Welfare Reform and Work Bill
(8 years, 10 months ago)
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Baroness Lister of Burtersett (Lab)
My Lords, Amendment 25 would remove child benefit and child tax credits from the benefit cap. I return to this amendment, which raises an important point of principle together with children’s rights questions, partly because in Committee it was grouped with various other exemptions from the cap, but, more importantly, because—and at the risk of being accused of being vituperative—once again, the response from the Minister was inadequate. He was challenged a number of times to justify why these benefits should be subject to the cap for those out of work when they are received by those in work, so that the cap is premised on a comparison between earnings in work and income out of work, but he failed to do so.
The argument boils down to what we believe is fair. According to the impact assessment, the clause promotes even greater fairness between those on out-of-work benefits and taxpayers in employment. Our view is that fairness requires that old cliché of the level playing field, on which, if you ignore the child benefit received by all taxpayers in employment on wages of £20,000 to £23,000 and the child tax credits received by a good proportion of them—how many and how much the Government refuse to say—you must ignore it when calculating the income of those on out-of-work benefits.
The exchange between my noble friend Lady Hollis of Heigham and the Minister on this point could have come straight out of a pantomime: “Oh, yes, it’s earnings”, “Oh, no, it’s income”; or that old song, “Let’s Call the Whole Thing Off”: “I say income, you say earnings”. But whereas my noble friend, as you would expect, offered argument, the Minister offered only assertion. He just kept repeating:
“We are looking at the level of earnings”,
without ever saying why, other than, as my noble friend put it, “Because I say so”. Therefore, I thought it only right to give him the opportunity to offer an argument today in justification so that noble Lords can decide whether it is indeed fair to base the policy on such an uneven playing field.
Other arguments that did not get addressed properly by the Minister concerned the impact on children. How did the policy fare against the family test, which was not even mentioned in the income assessment? He assured me that the family test was applied, but, as he could not,
“recall what was in it”,—[Official Report, 21/12/15; col. 2378.]
he promised to write to me with the details. I do not believe that I have received them, so perhaps he could provide them now. What is the likely impact on child poverty? That was conveniently circumvented on the spurious ground that it is all too difficult to estimate the likely dynamic effects of the policy. There is no reply to the argument that the policy has a disproportionate impact on children.
In the judgment in the recent Supreme Court case on the cap, which we spent some time debating in Committee, Lord Justice Carnwath made the point that the inclusion of child benefit and child tax credits in the cap raises the question as to why,
“the viability of a scheme, whose avowed purpose is directed at the parents not their children, is so disproportionately dependent on child related benefits”,
and said:
“The cap has the effect that for the first time some children will lose these benefits, for reasons which have nothing to do with their own needs, but are related solely to the circumstances of their parents”.
The noble and learned Baroness, Lady Hale, observed that, as a result, the children affected,
“suffer from a situation which is none of their making and which they themselves can do nothing about”.
This brings me to the children’s and human rights implications of the policy, which, as the Equality and Human Rights Commission has complained, were dealt with inadequately in the Government’s human rights assessment and the impact assessment. What is at issue is whether the inclusion of children’s benefits in the cap is in the best interests of the child in line with Article 3 of the UN Convention on the Rights of the Child.
In the human rights memorandum, the Government note the Supreme Court’s decision and assert that they have fully considered their obligations to treat the best interests of the child as a primary consideration. However, their analysis of the,
“best interests of the child”,
seems to rest on this proposition:
“The best interests of children overall is to have parents in work and work remains the surest route out of poverty”.
As the EHRC observes, this betrays,
“a particular lack of understanding regarding compliance with the UNCRC”.
It may well be in the best interests of many children for parents to find work, but it will depend on the work available, the circumstances and the durability of any work found. Moreover, this bald statement ignores the fact that the great majority of those already subject to the cap did not find work as a result. Is it really in the best interests of their children to have their standard of living reduced even further when a survey reported in the first-year review of the operation of the cap found that over a third of those affected had already had to cut back on household essentials and many had incurred debt, which the Government identify as a root cause of poverty? In fact, the Government’s position pretty much ignores the judgment of the noble and learned Baroness, Lady Hale, echoed by the noble Lord, Lord Kerr, that they,
“misunderstand what article 3(1) of the UNCRC requires. It requires that first consideration be given to the best interests, not only of children in general, but also of the particular child or children directly affected by the decision in question. It cannot possibly be in the best interests of the children affected by the cap to deprive them of the means to provide them with adequate food, clothing, warmth and housing, the basic necessities of life. It is not enough that children in general, now or in the future, may benefit by a shift in welfare culture if these are also the consequences. Insofar as the Secretary of State relies upon this as an answer to article 3(1), he has misdirected himself”.
In his response, the Minister did not address the substance of these arguments, but took refuge behind what he called the “sterling work” of the noble Lord, Lord Blencathra, whom he described as “utterly masterful” on the legal aspects and who he said had certainly taught him a lot. I am no lawyer, and I am sure the Minister will not consider me masterful on the subject. I am diffident about getting involved in legal disputation once more, but I am assured by the CPAG’s solicitor, to whom I am grateful—I make my usual declaration as the group’s honorary president—that the interpretation by the noble Lord, Lord Blencathra, is open to challenge. The Minister’s law lesson might, therefore, need some revision. It is not the case, as the noble Lord, Lord Blencathra, asserted, that the Supreme Court found the Government to have been “perfectly correct” when they were taken to court on not implementing the UNCRC, nor that five of the noble judges ruled, in the Government’s favour, that the benefits cap was not contrary to the rights of the child. Rather, the court found, by a majority of three to two, that the benefit cap regulations are in breach of Article 3(1). It is true that they went on to find that, as the convention is not incorporated into domestic UK law, it should be for Parliament, not the courts, to decide how to remedy the breach. Lord Justice Carnwath advised that the court’s concerns about the rights of the child would need to be addressed in the political arena. In other words, the court was looking to us—to Parliament—to find a way to ensure that the Government upheld the UK’s obligations under international law with regard to the cap.
