouser with a happy-go-lucky attitude arrive in your Lordships’ House? I was brought up in Liverpool, where we listened to Lennon and McCartney or talked of Shankly and Dalglish; it was and still is a city full of people with warmth and character, where, as a young member of the small but vibrant modern orthodox Jewish community, I was encouraged to play our part in the community, and to get involved in charitable projects in order to help others. This notion of giving of oneself for the benefit of others is central to my Jewish faith. As it says in the ethics of our fathers:
“Other people’s dignity should be as precious to you as your own”.
I moved to London in 1984 and took up my first job as a youth and community worker, and I have continued to be involved in communal and charitable endeavours. It is therefore fitting that I am delivering my maiden speech in your Lordships’ House on the Second Reading of the Welfare Reform and Work Bill—a Bill full of examples of the Government taking their responsibility. However, like my noble friend Lord Lupton, I would like to concentrate on Clause 3, which introduces a duty to report annually on the troubled families programme. This clause demonstrates the Government’s commitment to supporting and improving the lives of families with multiple problems. The original troubled families programme improved the lives of 117,000 families by getting children back to school and significantly reducing youth crime and anti-social behaviour, with many of the families on the programme seeing an adult move off benefits and into continuous employment.
Families were mentioned nearly 100 times in the 2015 Tory manifesto, and we have an opportunity to develop a robust and comprehensive range of family policies. We need to match the promises we have made with economic support, particularly childcare, and with further policies to prevent family breakdown as a result of parents’ relationships faltering, or of parents and carers being unable to provide the safe, stable and nurturing relationships that children need to flourish. My rabbi shared a second quote from scripture, saying:
“A society and a family are like a pile of stones. If you remove one stone the pile will collapse—if you add a stone to it, it will stand”.
I hope to be able to support welfare, education and particularly health programmes and policies through which help can be given to those in need. Just over 27 years ago, I was given six months to live as a result of a brain tumour. It was discovered on the day in 1988 when I was organising a reception for the new Lord Chancellor, my noble and learned friend Lord Mackay of Clashfern. I did not get to the reception. Fortunately, the NHS and some wonderful people at the Royal Free Hospital saved my life. The dedication, professionalism and care displayed by the doctors, nurses and support staff was truly remarkable, and I know that these traits continue today. As a result of the surgery, I am 100% deaf in my left ear, which over the years has occasionally proved quite useful. I am aware that today, I have not been interrupted—but I am also aware that this courtesy is for today only. So I apologise if, in future, a noble Lord wants to intervene and I carry on speaking: it will just be that I did not hear them.
In conclusion, I could not help noticing that the Book of Genesis is full of family problems, family disputes and dysfunctional families. However, as you reach the end, Jacob resolves the dispute with Esau, Judah takes responsibility for Benjamin and Joseph forgives his brothers. It was only when individuals and families began to take responsibility—when they began to forgive and turn to reconciliation—that the families became a people and a nation. It is with the policies in this Bill, and particularly with the troubled family programme, that we can strengthen our families, our communities and our nation.
Lord Farmer (Con)
My Lords, it is a great pleasure and an honour to follow my noble friend Lord Polak—I am not sure he can hear me as his left ear is to this side—particularly after a maiden speech that was remarkable for both its humaneness and its humility. The tone he struck rings completely true for those who, like me, have known my noble friend in his previous incarnation as director of Conservative Friends of Israel and now as the organisation’s unsalaried honorary president. I have always been moved and touched by my noble friend’s consistent work in improving relations between Britain and Israel for the common good of each country. He will, I am sure, make a uniquely valuable contribution to the work of this House. We welcome him to us.
I am pleased that this important debate has also enticed other new Peers to make their voices heard in this Chamber. I congratulate my noble friends Lord Lansley and Lord Lupton on their impressive contributions. Given her important role in designing universal credit, I am particularly looking forward to hearing the contribution from my noble friend Lady Stroud, and I want to acknowledge how fitting it is for to make her maiden speech in this debate. What better occasion to express the compassionate and one-nation conservativism—and I believe it is—that is not a new-fangled device cynically constructed to sweeten the bitter pills of difficult decisions? Rather it has a deep seam of tradition and a valued history in our party that goes back to Disraeli, Baldwin, Chamberlain and Butler—and today reaches Iain Duncan Smith and the Prime Minister.
As my noble friend Lord Polak said, government must take responsibility and it is vital to remember what the coalition inherited in 2010: a welfare system run by 35 different IT systems and a monster of complexity that constantly had to be fed and kept satisfied by myriad accretions of former Conservative and Labour Administrations alike. As he entered the last days of the 2010 election campaign, Gordon Brown promised a tiny toddler tax credit of just £4 a week, threatening to add further confusion to a system of 51 different benefits even highly numerate people found extremely difficult to understand.
In 2005, the National Audit Office said:
“Simplification is not an easy option. Radical reform is a rare, costly, time-consuming, and potentially controversial act”.
So it is hugely to their credit that the coalition Government embarked on the costly and ambitious project of root-and-branch welfare reform, so that we did not repeat the mistakes of previous downturns, when it became pointless for claimants who fell on hard times to get back into work. We urgently needed a system with an internal dynamic that responded to extra effort and other kinds of behaviour we want to see across the whole working-age population—and in the rising generation for whom they are role models—so that they benefit from the better health, social networks and sense of achievement and self-esteem that comes from earned, but not benefits, income.
The starting point of universal credit was the need to tackle relative poverty effectively. In the boom years of the mid-2000s, the DWP’s households below average income statistics showed that someone who had spent five years in low income had no more than a 10% chance of escaping poverty the next year. Large tranches of our population, often concentrated in poorer communities, were locked out of the record growth this country had been enjoying to 2008.
In 2009, by the time the recession had well and truly begun to bite, 5.9 million people were claiming out-of-work benefits, but throughout the preceding decade of high growth that number was only 500,000 lower. This speaks of a structural problem: high-participation tax rates preventing people in precarious economic circumstances moving into work and high marginal tax rates deterring them from working longer hours and progressing. Now, however, the British jobless rate has decreased to 5.3% and is at the lowest level since April 2008, when employment was at a record high.
Yet getting people into work is not the only priority. My understanding is that the ambition of ongoing welfare reform is to help people secure more hours and progress to better rates of pay so that they eventually no longer need tax credits at all. The 2009 Family Resources Survey showed that one in seven households were dependent on benefits for more than half of their income, and this may still be the case. Could the Minister explain to what extent underemployment, particularly as a result of working part-time, is contributing to low earnings, and not just unacceptably low wages? Surely progression towards full employment must distinguish between full-time and part-time work so that the Government hold themselves fully to account.
There were also penalties in the system that discouraged people from activities that could decrease their dependency over the long term, such as forming a stable family unit. Couples who had previously claimed as single people stood to lose far more income from benefits by moving in together than they saved through the economies of scale of sharing a home. If they were simply cohabiting, many continued to claim as single parents. In 2013, ONS and DWP figures suggested that well over 200,000 couples were pretending to live apart, with the couple penalty in tax credits a likely prime mover in this particular form of benefit fraud.
Married couples cannot hide their status and this is surely a major contributor to the social gradient in marriage. Wave 3 of the Millennium Cohort Study found that around half of new parents on a low income are married, compared to nearly 90% of those earning an annual salary of more than £52,000. Given the far greater stability of marriage, this has a terrible knock-on effect. Sadly, only half of children in poor families are still living with both their parents when they start school, compared with over 90% of those from higher- income families. Can the Minister explain what progress has been made in reducing the couple penalty in universal credit?
While on the subject of fraud, which is, after all, stealing from the taxpayer, your Lordships should also be aware that a tax credits system that pays for every child has created perverse incentives—for some migrants, for instance. Social workers in the borough of Westminster have made known to me that some are bringing in a large number of children, at least some of whom are very unlikely to be their own. If children are being treated as cash cows by exploitative adults, this is wholly unacceptable and must be exposed. It also puts the two-child limit for new claimants into a somewhat different light from what we have heard today.
To conclude, I was encouraged that, at earlier stages of welfare reform, noble Lords across the House acknowledged how complex, burdensome and inefficient our benefits system had become under successive previous Governments, and that universal credit offers a desperately needed runway out of poverty at a time when deficit reduction remains a pressing concern. The challenges predicted by the National Audit Office have been significant but surmountable. Universal credit is being relentlessly rolled out, and well below budget. I hope that the Bill will be similarly welcomed and given co-operative support, and that we can work together to ensure that this Government fulfil their elected mandate—for the common good.
Baroness Donaghy (Lab)
My Lords, I shall concentrate on an area in which the Government take some pride: the self-employed. The Bill will make the lives of the low-earning self-employed more difficult. The chasm between the Treasury and the DWP is more apparent in this area than in any other. There has been a huge growth in the number of self-employed since 2008 and the Government have favoured it as a viable route off welfare and into work, which is good, provided that it is not forced and that it is genuine self-employment.
Benefit claimants starting their own business are encouraged by the Government with a grant or loan under the new enterprise allowance, together with support from a business mentor. Perhaps the Minister could tell the House, if not today then in a letter that could be placed in the Library, how many loans or grants have been awarded in such circumstances, together with their value, and how many business mentors have been involved. You never know, that may present a rosy picture, but things become a lot bleaker for the self-employed when one contemplates the effect of the tax credit and universal credit cuts without the counterweight of the new national living wage premium—which employees, but not the self-employed, will receive. It has also become tougher for the self-employed to secure working tax credits since April this year.
I am grateful to the Low Incomes Tax Reform Group, and to Robin Williamson and his colleagues, for the briefing that they have provided. As I said, HMRC has tightened up the rules for the self-employed claiming working tax credits. The decision was first announced in the Chancellor’s Autumn Statement in December 2014 that self-employed claimants whose earnings were below 24 hours a week multiplied by the national minimum wage would be asked to show that their self-employment was genuine and effective. At the time of the Autumn Statement, the Low Incomes Tax Reform Group said that the proposed test was likely to discriminate unlawfully against disabled self-employed people who might not be able to work 24 hours a week for health reasons but who qualified under existing legislation on the basis of a 16-hour week.
The actual legislation, SI 2015/605, effective from 6 April this year, creates a slightly different rule whereby a claimant must meet the condition of being either employed or self-employed, as defined. For them to be self-employed, their activity needs to be undertaken on a commercial basis with a view to making a profit and it must be “organised and regular”. What is interesting is that the additional conditions laid down in the Autumn Statement—namely, that a client must register as self-employed with HMRC for self-assessment and provide their unique tax reference number with their working tax credit claim—have been postponed for introduction next year. Reading between the lines, I wonder whether this was a minor victory for the DWP and the Minister.
In a briefing published in April 2015, HMRC offered some information about how the new condition will be applied. It refers to selecting cases on the basis of a minimum-earnings threshold equivalent to qualifying working hours multiplied by the national minimum wage. It appears from its guidance that it is using the declared hours of the claimant rather than the hours needed to qualify for working tax credit to select claimants, and that leaves many uncertainties. How will HMRC determine whether an activity is undertaken on a commercial basis? Will there be practical implications for the difference in tax and tax credit interpretation of status, whether employed or self-employed? How will claimants and prospective claimants be helped to ensure that they claim on a correct basis to avoid incurring an overpayment by mistake? Apparently, HMRC is still developing its guidance on this. No wonder the Bow Group has said that self-employed people may be pushed on to unemployment benefits as a result.
I turn to the minimum income floor and universal credit. I raised this during the debates on the Welfare Reform Bill, and nothing has changed. The Government make the incorrect assumption that a self-employed person is running a viable business if they are making a clear profit equal to at least the national minimum wage. This ignores the fact that a business has to meet its own costs and expenses before it can declare a profit, and for an employee the salary that he or she is paid is clear of all those costs and expenses. The self-employed worker, though, has to pay for rent, heating, lighting, office equipment, a van, tools and so on, and can take home only what is left over. The two situations are not comparable. However, the DWP, in administering universal credit, deems that a claimant who is gainfully self-employed should be earning a clear profit equal in most cases to the national minimum wage for a 35-hour week, known as the minimum income floor. If they are not, their welfare payments will be restricted as though they were.
The exception is the start-up period during the first 12 months of a new business. This policy is unrealistic and impractical because very few self-employed people are able to make much, if any, profit in the early years of a new business, let alone the first 12 months. Many make a loss as a result of new premises, low receipts, bad debts, seasonal factors or taking on their first employees. This particularly affects the farming and hospitality industries. From April 2016, claimants will be allowed a limited carry-forward of cash trading losses made in any month, but this will not help to cushion the impact of the minimum income floor. Another rule will provide that if the claimant’s earnings in a month are high enough to no longer entitle them to universal credit, any surplus is to be treated as earnings in any of the next six months in which the claimant again claims universal credit. This rule is likely to bear more harshly on the self-employed claimant, again because of the impact of the minimum income floor.
Do the Government intend to align the minimum income floor with the national minimum wage, or the national living wage for the over-25s? This would raise the level of profit that they assumed a self-employed universal credit claimant was earning if their actual earnings in the month were less than that amount. With the cuts in tax credit levels and an increase in deemed income for universal credit purposes without any increase in actual income, this would be a double whammy for the low-earning self-employed worker and Britain’s pay rise would become another cut in welfare for the low-income self-employed worker.
Lastly, I want to raise the issue of the support for mortgage interest. According to the impact assessment, 170,000 households receive support for mortgage interest or SMI, 55% of claimants are of working age, and single females comprise almost half the case load. However, it is difficult for me to say how many self-employed would be affected because there is no reference whatever to the self-employed in any of the impact assessments.
Whether or not the proposal is justified, it will make life more difficult for the self-employed on low earnings. The SMI payments will be changed from a benefit to an interest-bearing loan, secured against the mortgaged property, from April 2018. Would the Minister consider a two-year grace period before SMI payments become loans secured on the property? This change, which would reflect an option previously given by the DWP during consultation, would ensure that SMI continued to act as a straightforward short-term safety net for homeowners in financial difficulty. I strongly believe that interest should not be charged on SMI loans and that administrative costs should not be secured on property. I look forward to the Committee stage of the Bill.
Lord Shipley (LD)
My Lords, I declare an interest as vice-president of the Local Government Association and of National Energy Action. As has been said, this is a wide-ranging Bill, in which the housing elements should be seen in the context of the Housing and Planning Bill that we shall shortly be considering. I shall concentrate tonight on issues relating to the future of social housing for rent, the particular difficulties the Bill presents for supported housing and its potential negative impact on delivering welfare-to-work programmes.
