Universal Credit and Child Tax Credit: Two-child Limit

Baroness Buscombe Excerpts

Wednesday 24th April 2019 Lords Chamber

[The Lord Bishop of Durham]

To ask Her Majesty’s Government what analysis they have made of the impact of the two-child limit on the per-child element of Universal Credit and Child Tax Credit payments on (1) child poverty, and (2) child development, for children under five years old affected by the policy.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, the Government are committed to supporting child well-being, and keep the impact of all their policies under review. This policy ensures fairness between those supporting themselves solely through work and those receiving benefits. Isolating the effect of the many individual policies on the income and well-being of children and families is, of course, challenging. Child benefit continues to be paid for all children, as well as an additional amount for any disabled children.

[The Lord Bishop of Durham]

I thank the Minister for her reply. May I push her further on the impact, specifically on child development? We all know that the first years of life are the most crucial for development and, therefore, the impact on life chances. Will the Minister commit to hearing the emerging stories of families with a third child who are being adversely affected by this policy?

[Baroness Buscombe]

My Lords, to be clear, on 28 June last year we published the first annual statistics related to the policy and have committed to do so annually. The Government have a broad range of policies which affect children and families across the tax and benefits system and public services. What makes a difference to child poverty is a strong economy, and I am pleased to inform the House that employment is at a record high, at 76.1%, while unemployment, at 3.9%, has not been lower since the 1970s.

[Baroness Lister of Burtersett (Lab)]

My Lords, the Government’s own statistics show that families with three or more children are at much greater risk of persistent poverty. Given that it is clear from Written Answers to the right reverend Prelate that the Government have done nothing to monitor the impact of this policy on children’s well-being, how can the Government be sure that it is in the best interests of children, in line with the UN Convention on the Rights of the Child, which the Government claim guides their policies?

[Baroness Buscombe]

My Lords, as I have made clear, the Government will be publishing statistics on this policy annually. Children growing up in workless families are almost twice as likely as children in working families to fail at all stages of their education, so our welfare reforms are designed to help people get into work, such that there are now 665,000 fewer children in workless households compared with 2010. Of course we want child poverty to fall, and that is part of our in-depth policy development, which is ongoing.

[Baroness Boycott (CB)]

My Lords, I thank the right reverend Prelate for raising the important issue of child poverty and development in relation to universal credit. We are the fifth-richest economy, but 4.1 million of our children live in poverty and 2.5 million of them come from families who cannot afford to feed them properly. This cripples their ability to grow and develop. Tomorrow the Children’s Future Food Inquiry, which is the first comprehensive investigation of children’s food insecurity, will be published. It details the devastating impact that has on children’s emotional well-being, their attainment at school and their mental and physical health. What plans do the Government have to strengthen and expand policies which make healthy, nutritious food available to all families on any income, regardless of where they live?

[Baroness Buscombe]

My Lords, the noble Baroness’s question is across government, but it is important from our standpoint at the Department for Work and Pensions that we concentrate on lifting people out of poverty so that they can support their children and develop as role models. A child living in a household where every adult is working is about five times less likely to be in relative poverty than one in a household where nobody works, so we support parents into work. For example, the Government spend £6 billion on childcare each year, which is not reflected in our poverty statistics, to help parents go out to work, support their families and develop a responsible living situation where they can properly feed their children.

[Lord Farmer (Con)]

My Lords, financial stability is important for healthy child development, but so too is relationship stability. The Government have replaced the family stability indicator with parental conflict measures, yet many divorces and separations take place in low-conflict relationships. Research shows that these are more damaging to children than when high-conflict relationships end. What are the Government doing to prevent family breakdown, not just reduce parental conflict?

[Baroness Buscombe]

My noble friend makes a good point. Although our welfare reforms—and, in particular, universal credit—are already transforming lives to lift children out of poverty and support parents into work, child development and family stability depend on so much more than financial stability and benefit payments alone. That is why the Government are, for example, helping local authorities across England train front-line practitioners to identify relationship distress, provide appropriate support and refer as appropriate.

[Baroness Massey of Darwen (Lab)]

My Lords, as the Minister said, co-ordination across government is important. The Royal College of Paediatrics and Child Health suggested that having a strategy for children and young people’s health across the board would help improve effectiveness and co-ordination. Do the Government agree and what will they do about it?

[Baroness Buscombe]

There is no doubt that a cross-governmental strategy is incredibly important, and that is why we are working across government with our colleagues in the Department of Health and the Department for Education. We of course want to see child poverty fall and child development improve, and we remain determined to tackle this. We will look at what more can be done to help the most vulnerable and improve their life chances by tackling the root causes of poverty, ensuring that children have the best possible start in life.

[Baroness Janke (LD)]

My Lords, nearly half of children from lone-parent families are in poverty, due not to worklessness but to disproportionately high housing costs and low wages. What are the Government doing to ensure that these children, already suffering disadvantage, are not doubly disadvantaged by the continuation of the benefits freeze?

[Baroness Buscombe]

My Lords, a very important point in relation to universal credit is that when somebody is homeless, the first thing our work coaches do—through support, understanding and signposting as necessary—is ensure that that person and their children are properly housed. We then go to the next stage, to see how we can support them to ensure they can manage both in work and in looking after their children.

[Baroness Meacher (CB)]

My Lords, the Minister will be aware that disabled children and their families are particularly penalised under universal credit. Does she accept that the lifelong prospects of those disabled children will be severely damaged by the loss to their families of something like £1,000 a year?

[Baroness Buscombe]

My Lords, I do not accept that disabled children in such families are penalised by universal credit. We spend more than £50 billion a year on benefits to support those with disabilities, including children. Let me be clear: we are making sure we do all that we can to support people, particularly children, through the introduction of the severe disability premium.

Households Below Average Incomes Statistics

Baroness Buscombe Excerpts

Thursday 28th March 2019 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, with the leave of the House I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Work and Pensions, Amber Rudd. The Statement is as follows:

“Mr Speaker, with your permission, I would like to make a Statement on the poverty statistics published today. These statistics cover a range of poverty indicators. In a year where inflation was relatively high, average incomes were flat but still remain at a record high. These numbers show that between 2016-17 and 2017-18, relative poverty, after housing costs, decreased by one percentage point; absolute poverty, after housing costs, was unchanged in percentage terms; and absolute poverty and relative poverty, before housing costs, increased by one percentage point.

Since we entered government in 2010, income inequality has fallen and we have lifted a total of 400,000 people out of absolute poverty, but no one in government wants to see poverty rise. After all, we all came into politics to help people plot a path to a better life. That has driven me since I entered this place in 2010, in the midst of a national economic crisis, because I know that it is vital that government supports its citizens and provides them with the opportunities they need to succeed. I sit in a department that has huge power to do this. I have seen what a force for good universal credit can be—and will continue to be when we roll it out further. I know how committed my jobcentre colleagues are up and down the country, having had the privilege of visiting so many of them over recent months. They truly change lives for the better, no matter what the party opposite may say.

Colleagues on this side of the House are rightly proud that this Government have cleared up Labour’s economic mess and helped more than 3.5 million people into work since 2010. Behind every employment statistic is a person or family whose mental health, well-being and life chances are improved by being in the workplace and having the security of a regular pay packet. It means that 665,000 fewer children will grow up in workless households, providing them with the support of an income, meaning that they are less likely to grow up in poverty and giving them a role model in work. It means that this Government have supported almost 1 million more disabled people into work; I want to be more ambitious to support even more disabled people into work. It means that millions more receive a well-earned pay increase, with wages now growing at the fastest rate in a decade.

This is the record of a Conservative Government who provide opportunities for all, rather than trapping people on welfare. Remember, every Labour Government have left office with unemployment higher than they inherited. Under the last Labour Government, 1.4 million people spent most of the previous decade trapped in out-of-work benefits, meaning that spending spiralled out of control, with benefits increasing by 65% in real terms. Trapping people on benefits does not help them; it holds them back and it costs those dearest to them, who do the right thing: get up early and go to work. Every household paid an extra £3,000 a year to cover Labour’s welfare splurge, including the lowest earners, who were paying income tax. It was vital that, in these circumstances, the Government brought spending under control.

Colleagues know that our careful management of the economy means that we continue to improve our support for the poorest and the lowest paid. Today’s statistics capture household incomes up to April 2018. Since then we have had nearly a year of real wage growth. This Government have made significant changes to increase the incomes of the poorest since then, injecting £4.5 billion into universal credit alone in the 2018 Autumn Budget.

Next month these changes begin to take effect. We will also give the country’s lowest earners the biggest pay rise in 20 years. From this April we will be increasing work allowances by £1,000 for families with children and disabled people; increasing the national living wage, which will rise to £8.21 an hour from next week; and increasing the personal allowance to £12,500, taking millions of the lowest paid out of paying income tax altogether. But I know we can do even more and I want to do more.

Since coming into post, I have been determined to deliver a compassionate welfare system that supports the most vulnerable. In January I announced that we will no longer be extending the two-child policy to apply to children born before 6 April 2017, costing £250 million and helping 15,000 families a year. We will trial supporting upfront childcare costs with the flexible support fund, allowing parents to start work before paying for childcare through universal credit. We committed to building an online system to enable private landlords to request that a UC tenant’s rent is paid directly to them, supporting the most vulnerable to manage their money. We are looking at how we can ensure that it is the main carer in the household, usually a woman, who receives the UC payment.

This month I further pledged to scrap PIP— personal independence payment—reassessments for 280,000 disabled pensioners; to introduce a personalised and streamlined assessment service to improve the experience for people claiming health-related benefits; to pilot a single assessment for UC and PIP; and to consider how we can best reduce the number of claimants who appeal decisions on PIP and WCA, by ensuring we do more to make the right decision first time around. In addition, the Chancellor has already announced our aspiration to end low pay, starting with a new review into the future of the national living wage.

I will continue to work with colleagues across the House to further improve our support for those on the lowest incomes, because I know that no one in Britain should have their future determined by the circumstances they are born into. Every single boy and girl born in this country should be able to reach their maximum potential, escape any societal constraints, dream big and reach the highest heights. Every single man and woman should be able to go into the workplace knowing that a better future awaits them and their family, and that endless possibilities and ambitions are within their grasp. Every town and city in this country needs to know that this Government are on their side, that we match their aspirations and that by working together we will make every community a better one to live in. These are ideals that are at the heart of this Government and at the heart of the work I do every day. We will not stop until we have completed this mission. I am determined to tackle poverty, in particular child poverty, and I will look at what more can be done in the spending review.

This is what it means to be a compassionate Government who support work, let dreams become reality and help those in need. We will work tirelessly to deliver this. We will act to support the lowest paid and the most vulnerable. We will deliver a country that works for all. I commend this Statement to the House”.

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[Baroness Buscombe]

My Lords, I will do my best to respond to the noble Baronesses, Lady Sherlock and Lady Thomas of Winchester, without repeating what I have already said in the Statement. It is important to make clear that these statistics focus on household income only, and are based on a survey of households which took place in 2017-18. It is important to recognise that the vast majority of people who were part of this survey were trapped on legacy benefits at that time, as only 10% of the universal credit programme had been rolled out. I make that point because it is important to recognise that we believe that one of the most important ways of lifting people out of poverty is through the universal credit system, which is encouraging many more people to go into full-time work.

