Welfare Benefits Up-rating Bill

Baroness Lister of Burtersett Excerpts

Tuesday 5th March 2013 Lords Chamber

Moved by

[Baroness Lister of Burtersett]

11: After Clause 2, insert the following new Clause—
“Duty on the Secretary of State
Before enactment, the Secretary of State shall lay before both Houses of Parliament a report which states—(a) his assessment of the adequacy of the social security benefits listed in Schedule 1;(b) the principles upon which the future up-rating of all benefits and tax credits covered by this Act will be based.”

[Baroness Lister of Burtersett]

My Lords, Amendment 11 is in part inspired by the speech made by the right reverend Prelate the Bishop of Leicester at Second Reading. He suggested that this was an occasion for considering,

“the moral responsibility of this House”,

and warned that this Bill,

“looks like part of an ideologically motivated attempt to alter the very nature of the welfare state”.—[Official Report, 11/2/13; col. 469.]

He voiced his fear that we are heading towards a US-style system, where pensions are protected,

“but working-age provision is less generous and more stigmatised, barely providing enough for people to live on without relying on charitable handouts”,

and asked:

“Is this really the kind of society that we want to live in?”.—[Official Report, 11/2/13; col. 471.]

It certainly is not the kind of society in which I want to live.

The purpose of this amendment is to facilitate a debate on that fundamental question of the generosity of benefits for working-age people and their children. The first part addresses the question of whether the social security benefits affected by this nasty Bill are adequate in the first place, and the second the principles that should govern the uprating of benefits in the future once the Bill’s provisions have ceased to have effect. Of course, the two questions are related because the current level of benefit reflects uprating policies over the years.

As the House of Commons Library briefing notes:

“It is a misconception that benefit rates in the UK are based on some regular, systematic estimate of minimum needs”.

In fact, they are not even based on an irregular systemic estimate, for as the briefing points out,

“no government has … attempted any official empirical study of adequacy”,

since a covert study undertaken by the National Assistance Board back in the 1960s, despite countless fundamental reviews of social security, which some of us have lived through to tell the tale.

There are various indicators that we can use to assess benefits’ adequacy. The most basic is whether they are sufficient to keep people out of poverty and, patently, they are not, as so many people living on benefits are in poverty if one uses the relative income and material deprivation measures. The income support received by, for example, a couple with two children or a lone parent with one child is around 30% below the poverty line. Briefings from children’s charities underline the hardship that families already experience as a result. For instance, research undertaken by Barnardo’s among its service users found that two-thirds were cutting back on fuel and half were borrowing money. Three-quarters reported that food poverty was impacting on their children’s health and well-being. Similarly, a Children’s Society survey of teachers found that nearly half of those surveyed are seeing children coming into school hungry. Recent peer research undertaken by five Gingerbread community researchers in partnership with the Poverty Alliance found many lone parents skipping meals to feed their children. As one said, “Occasionally, I’ll miss meals and things like that just to make sure that they get wee bits and pieces. It makes me feel better about them having than me having”. This is an example of a common phenomenon, where mothers deprive themselves of basics to try to protect their children against the worst impact of poverty, as they act as the shock-absorbers of poverty. It is an example, too, of a point made by the noble Baroness, Lady Howe of Idlicote, on our first day in Committee about how women are disproportionately affected by the Bill.

The most sophisticated benchmark of adequacy is the minimum income standard developed by the Joseph Rowntree Foundation. It represents what members of the public through group discussion have arrived at as the minimum acceptable standard of living: what you need in order to have the opportunities and choices necessary to participate in society. I emphasise that it is about needs, as socially determined, rather than about wants.

The latest calculations indicate that a couple with two children, or a lone parent with one child living on the basic safety net benefit of income support, receive only three-fifths of the income needed to meet the minimum income standard. A single working-age person receives only two-fifths. The researchers, who are colleagues of mine at the Centre for Research in Social Policy at Loughborough University, observe that, because increases in costs have not been adequately captured by the consumer prices index, out-of-work benefits fall even further short, providing a lower minimum income living standard for non-pensioners than they did in 2008 when the MIS was first calculated. They concluded, even before this Bill was proposed, that the gap between the incomes and needs of the worst-off households is widening, especially for families with children. While the JRF is not suggesting that benefits should be raised to the level of the MIS, the sheer scale of the shortfall is indicative of how far they fall below the decency benchmark established by members of the public.

Policy has been more successful in ensuring that pensioners can achieve minimum income standards, which is of course a good thing, but according to Professor Jonathan Bradshaw, the decision to uprate pensions by 2.5% and working-age benefits by 1% for three years is going to exacerbate further the absurd differentials in benefit rates that have developed over time. In 1948, a single pensioner received only 10p more than a single person on national assistance. Now, a single female receives £71 per week in jobseeker’s allowance. When they are eligible, they get £142.70 on pension credit. A lone mother with one child gets only £133.21 a week. These differentials, Professor Bradshaw says, clearly have nothing to do with need.

That brings us to the second half of the amendment, on the principles underlying uprating policies. The significance of these policies was underlined in an earlier JRF study. It pointed out that uprating policies have big effects over time. They are among the most significant decisions taken by Chancellors. Their gradual effects seem imperceptible on a year-to-year basis yet they carry immense implications for the future. This year’s decisions will certainly be perceptible, and the implications for the future are even more immense, because, whatever decision is taken by future uprating policies, they will be uprating benefits that have been significantly depressed in real terms over a three-year period.

The report called for a more open debate about this often hidden area of public policy, so that decisions that prevent the poorest members of society keeping up with rising living standards would not be taken in the dark. Unknown to most people, uprating policies have resulted in a significant erosion of relative living standards among benefit recipients over most of the past three decades. Recently, this has been exacerbated by the use of CPI rather than RPI as the measure of inflation, particularly during the period when prices of necessities that represent a disproportionate share of spending among benefit recipients have risen faster than prices generally—a point that we made on the first day in Committee. As Donald Hirsch of the Centre for Research in Social Policy comments, in this context, the index used to uprate benefits has become a highly imperfect mechanism for preserving their real value and a rather arbitrary means of raising benefits by an amount that politicians feel that the country can afford rather than of protecting living standards.

Of course, assessments of affordability cannot be ignored. They can also be contested, as we are doing in relation to this Bill, but looking to the future I agree with Donald Hirsch that there is a need to establish principles linking benefit uprating to some stable concept of what is fair, rather than just ad hoc decisions about what can be afforded. He suggested that, as a start, this might involve reasserting the principle of human decency whereby the real value of benefits is genuinely protected and that, in the longer term, if prosperity starts to grow again, we need to consider how those in greatest need can share in such growth.

I suggest that a report to Parliament that addresses these fundamental questions is the least that we can ask of a Secretary of State willing to preside over a deliberate reduction in the living standards of the most deprived members of our community. I beg to move.

[The Lord Bishop of Ripon and Leeds]

My Lords, I have put down my name in support of the amendment and am very grateful to the noble Baroness, Lady Lister, for her tabling of it and for her powerful advocacy of it. I have done so because I am repeatedly told by citizens advice bureaux and the like of the uncertainty which is being introduced by this Bill. It is ironic that we have talked so much of certainty in setting the rates for the years up to 2015-16, when those on benefit and providing advice feel uncertain as to its short and long-term effects.

So long as benefits have been uprated by inflation, it has been possible to budget taking them into account. But this cap on uprating is a major and apparently long-term change to the whole principle of our benefit system. Recipients and those who work with them are owed an explanation. I am not looking for commitments from either Front Bench beyond 2015, but I would be very grateful for comment from both of them on whether this is to be seen as a temporary reduction with the aim of restoring benefit values after 2016 so that we ensure a decent living standard for those on benefit—the requirement that has been so ably put by the noble Baroness, Lady Lister. Or is this actually a permanent reduction to a lower level, which will then be stabilised in real terms after 2016, or a continuation of a gradual reduction expected to continue after 2016? None of those options is desirable, but they are very different in the effect that they will have, and a sense of purpose and direction from the Government and Opposition is important in all this. It is important to know just where benefits are anticipated to be going in future, both from the opposition and the government Front Bench. I hope that they can supply that in the debate on this amendment.

--- Later in debate ---

[Baroness Stowell of Beeston]

It will be based on the benefits that exist at that time.

[Baroness Lister of Burtersett]

I start by thanking the right reverend Prelate the Bishop of Ripon and Leeds for supporting the amendment so powerfully. He asked for a sense of direction. I fear that we have a sense of direction but it is not one that either the right reverend Prelate or I feel happy about. I thank the noble Lord, Lord Kirkwood, who, as ever, has brought important issues to light. I also thank my noble friend Lady Sherlock who again made a powerful speech. I also thank the Minister, whose attempt to deal with the issues raised by the amendment I acknowledge and appreciate. She was given rather a hard time but I am sure that she will understand because people feel strongly about the implications of the Bill and the effect it will have on benefits. I should like to address a number of her points.

First, my noble friend Lady Hollis picked the Minister up on this mantra that work is the best route out of poverty. Of course we all agree with that, except that work is not always the best route out of poverty because some people are going to work and are in poverty. As well as the point made by my noble friend, there seems to be an assumption that if we depress benefit levels we are somehow making it more likely that we will push people into paid work. I always remember work on lone-parent families carried out by another poverty guru, Alan Marsh of the Policy Studies Institute. He pointed to evidence that,

“a malign spiral of hardship, poor health and low morale … builds up its own barriers to work”.

He found that those in severe hardship were three to four times more likely to suffer low morale, compared with those who were not in hardship. He very wisely commented:

“It is quite hard to contemplate work if you are that demoralised and hard up”.

That is why we must not assume that keeping benefits low is necessarily going to improve work incentives.

The Minister made a point that I found quite chilling. She said: “It has never been the intention to alleviate poverty through benefit payment”. That is not my understanding: I thought that the whole point of benefits was to try to alleviate poverty. I am dismayed by that statement.

[Baroness Stowell of Beeston]

What I said was that we believed it was misguided to try to lift people over the 60%-of-median-income line through benefit increases alone, because this would not change their lives or their children’s since it would not tackle the reason they found themselves in poverty in the first place.

[Baroness Lister of Burtersett]

I accept that, but I wrote down what the noble Baroness said. She said: “It has never been the intention to alleviate poverty through benefit payment”. I wrote it down. If she wants to retract that statement, I would be delighted.

[Baroness Hollis of Heigham]

I think it was at the point when the Minister said that unemployment benefits were only intended to be temporary while people were in between work, and that therefore they were never expected to address poverty as such. That is the problem that we are worried about.

[Baroness Stowell of Beeston]

This is a debate about the adequacy of benefit rates, not about benefits in a package of what people receive. The difference here is that if somebody is in receipt of a combination of different benefits—housing benefit, jobseeker’s allowance and so on—I can absolutely see the point that the noble Baroness is making. What I am saying in the context of a debate about how to set the rate of a benefit is that benefits alone do not alleviate poverty.

[Baroness Lister of Burtersett]

I thank the Minister for her clarification. I think I can take it that it is not the Government’s position that benefits are not there to alleviate poverty; I hope that is right. The noble Baroness must remember that not everybody can take the route into paid work: there are some people of working age who will be on benefits for a considerable length of time and we cannot just say, “Oh well, they don’t matter”.

There was quite a lot of discussion about food banks. It just so happened that I chaired a meeting the other week for a group called Just Fair, where the director of the Trussell Trust was speaking. He pointed out the exponential increase in the number of food banks over recent years. The increase is huge. That meeting was addressed by the UN rapporteur on the right to food. He made it very clear that he did not see food banks as any kind of solution to the problem of food poverty. I accept that the Minister was not saying that she was happy about the spread of food banks, but I think she was, perhaps, underplaying the extent to which they have spread recently. I do not think it is simply because Jobcentre Plus is now acting as a signpost.

I was disappointed that the noble Baroness was referring back to quotes from 1985 about the difficulties of establishing the adequacy of benefits. Research has become a lot more sophisticated since then and there is a growing consensus—although clearly not on those Benches—around the work done on minimum income standards. When my noble friend Lady Sherlock asked about impact, I do not think she was asking for the same kind of impact statement that we have been talking about—the numbers and so forth. She was asking for an impact on well-being. Local authorities are now supposed to address the well-being of everyone in their areas. What impact is this Bill—together with all the other things that are happening—going to have on the well-being of children and their parents? This goes back to what the noble Lord, Lord Kirkwood, was saying about monitoring. Monitoring is not simply about numbers: it is about what it is going to mean to the lives of some of the most deprived members of our community.

I am disappointed that the Minister is not prepared to accept an amendment which is not about spending money; it is about trying to let us better understand the principles that should govern our social security system when times are easier. However, I beg leave to withdraw the amendment.

Amendment 11 withdrawn.

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[Lord Kirkwood of Kirkhope]

My Lords, I hope to make an even shorter contribution to this important debate. I agree that the amendment relating to child poverty is apposite and important. I want to confine myself to seeking further clarification from the Minister, if she has the information to hand. It would be to the Committee’s advantage if we knew more about what we can expect from the Social Mobility and Child Poverty Commission, because it relates directly to the substance of this amendment.

I was pleased that there was a recent change to the membership of the commission and that our very own noble Baroness, Lady Shephard of Northwold, has joined it. I am pleased about that because she is an experienced hand and I trust her judgment. I look forward to seeing the fruits of her work within that commission. It is important to us all. However, I was disappointed to learn recently that the first annual report of the Social Mobility and Child Poverty Commission is not now to be with us before 26 September this year. We were expecting it in May. I make that observation because it is a sign of drift, potentially. If I am wrong about that, I hope that I will be put right.

I was very uneasy about adding social mobility to child poverty. The original terms of reference of the 2010 Bill as put forward by the noble Lord, Lord McKenzie, were the correct ones. The Deputy Prime Minister, of whom I am a great fan, as I am sure people understand, was wrong. Social mobility is a different subject altogether. It is much longer term and in the short term, we are dealing with a situation that is more of an emergency than the aspiration of social mobility, which of course we all accept. We really need to understand what contribution to child poverty this commission will make. If the Front Bench can tell us anything about that in the course of this amendment, that would be very useful.

My second point is that of course we know that there is a consultation on child poverty measurement. I am taxing my memory here, but I think we were expecting the end of the consultation to be earlier this year—some time in February. If that is the case and my memory is correct, I hope we can be told that the Government’s contribution to the further development of child poverty measurement will be vouchsafed to us sometime soon. It will certainly be important to get hold of this around the time of the Budget, if we can. Some of the Office for Budget Responsibility’s assessments of future policy in terms of the Budget should be seen against the background of the Government’s view about how they will treat child poverty measurement in the future.

I am slightly nervous about some of the things that I have been hearing are being factored into the measurement of child poverty in the future. It may be that I am misreading signals but I hope that we do not lose focus on the fact that, at the end of the day, child poverty can be addressed only with money. Regarding any attempt to dress that up and expand the measurements too widely, while I am in favour of having all the data and metrics that we can access, for the reasons I explained on the last amendment we are facing an emergency situation the extent of which I did not anticipate.

The difficulties are mounting up, as we heard earlier. The decisions to be taken by the Government in the near future on measuring the data on child poverty are very important. If the Minister can help us to understand when we might expect information of that kind, it would help the Committee’s consideration of this Bill not just today but over the rest of its proceedings.