That is what the amendment seeks to do. Just because the UN convention is not directly enforceable in UK courts, the Government cannot simply ignore it when their claims to have complied with it are challenged by the Supreme Court. It must concern us that, far from responding to the Supreme Court’s ruling and to the specific recommendation of the noble and learned Baroness, Lady Hale, that the Government consider removing children’s benefits from the cap, the Government are now compounding the infringement of children’s rights by reducing the cap to below median earnings, thereby bringing many more families into its net. I suspect that it is only a matter of time before the matter is before the courts again, as this could now mean that the cap is in breach of the European Convention on Human Rights because of its disproportionate impact.
On grounds of both fairness and the rights of children, I believe there is a strong case for the exclusion of children’s benefits from the cap. I hope that today the Minister will actually engage with the arguments, rather than continue with the “because I say so” approach. Given that that approach tends to be used when there is not a valid case to be made, better still, he should accept the amendment on grounds of both fairness and children’s rights. I beg to move.
Baroness Sherlock (Lab)
My Lords, I thank my noble friend Lady Lister for the way she has introduced the amendment and for her persistence and expertise on this subject. My noble friend raised this issue in Committee but did not get an adequate answer. One of the things I find most depressing about the debates on the benefit cap is that Ministers increasingly lump all benefits together as just welfare payments. No distinction is made between the various kinds of benefit we have traditionally had in the British social security system: between contributory and non-contributory benefits or between income-replacement benefits and those designed to compensate for extra costs. The failure to make such distinctions tends to demonise recipients. It also muddies the policy-making waters, because Government are reduced to making fairly broad claims for the behavioural impacts of benefits the purposes of which are, in fact, quite distinct from each other.
Child benefit is a good case in point. It has traditionally been a universal benefit and is still available to all but the highest-earning households. In effect, it is a horizontal transfer from taxpayers as a whole, including those who do not have children, to those who have children. Originally, it replaced an allowance in the tax system and it is there because, as a society, we recognise that children are a public as well as a private good. We all have a stake in ensuring that parents can afford to raise the next generation healthily. Child benefit goes to parents in and out of work, of course, as does child tax credit—the two benefits that are the subject of this amendment.
The Minister of State, Department for Work and Pensions (Lord Freud) (Con)
My Lords, Amendment 25 seeks to remove child benefit and child tax credit from the list of those benefits included within the benefit cap, so that they are disregarded when calculating the total amount of benefits that a household can receive before the cap is applied. This amendment undermines the fundamental principle that we established when we introduced the cap: that there has to be a clear limit to the amount of benefits that an out-of-work family can receive. This principle has gained very broad support across the country.
The benefit cap is just one part of our suite of welfare reforms, which are restoring work incentives and fairness to the benefits system. The previous system was not fair on working taxpayers, nor on claimants who were trapped in a life where it was more worthwhile claiming benefits than working. Our welfare reforms are about moving from dependence to independence and the benefit cap is helping people to take that important step into work. Indeed, the evidence shows that the cap is working, with capped households 41% more likely to go into work than similar uncapped households. In fact, more than 18,000 households have entered work since the cap was introduced.
However, we have always accepted that there should be some exemptions from the benefit cap which support the cap aims of incentivising work and bringing greater fairness to the welfare system, while supporting the most vulnerable. To incentivise work, the cap does not apply to those households which qualify for the in-work exemption in universal credit. Nor does it apply to those households in receipt of working tax credit. For lone parents, this is just 16 hours of work per week; for couples with children it is 24 hours of work per week. In recognition of the extra costs that disability can bring, households which include a member who is in receipt of attendance allowance, disability living allowance, the personal independence payment and the Armed Forces personal independence payment are exempt. Those who have limited capability for work and receive the support component of employment and support allowance, or the universal credit limited capability for work- related activity element, are exempt. Furthermore, war widows and widowers are also exempt. Noble Lords should also not forget that if the claimant, their partner or a child for whom they are caring is in receipt of an exempt benefit, the cap will not apply.
As well as promoting fairness for those families who are in work, the welfare reforms are about transforming life chances. Since the cap was introduced in April 2013, nearly 9,400 capped lone parents have moved into work and claimed working tax credits, joining the 1.26 million lone parents in employment in the UK. By going out to work, parents show their children the importance of a strong work ethic and reinforce the message that work is the best route out of poverty, while improving their longer-term life chances.
As to the ECHR criticism about the rights of the child, the interests of children are best served by doing everything possible to get their parents into work and providing the right support to remove the barriers to work, such as employment support, training, budgeting advice and free childcare. DHPs are available to assist in hard cases, and the Government will make £870 million available in that area over the next five years.
The noble Baroness, Lady Lister, raised the family test, and the noble Baroness, Lady Sherlock, was kind enough to remind her that I managed to get a letter to her saying that the family test had been applied when considering the benefit cap changes. The way that the test works on the whole is that the department thinks carefully how the new policy can support family relationships. We have been very clear, as I have been this evening, that it is important that children grow up in households that are in work. The cap is a key way of delivering this particular policy and this particular change.
Like other welfare benefits, child-related benefits are provided and funded by the state, and it is therefore right that they are taken into account along with other state benefits when applying the cap. It is only fair that households receiving benefits should make the same choices that families in work do. The cap levels are equivalent to annual pre-tax incomes of £29,000 and £25,000. These are still considerable incomes, with around four in 10 households earning these sums in London and the rest of the country respectively.
It is a simple matter of fairness for those families with children who are in work to set the cap at these levels and to include child-related benefits within its scope. To be clear, households who go out to work and qualify for the in-work exemption in universal credit or for working tax credits will be entirely exempt from the cap and will receive all of these benefits over the cap level. For those households who need additional support in adjusting to the cap, DHPs are available: £800 million has already been made available and a further £70 million was added to that figure in the Autumn Statement.
There is of course a nine-month grace period in which the cap may not be applied to those have recently left sustained employment. This gives households, including those people who are receiving child benefit and child tax credit and who may have had to leave employment, time to adapt to their new circumstances or find work before the cap is applied to them.
For the reasons I have explained, I do not agree that we should remove child benefit and child tax credit from the cap, as would be the result if this amendment, as drafted, was passed. I ask the noble Baroness to withdraw her amendment.
