Social Security (Personal Independence Payment) Regulations 2013
Baroness Lister of Burtersett Excerpts(12 years ago)
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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(12 years ago)
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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.
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(12 years ago)
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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.
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(12 years, 3 months ago)
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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(12 years, 3 months ago)
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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.
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.
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.
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.
Housing Benefit (Amendment) Regulations 2012
Baroness Lister of Burtersett Excerpts(12 years, 4 months ago)
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Baroness Lister of Burtersett
I do not think that either the noble Lord, Lord Shipley, or I want to follow the very powerful case made by my noble friend Lady Hollis. We have rightly focused on the bedroom tax but first I want to refer to the CPI uprating, following a point that was raised with us by Crisis. During the passage of the Welfare Reform Bill the noble Lord, Lord Freud, said that,
“if local housing allowance rates are clearly out of step with rents, they can be reconsidered”.—[Official Report, 14/12/2011; col. 1323.]
That was a welcome statement. I understand that there have been discussions between the department and Crisis, and perhaps other groups, in which it has been suggested that in 2014-15 the Government intend to review the method of uprating used. It would be helpful if the Minister could tell us how this review will take place. Will it be a formal review? Will it be part of the more general review of what is happening to housing benefit? What sort of discrepancy between local housing allowance rates and local rent would be deemed out of step? It would be helpful if the Minister could give us that information.
I turn to the bedroom tax, about which much has already been said by noble Lords. Like the noble Lord, Lord Kirkwood, I had not quite taken on board the extent to which disabled people are disproportionately hit by this measure. In our general discussion, we perhaps lost sight of that at the time. My noble friend Lord McKenzie asked the question, which I hope the Minister can answer: are disabled people expected to use their disability benefits to meet any rent that will not be covered? The briefing we were sent talked about a judgment, Burnip, which I admit I had not heard of before. One of the judges made clear that we should not expect tenants to use disability benefits to meet part of their rent.
The Minister started by saying that the regulations are compatible with convention rights but, as a member of the Joint Committee on Human Rights—I am now but was not then—I refer back to its report on the Welfare Reform Bill in which the committee raised concerns about whether there was a problem here for disabled people. The report said that if such tenants were forced to move into properties unsuited to their needs, this might risk breaching their Article 8 rights—respect for privacy or family life—and potentially be discriminatory. Since then, we have had the announcement, welcome as far as it went, of the discretionary housing payment. However, the noble Lord, Lord Best, has already raised major questions about that payment. During consideration of the Bill, I dubbed it the “loaves and fishes of income maintenance”. It feels as though these loaves and fishes are being stretched ever further, even if there is an extra £30 million there.
As the Secondary Legislation Scrutiny Committee points out, the money is not ring-fenced, and once again we cannot be absolutely sure that it is to be used for the purposes intended. The noble Lord, Lord Best, talked about how the money will be stretched and will help only those whose houses have been adapted, but there may be other disabled people for whom there may be good reasons for why they should not have to move, use other income, take a lodger or go into paid work. The situation is not terribly satisfactory.
The noble Lord, Lord Best, said that this money would last indefinitely. I had not realised that that was the case. It would be helpful if the Minister could confirm that this is an indefinite payment. Can he give a government commitment that that money will definitely be there for the current spending review period and that it will be at the very least inflation-proof, or go up in line with rents? Can he give that kind of assurance? I will be delighted if he can but there is a big question mark over the long-term viability of a policy based on a discretionary payment. Will the individual be able to receive it forever, or will they have to keep re-proving their deservingness in order to continue to receive it? All these questions remain unclear.
I do not think that the Minister will be able to put our minds at rest because of our strong case. We are all very unhappy about the regulations themselves but perhaps he can at least give some assurances that the discretionary housing payment will genuinely go some way to meeting the real problems raised by other noble Lords.
Lord Shipley
My Lords, I refer to the Secondary Legislation Scrutiny Committee’s comments at paragraph 13, in which it is pointed out, rightly, that the reduction will apply to,
“the total eligible rent for the dwelling, including any eligible service charges”.
Can the Minister confirm which service charge items will be eligible for universal credit? In consultation, these were different from those covered by the current housing benefit regulations, which provide a list of items that are not eligible. Will the revised regulations prescribe the range of eligible service charges and, in practice, reduce the numbers that may previously have existed? In particular, will the Minister clarify which service charges will be included in the definition of,
“services necessary to maintain the fabric of the accommodation”?
Specifically, will the maintenance of fire safety equipment, lifts, door entry schemes and other communal services be deemed necessary to maintain the fabric of the building and therefore be eligible?
Further, will the service charge currently associated with a furnished tenancy be eligible for housing benefit, as it is now? Finally, on concierge services, which include portering, security, caretaking, CCTV coverage and the cleaning of communal areas, will the service charges for these continue to be eligible? I hope they will because, if they become optional, many tenants will not be able to afford to pay and there will be reduced standards, impacting negatively on communal facilities and health and safety.
Lord Freud
There is an implication in that: who takes priority for those new houses and then who do you take off the waiting list for the larger properties? There is then a kind of order of position that becomes somewhat more manageable. Do not forget some of the examples given, such as that there would be children in these rooms. The reality is that for the bulk of people affected by this, their children have left home. That is why they have too many bedrooms. I think the figure is—I am plucking a number from my memory—70% of the people affected by this. I will be hit hard by someone if I have the wrong figure and I will get the right one in a second but, from memory, 70% of these people do not have their children at home. That is obvious because of the underoccupancy effect.
I responded to the question on DHP use from the noble Lord, Lord Best. We are not talking about a ring-fence system with the DHPs. When you have very hard cases, of the kind discussed this afternoon, local authorities can move in and help.
