Welfare Reform and Work Bill

Baroness Lister of Burtersett Excerpts

Monday 7th December 2015 Lords Chamber

[Baroness Manzoor]

My Lords, we on these Benches support these amendments, too—Amendment 3 in particular. The House needs some assurances from the Government that the disability premium for each disabled child in both tax credits and universal credits will be protected, regardless of the number of children in the family. However, the child element in tax credits and universal credit will be paid only in respect of two children in a family, even when the third child is disabled. That is the point. We need to look at those exemptions, so if the Government have already said that there is some protection, surely that same protection should be afforded to the third child who is disabled.

[Baroness Lister of Burtersett (Lab)]

My Lords, I want to make a brief point in support of the powerful case that has already been made. I believe that the latest HBAI statistics showed an increase in poverty among disabled children. Can the Minister tell us his assessment of the impact of these clauses on the number of disabled children living in poverty?

[Baroness Tyler of Enfield (LD)]

My Lords, very briefly, I lend my support to these very important amendments. We have heard some extremely powerful arguments. I want to draw attention to one point in Amendment 3, which refers to child tax credits and says that the limit should not apply,

“where one or more of the children or qualifying young persons are disabled”.

I remember vividly a meeting that I attended during the course of what became the Children and Families Act, organised by the noble Baroness, Lady Pitkeathley. The very point which she was talking about was the impact on parent carers trying to bring up disabled children. One of the mothers was bringing up three disabled children. I remember that vividly because I think it brought tears to most of our eyes, including those of the Minister. Can the Minister say what the Government’s thinking is about households which have more than one child who has a disability?

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[Lord Freud]

I think I have to fall back on the position that we have produced an analysis that is published and is available to noble Lords. I just make the point that often these statistics refer to households with both a man and a woman in them and it depends on who the recipient is. It is a household payment, not a payment to women specifically. One has to be rather careful of that when one looks at those statistics in the way that the noble Baroness has.

[Baroness Lister of Burtersett]

The noble Lord is correct but women still tend to bear the main responsibility for the care of children, so the impact on a household is borne particularly by the mother.

[Lord Freud]

We are getting way off but our evidence is that the vast bulk of households share financial resources, so although someone in a household may receive a particular amount of money it does not necessarily mean that they do not share the burdens evenly. One can make a lot of false assumptions out of some of these data if one is not careful. I urge noble Lords not to press these amendments.

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The policy also undermines the fundamental point of our welfare state, which is to protect the vulnerable and insure citizens against the hazards of life such as illness, disability, unemployment and bereavement. Given all that, the onus is very much on the Government to provide the evidence that this policy is necessary and proportionate. I look forward to hearing the Minister do just that.

[Baroness Lister of Burtersett]

My Lords, I was so disappointed with the Minister’s responses to the olive branch that the noble Lord, Lord Kirkwood of Kirkhope, held out and the inflexibility in response to all the suggestions of how these clauses could be mitigated. In support of the contention that these clauses should not stand part of the Bill, I want to address two main issues: one is the mentality underlying the clauses, and the other is the equality and human rights implications.

My noble friend Lady Hollis referred back to the 19th century in her earlier speech. I will go back just one century. The mentality of the Bill was summed up rather well in a letter to the Scotsman in 1931 which was quoted in The People by Selina Todd, which I just happened to read on holiday—it is a very good book. The letter complained that:

“Many of the workless marry and breed families while in receipt of the dole”,

adding to the taxpayers’ “heavy burden”. Nearly a century on, perhaps we are a bit more subtle, but that sums up the mentality. We have this constant false division, referred to by my noble friend Lady Sherlock, between taxpayers who fund the tax credits system and those who benefit from it and references to how families supporting themselves solely through work do not see their incomes increase when they have another child. Who are these families? Apart from the very wealthiest, those families will be in receipt of child benefit, so they are not supporting themselves solely through work. If they have another child, they will get extra child benefit, and rightly so.

The main difference between now and the situation referred to in the letter to the Scotsman is that the Government do not want those in work and on low incomes to breed too many children either, given that, as we have heard, the majority affected will indeed be in paid work. Incidentally, could the Minister tell us what the rationale is for the abolition of the family element and its universal credit equivalent, which I think perhaps we have rather overlooked in focusing—rightly—on the two-child limit? Is that to discourage people in poverty from breeding altogether?

I turn to the human rights and equality implications. The Equality and Human Rights Commission has raised concerned under a number of articles of the UN Convention on the Rights of the Child, the International Covenant on Economic, Social and Cultural Rights and the Convention on the Rights of Persons with Disabilities. The impact assessment and the Government’s human rights memorandum do not adequately address these issues at all, although I commend the department for providing the latter.

Relating back to the point made by my noble friend Lady Hollis about the gender impact, the legal officer of the Child Poverty Action Group—I declare an interest as honorary president—refers to Article 14 of the ECHR and the disproportionate impact on women as mothers. Indeed, the impact assessment notes that women are more likely to be affected than men. Article 16.1(e) of CEDAW guarantees that women have the right,

“to decide freely and responsibly on the number and spacing of their children and to have access to the information, education and means to enable them to exercise”,

that right. The International Conference on Human Rights proclaimed:

“Parents have a basic … right to determine freely and responsibly the number and the spacing of their children”.

With regard to families and children, as the Government acknowledge in their human rights memorandum, it may be argued that the clauses discriminate against large families and that large families have status for the purposes of Article 14. They discriminate against religious groups with a conscientious objection to contraception and abortion, which is contrary to Article 14, read with Article 9, of the ECHR. We have heard a lot from different faith groups about their very real concerns about the impact of these clauses.

It is difficult to see how these clauses are in the best interests of children affected, in line with Article 3 of the UNCRC. The Government’s justification in their human rights memorandum is that the articles are,

“justified, proportionate and not manifestly without reasonable foundation”.

That is based partly on all the usual guff about fairness and the encouragement,

“to make the same financial decisions as families supporting themselves solely through work”.

However, we have already heard that the majority of the families affected will be in paid work anyway. The overwhelming response, from a wide range of organisations, suggests that the clauses are not justified, are not proportionate and are without reasonable foundation.

Article 3 of the UNCRC is addressed with what I would call unconvincing arguments in the human rights memorandum, which says:

“The best interests of children … is to have parents in work”—

as we have already heard, the majority of these parents will be in work—

“and work remains the surest way out of poverty”.

These clauses will mean that it is a less sure way out of poverty than it is at present, and that is saying something.

The memorandum says that the savings,

“will allow the Government to protect expenditure on education, childcare and health and the improvements to the overall economic situation will have a positive impact on children and their best interests”.

I draw attention to the arguments of the noble and learned Baroness, Lady Hale, in the recent judgment on the benefit cap. She said that,

“article 3(1) … requires that first consideration be given to the best interests, not only of children in general, but also of the particular child or children directly affected by the decision in question”.

I suspect that the noble and learned Baroness, Lady Hale, would give the arguments in the human rights memorandum pretty short shrift. She will probably have the opportunity to do so quickly, if this Bill becomes law. I look forward to hearing her judgment on it.

The EHRC is also concerned about the disproportionately negative impact on particular black and minority ethnic groups, which are more likely to have large families. It says that this could be at risk of breaching Articles 2 and 5 of the International Convention on the Elimination of All Forms of Racial Discrimination. The statistics bear this out—of course, those statistics are not provided in the impact assessment, as it would be asking too much to have statistics in the impact assessment. For example, an analysis of the HBAI statistics, pooled for 2010-13 by Professor Lucinda Platt for the Women’s Budget Group, shows that just under two-thirds of children in Pakistani and Bangladeshi families with three or more children are already in poverty. Two-thirds is a staggering figure, and I dread to think what that figure is going to be like if these clauses go ahead.

[Lord Kirkwood of Kirkhope]

My Lords, I will make just two points. First, although it makes me sound old-fashioned, I am in favour of using the social security uprating rules, established over years, for looking at the total spend of the department and what proportion of the national wealth goes to social protection. I am always frustrated and angry when Chancellors of the Exchequer stand at the Dispatch Box. The Treasury knows the square root of nothing at all about social protection. In the run-up to the Budget, we have purdah, so nobody knows what is going to issue forth from the Chancellor’s Budget briefcase. We get things landed upon us that we all have to live with as a consequence.

I want to try to persuade Governments in the future to stick to the established rules, because there are very clear ways of changing rates and benefits. In the annual uprating, Parliament has a chance to look at trends and how things are changing, make decisions and support the Government or make suggestions otherwise. That is a sensible, well-established way of doing business.

My objection to clause stand part, absent any further exemptions, is that we now have a two-child rule. It is a precedent that I believe is very dangerous, because Chancellors of the Exchequer in future could start importing it to other parts of the social security system without let or hindrance. We might start asking ourselves: what are the intrinsic differences between the child element of tax credits and child benefit itself? They are semantic and subtle; we could be entirely wrong. My point is that a clause such as Clause 11, interfering with child tax credits, and the way in which it has been done, leaves the House with some really serious thinking to do about whether this is supportable.