Baroness Lister of Burtersett
My Lords, I am grateful to my noble friend Lady Sherlock and to the Minister. I never received the letter last Thursday, although I recall there was another letter when we raised the question of the family test in relation to the policy we will be discussing on Wednesday about families with two or more children. That said exactly the same thing—I think it was almost the same sentence.
When I was preparing this over the weekend, I realised I had never received a letter about our fourth day in Committee, so I emailed the Minister’s office to ask whether there had been such a letter, and I have not had a reply yet. Perhaps the letter about our fourth day could be re-sent, because I have certainly not received it. Anyway, it sounded horribly familiar—that is, it did not tell us very much at all, as my noble friend said.
I did not really expect we would agree on this. The Minister has certainly not satisfied me that it is fair when we are not comparing like with like. That is really the nub of the argument. On the rights of the child, he simply repeated the very argument that the noble and learned Baroness, Lady Hale, had pretty much destroyed in the Supreme Court judgment. He brought up the old DHPs again—many moons ago I said this was the loaves and fishes argument. DHPs have to be extended to cover everything and they do not provide anyone with any kind of right because they are discretionary. Clearly we are not going to make progress on this but it is important that we at least keep maintaining why we believe that this is not fair. I beg leave to withdraw the amendment.
Baroness Hollis of Heigham (Lab)
My Lords, guardian’s allowance is not separately listed in the Chancellor’s Excel sheets of benefits and budgets in the Autumn Statement. It is invisible. However, it emerges from obscurity to be included in the benefit cap.
What does guardian’s allowance do? Why does it matter and why should it be exempt? Guardian’s allowance supports those at the sharpest end of kinship care, not where parental care is extremely neglectful or unstable, as it is for many children in kinship care, but where no parental care is possible at all. It goes to those caring for orphans. Usually they are physical orphans whose parents have died but, very occasionally, they are what the Victorians would call moral orphans—the father is in jail and the mother is an addict or on the game, sectioned or imprisoned.
More usually, the mother has died and the father is missing, not known or not registered on the birth certificate. There is no known parent. Sometimes, sadly, both parents have died in a car crash. In one case, a lorry lost its load and killed both parents in the car behind it. In another instance, an 82 year-old grandparent, not of course herself affected by the cap, learned that her daughter had died of an overdose and 24 hours later her son-in-law followed suit. At 82, she was asked to be guardian to four children. Guardian’s allowance is worth just £16.55 a child on top of child benefit. It goes to those caring for those children: the maternal grandparent, sometimes an aunt, often the close friend of the child’s dead mother. Their guardian receives the allowance until the children leave school.
Why do they need it? The children come to them following an extreme, often unexpected and irreversible emergency, and they come for life. This is not revolving-door temporary care. They immediately need extra bunk beds and bedding and, depending on the home from which they have come, clothes, shoes and toys. There are no grants and no social fund for this. They may need a larger home with higher rent and therefore more housing benefit. They will be the most distressed and traumatised of children and usually it is distressed and traumatised adults who will be caring for them, having themselves lost their daughter, sister or best friend. Such guardians, if in work, usually have to give it up.
Few people know about guardian’s allowance. Government certainly seem to discourage any take-up of it among kinship carers, although I am sure that kindly staff do their best. The result is that only around 2,500 people receive guardian payments each year, a figure that has been stable since my time in DWP. No one can find out the total cost because the Chancellor does not seem to publish it. However, I estimate—and I could be wrong—it is in total perhaps £3 million to £4 million a year.
Most guardians will not be affected by the benefit cap. The maternal grandmother may be of pension age, although with women becoming a grandparent at the age of 51 and the raising of the state pension age, many other grandparents will be trapped.
Other guardians may be in a household where an adult works and is therefore not caught by the cap, but there will be some of those 2,500—perhaps 500 or 1,000—who will be caught by the benefit cap because they too, like the children’s dead mother before them, are in straitened circumstances. They will be her mother, her sister, her friend. They may be on benefit themselves. They probably have children themselves. If they are on benefit, have children of their own and become guardians, they will probably be caught three times over. First, they will be caught by the two-child policy: no additional child tax credit payments for them for cherishing these bereaved, traumatised children. Secondly, if they are in the private rented sector, they will be caught by the various housing benefit caps: no larger home for them, but more children cramped into the same tiny bedrooms as their birth children. Thirdly, if they are near or at the benefit cap, there will be no extra child tax credit, no child benefit and no guardian’s allowance either.
Baroness Sherlock
My Lords, the amendment would exclude guardian’s allowance from the cap. I shall briefly set out the regulations on exactly who gets guardian’s allowance, because I think it is worth doing. You can get it only if you are caring for somebody else’s child, you are entitled to child benefit for the child and both of the child’s parents are dead, or one of the child’s parents is dead and at that time the whereabouts of the other parent is unknown and you have made all reasonable efforts to find them, or one of the child’s parents is dead and the other is in prison with a minimum sentence of two years remaining to serve, following the death of the other parent. People do not get this allowance lightly. It is not paid to foster parents or prospective adopters. My noble friend Lady Hollis, with a precision and a lyricism that I could not begin to match, set out the effects of taking this away from a group of people who are reaching out to some of the most vulnerable children in our country. I hope that that has persuaded the Minister how important this is. But given those effects, and given how few these people are in number, and given how vulnerable the children are, I would like the Minister to explain why they do not fit into the category that he described under the last amendment, when he said that the Government wanted to incentivise work but also to protect the most vulnerable. Why do they not count as the most vulnerable?
In Committee on 21 December I asked the Minister what behavioural incentives the Government were seeking by including guardian’s allowance in the cap. He said:
“Recipients of maternity allowance and guardian’s allowance will be affected by the benefit cap only if they are in receipt of a significant amount of other welfare payments”.—[Official Report, 21/12/15; col. 2378.]
That is not a justification. Either it is right to include guardian’s allowance in the cap or it is not; it cannot be right because you get other benefits as well. So if the Government believe that it is right, can the Minister please tell the House what behavioural response the Government are looking for from people who receive guardian’s allowance as a result of the cap? If he cannot provide one, will he accept that the fact that they will be affected by the cap only if other benefits are also received is not a good argument for guardian’s allowance itself to be counted towards the cap? That argument could be made for any benefit. I look forward to the Minister’s explanation.