[Baroness Lister of Burtersett]

My Lords, I am pleased to support my noble friends on this important amendment, which has been moved so ably. The Government have still not explained why they did not include the impact on child poverty in the impact assessment for the Bill, as they promised. A Written Answer in the Commons as late as 30 January wrongly stated that the impact assessment sets out the estimated child and adult poverty effects, but it does not. As it is, the shameful figures had to be dragged out of the Government by a Written Question, as my noble friend said. Nor have the Government explained to the Committee how the anticipated increase in the number of children living in poverty thereby revealed is compatible with their obligations under the Child Poverty Act 2010, to which my noble friend referred. I asked this question during Second Reading, but answer came there none.

Instead, the Minister deflected the question with the Government’s usual line that the child poverty measurement indicators are somehow not fit for purpose —picking up on the point made by the noble Lord, Lord Kirkwood. That was followed by a brief discussion about the importance of education, debt and paid work in tackling poverty, but nothing was said about how by enacting this legislation and knowingly adding 200,000 children to the poverty rolls, the Government are fulfilling their obligations under the Act. Those obligations are in addition to the increase in child poverty estimated by the Institute for Fiscal Studies, to which my noble friend referred. I would be grateful if today the Minister could answer the question I asked at Second Reading. What does this mean for the Government’s statutory obligations under the Act? Whatever the Government think about the measures of poverty enshrined in the Act, unless they plan to amend it—perhaps the Minister could tell us if they do—they must face up to their legal obligations as set out in it. What countervailing measures will they take against the increase of 200,000 children living in poverty?

I agree with the Minister that education, debt and work are important factors in any anti-poverty strategy, but it is unclear how reducing real incomes will help with any of them. How, for instance, will making life harder for low-income families enhance the educational chances of their children? Hungry children do not make good learners. Anxious and stressed parents are less able to support their children’s education. Adequate incomes are important to educational chances. Paul Gregg has estimated that around 50% of educational inequalities or attainment gaps between the rich and the poor in the UK stem from differences in income. Similarly, as the Minister said, debt is a major problem for poor families, but I fail to see how reducing their weekly income will reduce that problem. All the children’s charities are predicting an increase in debt as a consequence of this Bill, and a Bill that depresses the incomes of low-income workers is hardly conducive to promoting work as the best route out of poverty. I made the point earlier about what Alan Marsh said: people who are demoralised do not make very effective jobseekers.

As the Government consistently attempt to deflect questions about the impact of the Bill on child poverty by dismissing the measures in the Child Poverty Act 2010 as inadequate I should like to say a few words, if the Committee will indulge me, about their recent consultation on those measures. Noble Lords might have read a letter recently in the Guardian from eight fellows of the British Academy, myself included. The letter argued that the Government’s proposals to measure child poverty in a new way,

“are confused and would meet neither the government’s objectives nor international standards”.

While accepting that,

“it is helpful to track what is happening to the factors that lead to poverty and the barriers to children’s life chances”,

the letter advises that,

“it does not make sense to combine all of these into a single measure. To do so would open up the government to the accusation that it aims to dilute the importance of income in monitoring the extent of ‘poverty’ at precisely the time that its policies will be reducing the real incomes of poor families”.

--- Later in debate ---

[Lord Newby]

My Lords, this proposed new clause would require the Secretary of State to lay a report in each of the years in question, assessing the impact of that year’s uprating order on child poverty based on the different measures contained in the Child Poverty Act. I absolutely understand noble Lords’ concern to ensure that we are tracking progress and impacts on child poverty. However, I do not believe that this new clause is necessary to do that.

The Government already publish child poverty figures every year using the households below average income series, which is usually published in May or June and includes details on the areas listed in the amendment: namely, the number of children,

“living in relative low income … combined low income and material deprivation … absolute low income … persistent poverty”.

Moreover, later this year, we will see the first of what will become an annual report from the Social Mobility and Child Poverty Commission, chaired by Alan Milburn. It will report on the Government’s progress towards reducing child poverty, in particular meeting the targets in the Act and implementing the most recent UK strategy.

The noble Lord, Lord Kirkwood, asked a number of questions about that commission. He asked where it had got to and what it was going to say. The answer is that the Government do not know what it is going to say because it is an independent commission. We await its report eagerly, but we are not attempting to pull it up by the roots to find out what it is going say as it is in the process of undertaking its work. I can reassure my noble friend that there is no drift in the work of the commission. It is a very substantive piece of work and it is therefore not surprising that it cannot do it very quickly. We expect that its report will be available in the late summer. It will report to Parliament and I am sure that we will give considerable scrutiny to it in your Lordships’ House when the time comes—we are already looking forward to it on these Benches, I can tell you.

I strongly believe that it is only through such comprehensive reporting, looking at poverty issues in the round, that we can have a meaningful debate about child poverty. As noble Lords have mentioned, we published in response to a Parliamentary Question in another place the expected impacts on child poverty of the uprating measures that we have announced. An additional 200,000 children will be in that category by the end of the period covered by the Bill as a result of the measures in it.

The noble Baroness, Lady Sherlock, asked whether we would publish other impacts of the measure. We do not think that it is possible to derive estimates of all the measures in the Bill. For example, impacts cannot be modelled for the persistent low income poverty measure because impact assessments are based on cross-sectional data rather than longitudinal data. In addition, measures based on an estimate of material deprivation are technically complex to model because material deprivation relies on more factors than just income, so impacts have not been modelled for these measures. The noble Baroness asked also about the absolute poverty figure. If she will forgive me, I shall write to her on that separately.

As we have said previously, we believe that we need to be cautious about setting too much store by such individual assessments of impact. These are not predictions of how the child poverty figures will change in the future, as they do not take into account all the other variables which exist. For example, our estimates will change as forecasts of economic growth and average earnings change, and they do not take account of policies which cause child poverty figures to move in the other direction such as universal credit. Universal credit, which has not played much of a part in our debate today, is of course expected to lift up to 250,000 children out of poverty depending on the effect of the minimum income floor. I believe that we can have a meaningful debate about poverty, as we have started to do in the latter part of this debate, only when we accept that poverty goes wider than the measures contained within the Child Poverty Act.

The noble Baroness, Lady Lister, asked a number of questions about the work that we are doing on defining poverty and on the consultation. The consultation is finished. She is quite right that a number of people have been very critical of what the Government are proposing and we are now considering how we respond to those criticisms. It is not the case that the Government have made up their mind about the outcome and are going to ignore everything that has been said—that would be ridiculous. I can give the noble Baroness an assurance that we are analysing all the submissions, of which there have been a number, and we will produce our response to the consultation in the summer.

[Baroness Lister of Burtersett]

I am sure that the Minister is about to say this, but the assurance that I was seeking was that all the responses would be published on the web. I do not question the fact that the Government are analysing them all—I am sure that they would not ignore any of them—but the public need to know what people were saying about it.

[Lord Newby]

I am happy, I think, to give that assurance. I say “I think” only because I have not talked to officials. That is the standard practice and, unless somebody for a reason that I cannot immediately think of has said that they do not want their comments to be published, I would expect the department to publish all the comments and representations that we have received.

I want to clarify a few matters that have been put to us on several occasions by noble Lords. First, the Government are committed to the Child Poverty Act; secondly, we are committed to eradicating child poverty; and, thirdly, we strongly believe that income matters and will remain a central part of any new measures of child poverty. Our discussion is about what else one needs to do both to measure and deal with child poverty so that all children have a better opportunity when they are living on very modest means.

A number of noble Lords have cited figures from the IFS and the Child Poverty Action Group which suggested that child poverty levels would rise by between 800,000 and 1 million by 2020. I really would caution against setting too much store by those figures. First, child poverty forecasts are an inexact science. For example, the numbers that the IFS produces do not account for future changes to government policy. It is measuring change at a time of immense fiscal challenge for the Government but cannot know what government policy will look like in four or five years. The IFS core numbers also do not take fully into account the dynamic and behavioural changes that will result from the Government’s reforms. Moreover, even in the short term, child poverty forecasting has proven difficult to get right. The IFS, which I accept is a leader in this area, made predictions in October 2011 of a fall of 100,000 in the figure for relative child poverty for the year 2010-11. In reality, the figure fell by 300,000. It is therefore an inexact science and it is very easy for numbers produced by it to be spectacularly wrong. This does not of course detract from the importance of taking action to reduce the level of child poverty, but it serves as a reminder that we should proceed with caution in making forecasts of child poverty, whether based on measures in isolation or changes over the longer term.

It is important to remember that many figures on poverty are based entirely on tax and benefit changes feeding entirely into the relative income measure of poverty. This measure does not capture the full range of issues that poverty involves. It captures a lot, but it does not capture them all. It will not tell us how many children’s lives will have been changed by 2020 but only how many children have circulated around the poverty line. One way of tackling child poverty is to focus on this line, pushing up benefit incomes to lift people from just below it to just above it. We already know that focusing on the relative income line alone yields perverse results, and people have referred in this debate and earlier debates to the fact that, in 2010, 300,000 fewer children were set to be in poverty because the recession had caused median incomes to drop. Children were set to be pulled out of poverty not because anything had changed in their lives but because the rest of society got poorer.

The alternative path that we are trying to follow in government focuses on the interventions that transform lives. That is why we have protected spending on the education budget; that is why we have invested £2.5 billion in the pupil premium for disadvantaged pupils; that is why we are spending £1.2 billion on capital investment in schools; and that is why we are investing in making work pay through the universal credit, sending out a clear signal that we believe that work is the best route out of poverty for parents and their children. As part of the universal credit, we are spending an extra £200 million to support families with childcare costs and, for the first time, this support will be made available to families who work fewer than 16 hours a week. This will mean that 100,000 working families will be helped with their childcare costs.

As I have said, the Government are currently analysing responses to their consultation on new measures of child poverty, measures which will attempt to capture the wider reality of poverty in the UK today. The Government already produce a number of detailed reports on poverty. I hope that this will reassure the Committee that we will continue to publish vital information around child poverty and to take our obligations around child poverty seriously. This proposed new clause would therefore be an unnecessary addition to the Bill.

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[Baroness Stowell of Beeston]

My Lords, I start by making it absolutely clear that, contrary to what the noble Baroness, Lady Sherlock, has just said, the United Kingdom has a strong and effective maternity and parental regime. The UK is significantly more generous than the requirements of the EU pregnant workers directive. The directive says that a woman should benefit from 14 weeks’ paid maternity leave; we provide 39 weeks. It also says that a woman should receive at least the amount that would be paid for sickness; our standard rate of maternity pay and maternity allowance is £135.45. This compares very favourably with the current statutory sick pay rate of £85.85 per week.

In addition, the latest available data from the OECD from the previous financial year show that the proportion of our GDP spent on maternity and parental pay is higher than in Germany or France. Moreover, in the past decade, the standard rates of statutory maternity pay and maternity allowance, which is the allowance that is paid to women who are not in work who have children, or who were not in work prior to the birth of their child, have increased by more than 35%, from £100 a week in 2003 to £135.45 currently. So while I accept that the decisions we have taken on statutory maternity pay will mean a slightly smaller increase for people over the next few years, the UK’s strong and effective maternity architecture will remain firmly in place.

The noble Baroness, Lady Sherlock, referred to what she described as a mummy tax and to media reports on it. I am slightly surprised that she referred to Mumsnet because when her honourable colleague Rachel Reeves published an article on Mumsnet on what she described as a mummy tax back in December last year, the blog attracted a lot of comment. It is worth highlighting some of the points that were made. Most of the contributors were at pains to say that they were not supporters of, or spokesmen for, the Government, or supporters of either of the two parties in government. One contributor said:

“I despise this latest Labour ‘Mummy Tax’ campaign. For one, the name ‘Mummy tax’ is hugely patronising and sexist for people in a relationship as my husband benefits from maternity pay just as much as me as all our household income is pooled. And let’s be clear although there is a real terms cut due to the rate of inflation, this change is not a tax”.

The comments continued and attracted quite a lot of support. Another contributor responding to the post on Rachel Reeves said:

“I’ve had no pay rise for the last 3 years and we are getting nothing this year and told to expect the same for the next 2-3 years—is that a tax? No, it’s just the real world and I have to get on with it. I’ve had a child during that time and we had to work around what we could afford with regard to length of maternity leave and to be honest £180 would have made no difference whatsoever. I despise the term ‘mummy tax’—it’s a patronising media friendly sound bite, which creates a hugely distracting perception of the middle class having to cut back on cappuccinos whilst on maternity leave which removes debate from the real issue. I would like to see the labour party setting out what it would do in power and challenging the government instead of wheeling yet more spin and inaccurate bluster”.

[Baroness Lister of Burtersett]

I am sorry to interrupt the noble Baroness. I accept that that must have been said on Mumsnet and I have to admit that I do not particularly like the term “mummy tax” either, but does she accept that while it is the case that the mother who posted on Mumsnet pooled her income, research that I and others have carried out shows that for many women having a benefit in their own right is important to them psychologically? They receive money over which they have control, whether or not they then pool it in the household. Not all households pool their incomes. Some do and some do not.

[Baroness Stowell of Beeston]

That is a fair point. The people who were posting on the internet at that time were responding to the comments of Rachel Reeves about the proposals having a disproportionate impact on women, and only women.

Away from the debate on Mumsnet, the Government are committed to make this architecture for women stronger. The provisions in the Children and Families Bill, which had its Second Reading in another place last week, will allow working parents to choose which parent takes parental leave and pay to care for their child in the early years. This will give mothers real choice over when and whether they return to work. This is helpful in two big ways—where the woman is the higher earner and in starting to chip away at the inequality that some women face at work just because it is assumed that they and only they will take a break in their careers to have children. Our proposals will start to make a big difference.

It is also important to remember that the Government have introduced other reforms that will help to offset the impacts of these changes. For example, a woman working full time at national minimum wage for six months of the tax year, who then receives statutory maternity pay for the next six months, will still be better off overall as a result of changes to the income tax personal allowance. The introduction of universal credit will also provide a big boost for many mothers and lone parents, with 2.6 million women and 700,000 lone parents expected to gain through increased take-up and improved financial incentives to work. In addition, as part of the introduction of universal credit, £200 million extra is being spent to support families with childcare costs. For the first time, this support will be made available for families who work less than 16 hours a week. This will mean that 100,000 more working families will be helped with their childcare costs. That is important, because it means that even if someone is able to take on only a small amount of work, they will get that support for childcare costs to which they previously would not have had access. In another move that will be helpful to mothers and parents, as my noble friend Lord Newby mentioned, we have committed to introduce 15 hours a week of early education for 40% of two year-olds, starting with the most disadvantaged.

The Government will also continue to make extra support available for mothers on low incomes to buy the basic goods that they need. We have a programme called Healthy Start, and the Sure Start maternity grant—a lump sum payment of £500—is available to help parents with the costs of having a new child. I know that the noble Baroness, Lady Sherlock, said that this is now available only to parents who have a child and no other child under the age of 16. However, this support is additional to the money that parents receive through their statutory maternity pay. Bear in mind that if there is another child in the home, some of the initial substantial expenses of having a family often are not repeated if they have a second child.

The amendment would reduce savings from the Bill by around £50 million in 2015-16. None of the decisions contained in the Bill are easy. I recognise that the noble Baroness, Lady Sherlock, would prefer that we did not include statutory maternity pay in the Bill. I would like that, too. I would love it if we could say, “Let’s exclude this or that”. However, as my noble friend said in our previous debates, every time we say that we will not include something in the Bill, we have to look somewhere else for the money. That £50 million is not a small sum and is equivalent to more than 20,000 part-time nursery places for three to four year-olds. This is money that will cover substantial support that rightly we provide to mothers and families in other ways.