I am becoming very concerned about what seems to be clear government policy not to prioritise the social housing sector, nor to support new build-for-rent adequately. In a recent report, the estate agency Savills found that the Government’s focus on boosting home ownership is set to exclude 70,000 more households each year from either buying or renting at a cost people can afford. I am unclear why the Government are so set on promoting owner-occupation, to the exclusion of social renting, and seek to deliver three-quarters of their promise to promote affordable housing through starter homes for sale with a 20% discount. In terms of providing homes to rent, this is not enough as a policy. It will not meet demand and it will not help those who cannot afford to buy.
In terms of supported housing, social housing providers play a critical role in keeping costs down, particularly for the National Health Service, but also for public spending generally. The case of homelessness is an example. In 2012, the Department for Communities and Local Government concluded that an individual being homeless cost the Government between £24,000 and £30,000 a year. It is much cheaper to prevent homelessness arising in the first place and supported housing is part of the means of doing that. The cost of placement in extra-care housing is much cheaper than alternative placements or care packages. There is, therefore, a strong case for the Government to exempt housing for vulnerable people from the 1% cut in rents each year for the next four years proposed in the Bill. Without that exemption, the reduction in rent income could result in fewer refuges, fewer homelessness hostels, fewer homes for veterans and fewer homes for people with disabilities, with the additional public spending that would entail.
The Bill was amended in the other place to allow for the possibility of organisational waivers. Given that the Government have accepted, in their own impact assessment, published at the end of September, that,
“the rent reduction measures may disproportionately impact on supported housing and may cause a reduction in service provision”,
the case for housing for vulnerable people being exempt from the rent decrease provisions in the Bill is very strong.
I move on to local authority housing. There is a difference between the impact of the Bill on housing associations and its impact on local councils. Typically, the rents are higher in housing association properties and housing associations generally carry more reserves. The level of annual surplus for some housing associations is very high—in some cases well into the tens of millions of pounds. This may well be one of the factors in the Government’s wish to reduce rents. However, council housing revenue accounts are different, with little or no annual surplus contributions to general funds. The view from this sector seems to be that it will have to consolidate and concentrate on core business, with the extra services it provides, which in some instances can be very important, facing withdrawal. There will, therefore, be a slowdown in new building across the sector, which is most certainly not in the public interest. The noble Lord, Lord Smith of Leigh, alluded to this. Have the Government assessed the impact on new build, since councils need to be confident about their ability to borrow? Constant changes in rent income levels do not help them and, if they are not helped to build, more prospective tenants will be forced into the private rented sector with its higher rents and an adverse impact, as a consequence, on the housing benefit bill.
A further impact of the Bill relates to social housing provider schemes to develop employability for tenants. It may not continue in the way that it has, yet the outputs for the level of spend are impressive. An example is Your Homes Newcastle, which is where I live. In 2014-15, 64 people were employed through either the Your Homes Your Jobs programme or an apprenticeship programme, with 83% moving into permanent employment. Some 42 tenants were supported to create their own businesses and in excess of 200 tenants received employment support through training programmes provided by Your Homes Newcastle. All this could be in danger of being lost. There are many similar examples that could be provided and of which I hope the Minister is aware. I hope that, in his reply, the Minister will explain whether the Government have plans to enable social housing providers to maintain and, indeed, enhance their welfare-to-work programmes, given the critical role they play in addressing low skills and barriers to employment and reducing social exclusion. These bodies deliver welfare to work, in line with government policy, for large numbers of people and I suggest to the Minister that it would be highly retrograde if this were to be lost.
Baroness Howe of Idlicote (CB)
My Lords, it would be wrong to discuss the measures in this Bill without highlighting the disproportionate impact the changes would have on people with mental health problems, and I am very glad to say that a number of your Lordships have already raised this issue as important. Just like physical health, we all have mental health. More of us are speaking out about mental health than ever before but, as has been mentioned, there is still a long way to go.
One area where people with mental health problems are still far too often unsupported and misunderstood is in back-to-work support. Over a third of people with mild to moderate mental health problems, and almost two-thirds of people with more severe mental health problems, are unemployed. Only 9% have been supported into work through the Government’s flagship back-to-work scheme, yet we know that the majority of people with mental health problems want to work. It is essential that this legislation looks at improving support to help people with these difficulties into work.
One problem is that mental health needs are not properly understood or acknowledged, which leads to the wrong support being provided. This does not help people get into work. The story of Lee, a 38 year-old man with mental health problems including depression, anxiety and a personality disorder, illustrates the difficulties. When out of work, in the employment and support allowance work-related activity group—the ESA WRAG—Lee attended a weekly self-help management course at his local jobcentre, which he had to attend or face his benefit being sanctioned. But the support he was provided with did not take into account his mental health. Lee said that,
“it was focussing more on people in pain, people who had bad backs and first aid ... and I did say a number of times at these meetings that this doesn’t apply to me. I’m not in pain as such, I have a mental health problem”.
Of course, Lee’s experiences are not unique. Another sufferer said that her adviser,
“simply did what I could already do on my own, put together a CV and look for jobs. There was not enough support geared to my specific difficulties. Every task was the same for everyone. Not everyone’s needs are the same”.
In addition, the conditionality and sanctions regime has become an unchallenged aspect of back-to-work support. Research by Mind, which does so much in this field, shows that people with mental health problems are three times more likely to have their benefit sanctioned than they are to be supported into employment. That is a clear signal that the system is not working for people with mental health problems, despite this group making up over half of all people on employment and support allowance.
The changes which this Bill legislates for—namely, reducing the amount people on the employment and support allowance work-related activity group receive by £30 a week—would have a serious impact on people with mental health problems, as others have said. We should all be concerned by the Government’s lack of assessment of the impact that these changes will be having on people and their families. I am pleased to hear about the review being undertaken by my noble friends Lord Low, Lady Meacher and Lady Grey-Thompson, which I gather will look at how the cut will affect the day-to-day lives of disabled people and whether it will help them move closer to work. We know already that 75% of people with common mental health problems, such as anxiety and depression, receive no appropriate treatment, and that many people use their benefit to pay for talking therapy treatments and well- being activities. There is space in this legislation to support people with mental health problems better and ultimately to move closer to the Government’s welcome commitment to halve the disability employment gap.
I end by asking the Minister two questions. One is a repeat of the question that my noble friend Lord Rix asked. The government impact assessment stated that the justification for the £30-a-week cut was to,
“remove the financial disincentive to work”.
Can the Minister present us with the evidence to show that cutting disabled people’s benefits results in more disabled people getting jobs? Secondly, the Equality and Human Rights Commission has said that the impact assessment accompanying the Bill does not,
“fully assess the impact on equality and human rights. This may make it difficult for parliamentarians to properly consider the implications of the measures in the Bill”.
Does the Minister accept this criticism? It would be good to hear his reply at some stage as the Bill progresses through your Lordships’ House, even though I do not expect much of an answer this evening.
Lord Hodgson of Astley Abbotts (Con)
My Lords, there have been 27 speeches so far and I want to avoid ploughing or reploughing ground that has probably been pretty extensively tilled already. Therefore, my contribution will draw on my experiences in the charity and voluntary sector and, in particular, on the work that I did for the Government in looking at effects on that sector in a report called Unshackling Good Neighbours. The report tried to find ways of removing barriers to the growth of the third sector, and the research for it gave me the chance to see the condition of some of our most disadvantaged fellow citizens. At times it could be slightly dispiriting but, by contrast, the activities of the volunteers in the third sector organisations—and they were mostly volunteers—were almost universally uplifting. Often with very little money and few assets, they set out to tackle some of the most deep-seated and intractable problems in our society. They were trying to provide a ladder up which our unlucky fellow citizens could climb.
It will come as no surprise to the House that one of the main rungs of the ladder was a job—regular, steady employment, often with third sector organisations helping to provide an introduction to the disciplines and self-disciplines that the commercial world requires from people who perhaps have become unfamiliar with them because of a long period out of work. Self-evidently a job provides an answer to some of the economic challenges but it does much more than that, as my noble friend Lord Lupton said in his distinguished maiden speech. It helps to provide an answer to social challenges, because one of the pernicious effects of long-term unemployment is an erosion of self-confidence. By contrast, a job creates self-confidence. It creates a sense of self-worth, a sense of belonging and a sense of having a stake in society—above all, a stake in a society that values the individual. Thus, it contributes to social cohesion—the glue that binds us all together—the creation and maintenance of which I believe is one of the great challenges that we will face over the next few years. I will come back to that in a minute or two.
Therefore, it will come as no surprise to the House that I strongly support the direction of travel of the Bill, and in my few minutes I want to address briefly three issues: the apprenticeship programme, the troubled families initiative and the restriction of certain benefits to two children only.
The plan to create 3 million apprenticeships seems admirable. There is a pressing need for vocational training, and the noble Lord, Lord Young of Norwood Green, will, I know, follow me on that. It will provide people with more satisfying, better-paid and more secure jobs than—dare I say it?—a 2.2 in media studies. The Sutton Trust and Big Society Capital are only two of the many organisations that provide many concrete examples of the advantages of this policy. It is certainly not a policy that lacks ambition, but I have some concern that, as numbers expand to meet the 3 million target, the quality standards may be compromised and an apprenticeship may too often become not much more than basic training. So some element of quality control will be essential to keep faith with those joining the programmes. On that point, at least, I am happy to agree with the UNISON briefing circulated to Members of your Lordships’ House. The Skills Funding Agency, as the potential policeman, has a vital role to play in this regard. It should also consider establishing a confidential hotline so that those who feel that what was promised is not now being delivered can seek support and redress.
Secondly, I strongly support the initiatives in the Bill to help break the cycle of underachievement, underperformance and deprivation—that is, the troubled families initiative. The troubles faced by each family are unique. Themes there may be but the admixture is unique. Government programmes tend by their very nature to be broad brush—no other approach is possible at scale—but what many of these families need is the detailed attention that can often best be provided by smaller third sector groups. However, their role is often constrained by the commissioning processes. Commissioners can be highly risk averse, preferring to put their faith in large groups, for which smaller third sector organisations can too often become “bid candy”, being landed with the most challenging areas, which perforce carry a higher risk of failure, while the main contractor takes the “vanilla flavour” mainstream cases.
A Second Reading debate is not the place to discuss the details of the commissioning processes but I urge my noble friend to ask his officials to consider establishing some commissioning yardsticks. The third sector deserves a level playing field and a series of yardsticks would help to establish it. It would also provide a means for more effective delivery of the Government’s admirable policy objectives in this area.
I turn thirdly to what I might call, in shorthand, the two children issue, which is possibly the most challenging. In my various visits and trips compiling my reports for the Government I have been struck by how many people, from every sector in every region of our country, emphasise the concept of fairness. It is of course true that the detailed aspect of what each thinks is fair varies according to the eye of the beholder, but the underlying principles are very often the same. This concept of fairness underpins the unspoken and unwritten contract that commits all of us to playing our part in preserving our social model, whether it be pay-as-you-go pensions, the method of funding the National Health Service or the issues that we are discussing tonight. However, the elasticity of the social model is not infinite and should not be taken for granted.
I have of course read very carefully the briefings from a number of organisations on this issue and, in particular, the one from the faith groups, signed by the right reverend Prelate the Bishop of Durham. I understand the point being made and, no doubt, we shall have some robust debates on this point in Committee. However, with great respect to the right reverend Prelate, and indeed to the noble Baroness, Lady Bakewell, who spoke very strongly on this matter half an hour ago, at this stage, I think that with the careful shaping given to this part of the Bill by the Government—for example, that it is a two-child rolling programme and disabled children are exempt—they have got the fairness balance about right.
In the last part of my speech, on the background of the Bill and the issue of social cohesion, I want to turn to a very different point: how we are going to preserve the social cohesion of this country over the next 20 years and the challenges that we face.
This country is undergoing an exceptionally rapid growth in population. I want to make it clear, as I always do when I speak on this subject, that this is not about people’s race, creed, colour or ethnic origin. It is purely about absolute numbers—and the numbers are stark. The ONS figures for 2014, produced in late September, indicated that the population of this country increased by 1,435 people every day—just under 900 from immigration, and around 600 from excess of births over deaths, or the natural increase. That is 10,000 people a week. We are putting a small town on to the map of the United Kingdom every week, 52 weeks of the year.
Think of the consequences of that. Take just one consequence that we always debate in your Lordships’ House, that of housing. Currently, we house 2.3 people per dwelling. I make the assumption that we would want our new arrivals, wherever they come from, to be no less well housed. To house 1,435 people per day means that we need 624 dwellings. That is 26 per hour or one every two and a half minutes, night and day, without any improvements being made to our existing housing stock, which I suspect most of us would believe are necessary.
I am afraid that this is not a temporary phenomenon. The ONS projections indicate a mid-point for the UK’s population in 2035 of a further 10 million people—that is made up of both immigration and natural increase. Twenty years from now, we are going to have to build three new Greater Manchesters. On the same metric of 2.3 people per dwelling, that is 4.4 million homes. If noble Lords do the simple arithmetic, they will see that that is one new house every two and a half minutes for the next 20 years.
I fear that the introduction of 10 million people and 4.5 million homes will pose challenges to our social cohesion that we have not really begun to think carefully about. This is 10 million people in a country that has just overtaken the Netherlands as the most densely populated in Europe, with 425 people per square kilometre—the Netherlands having just under 400 people per square kilometre.
It is easy to put this issue into a box marked “too difficult” because it is difficult. I urge my noble friend on the Front Bench; I urge the noble Baroness, Lady Sherlock—this is not a party political matter—and, indeed, I urge the right reverend Prelate the Bishop of Durham to hold this question and its implicit challenges in their collective mind. For, if there are to be challenges to our social cohesion, it will not be those of us in your Lordships’ House who will suffer. It will be the poor, the ill-educated, the unemployed and, above all, the recently arrived—in many ways the people we are trying to help in this Bill—who will bear the brunt.
Twenty years from now, I will probably be dribbling into my cornflakes, unaware of what is going on around me. I believe our successors will be entitled to ask why, on this important issue, we always looked the other way.
Lord Young of Norwood Green (Lab)
My Lords, as the noble Lord, Lord Hodgson, confidently predicted, I shall focus mainly on the question of apprenticeships. I welcome the Government’s commitment in the welfare Bill to both full employment and reporting on the status of apprenticeships. It is hard to quarrel with a Government who announce the ambitious target of 3 million apprenticeships. I make my usual comment that I only wish they would disaggregate that figure and be more upfront in recognising that a significant number of those apprentices—probably about 60%-plus of them—are people already in existing employment who are retraining and reskilling. It is not that we do not have to do that, but I think that “apprenticeship” is the wrong label.