My view is an olive branch, and I will probably be off the Christmas card list of the noble Baroness, Lady Lister, as a result of taking this weak-kneed position. But if the Government do not come up with serious responses to the powerful speeches that have been made this evening, it will condition how I will approach any future support for Clauses 11 and 12. Of course, it is technically true that clause stand part is not necessarily available to us on Report or at Third Reading, but there will be ways of trying to address this in other ways. I was put right on that by a stern note from the noble Baroness, Lady Hollis, a moment ago. She is of course right, as she always is.

I am quite clear about this: it is dodgy procedure and a dangerous precedent. The Minister might be able to sell it to people like me if there is serious consideration of the powerful speeches that have been made. I understand the constitutional context; we are not in easy territory. I am not looking for trouble or to pull the Government down, defeat manifestos or any nonsense of that kind, but I have a conscience to deploy in deciding how to vote on some of these really important things and I will follow my conscience. I am not frightened of constitutional rows, if that is what it comes to. However, we do not need to get into that territory if the Minister carefully reflects, as he has done in the past, on what he has heard this evening and comes back with further and better particulars in terms of exemptions.

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[Lord Freud]

We are going way off the core issues by looking at the times people retire. A lot of things are changing, and it is almost impossible to fine-tune for that.

I will address the challenge set by the noble Baroness, Lady Sherlock, on what our rationale for this is. It is very simple: the Government want to ensure that the system is fair to those who pay for it as well as those who benefit from it. That is the government position. I should add that the Bill should not be taken in isolation. We are introducing a number of measures to support households in work by reducing income tax through increasing personal allowances, increasing wages and increasing free childcare.

The right reverend Prelate the Bishop of Portsmouth and the noble Baroness, Lady Sherlock, raised the issue of those areas where there is a cultural disposition for larger families. To that, we make the point that all families need to think carefully and ensure that they can afford to provide for a new child in their household.

I make it clear that these changes will not mean a reduction in entitlement for those families already receiving child tax credit for children born before the 6 April 2017. In universal credit, for families already receiving the child element of universal credit, the changes will apply only to children joining the household on or after that date. I think that we have another amendment on which we can go into that in more detail.

Families moving to universal credit from child tax credit and receiving child tax credit for more than two children, and families claiming universal credit within six months of a previous universal credit or child tax credit claim that included the child element, will continue to be able to receive the child element for those children.

On the point raised by the noble Baroness, Lady Lister, on the EHRC, as she knows, the Government set out their assessment of the impacts of the policies in the Bill on 20 July, and the memorandum to the Joint Committee on Human Rights was published on 8 September. Ministers have considered impacts with regard to all the relevant legal obligations when formulating the welfare policies announced in the Bill. The intended impact of these reforms is to incentivise work and ensure that work always pays.

[Baroness Lister of Burtersett]

Subsequent to that, the Equality and Human Rights Commission has produced its own assessment, which says very clearly that it believes that the human rights statement from the Government was inadequate. I welcome the fact that the DWP produced such a statement but given its inadequacy, will the Minister now respond to what the EHRC is saying?

[Lord Freud]

I believe there has been correspondence with it, which I think is public.

[Baroness Lister of Burtersett]

That is not an answer.

Welfare Reform and Work Bill

Baroness Lister of Burtersett Excerpts

Monday 7th December 2015 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, I rise—albeit a little slowly—to move Amendment 11 in my name and that of my noble friend Lord McKenzie of Luton. This is a very simple amendment which would ensure that the two-child limit applies only to children born after 6 April 2017. The impact assessment for this measure states:

“Entitlement will remain at the level for two children for households who make the choice to have more children in the knowledge of the policy”.

That simply is not true. If someone has more than two children and needs to make a claim for universal credit after 6 April 2017, and if they are not getting tax credits or UC and they have not in the past six months, this measure will apply to them. Entitlement will remain at the level of two children for those households, even though they quite clearly have not made the choice to have more children in the knowledge of the policy.

I suppose that it is just about possible that there will be those who manage to conceive and deliver a child between the passing of the Bill and April 2017, though they would have to get a move on, but most of the children affected by this will be living, breathing, existing children, conceived and born when this policy was just a glint in the eye of a cost-cutting Chancellor.

I know that various attempts have been made to get the Government to explain their rationale for this. I understand that it was indicated to Peers during a briefing session that the reason was that, if someone had not needed to claim benefit or tax credits during the past six months, they clearly have enough money to protect themselves against unforeseen events, so should not have access to the full support of the welfare state. I may be mistaken, but if I am the Minister can correct me. If that is right, however, surely that is precisely what the welfare state is for—to protect all of us against unforeseen circumstances.

Let us suppose that a couple have two primary-school children, and then they have two year-old twins. One day the husband dies or disappears or is paralysed in an accident and cannot work, and they turn to the welfare state. Those twins will be invisible for the purposes of universal credit, so you can see that the dream scheme that Ministers have boasted would swing seamlessly into action as soon as someone’s circumstances changed will not help that family feed, clothe and house the twins.

The family will potentially lose £5,560 a year every year until the twins are adults. We are talking about the best part of £90,000. How should the family have provided for that when they did not know they had to? What should they have done? Saved that much when they are raising toddlers? Maybe they should have bought a PPI policy, the cause of the biggest mis-selling scandal in modern financial history—and I should know, since I am the senior independent director of the Financial Ombudsman Service. But even if that were a good idea, why would they do it? They thought the welfare state was there to help them at such times. That was what they had been led to believe when they had those children.

As I indicated in the previous debate, I think that this whole measure is a terrible idea. But perhaps I can pass on some advice to the Minister from the greatest Cabinet Secretary of modern times, the legendary Sir Humphrey Appleby. Sir Humphrey once said to his Minister: “If you’re going to do this damn silly thing, don’t do it in this damn silly way”. If the Minister is going to reduce support for larger families on the grounds that families on universal credit will have to make the same choices as those who are not, he should at least not apply it to people who have already made their choices because their children are already here. I beg to move.

[Baroness Lister of Burtersett (Lab)]

My Lords, I support my noble friend, who made a very powerful case. The joint briefing from the churches and faith groups that was circulated to all Peers made a very good point. It said:

“A policy designed to incentivise families to make responsible choices, becomes an unavoidable financial penalty for anyone confronted by relatively common life events”.

This amendment in particular puts that quotation into relief. The Office of the Children’s Commissioner has raised similar concerns.

I made the point at Second Reading that this provision sits oddly with the Government’s own emphasis in this and earlier legislation on the importance of a dynamic perspective on family behaviour. Indeed, in a letter of 13 October to the EHRC about impact assessments for the current Bill, the Secretary of State made as his main point the need,

“to take fully into account the dynamic nature of people’s lives”.

So why are the Government refusing to do so now, especially, as my noble friend said, in relation to existing third or subsequent children where there is a new universal credit claim? What is the justification?

As my noble friend said, when this was explained to us I think the way it was put was that there would be an unfair advantage to richer families if they were able to claim universal credit for third and subsequent children. Perhaps these families were not claiming tax credits or universal credit before, but they could still be on a low income and simply not have claimed. We know that take-up is far from perfect. I know that the Government expect take-up to be higher for universal credit, but that remains to be seen. I have been around this game for quite a long time with the expectation that take-up would be improved by various benefits and so forth. However, it remains stubbornly at less than 100% for means-tested benefits. Even if they were better off—my noble friend made a powerful point here—financial circumstances can change very quickly in the event of life events or shocks. So where is the fairness in refusing support to, say, an early teenage child who is the third in the family and who was born many years ago?

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

I thank the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie, for bringing forward this amendment and I thank the noble Baronesses for making their points so succinctly, but effectively.

This amendment would change our approach to applying the two-child limit in universal credit so that it would apply only to children born on or after 6 April 2017. That effect would apply in existing and completely new claims for universal credit. This reform, which sees support for children in universal credit limited to two children, is primarily about fairness to the taxpayer. The tax credits system has grown unsustainably, and spending on tax credits for the 870,000 households which have three or more children is around £9.4 billion. To accept this amendment would, we estimate, increase projected universal credit expenditure by around £250 million in 2019-20. I am pleased that at least on this amendment I am able to provide the Committee with some costings.

The Government were elected on a manifesto commitment to reduce welfare expenditure by a further £12 billion during the lifetime of this Parliament, as part of the plan to eliminate the deficit and eliminate burdening the next generation with additional debt. There is no strong justification for the taxpayer to provide more generous financial support for completely new claims in respect of children born before 2017 than in respect of those born after that date.

Families already claiming universal credit or child tax credit, whether in or out of work, will not be affected in relation to children or qualifying young persons in their households before the key date while they remain entitled to benefit. Similarly, any household that has claimed universal credit or child tax credit in the past six months will be protected if their previous award included a child element for more than two children or qualifying young persons and they continue to have responsibility for them. I urge the noble Baroness to withdraw this amendment.