I hope that I have been able to demonstrate that there is a strong architecture to support women when they have children. I therefore hope that the noble Baroness feels able to withdraw her amendment.

--- Later in debate ---

Debate on whether the Schedule should be agreed.

[Baroness Lister of Burtersett]

My Lords, in opposing the question that the Schedule be agreed, I do not wish to reopen the debates we have already had about the damaging impact it will have on some of the most deprived members of our community. I hope I can take it as read that I oppose this schedule in the same way that I have opposed the clauses. Instead, on the helpful advice of the Public Bill Office, I wish to use this debate as an opportunity to draw attention to the needs of an even more deprived and vulnerable group who cannot even count on a miserable 1% increase in benefits, and that is asylum-seeking families reliant on asylum support.

The right reverend Prelate the Bishop of Ripon and Leeds and I raised this issue briefly during Second Reading. The Minister responded, correctly, that asylum seeker benefit rates are a matter for the Home Office and are not within the scope of the Bill. He kindly said he would draw our remarks to the attention of colleagues in the Home Office. We are, of course, aware that asylum seeker benefit rates are not within the scope of the Bill; that is the very reason why we raise the question. They should be part of its scope and treated in the same way as other social security benefits when it comes to uprating policy. As I have given the Minister’s office notice that I planned to raise this issue in this context, I hope that the Minister will be able to address the substance of our remarks when she comes to respond.

The right reverend Prelate and I, together with the noble Lord, Lord Avebury, remember the all-party parliamentary inquiry into asylum support for children and young people, set up by the Children’s Society. I would like to put on record my thanks to the Children’s Society for all the work it has done on this important issue and for its briefing for today’s debate. That briefing draws on the findings of our inquiry. We found that the current asylum support system is forcing thousands of children and young people seeking safety in the UK into severe poverty. We were shocked to hear of instances where children were left destitute and homeless, entirely without institutional support, and forced to rely on food parcels or charitable donations. This cannot be right.

It is estimated that there are 10,000 children living on asylum support. The panel heard powerful evidence of the reality for those living on as little as £5 a day, whose parents are forced to skip meals to feed their children and are unable to buy warm clothing in the winter. Some families find current levels of support particularly difficult, including pregnant women and lone mothers with young children—and families of a disabled child, because asylum support does not offer families any standard additional support when a family member has a disability. With regard to pregnant women, one particularly shocking example brought to our attention was a mother having to walk home from hospital in the snow with her newborn baby in her arms because she had no money.

Just last week, Maternity Action and the Refugee Council published a report which gave more examples of the problems faced by pregnant and nursing women who had insufficient money to meet their most basic needs. Most asylum-seeking parents are not allowed to work, leaving families totally reliant on state support; paid work is not a route out of poverty for them. Asylum support levels differ significantly from income support and other mainstream benefit levels. Until 1999, asylum support was set at 90% of income support, after which levels of support were reduced to 70%, with the justification that asylum seekers in accommodation no longer had to pay utility bills. There is currently no statutory provision to make an annual uprating of levels of asylum support in line with increasing costs of living. I acknowledge that the previous Government did not set a good precedent on the uprating of asylum support. I therefore hope that my own party will at least be open to rethinking our policy on this.

Asylum support rates have not been raised in 2012-13, so they have effectively been frozen without any announcement to justify this. When I asked a Written Question about this, the Answer was that there was not only no statutory obligation to carry out an annual review but no obligation even to make an announcement. There should be, in both cases. As it is, I was told:

“There are no current plans to change asylum support rates”,

although the Government,

“will continue to keep them under review”.—[Official Report, 15/1/13; col. WA 121.]

If the rates are frozen for a second year in succession, that will mean a cut of 6.2% in relation to income support payments over the last two years, making it even more difficult for families to survive. Can the Minister please explain which factors are taken into account when keeping asylum support rates under review? What is the actual process for deciding how and when they will be uprated?

The inquiry recommended that asylum support for families also provided with accommodation should be aligned with mainstream benefit rates paid for living expenses. Where accommodation includes utilities, which would normally be expected to be paid from living expenses, it is appropriate to make a deduction. However, such a deduction must be reasonable. The inquiry argued that the rates of support should never fall below 70% of income support. As it is, asylum support now bears no relation to income support.

The inquiry was particularly concerned about the situation of families on Section 4 support, which may be provided if a child is born after an asylum claim had been refused but where the family are, for some reason, unable to leave the UK. Almost 800 children are being supported under Section 4, some for many years. Under Section 4, the amount provided is even lower and the use of a cashless system—the azure card, as it is called—can be degrading and wasteful because it can be used only in certain designated shops. The inquiry recommended that this particularly inhumane form of asylum support be abolished entirely and replaced with a single cash-based support system for all children and their families who need asylum support while they are in the UK.

Given that asylum support rates were not increased in 2012-13, they should be raised as a matter of urgency for the 2013-14 financial year and thereafter increased annually, at the very least in line with income support, along with other benefits in the schedule. I would be grateful if the Minister could explain the rationale for treating asylum support differently from mainstream social security benefits when it comes to annual upratings. Ministers frequently refer to the Government’s ongoing review of asylum support when questioned on these issues, including recently in response to a Written Question from the noble Lord, Lord Hylton, which referred to our all-party inquiry. In his Written Answer, the noble Lord, Lord Taylor of Holbeach, said that the Government would consider our findings as part of this ongoing review. Will the Minister please tell us whether the Government will respond to the all-party inquiry’s report? How long will this ongoing review go on, and when can we expect an outcome?

I would argue that a review of the treatment of one of the most deprived groups in our community should be treated with a little more urgency. It is shameful that we are willing to allow children and their parents who are seeking asylum in a rich country such as ours to continue to suffer in this way.

[Lord Avebury]

My Lords, I agree with the noble Baroness that the payments made to people who have applied for asylum should be treated in the same way as any other benefits and should be subject to review by your Lordships. Instead, as the noble Baroness explained, there is no obligation to uprate the benefits or even to make a statement, nor, in particular, for the Government to explain whether they believe that the payments made to asylum seekers should bear any relationship to those on income support, or whether the two calculations are to be performed on an entirely different basis. If so, what is the underlying rationale behind the amounts paid to people on asylum support?

As the noble Baroness has already said, with her I was a member of the cross-party parliamentary inquiry organised by the Children’s Society into asylum support for children and young people, under the very able chairmanship of my honourable friend Sarah Teather, the former Minister for Children. I join the noble Baroness, Lady Lister, in expressing the concern and dismay that we all felt when listening to the stories of suffering and destitution of asylum seekers. The worst-off were those supported under Section 4 of the Immigration and Asylum Act 1999, many of whom were failed asylum seekers who could not be returned to their country of origin because it would not accept them. Under that provision, people have to live in housing and accommodation provided by private agencies, the standard of which often is grossly deficient and lacking in ordinary facilities.

I could not help noticing the contrast with the Statement made earlier today about the arrangements being made for our forces returning from Germany. Quite rightly, £1 billion is being spent on 1,900 new houses for those families, when nothing whatever is spent on the accommodation of people who have applied for asylum.

Section 4 provides support in the form of vouchers which can be redeemed only at certain shops. The value of the azure card, which is intended to provide for all essential living needs, is £70.78 a week, compared with income support for a couple with children of £123.35. Because they have no cash, as the noble Baroness has explained, the recipients cannot do many ordinary things, such as buying stamps, taking a bus or making a telephone call. She gave a particularly lurid example of evidence that we heard about a mother who had to undertake all sorts of physical arrangements with her small child as regards apparatus that was needed. My noble friend Lord Taylor of Holbeach said, in his brief answer to a question on asylum support on 24 January, that he was surprised to find that there were two levels of benefit within the asylum system. Indeed, one cannot imagine the motive for building this level of complexity into it.

--- Later in debate ---

[Baroness Stowell of Beeston]

I was going to refer to the complaints that have been made about delays in dealing with Section 4 cases. These problems have been acknowledged by the department. Efforts have been made to address the causes behind those delays and there have been some improvements.

The noble Baroness, Lady Lister, said that disabled people receive no additional support. If asylum seekers have higher needs, they are supported by their local authority under an old Act, the National Assistance Act 1948. My noble friend Lord Avebury asked whether disabled children would receive higher value support. Again, that is a matter for individual local authorities, which will have considered the needs of the child and conducted a relevant assessment. My noble friend also asked whether these arrangements are compatible with the UN Convention on the Rights of the Child, and the answer to that is yes. The UK Border Agency is bound by its Section 55 duty to consider the best interests of children. As I have said, fully furnished free accommodation, education and healthcare are provided, plus an allowance to meet the need for food, clothes and other essential items.

Although I acknowledge the strength of feeling that has been expressed by noble Lords about the difficulties that inevitably are faced by people who come to this country seeking asylum, when comparing asylum support rates across Europe, our research shows that the UK is comparatively generous in family cases, providing more to an asylum-seeking family of four than countries like Sweden or Denmark. Further, as I have mentioned, there is an ongoing review of our approach to asylum seeker support and we expect to finish conducting our inquiries shortly. We are taking account of the views of partners, including the recommendations of the Children’s Society. We will want to ensure coherence with the mainstream benefit system and the financial constraints being faced. The noble Baroness, Lady Lister, asked for further details about the evidence that is being considered in the course of the review. I shall see whether I can write to her with further details on that.

It is worth saying that there is no statutory obligation to carry out an annual review of asylum support rates. Instead, Parliament has set a clear benchmark that the support provided must meet the “essential living needs” of recipients of Section 95 support and that it must provide “accommodation” to recipients of Section 4 support. It would be wrong to raise expectations in this area given the current constraints on the funding available, but we are committed to an approach to asylum support that is fair, reasonable and balanced. No one who has sought our protection need be destitute while waiting for an application to be decided, but if the application is refused and the decision is upheld by the courts, we expect people to return home. Perhaps I may add that if someone is granted asylum, if they are in need of benefits they will transfer on to the domestic regime, which ensures that they receive the same benefits as anyone else in this country under the normal rules that apply.

If I have failed to address all of the detailed questions put by my noble friend Lord Avebury and, indeed, if there are any others, I will follow them up in writing. I am grateful to the noble Baroness, Lady Lister, for the opportunity to set out the support that is provided and I hope that I have been able to reassure her and other noble Lords that the Government continue to take this matter very seriously. I hope that she will withdraw her objection to the schedule.

[Baroness Lister of Burtersett]

My Lords, I thank the noble Lord, Lord Avebury, and the right reverend Prelate for their powerful support in this debate, and I thank my noble friend Lord McKenzie for accepting that perhaps our side will have to reflect on the findings of the inquiry. That was very welcome. I also thank the Minister for her full reply and for the good news that the review is expected to conclude by the end of this financial year. That is one good piece of news. When she writes to noble Lords, perhaps she will also say whether the review will be published so that we can read the full results.

I want to make only one point because I am conscious that noble Lords are waiting for the next debate. I turn to the question of “temporary”, which was picked up by the noble Lord, Lord Avebury. I would point out that a Written Answer in the other place last week stated that the average time spent on Section 95—not Section 4—was 525 days. That is a long time to be living on such a low income.

It has been useful to have this debate. Although I cannot welcome everything the Minister has said, I do welcome her acknowledgment of the importance of these issues and the fact that the review is about to conclude. I do not intend to oppose the schedule.

Schedule agreed.

Enterprise and Regulatory Reform Bill

Baroness Lister of Burtersett Excerpts

Monday 4th March 2013 Lords Chamber

Your Lordships may have seen a briefing from the Equality and Human Rights Commission suggesting a simpler purpose clause, but I fear that it is merely a description. There are no aims. It separates equality from human rights, rather than uniting them. It gives little or no direction and does not reflect what the Government have said about the commission’s future role. I am sure that your Lordships will agree that this late stage of the Bill is not the time to be suggesting such a proposal, with no opportunity for true debate. To debate it as good scrutineers is our job, after all. It is vital to keep Section 3 and I hope that your Lordships will support me in this endeavour. I beg to move.

[Baroness Lister of Burtersett]

My Lords, I apologise for not being able to be present when this amendment was debated in Committee. However, I have read the debate and the balance of opinion clearly lay with the noble Baroness, Lady Campbell of Surbiton—not surprisingly, given the powerful speech she made and the one which she has also made today. It is a privilege to support an amendment moved by such a respected champion of equality and human rights, who I would like to call my noble friend. In doing so, I wish to address just two points that emerged during the debate in Committee.

First, the Minister argued that the general duty contained in Section 3 “creates unrealistic expectations”. She went on to acknowledge the importance of the statement contained in the general duty and suggested that it could,

“be replicated in the commission’s own strategic plan”—[Official Report, 9/1/13; col. GC 61.]

or mission statement. Surely, however, that is to undermine her own argument because if the problem is one of unrealistic expectations, they would still be created if replicated in a strategic plan or mission statement.

The other main argument put forward in the debate was that repeal of the general duty would not make any difference anyway, as it is of symbolic rather than practical importance. This is the official stance taken by the commission itself. I have two responses to that: first, as a number of noble Lords noted in Committee, this justification was challenged by Professor Sir Bob Hepple of Cambridge University. He argued that Section 3 has an important legal function and that without it equality law would be “rudderless” and would lack the “important unifying principle” that Section 3 provides, and which the Joint Committee on Human Rights welcomed in its report on the Equality Bill. However, even if the significance of the general duty were more symbolic than practical, symbols matter in politics and we should not underestimate the symbolism of removing the section. The deluge of e-mails that I have received in recent days defending Section 3 is a testament to the power of that symbolism.

At a time when politics has become increasingly managerial and uninspiring, I find it rather wonderful that the Equality Act contains an aspirational, visionary statement of intent. Moreover, the European Commission study on national equality bodies advised:

“In order to fully realise their potential in promoting equal treatment for all, equality bodies should develop a vision of their role within the administrative culture and society”.

It is a sad day if the vision enshrined in the legislation is now struck out. As the British Institute for Human Rights argues, it sends a worrying message that the Equality and Human Rights Commission,

“is to be a compliance factory with no real ambition or purpose”.

I fear that the suggested alternative put forward by the commission in its briefing, namely that it should be,

“a national expert on equality and human rights”,

and the strategic regulator for equality offers neither ambition nor visionary purpose but is, as the British Institute argues, purely descriptive, as the noble Baroness has already said. It offers mundane prose where Section 3 offered the poetry of high ideals.

I hope that the Minister will have thought again in the light of the support for this amendment in Committee and the public concern now being expressed. If not, should the noble Baroness, Lady Campbell, decide to test the opinion of the House, I hope that noble Lords will support her. The amendment will cost nothing, but it will provide reassurance that the work of the Equality and Human Rights Commission will continue to be framed by a vision of society in which each of us without exception is treated equally and with dignity and respect—the core principles of human rights.

[Baroness Hussein-Ece]

My Lords, I associate myself with what has been said by the noble Baronesses, Lady Campbell and Lady Lister. I do not want to repeat what I said at Second Reading—we had a very full debate then—but I was disappointed that we continue to hear that removing the general duty was a bit of tidying up and that it would have no effect whatever on the work or legal responsibilities of the commission. The question that has been put a number of times, including by myself, was then why do it? Why do something if it will have no impact at all? I am afraid that the reply has not given me much confidence.