Lord Freud
Amendment 26 seeks to remove guardian’s allowance from the list of those that are included within the benefit cap, so that it is disregarded when calculating the total amount of benefits a household can receive before the cap is applied. Guardian’s allowance is paid to those who are responsible for a child or young person and either both parents or in some circumstance one parent have died. The Government recognise the crucial and valuable role that recipients play in helping children to recover from the loss of their parents, but I do not agree that it should be excluded from the benefit cap. That is about the principle that there is a clear limit to the amount of benefits that an out-of-work family can receive.
In the interests of time, I shall not repeat my previous arguments, but will provide the best information that we have, which is that the noble Baroness, Lady Hollis, is right to say that this affects very few people. On our sums, the inclusion of the guardian’s allowance within the cap affects fewer than 50 claimants—those are the figures that I have. Rather than a blanket exclusion of this benefit, it is better that targeted support is offered to those who need it. That is where the discretionary housing payments of £870 million come into play. On that basis, I ask the noble Baroness to withdraw her amendment.
Baroness Hollis of Heigham
First, I thank my noble friend who spelled out the devastating situation in which these children find themselves, and how those who care for them—on kinship care, usually—are therefore entitled to receive guardian’s allowance.
The Minister made two points. First, he said that the principle was that there is a clear limit to benefits that out-of-work families can receive, even when that out-of-work family has taken on the joyless but essential and necessary task of caring for another family’s children. Why does the Minister not consider that therefore they are entitled morally—I am not saying practically, but morally—to benefits for two families, because that is what they are doing? We are not talking about families of their own children; we can argue for that, as my noble friend did, and she was absolutely right to do so.
I am talking about a situation at the extreme end of kinship care, when somebody has taken on responsibility for another family’s children. To say that, on principle, that out-of-work family should not get additional money for doing that—that is not a principle. A principle usually has some sort of moral quality to it. That, I am afraid, is a Treasury statement. I cannot believe that the Minister believes that it is the right policy to uphold in this situation. We should be hugging those kinship carers who are entitled to guardian’s allowance and giving them every support we can. Instead, what we do is to make them poorer.
The Minister’s second point was that he reckoned there were 50 families. I would love to see how he got to that figure. I could not work it out—obviously, because I could not work out how many people were grandparents, how many were in-work families and how many were below the limit, and therefore exempt, because they did not already have children of their own.
If we are really talking about 50 families, why on earth are the Government not conceding? How much does the Minister think this will cost? Let us assume that the average number of children taken on by a guardian is one and a half—in some cases one child, in others two children, and in a few cases three or more. I estimate that that would work out at about £1,000 to £1,200 a year. For 50 families that would be about £50,000 to £60,000 a year. The Minister cannot find £60,000 a year—or £65,000, if we push it—to address this problem? I am going to sit down and ask him whether, in the light of the information he has so far given, he is willing to reconsider his position.
Baroness Hollis of Heigham
What does that mean—“at this stage”? Is the Minister willing to come back at Third Reading with a little amendment just taking out this group of people, who are among the poorest of the poor, who are taking on the hardest of hard tasks—caring for bereaved and traumatised children—at a time when they themselves are probably also bereft?
Lord Freud
Regrettably, as I said, I am not in a position to make any kind of commitment.
Baroness Hollis of Heigham
I guess it is my fault. I should have brought this up in Committee and perhaps given the Minister more time to think about it. Perhaps he will look back on today’s proceedings. He absolutely rightly responded to my noble friend Lady Pitkeathley on a situation that we all recognised it was important that he should respect and meet—and not just because of the court case. I suggest to him that this is another such case—and I think he may wish to do otherwise. Obviously I shall withdraw the amendment now, but I would hope, none the less, that on reflection he will feel able, for 60,000 quid a year, to take guardian’s allowance, at the extreme end of kinship care, out of the benefit cap. He will not even notice it—but they will. I beg leave to withdraw the amendment.
“except in the case of persons who are at least 29 weeks pregnant or who are responsible for the care of a child aged under nine months, in respect of whom “welfare benefit” means any prescribed benefit, allowance, payment or credit.”
Baroness Hollis of Heigham
My Lords, this amendment relates to a situation that we touched on earlier, when we were debating the amendments tabled by the noble Lord, Lord Ramsbotham. Gingerbread reports that if a single parent with two primary school children is expecting a baby next month, just at the time when her needs increase she will lose £32 in housing benefit because of the benefit cap. The amendment is tightly targeted and would exclude women in late pregnancy—at 29 weeks or beyond—and for nine months following the birth of a child, from the benefit cap.
There are three reasons for this, which I hope the Minister will address. The first is parity with the rights of women in work, the second is consistency with the DWP’s own benefit conditionality rules, which do not apply when a child is under two, and the third is concern for the health and well-being of mother and baby.
On parity, the Government want parents on benefit to face the same choices as parents in work. The Minister has repeated that several times today. Yet when those in work—better-off people—enter late pregnancy or care for a newborn, they rightly get protection and income that reflect their situation. Those on benefit may instead face a benefit cap and therefore an income cut. Parents in work have pregnancy and maternity rights. They can commence maternity leave at 29 weeks, at which point a mother will be eligible for statutory maternity pay or maternity allowance, both of which run for 39 weeks; maternity leave is of course for 52 weeks.
Baroness Sherlock
My Lords, this amendment, in the name of my noble friend Lady Hollis, would exempt from the cap women who are at least 29 weeks pregnant or responsible for a child under nine months of age. I thank my noble friend for making it clear to the House just what a perilous situation these women will find themselves in if things proceed as planned.
Some very strong arguments were made to me by Gingerbread as to why this particular group ought to be excluded. It suggests, first, that the group will find it most difficult to move into work to escape the cap and therefore will simply be pushed deeper into poverty. Of course, that is the last thing that it wants for a woman who is pregnant or has a very young child. Secondly, it points out that the Government want families on benefits to make the same choices as those who are in work. Parents in work have pregnancy and maternity rights, including an expectation that they will have some time away from work both when they are in the later stages of pregnancy and in the first months of their child’s life, so this exemption would mirror the rights of working families.