It is true that many of those trapped in poverty are the lowest paid or are part-time paid, and those on very low, self-employed incomes. I want to make that clear. Unfortunately, inflation was also high in 2017; it was 2.8% but that has now come down. Lone parents were not incentivised to work full-time due to the 16 and 30-hour cliff edges on legacy benefits. In other words, the tax credits were a disincentive to work, and there was no incentive to work more than a 16 or 30-hour week. Universal credit is changing all of that. Indeed, in 2017-18, there was also stagnant wage growth following the financial crisis.

It is important for me to articulate to your Lordships’ House, to the best of my ability, where we are now. We believe we are in a better place: it is getting better and we want to make it even better. The taper rate is being reduced; work allowances are being increased by £1,000 next week; we have the run-on of housing benefit for those transferring to universal credit; transitional protection has been budgeted for next year; and our fiscal position has improved. We are looking to reduce fraud and error—hugely important to affordability and our ability to inject more into the welfare system—which costs more than £3 billion at the moment. I reassure all noble Lords that an amazing team in the Department of Work and Pensions is improving the way we can track it, with the support of amazing technology, so that will make a real difference.

Money has been reinvested elsewhere in the system. It is important that we look at the bigger picture. Much of overall public spending is not included in these stats. For example, we are now spending more than £6 billion a year on childcare; we have had enormous additional investment in the NHS; we have free healthcare; and we have a free education system. None of that is reflected in these poverty stats. It is also important to recognise that the poorest households receive 70% more in public spending than the richest households. Income distribution is not just about benefits; it is also about the labour market. We now have record employment figures. It is about wages—we need to look more at low wages—taxes and the housing market. Other support across government needs to be considered as part of the jigsaw.

I say to the noble Baroness, Lady Thomas of Winchester, that the Chancellor has injected £10 billion into the universal credit system since 2016—I think the figure she used was rather less than that. The noble Baroness, Lady Sherlock, referred to the Joseph Rowntree Foundation. Its analysis shows that universal credit will reduce the number of people in working families in poverty by 300,000.

There is much to say. From next month, we will start to inject £4.5 billion into universal credit to give the country’s lowest earners a pay rise. We want to help the vulnerable through world-class public services, and we want to deliver a sustainable, long-term solution to poverty. We need a strong economy and a welfare system that works with the tax system and the labour market to support employment and higher pay, and we will continue to reform the system so that it supports work. We know that a child in a household where all the adults work is five times less likely to be in relative poverty, hence my reference to part-time workers. We need to encourage more people into work. A household where everybody works makes a huge difference.

On the NAO report, we are committed to improving employment outcomes for disabled people and those with long-term health conditions. We have seen 930,000 more disabled people in work over the five years to the fourth quarter of 2018. The disability employment rate increased by one percentage point over the same period. In 2017-18, that number rose, and then the disability employment rate increased by a percentage point over the same period to 51.5%. However, we want to be more ambitious. That is our response to the NAO report. We can be more ambitious if we set our hearts on it, and we are working incredibly hard at the department to do as the noble Baroness asked and deliver a consistent system for universal credit across the UK. Our work coaches and case managers do fantastic work.

I say to the noble Baroness, Lady Sherlock, that we have gone further than previous Governments to support those on low incomes. Income inequality has fallen under this Government. The national living wage is expected to benefit up to 2.4 million people. With the rise this April, a full-time worker’s annual pay will have increased by over £2,750 since it was introduced. However, we need to do more and we are absolutely on course. Noble Lords will have heard what my right honourable friend in another place has said—that it is our ambition to further reduce the number of those in poverty. We take this issue incredibly seriously and our reforms have made sure that our welfare system encourages people into work and is fair for taxpayers and sustainable for the future. Tackling poverty will always be a priority for this Government.

[The Earl of Listowel (CB)]

My Lords, I welcome the Statement and much of what the Minister said regarding achieving high rates of employment, with its benefits to mental health and the importance of children having the role model of parents in work. However, I am very concerned at the rise in the number of children in poverty where the parents work. I highlight the two reports of the All-Party Parliamentary Group for Children on the funding of children’s services in local authorities. Cuts to local authority funding have reduced early intervention to support vulnerable families, and I hope that the Minister will take that into account when considering the pressures that these families are under.

I particularly welcome the reference in the Statement to a new review of the future of the national living wage. What is the likely timescale for that? When will it start and when might it end? Might there be an interim report? The Low Pay Commission has been asked to produce recommendations on the national living wage and the national minimum wage in October 2019, and it will clearly need the report from that review well before then to be able to make good recommendations. I look forward to the Minister perhaps writing to me on those points if she cannot answer in detail now.

[Baroness Buscombe]

My Lords, in many ways we are approaching our support and the welfare system slightly differently from how we did it in the past in terms of where the money goes. We do not necessarily agree that just reinjecting into the system money that might have been saved is the right thing to do. Obviously we want to support people to the best of our ability, but part of that should be practical support. Therefore, although we are putting money into the welfare system with the £1.7 billion a year boost announced in the last Budget, enabling 2.4 million households to keep more of what they earn, our focus is on how much more we can do to help children out of poverty.

As I said, children in workless households are around five times more likely to be in poverty than those in working households. We are supporting people into full-time work where possible—for example, by offering 30 hours of free childcare to parents of three and four year-olds. However, importantly, in addition we are trying to deal with the practical barriers. For example, following a speech in January by my right honourable friend the Secretary of State for Work and Pensions, we will trial paying mothers their first childcare costs up front so that they can start work with their children looked after. Importantly, we want to be more practical in our support but, as the economy has continued to grow, we have been able to share the proceeds of growth to support some of the most vulnerable in society. We have seen increases to the income tax threshold, which will reach £12,500 this year, taking 4 million of the lowest earners out of paying any income tax at all, and that will of course help children. Whereas spending on children was £4 billion in 2010, it will be £6 billion by 2020, which is a 50% increase in the last nine years. However, more can be done.

On the national living wage, this is an important review. We must be careful in increasing the national living wage to ensure that jobs are still sustainable. This review will be very much a cross-government task. I take the risk of saying at the Dispatch Box that I suspect it will be led by the Treasury, which the noble Earl will not be surprised to hear. That is quite right, because we have to balance the degree to which we can increase wages, which is crucial, while keeping people in jobs. We are very proud of our employment rate and we want to keep it. Of course, low wages are across the piece—not only in the private sector but in other sectors.

[Lord McKenzie of Luton (Lab)]

My Lords, might the Minister apply herself succinctly to the points raised? We are using up all this valuable time.

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[Lord Liddle (Lab)]

My Lords, instead of talking about “welfare splurge” at the end of the last Labour Government, the Minister should have given credit to the enormous success of that Government in tackling child poverty. I thought that we had established a national consensus in 2010 that we were all striving to overcome child poverty. Does she now accept that there are deep flaws in this Government’s approach and that, when then Chancellor George Osborne said that the way to deal with child poverty was to increase minimum wages while cutting government spending on welfare, this led to a crisis for poor families?

It is no good just talking about reductions in worklessness, which I acknowledge the Government have achieved. The real problem is that the lives of poor working families have got a lot more difficult. Do the Government acknowledge this failure, and that it should be a central objective of their policy in future to correct that failure?

[Baroness Buscombe]

My Lords, of course nobody wants to see poverty rising, and we take these statistics extremely seriously. But I hope the noble Lord heard me when I made it very clear that the statistics relate to two years ago. The reality is that we have done a huge amount to inject more money into the system as well as making a great difference in practical support terms. We do not want people trapped on legacy benefits, which have been a disincentive to their working full-time to support their families and give them life chances. We are looking across the piece on how we can help families out of poverty. The best ways are through work and a good education system for all children. My department is an important part of the jigsaw, but we want as a Government to be much more joined up in how we approach poverty.

[Lord Howell of Guildford (Con)]

My Lords, there is much to commend in the Statement but the Government say they want to do more. Is it not time to recognise—and this applies to the thinking in both political parties—that the whole process of new wealth creation produces benefits that go almost exclusively to those who already have savings and wealth, and to people who are personally accumulating capital on a scale they could never conceivably use, whereas the vast majority of households do not gain at all? They must rely only on wages income or, in the case of the poorest households, on income from welfare in the way that my noble friend has described. Is it not time to think of ways in which we can get more dignity and status from the ownership of resources and capital to millions of households who presently struggle with no benefit from the growth of wealth in the economy? Is it not time that our own party and the party opposite thought much more about ways in which wider ownership of capital and resources could be spread to millions of households, so that they benefit from the new wealth rather than see it grow among fewer and fewer people—in a tiny number of hands—creating social tension and denying the vast majority of people any benefit from the growth in capital and wealth that our system can now produce?

[Baroness Buscombe]

I entirely agree with my noble friend. Of course this is very important. It is why I welcome a review of low wages. That is why I want to talk about the big picture; we talk in silos, across different departments, about what each department is trying to do to support those who need support, but the reality is that we can do this only if we take time to stand back and talk across the piece. Obviously, much of this rests with the Treasury, which has an incredibly difficult job to do in deciding who receives what from each budget, but the reality is that we need to turn this on its head rather than just trying to increase by increment what people receive to lift them out of poverty.

Attacking the key causes of poverty is terribly important through a good education system and a welfare system that gives people sufficient support so that they can focus on improving their lives, rather than on getting by week to week. All the evidence shows us that the universal credit system will help; indeed, it is already helping—look at the record reduction in unemployment. Under the last Labour Government one-fifth of all UK households in the UK were entirely workless, but we have brought that down to somewhere below 13.9%, although I do not have the latest figure.

The reality is that we believe in having households where people are working and children are in school, and which have the right support systems in place. Focusing on those who are unable to work is of course hugely important, but we are spending more than £100 billion a year on benefits for people of working age. Think what we could be doing with much of that if we could lift those people out of the need to turn to support. My noble friend is right: it is a tough challenge.

[Baroness Boycott (CB)]

My Lords, I wish I could believe all the things that the Minister has claimed the Government are doing about poverty at the moment. I declare an interest as a trustee of Feeding Britain and of the Food Foundation. I do not know how many people saw the recent ONS figures about life expectancy, which are completely up to date. They show that the gap between the richest and the poorest in terms of years of life lived with health has widened yet again. In fact, if a woman in this country is poor, she will have 18.4 years of ill health. The richer the person, the longer they will live with health.

Is there any reason for that? Right now—not two years ago or whenever—the poorest 10% of UK households have to spend 74% of their disposable income after rent to afford the Government’s “eatwell plate”. That is not even up to the level of the House of Lords canteen; it is very basic food. If you do not have that food, you are 2.2 times more likely to be obese by the time you are five, and that gets worse. Recent material has shown that children who are badly fed, who get so little, are actually a centimetre shorter. We are sentencing a generation of children, the poorest 20%—one in five of our kids—to a lifetime in which they will not thrive or be equal unless we deal with some of the underlying causes.

I believe there are things that the Government could do. For instance, we could allow universal, free, healthy school meals to all children. We could also bring back meals on wheels for seniors who are struggling. I ask the Minister to think about this.

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[Baroness Buscombe]

My Lords, I reassure the noble Baroness that we spend hours and hours crafting what we will say at the Dispatch Box because it is hugely important that what we say is accurate. I can confirm to the best of my ability that the noble Baroness should believe what I have said, because I can say categorically that life is tough if we get it wrong.