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[The Lord Bishop of Portsmouth]

My Lords, I tabled Amendment 21 to highlight the impact of this measure on different faith communities who share our concerns with this part of the Bill in particular. Noble Lords who attended the special briefing we organised two weeks ago will have heard Chaya Spitz, chief executive of the Interlink Foundation, speak passionately about the implications for the Orthodox Jewish community that she represents and is a member of. For her community, larger families are the norm and the central pivot around which everything else revolves. There is a positive, faith-based imperative to have children, to create the next generation in service of God. There is also a commonly held conscientious objection to the use of artificial contraception, except in prescribed circumstances, and to abortion, except in rare circumstances. By limiting financial support to the first two children, this policy is making a judgment that touches on deeply personal and strongly held religious and cultural beliefs about the family, and that threatens the viability of whole faith communities.

According to the 2011 census, 52% of Jewish children lived in families with three or more children, compared with a national average of 31%. In Muslim families, the proportion is even higher—60% live in larger families. This measure will have a hugely disproportionate impact on these particular faith communities. Although it is difficult to see how this could be framed as an exemption, the effects will be profound, and I do not believe they have received the consideration they deserve.

A recent report by the Child Poverty Action Group highlighted serious human rights concerns relating to this and other parts of the Bill and argued that the regulations would need to include “extensive exceptions” protecting women,

“family integrity and religious freedom”.

One of the issues it raises is the potential discrimination against members of religious groups who have a conscientious objection to the use of contraception or abortion contrary to Article 14, read with Article 9, of the European Convention on Human Rights. There are other hard cases as well, including situations where women in abusive relationships are pressured into having more children or where a woman uses contraception in good faith but it fails. In all these cases, the assumption that women have a free choice about whether or not to have a child is called into question.

For these reasons, I have tabled this amendment calling on the Government to consult and report on the economic and social impacts, focusing in particular on the implications for family life and for different faith communities. The Government’s own impact assessment is inadequate in this respect, offering only a superficial assessment of the likely effects. To argue, without supporting evidence, that substantially reducing the level of support for larger families will somehow increase their financial resilience and support improved life chances for their children seems wishful thinking at best and requires further investigation. As part of a more rigorous assessment, will the Minister agree to seeing the Government apply their own family test to this policy, using the guidance published by the DWP in October last year?

In an earlier intervention in Committee, the noble Lord, Lord Lawson of Blaby, spoke about perceptions of fairness in legislation, citing the example of family allowances. Would the Minister agree that the perceived fairness of these policies will be judged not only by their overall popularity but by the respect they give to deeply held convictions of faith communities that enrich our common life? I seek not an exemption but a clear analysis of the impact.

[Baroness Lister of Burtersett]

My Lords, in speaking in support of this amendment, I will pick up what the right reverend Prelate said about the inadequacy of the impact assessment. This point was also made by the Equality and Human Rights Commission from the perspective of equality and human rights. It argued that it does not “enable proper scrutiny” or meet the requirements of the public sector equality duty; nor is there an assessment of the “aggregate effect” of the changes on people.

In fact, the impact assessment is inadequate from any perspective. In particular, there is no assessment of the impact on child poverty, despite the Joint Committee on Human Rights recommending that the Government should assess the impact on child poverty of any new law, as child poverty is a human rights issue—I declare an interest as I was a member of the committee at that point. I asked a Written Question about the impact, only to be told to look at the impact assessment—the implication being that I had not read it, which I found rather insulting.

Not only is there no assessment of the impact on child poverty, but this is the quality of distribution analysis:

“The policy has the impact of redistributing income from Universal Credit/tax credit recipients to the Exchequer (i.e. society as a whole)”.

Actually it is not society as a whole, because when I last thought about it, universal and tax credit recipients were themselves members of society. The assessment continues:

“The policy therefore has distributional impacts”.

That is the distribution analysis—and the impact assessment on life chances is similarly risible.

I remind the Minister of what it says in the Companion—that Ministers should be as open as possible in answering questions, because this is inherent in ministerial accountability to Parliament. I therefore ask him again now: what is the department’s assessment of the impact of these clauses on the number of children living in poverty? I simply do not accept that it is not possible to make an assessment. I accept that there might have to be a fairly wide margin of error—we cannot just say that it will be exactly x thousand—but I do not accept that there is no assessment. It is not possible.

The right reverend Prelate also mentioned the family test. That is drawn up by the Department for Work and Pensions itself. It is supposed to be equivalent to the public sector equality duty. According to the DWP, its application should be documented and the relevant department should consider publishing it. Given that this clearly has a family impact, why did the department decide not to publish the family test? As part of its equality statement for reforming asylum support, the Home Office set out very clearly each of the questions that the family test is supposed to answer and gave its answer. I might not agree with those answers, but that was a model of how a department should deal with it.

Will the Minister undertake to provide noble Lords with the documentation of the application of the family test before Report? There must be documentation, according to the DWP’s own guidance. Given that the measure has a clear family focus, can he tell us what additional analysis was undertaken involving stakeholders, as is recommended in the DWP’s own guidance on the test? Finally, will the Minister tell us which other countries restrict payment of benefits for children to smaller families in this way? I am reliably informed that there is no other country, but I accept that I may be wrong. When I last looked at this, I found that countries that cared about family policy and child poverty tended to pay more to larger families, rather than less, but I would welcome elucidation on that.

[Baroness Sherlock]

My Lords, I rise to support Amendment 21 in the name of the right reverend Prelate the Bishop of Portsmouth. I fully support the requirement in the amendment to report on the impact on family relationships and functioning, for the reasons that have been articulated in the debates we have been having this evening. Until now we have not discussed in any detail the impact on faith communities, so I am going to concentrate on that.

As we have heard, larger families are strongly prevalent within some faith traditions and cultures, which leads to legitimate concerns about the differential ways this policy will be felt throughout society. There is an issue of equality for children born into families of faith. This measure will disproportionately affect families where, perhaps because of the parents’ faith, there is a devout desire to avoid contraception and abortion. As we have heard and discussed this evening, family planning is not infallible and many people of faith and other like-minded people are concerned that unexpected pregnancies could lead to a rise in the number of abortions. This point was made by the right reverend Prelate the Bishop of Portsmouth earlier.

As my noble friend Lady Lister pointed out, the most damning evidence about the differential impact of this measure on equality grounds comes from the Equality and Human Rights Commission. I declare an interest, in that I am a former commissioner of EHRC. It says:

“The proposed changes may have a disproportionate negative impact on people from particular ethnic or religious groups … The impact assessments and human rights memorandum which accompany the Bill do not assess the effect of the Bill on equality and human rights in sufficient detail to enable proper scrutiny of the legislation”.

It is not kidding.

Disgracefully, the Government have resisted all pressures to conduct cumulative impact assessments of these measures, giving impact assessments only for individual measures. Even within that, however, I was staggered to find that there had been no attempt to conduct an equality impact assessment on the two-child policy. The short section in the IA on the impact on protected groups mentions gender and disability in passing, acknowledges that ethnic minority households may be more likely to be impacted, though offers no detail, but makes no reference at all to the protected characteristic of religion and belief. Can the Minister explain why there is no such reference, when even a cursory glance at the data suggests the possibility for significantly differential impacts on the grounds of some protected characteristics, particularly religion and belief?

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[Lord Freud]

I thank the right reverend Prelate the Bishop of Portsmouth and the noble Earl, Lord Listowel, for this amendment. On the ECHR point, the Government set out their assessment of the impacts of the policies in the Bill on 20 July, as I think I have already said. It is important to ensure that the dynamic behavioural effects of the changes are considered within that. Many of these analyses suffer from the fact that they are too static when considering gains and losses and too focused on notional changes.

On the question posed by the noble Baroness, Lady Lister, on child poverty impacts, I say that the intended impact of our reforms is to incentivise work, ensure that it always pays, and to allow people to keep more of what they earn. That is why, as we will go on to discuss, we are moving towards a life-chances analysis of poverty as our approach.

[Baroness Lister of Burtersett]

I am sorry to intervene, but that is no answer, my Lords. I asked a very clear, factual question. At present, the Child Poverty Act still holds; therefore this House deserves the respect of being given an analysis of the impact of the increase in the numbers of children in child poverty on the measures, which are still the law, and which will still be measured under the HBAI statistics, as the Minister has said. I do not expect to have it now, but I hope that the Minister will give us those figures before Report.

[Lord Freud]

As I said, projections on the HBAI are difficult, and everyone gets them wrong because they are done on a static basis.

I pick up the point from the noble Baroness, Lady Hollis: she will be pleased to know that universal credit does not recognise polygamous marriage.

On the family test raised by the right reverend Prelate, the noble Baroness, Lady Lister, and the noble Earl, it is not a tick-box, pass-or-fail test but is about looking at how policies support or potentially undermine family relationships, and about trade-offs. The family test ensures that family considerations are explicitly considered and recognised when making those trade-offs. These measures will ensure fairness for all families, both encouraging parents into work and giving a fair deal for the taxpayer.

[Baroness Lister of Burtersett]

I am very sorry to intervene again. As I said, the Home Office, which is not the author of the original family test—the DWP was—published the questions in the family test and how its policy met those questions. Of course the department must have carried that out not on a tick-box basis—I am not saying yes or no—but by carrying out a considered analysis around these questions. I simply ask why, therefore, the Department for Work and Pensions is not prepared to make available to this House the documentation of how the family test was applied to this clause?