I strongly believe that the Government have a choice between a strong independent body that is committed to promoting and safeguarding our values, which I believe are British values, independent of the Government of the day—whichever colour—or we go for the option of a watered-down, less independent, weaker institution, which in time would be rendered merely an enforcement agency or regulator without the vision and underpinning that is so important. I cannot think of another organisation, independent or statutory, that does not have some sort of mission statement or a duty to promote or do something. This is the only organisation of its kind in this country. Are we suggesting that the Equality and Human Rights Commission does not need such a mission or values, which were very much fought over and arose as a result of cross-party agreement when the Equality Act 2006 was debated and enshrined?

I said at Second Reading, and it is worth saying again, that the then Opposition gender and equality spokesperson Eleanor Laing, MP, spoke of how important it is that the general duty is ambitious and wide ranging. With the change of government and apparently as part of an unwritten agreement, this seems to have changed for whatever reason, and I am disappointed.

There is an opportunity here for the Government to say what sort of organisation we want. We have a choice, but I also think that maybe we need to take a step back. Perhaps this is not the right place to debate what sort of mission statement or general duty an organisation as important as this, with such a multifaceted function, should have at this stage. We evidently need more time to consider this. It cannot be resolved via this Bill on the Floor of the House.

Will the Government take this away and consider the type of organisation they want and what they want it to do? As I said, in line with other organisations, if not in this country then in the world, it should have some form of agreed mission statement incorporating its aims, responsibilities and duties to the taxpayers and citizens of this country. The Government should do this in consultation with the Equality and Human Rights Commission, and bring it back to the House. Will the Minister respond to that?

Welfare Benefits Up-rating Bill

Baroness Lister of Burtersett Excerpts

Monday 25th February 2013 Lords Chamber

[Baroness Lister of Burtersett]

My Lords, I support both these amendments. I have a question concerning Amendment 2. Like the noble Baroness, Lady Meacher, I am slightly confused; I had understood that the rationale for not including, say, pensioners in the Bill was that that group could not be expected to make up the difference through paid work. Therefore, and in a sense this follows on from the noble Lord’s question, why are disabled people in the support group affected, albeit not as much as some other groups? According to the Disability Benefits Consortium, a person in the support group will be £138 per year worse off by 2015. That is a considerable sum for someone living on benefits, and of course the personal allowance element is larger than the element that is protected. Why does that principle of excluding groups that the Government expect to go into the labour market to somehow protect themselves not extend to people in the support group who, by virtue of being in that group, are not expected to look for paid work?

[Baroness Stowell of Beeston]

My Lords, I am grateful to all noble Lords who have contributed to this debate. It is probably worth my summarising that the two amendments we are talking about seek to make changes to the ESA. Amendment 2 would remove from the Bill the 1% increases in the personal allowance for those in the support group, while Amendment 3 relates to those in the work-related activity group.

I understand why noble Lords have tabled these amendments and raised the points that they have in this debate. We all want to protect those who are furthest from the labour market, or who have additional costs because of disability, and that is what the Government are doing.

On the points raised by the noble Baroness, Lady Meacher, referring to the principles outlined by my noble friend Lord Freud during the passage of the Welfare Reform Act, I am clear that those principles—that we will target welfare spending to those most in need and ensure that we do not do anything to disincentivise people from pursuing work—remain intact via this Bill. We are prioritising those in greatest need.

It is right to say that there will still be some effects among disabled people through the Bill because we are including the personal allowance for both types of ESA as well as the additional element for those in the work-related activity group. However, we are ensuring that all those benefits that are paid specifically to cover the additional costs associated with disability are not included in the Bill. For example, the disability living allowance and the attendance allowance are protected, as are the disability premia in benefits such as income support, ESA, JSA and housing benefit, and we have excluded the disability elements of tax credits from the Bill.

In many cases, the basic rate of ESA is just one element of the total package of benefits received. Many people on ESA are also in receipt of other benefits, such as DLA, to which I have just referred, and housing benefit. It is worth noting that around 65% of people in the support group also claim DLA. The point I am trying to make here is that ESA is not the only benefit that most people are relying on. People in the support group receive a component worth £34.80 a week, as has already been said, and they are also automatically entitled to the enhanced disability premium of £14.80 a week if eligible for income-related ESA. We should not forget that some people will be eligible for the severe disability premium or the carer premium. All these are protected, like the support component. Income-related ESA households where a member of the couple is over pension age also receive a pensioner premium to ensure that the rate of benefit is the equivalent of the pension credit rate. This rate is also uprated as normal.

My noble friend Lord German asked in particular about the personal allowance aspect of ESA and why it is included in the Bill. It is important for me to be clear that the personal allowance is there to provide basic support. It is designed to meet the basic needs of all those on out-of-work income-related benefits. The personal allowance is consistent across all benefits which relate to those of working age. There is a standard amount. For single people, it is currently £71 a week. It is important that I am clear that this rate is common across all claimants who receive ESA, JSA, income support and housing benefit and reflects the fact that they perform a similar function of providing basic support for everyday needs. They do not reflect disability or the additional costs of disability, so therefore it is right that they are set at a standard rate. That is the rationale for including the personal allowance in this Bill and for the personal allowance to be subject to the 1% cap on annual increases. Treating one personal allowance rate differently from that in other benefits would mean that there would be no clear level of income at which state support is set and at which access to other help would be available across a wide range of services. It would also introduce an element of complexity in terms of the coherence of the benefit system which would introduce new challenges and be likely to add further costs to the running of the overall system.

As has been acknowledged, the support group component is protected, so it is not included in the Bill. It is the component element of ESA which differentiates the need based on the effects of a disability or a condition. That particular component relates to the effects of a specific disability. The support group component is paid in recognition of the fact that more severely disabled people are less likely to be able to increase their income by moving into work and may have additional needs. Therefore we pay those in the support group a higher increase than those in the work-related activity group.

It is worth making the point that for those in the work-related activity group, ESA is not like the old incapacity benefits that usually led to people being in receipt of that benefit for a long period. This is intended to be a short-term benefit for those in this group. Those who are placed in the work-related activity group are there because they have been found able to prepare for work. As such, they will be referred for appropriate support, training and provision to ensure that they get the help they need. ESA for people in that group is intended to be a short-term benefit and we expect these claimants to be closer to the labour market and be in a better position to prepare for work. Therefore, while they may not be looking for work immediately in receipt of that benefit, they have some ability to affect their own incomes. That is why it is right that the annual increase for those in the work-related activity group should—unlike that for those in the support group—be fully within the scope of the Bill.

In his opening remarks, the noble Lord, Lord McKenzie, again referred to the alternative option of the Government bringing forward annual orders rather than introducing the Bill. It is important for me to stress heavily that a central purpose of the Bill, in addition to achieving savings, is to provide certainty. I will say that regularly throughout the passage of the Bill; it is an important aspect of what we are doing. I know that the noble Lord seeks to undermine that, but it is central to what we are trying to do. It is important that we recognise the long-term benefits of providing that certainty; that is how we retain the credibility of the Government’s fiscal policy.

--- Later in debate ---

I agree with Mr John Redwood.

[Baroness Lister of Burtersett]

My Lords, I am pleased to be able to support the noble Lord, Lord Kirkwood of Kirkhope, who, given his stance on these issues, has to be considered a noble friend. I am grateful to him for tabling the amendment, which I regard very much as a bottom line amendment as he put it, a modest amendment. Support for it does not in any way imply acceptance of an uprating of up to 2% less than inflation, which would still happen even if the amendment was passed. Citizens Advice has calculated various scenarios assuming 2.2% inflation and taking account of any gains from the rise in the tax threshold, regularly waved as a fig leaf by Ministers. These show that for some families, in or out of work, the net loss could be as high as around £13 a week by April 2015. This is an enormous sum to lose for someone on a low income. The amendment would not prevent these losses if inflation is less than 3%. It is a damage limitation exercise designed to ensure that benefit and tax credit recipients are not required to bear an even greater burden should prices rise by 3% or more.

I, too, was going to quote the right honourable John Redwood MP—perhaps an even stranger bedfellow. As he said, it is a tough and cruel policy—and it is. He said that if inflation did go up by more than expected it would be extremely difficult. It will be extremely difficult for those affected. Inevitably, I shall be making some of the arguments that the noble Lord, Lord Kirkwood, made in his powerful opening speech. I hope that this will be to reinforce rather than simply to repeat.

The Bank of England has predicted that inflation could peak at 3.2% in the second half of this year. Given that the 2014-15 uprating will be based on the previous September’s CPI rate—that is, the rate in the second half of this year—this could mean an increase in benefits and tax credits 2.2% below the actual inflation rate rather than the 1.2% below inflation upon which the impact assessment is based. As the noble Lord, Lord Kirkwood, said, given that the incoming Governor of the Bank of England is making noises about possibly easing inflation targets and the loss of the AAA rating’s impact on import prices, it is quite possible that the 2% inflation rate predicted as the basis of the 2015-16 uprating could also be an underestimate. Indeed, many economic commentators are talking about inflation remaining in excess of 2% for at least the next two years.

A more relaxed inflation policy may well make sense in terms of stimulating the economy, but we should not leave the poorest members of the community to bear the burden—hence this amendment. My colleague, Donald Hirsch of the Centre for Research in Social Policy at Loughborough University, has calculated the likely impact of the Bill on a two-earner couple with two children on combined low earnings of £20,000 a year and in receipt of child tax credit and child benefit. Over the next three years, if inflation is on target at around 2%, they will lose just under £300 a year in real terms. To repeat the point, that is a cut. If it runs at 3% a year over the period, they will lose as much as £500 a year.

When we talk about inflation rates with reference to benefit upratings, we must remember two things. First, the switch from the RPI to the CPI is already expected to significantly depress benefit rates over the long term. The House of Commons Library cites the OBR’s long-term assumption that the annual increase in the RPI will be 1.4% more than the CPI. The Library calculates that such a difference will result in benefits being worth, after 10 years, 86% of the amount they would have been had they continued to be uprated by the RPI. That is quite a big difference. Secondly, even the RPI does not provide an accurate measure of the impact of price rises on low-income recipients of social security benefits and tax credits at a time when the prices of the essentials upon which they spend a disproportionate share of their budget are rising faster than prices generally. Recent work by the IFS shows that the general trend in recent years has been for higher than average CPI inflation rates for those on low incomes. Again, Donald Hirsch has calculated the increase in the cost of a minimum basket of necessary goods and services between 2001 and 2011. This shows that someone whose benefits were uprated only by the CPI during that period would have a shortfall of around 11% as opposed to if they had been uprated by the cost of the minimum basket. He warns that,

“there is every reason to believe that similar trends, in which the cost of a minimum budget rises faster than general inflation, will continue in the future”.

Analysis of the global influence on prices suggests that a long-term increase in commodity prices will have a knock-on effect on essentials such as food, fuel and clothing, and could mean that someone on basic benefits in 2020 would be at least 20% worse off relative to the minimum requirements in 2000—and that is before taking account of the long-term effect of three years of legislated cuts in the real value of these benefits.

It is not surprising that the Office for National Statistics reported in December that spending is falling fastest among the poorest, with an average reduction of 9% on the previous year among the bottom 10%. A number of noble Lords argued at Second Reading and earlier today that it does not make economic sense from the perspective of stimulating growth to depress demand in this way among a group with a greater propensity to spend than to save.

In the Second Reading debate, the Minister responded to the concerns raised by a number of noble Lords about what will happen if inflation soars. I guess he was trying to be reassuring when he said:

“We will continue to monitor the rate of inflation closely … and the impact that it has on the cost of living for families. This will continue to be a key consideration for this Government’s policies in the future”.—[Official Report, 11/2/13; col. 553.]

If I were, say, the parent of a young disabled child and had little prospect of getting a job by 2016, I would not take much comfort from that assurance. I would want to know what the Government will do if their monitoring shows that inflation is on the rise and is having a highly damaging impact on the cost of living for low income families. The noble Lord, Lord Kirkwood, asked a very direct question: what will the Government do? I do not know whether the noble Lord who is to reply can give a more precise answer than simply that the Government will monitor the situation. In other words, I would want an element of certainty, which this amendment seeks to provide.

The need to provide certainty was a theme of the remarks from the Government Front Bench at Second Reading and has already been emphasised during this debate more times than any of us care to say. The point has already been made, but as the noble Baroness said, she will continue to repeat the point about certainty and we will continue to repeat our point about certainty. The Minister was concerned only about certainty for taxpayers and the markets and said nothing about certainty for those affected by the Bill. But they too are taxpayers, even if not all of them are direct tax payers.

The Minister said:

“We believe it is only right that we set out our plans in advance and give as much certainty as possible”.—[Official Report, 11/2/13; col. 553.]

However, as other noble Lords have said, in the face of the very real possibility that prices could rise by more than the anticipated 2% or so during the uprating periods covered by this Bill, the application of an arbitrary 1% cap, regardless of the actual rate of CPI inflation, provides total uncertainty for people living in poverty who will be affected by this legislation. That is a point that we have to repeat over and over again. At the very minimum, I believe that we have a responsibility to support the noble Lord, Lord Kirkwood, in order to inject a modicum of genuine certainty for those affected and a modicum of justice.

--- Later in debate ---

[Lord Newby]

My Lords, the effect of Amendment 6 would be that if inflation as measured by the September CPI was to rise to 3% or above in 2014-15 or 2015-16, Clause 1 would not apply. Amendment 10 would do the same for Clause 2.

As I set out earlier today, a key purpose of the Bill is to deliver clear and credible plans for our public finances. It is only through having these plans that we can maintain confidence and keep interest rates at near-record low levels. We have clearly stated our intentions on uprating policy for the next three years, but the plans for 2014-15 and 2015-16 are made possible only by this Bill. Adding conditions to the Bill would remove that certainty and weaken the credibility of our plan to reduce public spending and tackle the deficit.

The Autumn Statement operating decisions were taken on the basis of the Office for Budget Responsibility’s CPI forecast. As the noble Lord, Lord Kirkwood, explained, the OBR does not forecast inflation to reach 3%. The CPI forecasts for the purpose of uprating in 2014-15 and 2015-16 are 2.6% and 2.2%. The Bank of England’s Monetary Policy Committee is committed to maintaining price stability, which is defined by the Government as an inflation target of 2% as measured by the 12-month increase in the consumer prices index. Inflation is forecast by the MPC and the OBR to be above the 2% target in the near term but is forecast to fall back towards the target in the medium term. The inflation target is not set by the Governor of the Bank of England. The inflation target is set under the terms of the Bank of England Act 1997 on an annual basis by the Chancellor, and that will continue to be the case whoever the Governor of the Bank of England is.

As I said at Second Reading, and as the noble Baroness, Lady Lister, helpfully reminded me, these are forecasts and targets. External factors and unforeseen events can produce a different outcome—on the upside or the downside. Nobody can say with absolute certainty what inflation is going to be two years from now.

[Baroness Lister of Burtersett]

Both the noble Lord, Lord Kirkwood, and I referred to economists and people who are suggesting that the inflation rate might be higher. Can the Minister quote the people who are saying it might be lower?

[Lord Newby]

My Lords, economists say all kinds of things. For every economist who says one thing, I guarantee that I can find you an economist who says the other thing. There will be a new inflation forecast from the OBR at the time of the Budget. It would be completely inappropriate for me to speculate on what that might say and I am certainly not going to do so today.

