My Lords, since 2013, the benefit cap has provided a strong financial incentive for those who can work to come off welfare and so improve their child and family well-being. While 134,000 households had their benefits capped, figures for February 2018 show that around half are no longer capped because they are working at least part time, and so qualify for their full benefit entitlement and therefore a considerable boost in income and well-being.
My Lords, a new study by Policy and Practice, which was founded by one of universal credit’s architects, highlighted the human costs of the cap, arguing that it should be applied only to those who are actively required to seek work. Can the Minister explain what purpose is achieved by imposing this measure, which is designed to get people into paid work, on lone parents of infants, who are not required to seek paid work because of their caring responsibilities, thereby causing, in the words of a High Court judge,
“real misery … to no good purpose”?
My Lords, I beg to differ from the noble Baroness. I would call it not “imposing” but “empowering”. Our research shows that the best way to lift children out of poverty is by supporting parents into work. Record numbers of lone parents are now working: 1.2 million, with 1 million fewer people living in absolute poverty compared to 2010, including 300,000 children. We know that 75% of children in poverty leave poverty altogether when their parents move into full employment. We have doubled free childcare to 30 hours a week for nearly 400,000 working parents of three and four year-olds, and a parent need work only one hour a month to be eligible for childcare costs.
My Lords, the noble Baroness has not responded to the question from the noble Baroness, Lady Lister, who was referring particularly to mothers of infants. There is no special nursery care for those, and mothers should be with their infants in the early stages.
I respond to the noble Countess by saying that many women, however young their children are, want to work. We are encouraging jobcentre staff to help people to find work that fits around their caring responsibilities. We are also giving those people extra discretionary housing payments. I add that those who are not working at all are still in receipt of what amounts to a gross salary outside London of £23,000 a year and in London £29,000 a year.
My Lords, does the Minister accept that many local authorities are now having to pick up the pieces of this policy, particularly in high rent areas, where two and three-child families are now being hit? Discretionary housing payments are supposed to be only a temporary sticking plaster, not the complete answer.
My Lords, we welcomed recent external research on the benefit cap, working with local authorities. We are finding that there is a positive employment impact from the lower benefit cap, even at such an early stage in a child’s life. This supports our evidence that the cap is increasing work incentives for previously workless households.
My Lords, welfare reform was predicated on the principal that work should pay, but that principal is being undermined, not least by the two-child limit. In future, a family with three or more children seeking to avoid the cap by moving into work will find themselves subject to the two-child limit instead. They could end up losing out by going to work. What assessment have the Government made of the impact of this perverse incentive?
My Lords, I would not call it a perverse incentive. Our reforms of support for children make sure that people on benefits and those supporting themselves solely through work have the same choices, including whether or not they can afford to have another child. Our policy is about fairness and incentivising work. Of course, child tax credits were not available before 2003, and, no matter how many children someone might have, they continue to be paid child benefit for each and every child.
We welcome last week’s decision by the High Court in relation to kinship carers. We have considered that part of the judgment, which I referred to during a Question last week, pertaining to non-parental carers, alongside internal reviews that the Department for Work and Pensions carried out in parallel to the legal case. We are pleased to announce that it is right that this change should be extended, not just to those in non-parental caring arrangements but also to include children who are adopted who would otherwise be in local authority care. We can respond positively to all noble Lords who have been pressing us on this point.
My Lords, I am grateful to the Minister for that and I commend the Government for having made the right decision, but will she think about what the next stage is? My honourable friend Anna Turley has raised the case of a constituent who had two dependent children in her care and was then asked by social services to take in two of her grandchildren. As a result, the household was hit by the benefit cap. Will the Minister think about that for a moment? There is not much point in exempting kinship carers from the two-child policy if, in practice, they cannot claim those benefits because the benefit cap then kicks in. Might the Government either review who is affected by the benefit cap or, at the very least, consider exempting the benefits given on behalf of the children that a kinship carer has taken in when the benefit cap is considered?
My Lords, I cannot assure the noble Baroness that we will consider this any further. It is right that I articulate the fact that we are already spending £95 billion a year on benefits for people of working age. We have a budget in our department of £200 billion, which is 25% of the whole of the budget for government. We have to think about affordability before we can continue to extend our policies, notwithstanding that each and every individual case is of great importance to us. Our concern is to ensure that we help those who are genuinely in need.
My Lords, perhaps I can also explain that, not only is universal credit giving so much further support and really making work transform lives that, in a family with three children, for example, the couple need only work up to 24 hours in total a week to be exempt from the cap. So the cap comes off and they receive benefits to the equivalent of a salary of £35,000 gross a year, and that does not include housing benefit. Noble Lords should accept that such a salary compares extremely favourably with the income of the many thousands of families who do not call upon the welfare system.