The noble Baroness is right, of course, that we need to do more to ensure that people are able to feed themselves well and live a full life in terms of their life chances, their life expectancy and their health and welfare. That is exactly what we are focused on, and it is why we are running all sorts of programmes within the department relating to healthy lives, along with work programmes to encourage people who have not felt able to join the workforce. We want not only to give people the right financial support but to see that they have dignity and the ability to live their lives fully and reach their full potential. It is important to say that we absolutely believe in helping the vulnerable through our world-class public services, and we are injecting more and more money so that we can help disadvantaged pupils in schools, help people through the NHS system and help people through what we do at the Department for Work and Pensions.

[Lord McKenzie of Luton]

My Lords, what does the Minister consider to be the veracity of the statement that the previous Government just dumped people on inactive benefits and required nothing from them? Is the case not actually the reverse—that it was Mrs Thatcher’s Government who moved people from unemployment benefit on to incapacity benefit in order to massage the unemployment figures? Was it not the Labour Government who introduced proactive programmes such as New Deal that required conditionality and engagement for people to get them into work, which were successful? We cannot allow that rewriting of history to continue any longer.

[Baroness Buscombe]

My Lords, I remember well, when I was a shadow Minister, sitting where the noble Baroness, Lady Sherlock, sits, listening to history being written on an almost daily basis. I respect the noble Lord’s question but I have to say to him: if that is the case, why were 20% of all households in this country entirely workless back in 2010? I think that is a disgraceful figure, and we are doing everything that we can to bring it down.

[Baroness Wyld (Con)]

My Lords, could I press my noble friend on her points about childcare? I welcome the Government’s support package but I worry about the practicalities. I declare an interest in that my own children have benefited from free hours in nursery, and I am fortunate in that clearly I do not have any money worries. It does not take a massive leap of imagination to realise that if you are trying to get into work and you go through what is actually quite a complicated and baffling system to work out the different ways through the patchwork of services, that is not conducive to an easy transition back into work. So my first question is on guiding people through that. Secondly, my noble friend mentioned up-front costs. Is that to all mothers, and will it be immediate?

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[Baroness Buscombe]

I thank my noble friend for that question. Funnily enough, this was one of main reasons why I came into politics in the first place. I thought it was appalling that for women wanting to work and support their households, but also needing to consider caring responsibilities, childcare was the big stumbling block. I could not get anyone in government to understand that so I came into politics myself. I have since discovered how difficult that is to change, but we are making changes.

With both the current Secretary of State and the immediately preceding one, Esther McVey, we have been focusing a lot on this issue and looking at the practicalities, as I referenced earlier. We are committed to helping mothers into jobs that fit around their caring responsibilities. There are now more than 1.2 million lone parents in work. To support parents into work we need to have the right fiscal support in place, so we are spending £6 billion on childcare each year, which, as I said earlier, is not reflected in these stats. We are doubling free childcare to 30 hours a week for nearly 400,000 working parents of three and four year-olds. We are introducing tax-free childcare worth up to £2,000 per child per year. With universal credit, parents can claim back up to 85% of their childcare costs, compared with 70% under the legacy benefits system.

The important thing is that we are piloting a more flexible approach to claimants reporting childcare costs, which will allow people to be reimbursed for childcare when they are not able to provide evidence within their assessment period. In cases where people need to pay for childcare up front, work coaches can use the Flexible Support Fund to meet these costs—because, of course, how can you start work if you do not have childcare in place, and how can you have childcare in place unless you can be confident that you can pay for it? We are looking at some of these things with great care at the moment. By the way, this childcare can be claimed up to a month before starting a job. For families with two children, this could be worth up to £13,000 a year.

To answer my noble friend’s question about how we approach the system, work coaches in jobcentres are there to support and explain. We are training and have trained our work coaches and our case managers to support mothers and fathers who want to make sure they can go out to work, knowing that their children are properly looked after and that they can afford it.

Chemicals (Health and Safety) and Genetically Modified Organisms (Contained Use) (Amendment etc.) (EU Exit) Regulations 2019

Baroness Buscombe Excerpts

Thursday 21st March 2019 Lords Chamber

Moved by

[Baroness Buscombe]

That the draft Regulations laid before the House on 18 February be approved.

Relevant document: 15th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee B).

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, this draft statutory instrument was laid before Parliament on 18 February and was approved in another place on 13 March 2019. The Government’s priority is to reach a negotiated settlement with the EU. However, it is our duty as a responsible Government to prepare for all eventualities, including leaving with no deal. This statutory instrument is one such contingency measure to ensure that regulations governing chemicals and genetically modified organisms for continued use stay operable under a no-deal scenario.

I take this opportunity to reiterate that this instrument will deliver on our commitment to protect workers’ rights as the UK leaves the EU by ensuring that health and safety regulation continues to provide a high level of protection in the workplace and for others affected by workplace activities. It will also deliver on the Government’s commitment that standards of protection for people and the environment will remain at least as high as at present as the UK leaves the EU.

Together with ministerial colleagues in the Department for Environment, Food and Rural Affairs, we oversee a number of key regulatory regimes that affect the chemicals sector. Since the referendum, our joint programme has conducted particularly intensive work to ensure that there will continue to be a functioning regulatory regime with associated enforcement activity for chemicals under any exit scenario. These draft regulations form part of the work being done to adjust our existing legislative framework in readiness for leaving the European Union.

I appreciate the technical nature of the regulations. They are made particularly complex by being a composite of several different regulatory regimes. It was decided to present these proposals as a single instrument for the benefit of your Lordships’ House in reducing pressure on parliamentary time and ensuring that we are able to deliver an orderly exit. Noble Lords should be assured that the proposals are sensible, proportionate and necessary.

If approved, these draft regulations will make necessary amendments to three retained EU regulations, as well as EU-derived domestic legislation affecting the whole of the United Kingdom, including Northern Ireland. As stated, the purpose of the instrument is to amend the relevant legislation to ensure that there is provision for an independent UK regulatory regime that maintains existing standards and protections. Going forward, the Government’s priority will be to maintain a legal framework to ensure the continued effective and safe management of chemicals in order to safeguard human health and the environment. That framework needs to be flexible enough to respond to emerging risks, while still allowing trade with the EU that is as frictionless as possible.

The first of the three retained EU regulations to be amended is the biocidal products regulation. This governs the placing on the market and use of products that contain chemicals which protect humans, animals, materials or articles against harmful organisms such as pests or bacteria. It is in place to ensure that these chemicals are safe for humans, animals and the environment, while improving the functioning of the biocidal products market. This market covers a wide range of products such as wood preservatives, insecticides such as wasp spray and anti-fouling paint to remove barnacles from boats.

Secondly, the classification, labelling and packaging of substances and mixtures regulation ensures that the hazardous intrinsic properties of chemicals are properly identified and effectively communicated to those throughout the supply chain, including at the point of use, partly through standardised hazard pictograms and warning phrases associated with specific hazards, such as explosivity, acute toxicity or carcinogenicity.

Lastly, the export and import of hazardous chemicals regulation implements the Rotterdam convention and requires exports of listed chemicals to be notified to the importing country. For some chemicals, the consent of the importing country must be obtained before export can proceed.

These regimes rely on EU processes to take and implement collective decisions. However, much of the business of these regimes already operates at national level. Decisions at EU level are taken on the basis of evaluations and assessments undertaken by member states or following consideration of scientific opinions reached by relevant expert committees. Under a no-deal scenario, this instrument provides for these evaluations or opinions to inform a national decision, rather than informing UK input into an EU decision.

The Health and Safety Executive currently acts as a UK competent authority within the EU regimes for chemicals regulations; therefore, it already has existing capability and capacity which can be built upon to take full UK regulatory authority responsibility. For example, across the whole of the EU, the Health and Safety Executive currently processes around an eighth of the biocidal active substance approvals and around a third of the biocidal product authorisations.

It is necessary to put in place arrangements for the Health and Safety Executive to recover its costs for work across the wider chemicals regimes, including for plant protection products, which is currently done by EU institutions and for which a fee is charged. This cost recovery approach is in line with Her Majesty’s Treasury policy and is a well-established procedure for charging industry for the various work and advice provided by the Health and Safety Executive, such as applications for approval of first aid training on offshore installations and pipelines, or evaluation of safety cases made under COMAH regulations.

This instrument also contains a small number of technical operability amendments to the Genetically Modified Organisms (Contained Use) Regulations 2014. These regulations pertain only to the use of genetically modified organisms in controlled settings, such as a laboratory, and currently refer to a number of European directives and regulations. The references, some of which are the responsibility of other government departments, are now updated with the corresponding repatriated UK domestic law. There are no policy changes or updates to duties, and all existing protections covering human health and the environment are maintained and will continue to work in the same way post EU exit.

The UK chemical sector is our second biggest manufacturing industry and second largest exporter. It is also integral to the provision of essential products and technologies on which society relies. This instrument will provide clarity to the chemical industry and regulators, ensuring that the legal requirements that apply in relation to chemicals regulations are clear immediately after exit and provide certainty to consumers that the use of chemicals in the UK will continue to be desirable and safe.

Before closing, I would also like to stress that the devolved Administrations have provided consent for the elements of this instrument which are considered devolved. I hope that all noble Lords will join me in supporting the draft regulations. I beg to move.

[Lord Fox (LD)]

My Lords, I thank the Minister for introducing this statutory instrument; quite clearly it covers some important ground, albeit in a compendium of different issues.

I am not sure what we have done to deserve the raffle prize of the most coveted slot of the week. I was a little surprised—with all due respect—to see a DWP Minister putting this forward, but the Minister explained the Government’s perspective that worker protection is one of the clear priorities of this legislation, along with human health and the environment, of course. This SI is something of a younger sibling to another one—the REACH statutory instrument, which we will debate on Tuesday. In that respect, I will touch on some issues today, but I expect to deal with them at greater length next week. I do not know whether the Minister then will be the noble Baroness, Lady Buscombe, or the noble Lord, Lord Gardiner. Perhaps the audience in the “royal box” might carry to the noble Lord some of the issues that I put forward today; it would be good if he could come prepared. As the Minister said, these regulations cover the important chemicals industry, and touch on our research capability through the GMO issues. There is some very important ground for us to consider.

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[Baroness Buscombe]

My Lords, I thank the noble Lords, Lord Fox and Lord McKenzie, for their pertinent questions on this instrument, which is extremely important for the chemicals industry. In response to the noble Lord, Lord Fox, I am here as the DWP Minister. The DWP is the lead department for HSE operations. When the REACH regulations—on which the noble Lord has tabled a Motion—are debated next week, it will be my noble friend Lord Gardiner at the Dispatch Box, not me. He is the Minister for Defra, the department which is directly impacted. I will make sure that my noble friend is aware of today’s debate. I hope it will help him prepare for next week’s debate and that we can avoid a fatal Motion.

I will do my utmost to respond to the questions asked. As both noble Lords have emphasised, this is an incredibly important industry. The chemical sector is our second largest manufacturing industry and is vital to the economy and to many other industries, often leading the way in research and innovation. It is not only our second largest export industry but a key component in other important sectors, such as pharmaceutical, automotive and aerospace. We want to make sure that it continues to succeed and will do our utmost to support it.