As I said at Second Reading—and I repeat—we will continue to monitor closely the rate of inflation and its impact on the cost of living for families and the wider economy, as we always do. Again, as I said at Second Reading, the Government have taken action in response to the changes in the cost of living, including cancelling the January fuel price rise, providing further funding for local authorities to freeze council tax and, of course, for virtually everybody in work, implementing the largest ever increase in the personal allowance in April 2013.

The Government believe that what really matters to families is the impact of our policies as a whole and this will continue to be a key consideration for our policies in the future. However, that does not mean that we believe that we should add conditions to the Bill, and I am certainly not going to agree to that this evening. People have seen very significant restraint in their pay across the private and public sectors without the comfort of a safeguard against increases in inflation. Noble Lords have said a lot about certainty today. The truth is that no one has certainty, whether they are in or out of work, about their future real income. As noble Lords know, many people in the public and private sectors have not been getting pay increases linked to inflation and have been falling behind in real terms. This is exemplified by the difficult decision we took to freeze public sector pay at a time when inflation was rising to 5.2%. It is also borne out by the fact that, according to the latest figures, over the past year average earnings have risen by only 1.3%—not very different from the increase that is being proposed in the Bill. This means that on the best available forecasts—those produced by the OBR in November last year—even with the effects of this Bill, by the end of the financial year 2015-16, out-of-work benefits will still have risen faster since the start of the financial crisis than if they had been linked to average earnings, which many noble Lords are concerned about.

It is vital that we set out clear and credible plans to reduce welfare spending, tackle the deficit and secure the economic recovery. Adding conditions to the vital savings delivered by this Bill would remove that certainty.

Universal Credit Regulations 2013

Baroness Lister of Burtersett Excerpts

Wednesday 13th February 2013 Lords Chamber

[Lord Eden of Winton]

My Lords, perhaps I may make a brief comment, but first I must apologise to noble Lords. It is quite clear from all those who have spoken that there is a great deal of expertise and deep knowledge of the subject and, as will become immediately clear, I cannot live up to those standards. However, there is one matter on which I wish to make a brief point. Before doing so, I congratulate my noble friend the Minister on the clarity with which he introduced this subject and on the immense work that has clearly been done on it.

I have one worry, which is that these are enormous and complex changes that will impact on and affect many people who by definition are extremely vulnerable. While I very much support the aim and objective of what the Minister is proposing, and I hope that the pathfinder work is a success, I worry about the implementation of such complex proposals in practice. I share quite a lot of the sentiments expressed by the noble Baronesses, Lady Sherlock and Lady Hollis, and others.

It is therefore most important—perhaps this can be enshrined in guidelines—that those who will be advising the potential beneficiaries of the change are fully and adequately trained and fully understand what they will be talking about. More importantly, when it comes to actually carrying out the whole process of changeover, those who are at the decision-making end should exercise supreme patience and understanding. For me, patience is all important.

As the noble Baroness, Lady Hollis, said, many people will not have online access. I know, being of advanced years myself, how difficult it is to understand everything that is going on. I am reasonably but not fully conversant with all the complexities of new technology and new systems of communicating. I can often sense the impatience at the other end of the line in people younger than me, for whom it is second nature to handle these things. It is not so for everyone and it is most important that those who are in a commanding position assist potential beneficiaries to understand the process of changeover, and do so with extreme patience.

[Baroness Lister of Burtersett]

My Lords, the noble Lord, Lord Eden, said that he is not an expert but sometimes it is the non-expert who puts his finger on the key points, as the noble Lord did. I apologise to noble Lords in advance for the length of my speech but there are a lot of areas to cover, although I shall be leaving out a lot of important issues, including monthly assessment. I shall return to that, in case the Minister thinks he is getting off lightly.

I shall start with three general points. First, I add my thanks to the noble Lord for the work done by him and his team in providing us with so much information. It is only right to draw your Lordships’ attention to the 17th report of the Joint Committee on Statutory Instruments, which has reported these regulations for four instances of defective drafting. Although the DWP acknowledges each of those defects, as I understand it, it did nothing to put them right before these regulations came before both Houses of Parliament. I am told that that is unprecedented.

My second general point was made by CPAG—I declare an interest as its honorary president—in its evidence to the Work and Pensions Committee and concerns simplification. That goes back to the point made by the noble Lord. This is a raison d’être of universal credit, as the Minister made clear in his introductory remarks. CPAG, having acknowledged that of course simplification is a worthy goal which we all support, warns that it is very difficult to achieve in a heavily means-tested and conditionality-based system such as universal credit. Noble Lords who have been grappling with these draft regulations will no doubt nod wryly in recognition of that fact. CPAG points out that many complexities will remain and new complications will be introduced with the advent of universal credit.

The draft regulations reveal that many of the rules that currently cause great confusion will simply be imported into universal credit, despite what the Minister said earlier. The group warns that without good advice, many claimants will struggle to comprehend either their entitlement or the new obligation that universal credit places on them. As a result, the Government’s expectation that universal credit will be taken up more widely than the existing benefits could be misplaced, which also means that its estimates for the number of gainers could be inflated. The group argues that it is essential that the Government provide support for the advice sector as an integral part of the design, piloting and rollout of universal credit. That point is emphasised also by the Work and Pensions Committee, which calls for sufficient additional resources to be available to the advice sector to support a successful transition to the new system.

During the last major reform of social security in the 1980s—noble Lords who have been around a while will remember that time—welfare rights advice services were flourishing in local authorities and in the voluntary sector. Today they are a shadow of their former selves as the cuts take their toll. Could the Minister tell the House what resources will be made available to the advice sector?

My third general point concerns the very heavy reliance on guidance to put into effect the Welfare Reform Act 2012. Gingerbread, for example, argues that transferring details from regulations to guidance removes important safeguards, erodes accountability and transparency in decision-making and increases uncertainty for claimants. It has a particular concern about the over-reliance on guidance to put into effect the flexibilities available to job-seeking lone parents. My noble friend Lady Sherlock has touched on this already and I shall try not to repeat what she said in her able opening statement.

I raised this issue during Report stage of the Bill, late at night on 23 January 2012. The debate was very rushed for procedural reasons, but I thought that I had achieved something when the Minister assured your Lordships’ House that,

“advisers will take childcare responsibilities into account when setting work-related requirements, and we intend to set out some specific safeguards on this issue in regulations”.—[Official Report, 23/1/12; col. 915.]

He then referred to the right of claimants with a child under 13 to limit their work search to jobs that would fit around their children’s school hours. He rightly emphasised that the best way to prevent the inappropriate application of sanctions was to ensure that the requirements were reasonable in the first instance. It is therefore incredibly disappointing that the regulations do not adequately reflect this wise principle.

Jobseeker’s Allowance Regulations 2013

Baroness Lister of Burtersett Excerpts

Wednesday 13th February 2013 Lords Chamber

Finally, the Prince’s Trust survey of its successful businesses cited two entrepreneurs who said that working tax credit, which is going to be replaced by the UC rate, has been a life saver and was “a real lifeline”. I hope that the eventual verdict on these regulations by the self-employed will not be that they were left to sink or swim.

[Baroness Lister of Burtersett]

My Lords, I want to make a very brief point. However, it is a positive point, after having been rather critical of the Universal Credit Regulations.

During our discussions on the Bill, I raised on a number of occasions my concern that there had been a suggestion that the payment of contributory benefits might be wrapped up with universal credit. That would mean that it would all go into one bank account even though contributory JSA is an individual entitlement. Therefore, I am delighted that that will not happen. I simply seek an assurance from the Minister that no step will be taken to make that happen without first debating it in both Houses of Parliament. It is an important issue and it could mean the loss of individual entitlement, particularly for many women who have now come within the contributory benefit system.

[Lord Kirkwood of Kirkhope]

It is still a pleasure to follow the noble Baroness because she made a point that I was going to make. I want to make two remarks on which I would like the Minister to reflect. The first is about the contributory system—the national insurance system. In the middle of last year, I remember listening with great attention to a lecture given by a valued friend, Malcolm Wicks, who sadly died recently. He was a great defender of the national contributory system. He gave a lecture on how he melded the concept of citizenship with the national insurance principle. He said that this involved a lifetime longitudinal commitment both ways between the state and the individual, with people paying in and people taking out, and that people understood that. He was an exponent of that all his life and I certainly miss his good counsel and wisdom. I share his view. We cannot allow these regulations to pass without remarking that this is another notch down in the diminishing of the national insurance principle. I regret that. I understand why the Government are doing it because otherwise the misalignment would be confusing. If you are introducing universal credit, I understand the rationale and it makes perfect sense. However, universal credit does not have the advantage that the national insurance contributory principle had of giving a longer-term relationship between the state and the individual. I want to put that on the record in passing.

Secondly, conditionality for people who are paying national insurance contributions suggests to me that people should perhaps pay less because they now have to submit themselves to sanctions. I have a strong view on sanctions and earlier today the noble Baroness, Lady Hollis, reflected some of that. I take the Paul Gregg view that sanctions are positive only if you can get the full commitment of the individual who might be potentially taking on a jobseeker’s commitment that will lead to sanctions, and if they feel that they are in charge of the process. That is not the case with the system of conditionality as it is currently cast, although with a bit of flexibility it might be amended in that direction to put people in a position where they feel they are more in control of what is going on. They are then much more likely to understand the rationale of a sanction being applied to them. That is work in progress. I hope it will be part of the careful evaluation that the Minister explained to us earlier this afternoon the Government will undertake.

My points really comprise two moans about national insurance that I am getting off my chest. I do not expect the Government to do anything about it. However, these regulations change things in a way that is significant for the future of the national insurance system. Indeed, perhaps in the long term, once universal credit gets into a steady state, the Government of the day—whoever they may be—may want to ask themselves whether it is sensible to continue to have a residual diminishing national insurance contributory principle set of benefits running alongside universal credit. I am agnostic about that but I certainly think that it needs to be recognised in this important debate.

Social Security (Personal Independence Payment) Regulations 2013

Baroness Lister of Burtersett Excerpts

Wednesday 13th February 2013 Lords Chamber

[Baroness Grey-Thompson]

My Lords, it gives me great pleasure to follow the noble Baroness, Lady Browning, who makes some excellent points on independent living. When I was born in 1969 with spina bifida my parents were told that if I had been born even two or three years earlier, I would have been taken away, not fed and left to die. I know that we are now a long way from that treatment of disabled people, but many fear that we are returning to days of ghettoisation.

I declare an interest in that I am in receipt of DLA. I do not have a Motability car, but I know that it is a lifeline for many. It was interesting to hear the noble Baroness, Lady Thomas, talk about how important her car is to her. She made some excellent points and gave some excellent examples of fluctuating conditions which we must take into account. A debate on accessible —or rather inaccessible—public transport is for another time, but perhaps I may offer to take the Minister or the noble Baroness, Lady Stowell, when they have a little more time, on some bus and train journeys to show the scale of what we have to change in the United Kingdom. It is really not very good out there for disabled people.

I thank the Minister for being open to continued dialogue, for having several meetings with me and not least for his phone call this week, when he offered me some reassurances around the evaluation process. Like many, I am delighted that the words “reliably”, “repeatedly”, “safely” and “timely” will be in amended regulations. Moreover, their gradual implementation will give all of us in your Lordships’ Chamber an opportunity to play a part in the review. Some disabled people have been offered just a small beacon of hope by this.

I have to admit that I spent a great deal of time—in fact, right up to the deadline last night and beyond—considering whether this amendment should have been tabled as a fatal amendment, because fatalistic is how I and many other disabled people feel. I know that the noble Baroness, Lady Campbell, would have liked to be here tonight to support this debate, but the lateness of the hour makes it impossible.

I am disappointed with these regulations because of how they are going to affect real disabled people—not the media portrayal of this homogenous group of unknowns who are living the high life on benefits but disabled people who are struggling to survive and live independent lives. The Government have listened up to a point, but not as much as I would have liked. While the Minister has said, and will keep on saying, that his Government are merely providing clarity with these regulations, he will know—not least from my Question of 24 January 2013—that I was extremely disappointed by the consultation around the change from 50 metres to 20 metres. I accept that the time is now past, but we should have had the opportunity at the very least to debate it on the Floor of your Lordships’ Chamber. Parkinson’s UK has called the 20/50 metre change a “back of an envelope” calculation.

When the regulations are combined with the outcome of the Welfare Benefits Up-rating Bill, disabled people, and many others, will be in a significantly worse position than they are now. This is not protecting the most vulnerable. Enough is enough. Once these regulations pass, we have to leave them to bed in and give disabled people a chance to deal with them. I sincerely hope that what we have here—the clarity—is not a stepping stone to something that is harsher and that the 20 metres is not going to be the upper limit for claiming the higher rate of support at some point in the undefined near future. I would like some further reassurance on this from the Minister.

The noble Lord, Lord Kirkwood of Kirkhope, talked in a wider context about the evaluation process. The right reverend Prelate the Bishop of Worcester, who is unfortunately not in his place, also made his feelings clear on this subject. Several other noble Lords, too, have raised this issue. I look forward to feeding into the review. It is vital that we have a detailed review that we can take forward and that we learn from some of the things that I still do not believe are right.

When I have talked about these changes—disabled people losing their access to transport, having to stop work and being stuck at home, it has been suggested by some that I am scaremongering. Well, I believe that it is imperative that not just the people affected by these changes but the wider public understand the implications of what we all do here today.

I am reporting back what significant numbers of disabled people are telling me about their real fears, and that fear is around disabled people’s ability to live independent lives. The most stark figure that I have seen is from the We Are Spartacus report, which suggests that around 200 Motability cars per constituency could be removed from disabled people once these changes kick in. That could be just the tip of the iceberg, as not everyone uses their DLA—or PIP in future—to pay for a Motability car.

Disabled people are going to be hit by the cuts in so many ways, not just under PIP. I do not envy the onslaught on the inboxes and postbags of Members in another place when that starts.

Perhaps the time when what these changes mean will really hit home is when our first Paralympian has their car taken away. They are not workshy scroungers; they represent our country. It is not a day that I look forward to, but I wonder what the reaction then will be—what will happen when they are no longer able to get to training or competition.

All the way through the welfare reform legislation, we heard about protecting the most vulnerable. I and many others both inside and outside your Lordships’ Chamber will be watching whether that is the case with a great deal of interest and care.

[Baroness Lister of Burtersett]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Grey-Thompson. She and other Members have spoken very powerfully about PIP, and I share their concern.

I want to speak very briefly about the implications for carers, to whom the Minister referred. He prayed in aid Carers UK’s approval at an earlier stage of the process. I think he would probably accept that if it had known then what it knows now, it would have been less approving. It issued a press release saying that it finds shocking the figures in the impact assessment, which appeared only days ago—we have been trying to get it for a long time. I think that it withdrew its approval at that point.

The Minister talked about only 5,000 fewer carers being eligible. It is not “only” for each of those 5,000 people. Each of them will be worse off. That 5,000 is nearly 7%, which is a minority but still a significant number. It is based on a static analysis. The Minister is always telling us that we should do dynamic analysis. Well, Carers UK has done what I would consider to be a more dynamic analysis of the figures in the impact assessment, and it suggests that by 2015 10,000 fewer carers will be eligible for carer’s allowance. Will the Minister comment on those figures? Will he also tell your Lordships’ House whether the Government will offer any transitional protection to carers losing carer’s allowance as a result of the introduction of PIP? Also in the spirit of the dynamic analysis, by 2015 I think that we are only about one-third of the way through the introduction of PIP. Do the Government anticipate further proportionate losses to those eligible for carer’s allowance as the process continues after that?