[Lord Freud]

As I said, the documentation that we have published is the documentation that we need to publish to comply with our public sector equality duties. We have done that, even though the noble Baroness may feel that it is inadequate.

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[Lord Freud]

That is a good point but, in essence, if you are not achieving the target in the earlier stages, you will know you are not going to get to the right point at key stage 4, so I think in practice this is built into the process.

Amendment 28, in the name of the noble Earl, Lord Listowel, would place a statutory duty on the Secretary of State to publish and lay before Parliament a report on children in care and care leavers. As I think we indicated earlier this evening, we share the noble Earl’s commitment to improving life chances for this particular group. We publish a wealth of information on both children in care and care leavers. There are two annual statistical publications, the first of which provides data on the numbers of children in care and the numbers entering and leaving care. It also includes data on placements, children who go missing from care and outcomes for care leavers, including their economic activity. The second publication deals with educational attainment at both key stage 2 and key stage 4, so I hope that noble Lords will be reassured that we already have the comprehensive data that the noble Earl is looking for.

We are also taking action. We recognise that children in care often need special attention at school. The Government’s own measure of educational disadvantage includes children who have been in care. Children in care also attract the highest rate of funding through the pupil premium plus and, from December, will be recognised in the education performance tables. At a local level, we have given local authorities £44 million over three years to support all young people to continue living with their foster families after the age of 18, helping to provide a stable setting at the key point of transition.

In Amendment 29, the noble Earl looks to do much the same with children who are “homeless” and “at risk of homelessness” every year—in other words to create a duty to lay an annual report. The noble Earl will be pleased to know that I have been a member of the ministerial homelessness committee now for the last five and a half years, so I am absolutely informed in this area. We agree of course that care and attention are required in the case of children who are at risk in this area, and we publish relevant data. Local authorities collect and publish data on the number of households with children who are eligible as homeless and in priority need and data on the number of children in temporary accommodation, which is published on a quarterly basis. I think that the last figures came out in September. This area is a key priority. Since 2010, we have invested over £500 million to support local authorities and voluntary sector agencies to help the most vulnerable back into society.

On Amendment 30, problem debt clearly is a key factor in trapping families in poverty and adversely impacting on their living standards, mental health, family stability, financial inclusion and well-being. This is a well-chosen issue. We intend to develop a range of non-statutory indicators, which will include that one, as well as family breakdown and drug and alcohol dependency, and set these out in our life chances strategy.

[Baroness Lister of Burtersett]

I have a couple of points, the first on problem debt. Will the Government also be assessing the impact of the Bill on debt? We have had briefings from a number of organisations that give debt advice, such as StepChange, which are very concerned that the Bill, in particular the clauses we have just been debating on the end of financial support for families with three or more children, are going to increase debt significantly.

I also wondered whether the Minister could comment on another point. He has twice referred now to addiction, which the Government talk about as a sort of root cause of poverty. A couple of years ago I put down a Written Question asking what the Government’s estimate was of the proportion of children living in poverty with at least one parent addicted to either drugs or alcohol. The Minister’s answer was that the Government do not have such an assessment. Drug or alcohol use is not recorded on the survey used for UK poverty national statistics. I wonder therefore—how do the Government know that this is a root cause of poverty, when they seem to have no relevant information?

--- Later in debate ---

[The Earl of Listowel]

That is very helpful.

[Baroness Lister of Burtersett]

The Minister talked about working with local authorities on child poverty, which obviously is welcome, and I think that he said something about not wanting to do that in a random way—excuse me, it is a bit late so I cannot remember exactly what he said. If that is the case, though, why are the Government removing the duty on local authorities to develop strategies? The letter that the Minister received from the Children’s Commissioners just the other day underlined how valuable that duty has been. I know that local authorities, within the constraints that they are having to work in, have been quite imaginative in trying to think about what they can do as partners of central government in combating child poverty, so I really do not understand why that has been taken away, given what the Minister said about wanting to work with local authorities.

[Lord Freud]

It is the same answer that I have just given: we want local authorities to focus their time on action to get at the root causes, not at the symptoms.

[Baroness Lister of Burtersett]

But surely the strategy could be a strategy to get at root causes. The Child Poverty Act does not say that local authorities have a duty to deal with symptoms. It says that they have a duty to help to eliminate child poverty, and of course that is about trying to get at root causes.

[Lord Freud]

What we are doing is working with local authorities to support them in getting at the root causes. That will be our strategy.

Welfare Reform and Work Bill

Baroness Lister of Burtersett Excerpts

Tuesday 17th November 2015 Lords Chamber

[Baroness Lister of Burtersett (Lab)]

My Lords, the title of this Bill is a misnomer. It will not enhance welfare in the true sense of, to fare well. Instead, it will undermine the welfare of families with children in particular—already hit hard by a succession of social security cuts—because, unlike the last welfare reform Bill, which included some genuine reform alongside cuts, this Bill does not. In so far as it promotes work, it does so through the punitive Poor Law “less eligibility” principle and the devaluation of unpaid care work. A truer title would be the “denial and aggravation of child poverty Bill”. It effectively erases child poverty from the legislative lexicon, while together with other measures it could mean a further 600,000 children in poverty by 2020, according to the Resolution Foundation. The Joint Committee on Human Rights, of which I was a member, recommended that the Government should assess the impact on child poverty of any new law, as well as its compatibility with the UN Convention on the Rights of the Child. There is no such assessment, and that with regard to the rights of the child is written in a rose-tinted font.

Instead, as we have heard, the Bill removes all the statutory measures, duties and targets that underpinned this country’s child poverty strategy, which, under the last Labour Government, led to a significant reduction in child poverty. How will the Government now be held accountable for meeting their manifesto pledge to,

“work to eliminate child poverty”?

As for measures, the 2012 consultation balanced a preference for a multidimensional measure, with the statement:

“The Government is not playing a zero-sum game with child poverty measurement”.

This is from the coalition Government, but led by a Conservative in the DWP:

“There can be no doubt that income is a key part of our understanding of child poverty”.

The Government are playing a zero-sum game now. The 2012 consultation demonstrated overwhelming support for the retention of an income measure, as analysis of the responses by Kitty Stewart and Nick Roberts, of the LSE’s Centre for Analysis of Social Exclusion, demonstrates. They found general agreement that low income/material deprivation are the only factors that are reliably able to distinguish those in poverty from those who are not. In evidence to the Public Bill Committee, respected academics branded the proposal as “silly” and warned that we are in danger of becoming “an international laughing stock”. A systematic academic review by CASE demonstrated unequivocally that family income is a key driver of children’s development and opportunities. As a CASE blog observed, not measuring income poverty while professing concern about life chances is little short of bizarre.

The Social Mobility and Child Poverty Commission called for,

“a clear commitment to maintain the centrality of income in measuring poverty”.

Perhaps that is why it is now going to lose child poverty from its remit. Will the Minister explain why that is the case? Given the replacement of the Child Poverty Act with a life chances Act, would it not make sense to call it the “life chances commission”, which would signal a broader remit than the narrow, meritocratic concept of “social mobility”?

Why, when the majority of children now live in households with a parent in work, is there to be no measure that can capture this alongside worklessness? Perhaps one reason is that some of the Bill’s measures, together with other tax credit cuts, are likely to aggravate in-work child poverty. In particular, families “supporting themselves through work”, to quote the Minister, could be hardest hit by the removal of means-tested financial support for third and subsequent children because of the interaction with the benefit cap for out-of-work families. The Children’s Commissioner is one of many who have voiced concerns, pointing out that this does not take account of the way family circumstances can so easily change. Yet, when introducing universal credit, Ministers placed such emphasis on the need for a dynamic understanding of family behaviour. Overall, children in black and minority ethnic families are likely to be disproportionately hurt. Their already high risk of poverty will increase, as will that of disabled children.

Another measure that will bear down particularly hard on larger and minority ethnic families is the reduction in the benefit cap. Now that it is being decoupled from average earnings, the rationale for its level is unclear. The original arguments against the cap have even greater force. As I argued when we last discussed the cap, it is unfair deliberately to reduce the amount of money some families will receive to well below the amount Parliament has determined is the minimum required to meet their needs.

It is even more unfair when, as my noble friend Lady Sherlock pointed out, the Government do not compare like with like when contrasting out-of-work and in-work incomes. No account is taken of the in-work benefits received on top of the comparator earnings, in particular child benefit and child tax credit, yet these benefits are included in the cap. This was pointed out in a recent Supreme Court judgment. Three out of five of the judges believed that the cap is not compliant with the UNCRC’s requirement to treat the best interests of the child as a primary consideration. Although the appeal was not allowed, the hope was expressed that the Government would address the implications of this finding when they review the cap—some hope.

One of the justifications for the cap is to increase work incentives, yet the House of Commons Library observes that,

“there is no general consensus”,

that it is,

“proving an effective means of moving claimants into work”.

Instead, a Community Links study found that when you force people into what they call “survival mode”, it can make finding and keeping a job harder and less of a priority because all you can think about is trying to get by. Also, 6% of those already capped are claiming carer’s allowance. Carers UK warns that many,

“are not in a position to pick up work or further work without reducing or withdrawing the care they provide”.