The real focus of attention ought to be on the lower end of the age spectrum—on the 16s to 18s, or even up to age 24. Notwithstanding the progress that has been made on employment, that is where the levels of unemployment are probably at their highest in many parts of the country.
My other concern is one which I have expressed on a number of occasions. In the drive to push up apprenticeships, which is laudable and with which the previous Government made a reasonable start, can you sustain quality as well as quantity? Take a situation where you have already had an Ofsted report which said that, in a number of sectors where the largest volume of apprentices were in areas such as business administration and retail, the quality was manifestly not being sustained, the level of training was minimal and people were, quite frankly being exploited. We should be concerned about that. It is not more than a couple of years ago that a young apprentice went out to work one day and never returned. He died in an environment which was absolutely appalling. I make no apology for reiterating these concerns.
Recently I received a helpful response about some of these issues from the noble Earl, Lord Courtown. He said:
“An ‘approved English apprenticeship agreement’ carries the status of a contract of service. That means that employment and health and safety laws apply. The apprenticeship agreement confirms that the apprentice is undertaking an apprenticeship and specifies the standard they are working towards completing. For apprentices who have an employer, an apprenticeship agreement (whether based on the old frameworks or the new standards) must be in place in order for an employer to claim government funding”.
As a statement, it is okay, but does it really guarantee quality? Does it absolutely guarantee that that young person is going to a good quality, safe working environment? I am not convinced that it does. I issue this as a caution against being complacent if the Government are going to drive up the level of apprenticeships at the rate that they say they are.
The letter goes on with more helpful news—about the introduction of a,
“‘Statement of Commitment’ which is signed by the employer, training provider and apprentice … and sets out the key expectations, roles and responsibilities”.
All of that is good and I want to see it. I am not complaining about it, but I also want to see that the Government actually have in place processes that will ensure that the quality of apprenticeships is consistently monitored and reviewed. I do not expect the Minister in a debate as wide-ranging as this to have anticipated all these questions, but that does not make them unimportant or unnecessary to pursue them.
We are told about the Skills Funding Agency which “runs the apprenticeship helpline”. That is good, but in many cases young people are only too grateful to be in employment. They do not want to rock the boat, so to speak, so they are capable of being exploited. I merely make the point. Another paragraph really does worry me a little. It states:
“Beyond the quality guarantees inherent in the new apprenticeship standards themselves, quality is assured by the assessment process. Whilst employers are generally free to arrange whatever on-programme training they believe will be needed”—
as I say, that worries me a little—
“to ensure their apprentice reaches full competence, which will often include the completion of a qualification”.
If it is an apprenticeship, should it not always include the completion of a qualification? If we are talking about raising the quality of apprenticeships and convincing parents that the vocational route is just as good as the academic one, that ought to be addressed. If it is a quality apprenticeship, it means that the individual is acquiring skills, training and competence that ought to be tested by an external, independent source.
I am conscious of the time, but I want to turn to a briefing from the charity Leonard Cheshire Disability, which I thought was really interesting; I am grateful for it. It focuses on disability. I cannot deal with as much of it as I would like, but I shall cover some of the points made. It states:
“Given the Prime Minister’s commitment to implementing the manifesto in full we welcome the inclusion in the manifesto of a pledge to halve the disability employment gap”.
I think that we would all welcome that. The charity goes on to stress four key points:
“Reporting on the progress towards halving the disability gap …Ensuring that more disabled people can benefit from apprenticeship schemes by ensuring that they are as accessible as possible …Greater clarity from the Government around the specialised support that will be available for disabled people to help them secure and stay in work … Exploring how the Government can use its role as a public sector employer and commissioner to encourage its supply chain and other employers to employ more disabled people”.
Those are good, constructive points and I hope that the Minister will be able to respond to them.
The briefing then goes on in another interesting paragraph to address apprenticeship schemes and disabled people:
“Apprenticeships provide an excellent route into work for young people—including disabled people—and allow them to develop the skills they need to succeed in the job market. We welcome the Government’s pledge to fund three million new, high quality apprenticeships this Parliament. However too often apprenticeships are inaccessible to disabled people; indeed the number of disabled apprentices has declined from 11.5% in 2007/8 to 8.7% in 2014/15. During the passage of the Bill, we would like to see further commitments from the Government to support more disabled people to participate in apprenticeships, by ensuring that vital funding, such as Access to Work and training funding, remains available and can meet the demand”.
That is a helpful, factual and constructive analysis of what is actually going on. I believe that the Government are genuine in their attempts to seek to secure full employment, but if they are going to meet the target of halving the number of people with disabilities who are not in work, some issues are raised here that need to be addressed. I want the Government to succeed because I believe that getting people into worthwhile employment has a transforming influence on their lives.
Baroness Greengross (CB)
My Lords, in the time available I can consider only a very few of the many issues covered in this Bill. I think we all encourage measures that support people into work and to remain at work, so I welcome the clauses which cover the new reporting obligations the Government will have to commit to. They include annual reporting on the progress towards full employment, and this should assist in the task of halving the disability employment gap and recruiting and keeping disabled people in work.
I also welcome the measures that seek to remove income-related targets and replace them with new measures to improve the life chances of children. The new duty to create an annual report on children living in workless households in England and their educational attainment is also very welcome.
The re-emphasis of the importance of encouraging social mobility is also good, but I have some concerns that some of the measures contained in the Bill may, in fact, drive up homelessness and consequently drive people further away from the labour market. In particular, I have concerns about the lowering of the benefit cap, which has been widely discussed by your Lordships. Most working-age benefits are to be frozen under Clauses 9 and 10. Some benefits, however, are not affected and are going to rise in line with CPI. Many of these are pensioners’ benefits. As someone who has worked for most of my adult life to ensure fairness for older people, I say that we must have regard to inter-generational fairness on some of these issues.
Some clauses will change the current provisions for help with mortgage payments. In the future, any assistance with interest payments will be in the form of a loan secured by a charge against the property. Under these regulations, the loan will also accrue interest and incur an administration fee. These costs will be recovered from the available equity in the property when it is sold, but this means that people could be left with nothing because they do not happen to live in the areas such as London and the south-east which enjoy the property prices that now prevail.
Clause 19 requires that registered providers of social housing must reduce the rents payable by 1% each year for the next four years, as the noble Lord, Lord Shipley, has illustrated. While this will be welcome relief to those struggling with the annual uprating of rents in the social housing sector, it is another blow to housing associations, which are still reeling from the plans to force them to engage in subsidised right-to-buy schemes. As a result of that, many associations are now selling off properties on the open market at full price and, if the rent is fair, they will also have to take the hit on any rent reductions. Not all landlords are exploiters of their tenants. While reducing social rents is obviously welcome, tackling the high cost of housing is the only sustainable way of reducing welfare spending in the long run. More housebuilding is the only way to bring housing costs down, and progress in achieving this aim must not be undermined. This reinforces the need for support in the latest round of the Affordable Homes programme, which aims to increase the supply of new affordable homes in England by March 2018.
Finally, as a former commissioner on the Equality and Human Rights Commission, I share the concern of the EHRC, which in its evidence to the Public Bill Committee felt that the impact assessments and human rights memorandum which accompany the Bill do not fully assess the impact on vulnerable groups, and that this could make it difficult for parliamentarians properly to consider the implications of the measures in the Bill. This Bill needs very careful consideration and the sort of scrutiny that only the House of Lords can give it.
The Lord Bishop of Durham
My Lords, I support many of the principles underlying this Bill: the importance of personal, as well as collective, responsibility; the value of decent work, not just financially, but for human dignity; the role of the welfare system in encouraging positive behaviours; the recognition that poverty is not simply about lack of income; and the desire for fairness for those who receive from and contribute to the system, including the vast majority of us who do both at different points in our lives. None of these is completely new, but the Government’s approach to welfare reform has certainly reinvigorated the debate about poverty, helping to challenge implicit assumptions and some very tired thinking. Governments naturally want to distinguish themselves, but in seeking to introduce a fresh perspective on old problems, there is always a danger of going too far or of throwing out the good with the bad. That is my concern about some of the measures being discussed today.
The first is the proposal to replace the existing child poverty measures and targets with an obligation to report on a set of life chances indicators. Where I agree with the proposal is that poverty is not simply a matter of economics and the possession of material goods. Unemployment, low skills, poor housing, addiction and family instability are all tied up with people’s experiences of poverty, so it is right to acknowledge this in some way in our understanding of poverty and our approach to tackling it.
However, to scrap all of the income-based measures ignores the importance of money in meeting people’s basic needs. It also ignores the wealth of evidence pointing to the damaging effects that income poverty has on children’s lives in terms of their health, education and future opportunities. Life chances are affected by a multiple of factors, and basic income is one of them. When the coalition Government carried out a public consultation on child poverty measurement in 2013, more than 200 public, academic and voluntary organisations responded. The overwhelming majority argued that poverty is defined by lack of income and that other non-income-based indicators should be used to supplement the current income-based measures. Only one respondent did not think that income should be included in the child poverty measures, yet this is what is proposed in the Bill.
If the Bill goes through in its current form, there will be no recognition of in-work poverty in spite of the fact that around two-thirds of children in poverty have at least one parent in paid employment and there will be no targets for the new indicators and no duty on central and local government to publish strategies to tackle child poverty, simply an obligation to report on the listed indicators. With child poverty projected to rise by up to a million over the next five years, it is convenient, but unacceptable, for the Government to abandon the commitment they made to these targets when the Child Poverty Act was voted through in 2010 with cross-party support.
Last week, I wrote to noble Lords to express deeply held concerns—I am grateful to the noble Lord, Lord Hodgson, for having read the letter and commented on it—about the limit that this Bill would introduce on the support for families with more than two children, so noble Lords will not be surprised that I am raising them now. We firmly believe that children are a blessing and strongly resist anything that implies that an additional child is unwanted or burdensome. Every child is valuable; every child matters. We are also very concerned about the practical consequences for the families affected who are already struggling to make ends meet. Larger families will lose up to £2,780 for each additional child beyond the first two. Two million children will be affected by the end of the Parliament, many of whom are already in or at risk of poverty. The majority of these live in working families with limited scope to increase their income. Also affected will be many families who had their children in good times, but who are unlucky enough to lose their job, become ill or disabled or experience a divorce. The Treasury is unable to forecast its own finances accurately more than a year ahead, yet parents are expected to anticipate their own future income for the next 16 years.
As faith leaders, we believe that this measure is fundamentally anti-family and surely fails the Government’s own family test. In extreme circumstances, older children may be forced to leave home before they are ready and large families may break up in order to avoid the two-child penalty. Vulnerable parents who are bereaved or fleeing domestic violence often require extra support at a time of acute need, but they will not be adequately supported if they have more than two children. Kinship carers and private foster parents—there are around 215,000 in the UK—may be unable to take on this vital role if they are no longer eligible for additional support.
This measure will also have a disproportionate impact on particular faith communities where large families are the norm, perhaps because of parents’ devout desire to avoid contraception or abortion. If the two-child limit is designed to encourage lower-income families to have fewer children there is very little evidence that it will be effective. Instead, the impact will be to increase child poverty, penalising children in a largely futile attempt to influence the behaviour of their parents.
A parent from the St Chad’s Community Project in Bensham in my diocese had this to say about the changes: “I receive Working Tax Credit as a single parent with three young boys to support. I feel that making these changes would be adding more pressure to my family. I already have to be very careful with my spending budget — rent, council tax, electric and gas all have to be paid before everything else. My children would suffer as a result. The extra money I get goes towards the children’s school uniform, trips and extras”. She is worried that she will not be able to manage if her benefits are cut, having only recently turned her life around when she was offered a job as a part-time support worker. This particular family may be protected in the short term, but future clients will find life gets even harder if these changes are introduced. Already, this project refers five to 10 families a week to the local food bank, because they are struggling so much, even though the majority of its clients are in work.
This situation will almost certainly get worse as a result of this Bill. I therefore urge the House to support amendments that would relax the limit on support for larger families—or at least reduce its impact by protecting the most vulnerable families—and look very carefully at ensuring that income is included as a factor in child poverty.
Baroness Andrews (Lab)
My Lords, it is a pleasure to follow the right reverend Prelate the Bishop of Durham, even if he has made most of my speech for me—although I can hardly complain about that. I shall try to add a few points that he did not mention.
This is a very regressive Bill that plays fast and loose with language and is based on a series of false premises. The basic tenets of the Bill have already been demolished by my noble friend Lady Hollis and the cumulative impact exposed by my noble friends Lady Sherlock and Lady Lister, the latter of whom also offered the House an alternative and rather more accurate title for the Bill.
I will confine myself to two broad points. The whole tone of the Bill is based on the assumption that if we call poverty by other names or measure it in other ways it will go away. In fact, as has been systematically demonstrated this evening, the Bill cuts the incomes of the poorest, and the working poor in particular. It puts children inevitably at the greatest risk. It prejudices family life and threatens the most vulnerable. It is a prospectus for greater poverty and greater inequality. It is a deliberate policy choice by this Government.
Clauses 1 to 7, which eradicate the poverty targets, are a very simple solution to the problem—they aim not to abolish poverty itself but simply the targets in the framework that has enabled successive Governments to examine, understand, chart and attack poverty. As we have heard many times already, the targets would be replaced by a set of life chances. It is a solution worthy of Kafka. The Government, as we have heard, are virtually alone in defending this. My own figures—perhaps the Minister can confirm this—say that 97% of respondents to the consultation on the new measures believe that the targets under the Child Poverty Act should be retained; a mere 3% disagreed. Can the Minister in winding up tell us who constituted the 3%? It would be quite interesting to know who agreed with him.
The reasons for the abolition are pretty unsubtle. Those income measures tell a graphic story of failure: half a million more children will be in absolute poverty after 2016 and a likely 4.7 million will be in absolute poverty by 2020. Clearly, income is no longer an indication, let alone a determinant, of poverty, because the Government decree it so. I find it astonishing that this can be defended with any integrity or logic, yet we know that the Minister is a man of great intelligence and integrity. Instead of robust, independent targets that will impose on the Government reporting requirements and accountability for troubled families, worklessness and educational achievement—these are the substitutes for the hard measures of income poverty. They are not, as they have been described by the Minister in another place, measures of poverty. They are not the root causes of poverty. Research shows that they are more likely to be the outcomes of poverty. There is a mass of evidence showing the proven link between poverty and educational failure, and much of the other indicators. If the Government were serious about the root causes of poverty, they can do something very simple: keep the income measures in place, add them to the new measures of life chances, explore the relationship between them and devise policies to attack them.