[Lord Alton of Liverpool]

My Lords, I think we all recognise that taking regulations of this nature in the course of a debate on eight sets of regulations is perhaps not the best way to do business. Given the speeches that we have already heard, especially about the effect on mobility and the allowances that people with disabilities cling to in order to ensure their freedom of movement, these regulations are so crucial that I am surprised that they have not been uncoupled from the others so that we could consider not just the regulations as they stand but the amendment that the Minister referred to earlier, which he intends to lay in due course anyway. It might have been better if they had been uncoupled from the other regulations before us today so that we could have had a separate debate on that question.

All of us will have been moved by my noble friend Lady Grey-Thompson’s powerful speech. Having had the chance to speak to her briefly yesterday, and to my noble friend Lady Campbell of Surbiton, none of us should underestimate the strength of feeling. My noble friend’s remarks about contemplating tabling a fatal amendment to the regulations underlines that, despite the changes that have been made, welcome though they are—as the noble Baroness, Lady Thomas of Winchester, said, the Minister has listened and made some changes—there are deep concerns in many organisations throughout the country. Some of those concerns have been mentioned already, but I shall refer to others.

During a debate on 17 January initiated by the noble Baroness, Lady Hollis of Heigham, I signalled my concern about the impact that the changes to the personal independence payment would have on the mobility of sick and disabled people. During that debate, and again on 24 January when I asked an Oral Question, I drew attention to those two things. The first was the omission of the words,

“reliably, safely, repeatedly and in a timely manner”,

from the text of the regulations setting out the qualifying criteria for the payment and the impact of altering the criteria for the enhanced mobility rate from 50 metres to 20 metres.

During the debate on 17 January, I asked the Minister to,

“confirm the Government's own prediction, made earlier this month, that 27% fewer working-age people will be eligible for the Motability scheme once PIP is fully rolled out? Disability organisations say that the new proposal means that 42% fewer disabled people of working age will be eligible—an average of 200 people in every constituency”,—[Official Report, 17/1/13; col. 817.]

a figure my noble friend referred to a moment ago. I received no answer in the Minister’s reply that day.

When I returned to the question on 24 January, I pressed him once more and asked whether he accepted that,

“with one-third of disabled people living in poverty and an estimated 42% fewer being eligible for mobility support-many fearing that they will become prisoners in their own homes-his admission that under the new regime some disabled people will have their specially adapted vehicles taken away from them or offered to them to buy has caused widespread disbelief and considerable distress?”.—[Official Report, 24/1/13; col. 1180.]

Let us be clear: some existing claimants will face losing as much as £150 a month if they fail to meet the newly tightened criteria. That amounts to an annual loss of £1,800. As the Disability Benefits Consortium, representing over 50 disability rights groups, says, that loss will have calamitous effects, as Motability vehicles, which include adapted cars, powered wheelchairs and scooters, are withdrawn. In its words, Motability vehicles are,

“their means of independence and participation, the lifeline that enables them to get to work, to GP appointments, to the shops, to take their kids to school”.

During the briefing session which the Minister kindly arranged two weeks ago, I returned to the same line of questioning, simply trying to obtain from the Government their estimate of how many people will be affected by the regulations that we are being asked to approve today. Not to know the figures but simply to have guesstimates thrown around like confetti is not a sensible way to proceed when the House is being asked to agree something as important as the regulations.

In a Written Question on 4 February, I asked,

“how many people they estimate will be affected by changes to mobility support for people with disabilities; and how many vehicles are likely to be repatriated or offered for sale”.

The Minister’s reply was, to put it charitably, opaque. He said:

“We are continuing to work closely with Motability to understand what impact personal independence payment might have on its customer numbers and to ensure the smooth introduction of PIP as it relates to users of the Motability scheme”.—[Official Report, 4/2/13; col. WA26.]

That is information that Parliament needs to have before we can in all conscience approve the regulations. The Minister needs to tell us how many vehicles will then be sequestrated or repatriated. What are the best guesstimates that have been made by his officials? He must have had discussions with Motability. What figures has it given him? How many will be offered for sale to their users and at what average price? What assessment has been made of the ability of the current users of those vehicles the funds to buy them and then to fully maintain them?

Like the noble Lord, Lord McKenzie, and others, I would also like the Minister to say something about companies that have been given responsibility for implementing PIP. Perhaps he can confirm that Atos Healthcare, also mentioned by the noble Lord, Lord Touhig, has been given responsibility for two of the three contracts for PIP. Only last week the Public Accounts Committee reported on the work capability assessment. The committee is damning of the whole process, and particularly stresses that ultimately the Department for Work and Pensions is responsible. One of its main findings was that:

“The Department lacks sufficient rigour in managing the contract with Atos Healthcare. It has adopted a light-touch approach to managing this contract and placed too much reliance upon information provided by the contractor. The Department seems reluctant to challenge Atos Healthcare. It has failed to withhold payment for poor performance and rarely checked that it is being correctly charged for work”.

If after three years of trying with the work capability assessment it has been unable to get that right, goodness knows how much further misery and cost will be incurred with PIP.

Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Decisions and Appeals) Regulations 2013

Baroness Lister of Burtersett Excerpts

Wednesday 13th February 2013 Lords Chamber

I used to think it was just ignorance that had led Her Majesty’s Government to abolish legal aid in welfare benefit cases. Now I am forced to the view, as I think are many fair-minded people from outside, that it is too much of a coincidence that these legal aid cuts come at exactly the same time as radical welfare reform. These things are connected—it must be a deliberate government policy to bring in radical and damaging welfare reforms at the same time as making it impossible for the vast majority to appeal against the decisions that affect their daily lives. I feel strongly about this, that it is a disgrace and a scandal and that it is something that has not been talked about enough. Not only is there the blow for people of losing benefits—if that is what happens to them—or of having their benefit reassessed so they do not know whether it is right or not; they have the added blow of not being able to go and get simple, quality and cheap legal advice to advise them whether they should ask for a reconsideration or for an appeal, which is not something they are qualified to do themselves. I very much hope that the House agrees with me and I look forward to the Minister’s reply.

[Baroness Lister of Burtersett]

My Lords, I want to focus on monthly assessment and the treatment of changes of circumstances under the whole-month approach adopted for universal credit. First, however, I will take a step backwards to our earlier debates during the passage of the Bill, when some of us raised our grave concerns about the implications of the move to monthly payments. These concerns remain. Indeed, they have been heightened as a consequence of research published subsequently. Given the late hour, I will spare noble Lords the details, but every piece of research reinforces our argument that we are not simply talking about a small, exceptional group of people with budgeting difficulties, which appears to be the premise underlying the guidance on personal budgeting that we have been sent.

This is a systemic issue, born of the difficulty of budgeting on a low income. I still do not believe that it is a problem that can be solved with an elaborate panoply of exceptions to protect so-called vulnerable groups. That has in effect been recognised by the Northern Ireland Assembly ad hoc committee which recently recommended that claimants should have the right to opt for bimonthly payments in order to minimise the potential adverse impact on women and children. We will return to this issue when we debate the claims and payments regulations—I am sure the Minister cannot wait—but given that guidance has been circulated, I would like to ask the Minister two questions now.

First, what are the department’s working assumptions about the number and proportion of recipients who will require personal budgeting support, both generally and specifically with regard to monthly payments? Secondly, what resources will be made available to the external organisations which will be expected to deliver money advice, according to the guidance, and what discussions has the department had with those organisations about their capacity to provide such advice at a time when the advice sector is under considerable strain?

Turning back to monthly assessment and the whole-month approach to treatment of changes of circumstances, I start with a mea culpa. When we debated monthly payments, I argued that we could separate the question from that of monthly assessment. However, I think I was wrong. As the Women’s Budget Group—I declare an interest as a member—observed in its evidence to the Work and Pensions Committee, the implications of monthly assessment were only,

“fully realised on publication of the Explanatory Memorandum for the Social Security Advisory Committee about the draft regulations”.

I pay tribute to the tenacity of Fran Bennett of the Women’s Budget Group in pursuing this issue. I have decided that I am a bear of little brain when it comes to understanding it—I hope that recipients manage better than I do—and therefore I will be drawing heavily on what she has written on the subject.

What now strikes me, reading what has been said about this by the department, is the extent to which monthly payment, motivated by the desire to change behaviour to monthly budgeting, is the driver behind monthly assessment. In other words, the two issues are in fact closely entwined. In the same way that I argued during the Bill’s passage that monthly payments risked undermining universal credit as a consequence of the Government taking what the Social Market Foundation calls a “sink or swim” approach, so I fear now its underpinning by monthly assessment could do the same, not least because it has limited the options for dealing with changes of circumstances and with more frequent payments.

It seems that the key to understanding the whole-month approach to a change of circumstances is that a whole month’s entitlement will depend on a recipient’s situation on one particular day just because it happens to fall at the end of the assessment period. If a baby is born at the end of the month, the extra benefit will be paid for the whole month, which of course is to the recipient’s advantage. But if a teenage child turns 18 and leaves home towards the end of the month, the universal credit recipient will lose a whole month’s credit for that young person even though she had been feeding her throughout the month. This strikes me as somewhat arbitrary, as I suspect it will to recipients as well.

I acknowledge that this is how the main out-of-work legacy benefits—ESA, JSA and IS—operate already but they do so on a weekly rather than monthly basis, which is totally different. Moreover, these legacy benefits typically represented only part of a recipient’s income as they would also be receiving, for example, housing benefit and child tax credit, whereas with universal credit nearly all their benefit eggs are in one basket, with the exception of council tax support and, thankfully, child benefit.

This approach to changes of circumstances also seems to be out of tune with all the talk about universal credit being more responsive to a recipient’s immediate circumstances. In fact, it is going to be less responsive than income support because instead of following changes of circumstances week by week, it does so only month by month. The Explanatory Memorandum states:

“This whole month approach means that Universal Credit payments will reflect the claimant’s circumstances at the point of payment, and so leave them better able to manage from pay day to pay day”.

But it also means that claimants may not reflect the circumstances that pertained at the time the payment relates to. I would be grateful if the Minister could explain to this bear of little brain how exactly it will leave claimants better able to manage from monthly payday to monthly payday.

SSAC has drawn attention to the particular implications for women who have fled violence. In its response to the draft regulations it observes that:

“Given the unpredictable nature of each potential crisis, the Universal Credit rules about changes of circumstances taking effect from the start of the monthly assessment period do not fit well. The draft regulations mean that an existing claimant arriving and leaving a refuge within their monthly assessment period would be entitled only to their regular monthly payment of benefit. The person or organisation providing the accommodation would receive nothing. Respondents were concerned that the network of support currently made available to those fleeing violence would be weakened. The Committee recommends that the Government gives further consideration to the issues that have been raised”.

Of course, since the SSAC report, the Government have announced that supported housing costs would be administered separately from universal credit and would be disregarded in the calculation of the benefit cap. Although we very much welcomed this concession when it was announced, I have subsequently learned that domestic violence organisations are concerned that the definition of supported housing in the regulations will leave many survivors of domestic violence within universal credit and so subject to the rigidities of monthly assessment.

SSAC also recommended that Government engage with stakeholders on the issue of monthly assessment. Can the Minister explain what engagement has taken place, and will he undertake to think again about how supported housing is defined in order to ensure that all refuges are covered? The Government’s recent response to the Work and Pensions Select Committee report on universal credit stated that there would be a process of consultation with stakeholders later this year on the long-term future of supported housing costs, which will affect refuge services. Can the Minister say if this consultation will include how supported housing is defined in order to ensure that all refuges are covered?

As the Women’s Budget Group pointed out in its evidence to the Work and Pensions Select Committee, the whole-month approach to changes in circumstances may reduce administrative complexity for the department and—the Government no doubt hope—the adverse publicity associated with the underpayment and overpayment of tax credits in the past. But in reality underpayments and overpayments in relation to actual circumstances will still exist. They will simply be hidden by the whole-month approach and the impact will be borne by the recipient—for good or ill.

Clearly the department now thinks monthly and thus in its eyes changes of circumstances during a month simply do not exist, but I am not convinced that that is how recipients will think. I think they will be confused and uncertain as to how what they do affects their universal credit entitlement, and will have greater trouble in budgeting. It seems that the Government want to change not only behaviour but how people think about their everyday lives—and that is not so easy.

I would welcome the Minister’s observations on this and seek an assurance that the impact of monthly assessment and the whole-month approach to changes of circumstances will be closely monitored. I received an assurance from his department yesterday that the general evaluation framework covers intra-household issues as well as household-level issues, which is very welcome. I would be grateful if he could confirm that this will include evaluation of the impact of monthly assessment and monthly payment, because I am particularly concerned about the possible impact on mothers as the main day-to-day budgeters who will carry much of the hidden burden of these changes.

--- Later in debate ---

[Lord Freud]

Yes, the payment reflects what happened in the previous month, but it gives you what you need for the month that you are going to be spending that money in. I will take this debate outside over a cup of—sorry, over a glass of something; I think vodka is appropriate. I will argue this right the way through, because I think it is the most benign way to ensure that people have the appropriate amount of money for each month.

On the point about the advice sector, we are looking at working closely with the advice sector to look at how the existing infrastructure can be used to support claimants with complex needs, and we are looking at new services that we need to develop to ensure that claimants have access to the right support. I have already talked about the multimillion pound support package from the Cabinet Office and the Big Lottery Fund.

I hope that I can offer some reassurance to the noble Baroness, Lady Lister, on the question of supported exempt accommodation. I pulled this area out from the universal credit because I could see that people often came through these accommodations quite rapidly, and it just was not the appropriate way of doing this. We have left that for the time being but with a view to ensuring that there is a sustainable financial regime for this kind of accommodation.

I have to confess to the noble Baroness that I have heard concerns only recently that some of the kinds of accommodation that we would want to support are not within our definition of support-exempt accommodation. I will look at that when we look at the whole thing, and we will consult on it. It is an important issue that we have right up front.

I do not have numbers on payment exceptions. We do not want to set targets for this, but a useful figure to bear in mind in the private-rented sector is that currently about 25% of private-rental claimants have their landlord paid direct. We are trying to get as many people as possible to pay their own landlords.

[Baroness Lister of Burtersett]

I would not expect a target, but there must a working assumption. I am not thinking necessarily about direct payments but about those who are going to find it difficult to deal with monthly payments, which is one of my main concerns. Perhaps the Minister can write to me, because the Government must have some view about whether this is a very small group, a larger group or whatever.

[Lord Freud]

We are not defining this by saying that they are vulnerable people; we are asking how many touch points of support people have. The four groups that have a large number of touch points are people who are homeless or who have mental health problems, addiction problems or learning difficulties. They are the groups about whom I have particular concern about making sure there is support for them. The noble Baroness will have her own figures on how big those groups are. We are working to get them refined. I will be able to provide more information on this as we work our way through. We are doing an enormous amount of work in this area, as noble Lords can see from the piloting we are doing and from how we have built up this network with the local support services. This is an area of great activity.

The noble Lord, Lord Bach, made an impassioned speech. Clearly, legal aid will still be available for appeals to the upper tier on a point of law. In our view, the first tier does not require legal representation because it is not adversarial. We are hoping that one of the things that mandatory reconsideration will do is mean that many applicants do not need to proceed to appeal. We are actively working on getting the right advice services locally.