The Government therefore seek to ensure that any potential new burdens on UK companies are minimised. The Health and Safety Executive is aware of the impacts and cost implications for business of any potential changes. It will, consequently, endeavour to keep such changes as simple and straightforward as possible. The Health and Safety Executive will implement an active communications programme on this point, leading up to exit and following it, to ensure that all stakeholders are aware of any potential changes in their responsibilities.

Both noble Lords asked about capability. This is understandable, because this adds to the already established role the HSE plays. Some of my ministerial colleagues in another place have had numerous, cross-government meetings with the HSE to discuss capability. The HSE, as we know, currently acts as the competent authority, but resources have been reprioritised to meet new pressures and to supplement existing capability and capacity. Under a no-deal scenario, the HSE would look to recruit around 120 additional staff in 2019, with an estimated cost per annum of £3.3 million. It should be noted that currently more than two-thirds of its budget for work carried out by the chemicals regulation division in the HSE is cost recoverable and the expectation is that cost-recoverable work will continue to form a reasonable proportion of its income after we exit the EU. Additional funding will also be made available to the HSE. The HSE keeps its resourcing plans continuously under review and will carry on assessing the impact, including on cost-recoverable work.

[Lord Fox]

Just to be clear, is 120 extra people the total number expected to be taken on to cover all the post-Brexit requirement? Is the £3.3 million not new money but money that has been moved from one HSE box to another? The noble Baroness talked about money being reprioritised: from which priority has it been moved in order that this becomes a priority? I would like a little more clarity around that.

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[Baroness Buscombe]

I ask the noble Lord to bear with me in case my officials can reassure me on both those points: I would not like to take a punt, as it were, before we close this debate.

I thank the noble Lord, Lord McKenzie, for attending a recent meeting to which all Peers were invited, chaired by the then Minister for Disabled People and the lead Minister for the HSE in the Department of Work and Pensions. At that meeting it was helpful to have the opportunity to listen to representatives of the HSE, who were very clear about the pathways forward in the event either of a deal or no deal, and who work extremely well, I have to say, with our department and across government to support its crucial work now and the crucial work that will be placed upon it.

The noble Lord, Lord Fox, asked about accountability for decisions. The UK Government are committed to transparency so that citizens can hold the Government to account on how decisions are made that affect their lives. Decisions taken by the Secretary of State regarding chemicals regulation will be subject to the same processes that hold Ministers to account as any other decisions. In addition, for several decisions, the consent of the devolved Administrations will be required.

As for the cost to the industry, the proposed amendments in this instrument relate to the maintenance of existing regulatory standards. Therefore, the instrument has been calculated to have a net direct impact on business or civil society organisations of less than £5 million annually. The Government seek to ensure that any potential new burdens on UK companies are minimised. The HSE is aware of the impacts and potential cost implications to business of any potential changes and consequently will endeavour, as I have already said, to keep these as straightforward and simple as possible.

I can now respond to the noble Lord, Lord Fox. There will be 120 additional staff in 2019 and the £3.3 million is DWP funding for the HSE’s work and REACH is funded by Defra. The cost-recovery work is additional to this funding. I hope that that is clear.

On parliamentary scrutiny, after exit the same UK regulatory scientists will recommend updates to ensure the continued protection of people, the environment and the interests of UK business. This will be for the UK only, not as part of the EU system. When Ministers agree with a recommendation, they will issue a decision to this effect and the HSE will then ensure that the updates are given effect from an agreed date and alert duty holders to changes. Decisions taken by the Secretary of State on chemicals regulation will be subject to the same processes that hold Ministers to account on other decisions, as I have said. This approach is better suited to the volume and pace of the scientific and technical changes involved, and will allow for effective management of the downstream consequences. Enabling the updates in this way ensures that they are dealt with promptly and efficiently, which is necessary to provide legal certainty for UK businesses. The approach also prevents undue pressure on parliamentary time; under the BPR regime, for example, there can be up to 50 active substances approval decisions a year.

On the Biocidal Products Regulation and the active substance review programme, in a no-deal scenario the UK would be outside the EU review programme and responsible for taking on active substance approvals nationally. The UK could however take into account evaluations done by other regulators, and would seek to do so where feasible. This includes the EU, which would continue to work to the same standards as operated by the UK. However, we would also maintain the option to take different decisions from the EU 27. Submission deadlines specified under Article 89 of the Biocidal Products Regulation will continue to apply, allowing the use of products containing active substances that are within the scope of this review programme, permitting them to continue to be made available on the market for a specified period of time. Other rules for participation in and withdrawal from the review programme will also remain similar to those in the present EU review programme.

[Lord Fox]

I apologise for rising again, but I thought the Minister said that it is perfectly reasonable for the Government to expect that in some cases, if the European Union safety authority decides to ban a chemical for a particular use, the UK would follow that ban without doing its own work and assessment. Is that a correct assumption?

[Baroness Buscombe]

I said that the UK could take into account evaluations made by other regulators, and would seek to do so where feasible. This includes the EU, which will continue to work to the same standards as the UK. It would also maintain the option to take different decisions from the EU 27.

[Lord Fox]

I think that is a yes.

[Baroness Buscombe]

That is a yes.

The noble Lords, Lord Fox and Lord McKenzie, asked about data. In a no-deal scenario, following EU exit it is not expected that the UK would be granted any permission to access confidential information held by the European Commission or the European Chemicals Agency, so any information previously submitted via these processes would not be available for the Health and Safety Executive to refer to. Such data must therefore be resubmitted to the HSE where necessary for it to continue operating the regulatory regime.

The specific circumstances in which data resubmission would be required are set out in the Biocidal Products Regulation transitional arrangements. The HSE appreciates that the requirement for applicants to resubmit their data packages may result in some increase in cost to business. However, this increase is expected to be minimal, on the basis that any data the HSE requests will be the same information as previously submitted and can be submitted in electronic format.

The technical data requirements needed to support an approval of an active substance or an authorisation of a biocidal product would be the same as those specified under the EU regime. In the immediate period following exit day, the necessary processes will be in place such that applicants can submit data to and correspond with the HSE as the competent authority. Such processes and systems will be sufficient to process applications and permit the necessary communications to take place in the weeks following EU exit, with the intention that a more streamlined, efficient process will be developed in due course. More information on what systems will be used will be made available to applicants as soon as it is available.

As I have been corrected to an extent, I return to a point I made a few moments ago on taking decisions on active substance approvals nationally and whether we would just do what the EU has done and accept a ban. To clarify, we would always make our own assessment of EU conclusions, so we would not just accept them at face value. Perhaps that is helpful.

[Lord Fox]

That brings me back to the point I made in my speech: there are 488 chemicals to be reassessed if we follow the European Union’s work programme on this. In addition, it will be an extremely laborious, expensive and time-consuming process that will inevitably be slower than it would have been had we remained within the European chemicals regime.

[Baroness Buscombe]

My Lords, I think I can say confidently that in our discussions with the HSE it has said that it is confident that it could carry out this—albeit laborious—assessment as our competent national, domestic authority were we to leave without a deal.

The noble Lord, Lord McKenzie, asked specifically about impact assessments. The department has been provided with guidance that the impact of EU exit statutory instruments should be assessed in line with standard practice by following the existing better regulation framework, in accordance with Her Majesty’s Treasury’s Green Book guidance. The proposed amendments in this instrument relate to the maintenance of existing regulatory standards. Therefore, as I said, this instrument has been calculated to have a net direct impact on business of £5 million annually. This approach is in line with published guidance, and departmental chief analysts are responsible for ensuring that the proportionate level of analysis is provided. Costs arising for duty holders will be costs of exit rather than of this instrument, which are not applicable to this assessment. An analysis of the wider impacts of the UK’s exit from the EU was published in November 2018 in EU Exit: Long-Term Economic Analysis.

The noble Lord, Lord McKenzie, asked about transparency. The UK Government are committed to transparency so that citizens can hold the Government to account with regard to how decisions that will affect their lives are made. Therefore, in a no-deal scenario the Government would ensure that regulatory decisions are made with justification, in an open manner, with regular and full consultation on key decisions, in line with the Regulators’ Code, committed to transparency. The UK remains a signatory to the Aarhus convention, which guarantees the public rights on access to information, public participation and justice in environmental matters.

The noble Lord, Lord McKenzie, also asked for assurances with regard to scientific and technical updates. The Health and Safety Executive is a world leader in the regulation of chemicals and will continue to be so following EU exit. The Government will ensure that the best scientific and technical advice is available during the process. Indeed, we have to be proud of the extraordinary expertise and skills we have in this area; we must ensure that the best skills and advice continue to be available and that decisions are transparent and involve the opportunity for public participation.

On fees and cost recovery provisions—I apologise in advance if I am being repetitive—the UK will charge fees in line with Her Majesty’s Treasury’s policy and the Regulators’ Code, which requires regulators to clearly explain the basis on which fees and charges are calculated. Industry will be charged only for the work and advice provided by the Health and Safety Executive. This approach is a well-established procedure for ensuring a 100% cost recovery.

Potential changes to fee levels would require legislation to be passed through Parliament. The principle of transparency underpins any changes to fees, so there would be a wide consultation process. This instrument is a purely formal change of the location of powers. In response to the question from the noble Lord, Lord McKenzie, about paragraph 2.7 of the Explanatory Notes, I can say that the situation will not be operable after exit unless we make these changes to ensure clarity about the formal location of powers—that is, powers resting with the HSE.

I think that I am almost there. I think I said that the competent authority involved in scientific advice will be the HSE, alongside the Environment Agency and the devolved authorities’ relevant competent authorities, such as HSENI. It is important to make clear our involvement with the devolved Administrations. All the competent authorities will be involved in decision-making.

There was a question on enforcement. The Government are extremely committed to the protection of workers, the public and the environment. The Health and Safety Executive has sufficient enforcement capacity to police non-compliance with chemical regulations, but enforcement action will be proportionate to the health and safety risks and to the seriousness of any breach of the law, as the HSE enforcement policy statement sets out. HSE’s approach to enforcement will not change as a result of exit. Although some duty holders will have new or different roles to fulfil, depending on their position in the supply chain, the scope of the regulation and the number of duty holders affected will remain broadly the same. HSE has planned a modest increase in enforcement resource to cope with the potential increase in the number of enforcement cases that could arise as a result of increased scrutiny from other agencies, such as Border Force or HMRC.

I think that that covers pretty much all the questions. I hope that noble Lords will bear with me. I put it differently from the noble Lord, Lord Fox: I always call this the graveyard slot. But I want to touch on consultation, because I know that this has been of concern to noble Lords across the House in relation to a number of SIs. We have a very good story to tell about what the Government, working with the HSE, have been doing to ensure that those who are impacted by these changes are aware of what is going on.

Consultation on chemicals was conducted on an informal basis, although, until very recently, this was constrained due to sensitivities arising from the ongoing negotiations with the EU. At the beginning of February, HSE consulted all the major chemical trade associations and it has held a series of workshops and events to discuss changes with representatives of industry and non-governmental organisations. Indeed, in the past month alone, a series of roadshows was held in Belfast, Hull, Cardiff, London, Chester and Edinburgh. In total, across all events since February 2018, HSE has engaged with approximately 1,240 attendees and, since August, the EU exit chemicals regulations guidance pages on HSE’s website have had just under 100,000 views. In the past month, pages with specific EU exit guidance on each EU chemicals regulation have had approximately 3,600 views. So we take the issue of consultation seriously. It is not formal consultation, because there are no policy changes in the legislation, but we believe that it is necessary to ensure that all those who are impacted either directly or indirectly by the regulations and changes associated with our exit from the European Union are aware of what we are doing and the impact of this statutory instrument.