It asks, as the Government have said that it is not their intention to encourage people to stop caring and go into work, why this policy applies to carers. I hope the Minister has an answer. Also, is it reasonable to expect the 15% of capped lone parents who have a child aged under one to work when they are not required to do so even under the Bill’s further extension of conditionality?

Finally, the benefits freeze comes on top of existing cuts in their real value, which is particularly marked for child benefit and has been described by the IFS as “highly regressive”. The impact assessment notes that women are more likely to be affected than men, which is true of many of the measures. Moreover, as the main managers of poverty, women will bear much of the burden, at the expense of their mental and physical health.

I end with two questions. Will the Minister explain how the family test—which the noble Baroness, Lady Altmann, assured your Lordships’ House would be “strictly applied” to “all new policies”—is applied to a Bill that will spell disproportionate hardship for families with children? Will he explain how this damaging and punitive Bill, which will increase child poverty, is compatible with the Prime Minister’s pledge of,

“an all-out assault on poverty”?

Families: Work Incentives

Baroness Lister of Burtersett Excerpts

Tuesday 27th October 2015 Lords Chamber

[Lord Freud]

The target to halve the disability employment gap implies that we need to find work for 1 million more people in this category. We are currently working pretty hard on the strategy for that. It was announced by the Secretary of State in August, and we are now consulting with the various interest groups to find out the optimal way of achieving it. One group that is particularly important is people with learning disabilities; they have had a tough time in the work market.

[Baroness Lister of Burtersett (Lab)]

The Minister acknowledged that work allowances have “come down” as if that was somehow an act of God. The fact is that the Government first froze them and are now abolishing them for non-disabled workless households and reducing them for most other households. Yet when the Welfare Reform Bill was going through this House, the Minister constantly told us that the new improved work allowances were absolutely key to making work pay. Will he explain why they have been cut back so drastically?

[Lord Freud]

As the noble Baroness will know, a reduction and a cost saving are going on in this part of the benefits system. We had to make a decision about how to structure that. We decided that the taper was critical because it moved people right the way down at 65%. We have maintained that level. We have taken it out and reduced the work allowances in other areas. In particular, in our experience, for singles the removal has meant that people move straight through the work allowance out of UC. We have tested people carefully and seen a significant, measurable increase in the amount of work that they do and in their earnings. The work allowance impact seems to be less in those areas.

Universal Credit (Waiting Days) (Amendment) Regulations 2015

Baroness Lister of Burtersett Excerpts

Monday 13th July 2015 Lords Chamber

[Baroness Thomas of Winchester (LD)]

My Lords, this debate perhaps illustrates why the way in which the House scrutinises important, not to say controversial, statutory instruments is not satisfactory and is rising to the top of the procedural agenda. I know that there is a move afoot for a delaying power; in fact, we now have the Motion of the noble Baroness, Lady Sherlock. I have also put forward what I believe is a better way of debating controversial SIs, with advisory amendments being suggested. But for the moment these two types of Motion, moved by my noble friend Lord German and the noble Baroness, Lady Sherlock, are the best that we can do without killing the regulations. However, I should make it clear that I see no merit in the Government’s proposals at all. It is tempting simply to recommend that the regulations be annulled. The suggestion in my noble friend Lord German’s Motion for removing the housing benefit element from UC waiting days, from the Government’s very own advisory committee, is the very least that the Government should do. However, I will support the Motion of the noble Baroness, Lady Sherlock, as the second-best option after that.

The purpose of the Social Security Advisory Committee is to advise the Government on secondary legislation and to issue occasional reports in this area. Its report on these regulations details what it calls “compelling evidence” as to why they should not proceed, received in response to its consultation. The Government’s reasoning is that the new arrangements refer only to new claims for universal credit made after 3 August this year and do not apply to certain vulnerable groups or those migrating to UC from existing benefits. They therefore believe that those who qualify for UC by a means test are likely to have savings to fall back on because they will be,

“coming from the world of employment”.

In any case, they then say rather vaguely,

“advances of benefit will be available to help those who are in financial need”.

This is a thoroughly misleading sentence which turns out not to be entirely true, as I shall demonstrate.

We are told that the principle behind the waiting days policy in UC is,

“not designed to provide cover for moving between jobs or brief spells of unemployment”,

although this somewhat sniffy comment does not take account of the fact that universal credit, like PIP, is an in-work as well as an out-of-work benefit. I have been very fair to the Minister by spelling out the Government’s rationale for the policy. So why is the policy being questioned by not just the SSAC but our very own Secondary Legislation Scrutiny Committee? I prefer to call that committee by its old name, the Merits Committee, because the clue as to what it does is in the name. I am very pleased that the chairman of the committee, who has been writing letters to the Minister, is here.

The committee has been like a terrier with a bone. First, it points out that, as the noble Baroness, Lady Sherlock, said, no impact assessment giving costs and savings has been provided, so there is insufficient information to gain a clear understanding of what is going on. I take the noble Baroness’s point that the impact assessment would in any case probably be out of date but that is no excuse for the Government not having done it. The equality assessment is not a substitute for a properly done impact assessment. There is a glaringly obvious example of why an impact assessment is vital. The Government maintain that benefit advances are available for those in financial need, as I said just now. But the SSAC report tells us that the Government admit that advances will not be available to everyone, especially not to those who will not be able to afford the repayment. So what will these people do when they are left with no money for six weeks while almost certainly having debts, being in danger of being thrown out of their accommodation for non-payment of rent and with no food?

No wonder the Government have not done an impact assessment. If they had done one properly, they would have had to admit that there will indeed be extra burdens on landlords, local authorities—particularly if they have to give out loans—housing charities and food banks, and quite possibly the police and health services. But, I hear the Minister saying, “These are people from the world of work, surely not those at the bottom of the pile. They must have some savings, mustn’t they?”. But the evidence provided to the SSAC does not back this up. As my noble friend Lord German said, research by HSBC showed that 34% of the UK population have less than £250 in savings and do not have the means to cover a week’s rent and living costs if the breadwinner’s job were to end. Scottish Widows found that of those with no savings, two-thirds had debts. There are lots of similar comments. We also know what happened when there was a computer glitch at RBS recently: many of its wage-earning customers said that they could not manage to pay their outgoings, even for a very short time.

The SSAC report sums up the argument by saying that the question as to the balance between those with sufficient savings and those without has not been resolved in the supporting paperwork from the DWP. What the Government seem not to have understood is that what they call the “world of employment” might mean a very low-paid job in an expensive place such as London.

Turning to the crucial question of the housing benefit element of UC, the SSAC says:

“The fact that the Committee received so many submissions from landlords and their representatives is an indication of the degree of anxiety that has been generated in the housing market by this proposal”.

The Cornwall Residential Landlords Association is more forthright. It says:

“Many landlords have expressed concern about the payment of Universal Credit at the end of a calendar month leading to late payment of rents and other bills. Adding a further barrier to claimants being able to meet their financial obligations is likely to result in an increase in the number of landlords no longer willing to accept these people as tenants”,

as my noble friend Lord German said. It added:

“The increased risk of homelessness will add to the costs of policing and health services”.

The Notting Hill Housing Trust also makes the point that having rent arrears has the potential to inhibit the free movement of labour, thus hobbling those who are looking for work in as wide an area as possible.

Turning back to the absent impact assessment which should have provided costs and savings, the Minister’s letter to the chairman of our secondary legislation committee gives us more information. It says that the anticipated savings will all be spent in giving additional support for claimants in Jobcentre Plus offices but we have heard before of all the support that claimants are now supposed to be getting from JCP offices. As for the impact assessment not having been done, the reason is given that the legislation does not directly impose obligations on public or private bodies. In other words, it is almost admitted that parts of impact assessments are tick-box exercises, often not worth the paper they are written on. That is something those of us interested in statutory instruments know all about.

However, I am concerned not just with process but with the end result. I fear that the result of the Government proceeding with this arrangement will be real hardship for many of those affected. The Government do not seem to acknowledge that many UC claimants will have been trying to find work before they apply, which makes this proposal particularly harsh. I urge the Government to withdraw the regulations—and if not, to take the housing benefit element out before pressing ahead.

[Baroness Lister of Burtersett (Lab)]

My Lords, I support my noble friend Lady Sherlock’s Motion. However, I am sorry that the noble Lord, Lord Kirkwood of Kirkhope, was not able to go ahead with his original fatal Motion, not least because when we debated the earlier waiting days regulations on 19 November, I promised that I would see him on the barricades were he to do so. I, too, oppose these regulations. I will inevitably be repeating some of the arguments already put so ably, but I hope to provide reinforcements in doing so.

I accept that the universal credit regulations will affect fewer people than did those for JSA/ESA, because of how universal credit operates. However, as we have heard, those who are affected stand to be hit harder because of monthly payments and because the universal credit payment includes more elements—in particular housing, to which the Motion of the noble Lord, Lord German, which I also support, relates. The payment also includes childcare costs and children’s allowances.

