Welfare Reform Bill
Debate between Baroness Drake and Lord Skelmersdale(12 years, 10 months ago)
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Baroness Drake
My Lords, I support Amendment 60, to which my name is attached. It would support hard-working people and their families with a clear work ethic to manage the challenges of today’s flexible labour market and the consequences of losing their job through no fault of their own by allowing a transition period of 26 weeks before the benefit cap is applied. In integrating in and out-of-work benefits, universal credit has to be applied to two different constituencies: those who are out of work for long or sustained periods and those who are regularly in work. A single system has to provide an experience fit for both. I accept that a modern welfare system has to incentivise people to work and to address benefit dependency, but it also has to support hard-working people with a clear work ethic and their families in managing difficult economic circumstances. A benefit cap immediately applied can have a very negative effect on hard-working people and their children when the wage earner loses their job or work involuntarily, even more so where the loss of work happens quickly.
The Government have made clear that a driving principle of the Bill is that work should always pay more than out-of-work benefits and that a benefit cap is, first, a clear message that there is a maximum level of financial support that claimants can expect and, secondly, necessary to provide incentives to work and to reduce benefit dependency. When my noble friend Lord McKenzie questioned the Minister in Committee about whether, if it were established that the cost of the cap outweighed the benefit savings, he would still support the cap, the Minister replied:
“Clearly the message that we are trying to get over is a behavioural one much more than a cost-based one”.—[Official Report, 23/11/11; col. GC 421.]
What is the change in behaviour that the immediate application of the cap is designed to achieve in hard-working people who have lost their job and are desperately seeking another one? Where someone has a clear work ethic and a clear pattern of working and is desperately seeking another job, a grace period of 26 weeks will give them a fighting chance of re-entering the labour force before the weight of penalties comes into play and the cap bites. When faced with job loss, normal working people do not clap their hands and say, “Oh goody goody, I'm off to a life on benefits”. They are more likely to be stressed, anxious and worried about their home, paying bills, their children and their future while they rush around trying to find another job, probably fighting feelings of depression while they do so.
It is higher housing costs that are most likely to push families over the cap. As the noble Lord, Lord Best, said, without a period of grace, many families in private rented accommodation, particularly those with children and living in the south, will see the benefits for their housing costs cut, potentially forcing them to look for alternative housing elsewhere.
The Government’s impact assessment of the cap said that those affected will need to choose between taking up work, reducing non-rent expenditure or cheaper accommodation, but where someone who loses their job is clearly choosing to take work, they need time to do that. Finding a new job rarely takes days. It is most likely to take quite some weeks and even longer in difficult economic circumstances. The welfare system should provide this safety net, otherwise at the very time when a person needs to put all their efforts into finding another job, their efforts may be redirected to relocating to cheaper accommodation and relocating their children to different schools. In moving, they may lose, as has been said, their contacts, their local knowledge and their networks—all the routes that would most frequently take them back into work. The ultimate irony is that lone parents could face having to relinquish their childcare arrangements—their nursery place or their childminder—just as they need to keep them in place so that they are available to make an early transition back to work.
Currently, approximately 50 per cent of people on JSA get back to work within six months, 75 per cent in nine months and 90 per cent within a year. They clearly want to work. I accept that these figures might have been overtaken because of the rise of unemployment that we are now experiencing whereby 10 people are chasing every job in London, but the underlying argument holds good. They are chasing them because they want to get back into work.
The immediate application of the benefit cap would penalise those who have just lost their jobs—decisions about their rental costs or family size were made while they were employed—before they had even been given time to find another job. Rather than penalise people who are trying to make a rapid return to employment, universal credit should be supporting them. A grace period of 26 weeks does not contradict the simple message, as expressed by the noble Lord, Lord Freud, who said that,
“in the end, there is a limit to how much the state is prepared to support someone”.—[Official Report, 23/11/11; col. GC 422.]
Rather, a transition period would ensure that hard-working people faced with an involuntary loss of work are assisted in making an early move back into the labour force and getting their family’s lives back on track before the cap bites. That seems to be a fair, reasonable and decent thing to do.