This instrument will provide clarity to the chemical industry and regulators, ensuring that the legal requirements that apply in relation to chemicals regulations are clear immediately after exit, and it will provide certainty to consumers that the use of chemicals in the UK will continue to be desirable and safe. I commend the regulations.

Motion agreed.

Social Security Coordination (Council Regulation (EEC) No 574/72) (Amendment) (EU Exit) Regulations 2019

Baroness Buscombe Excerpts

Tuesday 5th March 2019 Lords Chamber

Moved by

[Baroness Buscombe]

That the draft Regulations laid before the House on 30 January be approved.

Motion agreed.

Social Security Benefits Up-rating Order 2019

Baroness Buscombe Excerpts

Tuesday 5th March 2019 Lords Chamber

Moved by

[Baroness Buscombe]

That the draft Order laid before the House on 30 January be approved.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, in my view the provisions in this order are compatible with the European Convention on Human Rights.

The Social Security Benefits Up-rating Order 2019 reflects the Government’s continuing commitment to: increase the basic and full rate of the new state pensions by the triple lock; increase the pension credit standard minimum guarantee in line with earnings; and increase carers’ benefits and benefits intended to meet additional disability needs in line with prices.

On the basic state pension, the Government’s continuing commitment to the triple lock means that, this year, the basic state pension will continue to be uprated by the highest of: earnings, prices, or 2.5%. The triple lock has been an invaluable tool in combating pensioner poverty. Maintaining it ensures that pensioners receive the financial security and certainty that they deserve.

This year, the increase in average earnings was the highest of the triple lock figures. As a result, the basic state pension will increase by 2.6%, rising from £125.95 to £129.20 a week for a single person. Consequently, from April this year, the basic state pension will be over £1,600 a year higher than in April 2010. We estimate that the basic state pension will be around 18.4% of average earnings—one of its highest levels relative to earnings for over two decades.

Three years ago, the Government introduced the new state pension, which provides a transparent and sustainable foundation for private saving and retirement planning for people reaching state pension age on or after 6 April 2016. We have also committed to triple lock the full rate of the new state pension. Therefore, from April 2019, the full rate of the new state pension will increase from £164.35 to £168.60 a week. This is approximately 24% of average earnings.

On the additional state pension, this year state earnings-related pension schemes and the other state second pensions, as well as protected payments in the new state pension, will rise by 2.4%, in line with prices. In addition, we are continuing to take steps to protect the poorest pensioner households, including through the pension credit standard minimum guarantee—the means-tested threshold below which pensioner income should not fall. This will rise by 2.6%, in line with average earnings. From April 2019, the single person threshold will rise from £164.35 to £167.25 a week—more than £1,800 a year higher than it was in 2010. Pensioner poverty continues to stand at one of the lowest rates since comparable records began. These measures will help us keep it that way.

In the 2018 Autumn Budget Statement, the Chancellor announced additional assistance for those on universal credit. As such, universal credit work allowances will rise by £1,000 once they have been increased by prices. This measure raises the amount someone can earn before their universal credit payment is reduced and directs additional support to some of the most vulnerable, low-paid, working families.

Finally, I turn to disability benefits. The Government continue to make sure that carers and people who face additional costs as a result of their disability will get the additional support they need. So, disability living allowance, attendance allowance, carer’s allowance, incapacity benefit and the personal independence payment will all rise by 2.4%, in line with the increase in prices. In addition, the carer and disability-related premia paid with pension credit and working-age benefits, the employment and support allowance support group component and the limited capability for work and work-related activity element of universal credit will also increase by 2.4%. These increases will continue to ensure that our welfare system provides the most support to the people who most need it.

In conclusion, in this order the Government propose to spend an extra £3.7 billion in 2019-20 to increase benefit and pension rates. With this spending, we are maintaining our commitment to protect the country’s pensioners through the triple lock and helping the poorest pensioner households who count on pension credit. We are also ensuring that people on universal credit can earn more before their payment is reduced and providing essential support to disabled people and carers. On this basis, I beg to move.

[Baroness Lister of Burtersett (Lab)]

My Lords, last week I received notification from the Pension Service of the increase in my pension from 8 April, under the triple lock. If I were a hard-pressed mother, claiming child benefit and most other working-age benefits, I would not have been so fortunate.

It has become something of a tradition in these uprating debates that some of us focus on the benefits that are not being uprated because of the benefits freeze. I am sure it will come as no surprise to the Minister that I do not plan to break the tradition. It is particularly pertinent this year, given the growing pressure from a number of quarters to end the freeze a year early. I welcome the real increase in the work allowance, after it was defrosted last year. I hope that the Government will start thinking about a second earner work allowance as a targeted way of addressing child poverty and encouraging more women into paid work.

As my noble friend Lady Sherlock spelled out in the earlier tax credit uprating debate, with her customary forensic skill, the freeze has had a much greater impact on working-age benefits than was originally anticipated at the time of the Welfare Reform and Work Act 2016. This is because of higher than expected inflation, due largely to the outcome of the referendum. According to the Resolution Foundation, the overall, cumulative, real cut in benefits will amount to around 6% by this coming benefit year. The total saving to the Treasury is around £4.4 billion. That is £4.4 billion being taken out of the purses and wallets of some of the poorest members of our society.

According to House of Commons Library calculations for Neil Gray MP, the higher than anticipated inflation rate means that around £1.2 billion is being cut this coming year over and above that originally budgeted for. The Joseph Rowntree Foundation has warned that maintaining the freeze for this final year will mean 10.7 million people living in poverty missing out on £220 to help cover the increased cost of living, and as many as 200,000 more being locked into poverty. The scenario will be even worse in the event of a no-deal Brexit.

--- Later in debate ---

Finally, if the Government are not willing to end the freeze a year early, why not? Why is that not a priority when making decisions about spending? I look forward to the Minister’s reply.

[Baroness Buscombe]

My Lords, I thank all noble Lords who have taken part in this debate. It has certainly focused on things outside the order itself, but I thank noble Lords for appreciating the upratings made in the order. It feels like 10 minutes ago that we were debating this last year, so I was, to some degree, ready for some of the points that would be raised; I expected there to be references to the benefit freeze and various other issues.

I begin by referencing something that my honourable friend, Justin Tomlinson MP, stated last night in a similar debate in another place. He said that we will always share the proceeds of economic growth to target our support for the most vulnerable in our society. That is why we are spending £7 billion more than in 2010 to support those with severe disabilities and mental health issues.

It is true that things have changed. Our approach is, to some degree, different to that of the party opposite when it was in government. We want to incentivise people; we want to look at the root causes of poverty and lift people out of it. We know—we have research that tells us this—that lifting people out of poverty and into work is the best route. Our welfare reforms incentivise moves into work and support working families. What we are providing is different in some ways, but we know this approach is working. The number of people in work is now at a record high. Through our welfare reforms, the Government have introduced 30 hours of free childcare a week for working families in England; cut income tax for 31 million people; and provided the lowest earners with their fastest pay rise in 20 years through the national living wage.

Our reforms have been highly redistributive. The latest analysis shows that, since taking office in 2016, the poorest households have gained the most as a percentage of net income. The annual average income of the poorest fifth of households has risen in real terms by more than £400 since 2010, while incomes of the richest fifth have fallen. Income inequality is lower than it was in 2010. In 2019-20, the 10% of households with the lowest incomes will receive more than four times as much support in public spending as they contribute in tax. We believe it is right that the poorest households should gain the most as a percentage of net income.

The noble Baroness, Lady Lister, referenced several studies showing that the number of children in poverty will increase substantially over the next few years. However, experts such as the IFS, who undertake these forecasts, acknowledge a degree of uncertainty around them. We stay with our firm belief and principle that work offers the best chance for families to get out of poverty.

Since 2010, there are more than 3.4 million more people in work and around 637,000 fewer children living in workless households. Children are about five times more likely to be in poverty if they live in a workless household, compared to a household where all adults work. There are 300,000 fewer children in absolute poverty, both before and after housing costs, compared to 2010, meaning we are currently at a historic low. We know that children in workless families can face real disadvantages to their development and prospects. This is why we will continue with policies that support and encourage employment, reform the welfare system to make work pay—as I always say, to make work transforms lives—and introduce universal credit to strengthen incentives for parents to move into and progress in work.

The rates of children in material deprivation have never been lower. As I said, children in households where no one works are more likely to be in poverty, but we will be investing more than £6 billion a year in childcare by 2020. There are a number of key ways in which we are demonstrating that our approach is different.

[Lord McKenzie of Luton (Lab)]

My Lords, the Minister has touched on the Opposition’s policy for work in previous debates. How would she respond to the executive summary of a White Paper produced when we were in government, which states:

“This White Paper sets out a vision and route map for a welfare state where everyone is given the help they need to get back to work, matched by an expectation that they take up that support”—


a concept supported by the noble Lord, Lord Freud? Indeed, he worked on that programme for the DWP.

[Baroness Buscombe]

My Lords, what the noble Lord just referenced goes to the heart of what we are trying to achieve. The reality is that we are providing support in every which way to help people into work, and to help people through our jobcentres with our work coaches and case managers. The important thing is that the first thing people do when they go into a jobcentre is talk to a work coach who is interested in ensuring that they have the right support, the right benefits and a roof over their head. We signpost them to the right support where that is lacking. From there, we do all we can, working with a bespoke work coach and case managers. It could take months, weeks or days to encourage people to go into work. Of course, as we know, some of these people have never been in work. Indeed, in 2010 a fifth, of all households in the United Kingdom—20%—were entirely workless. We have brought that down to 13.9% of all UK households. That is still an enormous number of households where nobody is actually working. We genuinely believe it is crucial that we change that, and we are changing it.

[Lord McKenzie of Luton]

Can the Minister tell me what the figure was when the Conservative Government left office previously?

[Baroness Buscombe]

I am not able to share that figure with the noble Lord, but I believe so strongly that what we are doing in introducing and developing universal credit with bespoke and universal support is a far cry from what previous Conservative Governments prior to 1997 and the party opposite in Government up to 2010 did with legacy benefits, when people had no contact.

[Baroness Altmann (Con)]

I offer my noble friend a little assistance, because the Government should be rightly proud of the enormous strides that have been made in employment for older people. The Government have made specific efforts to ensure more older people are supported back into work. That has not been done by previous Governments.

[Baroness Buscombe]

I thank my noble friend for that. It is a very important point because, as we know, life expectancy is extending. The reality is that there are so many people out there, particularly women, who have never had the confidence to go back to work after having children. So many of my peer group would love to have had the confidence to go back to work. That is the sort of thing the Government have been doing and are working so hard at. We have all sorts of projects and support systems in place. In fact, two Secretaries of State have announced in the last year different projects to encourage older women particularly. When we say “older”, we—

[Baroness Lister of Burtersett]

On the point about encouraging women back into work, which I very much agree with, would the Minister be willing to take away my point about work allowance? At present, second earners have little incentive to get back into paid work. She made the point that we need all adults to be in paid work to have the full impact on poverty. I do not expect her to say that the Government are going to do that but perhaps she might consider my point when developing universal credit policy.