As my noble friend Lady Hollis pointed out, pregnant women and those with very young children are not listed as a priority group for discretionary housing payments, despite the complex challenges that they face as they move into work, and therefore they cannot have that to fall back on as other vulnerable groups might. I would be very interested to hear the Minister’s response to these challenges.
In Committee, I tabled an amendment that would have excluded maternity allowance from the cap. I did so to probe the Government’s reasoning and particularly to try to find out what behavioural responses the Government were expecting of pregnant women. However, as I explained earlier, I could not get an answer from the Minister. The only thing that I got on maternity allowance was the same as for the guardian’s allowance: the response was that people would not be affected unless the household was also getting other benefits. As I have said, that is not an answer.
This amendment from my noble friend seeks to protect a very narrow group of people at a very vulnerable time. The Government’s usual response is that if someone wants to escape the cap, they should either get a job or move house. Can the Minister explain to the House what he thinks the chances are of a woman who is 29 weeks pregnant getting a job? How strong does he think her chances will be out there in the job market if she has not worked previously? Secondly, if that is not a practical thing for her to try to do, maybe he thinks she should move house. I do not know whether he has ever had to help a very heavily pregnant woman move house, but would he really suggest to her that moving house when she is very heavily pregnant or has a brand new baby is either desirable or practical, unless of course she is forced into it in the circumstances described by my noble friend because she ends up being evicted for rent arrears?
I just want to get the Minister to address the practicalities of this situation. This is a very narrow group of people. What do the Government expect them to do if they find themselves hit by the cap? Will he please tell the House?
Lord Freud
My Lords, as I have already set out, those with a sustained work history benefit from a nine-month grace period before the cap is applied to them. Therefore, those households that have been in employment for at least 50 out of 52 weeks will be exempt from the cap. This gives time for households, including those with a new child, to adapt to their new circumstances before the cap is applied to them.
Households in receipt of working tax credits or which meet the UC earnings threshold will be entirely exempt from the cap. Although some single mothers will not be immediately able to move into work, for those households consisting of couples, the partner need work only 24 hours a week for the household to qualify for the exemption. Around 45% of households that include a maternity allowance claimant who will be affected by the new cap levels are households consisting of a couple, meaning that a partner can help to exempt a household from the cap through work. Households that include a claimant in receipt of maternity allowance may also be entitled to working tax credits and so be exempt from the cap.
Although I am grateful to the noble Baroness for speaking on this issue and for the research that she has put into it, I am not sure that the amendment would do what is intended. It would not create a disregard or exemption from the cap for the specified group; it would, however, appear to make the group subject to a different prescribed list of benefits to be defined by the Government in regulations. That would of course go against the approach that the Bill adopts of providing certainty about the capped benefits by including them in the Bill. I therefore ask the noble Baroness to withdraw the amendment.
Baroness Hollis of Heigham
I thank my noble friend Lady Sherlock. The Minister’s answer is that if a woman has a partner, he can increase his hours and she will be okay; if she does not, the amendment is technically deficient and so she cannot be helped. Is that a fair summary of what the Minister has argued? I think it rather is. But what about the situation of a deserted mum? She has one or two children already, she is now pregnant and the man has swanned off. What then? She has no partner who can increase his hours, she already has the care of children and she is up to or at the point of the benefit cap. She is now 29 weeks pregnant and trying to manage a budget, given she is in the private sector, that means she is probably unable to follow the nutritional guidelines and all the rest of it that is heavily recommended for her at this stage. I ask the Minister the same question that my noble friend asked: what is she supposed to do—apart from find another man?
Lord Freud
One of the things we have tested rather thoroughly through the courts is the role of discretionary housing payments for the kind of hard cases that the noble Baroness is so adept at finding. This is precisely where one would anticipate that provision, which is quite substantial, being used. The courts have found, again and again, that it is appropriate to use those payments for such cases because they are so hard to define in statute. Because of that difficulty, the flexibility of the DHP is the way to address the issue.
Baroness Hollis of Heigham
In that case, why do such women not fall within the Government’s guidelines as having high priority for DHPs? As my noble friend says, they do not. Although I have not been able to verify it myself, I understand that, as a result of that, in most local authorities they do not get such money because the money is not there. They certainly, I suspect, would not get it for nine months after and up to two months before, or something like 11 months’ continuous payment, because local authorities cannot run it. They use DHPs to deal with temporary, immediate emergencies. Therefore, if the Minister means what he says, he should be giving guidance to local authorities that this should be a priority consideration and he should back that with the necessary money, which is not there at the moment, to do so. However, I see that he is standing up, perhaps to respond to that.
Lord Freud
I just want to make the point that DHPs can be used for the long term. They are not just a temporary thing and the guidance says that very precisely.
Baroness Hollis of Heigham
I do not know how many local authorities the Minister has spoken to about their use of DHPs, but that is not my experience. Obviously, I have not been able to test the opinion of the entire local authority movement, but certainly this is what I am assured. I have crawled over some of the priority considerations of certain local authorities and can assure the Minister that what he is saying does not hold good: there is simply not enough money.
As far as I can see, the only advice the Minister is offering is that these women should throw themselves on the mercy of non-existent DHPs from local authorities whose money is already spent, cross their fingers and hope. I do not think that is a policy. I do not even think it is appropriate for the Minister to possibly suggest that that is what they should rely on. However, at this point, and given the time of night, I beg leave to withdraw the amendment.
Lord McKenzie of Luton
“( ) After subsection (11) insert—
“( ) Persons who have been placed in temporary accommodation by a local authority which has found them to be in priority need as defined in section 189(2) of the Housing Act 1996 (priority need for accommodation) are exempted from the benefit cap.””
Lord McKenzie of Luton (Lab)
My Lords, Amendment 27 stands in my name and that of my noble friend Lady Sherlock. This is also a rerun of an amendment that we moved in Committee, then part of a trio of similar amendments, so I will be brief.
The amendment would cause those families to be outwith the benefit cap if placed in temporary accommodation under the 1996 Housing Act. Regardless of whether the benefit cap has played a role, local authorities are legally obliged to rehouse families who are homeless through no fault of their own, are vulnerable in some way or are in priority need for rehousing. Families will be placed in temporary accommodation while a council decides whether it owes them a rehousing duty and then until a settled home can be found. The wait can be considerable, as can the costs. Invariably the temporary accommodation is leased by councils from the private sector, which charges the tenant a rent to cover these costs and expenses. These costs are commonly paid for by housing benefit with some top-up from DHPs.