As the Child Poverty Action Group—I declare an interest as its honorary president—points out in its evidence to SSAC, this means that those with high housing costs and/or with children will be particularly adversely affected. In addition, SSAC points out that carers and lone parents of children aged under three, who do not have to serve waiting days on income support, will have to do so on universal credit.

Child Poverty

Baroness Lister of Burtersett Excerpts

Wednesday 8th July 2015 Lords Chamber

Asked by

[Baroness Lister of Burtersett]

To ask Her Majesty’s Government what steps they plan to take to (1) implement their pledge to work to eliminate child poverty, and (2) meet the 2020 statutory targets set out in the Child Poverty Act 2010.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

In line with our manifesto commitment to work to eliminate child poverty, we will bring forward legislation to remove the existing measures and targets in the Child Poverty Act, as well as the other duties and provisions. The legislation will introduce a statutory duty to report on measures of worklessness and educational attainment. These new measures will drive real change and make the biggest difference to the lives of poor children now and in the future.

[Baroness Lister of Burtersett (Lab)]

Will the Minister explain how government accountability for the elimination of child poverty will not be seriously weakened when the targets are abolished, the measures of child poverty as such are effectively abandoned and child poverty is removed from the title and presumably remit of the Social Mobility and Child Poverty Commission—all at a time when punitive cuts in financial support for low-income families with children, in work as well as out of work, will blight their children’s life chances and childhoods?

[Lord Freud]

The HBAI measure will clearly still be published and is a useful measure to track what is actually happening. It is, however, a very poor measure as a statutory target because it is simply not forecastable. I come back to the point about the so-called cuts for those in work. After today’s Budget, by 2017-18, eight out of 10 working households will be better off as a result of the combination of personal allowances, the new national living wage, which will rise to £9, and the welfare changes. That is 17.7 million households better off.

Housing: Under-occupancy Charge

Baroness Lister of Burtersett Excerpts

Tuesday 16th June 2015 Lords Chamber

[Lord Freud]

The current year figure is running at £125 million, which is very high and up substantially—by more than £100 million—on the figures that we were looking at in 2010. I obviously cannot make any commitment at this stage on its future levels—that will go into a spending review—but clearly this has been an important way of making sure that this policy goes in without the kind of impacts that some people were concerned about.

[Baroness Lister of Burtersett (Lab)]

My Lords, research published in the Journal of Public Health points to a disquieting amount of financial hardship as a result of the bedroom tax, as well as compromised diets, an impact on physical and mental health, and the disruption of important social networks. The Minister seems to think that downsizing is something simple. We are asking people to downsize from their homes, not just from housing, and we are disrupting their lives and networks. Will the Minister think again on this and take into account that, as my noble friend and many members of his own party have said, this is a cruel mistake?

[Lord Freud]

I am not sure that noble Lords can have it both ways. Either there is not very much downsizing or there is too much disruption of networks. I do not think that both can be argued at the same time.

Child Poverty Act 2010 (Persistent Poverty Target) Regulations 2014

Baroness Lister of Burtersett Excerpts

Tuesday 25th November 2014 Grand Committee

In summary, this target is a declaration of this Government’s commitment to tackling this most harmful aspect of child poverty; it reflects the efforts that we are already putting into addressing the issue; and it will ensure that there is continued and relentless focus on it in coming years by both the Government and the wide range of others who have a part to play. On that basis, today I present a persistent child poverty target of less than 7% before the House and ask for its approval. I commend the regulations to the Committee.

[Baroness Lister of Burtersett (Lab)]

My Lords, I endorse what the Minister has said about the damaging effects of long-term persistent poverty. However, I am sure that he did not expect me to come here to agree with him, so I will now make a few critical points. The Secondary Legislation Scrutiny Committee was critical of the lack of clarity in the explanatory material with these regulations, which, as it points out, is not for the first time. It asked about the definition of qualifying households. Just for the record, will the Minister clarify which children are excluded? The scrutiny committee referred to children in state institutions. Am I right in thinking that it also excludes the children of asylum seekers and Travellers? Are there any other groups? It would be helpful for noble Lords to know that.

A perhaps rather techie but significant point, which was not raised by the committee, is the use of before housing costs to measure child poverty. According to the Social Mobility and Child Poverty Commission’s State of the Nation report—I did not realise that the Government’s response was published today; I am not a clairvoyant and I have not read it—if you use the after-housing-costs measure rather than the before-housing-costs measure, which is preferred by the Government, it adds an additional 1.4 million children to the numbers in relative poverty. Therefore, 27% of all children rather than 17% of children are in poverty. As I say, that may seem a rather techie point but it makes a huge difference. As recent research by the Joseph Rowntree Foundation has underlined, housing costs are an increasingly important driver of poverty among people of working age and their children. When I questioned the Minister about this in Oral Questions yesterday, he did not answer my question, and it is a rare opportunity to be able to come back the next day. I will not re-ask the question, which concerned what the Government are doing about high housing costs, but I noted that, instead of answering the question, he talked about how they are making really good progress in tackling poverty. Of course any reduction in the figures is welcome, but it is interesting that every time the Government get up and say, “We’re reducing poverty”, they use a measure that in other contexts they tend to rubbish. Anyway, I will put that to one side.

If we take the figures after housing costs, they are rather less favourable. Indeed, the child poverty figures increased in 2012-13 over the previous year, whereas if you look at before housing costs, they are flat. That is just to underline the importance of these different measures and how they are used.

The scrutiny committee also queried, as the Minister acknowledged, why the target figure in the regulations is not lower. I absolutely accept that zero is not realistic, but the committee pointed out in particular that the majority of consultation responses argued for 5% or less. In fact, 31 out of 39 written responses were against the below 7% target, with only six arguing for it, and 23 were in favour of a below 5% target. One example was the Child Poverty Action Group—I declare an interest as honorary president—which made the point that:

“In setting the persistent child poverty target, the government should consider past historical performance in the UK, and the performance of other comparable countries in tackling persistent poverty. This is suggestive of a range of 3 to 5 per cent”.

It was also critical of the lack of ambition of a 7% target.

I cannot help wondering why the Government bothered to consult in the first place. When they reject a clear consensus of pretty expert opinion, I fear that that feeds cynicism around consultation exercises, despite the warm words in the Written Ministerial Statement, which the noble Lord repeated, that the Government “carefully considered all representations”.

The scrutiny committee also said that it remained unclear as to how the Government intend to implement their policy. The Minister talked about that today with regard to the child poverty strategy, which, as I am sure noble Lords are aware, was published earlier this year. I could say plenty about that, but I will not say what I think about it; I will simply quote—at a bit of length, because it is worth putting on the record—what the Social Mobility and Child Poverty Commission said in response to the draft child poverty strategy, and the final strategy was not that different regarding the overall strategic approach. The commission said:

“The new strategy is the Government’s opportunity to revise its plans for tackling child poverty to get back on track towards meeting its legal obligation to end child poverty by 2020 … Our key conclusion is that this opportunity has not been taken. While there have been improvements in the Government’s strategic approach and in some policy areas, overall the strategy falls far short of what is needed”.

The Minister talked about reducing worklessness being at the heart of the strategy, but the commission points out that its research shows that,

“ending poverty mainly through the labour market does not look remotely realistic by 2020”.

It goes on to say:

“We acknowledge that there are some good things in the draft strategy”—

as do I—but continues:

“However, overall it falls far short of what is needed. Key problems include: the lack of any clear measures, with the Government continuing to distance itself from the statutory measures in the Child Poverty Act 2010 without suggesting any additions or alternatives. This is not acceptable—a strategy which cannot be measured is meaningless. In the absence of further measures and in line with our statutory duty, the Commission will continue to monitor progress”.

Other key problems are:

“The absence of a step-by-step plan for meeting the statutory targets, with the strategy presenting a list of policies rather than a detailed plan with impacts clearly delineated. A failure to engage with independent projections that poverty is set to increase substantially … Lack of new action on in-work poverty … Limited action to mobilise society-wide efforts to tackle poverty … Ignoring the impact of additional welfare cuts”.

It points out what that likely impact would be. Then it says:

“To ensure the final strategy is an effective and credible plan for tackling child poverty, the Government needs to … set out clear measures … Develop a step-by-step plan … Engage with independent projections of increases in child poverty over the next few years … Resolve gaps in the strategic approach … by taking action to address the structural as well as the individual-level causes of poverty”.

That is a really important point, because the Government are always going on about how they are concerned about the causes of poverty but do not tend to acknowledge the structural causes as opposed to individual ones. The response also says that the Government need to:

“Ensure the strategy represents a clear plan for mobilisation and leadership of other actors in society … Engage with the challenges posed for the child poverty strategy by continued fiscal consolidation”.

All the projections are very worrying regarding what the impact of other policies will be on the numbers in poverty, including the numbers in persistent poverty. The fear is, obviously, that the 7% is not going to be achieved because of these policies. It sometimes feels a bit unreal that we are designating 7% or 5% when the policies now being implemented suggest that we are going to go the wrong way on levels of child poverty, including persistent child poverty.

--- Later in debate ---

[Lord Freud]

My Lords, I wish that the noble Lord, Lord McAvoy, had not gone rather crudely political on what is a difficult area, especially as the facts that he used are simply not true. There has been an absolute cut in income for the richest 20% and an increase for the lowest, as has been put out by the Government. This is not the forum to have that kind of crude debate and I do not want that.