When I think about what the Government are trying to do by redefining poverty, I think of a young man I heard about last week. He is a student who was unable to go to school because he had only one shirt. When it was washed he had to wait for it to dry, but there was no money for the meter, so he missed school. That is what poverty means: it means having no money for the meter, not having a spare shirt or a spare pair of shoes. That young man possibly came from a troubled family, and it would be good to measure his educational achievement and his social mobility, although it would take years and involve sophisticated methodologies. The point is, by dismantling the full picture of the impact of policies on incomes of families in and out of work, we cannot equip ourselves to understand or frame the policies that have the greatest effect, let alone eradicate material poverty.
One of the most disingenuous aspects of this part of the Bill is that the new measures proposed are at most half measures. The most egregious gap is that there is no measure for the poverty of families in work—those families attacked by the attempted tax credit changes. Another is that there is no reference or target for measuring the cost of housing on families, at a time when working families are being priced out of the private rented sector. Will the Minister explain why these measures do not take into account those two most fundamental aspects of family costs?
That brings me to the second area: housing. As we have heard, Clause 21 introduces a 1% reduction to social housing rents for each of four years, beginning in April 2016. It looks like a sensible step and has been cautiously welcomed. What are not welcome are the perverse consequences. The predicted loss of income to housing associations is £3.85 billion. The Office for Budget Responsibility has estimated a loss of 14,000 homes; the National Housing Federation, 27,000. Which of these figures does the Minister agree with, or does he have an alternative figure? There is only one way to compensate for this: maintain funding for the affordable homes programme. Will he give us that assurance?
As we have heard, some of the most vulnerable people in society will be badly hurt by these reductions in rent. These are people in supported housing, people who need shelter from domestic abuse, people who would otherwise be on the streets. It is the most expensive form of housing support. It carries high rents. As the noble Baroness, Lady Greengross, said, housing associations are already cutting back on their plans. It is such a false economy. Supported housing is estimated to save the country about £640 million a year. In 10 years’ time the shortfall, if these plans go ahead, will be 46,000 homes. The only certain prognosis is a massive increase in homelessness and greater cost to the NHS. This is yet another example of the dysfunctional disconnect between housing and health policy. The Bill has already been amended in the House of Commons to allow for some limited exemptions. I urge the Minister to do what many of the agencies that really know what they are talking about are asking him to do and introduce an amendment for the whole of the supported housing sector. That is the only thing that we can do to guarantee viability.
Finally, I come back to a very significant point about young people. The Government announced in the Budget that 18 to 21 year-olds making a new claim for universal credit will not be automatically entitled to support with their housing costs. As yet, the details are unclear, as is the process of implementation, but there is widespread concern that many young people may not fall into a protected category. Already, 8% of 16 to 24 year-olds report homelessness. The last thing we want is more young people recruited on to the streets. Will the Minister give us an assurance this evening that he will provide the list of exemptions that takes into account all the reasons that young people may need support with their housing costs, and that this will be the subject of wide consultation before any regulations are brought forward?
In conclusion, in his foreword to the Cabinet Office briefing on the Bill, the Prime Minister said that the Bill was designed to champion social justice. We on this side of the House have a better idea of what social justice means. It does not mean cutting benefits. It does not mean removing a guaranteed framework so that you know how many people are in poverty and whether those figures are going up or down. It means being fair and introducing policies that really support families and the most vulnerable in our society.
Baroness Stroud (Con) (Maiden Speech)
My Lords, it is an honour and a privilege to stand before you today for the first time as a Member of this House. I have been overwhelmed by the kindness and generosity of Members on both sides of this House as they have supported me in taking my seat here. I would also like to thank the doorkeepers who, on various occasions, have found me on red-carpeted corridors going in the wrong direction and have simply turned me around and pointed me back in the right direction. I thank too my noble friends Lord Freud and Lord Farmer, who introduced me to the House as my supporters. I have worked with the noble Lord, Lord Freud, for five years in the Department for Work and Pensions, and have known the support of the noble Lord, Lord Farmer, for eight years at the Centre for Social Justice. I cannot think of two better men to be my supporters and I thank them.
There is a line in the Queen’s Letters Patent to each of us which says:
“I give you a seat, a place and a voice”.
To have a place and be able to sit in this House is nothing short of a privilege, but to have a voice here is nothing short of a responsibility. It is my desire to use my voice in this House to speak up on behalf of those who cannot speak for themselves.
I first became convinced that it was possible to see those in poverty completely turn their lives around when I left university—a few more years ago than I care to admit to. I went to live in Hong Kong. I lived in a place called the Walled City, a slum area rife with drug trading and prostitution. I worked with drug addicts to take them off drugs and see them completely rehabilitated. It was not the drug withdrawal process that really astounded me, however: it was the life change that followed—the rebuilding of learning to work again, of family relationships, of learning how to manage one’s finances and deal with one’s mental health problems. This is where the true courage of those who I worked among really lay. This is when I became convinced that true personal change was absolutely possible.
I came back to the UK to see if the same transformation was possible here too. Working with those struggling with drug and alcohol addictions and those with mental health problems, I started a night shelter, then a hostel, then a rehabilitation house and a halfway house back into the community. We saw lives transformed here too and it taught me not to sell anybody short with a maintenance culture, but to support the innate human desire of individuals to fight their way out of poverty and to take every opportunity available to them.
After 17 years of front-line poverty fighting I had built organisations that cared for 50 people for one night and another 50 for another night. But I found that down the road there were another 50—and in the next town another 50, and in the one after that. So I started asking: how do you translate up on to a national level the lessons that we had been learning on a local level?
It was at this point that I met Iain Duncan Smith and founded the Centre for Social Justice, which was all about translating solutions to poverty from local levels up on to a national level. It was about tackling the root causes of poverty and not just the symptoms. If we were to get ahead of the curve and start addressing the real problems, we needed to turn off the tap and not just pick up the pieces. We identified family breakdown, the failure of our education system for the poorest, addiction, debt and worklessness as the key drivers of social breakdown. It started with the understanding that if you are born into a family who love you and care for you, if you go to a good school, do not get involved in drugs or get into debt and have a job, your chances of being poor are really remote. But if one of those drivers turns—you lose your job, say—or a second turns so that you lose your job and get into debt, your life begins to destabilise. If you lose your job, get into debt and experience family breakdown, things become really tough for you. If all five of those pathways reverse, you become entrenched in poverty and without some other external intervention, you are unlikely to see the life transformation which you as an individual long for.
These five pathways, developed at the Centre for Social Justice and informed by front-line poverty-fighting organisations from all over the UK, have become the building block of the Government’s life chances strategy. This is a life chances measure, which is about saying, “Let’s actually tackle the reasons why someone is poor. Let’s support people by removing the obstacles that confront families so that they can take responsibility for their own lives”. It is about saying: let us challenge the risk of future poverty, by narrowing the educational attainment gap, and challenge current poverty by ensuring that children grow up in working households—preferably full-time working households. But let us ensure that the entrenching factors of family breakdown, mental health, serious personal debt and addiction are challenged, too.
Since I arrived in this House I have been deeply moved, in listening to the debates from all sides of the House, by the genuine care, compassion and commitment that exists in this place for disadvantaged people. It is my wish to add my voice and experience to support those who are the most vulnerable, and to ensure that every life chance is given and every obstacle torn down.
Baroness Stedman-Scott (Con)
I congratulate my noble friend Lady Stroud, whom I have known and worked with for some time, on her maiden speech. We worked at the CSJ on Breakdown Britain and Breakthrough Britain, and I compliment her on identifying not just problems but the solutions that make a real difference to the lives of people. She is committed, knowledgeable and incisive regarding the issues and the solutions we need to put in place. This House will be the richer for her contribution and involvement. From all my dealings with her, the one thing I would say is that she is very good at challenging herself and her colleagues—and, I hope, the whole House—to do that which is best for those who need us most.
I support the principles behind this welfare Bill. While I am sure that it will have been quoted many times, I fully support the objective of doing all we can to move our country and the individuals in it from a low-wage, high-tax and high-welfare society to a higher-wage, lower-tax, lower-welfare economy. This principle will ensure that work always pays more than a life on benefits and that support is focused on the most vulnerable in a way that they need. We must not miss the point that the system must be fair, as my noble friend Lord Blencathra explained, to all those who have put in and those who receive the help they need. I do not mean being fair to one group at the expense of another; I mean basic fairness.
We heard about China tonight. I am thankful that we live in a democracy that allows everybody in this House to stand up and say exactly how they see the situation. People listen, and some people’s views may well be changed, but we need to make sure we work together to get the best of this Bill for those who need it most.
I will focus on apprenticeships. Clause 2 introduces a duty to report annually on the progress being made towards the Government’s ambitious target of 3 million apprenticeships being started in England during this Parliament. That figure is ambitious, but we have to be ambitious for the people we want to take part in apprenticeships. However, our ambitions must not stop at the quantity of apprenticeships; we must also consider their quality.
It is encouraging to know that in development are more than 140 Trailblazer groups, involving more than 1,300 employers and 187 published approved apprenticeship standards. Of these, more than 60 are higher and degree apprenticeships, and more than 160 are new, approved English apprenticeship standards. Provisional data show that during the last Parliament, there were 2.3 million apprenticeship starts, of which more than 600,000—26%—were taken by 16 to 18 year-olds. We need to build capacity for more 16 to 18 year-olds in approved apprenticeships.
For me, apprenticeships have three benefits: for the participants, for the employers and for the economy. I will talk about the participants. Apprenticeships are part of the journey of people who want and need to make a successful transition from education to employment. I have spoken many times in this House about the need to take young people on a journey and support them. Apprenticeships introduce young people in particular to the world of work. They do not just produce work experience but, most important, they provide real experience of the world of work and give young people the necessary skills.
Research by London Economics shows that the lifetime benefits associated with apprenticeships at Levels 2 and 3 are significant: between £48,000 and £74,000 for Level 2, and between £77,000 and £117,000 for Level 3. Higher apprentices can earn up to £150,000 more, on average, over their lifetime than those with just vocational qualifications. I am a great believer in evaluating programmes. In 2014 an apprenticeship evaluation showed that 89% of apprentices were satisfied with their apprenticeship; 85% said that their ability to do the job had improved; and 83% said that their career prospects had improved. Apprenticeships are good for apprentices. Nine out of 10 of all apprenticeship completers—88%—are in either full or part-time employment, seven out of 10 with the same employer.
Secondly, apprenticeships are good for employers. According to the 2014 apprenticeship evaluation, 82% of employers were satisfied with the programme, while 70% reported that apprenticeships had improved the quality of their product or service. That is an excellent basis on which to build to ensure that quality as well as quantity is maintained. I fully accept that larger employers have the capacity and infrastructure to accommodate and support apprenticeships. I am pleased at the number of SMEs that are giving such opportunities, but sometimes they do not have the capacity and infrastructure to do as well as they want. Are we doing enough to support SMEs to make sure that they play their full role and give young people the opportunities that they should? I would also like to encourage the whole public sector to open their minds more to providing apprenticeship roles.
Thirdly, the economy as a whole benefits from apprenticeships, as people are upskilled and make a good transition from education to employment and understand how they can play their full role in the business. That helps our economy to continue to grow.
In summary, we have a welfare Bill that aims to ensure that we do better for people. I am sure we will have a big debate about the rights and wrongs of that, but let us not only have the debate but find some really good solutions, so that many who start their journey can, with our support, complete it and reach a good destination. Apprenticeships are a key, fundamental part of that journey, and quality is important. None of these things will happen unless employers, particularly SMEs, are able to deliver good quality apprenticeships and, as a result, a good economy.
I look forward to the continuing debate and, with some trepidation, to the continuing challenge. But I hope that the hearts of every one of us will beat in concert, and at the end of the day we will do the right thing for the people whom we in this House are here to serve.
Baroness Warwick of Undercliffe (Lab)
My Lords, last week in my capacity as chair of the National Housing Federation, I hosted a briefing on this Bill. One of the speakers was the chief executive of an NHF member organisation, St Mungo’s Broadway. St Mungo’s provides supported housing for about 3,600 people a year. On any one night, about 2,500 people are in its hostels, semi-independent housing or care homes. St Mungo’s provides vital support to help people to gain the skills and confidence to recover from homelessness and to live as independently as possible. The CEO was enormously concerned that, under the Government’s plan to reduce social housing rents as set out in this Bill, it will not be able to deliver for homeless and vulnerable people on anything like the same scale. Taking into account the rental income that it had anticipated over this period, it expects to lose £4 million, and local authority cuts over the same four-year period will mean further falls in income. These cuts will mean that St Mungo’s will have to stop running some of its vital supported housing schemes. Their residents have slept rough, been in prison, have a mental health problem or a significant physical health condition; more than half have a substance-use problem, and their problems often overlap. They need skilled and intensive housing management and support. Who else will provide it if schemes like these are forced to close?
Housing associations up and down the country will face the same dilemma. They are committed to building the homes the country needs and will do all they can to continue with this vital work, but we underestimate at our peril the impact of the 1% rent reduction over the next four years. The result is an estimated loss of more than £3.85 billion in rental income. This will have a significant impact on all associations; it will have a particularly severe impact on the provision of supported housing for vulnerable people, including domestic abuse refuges, homelessness hostels and homes for veterans and people with disabilities. Like the right reverend Prelate the Bishop of St Albans—I thought he set out the issues extremely well—and many other noble Lords in this debate today, I am deeply concerned that the rent reduction will result in a serious lack of provision for people with complex problems and high support needs.
I have had numerous examples from all over the country. I will mention just two: Framework in Nottingham estimates losing 240 high support units over the next four years, and Riverside based in Liverpool says that 32 of its 102 supported housing schemes will become loss-making as a result of the rent reduction. As well as this, the policy will add greater cost to the public purse. The Homes and Communities Agency recently estimated that the net financial benefit of specialist housing was about £640 million overall. Excluding specified accommodation from the rent reduction measure would result in a reduction in the overall savings delivered by this policy of around £93.5 million in year 4—over six times less than the savings that specialist housing offers the public.
As others have said, the Government have acknowledged that,
“the rent reduction measures may disproportionately impact on supported housing and may cause a reduction in service provision”.
The Bill was amended in another place to allow the possibility for organisational waivers. But the cost structures used by health, care and support providers are complex, and vary across the sector. The development of a waiver formula that is consistent and fair would be extremely challenging. As my noble friend Lady Andrews and other Members of this House have done already in this debate, I urge the Minister to agree that specified housing—in other words, housing for vulnerable people—should be excluded from the rent reduction requirement. I hope that the House will support this.