Lord Freud
Amendment 27 seeks to exempt people in temporary accommodation from the benefit cap. I do not agree that it is appropriate to have a blanket exemption from the cap for people living in temporary accommodation. Rather, the best approach is to provide targeted support early so that people may better address their barriers to work. As I said in Committee, an exemption might, in fact, prolong a stay in temporary accommodation if it is likely that the cap will apply when a household moves to more permanent accommodation. That is an incentive both on the local authority and on the family.
I have already explained how £870 million in discretionary housing payments will be available for those households that need additional support in adjusting to the cap. Provision already exists to support the most vulnerable people who might be affected by the cap. Housing benefit paid to households in specified accommodation is disregarded from the benefit cap, and we included refuges within the definition of “specified accommodation”. While this does not mean that such households are exempt, by not including housing benefit in the calculation we expect that the vast majority of these cases will not be affected in practice by the benefit cap.
From April 2017, the weekly management fee in respect of temporary accommodation, currently £40 in London and £60 elsewhere, will be abolished and replaced with a grant that devolves this funding to local authorities. Unlike the existing management fee, this new grant will not count towards the benefit cap and that will help local authorities tackle homelessness more effectively. I therefore ask the noble Lord to withdraw his amendment.
Lord McKenzie of Luton
I thank the Minister for his reply. None of it was a surprise, and I will, of course, withdraw the amendment in due course. I would just like to ask the Minister a few questions. He said that if there were a blanket exemption, this would prolong the stay of people in temporary accommodation. What evidence is there for that? Is it not generally the case that temporary accommodation is not of the best quality, and some of it pretty grotty? Why would families not want to move out of temporary accommodation as soon as they could to put down their roots in a more permanent arrangement? In relation to the grant, that seems helpful in principle, but on what basis is that grant going to be made available? Is it going to be ring-fenced for these situations, or just generally devolved to local authorities and caught up in the morass of funding and cuts that they are having to face?
Lord Freud
One of the most worrying aspects about temporary accommodation is that many cases have not been temporary. There have been cases where people have been kept in temporary accommodation for months, stretching to years. One of the reasons for that was that the only way it could be extinguished was by going into social housing. People were quite keen on that route through. That was changed in the 2012 Act so that it can be extinguished by going into private housing. Nevertheless, we want to incentivise councils to move people into settled housing as quickly as they can. Indeed, I think that the limit is 13 weeks. There are just too many examples; I do not have the exact number, but there are too many cases where it has gone on too long.
On the fee, funding previously paid to local authorities will become an upfront payment no longer tied to households remaining in temporary accommodation. The fund will be administered by the DCLG and the devolved Administrations. We will be able to give further details of that process in due course. That is all I have at the moment.
Lord McKenzie of Luton
I am grateful to the Minister for that. I will read the record, but I am not sure that I would agree with the proposition about local authorities not wanting to move people into more permanent accommodation as quickly as they can, and away from temporary accommodation, which is expensive for them. Having said that, and given the hour, I beg leave to withdraw the amendment.
Lord Freud
“(b) in subsection (4), omit “other”.”
Lord Freud
The Delegated Powers and Regulatory Reform Committee recommended in its report of 23 November a number of amendments to the benefit cap clauses in the Bill. Amendments 29 and 30 are technical and consequential amendments as a result of the committee’s recommendations. Amendment 28 is a tidying amendment and not as a result of the committee’s recommendations.
Before I do that, I would like to explain that, although the committee recommended that Clause 7 should be amended so that new Section 96, which it inserts into the Welfare Reform Act 2012, should reference single persons, couples and lone parents, and provide for the meaning of those terms to be specified in regulations, the Government do not consider this to be necessary. Redrafting the provision in the way suggested would overly complicate the legislation. The Government have been very clear in debates and briefings that the higher tier of the cap levels will apply to lone parents and couples, and that the lower-tier levels will apply to single people without children. I am happy to formally put on record again here today that this is the policy.
Turning to the amendments that are being taken forward, the committee recommended that the affirmative procedure should apply to any regulations amending the level of the benefit cap, using the power introduced in new Section 96A of the 2012 Welfare Reform Act to be inserted by Clause 8. As currently drafted, the affirmative procedure is applied only if the level of the cap is lowered. The amendments to Clause 8 mean that any change to the levels of the cap will be subject to parliamentary debate in line with the committee’s recommendation. This is a considerable level of extra parliamentary scrutiny for these future decisions. I am sure that these amendments to Clause 8 will reassure noble Lords’ concerns that for any future review of the cap this House and the other place will have the opportunity to have the decision explained and debated, and to agree it.
The committee also highlighted that currently regulations pertaining to the benefit cap are not required to be referred to SSAC. It has recommended that an amendment be made to provide that regulations pertaining to the cap must be referred to SSAC. After careful consideration, the Government accept this recommendation in principle and will table an amendment at Third Reading to reflect this. However, the Government do not accept that regulations relating solely to the level of the cap should be referred to SSAC, as that is a matter for Parliament.
A consequential amendment to Clause 7 has been identified. It has arisen as a result of the removal of Section 97(3) of the Welfare Reform Act 2012. Section 97(3) provided that the first set of regulations made under Section 96 were affirmative. As the first set of regulations has been made, the removal of the word “other” from Section 97(4) is purely consequential on that. I beg to move.
Baroness Sherlock
My Lords, I thank the Minister for that explanation. We welcome the move to affirmative regulations and are happy to accept his assurance that the other amendments are technical and consequential. I look forward to his returning at Third Reading with details of the amendments relating to SSAC. I would like to ask him to come to Third Reading armed with some specific information. If the Government are not minded to make reference to SSAC in relation to the level of the cap, and given that all the benefits affected by the cap are now in the Bill, will the Minister come back and detail for us precisely what those regulations might refer to that are still available to be sent to SSAC? Will he come back at that point and give a better explanation, of appropriate length—I am not blaming him for not doing it now—as to why the Government do not think that the level of the cap should be referred to SSAC, given that that is probably the single biggest determinant of the impact on those affected by it?