Some really important points have been made today. This is a difficult area at a difficult time. My noble friend Lord Kirkwood looked at the national debt and blanched, for very good reason. I look down my nose at him because, when looking at the performance of the last Government on poverty, one saw that they achieved the trajectory for people who were out of work, and they were able to do that through income transfers, but for people at the next level who were just in work and at the next level of income, there was very little movement. That is the problem that we are addressing. We are looking at a problem that cannot be solved just by moving money around particular areas. I commend the noble Lord to look through those figures, which are very interesting and illustrate the fact that we have got to the limits of what you can do just by income transfers, which is what the previous Government did.

[Baroness Lister of Burtersett]

I was not part of that Government, but will the noble Lord not accept that part of their child poverty strategy was also to move people into work? Part of the problem with the current situation, as the noble Lord, Lord Kirkwood, said, is that, although it may not be completely new, this is certainly the first time where more people in poverty are in work than out of work. We all agree that work is a good route out of poverty; but it is not necessarily a route out of poverty. Both Governments have faced the same problem of what you do with a labour market which is not providing enough to keep people out of poverty.

[Lord Freud]

I speak here from a somewhat privileged position, in that I advised the last Government in exactly this area and now speak for the current Government on it. So I am in a position—

--- Later in debate ---

Forgive me, the troubled families programme has not been renamed; I may have had a brainstorm on that. From next year it is being expanded to include 400,000 families, so it is supported.

[Baroness Lister of Burtersett]

I am sorry to intervene again. Before the Minister moves on, my understanding was that although the noble Lord, Lord Kirkwood, mentioned the delay because of the survey data, he was asking about what the actual measures are, and that is separate from the survey data. There was a big consultation about a set of measures that I personally did not think were measures of poverty. That is also what most people said in response so, fortunately, that time the Government did take note of the consultation and withdrew it. However, as the commission says, they are still distancing themselves from the measures that they have without coming forward with a more acceptable set of measures to complement them. The question is: what has happened to them? Have they got lost? There have been rumours about the Treasury having had something to do with it. What has happened to those complementary measures?

[Lord Freud]

In the long term, the Government think that we need a revised set of child poverty measures which would better reflect the evidence about poverty’s underlying causes and where we need to target action most—the kind of thing that my noble friend Lord Farmer, in particular, was talking about, but we are not currently in a position to put those new measures forward. As our consultation, which the noble Baroness mentioned, showed, this is a complex area and there are a variety of views. I am afraid that that is all I am in a position to say at this stage.

On the noble Lord’s point about how these measures are made up; clearly, both relative and persistent poverty levels depend in part on how both median income changes and how those with low incomes improve relative to the median. That is just how the Act was made. We spent an awfully long time debating during the passage of the Bill a general level of discomfort with just this mechanistic approach to this kind of measure. That is just how it is, and that is what the Act shows, but the fundamentals are that we need to maintain our focus on helping those on lower incomes, which means helping people into work—or more work, which is what universal credit will do—and in help with living costs.

Universal Credit

Baroness Lister of Burtersett Excerpts

Monday 24th November 2014 Lords Chamber

[Lord Freud]

In the last strategic outline business case the costs of the programme to 2023-24 were £1.8 billion. That is down from the £2.4 billion figure that we had in 2011. Under that case, we anticipate that the bulk of the exercise to transfer people on to universal credit will be completed by 2019.

[Baroness Lister of Burtersett (Lab)]

My Lords, recent research by the Joseph Rowntree Foundation, and the Social Mobility and Child Poverty Commission’s recent State of the Nation report, underline the extent to which high housing costs drive poverty among working people, their children and young people. What are the Government doing about these high housing costs?

[Lord Freud]

The poverty figures show that we are making really good progress in tackling poverty, with 600,000 fewer people in poverty through this Government. We are ensuring that housing costs are covered within universal credit and that people can take control of their lives in that way.

Social Security (Jobseeker’s Allowance and Employment and Support Allowance) (Waiting Days) Amendment Regulations 2014

Baroness Lister of Burtersett Excerpts

Wednesday 19th November 2014 Grand Committee

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I am substantially discomfited by the fact that sitting on my right-hand side is the chairman of the Delegated Powers and Regulatory Reform Committee. Next week she is chairing a seminar on how we deal with these orders, and I hope that she does not mark me down too hard.

These regulations are not new to us, and we as a Grand Committee have been considerably assisted in their consideration by the work done, as always, by the scrutiny committee, which identified—rightly, I think—that these amendment regulations raise issues of policy interest to the House. I am also indebted to the Social Security Advisory Committee, which—again rightly, in my view—engaged in a formal consultation on these orders. I think that that was the right thing to do. I am sure that, like me, colleagues have been able to read the orders carefully; they repay careful study, and a consultation was proper.

In passing, I would say that it is disappointing that we got advance notice of these regulations in 2013—I think it was in the Budget, or perhaps the Autumn Statement—and that was repeated in the Budget Statement 2014, but these regulations required some consultation if the policymaking was going to be done carefully, and there was a whole fallow year following their announcement with a flourish—and I am getting more and more nervous about social security announcements that are made with a flourish in Budgets. So, that time in the year 2013-14 could have been used to look at some of these things.

The evidence that the SSAC has uncovered is invaluable in the consideration of this policy. Indeed, as the Explanatory Memorandum says, the estimated saving is some £50 million in fiscal year 2015-16, and the savings will diminish thereafter. I guess that that is because we approach the introduction of universal credit in 2017-18, and I shall come back later to that important moment. The Explanatory Memorandum mentions the calculations done by the department, and these are useful for reference. Paragraph 3.10 of the SSAC report says:

“The … analysis indicates that for 2015/16, the number of new claimants likely to be most at risk of suffering financial hardship are around 245,000 in JSA and 35,000 in ESA … The estimated average loss of benefit to each claimant from this policy change is £40 for JSA claimants and £50 for ESA claimants”.

That is very helpful to know. The point that I want to raise more than anything else is the hardship that will be experienced by that client group—the 35,000 people on ESA and the 245,000 on JSA. That is the point of discussing this here today.

I am opposed to these changes. If I thought I had any chance of getting a Division that would successfully annul them, I would have tried that. I am seriously considering doing so, depending on what support I can garner from colleagues if restrictions such as waiting days are put on universal credit as we approach 2017. These are savings dressed up. They are pretty mean-spirited and hit the most vulnerable. They again concentrate cuts on the working-age population and take no account whatever of the environment of the past four or five years. A policy of this kind, if it were to be applied eventually to universal credit, would be much worse.

I therefore support the SSAC’s recommendations and need to continue the analysis. I understand and am grateful for the extra work that the department has put in as a result of the request from the Social Security Advisory Committee. The case for exempting ESA was strongly made but resisted by the Government, which is a shame. The case that the SSAC made for promoting short-term benefit advances as a way of trying to alleviate some of the hardship was discarded in a rather offhand way by the Government. Members of the ESA and JSA client group who are most at risk in 2015 and beyond will have to rely on STBAs because they do not have any other options to plug gaps in benefit. I clearly support the idea from the SSAC that communications must be absolutely crystal clear regarding what is happening to the client group so that they can understand the position in advance and get their claims in early. The recommendations of the committee were all well founded. I was pleased that the Government accepted some, but not all, of them.

I want to say a word about context because I get the impression that the department does not pay enough attention to the payment regime. The system of paying benefits to low-income households who operate on a weekly or fortnightly cash basis underestimates problem that some of these delays and reductions will bring. I remember the good old days before 1998, as will other colleagues, when benefits were actually paid weekly and everyone knew where they were. That changed in 2009 to payments fortnightly in arrears, and in 2018 we are facing the cliff edge of universal credit paid monthly in arrears. I do not think that the department fully appreciates the significance of the change in the method of payment. I point out the obvious fact that Social Fund crisis loans are no longer available and there is an uncertain labour market in which people are much more quickly churning in and out of benefits and work.

Yesterday I was made aware of a publication by the Institute for Fiscal Studies which reminded me that over the past four years we have been taking, and will take, £20,000 million out of benefit expenditure in every year of this Parliament. That is a huge amount and the vast majority is being focused on working-age benefits. In a wider context, although I might be out of order in terms of this debate, we need to think clearly about how the cuts are shared across any future attempts to reduce social security spending, 50% of which is now spent on the retired cohort of our population.

I want to say a brief word about the eight vulnerable groups who have been identified. I am sure that the categories are not new to any of us. They include 18 to 24 year-olds, the homeless, disabled people and prisoners—who are of particular interest to me as a non-executive director of the Wise Group. We have a Routes Out of Prison programme which tries to mitigate the fact that we send prisoners out on a Thursday morning from Barlinnie prison with £46 in their hands and next to no other support. Issues such as those contained in the regulations will make their lives and futures worse. Concerns about the vulnerable groups identified by the SSAC are all well founded, and we need to watch the impact of these regulations on these eight categories very carefully.