There are two other issues I want to touch on: the impact of the rent reduction on stock transfer organisations, and the impact of the benefit cap on housing affordability and temporary accommodation. Stock transfer organisations inherit from local authorities housing stock that needs improvement. They generally start out with a business plan that involves increasing rents in accordance with guidelines set by the regulator, and they use this anticipated revenue to underpin borrowings to undertake the much-needed improvements.
This means that the organisation’s finances are extremely tight in its early years of operation. The rent reduction will cause many of these organisations to struggle to deliver improvements promised to tenants at the time of the transfer. In some cases their financial viability will be put at risk. In regard to the benefit cap, a secure and decent home is often the starting point to help people back into work. The Bill’s proposal to lower the benefit cap to £23,000 in Greater London and £20,000 elsewhere will make housing unaffordable for thousands of families. This affordability challenge is not restricted to families renting in the private rented sector. The NHF’s modelling shows that a couple with three children would not be able to afford the average housing association rent on a three-bed property in any region. In London, families would face a shortfall between benefit and rent of £27.79 per week. The weekly shortfall under a £20,000 cap ranges from £37.40 in Yorkshire and Humberside to £67.35 in the south-east, based on the current rent agreement.
A lower benefit cap will have a particularly significant impact on families living in temporary accommodation. Temporary accommodation is a vital part of the homelessness safety net and is used by local authorities to house people who otherwise would need to be placed in more costly emergency interventions such as bed-and-breakfast accommodation. People placed in temporary accommodation by local authorities have little scope to move to reduce their housing costs, and are likely to be further from the job market. If they are no longer able to keep up with rent payments in temporary housing due to the cap, they may find themselves homeless again, and it is likely that local authorities will struggle to rehouse them. I hope the Minister will agree that people living in temporary accommodation should be treated in a similar way to tenants in supported exempt accommodation and have their housing costs omitted from the calculation of the cap.
The current system for regulating social rents is overly rigid and confusing. Currently rents are fixed by the Government, at either a percentage of the local private rent or the lower social rent level. Because private rents vary hugely across the country and do not rise and fall in proportion to local wages, housing association homes are much less affordable for customers in some places than in others. Surely it makes much more sense for housing associations to be able to set rents that reflect local market conditions and customer circumstances, within an overall envelope set by the Secretary of State. I urge the Government to give housing associations that flexibility.
The Bill will have some significant unintended consequences for the housing of some of the most vulnerable people in society. I hope that the Minister will be prepared to look carefully at exempting specified housing from the rent reduction. Will he agree to meet some of the providers of these schemes to hear their concerns first hand?
Baroness Grey-Thompson (CB)
My Lords, I welcome the Government’s manifesto commitment to halve the disability employment gap. I sincerely hope that the Bill will help to achieve that, but there are challenges along the way.
Scope’s analysis of the labour force survey indicates that between July and September 2011, 18.5% of the total number of unemployed people were disabled. The statistics from April to June 2015 indicate that disabled people now make up 26% of the total number of unemployed people. It is also estimated that a 10 percentage point increase in disability employment would increase GDP by £45 billion by 2030.
I believe that disabled people should be in work, but it is a complex issue. The Government have consistently said that they support the most vulnerable but it is no surprise that I have concerns about how we might achieve that. The importance of the annual report has been highlighted by the noble Baroness, Lady Doocey, and she is absolutely right, but it is more likely that a disabled person will be asked at interview how they go to the bathroom than whether they have the skills to do the job. In other contexts, I have frequently been asked that question. A non-disabled person would be utterly appalled if they were asked that in an interview, but disabled people wrongly expect this as the norm.
I hope that in Committee we will be able to explore what good reporting will look like and how value can be added. That is important because, once out of work, disabled people face considerable barriers to returning. Some 10% of unemployed disabled people have been out of work for five years or more, compared with just 3% of the non-disabled population. I live in the north-east of England, where in the past eight weeks 5,000 jobs have been lost. The chances of a disabled person finding work in this environment will be few and far between. In recommissioning for the work programme and Work Choice in 2017, the Government must develop detailed plans for specialist employment support programmes for disabled people, as recommended by the Commons Work and Pensions Select Committee last month.
The current back-to-work support for disabled people is ineffective. The work programme may have been successful in helping to address cyclical unemployment but it has struggled to address the historically low employment rates among disabled people. Job outcomes for disabled people on the work programme are only 7.7% for new ESA customers and 3.9% for other ESA incapacity benefit customers. This is compared to a job outcome rate of 21.5% for JSA 25-plus customers. People referred to Work Choice between July and December 2014 had a job-start rate of 57.3% by June 2015, but Work Choice is small in scale and poorly targeted at disabled people on ESA.
I hope that the Minister will consult experts on what support into employment should look like, because the work capability assessment does not assess employment support needs. The level of financial support that a disabled person receives determines the employment support that they receive, but that is unhelpful because those two things are just not related.
I must apologise to the Minister that I am unable to attend the weekly Cross-Bench meeting tomorrow, where he will be speaking to my noble friends about this Bill, because I am launching a Citizens Advice report called Waiting for Credit, which looks at the universal credit rollout. It is vital that we get the correct implementation of this because it affects how disabled and non-disabled people are able to move in and out of work.
The noble Lord, Lord Low, has already mentioned that he, my noble friend Lady Meacher and I will be looking at ESA. I do not wish to pre-empt the findings but I imagine that there may be quite a number of amendments in this area. There is a great deal of concern. I do not want disabled people to be disincentivised from getting into work, and we need to explore further whether it creates a greater incentive for claimants to want to be placed in the support group. Given the limited support available to disabled people in the support group, it could have the negative impact of moving people further away from the workplace.
I would welcome a further discussion with the Minister about the impact assessment. I struggle to see how cutting support could incentivise disabled people into work, and I am looking forward to the DWP’s convincing arguments in this area.
There are also a number of issues to do with carers, who could be penalised by the lower benefit cap in the Bill. They make a huge contribution to society, but there is great complexity about whether they live in the same property and whether they are counted as a separate household, even if they do. We must consider how protection can be offered to carers who do not live in the same household. There are also many considerations for people with a life-limiting and potentially rapidly declining condition.
The noble Lord, Lord Borwick, raised the issue of Motability. I had a Motability car when I started learning to drive at 17, because insurance for a disabled person was ludicrous, twice the price of that for a new driver, which was blatant discrimination. It is better now, but under the changes that are coming, if a person loses their benefits they will lose their car. There was a recent case of Olivia Cork, a leg amputee, who was told she was not disabled enough. She went through the process and asked for reconsideration but was turned down. She now has to find £4,900 to be able to keep her car. In a Britain where there are many issues of accessibility to public transport, this is far more disabling than it is helping a disabled person get into work. Whizz-Kidz launched a campaign today looking at accessible travel. In London it is fine, but if you live in the north-east like I do it is really difficult for a disabled person to get around.
There is so much that can be done to help disabled people, but so much is outside the Minister’s remit. I dream that one day we will actually have a joined-up Government. I am chair of ukactive, and last week we released Blueprint for an Active Britain; it contains a whole host of recommendations, such as having activity experts in GPs’ surgeries to help everybody become more active. The Minister said that work is beneficial—activity is beneficial too. We need to be looking at physical literacy for all. Many disabled children are excluded from physical activity and PE in school and there are clear links between educational attainment and activity, but that is outside the remit of the Bill.
I am also chair of the national Wheelchair Leadership Alliance; it is looking at provision of day chairs, which in England is a complete postcode lottery. I am grateful that we have had a lot of support from MPs and CCGs but the wrong wheelchair causes harm. It excludes children from school and people from work. To highlight the issue, I had a picture of myself taken in a wheelbarrow. It has a seat, wheels and handles but is absolutely no use to me. That is the problem of providing a wrong wheelchair. Access to Work has been through reforms. I am currently dealing with a case—it provided a woman with a chair but only gave her five-sevenths of the money towards it. It then suggested that she leave it in work over the weekend so she would not wear it out. These changes are simply bonkers. Instead of encouraging people to work, they are making it really difficult.
Finally, I was today considering why we are here and what we are trying to achieve. I saw a story in the Bristol Post this morning about a young lady called Lily Grace Hooper, who is at primary school. She had a stroke as a baby and is now blind. After a health and safety assessment, she was told that she cannot use her white cane in school in case she tripped people up, but she should have a full-time adult helper instead. What a waste of resources. I am sure there are decent intentions behind it, but it is patronising, it does not promote socialisation, it does not aid her education and it takes away any aspiration. This case sends out a really poor message to disabled people about their independence. The message is, “Why bother?”. I know that this decision was not made by the DWP or the Minister, but the message it sends out about the value of disabled people in society is very worrying. If the Government want disabled people in work, we need to look at the wider issues, not just treat them in isolation. If children are important—if we genuinely want to look at their life chances—children like Lily Grace Hooper deserve a much brighter future.
Baroness Eaton (Con)
My Lords, I declare an interest as a former chairman and current vice-president of the Local Government Association. Getting people into work and reforming welfare are two of the key priorities of this Government, building on the successes achieved over the past five years. In the previous Parliament, 1.9 million jobs were created, an average of 1,000 new jobs per day, more than in the rest of the European Union combined. Each of these new jobs represents a transformation in people’s lives, giving families more security, boosting the self-esteem of young people employed for the first time and providing renewed hope for the long-term unemployed. This successful record in relation to job creation is no accident. It is the product of hard work by people in every part of the country. It is thanks also to the Government’s long-term economic plan. However impressive this record is, it is not enough. The Government have set themselves the bold aim of achieving full employment, and this Bill introduces a duty on them to report to Parliament on the progress being made on this, which I welcome.
As other noble Lords mentioned, the Bill also introduces a duty on the Government to report to Parliament on progress towards another key aim: the achievement of 3 million apprenticeships in England. Over the past five years, the number of apprenticeships has reached record levels—2.2 million—but there is clearly more to be done. I strongly welcome the Government’s ambitions in this area, and I know that local government will be keen to play its part in meeting this target. Indeed, councils are currently leading the way in providing apprenticeship opportunities for young people in their local areas. By way of illustration, I will highlight just one example that I am aware of. Kent County Council, via the Kent Apprenticeship Programme, offers grants of up to £2,000 to businesses which take on a young person aged 18 to 24 who has previously been claiming out-of-work benefit.
The Government’s commitment to create 3 million new apprenticeships over the course of this Parliament has received universal support. It is absolutely right that we are prioritising apprenticeships, which provide a high-quality, accessible alternative for young people who are not pursuing the academic route. By championing apprenticeships, the Government are working in partnership with employers and further education providers to invest in the workforce of tomorrow. This is essential to the future success of our economy. Apprenticeships are also key to solving long-term unemployment. They provide a path for young people into work, a route out of benefits and a path to self-sufficiency and success.
As with all opportunities for young people, we must make sure that apprenticeships are accessible to those who are vulnerable or who need extra support to unlock their potential. We know that some young people will need additional support to transition effectively into work and become financially independent. Another group of particular concern is young people who have been in care. We know that these young people typically have much poorer outcomes than their peers. Multiple care placements too often lead to a disrupted education, which in turn means that they leave school without the necessary qualifications. Some 84% of children in care leave school without good GCSEs. In addition, many have emotional and mental health problems.
The Prime Minister used his party conference speech to restate his commitment to improving outcomes for children in care. As he said, the state has a responsibility, as their corporate parent, to provide them with opportunities by improving standards in our schools and performance in social services. We also need to think about what happens after a looked-after child becomes a young adult. The previous Government took some important steps forward, including the welcome introduction of Staying Put, which enables young people in foster care to remain with their foster families until the age of 21. We know that this has had a positive impact. But of course more needs to be done to help care leavers realise their ambitions and become independent.
The charity Barnardo’s has put forward a number of suggestions for improving access to apprenticeships for care leavers. There are two points that are worth consideration. The first is that we know some young people are not ready to start an apprenticeship straightaway. They may not have the academic qualifications they need, such as GCSEs in English and maths, or they may lack other skills needed for the workplace. What we must not do is to give up on these young people or write them off as unable to move into employment. Rather, we need to find the right pathways into work. Traineeships are an important way forward in this respect. The Government rightly identified that they can provide a useful transition between school and an apprenticeship or other forms of training or work. However, it is very important that these traineeships lead to paid work. I hope that Ministers will consider how we can ensure that traineeships provide an effective part of the solution to improving employment prospects for young people furthest from the workplace.
The other suggestion from Barnardo’s concerns young people who have the skills to do an apprenticeship but need support to complete it successfully. Let us consider, for instance, a care leaver who has qualifications but lacks what we often term “life skills” as a result of suffering trauma. For these young people, extra support either in the workplace or outside it is vital to boost their confidence and make sure that they stay on track. The challenge, of course, is that this kind of support has cost implications. I would welcome a discussion with the Minister to explore options for some kind of support fund for apprentices with additional needs.
In eight minutes, it is impossible to refer to all aspects of the Bill but, finally, I want to touch on the admittedly difficult issue of restricting child tax credit to two or fewer children. It is important that we understand that this Government have a mandate to reduce the welfare bill and that they need to be fair to the many working families whose budgets have to accommodate the cost of every additional child. In 2012, the average number of dependent children in families in the UK was 1.7. Limiting support through tax credits to two children is proportionate. Families on benefit should have to make the same financial decisions as families supporting themselves solely through work.
It is important to see this measure in the round. Child benefit will see no incursions, and the additional 15 hours of free childcare for working parents of three and four year-olds is worth £2,500 per child. I am relieved that the Government will treat multiple births as single births but with a child element for each sibling where there were previously fewer than two children in the household. I believe that the Government will be consulting on further exemptions, so obviously flexibility seems to be the order of the day.
Achieving full employment and ensuring that those in work are rewarded are key to securing a just society and a prosperous economy. These are the two central ambitions of the Bill and, as such, it has my strong and enthusiastic support.
Lord MacKenzie of Culkein (Lab)
My Lords, I will try not to detain the House for too long at this hour. I want to speak, in particular, about the effects that this legislation will have on people with life-limiting illnesses and on those with terminal diagnoses. I want to follow on from a lot of what was said by the noble Lord, Lord Patel, and the right reverend Prelate the Bishop of St Albans and from some of the points made by the noble Baroness, Lady Browning.
As a nurse by profession, I could give many examples, but one that bears heavily on me is that of people living with motor neurone disease—that awful, usually rapidly progressing illness, which is always fatal. There is no cure, and it is a disease that I have seen at close hand.