Lord Freud
“(4A) A statutory instrument containing regulations under section 96A”
Lord McKenzie of Luton
(a) the rate of inflation, and(b) the national economic situation.”
Lord McKenzie of Luton
My Lords, in moving Amendment 31 in my name and that of my noble friend Lady Sherlock, I shall speak to our other amendments in this group. Noble Lords will be aware that this is also a rerun of the amendments discussed in Committee. We found the Government’s arguments on that occasion less than convincing. As they stand, Clauses 9 and 10 provide for the freezing of certain working-age benefits for four years until 2019-20. This would follow the 1% uprating imposed in 2013. Our amendments would require that these benefits instead be reviewed annually, taking account of inflation and the national economic situation.
We understand that the benefit freeze is designed to contribute to the Government’s cuts programme, and it is alarming that this measure will garner the Government some £3.5 billion in 2019-20, compared with a CPI uprating. This comes on top of benefit cuts and tax increases borne under the coalition, where the IFS reminds us—I raised this figure earlier—that, as a percentage of income, the poorest two deciles suffered the largest reductions. The End Child Poverty alliance reminds us that some 4.1 million families and 7.7 million children have already been affected by below-inflation rises over the last three years. As my noble friend Lady Lister pointed out in our previous debate, the inflation index does not properly capture the budgets of low-income families because they spend more on essentials, the costs of which have tended to rise faster than the average price index in recent years.
My noble friend Lady Sherlock articulated our major concern with the freeze, which is that it both cuts the link between prices and earnings and widens the gap between the income of the poorest and the living standards of the mainstream of society. It is part of a growing trend under this Government to uncouple eligibility for support from need. Our amendment would not preclude the Government freezing working-age benefits for four years, although it has manifesto cover for just two. It would at least cause the Government to confront the extent to which they are causing the poorest to miss out, and to account for their actions.
The Government’s rationale was that those on certain benefits—JSA was one—have done too well in the past few years in comparison with earnings and the minimum wage, and that the trend needed to be reversed. On 21 December, the noble Baroness, Lady Evans, told noble Lords that the Government had struck,
“a balance between the needs of claimants and affordability”.—[Official Report, 21/12/15; col. 2388.]
Perhaps we can hear how the needs of claimants have been assessed for these purposes. On what basis has it been determined that claimants can accommodate a real-terms reduction in their income for each of the next four years? What rate of inflation have the Government assumed in making this judgment? The noble Baroness told the House that 7% of global expenditure on social protection is spent in the UK, which has only 1% of the world’s population. Is it now the Government’s serious intent to benchmark UK social security spending against some of the poorest countries in the world?
So far as Amendment 32 is concerned, I look forward to hearing from my noble friend—and, indeed, namesake—but, so far as the support group is concerned, his amendment seeks to ensure that the full amount of the allowance is to be the subject of uprating, not just the support group addition. I wait to hear what he says, but it seems to me entirely reasonable, particularly since those in the support group are not able to work, so issues of work incentives have no application—but, equally, such individuals are generally unable to supplement their income. I support my noble friend’s amendment and I beg to move.
Lord MacKenzie of Culkein (Lab)
My Lords, I support Amendments 31, 33 and 34 in the names of my noble friends Lady Sherlock and Lord McKenzie of Luton. However, I shall concentrate on Amendment 32, which is almost but not quite the same as an amendment tabled in my name in Committee. I regret and apologise that I was unable to be in the House on that day. I am most grateful to the right reverend Prelate the Bishop of Durham for moving that amendment on my behalf—more importantly, perhaps, on behalf of people with life-limiting illnesses such as motor neurone disease.
In speaking to that amendment, the right reverend Prelate reminded the Committee of the promises made by the Conservative Party in the run-up to the general election. I want to refer to that promise again, writ large in its manifesto, which was to always protect the benefits for the most disabled. Despite that promise, the Bill before us does not fully protect people with life-limiting illnesses such as motor neurone disease and other similar rapidly progressing ghastly conditions. Either the words in the manifesto say what they mean and mean what they say or they do not. As of this moment, these promises are not being kept. Going some of the way is what has happened in the Bill—and some of the way is not fully protecting, and is not always protecting, benefits for the most disabled. Unless this amendment is agreed, or the Government come forward at Third Reading with something to produce the same outcome, they will have failed to keep that manifesto promise. I do not believe that is good enough in a modern, civilised society, where people with life-limiting illnesses should not be expected to suffer any more financial hardship than is the inevitable consequence of their illness.
People with motor neurone disease frequently end up having to build bedrooms and wet rooms downstairs, adapt furniture and face all sorts of costs. Couples who may have been reasonably comfortably off rapidly find themselves in considerable debt. As the right reverend Prelate the Bishop of Durham put it:
“Those whom we cannot reasonably expect to support themselves should not be expected to shoulder the burden of austerity”.—[Official Report, 21/12/15; col. 2405.]
The most disabled will lose perhaps more than £250 per annum by 2020 because the basic rate of the employment and support allowance is not exempted. I appreciate that the amendment in my name is rather complicated, but it is a serious attempt to right a potential wrong. If it is too complicated, I do not believe that it is beyond the wit of government to find another formula to produce a result that will give the full protection that is needed.
In Committee, the right reverend Prelate the Bishop of Durham expressed the hope that Ministers would give the matter further and serious consideration. The noble Baroness, Lady Evans of Bowes Park, said in response that benefits,
“are designed to provide a basic standard of living to those who are not in work but at a level that does not disincentivise moving into work”.—[Official Report, 21/12/15; col. 2406.]
People with life-limiting illnesses such as motor neurone disease are not disincentivised from going to work. They cannot go to work—would that they could. There is no behavioural change that people with these dreadful illnesses can make to get back into work. The noble Baroness, Lady Evans, concluded by agreeing that,
“we absolutely must provide suitable protections for disabled people”.—[Official Report, 21/12/15; col. 2407.]