The Government want to see an increase in private sector employment relative to the public sector to increase flexibility in the labour market through a reduction in employment rights and regulation, but they appear reluctant to transition the benefit cap to help hard-working people manage today’s labour markets and economic realities—realities that will become harsher as global competition intensifies. As currently drafted, the benefit cap would undermine the expectation that if you work hard, pay into the system and play by the rules, there will be a safety net available to you if you hit hard times so that you have a chance to recover.
This Bill also sets the welfare rules for people who have no record of benefit dependency and are paying their national insurance contributions. When I made that point in Committee, the Minister commented:
“I shall bear that point very much in mind as we go through the next stages”.—[Official Report, 23/11/11; col. GC 427.]
We are at the “next stages” and I encourage him to put flesh on that consideration. This amendment does not pose a principled challenge to the cap; it poses a 26-week transition for people who are rushing around urgently trying to find another job before the cap is imposed. I accept that the Minister has made a major contribution to welfare reform but I ask him to accept the case for a safety net. As I have said, that seems to me to be a fair, reasonable and decent thing to do.
Lord Skelmersdale
My Lords, would the noble Baroness, Lady Drake, accept that she is talking about those who have been earning more than cap and fallen on hard times rather than those with whom much of the legislation is involved: that is, those who in employment have been earning under the cap?
Baroness Drake
The Bill sets the welfare rules for people who do not have a record of benefit dependency. In the national insurance contribution system, one is trying to design something that gives people a cushion. Sometimes it will be because they will be earning higher than the cap; on other occasions it is because of the nature of their accommodation. Either way, instead of having a cushion so that they can concentrate on getting back into work as quickly as possible, which it is clear most of them want to do, there is a danger that the immediate way in which the cap will operate means that they will have to take defensive measures to bring down their level of expenditure rather than putting all their efforts into finding a job.
Postal Services Bill
Debate between Baroness Drake and Lord Skelmersdale
Baroness Drake
My Lords, the Minister in the other place, the honourable Ed Davey, has tried on several occasions to reassure stakeholders by arguing that both Royal Mail and the Post Office want an extended inter-business agreement. In Committee, he said:
“I refer the Committee to what the chief executive of Royal Mail, Moya Greene, and Donald Brydon, the chairman, said. Moya Greene said it was unthinkable that there would not be a long-term relationship between Royal Mail and Post Office Ltd. Donald Brydon said that he wanted to have the longest possible legally permissible agreement”.—[Official Report, Commons, Postal Services Bill Committee; 11/11/10; cols. 121-22.]
Those are wonderful and fine sentiments. The only trouble is that the current board cannot bind a wholly privatised Royal Mail board. Noble friends have said that Moya Greene is a very impressive figure and a great asset to Royal Mail. Having met her, I wholly agree. However, she cannot speak for the board of a new owner whose identity we do not yet know. It is wonderfully reassuring that the existing CEO and the chairman have such positive sentiments, but they are not necessarily translatable into what will effectively be an agreement between the Post Office and any new owner.
If one looks at the Bill and the statements that the Government have made, one sees that, as things currently stand, a privatised Royal Mail has little obligation, nor is it required as part of any terms of sale, in principle or in detail, to be bound to any obligation towards the Post Office beyond the current inter-business agreement.
Many people are anxious to extend the agreement significantly beyond the current five years because there is no firm confirmation that it will be so extended. At the point of sale—because one has no idea how long it will take to negotiate and confirm the details of a purchase—there may be only two to three years left on the existing agreement. The situation could be even more insecure, therefore, because at the point of confirming the sale the Post Office may discover that its fortunes are not well favoured and have only a limited time to deal with that.
As far as I can see—I am sure that the Minister will correct me if I am wrong—the Government have to date refused any amendment that would guarantee a continued relationship between the two businesses. They have suggested that there are legal difficulties in legislating on an inter-business agreement, but they have neither detailed why such legislation would be illegal nor defined what is the longest legally permissible period for any inter-business agreement. More to the point of the noble Baroness, Lady Kramer, who said that we should not get into the detail but take command of principles, nor have the Government said anything about whether a renewed agreement or a sustained relationship with Post Office Counters beyond the five years of the current agreement would be a condition of sale, or whether there would be an expectation that any bidders would make submissions as to the relationship with the Post Office.