We have heard much from the Government about the need to have a welfare system that is fair, that boosts employment; that is about choices, transforming lives, paying off the deficit and so on. The Conservative manifesto also promised—if I recall correctly—to protect people with disabilities and the most vulnerable in society. Therefore, I wonder why so many charitable organisations caring for the vulnerable and for those with differing disabilities are so concerned about the Bill—none more so than the Motor Neurone Disease Association, to which I should pay the warmest of tributes for its tireless work in supporting those living with MND and in supporting research into a possible cure.
One of the MNDA’s real concerns is the proposal to include the basic or main rate allowance of the employment support allowance in the freeze. People with motor neurone disease inevitably face rising costs as the disease progresses. If the Bill is enacted in its present form, they would be quite a bit worse off by 2019 or 2020.
A second issue causing much concern is the reduction in the benefit cap. This will undoubtedly have an adverse effect on those full-time, unpaid carers who do not live in the same household as the person they care for. This can include friends and/or family members who do not live in the same property. It could also include people who do live in the same property but who are counted as a separate household. For example, an adult living with and caring for an elderly parent or sibling may still be subject to the benefit cap. It cannot be right, therefore, that the inclusion of the carer’s allowance and bereavement allowance will affect full-time, unpaid carers in this way. In my view, these two allowances should be removed from the scope of the benefit cap.
Thirdly, there is very real concern about the question of mortgage interest. Converting this present benefit into a recoverable interest-bearing loan has the potential to leave many in great difficulty, not least those with an illness such as motor neurone disease, where the condition can deteriorate very quickly. In these situations, financial difficulties can follow just as rapidly. It cannot be right that people with life-limiting illnesses should be put in this position of possible financial crisis.
How can the waiting period of 39 weeks before qualifying for this new loan be justified? In not a few cases, 39 weeks is actually longer than the time between diagnosis of motor neurone disease and death. The cumulative effect of the reforms I have referred to is a potentially adverse effect for many people with life-limiting illnesses.
All Governments will sometimes propose or do things that provoke disappointment, anger and a whole gamut of other emotions and reactions. However, I suspect that anyone with a nursing background such as mine, and who is familiar with life-limiting illnesses, is entitled to be profoundly upset and not a little angry that any political party that claims to be on the side of the people, not least people with illness and disability, would seek to deal with the deficit on the backs of those living with always fatal illnesses such as motor neurone disease.
Nothing in these proposals has anything whatever to do with fairness, boosting employment or making work pay. Penalising people with life-limiting illness will do nothing to build an economy based on higher pay—or any of the other reasons that might be advanced as justification for this Bill. Except it will, perhaps, make the tiniest of tiny dents in the deficit. But if so, to how many decimal points would the Treasury have to go to measure that very tiny dent? Even if it were measurable, the Treasury would never publish such a calculation. Given the track record of that department in recent times, it is not about caring but about dogma. Others are being left to pick up the pieces.
I do not believe for one moment that the Minister would wish these things on people with terminal illnesses or diseases such as motor neurone disease. I hope that he will, in replying, be able to give a commitment that the Government will attempt to address these very proper and real concerns raised on behalf of those with life-limiting illnesses, and that the Government can show that they are listening. I look forward very much to the Minister’s reply.
The Earl of Listowel (CB)
My Lords, it was a privilege and pleasure to hear the maiden speeches of the noble Lord, Lord Polak, and the noble Baroness, Lady Stroud. I much regret that business in the Moses Room prevented me hearing the two earlier maiden speeches, but of course I will read those later. I much look forward to further contributions from the noble Lords and the noble Baroness.
I warmly welcome many aspects of this Bill. I welcome the attention paid to the importance of employment, to apprenticeships, and I welcome the troubled families clause. I have some serious concerns as well, in particular with regard to removing the monitoring of child poverty. However, I would like to convey my admiration for the Government in achieving high rates of employment and coming through such a difficult economic crisis. When I speak with people from Spain who come here to work and I hear of the atrocious unemployment rates among young people there and the difficulties they face, it brings home to me the achievement of this Government. We now have the lowest rate of unemployment since 2008 and, I think, the highest rate of employment on record—a real, important achievement.
This has been particularly brought home to me as I am a carer of a mentally ill, middle-aged man who has not worked for at least four years. What has brought a sense of the possibility of escape from his depression and paranoia has been the recognition that, if he carries on as he is, he will be wasting his whole life doing nothing, and the hope that he might be able to return to the job that he thoroughly enjoyed doing in the past.
There is a checkout lady in my local supermarket who is due to give birth in December. She has just had her last day at work. I see her quite regularly and I see customers saying: “I wish you well”. This will be her first child, so she is a bit worried about it. Because she is in employment, she has a community of people around her who are encouraging and supporting her. She need not feel isolated.
Many noble Lords will be aware of the recent report on perinatal mental health which caused so much concern. It highlighted the problems of depression during and after pregnancy. At the launch of that report, I spoke with a psychiatrist. He said: “One can bear almost anything, as long as one does not have to do it on one’s own”. So a key aspect of the Government’s success in creating more employment is how it can break the isolation that so many long-term unemployed people can experience.
Reference has been made to the work of Louise Casey and the troubled families programme. I remember Louise Casey in her first important job—the Rough Sleepers’ Initiative. I saw her on a number of occasions inspiring the people on the ground and bringing about very important and welcome changes to provision for rough sleepers. One thing that she really hammered home was the need to have purposeful activity for those on the streets as soon as possible. They needed to have something useful to do. I want to make clear my admiration and respect for the Government in what they have been doing to help many people into employment in these difficult times.
I hope there may be time for me to speak about homelessness and housing need. I urge noble Lords to consider introducing a metric in this Bill to look at housing need. Shelter is perhaps the primary requisite for people from which they can then find work and educate themselves. If we are looking at poverty, we should be looking at housing poverty as well.
I am concerned at the decision to move away from a metric for child poverty in terms of income poverty. I had the privilege of hearing the right honourable Iain Duncan Smith about six or seven years ago when he came to speak at a dinner at the Michael Sieff Foundation conference. I am a trustee of that organisation. He spoke knowledgeably and passionately about the work he had been doing at the Centre for Social Justice with Graham Allen MP to tackle some of the long-standing social issues in Britain. We found it very refreshing to hear from a politician who was so committed and understood the issues at hand so well.
The area of the Bill I am looking at in particular concerns the metrics around child poverty, not only for children in workless households but also for those in working ones. Some two-thirds of children living in poverty are in working households. It is important that we keep a hold on these things. Perhaps it is presumptuous of me to say this, but I noticed that the last coalition Government recognised that the women’s vote is very important. Around half way through the last Parliament one suddenly had the sense that the Government were saying, “We really need to think about our policy towards women”. I have derived such pleasure and satisfaction from working with the noble Lord and his colleagues over the years and I worry that perhaps they might be shooting themselves in the foot. If the Government stop thinking about child poverty and if they do not look at how many children are in low-income circumstances and thus in material poverty, that might make women think that perhaps the Government are not sensitive to families, particularly vulnerable families. It may be very presumptuous of me to say this, but most of the people I work with are women because it seems that it is mostly women who are interested in family issues, as I am. I notice that polling with regard to women has been changing and they are becoming more concerned about these issues. The work done by Iain Duncan Smith in the past was so important because of the perception that, way back, the Conservative Party had become insensitive to some of these areas and that it was being too harsh. Indeed, it was a female politician, Theresa May, who raised this issue at a party conference.
I shall move on to housing. I noted the speeches of the noble Lords, Lord Smith of Leigh, Lord Shipley and Lord Hodgson of Astley Abbotts, on this subject. I have spoken to many women who are in housing need or are homeless and they have told me about the instability in their lives. I have seen the poor conditions and overcrowding, of which perhaps the worst example was a woman living in a house in multiple occupation. She shared the kitchen and bathroom with five other families. She had a newborn baby and felt deeply isolated; indeed, she was in tears during our visit because she knew no one. I agree with the Minister that we need to think not only about income, but employment and other aspects such as education. We also need to think about housing need among vulnerable families, which should be monitored carefully.
Finally, there is the question of housing benefit being paid to tenants. I declare an interest as a landlord; fortunately I have not had the issue of tenants not paying their rent, but I understand that it is a serious concern for landlords. If we continue to pay housing benefit directly to tenants, there is the risk that many of them will fail to pay the rent and arrears will accrue, exacerbating the problems that have been talked about for housing associations and local authorities as regards their financial security. They will spend a lot of time and resource on chasing up arrears. This is a matter I hope to take up with the noble Baroness, Lady Meacher, at a later point in the Bill. I look forward to the Minister’s response.
Lord Young of Cookham (Con)
My Lords, I have listened for the past six hours to this excellent debate with its high-quality maiden speeches with a growing sense of relief that I am no longer the Government’s Chief Whip, as some serious issues have been raised that will need addressing in Committee. As someone who was a Housing Minister, on and off, for 10 years and who chaired a housing association for seven years, I want to focus my remarks on the two clauses in the Bill that deal with housing, which were welcomed in another place by the Opposition Front Bench.
Looking at the clauses on support for mortgage interest, the Opposition spokesman said:
“We support reforms to mortgage interest support that will strengthen work incentives and deliver savings”.—[Official Report, Commons, 20/7/15; col. 1265.]
Of the rent reductions, which have been controversial in today’s debate, the Opposition spokesman said:
“We want…reductions in social rents that will deliver savings to the taxpayer”.—[Official Report, Commons, 20/7/15; col. 1273.]
So the housing element of the Bill ought to be less controversial than the rest of it.
Dealing first with support for mortgage interest, which was touched on by the noble Baroness, Lady Sherlock, and the noble Lord, Lord MacKenzie, turning a grant into a loan is a sensible way of cutting public expenditure without reducing support to the homeowner who faces difficulties. I will come to the extra waiting period in a moment, but it is difficult to justify the fact that a householder sitting on a substantial chunk of equity gets a grant from the taxpayer, leaving when he dies his estate to his beneficiaries, unencumbered by the help he has had from the taxpayer. It seems sensible to convert that from a grant to a loan, and I think that would be justifiable whether or not one was looking for savings in public expenditure.
There are extra weeks before the entitlement kicks in, but that simply restores the waiting period to what it was before the financial crash in 2009. I understand the concern that this might push up repossessions, which are at an all-time low, but I wonder whether a bank or building society would go through the aggravation of repossession if it knew that in a few weeks’ time it would get, direct from the Government, monthly interest in full on the sum in question. In view of the concern, I wonder if it would make sense for Housing Ministers to have a dialogue with the CML, perhaps to get a memorandum of understanding that repossession would not normally be activated if SMI was about to kick in. Ministers made it clear in another place that:
“We remain committed to helping owner-occupiers in times of need to avoid the risk of repossession”.—[Official Report, Commons, Welfare Reform and Work Bill Committee, 13/10/15; col. 356.]
I think that dialogue might help.
The reduction in social rents is of course welcome news to tenants, and not just those who pay the rent in full. Of course, some of those currently on housing benefit hopefully will float off it in the next four years and therefore benefit from the measure. Those who currently pay their rent will be able to plan, knowing that for the next four years one of the largest items in their budget will go down in cash terms. This is good news for tenants and good news for the DWP, in that it reduces its outgoings not just on housing benefit but presumably on other index-linked benefits as well, as the downward pressure on rents will influence the CPI.
However, as my noble friend will know, this saving is subject to the ONS changing its mind on housing association debt. It decided just a few days ago that, as from next March, housing association debt will score as public expenditure. This means that, far from this measure reducing public expenditure, it will push it up unless between now and next March the Government can make sufficient changes to the housing association regime to convince the ONS that it can be reclassified. Can my noble friend indicate how they are going to ensure that the ONS ruling is reversed? Of course, that was based on measures taken before the rent reduction and the voluntary right to buy was introduced. It is important that any deregulation does not undermine the creditworthiness of the movement.
What is good news for tenants and the DWP is less good news for investment in housing, as many noble Lords have said in this debate. Ever since housing associations were able to borrow from the capital markets, there has been a link between housing associations’ rents and the size of their investment programme. I confess that when I was Housing Minister, much of my capital programme was funded by the DWP through housing benefit, so any reduction in rent affects cash flow and the ability to sustain borrowing, and therefore affects the investment programme.
It is therefore important that any measures in the Bill that reduce the investment programme of housing associations be replaced by other measures in the Housing and Planning Bill, because there are two sides to this coin. If one side of the coin is reduction in rents in this Bill, the other side has to be measures to increase supply to counteract that in the Housing and Planning Bill currently in another place. I understand the points that were made about supported housing and the excellent work done by those who help the homeless, such as St Mungo’s Broadway and other movements. Clause 22(7) enables the Minister to make exceptions, and I am sure we will want to look at this in Committee to see whether we can safeguard the valuable work housing associations do to support vulnerable people.
My final point concerns an issue that has not been raised in this debate. Reducing social rents at a time when market rents continue to rise brings into sharp focus the question of who gets lifetime tenancies at a lower rent from a social landlord, as opposed to the other half of the market, which has to accept short-term tenancies at market rents from landlords who, in some cases, are not as good as local authorities or registered social landlords. Noble Lords with very long memories may recall the Local Government and Housing Act 1989, one of the objectives of which was to influence the level of social rents to market level, with housing benefit taking the strain. The golden age of Nicholas Ridley never actually arrived, for good reasons, but this measure makes a sharp step in the opposite direction, widening the gap between the two sectors. That means that we need to ensure that the stock of social housing is more accurately targeted at those who need it most. That means another look at lifetime tenancies and at measures to encourage mobility through the social housing sector, as families now decently housed find their circumstances have improved and they can make their way into market housing, freeing social housing for those who, like they were, are in desperate housing need at the inception of their tenancies.
This Bill is an important building block in getting public finances under control, but it raises serious issues for those who want to see an increase in housing supply. Those issues need to be developed when the Housing and Planning Bill reaches this House, and I hope to take a part in those proceedings.
Baroness Gale (Lab)
My Lords, as I am the last Back-Bencher to speak in this debate, I believe that everything that has to be said about this Bill has already been said, but I will speak briefly on Clause 13. It will cut the support paid to people who cannot currently work owing to sickness or disability by about 30%. That means that this group of sick and disabled people will get the same financial support as those on jobseeker’s allowance who are fit and well enough to work. The rationale given for the cut is that this extra money for people in the ESA WRAG acts as what the Chancellor calls a “perverse incentive” which stops sick and disabled people getting better and working. The noble Baroness, Lady Browning, put it very clearly when she described this move as disgusting. I agree with her on that. The Government’s policy intention is to get more people from the work-related activity group back into work. Where is the evidence for the Government’s claims that the cut will get people into jobs who are currently unfit to work owing to sickness or disability?