[Baroness Buscombe]

Yes, I noted somewhere in my papers and will say now that of course it is right that we look at every way to incentivise the second earner to go back into the workplace; that is very much our thinking at the moment. We are looking to find different ways to help and incentivise people. We also have to think about affordability. We touched on that when we debated these uprating measures a year ago; it has to be taken into account as well. The noble Baroness, Lady Janke, talked about how much was spent at the last Budget, but actually quite a large proportion of that—£4.5 billion—went towards the work that we are doing at the Department for Work and Pensions in supporting people, so we have to ensure—

[Baroness Sherlock]

On the affordability question, will the Minister address the point that I and another noble Lord made: the Government are likely to save half a billion pounds more on this freeze than they did from the 2014-15 Budget, so why could that money not be put to this purpose? While she is at it, her comments about work are very interesting, but if I could bring her back to the order under discussion, if the aim of this freeze is to incentivise work, why are the Government freezing payments made to some of the people on employment and support allowance whom they have deemed not fit to work? Why does the freeze include benefits paid to mothers of very young children, whom the Government do not require to work? Why does it apply to in-work benefits designed to make work pay?

[Baroness Buscombe]

Because of the issue of affordability, we have to make some difficult choices. I will not pretend that we are not constantly looking at this; indeed, the Secretary of State for Work and Pensions made a speech only today amplifying the fact that we are looking at different ways of supporting people with disabilities. They may not attract a price tag, if I may put it that way, but they are going to help transform the lives particularly of people with severe disabilities, because the reality is that we cannot simply take that difficult leap and say that we are going to lift the benefit freeze. As my noble friend said last night in another place, we have to face the fact that under the previous Labour Government, welfare spending increased by £84 billion—the equivalent of £3,000 additional cost for every working household in this country. We have to strike a fair balance between those who are funding the welfare system and those who are in receipt of it. It is always a difficult balance, but again, I thank noble Lords who are making suggestions and encouraging me to amplify the fact that we have a particular interest in supporting those who may not have been in work for a number of years, or who may never have worked, to have the confidence to do so.

[Lord Judd (Lab)]

My Lords, the Minister is speaking with great passion and conviction about her commitment to get people back into work. Is it not also incumbent on us all, irrespective of party, to keep constantly under review exactly what some of this work amounts to? It is hardly surprising that there are large numbers of families still not in work: the attraction of going into the sort of work available is the attraction of going into hell.

[Baroness Buscombe]

I am pleased to say that the vast majority of jobs which people are taking are full-time employment but, as I have said before at this Dispatch Box, it is really important that we focus on low pay. We have introduced the living wage, which has made an enormous difference. However, there is an issue not just in the private sector but in the third sector and others, where low wages are paid on the expectation that they will be supplemented by the state. We have to think about how we can tackle that. It is a very tough one. In a sense, I speak now not as a Minister but we have to take it on board. The reality is that until we have more people being paid what one might call properly, so that they do not have to turn to the benefits system, there will be the issue of how we maintain and sustain an affordable welfare system in the years ahead.

The costs are going up. I do not know whether I dare say this without checking my notes but the reality is that in a few short years—here we are, it is by 2022—our expenditure on welfare will rise by a further £28 billion. We are already spending more than £100 billion on benefits for people of working age. That £100,000 million will go up by £28,000 million by 2022.

[Baroness Altmann]

It is important for the House to recognise that there are a number of people, particularly older workers—yet again, I declare my interest—who want to work part-time and on zero-hours contracts. It is not as simple as it might appear from looking at the bald figures. That is perhaps work that the department might wish to take further but it is an important point.

[Baroness Buscombe]

Again, I thank my noble friend. It is a very important point. I often come across people who actually want to work on zero-hours contracts. They want to work in a flexible way so that they can work around their childcare arrangements or caring responsibilities. We live in a complex space. This is where I think the universal credit system is so brilliant, although we constantly seek to improve as we develop it. We inject every two weeks, on average, a new piece of software into that system to improve it, on the basis that everybody’s situation is different. We therefore have to have a system that can be as flexible as possible in responding to people’s way of working and their family arrangements, which are many and varied and can of course change literally overnight. People may then need to turn, maybe overnight, to our support and help.

That is why we are working hard to ensure that we can support the system in a way that provides for those who are in most need. We will not always agree about every benefit in it, but I hope noble Lords will accept that we at the Department for Work and Pensions are doing our best to develop many policies to encourage and empower people to go into the workplace to provide for their children, and therefore to have fuller lives and fulfil every opportunity for their potential.

[Baroness Lister of Burtersett]

I sense that the Minister is about to sit down—I apologise if she was not—but I made one point on which I asked her to respond. It would be a new policy but would not cost anything, other than the administrative costs of doing it. It would be to routinely publish the poverty depth statistics, which would help to answer for the future the question that my noble friend Lady Sherlock asked, which has not been answered. What attempts are the Government making, or have they made, to measure the impact on poverty of this freeze?

[Baroness Buscombe]

My Lords, the Welfare Reform and Work Act 2016 was supported by a number of impact assessments that considered the whole picture of the Government’s welfare reforms. Any estimate of the impact will fluctuate whenever the number of people claiming benefit, or assumptions about the economy, turn out differently from the forecasts at the time. Although CPI for this year is higher than anticipated, at the time of the impact assessment for 2017-18 CPI was lower than expected. Since the impact assessment for the Welfare Reform and Work Act, we have seen employment reach record levels. If people choose to move into work or to increase their hours, they may mitigate or never experience the notional loss. In total, freezing benefits and tax credits overall is expected to result in £3.5 billion of savings in 2019-20, but the 2015 impact assessment shows a saving from the benefit freeze this year of around £1.4 billion.

I reassure the noble Baroness, Lady Sherlock, that I will share with my colleagues the points that have been raised in this debate. We constantly review whether we have the right policies, what we can do to change them and what our constraints are given that we are just one of numerous departments. We account for 25% of the entire government budget. Therefore, it is always a tough challenge for us to influence change. I have huge respect for the previous and current Secretaries of State, who have been able to encourage the Chancellor of the Exchequer to make some changes.

A question was asked about those with a disabled child. All those qualifying for the disabled child addition also qualify for disability living allowance or personal independence payments, which are exempt from the freeze. Another question was asked about the two-child element. We believe that families on benefits should face the same financial choices when deciding to grow their family as those supporting themselves solely through work. A benefits structure adjusting automatically to family size is unsustainable. I think I have answered almost everything—

[Baroness Lister of Burtersett]

My noble friend asked a rather pertinent question: do the Government think that these benefits are too high?

[Baroness Buscombe]

My Lords, no; I can answer that very simply. We do not think that the benefits are too high, but we feel strongly that we have to focus them where the need is greatest.

I hope that noble Lords will agree that we have had a full debate, much of which has related to matters other than the uprating itself. The social security uprating order will provide an extra £3.7 billion of support for the most vulnerable in 2019-20. The triple lock on the state pension will provide an extra £3.6 billion for pensioners. The uprating of disability living allowance, personal independence payments and carer’s allowance are worth £0.7 billion in 2019-20 alone. The increase in universal credit work allowances by £1,000 will provide 2.4 million working families with an extra £630 a year from April 2019. This Government have a track record of increasing their generosity in welfare spending. Since 2016, they have invested more than £9.5 billion in universal credit. I thank all those who have taken part in this debate. I beg to move.

Motion agreed.

Social Security Coordination (Council Regulation (EEC) No 1408/71 and Council Regulation (EC) No 859/2003) (Amendment) (EU Exit) Regulations 2019

Baroness Buscombe Excerpts

Tuesday 5th March 2019 Lords Chamber

Moved by

[Baroness Buscombe]

That the draft Regulations laid before the House on 30 January be approved.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, I thank all noble Lords who have supported the presentation of these four statutory instruments, and I will also speak to the remaining three.

These regulations were laid before both Houses on 30 January. They enable the Government to address deficiencies in retained EU law caused by the United Kingdom withdrawing from the EU, which would impact the operation of the retained social security co-ordination regulations in a no-deal scenario. The whole system of social security co-ordination across the EU relies on co-operation and reciprocity. The legal framework for this will cease in a no-deal scenario. The UK will have no means of enforcing reciprocal obligations on EU member states and cannot therefore legislate for this when correcting deficiencies in the co-ordination regulations.

These instruments aim to maintain the status quo on a unilateral basis, ensuring that citizens’ rights are protected as far as possible in a no-deal scenario in relation to social security. They are intended to ensure a functioning statute book in the event of no deal, by fixing deficiencies in retained EU law, in line with the power provided by Section 8 of the EU withdrawal Act.

The list of specific legislation that these regulations amend is lengthy but can broadly be split into three categories. The first is data and information sharing. The co-ordination regulations require EU member states to exchange information through specific administrative procedures laid down in the regulations. Data shared is used, for example, to establish which member state is responsible for payment of benefits to avoid overlapping benefits being paid in different member states. These instruments will enable us to ask claimants to provide, within reasonable time, the relevant information to determine competence in cases where the relevant member state does not do so when asked. They also include provisions to ensure that the UK can continue to share data with member states when they are applying the co-ordination regulations.

These SIs also remove provisions within the retained co-ordination regulations that will be inoperable if the UK leaves the European Union without a deal. For example, the co-ordination regulations make provision for a number of bodies at EU level to deal with administrative and technical issues or disputes arising from the application of the social security co-ordination regulations—the administrative commission being the main one. These instruments remove references to these bodies on the basis that they will be inoperable when the UK withdraws from the EU in a no-deal scenario.

Finally, they deal with applicable legislation. The co-ordination regulations state that an individual shall be subject to only one EU member state’s legislation at a time. These arrangements rely on co-ordination between member states in order to operate effectively. These instruments amend the co-ordination regulations to maintain the status quo for when UK legislation does, and does not, apply. These regulations are made using powers in the European Union (Withdrawal) Act 2018 to fix legal inoperabilities and other deficiencies that will arise on exit in retained EU law, so that the converted law continues to operate effectively post exit, and to make consequential provision.

The legal powers used are those provided for under the EU withdrawal Act, and the amendments made are completely in line with both the policy and legal intent of that Act. The use of secondary legislation to amend primary legislation—the so-called Henry VIII powers—was debated at length during the passage of the Act.

These statutory instruments are part of a wider legislative package that my department is laying. We have already laid SIs relating to private pensions, the European job mobility portal regime—more commonly known as EURES—and consequential powers. My officials will be happy to provide noble Lords with more information on the department’s legislative programme following the debate.

No formal consultation on the regulations has been carried out by the Department for Work and Pensions as the instruments address deficiencies in retained EU law and there is no significant impact as a result. My officials, nevertheless, had informal discussions with the Social Security Advisory Committee on these instruments; these focused on technical issues and policy considerations. Similarly, we expect the regulations to have no impact on business, charities, voluntary bodies or the public sector.

In my view, the provisions in these statutory instruments are compatible with the European Convention on Human Rights. The Minister of State for Employment has also made the same statement.

