Welfare Reform and Work (Northern Ireland) Order 2016
(Limited Text - Ministerial Extracts only)
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Lord Freud
That the draft Order laid before the House on 6 July be approved.
The Minister of State, Department for Work and Pensions (Lord Freud) (Con)
My Lords, the order will ensure that the welfare reforms enabled by the Welfare Reform and Work Act 2016 in Great Britain are delivered in Northern Ireland, while also ensuring that the Northern Ireland Executive have a workable budget. This order is an important part of delivering the fresh start agreement and enables the Northern Ireland Executive to provide for supplementary welfare payments from within their own budget.
Before I turn to the specifics of the order, I remind the House of why we are implementing welfare reform in Northern Ireland. This order marks an essential step towards bringing Northern Ireland social security back into parity with the rest of the UK, as agreed in the fresh start agreement last year. Before that agreement, the impasse on agreeing the implementation of welfare reform meant that the Northern Ireland Executive had been operating on an unworkable budget. This had created significant political instability, and it risked collapsing the devolution settlement. This order brings changes which will help to ensure that the budget of the Northern Ireland Executive is placed on a stable footing.
This Government’s goals for Northern Ireland are clear. We want to work with the Northern Ireland Executive to support a Northern Ireland where politics works, and a Northern Ireland with a stronger economy and a stronger, secure and united society. It was in the light of these goals that the Government agreed to legislate on behalf of the Northern Ireland Executive to enable the welfare reform changes in the Welfare Reform Act 2012 and the Welfare Reform and Work Act 2016, such as the introduction of universal credit, personal independence payment and the benefit cap. This formed an integral part of the fresh start agreement in November last year.
To make the changes set out in the 2012 and 2016 Acts a reality in Northern Ireland, UK government and Northern Ireland executive officials have worked closely together on the legislation required. The Welfare Reform (Northern Ireland) Order, passed in December last year, has enabled the making of more than 30 sets of regulations, replicating in Northern Ireland welfare reforms from the 2012 Act.
The order before the House today is the next step in that process. It has been drafted with the full consent and collaboration of the Northern Ireland Executive to bring social security in Northern Ireland back to a position of parity, thereby helping to rebalance and strengthen the finances of the Executive.
Allow me to remind the House of why we have been reforming welfare in Great Britain and Northern Ireland since 2010. Our welfare reforms are focused on supporting people to find and keep work, with a focus on employment, fairness and affordability while supporting the vulnerable and making sure people on benefits face the same choices as those who are not on benefits and are in work. We believe that more people should have access to the dignity of a job and all the wider advantages that come with employment.
Over the past six years we have stuck to our economic plan, delivered welfare reform and seen great progress: employment is up by more than 2 million; there are more than 680,000 fewer workless households, a record low; there are 2.3 million more apprenticeships; and the number of people claiming the main out-of-work benefits has fallen by 1 million.
Helping people’s life chances is a central part of this Government’s plans. By raising tax thresholds, we are helping to take the poorest out of income tax. In Northern Ireland, this will mean that 110,000 of the lowest-paid will be taken out of tax altogether and 700,000 people will benefit from reduced taxes. It is projected that, with the new national living wage, 100,000 people in Northern Ireland will be taking home more money by 2020. The new rate of £7.20 will mean a £900 increase in the annual earnings of a full-time worker. The Government’s support to working people goes hand in hand with their welfare reform programme by encouraging people into work. Increases to the minimum wage and the national living wage and changes to income tax mean that people can take home more money.
We have also invested in Northern Ireland. The Stormont House and fresh start agreements include financial packages of £2.5 billion to support investment and reform. This includes £350 million of additional capital borrowing explicitly for economic development projects.
By working together, the Government and the Executive have achieved significant success from the economic pact, including bringing £60 million in additional finance to Northern Ireland businesses, providing additional borrowing for shared education projects and boosting green investment by £70 million.
Alongside strengthening our economy, welfare reform is helping people out of dependency and into work. In Northern Ireland, there have been improvements in the labour market, with 55,000 more people in employment since 2010. The Welfare Reform (Northern Ireland) Order 2015 introduced changes to social security, but there is still much more to be done: the most recent Northern Ireland unemployment rate, at 5.9%, is above the overall UK average rate of 4.9% and is the third-highest rate among the 12 UK regions; the long-term unemployment rate of 48.3% is markedly higher than the UK average of 27.6%; and 22% of working-age households in Northern Ireland are workless, compared to 15% in the UK.
Lord Kirkwood of Kirkhope (LD)
The Minister is right to point to the differences that apply in the different jurisdictions throughout the United Kingdom, but would he agree with me that the excellent work that Professor Eileen Evason did in identifying the mitigating factors has helped bring forward this set of proposals, with which I agree? After a four-year period, taking this together with what is happening in other parts of the United Kingdom such as Scotland, it should be possible for the DWP centrally to look at best practice and at whether some of these mitigating measures are having a beneficial effect that could be applied in other parts of the country.
