Welfare Reform

Baroness Hollis of Heigham Excerpts

Monday 11th October 2010 Lords Chamber

[Lord Freud]

The core difference between the work programme and past programmes is that we are determined to put price differentiation into it because otherwise, as the noble Lord pointed out, the financial incentive for providers is to concentrate on the easiest people. To neutralise that effect, we need to give providers a higher reward for helping the more difficult people. That also has the effect of encouraging the consortia which are formed to be rather rich in terms of their capability. As the noble Lord pointed out, the third sector has some of the greatest expertise in the most difficult people to help. Once you pay for that, it encourages consortia to form which include them. That price differentiation mechanism is one of the most powerful aspects of the work programme for lifting people out of poverty into jobs.

[Baroness Hollis of Heigham]

My Lords, I very much support the Government’s approach in their 21st Century Welfare paper on making work pay and on the running particularly of benefits alongside low hour working in order to reduce the risk of returning to work. That approach is absolutely right and well done on that point. However, for most people of whom I have had experience the issue is not whether work paid, because people have an irrational attachment to being in work, it is whether you can reduce the risk of returning to work. If the job folds and as a result you have to go back on benefits, which may take three to four weeks to come through, and you are only two tins of baked beans away from not being able to feed your children, you may prefer the security of a low but steady income than the risk of work. I hope that the Government’s approach on that will identify that problem, but it is to be welcomed and very much supported.

I have two key questions, to which my noble friend referred, on child benefit. Perhaps the Minister can help us. One shocking consequence of the proposals is that at the moment, if you are on child benefit, through the passporting of HPP—home protection payment—being a carer of a child until your youngest child is 12 years old gives you credits into the state pension. Women who stay at home to bring up their children—all credit to them—whose husbands earn above £44,000 will lose their child benefit. At the moment, those same mums will simultaneously lose a huge chunk, potentially, of their state pension credits. That is completely and utterly unacceptable. If that is not amended, I am sure that this House may have a view which differs from that of the Minister as at present exposed. It would be good if he could help us on this. To penalise stay-at-home mums twice over with the loss of child benefit and the loss of credits into the state pension is completely unacceptable.

Secondly, I turn to the connection between JSA and HB with the threat that HB will be cut after 12 months on JSA. This assumes that what is stopping people on JSA after 12 months going into work is their unwillingness to work and that, therefore, they need to be sanctioned by an additional sanction of 10 per cent on their HB. On this point, I should declare my interest as chair of Broadland Housing Association. I had the stats done for me by the House of Lords for July. In July in Norfolk, 15,900 people—just under 16,000 people—were on JSA. The number of job vacancies in Norfolk was 3,500. The people who get those vacancies will be those who have been most recently made unemployed because they are the most attractive to the employer. Those of us involved in social housing will have on our books young people, who are sometimes difficult to place in jobs, who will have been on JSA for far more than 12 months by virtue of the job shortages that currently exist. Yet they will face a sanction of 10 per cent on their rent.

As a chair of a housing association, I can either accept that rent arrears will mount or I can evict them. They will become homeless and then they may squat. But if I keep them and their rent arrears go up, I do not have the money to put in the solar panels et cetera to reduce the fuel poverty of elderly people. What choice would the Minister have me make? Should I evict those young people who through no fault of their own cannot get a job where there are 16,000 people unemployed and 3,500 vacancies or deprive elderly people of the opportunity to reduce their fuel poverty? No Government should force socially responsible landlords into having to choose between those two categories. I hope that the Minister today will assure us that that will not be the choice we will have to make.

[Lord Freud]

I thank the noble Baroness, Lady Hollis. Again, I take comfort from her general support for the universal credit. The point I would like to emphasise is that because we have two systems, an out-of-work benefit system and an in-work tax credit system, the risk of moving from one to the other is enormous. One has only to experience doing a job which does not work out, having to fall back into out-of-work benefits with perhaps a delay of three months as the bureaucracy is sorted out and thus not being able to afford the baked beans mentioned by the noble Baroness, to realise that that kind of risk is highly unattractive. We have created a very conservative group of people who should be prepared to take that risk, by which I mean conservative with a small “c”. On child benefit, we have not made a full announcement of what is going to be in the spending review on 20 October, at which point the detail will be revealed, so I am not in a position to answer.

On the second point made by the noble Baroness, noble Lords will be aware that what we are looking at in the numbers is flows. Any work programme tries to balance the disadvantage experienced by people who have been out of the job market for a period and what it takes to get them back into work against those who have only just lost their jobs. Effectively, that is what all programmes try to do. Clearly, we need to ramp up the speed with which we can get people back into work, and this is one measure that is designed to encourage and put pressure on them.