All noble Lords will know that the EU withdrawal Act is a crucial piece of legislation that will ensure that whatever the outcome of negotiations, we have a functioning statute book on exit day, providing certainty to people and business across the UK. The Act enables this by providing a power for Ministers in the UK Government and devolved Administrations to deal with deficiencies in the law arising as a result of our exit from the EU.

These regulations are an essential part of the legislative programme that my department is laying in preparation for a no-deal scenario. They are needed to correct deficiencies so that the system can function, albeit unilaterally, and to retain the department’s ability to make payments to claimants and to determine claims. Not proceeding with this legislation would result in a statute book that does not function correctly and would fail to protect citizens’ rights. Passing these SIs will ensure that we are ready for all eventualities.

[Lord McKenzie of Luton (Lab)]

My Lords, I thank the Minister for introducing these regulations. As we have heard, they seek to address deficiencies in retained law caused by the UK withdrawing from the EU. They amend the retained EU regulations comprising the co-ordination regulations, which currently co-ordinate social security systems throughout the EU.

Given that the changes these regulations cover potentially create new imposts and a move away from the status quo, it seems to us that there is a case for an impact assessment and some consultation. Change is necessary, as we have heard, because the current system relies on co-operation and reciprocity from other member states and that cannot be guaranteed when we withdraw in all respects. It will not be possible, for example, to impose reciprocal obligations on member states when correcting deficiencies, or say when co-ordinating rules relate to individuals moving to or from the UK. We understand and accept that.

The regulations will amend retained co-ordination regulations covering provisions that will not apply to the UK, confer functions on EU entities that will no longer have functions in relation to the UK, and make provision for reciprocal arrangements between the UK and other European Union member states. According to the Explanatory Memorandum:

“The instruments aim to ensure that citizens’ rights are protected as far as possible in a no-deal scenario”.


How? It is asserted that this is about maintaining the status quo, but will the Minister say to what extent the instrument varies from the maintenance of the status quo in practice? How does she characterise this?

The legal framework, as we have heard, for co-operation and enforcing reciprocal obligations in a no-deal scenario will cease. The Explanatory Memorandum states that:

“These instruments aim to maintain the status quo on a unilateral basis”,


but there will be arrangements which are inoperable. These include the denial of membership of such bodies as the administrative commission, the advisory body and the audit board. Will the Minister say in more detail what the implications of this are? It is noted that the ability to make provisional payments in the event of an unresolved dispute will no longer exist, although it is understood that these are in fact little used.

The approach to amending the co-ordination regulations is to focus on circumstances where the UK legislation does apply. Will the Minister please expand on that assertion? The Explanatory Memorandum identifies that the change,

“may give rise to occasions where an individual becomes subject to the legislation of more than one state at a time”,

and possibly to the legislation of two or more states. This is noted as being an unavoidable consequence of a no-deal exit which cannot be managed using powers in the withdrawal Act, but has any assessment been undertaken of the consequences? On what basis does the Minister conclude that the changes,

“do not give rise to any new costs or any financial or economic impact”?

Further, it is understood that fixes for deficiencies relating to healthcare are not provided for in these SIs. How and where are they to be provided for? We know that, by virtue of the EEA agreement and the Swiss free movement of people agreement, the co-ordination regulations also apply in the EEA. Will she outline the full consequences of that for us tonight? I am conscious that there were one or two technical questions there, but this is a technical document and we are entitled to ask them, although I do not believe that we will have undue problems in supporting the regulations.

--- Later in debate ---

[Baroness Buscombe]

My Lords, I thank all noble Lords who have taken part in this excellent debate and for the searching questions, if I may say so. I am particularly grateful to the noble Baroness, Lady Sherlock, for giving me early notice of some of the very technical questions. I have to say, I am certainly not an expert in Brexit and I am not quite sure who is. We all hope very much that we will have a deal and we wish it was already in place. Let me do my best to respond to noble Lords’ questions.

As regards an impact assessment, I shall be absolutely straight. An impact assessment has not been prepared for these instruments as they make only technical changes to retained EU law and, as such, do not give rise to any new costs or financial or economic impact beyond the status quo. There is no, or no significant, impact on businesses, charities or voluntary bodies as a result of the instruments and there is no, or no significant, impact on the public sector. That said, as I referenced in my opening remarks on the statutory instruments, we take the role of the Social Security Advisory Committee very seriously. In response to the question of the noble Lord, Lord McKenzie, on consultation, the SSAC provides impartial advice on social security and related matters. It scrutinises most of the complex secondary legislation that underpins the social security system. The committee had the opportunity to review these regulations and a meeting was held on 7 March last year for it to share and discuss the initial drafts. The committee was content with the approach being taken.

Noble Lords asked a number of questions about future policy for social security and how these SIs fit with the immigration and social security Bill currently going through Parliament. These statutory instruments provide for a functioning statute book immediately after exit day, and the immigration and social security Bill ensures that there is the legislative framework required to deliver future policy at the appropriate time. Future policy changes will be set out in regulations made under that Bill and will be subject to the affirmative procedure.

The noble Baroness, Lady Janke, and the noble Lord, Lord McKenzie, referred to healthcare entitlement. I assure noble Lords that these statutory instruments do not make changes to healthcare policy. Any such changes will be brought forward by the Department of Health and Social Care via the Healthcare (International Arrangements) Bill and its statutory instruments. The Department of Health and Social Care is bringing forward the healthcare Bill to enable the UK to implement any future relationship with the EU on reciprocal healthcare as necessary and to ensure that the UK is prepared for any outcome if there is a no-deal exit. The healthcare Bill contains a power to amend, repeal or revoke retained EU law, so we do not anticipate the Department of Health and Social Care using this power.

The noble Lord, Lord McKenzie, asked how the regulations vary from the status quo. The amendments retain the status quo for UK obligations to individuals. They include provision to allow information to be provided by the claimant where we now receive it from the member state. The noble Lord, Lord McKenzie, also asked why provisional payments have been removed. The current provisional payment system operates where there is a dispute between member states of the European Union, disputes being an issue raised by all noble Lords. These disputes are resolved following a decision made by a mediation body, the administrative commission of the European Union. In a no-deal scenario, the UK will no longer be a member state or part of this body. That is why this provision has been removed. We will continue to use the same rules as now to determine whether the UK is competent. Any challenges will instead be resolved through domestic routes.

The noble Baroness, Lady Lister, asked about the terminology “as far as possible”. Perhaps it is the lawyer in me, but the reality from a legal standpoint is that it is sensible to use the terminology “as far as possible” rather than providing guarantees and raising an expectation, when something could happen where we would then fail to deliver. We are extremely keen to avoid that, particularly on such an important issue as social security. The noble Baroness, Lady Lister, also asked why this legislation only maintains the status quo and whether it is the Government’s plan not to change anything relating to social security. This legislation is about maintaining a functioning statute book. Of course, future policy is a matter for negotiations and, as such, cannot be discussed or raised today. I cannot say more than that today, but we are considering future policy with care. The Government are planning an ambitious deal with the EU in many areas, and this legislation is not about future policy but technical amendments to retained EU law.

The Government are confident that a deal will be reached. However, as a responsible Government, we are planning for all eventualities, including a no-deal scenario. Announcements relating to social security will therefore be made when it is appropriate to do so.

The noble Baroness, Lady Lister, also asked about social security co-ordination and how these statutory instruments fit with the immigration Bill. As I have said, this will be set out in regulations under that Bill.

There was a question about the ESIC referring to changes to retained EU regulations ensuring that any bilateral agreements between the UK and an EU country take precedence over the retained regulations and what impact this will have. Changes made through these fixing SIs are intended to deliver a functioning statute book on day one of exit to ensure a smooth and orderly exit. However, the UK will operate these retained regulations on a unilateral basis. As the Government negotiate future agreements with EU countries that provide for reciprocal social security co-ordination or agree to revive an existing reciprocal arrangement, retained EU law that delivers a unilateral system will no longer be appropriate.

Noble Lords may be interested to know that we have 17 reciprocal social security arrangements within the EU—with Austria, Belgium, Croatia, Cyprus, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, Spain and Sweden. We have reciprocal arrangements with two EEA countries, Iceland and Norway, and with Switzerland. However, there are apparently no reciprocal agreements with Bulgaria, the Czech Republic, Estonia, Greece, Hungary, Latvia, Liechtenstein, Lithuania, Poland, Romania and Slovakia.

There was question about people being affected by double contributions. The latest published figures from the EU show that in 2017 around 50,000 UK workers went to work in the EU and around 60,000 EU workers went to work in the UK under the co-ordinated regulations, which work to avoid duplication.

The noble Baroness, Lady Janke, referenced data sharing. We will continue to work closely with the EU 27 so that the first port of call for all contribution queries will be the appropriate administration in a member state. We would expect the claimant to provide wage slips or proof of contributions made. The Government will provide support to claimants where any additional information is required from them. The instruments include provisions to ensure that the UK can continue to share data with the EU member states when they are applying the co-ordinated regulations.

The noble Baroness, Lady Janke, asked what evidence an individual will have to produce to confirm contributions in the EU. The UK will consider evidence on a case-by-case basis. We would expect the claimant to provide wage slips or proof of contributions made. The Government will provide support to claimants where any additional information is required from them.

The noble Lord, Lord McKenzie, asked about healthcare. As I have said, the Department for Health and Social Care is bringing forward a healthcare Bill.

The noble Baroness, Lady Lister, asked what scenario is envisaged where rights would not be protected. We are not able to protect the rights of citizens to the extent that they are provided by member states. We have sought assurances, and will continue to do so, from member states that they will respect the rights of UK nationals.

The noble Baroness, Lady Sherlock, asked about bilateral agreements. In the event that the UK leaves without a withdrawal agreement, we will keep pre-existing reciprocal agreements with individual member states under review. Whether these come back into force will be subject to discussion and agreement between the UK and the relevant EU member state.

Will returnees have access to benefits? Returning UK nationals have the same rights to access benefits as other UK citizens or UK residents. For some benefits, in addition to meeting the entitlement conditions, certain residence criteria must be satisfied. For income-related means-tested benefits, such as universal credit and pension credit, claimants must be habitually resident in the UK. In general, this means that they will need to show that they have made the UK their home and plan to stay here. Those returning to the UK after a period spent abroad may be considered to be habitually resident on arrival if it can be established that they were previously habitually resident in the UK and are returning to resume their residence.

For some disability and carers’ benefits, such as personal independence payment and carer’s allowance, claimants must be habitually resident in the UK. They must also have been present in the UK for a specified period before the claim but this requirement may be satisfied if they have links with the UK—for example, if they have worked and paid national insurance contributions in the UK in the past.

The noble Baroness referred to the terminology “deficiencies”. The word “deficiencies”, from a legal standpoint, contains anything with no practical application to the UK rather than this being a political deficiency on the part of government. I want to make that clear.

I hope noble Lords will bear with me. The noble Baroness asked a number of technical questions, and I will do my best to answer them as efficiently and speedily as possible. First, it is correct that the UK has reciprocal social security agreements with 17 EU member states, as I have already referenced. These arrangements are generally superseded by EU social security regulations in the UK but are still in use by the Crown dependencies, where EU social security regulations do not apply.