Lord Freud
The DWP has embedded a “test and learn” approach, and really does look at things. Clearly, where you have different strategies in the different countries of the United Kingdom, one can look at what differential impact those policies have had. I am sure that the DWP will take the opportunity to assess that.
The Welfare Reform and Work Act built on the 2012 reforms. This order provides the legislative framework to replicate some of the most important aspects, with changes such as improving fairness in the welfare system by changing the benefit cap level. This order will bring the level of the benefit cap in Northern Ireland alongside that in Great Britain, ensuring parity, through changes such as providing new funding for additional support to help ESA and UC claimants with health conditions and disabilities into work, as well as reforming the ESA work-related activity component, so that the right support and the right incentives are in place for those capable of taking steps back to work. Then there are changes such as correcting the unsustainable rise in benefits compared to earnings by freezing most working-age benefits. Importantly, these changes will help to ensure that the budget of the Northern Ireland Executive is placed on a stable footing.
It was agreed in the fresh start agreement that the Executive could supplement benefits from within their own budget. The agreement allocated up to £585 million of the Executive’s block grant over four years to provide supplementary welfare payments in Northern Ireland, which would be reviewed in three years. Under the 2015 order, the Assembly has already passed some regulations for supplementary welfare payments relating to the 2012 reforms. The provisions of this order will give the Assembly the ability to design and pass further such regulations, including a cost-of-work allowance, and supplementary payments to those affected by the removal of the spare room subsidy. These time-limited payments follow the recommendations of the Evason report, which flowed from a commitment in the fresh start agreement.
This order is about delivering the fresh start agreement and returning Northern Ireland to a position of legislative parity and financial stability. It is about supporting hard work and creating the right incentives for people to find work and create a self-sufficient life, supported by but independent from the state. It is about making sure that spending on welfare is sustainable and fair to the taxpayer, while protecting the most vulnerable. Building an economy based on higher pay, lower taxes and lower welfare is right for the UK, and right for Northern Ireland. I beg to move.
Lord McAvoy (Lab)
My Lords, first I want to place on record our genuine appreciation of the steps taken by the Minister to inform the Official Opposition of each step as it was taken along the way in implementing the order. He went to great lengths—probably more lengths than was required, but it is always appreciated. The many details that he has given us about welfare reform today and in his letter to my noble friend Lady Sherlock do not entirely resonate with us, but we take the point of view that the overriding priority was and is the political situation in Northern Ireland, and therefore we will not stand in the way of the order.
The point has been made before by a number of people in discussing the legislation, and the whole Northern Ireland situation, that credit must be given to Members of Parliament on all sides of the House of Commons for agreeing to this statutory instrument. They could be open to accusations that they were supporting a better deal for Northern Ireland than their own people were getting. We could argue back and forth about that but, again, the overriding principle that we are pursuing is a duty of care to the whole of Northern Ireland to facilitate agreement and the political situation coming together.
On this 100th anniversary of the Battle of the Somme and other battles in the First World War, where many people from the island of Ireland from both the loyalist and nationalist communities paid with their lives to support their overall country, Britain and the United Kingdom, in the war against the Germans at that time, can we put a price on that? Many parts of the country suffered terrible losses, such as the north-east—I am not going to start naming them all because I will miss out one area that paid a terrible price in Europe fighting for freedom. We owe a duty of care to the people of the island of Ireland as well as Northern Ireland. One of my own family members, my grandmother’s brother, Joseph Martin of the Martin family of Irvinestown in County Fermanagh, is buried in the military graveyard in Arras in France. He fought with the Royal Inniskilling Fusiliers. I well remember the stories that my grandmother told me about her brother.
It has been a rocky and difficult road in Northern Ireland and there is still a long way to go. The solution offered in the fresh start programme and the negotiations were and are justified. It shows that the rest of the UK is anxious to maintain the state of peace in Northern Ireland. I know full well that I and the Labour Party may be criticised for not standing in the way of this order, but we take the bigger picture that the people of Northern Ireland deserve support in their struggles to come to a conclusion so that both communities in Northern Ireland can work better together.
Once again, I thank the Minister, the noble Lord, Lord Freud, for his terrific information and points of view put to us in various correspondence. I indicate that we will not in any way oppose the order.
Lord Freud
My Lords, perhaps I may say how much I appreciate what the noble Lord, Lord McAvoy, said. One thing he said that really gets to the heart of this is that the people of Northern Ireland deserve our support. That is felt across the Benches and around the Chamber; we all feel that. We have gone through an unusual procedure, but the fresh start agreement has taken Northern Ireland from a long impasse. I happen to have been deeply involved in the process right from the beginning, years ago, talking to all the different parties in Northern Ireland, and I know exactly how difficult it has been for them.
The statutory instrument has the support of the Northern Ireland Assembly. It does not diminish the devolution settlement. It supports the future financial and political stability of Northern Ireland. The response from the noble Lord, Lord McAvoy, and the mood of the Chamber indicates that we want to give that support to Northern Ireland. Therefore, without more ado, I commend the Motion.