However, she then did not support the amendment. The meaning of “suitable” is very different from the meaning of “full protection”, as was promised in the manifesto. A great many people with life-limiting illnesses, and their organisations such as the Motor Neurone Disease Association, take a great interest in what the Government will now do. I hope the Minister, for whom I have the greatest respect, will be able to say that he will bring something back at Third Reading along the lines of this amendment, which will honour the promise that the Government made in their manifesto in the run-up to the election.
Baroness Evans of Bowes Park (Con)
I thank noble Lords for tabling these amendments. I do not wish to spend too much time restating the same points that were made in Committee so I will keep my remarks brief. First, I address the amendments tabled by the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie, which replace the provisions in the freeze with a duty on the Secretary of State to review the benefits in question, having regard to inflation and the national economic situation.
I remind noble Lords that the provisions in Clauses 9 and 10 contribute £3.5 billion of the £12 billion of welfare savings by 2019-20 that the Government are committed to. The Government have a £35 billion consolidation plan, as the Chancellor set out in the summer Budget and the joint Autumn Statement and spending review, and we are on target to achieve a surplus of around £10 billion by 2019-20. The savings that the freeze provide therefore represent a significant proportion—10%—of the work that remains to be done through this Parliament to restore the nation’s finances.
Noble Lords have argued that these amendments would merely place a review on the freeze rather than remove it altogether, but they would remove the certainty provided by a legislated-for four-year freeze. This would lead to increased uncertainty about where the Government intend to find the necessary savings to restore the nation’s finances and could decrease market confidence in the Government’s ability to deliver their target surplus by 2019-20. Noble Lords have also raised concerns about the impact of this freeze. I reiterate that there are no cash losers to this policy and that inflation is still forecast, by the independent Office for Budget Responsibility, to be relatively low over the next two years, providing time for benefit recipients to adjust their finances to compensate. Furthermore, OBR forecasts at the Autumn Statement projected average earnings growth of around 3.9% by 2020, higher than projected inflation at around 2%, meaning many working families can expect to see the impact of the freeze offset by their rise in earnings. The annual average income of the poorest fifth of households has risen by £300 in real terms, compared to 2007-8.
I turn to the amendment in the name of the noble Lord, Lord MacKenzie of Culkein, regarding employment and support allowance. This amendment seeks to place into legislation a requirement for the support group component of ESA to be uprated by an additional amount above the amount it would otherwise be uprated by. This additional amount would be equal to the difference between the current main rate of ESA and that rate if it were uprated by inflation. I should remind noble Lords that, as said in Committee, those in the ESA support group receive an additional amount on top of the personal allowance—the support group component—which we have specifically exempted from the benefits freeze. Furthermore, the enhanced disability and severe disability premiums within ESA are also exempt from the freeze, as are benefits which contribute towards some of the additional costs of disability such as disability living allowance and personal independence payment.
Noble Lords will be aware that spending on main disability benefits went up by over £2 billion over the course of the last Parliament, and that the proportion of those in relative poverty who live in a family where someone is disabled has fallen since 2010. We believe that we are continuing to provide important protections for the most disabled through the exemptions we have from the freeze, and that this amendment is therefore not required.
In conclusion, the Government believe that the freeze strikes a necessary balance between making important welfare savings while having in place the protections for the most vulnerable and disabled. I therefore urge the noble Lord to withdraw the amendment.
Lord McKenzie of Luton
My Lords, I thank the noble Baroness for her response. If the Government are to be in surplus in 2019-20, why is it necessary for any benefits freeze to extend into that year, whatever the rationale for earlier years? The noble Baroness said that there are no cash losers, but we know what that means: in real terms, people are going to miss out. Specifically, I refer the noble Baroness to my question about what she said in the previous debate about the balance being struck between—in her words—the needs of claimants and affordability. I ask again: how were the needs of claimants assessed in that determination?
The response to my noble friend, who made a compelling case, was deeply disappointing. In any reasonable understanding of language, the commitment made in the manifesto has not been met by how this issue has been dealt with this evening. I ask the noble Baroness to reflect again to see whether the Government could at least come back on the issue raised by my noble friend. As he outlined, those with life-limiting injuries are the most disadvantaged and are missing out. This is simply not fair.
Baroness Evans of Bowes Park
As I said in relation to the disability element, we have exempted quite a number of elements from the freeze, so we believe that we are ensuring that disabled people continue to get support and that the most vulnerable are protected. In more broad terms, we need to ensure that benefit spending is sustainable in the long term.
Lord McKenzie of Luton
Is that it? Given the hour, I think there is no point in pursuing this, except to ask whether, on that point, there is nothing further the Government wish to say to my noble friend Lord MacKenzie in relation to those people who find themselves in the support group and are undoubtedly short-changed by the way that the Government have dealt with this uprating.
Baroness Evans of Bowes Park
As I have said, we are protecting certain elements of disability benefits. We understand the needs of disabled people which is why, as I set out in my response, a number of elements are being kept outside the freeze. Overall, we have increased spending on the disabled and will obviously continue to try to ensure that they have the support that they need.
Lord McKenzie of Luton
My Lords, we are clearly not going to make much further progress this evening. In the circumstances, I beg leave to withdraw this amendment but it is deeply disappointing that this issue of the support group has been dealt with in this way.
Lord MacKenzie of Culkein
“( ) For each of the tax years ending with 5 April 2017, 5 April 2018, 5 April 2019 and 5 April 2020, the amount of the support group component of employment and support allowance is to be up-rated in accordance with Part X of the Social Security Administration Act 1992 (review and alteration of benefits) plus an additional sum equal to the difference between the value of the basic allowance of employment and support allowance as subject to subsection (1) and what the value of the basic allowance of employment and support allowance would have been had it been adjusted for inflation for the specified year.”
Lord MacKenzie of Culkein
My Lords, like my noble friend Lord McKenzie of Luton I find it deeply disappointing that the Government cannot take this away and give it some further consideration. It reminds me of the days when I used to be lead negotiator for Britain’s nurses and midwives. The management side across the table used to give us answers which I knew were not theirs but those of the Treasury. I think that is the case here again tonight. We are dealing with the dead hand of the Treasury but, unfortunately, they are not across the table where we can negotiate with them. I am sorry that we have reached this sad situation on behalf of people with these life-limiting illnesses.