Social Security Coordination (Regulation (EC) No 883/2004, EEA Agreement and Swiss Agreement) (Amendment) (EU Exit) Regulations 2019

Baroness Buscombe Excerpts

Tuesday 5th March 2019 Lords Chamber

Moved by

[Baroness Buscombe]

That the draft Regulations laid before the House on 30 January be approved.

Motion agreed.

Social Security Coordination (Regulation (EC) No 987/2009) (Amendment) (EU Exit) Regulations 2019

Baroness Buscombe Excerpts

Tuesday 5th March 2019 Lords Chamber

Moved by

[Baroness Buscombe]

That the draft Regulations laid before the House on 30 January be approved.

Motion agreed.

Employment and Support Allowance Payments

Baroness Buscombe Excerpts

Monday 25th February 2019 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, with the leave of the House, I shall repeat as a Statement an Answer given to an Urgent Question in another place by my honourable friend the Minister for Disabled People, Health and Work. The Statement is as follows:

“The Department for Work and Pensions is correcting some past underpayments of ESA that arose while reassessing incapacity benefit claims. We realise how important it is to get this matter fixed—clearly, the mistakes should not have happened—and we know it is vital that it is sorted as quickly as possible.

Since I last updated the House in October 2018, we have made significant progress. We are on track to complete work on the majority of the original 320,000 cases by the end of April this year. By 11 February we had started 310,000 people on the reassessment journey and paid arrears of over £328 million to 58,000 people, which is significant progress. The department has also increased the number of staff working on putting these cases right, from around 400 to approximately 1,200, which will enable us to continue to complete this important activity at pace.

Following the announcement in July last year to pay cases back to the point of conversion, I confirmed in October 2018 that that will require us to review an additional 250,000 cases, with activity due to begin shortly, and we aim to complete phase 2 by the end of this year. The department also published an ad hoc statistical publication last Thursday on GOV.UK setting out further detail on the progress that it has made on processing the cases, including an updated estimate on forecast expenditure and the number of people affected. The department now estimates that around 600,000 cases require review and that by the end of the exercise around 210,000 arrears payments will have been made. The increase, compared with the previous estimate of 180,000, is based on additional assumptions and samples, and very careful checking.

Alongside the Written Statement that was published last Thursday, I also published an updated version of the frequently asked questions, which has been deposited in the House Library”.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for repeating that Answer. When, as part of their reforms, the Government moved people across from incapacity benefit to contributory-based ESA, they failed to consider whether or not those people might have been entitled to an income-related ESA, which would have brought with it a potential entitlement to enhanced or severe disability premiums or to housing benefit, council tax benefit and passported benefits. As the Minister has explained, the number of people estimated to have missed out has now gone up from the original 70,000 to 210,000, with a potential bill of £920 million. It took the DWP six years to even begin to sort this out. Even by recent DWP standards, I think we could reasonably say that this is a right mess.

I have two questions for the Minister. First, the department estimates that around 20,000 people have or will have died before payments reach them, so what steps is it taking to identify the families of people in those circumstances? Secondly, the Treasury guidance is very clear that in cases of maladministration or service failure it should seek to,

“restore the wronged party to the position that they would be in had things been done correctly”.

When the Minister spoke in October, I asked her about what was happening to people who had missed out on passported benefits. She said the department was in discussion with other departments about that. Could she please update the House and assure us that no one will miss out or fail to be compensated because they should have got housing benefit, council tax benefit, free prescriptions or free eye tests?

[Baroness Buscombe]

First, my Lords, I repeat that these errors should never have happened, and the department is working extremely hard to make sure that the wrongs that have been done are put right at pace. I want to make it clear that we did not do nothing, as it were, for six years; we started work on this back in 2013. We are working hard with increased support to make sure that we get this right but we want to do it with care. It is very unfortunate that an estimated 20,000 people have deceased since this work began but we are working extremely hard to identify the families.

On passported benefits, I am able to say to the noble Baroness that we are engaging with a number of authorities that are responsible for passported benefits to raise awareness of the ESA underpayment exercise and the potential issues arising from it. This will enable departments across government to understand the impacts on the passported benefits they administer. However, the department does not hold information on what people may or may not have claimed.

[Baroness Thomas of Winchester (LD)]

My Lords, from the Lib Dem Benches, I thank the Minister for making this important Statement. The issue of passported benefits is extremely important. I wonder how the department has learned from this mistake so that it does not slip up on migrating claimants from ESA to universal credit. Will she use the upcoming managed migration pilot to consider alternatives to the hard stop, so that vulnerable claimants do not have their benefits cut off if they do not make a universal credit application on time?

[Baroness Buscombe]

My Lords, let me make it very clear that those with complex needs will not suffer from a hard stop during the managed migration process. As I have said to your Lordships in previous debates, we are working hard to ensure that we work with stakeholders to pilot the whole scheme of managed migration. On the noble Baroness’s very good question about lessons learned, the key point is that through these errors in migrating people from incapacity benefit to ESA, we have learned that the big mistake made was that we did not make contact with individual claimants. We thought it was great to have an automatic transfer, but the issue was that we did not have all the right, real-time, up-to-date information on claimants. Therefore, some of those who were eligible did not receive these payments.

[Lord McKenzie of Luton (Lab)]

My Lords, the Minister explained that the number of staff included in this exercise has increased from 400 to 1,200. Can she tell us from where those staff have been deployed and what training they have had?

--- Later in debate ---

[Baroness Buscombe]

Again, that is a good question. As the noble Lord will recognise, we have increased the number of people working on this quite considerably. We are increasing our resources from 400 to 1,200 fully employed people to manage all demands. We have taken a considerable number of staff from those who were focused solely on new ESA claimants. Of course, we are not taking new ESA claimants now because they are going straight on to universal credit, so we have a number of considerably well-trained staff. We are also increasing our training across the piece to make sure that people are fully aware of the support and the exercise required. I am pleased to say that I learned from meetings with officials only last week that we are taking on more and more highly skilled individuals, who want to work with us on this exercise and on universal credit.

[Lord Bassam of Brighton (Lab)]

My Lords, ESA enables passporting to other benefits. What compensation will the department give to those families that lost out from the passporting arrangements? Perhaps I missed something in what the Minister said earlier, but my other question is: what will happen to the payments that would have been due to people who have now deceased? Will their families benefit from these payments by way of compensation?

[Baroness Buscombe]

On the first question, the reality is that we are reviewing all cases potentially affected and paying any arrears of past payments that are due. Our focus is on paying arrears to claimants in line with the primary legislation. With regards to those who have already, sadly, deceased, we are making sure that the money that would have been paid to those individuals will be paid to the families.

Retirement Age: Women

Baroness Buscombe Excerpts

Wednesday 20th February 2019 Lords Chamber

[Baroness Bryan of Partick]

To ask Her Majesty’s Government how much in additional contributions has been paid into the National Insurance Fund as a result of the extension of the retirement age for women born in the 1950s.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, I can confirm that between October 2017 and September 2018 there were 1.4 million women aged 60 and over employed in the UK. However, I am unable to say how this equates to national insurance contributions. This is because some women may earn under the primary threshold and therefore not pay national insurance contributions and, conversely, others may choose to pay voluntary national insurance contributions but are not working.

[Baroness Bryan of Partick (Lab)]

I thank the Minister for that Answer. When the previous Chancellor of the Exchequer accelerated the equalisation of the state pension age for women he congratulated himself by saying:

“I’ve found it one of the less controversial things we’ve done and probably saved more money than anything else we’ve done”.


I assume he had a rough idea of what he was going to get in. It was less controversial because at that point the women who would be affected had not actually been told and the WASPI campaign had not got off the ground. Does the Minister think it is fair that these women, many of whom sacrificed their pension rights to bring up families and who are often excluded from workplace pensions, should be making a disproportionate contribution to reducing the deficit while those who helped cause it got off scot free?

[Baroness Buscombe]

My Lords, since 1995, successive Governments, including the Government of the party opposite, have gone to significant lengths to communicate these changes using a range of formats, communication methods and styles, including communication campaigns, leaflets and information online. But it is also important to emphasise that there is no link between the balance of the National Insurance Fund and the decision to introduce changes to the state pension age. Changes to the state pension age have been introduced by successive Governments since 1995 to address a long-standing inequality in the state pension age.

[Lord McKenzie of Luton (Lab)]

My Lords, the Government have stated that they are committed to supporting people aged 50 and over to remain in or return to work, which is in part in mitigation of the changes to the state pension age. Can the Minister say what in practice is on offer under that heading and how many older persons’ champions are now in post in Jobcentre Plus districts?

[Baroness Buscombe]

My Lords, given that people are living longer, which of course we welcome, it is right that arrangements for the state pension system reflect changes in average life expectancy. We are doing much to focus on the need to ensure that we support people who are working longer. The Government are committed to improving the outlook for older workers, including women, affected by increases in the state pension age. The latest figures show that the employment rates for older workers have been increasing: there are 10.4 million workers aged 50-plus in the UK, which is an increase of 1.3 million over just the last five years, and 2.4 million over the last 10 years. But to enable people to work for longer, we have removed the default retirement age, meaning that people are no longer forced to retire at an arbitrary age, and have extended the right to request flexible working to all, which means that people can discuss a flexible working requirement to suit their needs.

[Baroness Burt of Solihull (LD)]

My Lords, I declare my interest as a woman born in the 1950s. We know that many WASPI women and other women have made complaints to the ombudsman, and that has now been referred to judicial review. It has been a long time, and we will still have to wait until next June to get a result. These women have waited for justice for a long time, they are suffering, and many are set to suffer even more with the rollout of universal credit. So will the Minister commit today to implement the findings of the judicial review without delay as soon as they are published?

[Baroness Buscombe]

My Lords, I think the noble Baroness will appreciate that I am not able to make any comment on the judicial review. However, it is important—I can say this as someone who also was born in the 1950s—that this has a lot to do with not only the fact that we have an increase in life expectancy but with the equalisation between the pension ages for men and women. The fact is that between April 2010 and April 2018, the basic state pension has risen by £660 more than if it had just been uprated by earnings since April 2010, which is a rise of £1,450 a year in cash terms, and that by 2030, over 3 million women will stand to gain an average of £550 per year through the recent state pension reforms. However, we have to think about having a sustainable welfare system that means that generations to come can enjoy a state pension.

[Baroness Altmann (Con)]

My Lords, I congratulate the Government on all the work they have done to achieve a higher employment rate for older workers, and in particular for older women. That is important in supporting our economy. I also congratulate them on all the work they are doing in jobcentres to try to help older people back to work. My concern for the women affected here is about those who are facing real hardship who did not know about the changes. What progress has there been in supporting, whether in jobcentres or elsewhere, these women who are facing hardship?

[Baroness Buscombe]

My Lords, anybody facing a particular hardship can seek help from, and will be given support and help by, their local jobcentre. There is no question but that women can always have access, if they require it, at any age, to other state benefits to support them. Indeed, a percentage of the contributions to the national insurance scheme goes towards helping to fund contributory jobseeker’s allowance and the NHS; about 20% of receipts are used to fund the NHS. Our national insurance scheme operates on a pay-as-you-go basis: today’s contributors pay for today’s benefit recipients, including those in receipt of the state pension. It is also important to emphasise that we have communicated over the years with women directly affected by the changes in the 1995 Act. Between April 2000 and the end of January 2019, more than 26 million personalised state pension statements were sent out to women, including to myself and others born in the 1950s.