Reducing financial support for sick and disabled people cannot improve a medical prognosis or speed a recovery. There are also fears about not being able to afford to attend all medical appointments and having to stop therapeutic classes that maximise physical movement and social confidence. It is clear that cutting support by one-third to half a million sick and disabled people is likely to put extra pressure on accident and emergency services and the health service generally.
This is not mentioned at all in the Government’s impact assessment, and the glaring omission casts doubt on the Government’s claim that this policy will save around £640 million a year by 2020-21. Sick and disabled people do not give up work lightly in order to claim benefits. It is not a lifestyle choice. A study found that people with Parkinson’s worked for an average of 3.4 to 4.9 years after being diagnosed. People report regularly that they want to work for as long as they are able. Many people with Parkinson’s work and, with the correct drugs regime and the help and support of their workplace, will be able to continue to work for some time. Eventually, as it is a progressive illness, they will have to give up work. They work as long as they can because of the uncertain future they face, which for many will mean expensive care and support.
There should be no doubt about the motivation of sick and disabled people wanting to work—most people want to work—but they face many significant barriers, including their health and workplace obstacles such as employer attitudes and inappropriate job design. The test does not capture the reality of living with a fluctuating condition, leaving people at risk of being assessed on a “good day”. People with Parkinson’s can have a good day and perhaps the next day cannot do anything. Tests such as the ability to lift a pen and place it in a pocket do not say anything of someone’s ability to have a job and carry out the work. The impact of pain and fatigue is not considered and neither is the fact that some people will not recover because they have incurable and degenerative conditions.
If someone has had to give up work because of the progression of their condition and their prognosis is further deterioration, this will inevitably impact their chances of securing employment again. As a result of the many failings of the WCA, employment and support allowance claimants with Parkinson’s are placed in the impossible and demoralising position of being told they are either fit for work or should be getting themselves back into work, and are often placed in the work-related activity group rather than the much more appropriate support group.
Many people struggle to survive on the WRAG payment, as they are already trying to improve or maintain their health. The Government would be taking £30 a week from almost half a million people on employment support allowance in the work-related activity group. Ministers argue that if these people worked between four and five hours a week on the new minimum wage they could recoup this loss. I wonder where these jobs offering four to five hours a week are. Can the Minister say how many thousands of jobs there are that people could work in for those few hours to recoup the money the Government are going to cut from their benefits?
How is making people poorer an incentive to work, especially people with progressive illnesses such as Parkinson’s and multiple sclerosis? In its excellent briefing, Scope says that it,
“opposes the proposed reduction in support provided to disabled people through the Employment and Support Allowance Work Related Activity Group (WRAG) set out in Clause 13. Disabled people placed in ESA WRAG have been found ‘unfit for work’ by the independent Work Capability Assessment (WCA). The proposed change will not incentivise disabled people to find work”.
I agree with Scope and look forward to hearing the Minister’s response.
Lord Kirkwood of Kirkhope (LD)
My Lords, it has been a long evening and we are now in injury time. I will try to dispose of my winding-up speech with as much dispatch as I can. I am bound to warn the Minister at the beginning that, as my noble friend Lady Manzoor said at the end of her excellent speech, my noble friend Lady Thomas is not able to be with us because she managed to break her right patella while opening her mail. She obviously gets more exciting mail than I do, but the message I got said specifically that the noble Lord, Lord Freud, must understand that she still has one whole patella left. I do not know with what malice this was meant, but I pass it on, for what it is worth. She will be watching us on Parliament TV as we speak.
I characterise the Bill as one that would never have seen the light of day had any Liberal Democrats been left in the Government. I could say more about that, but I will save it for Committee, where we will all be manning the barricades yet again. I look forward to that. However, there is an unreality about the debate. It has been a very well-informed debate—I would expect nothing else—but we are all in the difficulty that we do not know what is happening in the comprehensive spending review. That will change the game in a way that will not help.
I see all this as a second squeeze. The first squeeze in 2010 was more understandable. This will be a harder sell. The Government will find this very difficult politically when it all beds down and the consequences are fully known and understood. I say that not just because of the deficit reduction programme embedded in the Bill; it is on top of everything else. One of my biggest disappointments in the coalition Government was that, despite the DWP having 200-odd researchers, they never got round to the interrelated, total evaluation of how some of phase 1 of the squeeze in the last Parliament was affecting individual, low-income families. We still do not know that. We are now putting extra pressure on low-income families who are in a much worse position than they were in 2010 when this went through its first iteration. Another thing that is different is not just that they are worse off than they were, but that the public services on which they could rely in 2010 are much degraded. That is almost as big a factor as some of the reductions in finance available to these low-income groups.
We really need to move in this direction with massive caution. I know and trust the Minister. I know that this has less to do with him than it does some other people, but he understands the importance of monitoring, piloting, watching and learning. He gets that. We are relying on him to maintain as much of that as he can keep hold of. Obviously he is not in charge of everything —I do not think that he would be here in the first place if he was—but we will need him to be in listening mode. Committee on the Welfare Reform Bill in 2012 was a model of what a Minister should do in response to some constructive but positive criticism from an Opposition who, I am sure, will continue to be constructive in the way they approach Committee on the Bill.
We have 32 clauses. I hope that the business managers understand that we need time for the noble Lord, Lord Freud, to work his listening magic. He needs time to reflect on what we say to him. The business managers may say, “32 clauses; we can do that in three or four weeks”. We seriously need to take time on this. My former colleague in the House of Commons, the noble Lord, Lord Young of Cookham, spoke about being a former Chief Whip. Once a Chief Whip, always a Chief Whip; I was a Chief Whip in my time. I would not like to be whipping the government side.
Although some powerful and well-informed speeches were made by the Opposition, they were all about the need to get reports made to Parliament. Annual reports are terrific, but they change absolutely nothing and they make no one any better off. That does not mean that they are not important, but they are insignificant compared to some of the other changes that got the House’s attention. Clearly, I consider those to be Clauses 13 and 14. There has been a powerful set of speeches from all sides of the House about the need to change the provisions for the ESA WRAG group clients. That is clearly something we need to think about.
The child poverty measures will take time. The noble Baroness, Lady Lister, made a powerful speech, and I always agree with everything that she says. In particular, however, I agree with the reference to the LSE British Politics and Policy survey by Nick Roberts and Kitty Stewart, which looked at the results of the consultation on child poverty indicators. They looked at 230 of the 257 submissions under a freedom of information request. They said:
“There is very strong support for the existing measures, and near universal support for keeping income poverty and material deprivation at the heart of poverty measurement”.
That does not exclude any of the other things mentioned, a point made earlier. I am in favour of expanding some of the measures. What I am absolutely not in favour of, and I do not know anybody sensible who is, is ditching income. It does not make any sense at all. It makes us the laughing-stock of our European neighbours. We have academics—the noble Baroness, Lady Lister, is one of them—who understand these things better than anybody else in the world. Theirs were among the 230 submissions that were looked at by the LSE group, and that was their conclusion. It was a serious piece of work looking at what we need to do to get that set of indicators correct.
I want to say something else in passing—I have no time to develop it. Parts of the Bill affect Scotland. Parts of it, however, do not. I invite the noble Lord, Lord Freud, to come to Drumchapel and Easterhouse. He and I will go around advocating low-welfare and low-tax policies in the coming May elections in Scotland for Holyrood. Let us see how we get on. I promise the House that this could be used by the Scottish nationalist propagandists. They are grudge experts; we know that. This is meat and drink to them. It will make the job of the unionist parties, including the Conservative Party in Scotland, a lot more difficult than it otherwise might be. There are unintended consequences that we need to deal with. This is a very important Bill. I could say more, but I hope the Minister will be able to arrange some serious time in Committee to deal with this.
As a final point, I want to explore the idea of preventive spending. The noble Baroness, Lady Stroud, whose maiden speech was excellent, and whose work I know—although I do not always agree with her conclusions—made a very powerful speech. What she was actually saying was that if we were cleverer about evaluating the outcomes of preventive spending, the kind of things that she does would be an absolute no-brainer. However, they cost money and you cannot do bespoke preventive spending on an invest-to-save basis without giving some basic income support to keep people alive while you are doing it. I want to use Committee to explore some ideas about that through probing amendments. I hope that we will have a constructive Committee. We need to: this is an important Bill. It is important that we get it right. It would not have happened if there had been a Liberal Democrat in the Government.
Lord McKenzie of Luton (Lab)
My Lords, notwithstanding the fascinating and varied content of their contributions, given the hour, I hope that the House will allow me just to offer collective congratulations to all our maiden speakers. I look forward to hearing their contributions in future.
This is a wretched Bill. I am bound to say that it is the worst I have encountered in my time in the House. As my noble friend Lady Sherlock said at the start, it will increase poverty, penalise working households and accelerate homelessness. There is more besides as the Government are pursuing further cuts in parallel, not least their ill-fated attempt to cut tax credits through secondary legislation. This is done in the name of moving to a low-tax, lower-welfare and higher-wage society but we know that tax cuts and higher wages, even when they come, do not compensate for the scale of social security cuts which the poorest will be made to endure. The national living wage is not a direct substitute for cuts to in-work support and we know that half of the cash gains flow to the wealthiest half of households and are not available to the self-employed. My noble friend Lady Donaghy made some important wider points about the self-employed, which we will need to explore in Committee.
A significant contribution to the Chancellor’s £12 billion of cuts, which the noble Baroness, Lady Manzoor, rightly claimed as a political choice, will come from across-the-board freezes in working-age benefit rates. This amounts to a 4.8% real cut, given the OBR forecast for CPI, and comes on top of three years of nominal increases under the coalition Government—presumably, also a political choice. Because of this, the IFS tells us that 13 million families will on average lose something like £260 a year. Breaking the link with prices and earnings, a growing feature of government policy, means cutting the poorest off from the mainstream of society. We argue for an annual assessment of benefit levels. My noble friend Lady Hollis reminded us to be careful of the mantra around benefits and pointed that as a percentage of GDP, the welfare bill has been pretty constant over a long time. The welfare and social security system is something which we all dip in and out of during the course of our lives.
The IFS analysis of the distributional effect of the coalition’s tax and benefit changes shows that, overall, the coalition Government raised a net £13.5 billion in taxes and cut net benefits by £16.5 billion. Who picked up the tab when measured as a percentage of income? The bottom two deciles have borne the most. How is this supporting the most vulnerable? Where are Adam Smith’s values in all that and who will bear the cost this time round? According to the IFS, it will be the poorest income decile groups.
The reporting obligations of Clauses 1 to 3 can be supported if strengthened. We heard from the noble Baronesses, Lady Stedman-Scott and Lady Eaton, the noble Lord, Lord Hodgson, and my noble friend Lord Young of Norwood Green, who was passionate about having quality apprenticeships and the importance of that government commitment. We need to be clear what employment means to the Government. I sometimes think that the impression is created that active market policies began with the Centre for Social Justice. If we need to look at a bit of history, perhaps I may take the Minister back to a report which he wrote in 2007, when he said that the Labour Government,
“has made strong, and in some respects remarkable, progress over the last ten years”.
He went on to say:
“This is a genuinely impressive record. And underneath these headlines the biggest improvements have been for areas and groups which were previously furthest behind. Nearly every disadvantaged group that the Government has targeted (e.g. lone parents, older workers, ethnic minorities and disabled people) has seen its ‘employment gap’ reduced”.
I commend the noble Lord for the excellent report which he wrote previously.
Several noble Lords talked about the troubled families programme. My noble friend Lord Smith and the noble Lord, Lord Lupton, have supported that. I think we need to make sure that reporting of the troubled families programme includes a report on resources that are made available to local government. Several noble Lords focused on the lowering to three of the age of children whose parents must undertake work search or be sanctioned.
As well as seeking an independent review of the operation of sanctions, we will look to constrain this policy in circumstances where suitable and affordable child care is not available. We agree that child poverty is multifaceted and have no problem with further reporting requirements around worklessness and educational attainment. We might think about bad housing as well, but, although we subscribe to work being the best route out of poverty, we need to acknowledge the growing reality of in-work poverty, a point made by several noble Lords during this debate. CPAG tells us that 64% of children who are now living in poverty are in working households.
Like my noble friend Lady Lister, we are vigorously opposed to the removal of the measures and targets in the Child Poverty Act. We know that the lack of adequate income is a decisive characteristic and one of the primary drivers of poor life chances. Not having to measure income or indeed develop a strategy may be convenient for the Government, but it will not change the reality, a reality where the Resolution Foundation says that we are facing, in this rich country of ours, having some 3.7 million children in poverty by 2020. This is an outcome which is spurred by cuts to working-age benefits.
We look forward to the review of the noble Lord, Lord Low, and the noble Baronesses, Lady Meacher and Lady Grey-Thompson, and to their bringing their expertise to bear on the consequences for disabled people of this legislation. We have great confidence in their deliberations.
We support the Government’s ambition to halve the disability employment gap, although their progress, as the noble Baroness, Lady Doocey, said, should be routinely measured. However, there are a number of measures in the Bill which do not help in recognising that disabled people take longer to get back to work and have challenging financial resistance. The noble Lord, Lord Patel, gave us an authoritative account of some of the challenges that disabled people face in getting back to work. Removing the uplift for individuals in the WRAG will cost them £1,500 a year and is justified on the spurious and unsubstantiated basis that it will improve work incentives, notwithstanding, of course, that people in the WRAG—this is a point made by several noble Lords—have been assessed as not currently able to work. These are individuals also who will be disproportionately affected by cuts to working-age benefits, including, for those not in receipt of DLA/PIP, the benefit cap. How is that supporting the most vulnerable? We will seek to remove Clauses 13 and 14 from the Bill.
It is said that disabled people have been failed by the benefits system. We maintain they have been failed by the Work Programme, particularly those with mental health challenges. I commend the contributions of the noble Baroness, Lady Meacher, and the noble Lord, Lord Layard.
That we have a housing crisis is not in doubt. New build is woefully short of what is required. Rents in the private sector are rising. Homelessness is increasing. Of course, one of the first decisions of the coalition Government was to cut capital spending for social housing and to put the burden of funding on so-called affordable rents. No surprise therefore that the housing benefit bill ballooned by some £30 billion, so now it is all going to go into reverse with enforced social rent reduction, amounting to an average 12% by 2020, reversing also the agreements relating to refinancing agreements for local authorities. That may be good news for some tenants, perhaps, but the benefit will overwhelmingly accrue to the Treasury in reduced housing benefit. Taking some £4 billion out of the sector by 2020 is bound to lead to fewer social homes being provided. We heard from my noble friend Lord Smith of Leigh that this problem is already beginning to bite. As was mentioned, the National Housing Federation has said that it could lead to 27,000 fewer homes by 2020.