These reforms are necessary and will not lose sight of the overarching policy drivers, but clearly we will go on listening and learning. I hope that noble Lords leave this debate thinking that the department’s decision-making and appeals structure is robust, fit for purpose and ready for the introduction of UC and PIP.

Social Security (Payments on Account of Benefit) Regulations 2013

Baroness Lister of Burtersett Excerpts

Wednesday 13th February 2013 Lords Chamber

During discussions with the Social Security Advisory Committee, an issue was raised regarding the way in which the earnings of self-employed people were treated when it came to accessing budgeting advances. Therefore, we plan to lay a minor amendment to the regulations in due course to ensure that assumed income from the minimum income floor is not included in the earnings calculation for accessing a budgeting advance. I am grateful for the work of the Secondary Legislation Scrutiny Committee. Although it drew this instrument to the special attention of the House, it did not appear to have any particular concerns. I seek the approval of noble Lords for these regulations and I commend them to the House.

[Baroness Lister of Burtersett]

My Lords, I have a few points to make. The Minister will be glad that I am not going to go over all the previous arguments about the demise of the Social Fund and I will not cover everything that I had planned to cover. However, I want to ask about budget advances. I think that the Minister may have referred to my first point. In the answers to questions raised at the seminar, which I was unable to attend, it was stated that,

“the test of ‘serious risk’ for budgeting advances has been carried forward from the existing system and is deliberately set at a high bar, but it is one staff are familiar with”.

However, I am advised by CPAG that in the existing system the “serious risk” test is applied to crisis loans and not budgeting loans, which budgeting advances replace. So, yes, staff are familiar with it but in another part of the system. By introducing the test for budgeting advances, the bar is being set higher for this part of the system, and yet another part of social security is being made available only in situations of dire need. Surely, the point of budgeting loans is in part to help prevent ever getting to a situation where there may be a serious risk of damage to health or safety. Will the Minister explain why this particular change has been made? To be honest, I think that he slightly conflated crisis and budgeting loans in his introductory explanation. Will he also confirm that, as with regard to crisis loans, health will include mental as well as physical health, and that safety relates to potential as well as actual danger? Does he agree that the lack of adequate cooking, heating or sleeping facilities could constitute a risk to health? I would feel happier about this shift if the Minister could give that assurance.

Regulation 15 prescribes the maximum amounts of budgeting advances as £348 for single people, £464 for couples and £812 for households with children, single or couples and irrespective of the number of children. These amounts are much lower than the current maximum amount under the Social Fund budgeting loans scheme, which is £1,500. I should be grateful if the Minister could explain the justification for this reduction. In particular, is there any evidential basis to suggest that the maximum amounts can be so substantially reduced, compared to that used for the Social Fund scheme of budgeting loans, without it causing problems for some claimants?

Having elicited some management information through Parliamentary Questions, I accept that these amounts are higher than the average budgeting loan award made to each of these family groups in 2011-12 and that fewer than 100 people are recorded as receiving awards higher than those specified. However, that suggests that such a big reduction in the maximum amount is unnecessary from a public spending point of view while a small number of claimants could suffer as a consequence. Is the Minister able to give any information as to the kinds of circumstances in which claimants have received higher awards than those specified and what kinds of sums are involved? Given that these maximum amounts are set out in the regulations, can he explain the procedures for keeping them under review and for uprating them? This question becomes more important now with the significant reduction in the maximum amounts.

I thank the Minister for explaining why a person has to pay back all a previous advance before getting the next one, but I am still worried that, at a time when benefit levels are being cut in real terms and people will have problems with monthly budgeting, these new rules will be unduly restrictive and cause real hardship. Lone parents and disabled people currently receive two-thirds of the gross expenditure on budgeting loans and they will therefore be the groups hardest hit.

[Baroness Sherlock]

My Lords, I thank the Minister for introducing these regulations and explaining how they would work; and my noble friend Lady Lister for her characteristically incisive questions. For this one moment only, I am glad that I am standing here and not sitting in the Minister’s seat. As has been explained, these regulations come in two parts. I will first look briefly at the payments on account. The Minister has explained the circumstances in which these will operate and my noble friend Lady Lister has already tried to tease out the reason why the Government have gone for this strict test of being available only to those in financial need. It is even slightly stricter than that. They will be available only for those in financial need as a result of having applied for a benefit, but not yet received a payment, when it seems likely that they will do; or when an award of benefit has been made, but the date on which it would be paid has not yet been reached.

That last one is likely to be of particular interest to millions of people who will find themselves being moved from weekly or fortnightly to monthly payments. Recent research commissioned by DWP, Work and the Welfare System: a survey of benefits and tax credits recipients, by Tu and Ginnis in 2012, found that 42% of potential universal credit claimants said they would find it harder to budget with monthly payments; 80% of these said that they were likely to run out of money before the end of the month. As I understand it, they will not all be entitled to budgeting advances, only those who find themselves in this stiff test of financial need, as a result of the circumstances I have described.

I would be grateful if the Minister would explain what he understands as being a “serious risk”. Would running out of food or cooking facilities constitute that, as my noble friend Lady Lister mentioned? Food banks already see significant numbers of people turning up because their benefit payments have been delayed. I suggest that this is likely to become much more significant in future with the move to monthly payments. Even if the test is the same as now, will the Minister concede that there may be a different set of needs resulting from a change in the circumstances because all these people are moving into monthly payments? Has he considered that aspect of it?

Regulations 11 to 15 cover budgeting advances. My noble friend Lady Lister has gone through the reduction in the maximum amount available, so I do not need to revisit that but I will be interested to hear the Minister’s answer. I would be interested, though, in the following information, if the Minister can provide it. His department has inquired about what has been happening with regard to the replacement for the Social Fund in different parts of the country. How many of those schemes will offer cash to claimants? What has his department found out about that? That will be important since they will replace a system whereby claimants can access cash at the moment. What research has the department done to establish the alternatives to which claimants are likely to turn? Since many claimants will not be able to access mainstream credit, it must be feared that they will turn at best to expensive legal credit, home credit or retailer financing, or at worst to illegal loan sharks.

I would be grateful if the Minister could explain again why he thinks it is important that claimants should be able to have only one loan at a time, even when it is a very small loan. A family may have borrowed £150 to buy a bed for a child but then a disaster strikes: for example, their washing machine breaks down, there is a flood or the bicycle which the mum is going to use to get to a job interview is stolen. They then need a significantly larger loan. What is the rationale for their not being allowed to take out more than one loan even if the total of the loans is well below the ceiling?

Will the Minister address the interaction between the new low ceiling, the fact that the adviser will be required to establish that the claimant can afford to repay the loan and the fact that the maximum period over which it can be borrowed has been reduced from two years to one year? Therefore, somebody taking out the maximum loan will have to contend with a tighter borrowing period and will have to prove that he or she can afford to repay it. Is there not a danger that that will make it even harder to get the loan in the first place?

These regulations may seem minor and technical but we will see millions of people face changes in their payment patterns because the decisions the Government have taken—in the face of widespread dismay and advice to the contrary—to move to a single payment, including amounts for rent, children as well as work, and to pay it monthly in arrears, are likely to be the cause of significant difficulty for a great many claimants. The least they deserve is a generous, open, accessible system of payments on account to ease the regulations’ passage.

--- Later in debate ---

[Lord Freud]

This is a fascinating area because, following the growth of the micro-loan industry particularly in Bangladesh, where it started—it has spread all around the world—the lessons on helping people to learn how to budget are very much along the lines of giving someone a loan which they pay back before they get the next loan. There is therefore a real learning process. In our approach, we are picking up this global phenomenon, whereby we will provide credit—in practice, free credit behind which there is a discipline—which has to be repaid before the next loan is available. It is very much the same thinking as that which we see globally.

[Baroness Lister of Burtersett]

If people know they can get only that amount, they will borrow more than they need at that point, knowing that that is it, whereas, as both of my noble friends are suggesting, you could have £100 here and £100 there, as you need it. I suggest that it would be good to look at this again.

[Baroness Hollis of Heigham]

I would artificially inflate my bid, knowing what you are doing to me. That would be a very foolish way to encourage me to learn how to manage credit.

Housing Benefit (Amendment) Regulations 2012

Baroness Lister of Burtersett Excerpts

Tuesday 6th November 2012 Lords Chamber

[The Lord Bishop of Norwich]

My Lords, there is a logic, if a rather cold one, in suggesting that those on housing benefit should not be supported from the public purse if they live in homes larger than they need. However, as we have already heard, it is the lack of availability of alternative accommodation in reasonable proximity that may make this proposal so socially disruptive and prompts me to support this amendment.

If, as we are told, 660,000 households will be affected, a great many people might be on the move. A couple in middle life whose children have left home would be entitled to only one bedroom, although they may have lived in their rented home for many years. There would be no room for an adult child to return after a failed relationship, which then creates a greater burden on much-needed housing. It would be tough on those in their 50s in this situation when their pensioner neighbours would be excluded from the reach of this regulation. Households such as this will be given a stark choice: move to a smaller home or take a substantial cut in housing benefit—on average, £14 a week. Housing associations are telling us that even if people want to move, there is not sufficient housing stock of the right size to enable them to do so. In practice, tenants will mostly have no choice but to remain in their own home and cover the shortfall out of their other income; this on top of reductions in council tax benefit and rising fuel prices.

A significant proportion of those who will be affected have become single because of the breakdown of relationships and, in many cases, the removal of their children elsewhere. They want to see them regularly. What looks like unoccupied space in the house is very important to them. Many single people rely on the local social networks that they have built over the years. That is where they find such stability as they can. A job, even a poorly paid, part-time one, may be lost and not replaced. Depression may set in. Alcohol or drug abuse may compensate for loneliness. Social disruption has economic consequences. While the housing budget may reduce, other budgets may rise. Worst of all, those affected may think that they are not treated as being of much value in our society. A loss of human dignity has a great many social and spiritual consequences. We save a bit of money, perhaps, but we are a lot worse off in all sorts of other ways.

What concerns me is that that will not be simply an urban problem. In rural areas the possibilities of alternative accommodation are even scarcer, the disruption greater, and the harm to diverse social networks larger. The Christian charity Housing Justice estimates that between 25% and 30% of rural social housing tenants will be affected.

One reason why rural deprivation is so hidden in our small villages, hamlets and settlements is that they often have the very wealthy, the vulnerable and those living on benefits living in close proximity, even in small numbers. That is one of the reasons why rural England is comparatively socially healthy. People in rural areas often cope with smaller incomes than their urban counterparts, while the cost of rural living is actually higher. They live more simply, even if their accommodation is a bit larger than seems logical to someone devising a system in a government department. It would be a tragedy to undermine all this, and I believe that the potential cost to our social fabric, especially in rural areas, could be very large indeed.

[Baroness Lister of Burtersett]

My Lords, we have heard some powerful speeches in support of the amendment. I take us back to the debate in Grand Committee on 15 October and what the Minister had to say:

“A lot of people will decide that they will have enough money or that they will be able to take in a lodger or take extra work. Those are the kind of decisions that we expect to happen in the marketplace”.—[Official Report, 15/10/12; col. GC 485.]

How many of us think of our homes as the marketplace or the decisions that we make around our homes as market decisions? We are not just talking about bricks and mortar; we are talking about the homes that people live in and the local roots that nourish them. The Minister made it sound so simple, saying that people will decide whether they have “enough money”; we are talking by definition about people on a low income, as my noble friend Lord McKenzie said. Or, the Minister says, they can “take in a lodger”; my noble friend has explained why that is not always appropriate. Or, the Minister says, they can find “extra work”; that is not so easy, either to get a job or increase one’s hours.

According to the National Audit Office report, one-third of households surveyed by Housing Future expect to fall into arrears as a result of this policy. According to Citizens Advice, other debts are likely to increase because, initially at least, people will try to prioritise their rent. Yet the Minister made no mention of debt or arrears as a likely solution, if that is a solution, even though debt is identified by the Government as a primary cause of poverty. One thing that we discussed in Grand Committee was the disproportionate impact of this policy on disabled people. There is evidence about the particular effects on disabled people of debt, and how debt can itself create mental health problems.

I come back to a point that I made earlier, and I have made before. I know that I probably sound like a broken record, but I refer to the impact on social networks when people move as a result of this policy—to people’s lives and to their being able to find work. Often lone mothers can use those networks for childcare, and so forth. The Minister mentioned the evaluation that will take place, which I welcome. In our last gasp, when we were discussing the then Welfare Reform Bill and this provision, the Minister committed that the monitoring would include the impact on social networks. In every subsequent reference that I have seen to that monitoring, I have not seen a mention of that, so I would be very grateful if the Minister could recommit this evening that that monitoring will include the impact on social networks.

On discretionary housing payments, I will not labour the loaves and fishes point any further, but I would instead like to quote from the National Audit Office report that came out last week, which says:

“It is not clear how the current level of funding for Discretionary Housing Payments has been determined or whether it is likely to be sufficient for local authorities in tackling the impacts of reforms. The £390 million of funding over the Spending Review period represents around six per cent of the total £6.4 billion savings expected from Housing Benefit reforms during this period. This works out at around £200 per household affected … There is also no established process for reviewing the level of funding for Discretionary Housing Payments over time. For example there is no mechanism to assess whether the overall funding amount should change to reflect higher claimant numbers. Uncertainty about the basis for future funding in part reflects the fact that the Department is still reviewing how to provide support for housing as a result of broader welfare reforms … Monitoring of how payments are made by local authorities would improve the Department’s understanding of local need. At the moment monitoring is limited”.

I would be grateful if the Minister could tell your Lordships’ House what the department’s response is to those observations from the National Audit Office.

Letters have already been going out to people who are likely to be affected by this policy, and it is striking fear into their hearts. It is a mean-minded policy that shows scant concern for the lives of those affected—and, as the right reverend Prelate put it, shows no concern for the dignity of those affected. Human dignity is at the heart of human rights.

[Lord Best]

My Lords, the noble Lord, Lord McKenzie, attributes the phrase “bedroom tax” to me, so I take responsibility for this—because it is a tax. It is not about trying to ensure that people are allocated to the property that best suits their needs; it is about raising money and reducing the deficit. We all understand about deficit reduction. Where we differ on this is whether people on the lowest incomes should be contributing to that deficit reduction with what is in effect a tax. It is a payment, which the tenant makes out of their benefits—out of the other benefits they receive, such as disability living allowance, income support or child benefits. It goes to government; that is where the payment ends up, and it reduces the deficit. That is a perfectly valid objective, but I and others maintain that it should not be at the expense of people who are living on the very lowest incomes at present.

The noble Baroness, Lady Turner, attributed the underlying problem to the shortage of accommodation, which then means that rents are much higher than one would hope and expect that they should be. It is not the fault of the occupier that they pay a large rent. We say that it is a disgrace that people are paying these enormous rents, but it is not that people wish to pay large sums in rent; that is what the market has determined. It is very different in London, as the noble Baroness pointed out, as it is in so many other places.

