Welfare Reform Bill

Debate between Baroness Flather and Lord Freud

Monday 23rd January 2012 Lords Chamber

[Lord Freud]

My Lords, the effects of Amendments 59A and 61A would be to reduce the level of universal credit awarded in respect of children in larger families who would be subject to the benefit cap. Under this amendment, families who would not be subject to the cap would be able to receive the full amount of the child element of universal credit for their third child and any subsequent children. We recognise that families with more children do require more support and we believe that it is right that this is recognised in universal credit. However, as I have said, we also believe that there should be a limit to the overall amount of financial support that households on out-of-work benefits can expect to receive in welfare payments. That is why we intend introducing the benefit cap. We believe that this is the most appropriate way to address this issue as in future people will have to understand that there is a limit to the amount of benefit the state can afford to pay them.

I move now to Amendments 61ZB, 61ZC and 61ZD. These would require us to replace the national cap based on median earned income earnings with regional caps based on the local average weekly costs of private rented accommodation, the local average weekly cost of childcare and the local average weekly earnings. Given that we will not take childcare payments into account, this part of the amendment is obviously unnecessary. More generally, while the Chancellor may be asking the independent pay review bodies to consider how public sector pay can be made more responsive to local labour markets, we do not have a regionalised benefits system and it would not make sense to regionalise the cap without that. In addition, the approach suggested by the noble Baroness would be extremely expensive to administer, add considerable complexity to the benefits system and would be a recipe for confusion for claimants and staff.

On my noble friend Lady Tyler’s point that the cap disadvantages people living in London, given that many working age households with adults in work cannot afford to live in central London—or, indeed, central-ish London—it is not right for the taxpayer to subsidise households on out-of-work benefits who do so. In answer to the point raised by both my noble friend Lady Tyler and the noble Baroness, Lady Howe, on whether I would see London Councils, I would be happy to see London Councils if it asks to see me—if it wants to see me—although it would probably be best to meet in the context of discussing the regulations that will implement this measure.

Both these sets of amendments are about how we set the maximum amount available to people. We believe our approach is fair and simple. When we introduce the cap, we intend to use a method that, by looking at median earned income after tax and national insurance for all working families, will strike the right balance between providing support for families—promoting fairness between those out of work on benefits and those in work—and ensuring clear financial incentives to work.

Before I ask the noble Baroness to withdraw her amendment, I would like to make it clear that the Government see Amendment 61A as directly consequential on Amendment 59A and Amendments 61ZC and 61ZD as directly consequential on Amendment 61ZB. So, if we divide on Amendment 59A, a further Division would be required should the noble Baroness wish to press Amendments 61ZB, 61ZC or 61ZD to a vote. I ask the noble Baroness to withdraw her amendment.

[Baroness Flather]

My Lords, I will just say a few words about what has been said about my amendment. I was very surprised to hear the noble Lord, Lord McKenzie of Luton, say that the Pakistanis, Bangladeshis and Indians all have the same aspirations. I am sorry to say that I do not agree with that. I am afraid the aspirations of Indians are very high, but the aspirations of Bangladeshis and Pakistanis do not come up to the same level, as they do not have as much interest in education as in Indian communities. The Indian communities are mostly in work—more in work than any other community except for the Poles. A survey by Channel 4 said that the highest number of taxpayers of the immigrant communities were the Indians and the Poles. I would like there to be a little more consideration of the fact that Pakistani and Bangladeshi communities in Tower Hamlets, in Yorkshire and in Lancashire are not doing well. Whatever way could be found to help them to do well would be a good thing.