In reality, there are very few safeguards for keeping the Post Office contract for the long term. As things stand, it is entirely conceivable that, just a few years down the line, there will be a post office network where you cannot undertake mail transactions. That is simply a proposition of possibility under the terms of the Bill. A privatised Royal Mail will be free to cherry-pick, as my noble friend Lord Clarke said. It could select a supermarket chain to meet its requirement in urban areas, with the Post Office picking up, if it was able to, the slack in rural areas where no one else wanted to compete to deliver the service. That would have serious implications for the viability and integrity of the network.
I refer to the very appropriate comments of the noble Lord, Lord Dobbs, in his maiden speech at Second Reading, who captured the point far better than I could. He said:
“In many rural areas, far from the post office subsidising the shopkeeper, it is the shopkeeper who is now subsidising the post office”.—[Official Report, 16/2/11; col. 732.]
This is not careless speculation on my part, because I think that it is highly possible that a private owner would take such an approach. No access criteria are laid down to which a privatised Royal Mail would need to adhere specifically in relation to post offices. This is important for the small business community, which makes an important economic contribution in sustaining employment in key areas. Fifty-nine per cent of small businesses use post offices at least once a week and 77 per cent use them to send their parcels. Perhaps I may therefore put two questions to the Minister. First, what exactly are the legal constraints on extending the five-year inter-business agreement? I may be able to speculate on the legal restraints on an unlimited extension, but I am not at all sure what they are on extending it. Secondly, why are the Government not confirming that maintaining a business agreement with the Post Office for at least a further five years beyond the existing agreement is a defined provision within the terms-of-sale agreement or invitation to tender that potential bidders would have to address? It strikes me that if everyone is saying that they are so committed to Post Office Counters, one would welcome such a commitment to that being in any documentation prepared, or terms set, for potential bidders.
My noble friend Lord Whitty expressed concern about who owns the assets and how they will be allocated. If the Post Office has to compete in a world where the Royal Mail is privately owned, its ability to do so will be heavily influenced by the assets on its balance sheet at the point of separation of the businesses within the post offices.
I noted that in the Second Reading debate in the other place, the honourable Mr Ed Davey, the Parliamentary Under-Secretary of State in the Department for Business, Innovation and Skills, argued that,
“a privately owned Royal Mail will not act against its own commercial interests. It will not give up valued retail space in the heart of communities the length and breadth of Britain”.—[Official Report, Commons, 27/10/10; cols. 426-27.]
He is no doubt correct that a privatised Royal Mail will not act against its own commercial interests and that it will not give up valuable retail space, but he could be incorrect in supposing that its commercial interests will necessarily lie with the Post Office. When the honourable gentleman says,
“It will not give up valued retail space”,
one has to ask whether he has taken a view as to whose retail space it is to give up. If the Crown Office estate is to be with the Post Office, it is not the Royal Mail’s to give up but Post Office Counters Limited’s to sell. My noble friend Lord Whitty is quite right to be concerned that there should be visibility as to who owns which assets at the point of sale.
Lord Skelmersdale
My Lords, I tend to agree with my noble friend Lady Kramer on this. Although what comes out of the discussion on this amendment will be valuable to our future discussions, as it is it rather puts the cart before the horse. As far as the noble Baroness, Lady Drake, is concerned, I will ask my noble friend one question, if she will deign to answer it. Quite clearly, from what she said in our last exchanges, she has as high an opinion of me as I do of her. The Government have a policy of supporting post offices and it is quite clear that this is what they intend. The inter-business agreement—currently lasting five years, as the noble Baroness, Lady Drake, has just said—is one of the ways in which post offices are supported. Should her worst fears be realised and there is no future inter-business agreement at the end of the five years, does my noble friend think that the policy of supporting the post offices will continue to be self-sustaining?