I am collecting examples of people who have written to me with their own cases. One after another, they are cases in which any reasonable person would say, “In that particular case, it seems very unfair for people to have to pay a new tax that they didn’t pay before—in that case, I agree that there should not be this tax to be paid”. One such case I can cite comes from the diocese of the right reverend Prelate the Bishop of Norwich. I agreed very much with his words. I apologise to the Minister for repeating the content of an e-mail that I mentioned in Grand Committee, but it is such a typical case. The lady has lived 23 years in her council house and now it contains herself and her husband. It has three bedrooms. They have actually done quite a bit of work to the House; the garden is immaculate—this is their home. But it is a tax, and they will face a bedroom tax of £25 a week unless they can move out. They have been told that there is a place in another Norfolk town. It is 16 miles from where they live, but there will be a place there in due course. It is not available at the moment, but in due course they will be able to get a one-bedroom flat. The absolute last thing that they want to do is to leave the family home where they have been for 23 years, where their children still come back at Christmas and on other occasions, and where she has a base to look after her mother in the village. It will cost the social services an arm and a leg to have to send in carers to look after mum. At the moment she goes in three times a day: once in the morning, briefly at lunchtime, and once in the evening. She will not be there to do that once she has moved away to the town. This is all ridiculous, and anyone would say, “Look, in that case don’t charge them the tax. Leave them where they are”. Anybody can see that that is the sensible thing to do. However, it will be extremely difficult to make those special cases, and to find the resource that will bridge the gap in their rent in those cases.

Benefit Cap (Housing Benefit) Regulations 2012

Baroness Lister of Burtersett Excerpts

Tuesday 6th November 2012 Grand Committee

I also repeat, in a slightly different way, the question of the noble Lord, Lord McKenzie, about the self-employed. We are expecting the self-employed under universal credit to register their wages monthly. Surely it will become possible under universal credit for people to be given the same sort of understanding as people who lose their jobs in the employed market. I would be grateful for some answers, but I am particularly concerned that we do not yet have the full detail of the guidance available to us.

[Baroness Lister of Burtersett]

My Lords, I think that I and the noble Lord, Lord Kirkwood, were the only Members of this House to oppose the benefit cap on principle and I remain opposed to it on principle, but I will not go through all those arguments again, although the Minister put the principled arguments for the cap, except to say that we have rather different views about fairness. I refer to that in relation to what is not yet a proposal but a suggestion mooted by the Secretary of State that a further benefit cap should be imposed on families with three or more children—exactly the same group who stand to lose most from this benefit cap—before this cap has even been applied. What possible basis is there for floating yet further caps until we know the effects of this one? I should be grateful if the Minister could say something about the interaction between the caps and what work has been done in the department on the likely impact on child poverty.

Like my noble friend Lord McKenzie, I read the Guardian and saw yesterday’s report. I followed it up by contacting the Child Poverty Action Group— I declare an interest as its honorary president. It has just, with the London Advice Services’ Alliance, published a study of London local authorities and how they are dealing with the various cuts in housing benefit.

It is clear that one of the common solutions, as evidenced in that Guardian piece, is to move families from inner to outer boroughs, or well beyond. Like the localisation of council tax benefit, it seems that the Government are taking a Pontius Pilate position here—washing their hands of all responsibility and then saying, “It is the local authorities that are responsible”. A Government spokesperson was quoted in the Guardian yesterday as saying:

“It is neither acceptable, fair nor necessary for local authorities to place families far away from their area”.

I agree, but to the extent that it becomes necessary, the blame lies with central government.

The National Audit Office spelled out, in its report last week, the pressure that the combined cuts in housing benefit would put on the supply of affordable local housing in some areas. The National Audit Office also drew attention to one of the findings of the interim report from the evaluation being carried out for the departments:

“Claimants’ reluctance to consider moving to other areas appears to reflect a considerable attachment to their local area as a place to live”.

The evaluation report refers to the importance of proximity to family, friends and schools.

I have heard Ministers—I do not think that this includes the Minister here today—say that people have no right to be able to live in nice areas that other people cannot afford to live in, as if we are talking about posh areas here and it is all about the niceness of the area. Actually, quite a few pieces of research around poverty and place show the importance of local roots and the networks that people have, and the Government seem completely impervious to this. I find it very strange because it seems to me to fly in the face of the whole philosophy of the big society, which is about the support that people give to each other. Yet this and other policies—I will probably say more about this this evening—wilfully destroy, or are happy to countenance the destruction of, these social support networks. One of my hobby-horses is that this is something that we must look at in all the evaluation that is being done. Like my noble friend I welcome the fact that there will be a review of the impact of the cap, but nothing is said in the Explanatory Memorandum about the impact on social networks.

The Minister talked about incentivising work. We have heard this on a number of occasions. I shall quote the Secretary of State, who said, in the House of Commons in an Oral Answer in September:

“When we recently started dipping into the issue and surveying those who were likely to be affected, it was interesting to find out that, already, well in advance of what is going to happen, about a third of people have admitted that they are out looking for work as a result of the oncoming benefit cap”.—[Official Report, Commons, 10/9/12; col. 15.]

I am interested; I keep hearing this. I am sorry to add to the questions the Minister is being asked, but what is this survey? Is this the telephone calls that he mentioned? Does the department ring up and they say, “Oh, yes, I am looking for work because you are about to cap me”, or what?

I have heard a number of social policy academics say that, if it is in terms of people going into work, this is the normal turnover one would expect. How do we know it is because of the forthcoming cap? Even to the extent that it is having this effect, the CPAG/Lasa study confirmed that several local authorities are working actively with residents to help them move into work or increase their hours in order to avoid a cap, and this is obviously very welcome. It stated:

“However, few see this as an approach able to solve the problems of more than a small proportion of families hit by the cap. One authority estimates that there are at least 500 families who would not be able to be supported into employment due to disability, caring or parental issues”.

Many emphasise the high cost of childcare as a barrier.

My noble friend Lord McKenzie and the noble Lord, Lord German, have mentioned carers and the fact that 5,200 of those expected to be hit by the cap are in receipt of carer’s allowance—that is about one in 10 of everyone affected in 2013-14. The mean reduction will be £105 a week, the median £77 a week. That is a lot of money for people to lose.

The Minister talked about the long-term positive behavioural effect. He might recall that in Committee on the Welfare Reform Bill my noble friend Lady Sherlock and I asked the noble Lord—this is a variation on the question asked by my noble friend—what are the positive behavioural effects that the Government are seeking from carers? Presumably they are not to stop caring. I asked the noble Lord and I am glad to say that he confirmed that that was the case. What other behavioural effects are being sought of carers? I am as baffled as I was then.

I turn to the question again raised by my noble friend on supported housing. I am grateful to Crisis for its briefing on this. It estimates that 10% of those affected could be single adults and it is likely that some of them will be living in supported accommodation. Supported accommodation ranges from hostels for homeless people to domestic violence refuges; it is exempt from normal housing benefit rules so it is not subject to LHA restrictions; the rents charged by different accommodation projects vary, depending on a number of factors but particularly the level and range of support provided. Therefore, a hostel that houses, for example, long-term rough sleepers with severe mental health problems will have higher running costs. A small number of people who live in such high-cost accommodation and who receive other benefits will be affected by the cap. They are not in a position to move elsewhere and they pay a lower rent. We are talking possibly about higher-rate ESA or incapacity benefit as was, and they are likely to be some distance away from moving into work so would not be able to avoid being hit by the cap.

I do not believe that it is right, nor do I believe it is the intention of the policy that the cap should impact on people who are extremely vulnerable or who are at a crisis point in their lives and cannot live independently. Supported accommodation providers rely on housing benefit as a source of funding and they would struggle to provide the vital services that they offer if their residents’ housing benefit were to be cut. Although Ministers have stated publicly that there will be no more exemptions to the cap, I understand that there are discussions going on as to how residents in supported accommodation will be treated. Ideally, I would like to see people who live in supported accommodation exempt from the cap but, failing that, I would be very grateful if the Minister could explain to your Lordships how it is intended to protect supported housing residents from the impact of the cap.

Crisis is also concerned that in the worst instances, households that are not able to find alternative accommodation could be left facing homelessness. That is a point made by my noble friend. I would like to read from the CPAG/ Lasa report, which states:

“Applying the benefit cap to families in temporary accommodation effectively means that families who are accepted as homeless, could be made homeless once more due to their inability to pay the costs of temporary accommodation”.

The situation was recognised by the noble Lord, Lord Freud, during the passage of the Welfare Reform Bill. I quote the noble Lord:

“We need to get a solution to this so that we do not have a ludicrous go-round of people moving into expensive temporary accommodation which they can no longer pay for because of the cap. We are absolutely aware of this and have measures in train to get a solution in the round to that issue”.—[Official Report, 23/1/12; col. 893.]

The report continues:

“At present, however, local authorities see themselves pushed into precisely this ‘ludicrous go-round’, with little option for escape”.

Could the Minister please comment on that and explain what measures exactly are in train to solve what he himself described as a ludicrous situation?

[Lord Best]

My Lords, I thank the Minister again for that period of grace. I had an amendment seeking a 26-week period of grace and this is the first time that I have ever had a Minister exceed my expectations. I knew I should have gone for 52 weeks but I thank him for confirming that that is safely in place.

Although I agree with a great deal of what has already been said, I particularly wanted to pick out the problem faced by those going into temporary accommodation. There are 51,600 households currently in these properties leased from private landlords. The housing association and sometimes the local authority itself stand in the middle. The private landlord charges a rent and on top of the rent that the landlord charges, the housing association, in taking on this commitment, has to agree to return the place to the landlord in pristine condition at the end of the period so there is a need for reinstatement costs. Management costs are also involved in this, so it is unsurprising that rents for these temporary accommodation leases are higher than other rents. In the areas where the other rents are already very high, these are going to be very high rents. However, the £500 per family cap kicks in regardless of the fact that rents in particular places will be very high.

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[Baroness Lister of Burtersett]

I am sorry to interrupt, but those are not the people we are talking about; we are talking about people with local links that matter to them for all sorts of reasons. This policy will destroy many of those local links.

[Lord Freud]

Perhaps the noble Baroness will let me finish the point. A lot of the stories in the newspapers refer to the former. Councils have had arrangements for many years with other councils some distance away. We have reinforced the point—this is where the regulations coming in on 9 November apply—that where people are local, the council has to consider whether the location is suitable for the household’s individual circumstances, including the significance of any disruption to employment, education and caring responsibilities. Local authorities are required to carry out a full impact assessment before moving people out to other boroughs.

[Baroness Lister of Burtersett]

I am sorry to push this, but if the stories are referring to the first group, why are local authorities expressing fear that they could be subject to legal challenge for moving families out? We are talking about a different group.

[Lord Freud]

I am trying to say that if you read the stories carefully, as I have been, you will see that they refer to preparatory moves about what councils may do and what they are preparing for. The stories are fairly evanescent, if you look at them closely. Clearly one reason for that is that these changes have not happened yet. Through this year, we have had the introduction of the LHA reduction from 50% to 30%, which my noble friend Lord German talked about. There has not been a huge flood of changes as a result of that. The stories are about councils being worried and their preparatory plans. They are about plans to move people around councils, but local authorities have always done that, for the reasons that I have given. They have always had this problem in London—people arrive and the councils have had to do something about them. Let me repeat the obligation in the 9 November regulations. Under the regulations, local authorities are required to keep people in the local area whenever they can and to carry out a full impact assessment before moving people out to other boroughs. We have strengthened that localism point in recognition of the same sentiments that are concerning noble Lords today.

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[Lord Freud]

I will be corrected on this if I am wrong, but ATLAS works both ways, so the information flows both ways, so we will have the information and will be able to notify and go through the normal process. We will know what is happening on housing benefit. That is how it will flow back and forth. There had to be an adaptation to ATLAS to make it a two-way flow. When it started, as the noble Lord probably remembers, I hope with nostalgia, it was a one-way process.

How and when are the guidelines being produced? The local authority Practitioners Operational Group, with a subgroup based on the benefit cap, has been briefed at working level on detailed procedures and guidance. Members have confirmed that people will develop detailed guidance and products which will supplement those to be published via the DWP intranet and the LGA’s knowledge hub.

The way that the benefit cap interacts with financial sanctions is that the benefit cap will apply to the overall level of household benefits. If the sanction is imposed, any reduction will be applied to the sanctioned benefit after the application of the cap. Otherwise, clearly, the impact of the sanction would be negated.

My noble friend Lord German and the noble Lord, Lord McKenzie, raised the issue of ESA. The specific exemption is to do with the people in the support group of ESA, not in the WRAG group. Several noble Lords mentioned carers. The benefits system is designed to provide financial support where caring responsibilities prevent carers working full-time. As such, the carer’s allowance should be treated in the same way, for the purposes of the cap, as other income-maintenance benefits. Clearly, where the carer is in the same household as someone entitled to DLA or ESA support, the whole household, including the carer, will be exempt. Most carers of working age want to retain a foothold in the labour market where possible. We know that more than nine in 10 claimants receiving carer’s allowance are claiming another out-of-work benefit. In other words, they are looking for work. Carers who move into work clearly become eligible for the working tax credit and will be exempt from the cap.

[Baroness Lister of Burtersett]

I am still unclear what behavioural change the noble Lord seeks from that group of carers. If they are already seeking work anyway, why do they need the cap to spur them on to do it on top of their caring responsibilities?

[Lord Freud]

Clearly, we are expecting that they will find work at that level.

On the grace period questions from the noble Lord, Lord McKenzie, which really boiled down to the self-employment questions, they are entitled to working tax credit if they meet the other conditions. On the 50 out of 52 weeks, there may be a gap in employment, but my understanding is that SSP, statutory sick pay, which is paid by the employer in the case of the employed, would constitute being in work, for obvious reasons. That actually responds to my noble friend Lord German’s questions.

--- Later in debate ---

[Baroness Lister of Burtersett]

The point I was raising was about the effect on child poverty should the Government introduce a new cap on families who are not in work with three or more children, over and above the benefit cap. What work is being done in the department to look at the effect of the interaction of these two different caps on child poverty? It is possible that the noble Lord was about to go on to this but he seemed to be moving on to another issue.

[Lord Freud]

We have not done any work on that because it is not agreed government policy, but it is something that we are looking at, clearly. To the extent that we do look at it, it will be done on flow and not on stock. That was very clear in some of the discussions on this particular option. However, it is about people who get more than two children rather than people with more than two children. People will at least be able to plan their families should that become government policy. Regarding local networks, as raised by the noble Baroness, Lady Lister, clearly we acknowledge their importance. That is one reason for the regulations coming in on Friday: to try to ensure that people are not moved without very serious consideration.

There was a question about our early findings. There has not yet been a coherent survey. However, there are some interesting figures from our early findings showing the effect of the cap, and I think we will be able to share those more widely when they are locked down. As the noble Baroness said, it is absolutely essential that we do not confuse things that are happening anyway, and that we try to get analysis of the excess. There is, however, an interesting point: quite a few people dropped out of the benefits system when this started. That is not a surprise. One would expect to find some of the people who feel uncomfortable claiming gathered in the area with the highest numbers of claims—I put that as delicately as I can. I hope to be able to give some more information on that.

The noble Baroness asked about childcare. Jobcentre Plus recognises the importance of childcare as a key enabler, and clearly financial assistance is available for a claimant moving into the labour market. We accept the need for appropriate childcare when we make that judgment.

I think that I have done my best to deal with the point about temporary accommodation. The noble Lord, Lord Best, talked about rent levels and urged a regionalised system, quoting the originator of the welfare state. The rate of increase in rent has slowed down a bit over the past year and local authorities are working with households affected by the cap to ensure that they are able to locate affordable homes. I was just looking at some rental levels, which show a slight slowdown in some months of the year.

I am running out of time. There is a lot of other business and I have to stop now. I will have to write on the other matters, as there was just so much—I counted 40 questions from the noble Lord. I commend the draft Benefit Cap (Housing Benefit) Regulations 2012 to the Committee.