I want to make two other points. The so-called list of investments that we now have access to as a result of this £50 million saving being recycled was first adverted to by the Chancellor as part of the 2013 spending review. They are things like upfront work search, English language requirements, weekly work search reviews and annual verification. I may be missing something, but I thought all this happened anyway. If it has not been happening since 2013, I will be disappointed. I do not see that we can demonstrate clearly that these savings are going to make any difference whatever, which folds back to the point that I made at the very beginning—that this is actually a dressed-up saving. It is the departmental expenditure limit that will get the benefit of this £50 million and next to nothing else. This is why I want to press the Minister about evaluation. There is an undertaking here in the Explanatory Memorandum which talks about looking at the results of these new investments and how beneficial they will be. I am very sceptical about that and would like to hear a little more about it.

The SSAC report says that the statement in the Explanatory Memorandum that there was likely to be “no impact” on business or charities is “implausible”. It is being very polite. Anybody who knows anything about the 245,000 and 35,000 people in the client groups that we are dealing with realises exactly how important charities are to people in that situation. I do not think that the department is living in the real world. It is a laughable statement. This will lead to payday loans and all that they bring, which is potentially deeply regrettable.

With the funding available to local authorities also being reduced, these regulations are bound to increase hardship. It may not involve millions of people, but it will affect those whom it does affect severely. I want the Government, in evaluating how these regulations are implemented, to have very careful regard to the consequences and the effects on these families. I want them in particular to reflect very carefully about bringing forward similar regulations when it comes to introducing universal credit later in the next Parliament. I beg to move.

[Baroness Lister of Burtersett (Lab)]

My Lords, I thank the noble Lord, Lord Kirkwood of Kirkhope, for initiating this take note debate on a very important subject. I apologise if I repeat any of the points that he made, but they bear repetition because there has not been sufficient publicity about the implications of these important regulations. The SSAC, as we have heard, is very critical of them, especially of the lack of robust analysis of the costs and benefits. The impact assessment that the Government have produced in response is certainly an improvement. Whether it constitutes that robust analysis is another matter, but it does at least give us more information on those who are likely to be affected. I accept that it does give some credence to the original—unevidenced—claim that many affected would be,

“coming to benefits from relatively well paid jobs”,

as the lowest paid are more likely to have linked claims and therefore not be affected. Nevertheless, nearly two-fifths of JSA and three-fifths of ESA unlinked claims were from those earning less than £5,200.

--- Later in debate ---

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

I thank noble Lords for their many helpful contributions to the debate. It is clear that this measure has generated a great deal of interest, not just within this House but outside among voluntary and public organisations, which have also presented their views to the Government. The principle behind this extension from three to seven waiting days is that benefits are not intended to provide financial support for very brief periods, for instance when someone is between jobs or during a short period of illness. This measure will generate savings of £125 million over five years. It is money that, as noble Lords have touched on, will be reinvested to help those most at risk of long-term welfare dependency. As noble Lords know, the measures will fund schemes including additional support for lone parents and improving literacy and numeracy skills.

To pick up the question from my noble friend Lady Thomas about any change in those estimates, they were based on departmental forecasts which themselves were based on OBR economic assumptions at the Autumn Statement 2013 and in Budget 2014 and there have not been any updates to this analysis since then, although we are, of course, awaiting another financial event quite shortly.

On the related question from my noble friend Lord Kirkwood and the noble Baroness, Lady Lister, about what and where these investments are, we are expanding on measures that are already in place. They will introduce more rigorous scrutiny on the hardest-to-help claimants. The English language provision is new and will ensure that claimants have the language skills for the workplace. Those methods should enable the claimants to enter the workplace sooner than they otherwise would, which means that they will be earning sooner and not receiving benefits.

[Baroness Lister of Burtersett]

Perhaps I may ask the noble Lord the question raised by SSAC. Is it likely that the people who are going to be adversely affected by this change will be the people who will be helped by these measures?

[Lord Freud]

Yes; I thought that I had made that clear—that the intention is to focus on the people with longer-term difficulties. So, yes, the intention is that it will be those people.

This measure means that many people who make a new claim for jobseeker’s allowance and ESA will see a reduction in their first benefit payment. However, we have measures in place through exemptions and the offer of advances and signposting advice to ensure that claimants who are most in need will continue to be protected.

I hope that I can pick up all the points that have been raised. On the point raised by my noble friends Lord Kirkwood and Lady Thomas on the exemption of ESA claimants, if there had been a differentiation between the two types of claimant there would have been a perverse incentive for people to self-certify sickness for a week and claim ESA rather than JSA in order to get an additional four days’ benefit. There is no evidence that ESA claimants are at greater risk of financial hardship than JSA claimants. Furthermore, to exempt ESA claimants to make that differentiation would be inconsistent with future proposals for universal credit, where our intention is that all ESA-type claimants will be placed in the all work-related requirements group and therefore subject to waiting days. Clearly, waiting days themselves have been a feature of ESA since its introduction in 2008. This measure has simply extended that existing provision for those who do not qualify for an exemption.

The point that my noble friend made about exempting vulnerable groups is clearly one into which we put a lot of consideration, particularly around care leavers, sufferers of domestic violence and ex-prisoners. Bluntly, they were exempted on grounds of practicability. It would have introduced an unworkable, three-tier system and these groups are already required to serve three waiting days, so the only other option would be a full exemption which would go beyond the scope of this change. Despite what my noble friend said about the UC provisions in this line, we are able to make an exemption for these groups in the UC-equivalent provisions. Perhaps that will leave my noble friend somewhat more relaxed about those.

--- Later in debate ---

The noble Baroness, Lady Lister, asked about the number of people, when they had their last payments and the state of their savings. Some 70% of JSA claimants are subject to waiting days, 30% having been exempted because of linking rules. Of that 70%, it is estimated that half have been in employment within three months prior to their claim and 30% are in a benefit with savings of greater than £100. For ESA claimants, 60% of whom are exempt, the equivalent figures are that around half of the other 40% were in paid employment immediately prior to their claim and 38% are estimated to be in a benefit with savings of greater than £100.

[Baroness Lister of Burtersett]

I am sorry to intervene on the Minister. I was not asking about savings, because that is in the public sphere. My question was whether there was any information about people who come out of work in debt or arrears?

[Lord Freud]

I was coming on to that. The noble Baroness asked a series of questions. We do not currently have the information on the proportion of people coming on to benefit who are likely to be in arrears or debt. I am not aware of any published analysis that would allow us to estimate this quickly. All noble Lords who spoke raised the question of short-term advances. SSAC recommended that communications about them should be strengthened.

--- Later in debate ---

[Lord Freud]

A number of noble Lords raised the communications issue around short-term benefit advances. We have taken the recommendation of the committee and issued communications to all staff to improve staff awareness of benefit advances and to remind them of the circumstances in which an advance can be considered.

On the point made by the noble Baroness, Lady Lister, on the report on food banks, I was not at today’s press conference but no one takes the decision to use a food bank lightly. The factors driving food-bank use are many and complex, as today’s report recognises. The report said:

“The immediate income crisis that predominantly led to food bank use was often one incident in a complex life story, in which several other factors had combined to leave people vulnerable and less able to cope with dramatic changes”.

[Baroness Lister of Burtersett]

I agree that we are talking about very difficult lives here, but it is very clear from this research, which is not a huge study but it is from a number of different places using a number of different methodologies, that benefit delays were a very important factor. Given that, does the noble Lord not accept that this measure could well make it worse?

[Lord Freud]

My Lords, I would be the last person to say that the current benefits system was easy to navigate. One of the things that has been driving the reform that we are introducing, universal credit, is the production of an in-work and out-of-work benefit that is easy to navigate. I started researching this area in some depth in 2006 and the irony is that benefit delays under the existing, rather complicated system have actually been improving. That is why I revert to the point that this is a complicated matter, as is acknowledged in today’s report and in other reports. That is the only point I want to make.

There was a series of questions on universal credit and the noble Baroness raised the point about TUC concerns about the length of time claimants have to wait for payments under universal credit. Clearly we have an advances process built in, but probably more important is the system that is now developing of universal support delivered locally, which is designed to work in the local community, both with councils and with voluntary organisations, to bring the support that is specifically required by vulnerable people. The estimated saving from increasing the waiting days in universal credit is £200 million per annum once it is fully rolled out, but this figure will be reviewed and updated with the Autumn Statement. I have talked about exemptions within universal credit.

The noble Lord, Lord McAvoy, asked about our consideration of whether we add waiting days to the assessment period in universal credit or whether we have partial periods of universal credit. We spent a great deal of time considering that issue. Universal credit is an in-work and out-of-work benefit, paid on a monthly basis. That monthly basis is designed to help households to budget on a monthly income and eases the transition from and back into paid work. The one-month assessment period is therefore central to universal credit, and the waiting days in universal credit are days of non-entitlement. I need to remind noble Lords that because universal credit is an in-work and out-of-work benefit, one might not experience waiting days anything like the same number of times as, especially if one is moving from low-paid work to being out of work, one is likely to be consistently on universal credit. That is one of the safety features of universal credit in this regard.

With that I think I have dealt with all the questions raised today and thank my noble friend—