We have received strong representations about the impact of this policy on providers of specialist housing that deliver vital services to some of the most vulnerable in our communities. The right reverend Prelate the Bishop of St Albans in particular focused on this issue. Being able to seek an exemption from the policy is all very well, but we support a statutory exemption for specialised housing and seek to require the Secretary of State to bring forward arrangements to ensure that the impact of rent reduction will not impair the ability of housing associations or councils to build new affordable homes. We know that the benefit cap has already reduced the affordability of suitable housing and increased homelessness. Further reductions will make the vast majority of the country unaffordable to couples with three or more children. Freezing local housing allowance will further put housing beyond the reach of many. Shelter advises that in two years local housing allowance will not cover the bottom one-third of rents in almost all local authorities, which is staggering. The homelessness duty placed on local authorities will become intolerable, as cuts to their budgets bite. Of course, although DHPs will help, they are not a panacea.
We will support exemption from the cap for those in high-cost temporary accommodation; we will also seek to remove carers from the scope of the cap and exclude children-related allowances from the calculation. The assertion that this is all about work incentives is bogus, as those caught by the cap are overwhelmingly not required to work. Perhaps the Minister can give us the figure of how many people that actually involves. The Secretary of State should certainly not be let loose to change the cap almost at will and without reference to clear criteria.
As for switching support for mortgage interest by grant to a loan, we will seek protection for pensioners, who comprise some 45% of claimants. Given the switch, there seems little justification for the extended wait to 39 weeks. We will probe in Committee the availability of independent advice and concerns over conflicts of interest.
We have heard fierce opposition to the two-child policy, none more powerful than that from the right reverend Prelate the Bishop of Durham and my noble friend Lady Sherlock. Their opposition and that of the faith communities generally is not only about the financial impact of the restriction on larger families, including some 2 million children—families which already have a higher risk of poverty. As their briefing makes clear, the policy will have profoundly negative effects on family life. It raises horrific images of what women may have to endure in seeking exemption. There is much that we have to challenge in this Bill, none more so than this grotesque policy. It is a line that we must ensure that the Government are not allowed to cross.
Lord Freud
My Lords, I was expecting some excellent contributions to this debate, and I was not disappointed. We have all been privileged to enjoy the quartet of maiden speeches this evening. I was particularly struck by my noble friend Lord Lansley saying that we need to add value in our measures of poverty. No one could mistake the passion with which my noble friend Lady Stroud has devoted her life to tackling the root causes of poverty. My noble friends Lord Lupton and Lord Polak concentrated on the importance of the troubled families programme. As my noble friend Lord Lupton said, we need to intervene, not just look at statistics. I also thought that we had a complete variety of styles from the four—you could not get a more varied set of contributions—and I look forward to many more contributions from my noble friends.
This Bill builds on the principles first introduced in the Welfare Reform Act 2012. In the past, Governments spent money in an attempt to solve problems rather than drive real change in people’s lives, and our approach is different: we believe that we should reward work and support aspiration, that we must have in place a fair, affordable and sustainable welfare system, along with the appropriate protections for the most vulnerable, and that we must relentlessly focus on tackling the root causes of child poverty to improve the life chances of our children. It is also worth remembering that the measures in the Bill must not be taken alone. We must also take into account the national living wage, increases in the personal tax allowance and the reforms of childcare, all of which will help to ensure that work pays.
Let me address some of the points that were made in the debate. There were quite a lot, and I will attempt to answer as many as possible. We will have a chance to go into them all in Committee. To help that process, I will, as the noble Lord, Lord Kirkwood, asked, make sure that we have the same process that we had with the Welfare Reform Bill. I will make briefing sessions available for noble Lords on the specific policy in good time, so that we have an informed process.
Let me begin with the first three clauses of the Bill: the statutory duties to report on full employment, apprenticeships and troubled families. The noble Lord, Lord McKenzie, asked why we are not setting the target for full employment there. We set out in our manifesto the aspiration for the UK to be the best place in the world to start a business, and to achieve the highest employment rate in the G7. Producing an annual report will illustrate our progress towards that goal.
The noble Baroness, Lady Donaghy, asked whether underemployment as a result of working part-time is contributing to low earnings. The figures show that 85% of people who are working part-time are doing so through choice. The number of vacancies are now pretty substantial—in excess of 700,000 at any one time. In answer to the question asked by the noble Baronesses, Lady Manzoor, Lady Doocey and Lady Hollis, full employment will allow support for those with disabilities. We have already found 450,000 people in the Work Programme sustained work. We need to continue to support individuals into work through successful programmes such as Access to Work, and to work with the health system to improve access to treatment.
Closing the disability gap and improving employers’ attitudes to disabled people is a theme that was picked up by the noble Baronesses, Lady Doocey, Lady Meacher, Lady Hollins, and Lady Grey-Thompson, and by the noble Lords, Lord Rix and Lord Young. Clearly, it is a challenging ambition and we are committed to it. We have extended Access to Work and launched specialist employability support. We continue to work with employers through our Disability Confident campaign, and announced funding of a further £100 million per year for additional practical support. Clearly, progress here is a key factor in achieving full employment and closing the gap.
The noble Lord, Lord Young, my noble friend Lord Blencathra and my noble friend Lady Stedman-Scott asked about the quality of apprenticeships. Improving quality has been central to our reforms, and employers are developing new standards to ensure that apprenticeships meet the skills needs of their sectors.
The Government ensure that small businesses are engaged in the development of those apprenticeship standards, and we have made significant progress in making them easier for small businesses to take on. In answer to the question of my noble friend Lord Hodgson, there are 40,000 people with disabilities or learning difficulties starting an apprenticeship. More clearly can be done. My noble friend Lady Eaton asked about care leavers. The Government provide full funding for apprenticeship training for entitled 19 to 23 year-old care leavers. They can also get access to programmes such as traineeships for the support they need to get ready for an apprenticeship.
I turn to life chances. We have made it clear that our focus is on the symptoms of child poverty—excuse me, the existing statutory targets focus on the symptoms of child poverty—and we have a new approach, the life chances one, focused on transforming lives through tackling the root causes of child poverty. Clause 4 therefore places a duty on the Secretary of State to report annually on the key life-chance measures of worklessness and educational attainment.
Baroness Hollis of Heigham
How is the Minister going to account for poverty among children of working families?
Lord Freud
The HBAI measures are still there. We will have all the measures that we normally have.
The noble Baronesses, Lady Hollis, Lady Sherlock and Lady Lister, were concerned about the impact of this on the Budget. Our reforms are designed to incentivise work and ensure that it always pays, and then to allow people to keep more of what they earn. The new life- chance measures will drive continued action on work and education, which will make the biggest differences to disadvantaged children now and in the future.
Numerous noble Lords argued that we should keep income-based measures and measure in-work poverty, as the noble Baroness has just reinforced. The existing statutory framework set around the four income-related targets is unfit for purpose. The framework does not drive the right action, so instead we will focus on the root causes such as worklessness and educational failure. The income measures led Governments to spend their finite resources on action that did not produce the best results for our children, and that is the reason for our new approach. As I just said, though, and in response to the noble Lord, Lord Kirkwood, we will still be publishing all the income measures and the HBAI report. I remind him that no other country in the world uses those measures as a target as opposed to a measure.
I am flattered by the vigorous quoting by the noble Lord, Lord McKenzie, from that small piece of work. I should point out that when I say there were some remarkable changes, there were no remarkable changes in the number of NEETs, which went up through the longest boom in history, nor in the amount of worklessness or social housing, which plateaued whether one was at the top or the bottom of the cycle, and I recommended a major effort to pull the disabled back into the labour market and into society. Of course some of the figures that I was so pleased with then fell straight off a cliff when we had a rather remarkable recession—probably the worst recession that this country has had since the 1920s. However, we took £60 billion out of the welfare bill over the last coalition Government, and up until the time for when we have the latest data, the relative measure of people in poverty had declined in that period by 800,000 people. So it is wise to use not people’s forecasts of income but what has actually happened.
I turn to the benefit cap. It is not fair for someone on benefits to receive more than many people in work; reducing the benefit cap to £23,000 in London and £20,000 elsewhere better aligns the level with the circumstances of hard-working families across the country. On the question raised by a number of noble Lords—the noble Baronesses, Lady Sherlock, Lady Hollis, Lady Lister and Lady Warwick—about whether the level was too low, we originally set the cap at £26,000 but we want to balance the key aims of strengthening work incentives and promoting fairness between those in work and those in receipt of out-of-work benefits.
Any changes to the cap level will require the passage of regulations. I can assure the noble Baroness, Lady Sherlock, who was concerned about this, that the regulations which lower the level of the cap will follow the affirmative parliamentary process. In response to the question from the noble Baroness, Lady Lister, and the noble Lord, Lord McKenzie, carer’s allowance is included in the cap. The Government fully acknowledge and value the very important role that carers provide to society but 94% of households in receipt of carer’s allowance will have a benefit income above the new cap level. They are, anyway, exempt from the cap.
The benefits freeze is a vital part of the Government’s welfare reforms, providing £3.5 billion of savings by 2019-20—without any cash losers—which would otherwise need to be found elsewhere. The noble Lord, Lord Low, asked about the impact of the freeze on the disabled. We have exempted the benefits which contribute to the additional cost of disability and care from the working-age benefit freeze. The noble Baronesses, Lady Hollis and Lady Bakewell, raised the issue of the two-child limit. Families on benefits should make the same financial decisions as those families supporting themselves solely through work. Families on lower incomes will continue to receive child benefit for all children in the household, including a higher rate paid for the eldest qualifying child or young person. The noble Baronesses, Lady Sherlock and Lady Manzoor, both raised questions about involuntary two-child families. The Government will look at the important issues around exemption through secondary legislation and will provide more detail in due course. The situation with kinship carers is similar.
The noble Baroness, Lady Sherlock, raised the point of the impact on disabled children. Parents of disabled children will continue to receive the disabled child element and severely disabled child element in child tax credit and, in UC, the additional amount of the child element in respect of all disabled children, regardless of the total number of children in the household. The noble Baroness, Lady Manzoor, asked for assurance that the architecture of UC will not be lost. I appreciate her support on that and give credit to the Liberal Democrats, who were utterly supportive of universal credit and our efforts to bring it into reality under the previous Government. I am delighted to see that they maintain that level of support.
I turn now to the clauses which remove the work-related activity component in ESA, and its equivalent in universal credit, for new claimants from April 2017. The noble Baronesses, Lady Sherlock, Lady Manzoor, Lady Doocey, Lady Browning, Lady Meacher, Lady Howe and Lady Gale, asked for evidence that the WRAG component is a disincentive. A report by the OECD in 2005 argued that:
“Financial incentives to work can be improved by either cutting welfare benefit levels, or introducing in-work benefits while leaving benefit levels unchanged”.
On the other hand, employment support provides an opportunity to begin talking to ESA claimants about their ability to work. A positive relationship with a work coach, combined with evidence-based methods for goal-setting and striving, offers a promising way towards moving ESA claimants back into work. We will be increasing the practical support with new funding. The noble Baronesses, Lady Sherlock, Lady Manzoor, Lady Doocey, Lady Browning, Lady Meacher and Lady Gale, the right reverend Prelate the Bishop of St Albans and the noble Lord, Lord Patel, argued that these claimants have been found unfit for work. The ESA claimants in the work-related activity group have been found to have limited capability for work. This is very different from being unfit for any work and, although they are not required to look for work, ESA explicitly recognises that claimants may be able to undertake some work via the permitted work rules. This change, combined with the new funding, is about providing the right incentives and support to encourage more people to move closer to the labour market.
The noble Lord, Lord Patel, made a point about those with cancer. The vast majority of those with cancer claiming ESA are actually in the support group, a point that he himself made. This includes anyone who is preparing for, receiving or recovering from chemotherapy or radiotherapy that will significantly limit their ability to work. Only a small proportion of individuals whose initial diagnosis is cancer will be placed in a work-related activity group.
On mental health conditions, raised by the noble Baronesses, Lady Manzoor and Lady Howe, and the noble Lord, Lord Layard, it was clearly acknowledged that returning to work can improve mental health, which is why we are committed to ensuring that as many people with mental health conditions as possible receive effective support to return to and remain in work. We will actually be investing £43 million over the next three years in trialling ways to provide specialist support for people with common health conditions to get back into the workplace.
On conditionality for parents, raised by the noble Baroness, Lady Sherlock, we believe that more can be done to support parents with young children to prepare and look for work. Where childcare is not available, requirements will be tailored around caring responsibilities.
On the clauses to turn support for mortgage interest into a loan, the noble Lord, Lord McKenzie, and the noble Baroness, Lady Sherlock, raised issues around pensioners. Pensioners will have access to the same level of support for mortgage interest payments as the current system provides. This will be provided via a loan, but that will not have to be repaid until the individual’s property has been sold—which often, in the case of pensioners, will be on their death, so the people who actually pay are the inheritors; that is not something the party opposite would have a huge problem with, I would have thought.
A large number of noble Lords talked about social housing rents. The answer to the noble Lord, Lord Smith, is that the Government were elected with a mandate to put welfare spending on a sustainable footing to reduce the deficit. We are confident that housing associations and local authorities will be able to find and make efficiencies to accommodate the new settlement.
On specialist supported accommodation, which a large number of noble Lords brought up, we are proposing that there will be some exceptions from the rent reductions. We have set out some of those in the Bill and we will be setting out further exceptions in regulations. Our intention is to align exceptions with the equivalent provisions of the rent standard. At present these include specialised supported accommodation, residential care homes and nursing homes, and intermediate rent and private finance initiative housing. We will work with the sector to ensure that the most vulnerable people are not adversely affected—indeed, I am planning to meet St Mungo’s.
Regrettably, I cannot deal with all the questions and must draw to a close. I thank all noble Lords again for their contributions. Welfare reform is about much more than simply money. Our reforms seek to change the state of the nation, break the cycle of dependency, create the right kinds of incentives, have a fair welfare system, provide the best possible start in life for children, and bring lasting change that directly affects attitudes and behaviours. This Bill is a real opportunity to make a difference to the lives of some of the poorest, the neediest and the most vulnerable people in our society. It is an important and necessary piece of legislation. I commend this Bill to the House and ask for it to be given a Second Reading.