As to the total figure, I have already given that as £165 million for next year. That is made up of the baseline funding of £20 million, £40 million from the LHA reforms, £30 million from the social sector—under the size criteria that we are talking about—and £75 million from the benefit cap. These are the kind of figures for people who have multiple effects.
I must correct my earlier figure of 70%. My memory was just slightly faulty; the figure is actually 66%, not 70%. I apologise.
This is a good time to answer the question of the noble Lord, Lord Best, about making an assurance. Actually, it was not Lord Best. Who wanted that assurance?
Lord Freud
It was the noble Baroness, Lady Lister, who wanted that assurance on the indefinite lasting of DHPs. I clearly cannot make any assurances through into the next spending review. To commit into the next spending review is, I suspect, the shortest way to get yourself fired that I know of, in any political party. However, when it comes to adaptations and foster children, the structure of this is not an eroding factor. It might erode, but only very slowly. Clearly, any Government would have to look very closely at how they maintained that type of support when they looked at the next spending review. So if that is some small reassurance, I leave it with the noble Baroness. I do not think I have got myself fired by saying that.
Baroness Lister of Burtersett
I certainly do not want to get the noble Lord fired, but will the department be doing all it can to ensure that that money is maintained into the next spending review period?
Lord Freud
We are doing a serious review, as the noble Lords, Lord Best and Lord McKenzie, and others have pointed out. We take reviews very seriously. They are public and they provide information to look at as we consider how we go forward. I certainly can say that the department and I take the information from these reviews very seriously. That is as far as I can go at the moment. The noble Baroness perhaps understands better now than when we were going through the Bill when I am making a move and when I am not.
Perhaps I may pick up on a point made by the noble Baroness, Lady Hollis, about overcrowding. Clearly the primary reason for these regulations, and we have made it absolutely clear, is that this is a huge Bill and we have to look at where we want to spend the money and how we make the half a billion pounds in savings. In other words, if we do not make savings here, where else do we make them?
Lord Freud
I do not want to get into a huge debate about housing policy because it is a huge and complicated area. Clearly, we are dealing with counterfactuals. There are some signs of bearing down on rents. During the middle part of this year, rents were below the CPI increase. As the noble Baroness argues, we are probably fighting supply and demand pressure going the other way. Within that, there are some signs that we are bearing down. Clearly, the Government’s strategies on getting more housing, particularly build-to-let, in the private sector as well as social housing are important initiatives. We have 146 providers delivering 80,000 new homes for affordable rent with government funding of just under £1.8 billion. Over the 12 months to August, private rents went up by 2.9% on the LSL rental measure for England and Wales, which is not hugely out of line with the CPI.
Arrears are clearly a primary concern for housing associations. I am aware of that. It is about managing the different proportions. When you look at the pie chart of the number of tenants who are affected, housing associations will have to watch closely how a proportion of tenants are supported. From going around talking to housing associations, I know they are ramping up their support for those groups. One of the interesting things about the housing demonstration projects is how housing associations are saying, “We thought we knew our tenants and we are finding with these demonstration projects that we did not, but we are now establishing completely different relationships with them”. I am sure that the noble Baroness’s housing association knew its tenants much better than the average, but that is what I am hearing from the demonstration projects.
On the point made by the noble Baroness, Lady Lister, the scheme already recognises the need for an extra room where there is a need for an overnight carer in the private rented sector, and we have carried that over into this scheme.
On the point made by the noble Lord, Lord Shipley, the legislation sets out the types of eligible charges, and guidance will provide more detail. We expect the costs to be met broadly as now.
The noble Baroness, Lady Lister, made a point about human rights. We have DHPs to assist people to move, and local authorities must consider human rights and obligations when making decisions about these kinds of cases.
The noble Lord, Lord McKenzie, asked about households not fit for work, and I think I have dealt with that. The two-thirds figure has not changed, and 56% report a disability that leads to a significant difficulty with one or more areas of daily life. That does not necessarily mean that the daily lives of the two-thirds are affected by their disabilities. I have touched on the question put by the noble Lords about what people can do; there are four or five things that can be done.
One or two noble Lords asked about income from lodgers. The first £20 of weekly income is disregarded entirely, which will usually cover the amount of money in the reduction, and half of the remainder is taken into account. I have made sure that under universal credit, the entire amount is disregarded. That is to be introduced from next year. I was asked by the noble Lord, Lord McKenzie, about the average cost of moving home. DCLG estimates that it is about £500 per move. On questions about the CPI, again that is to keep the pressure on. We froze it a year ago so that we can make the standardised changes with regard to CPI in April 2013. I was asked how long that pressure is likely to last. We have made it absolutely clear that we need to keep it under review. People have made projections up to 2030, but we are in unusual times since earnings normally rise faster than inflation and thus drag up other factoring events. Usually one would expect to have to review the figures as those factors come through. I am not sure yet how we will do the review, so I cannot spell it out. However, as we get closer to the right period, we will look at exactly how it will be done. I repeat, we will take it seriously.
Baroness Lister of Burtersett
I am sorry to hold the noble Lord up. I understand if he is not yet able to say how the review is to be carried out, but when the department does know that, could he perhaps tell noble Lords?
Lord Freud
I have pleasure in giving a commitment that I will tell noble Lords exactly how we plan to do it when we know. I think I have covered all the issues that were raised—
Welfare Reform Bill
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Baroness Lister of Burtersett
My Lords, I support Motion A1 as the best outcome we could possibly hope for in the current circumstances. However, I would like to suggest another area that the review should look at in terms of a foreseeable consequence, which is the impact of this measure on social support networks. I was an adviser to a Joseph Rowntree Foundation-funded project carried out by some of the people involved in the review instigated as a result of the noble Lord’s earlier intervention: namely, Sheffield Hallam University, which has been looking at the relationship between poverty and place over a three-year period. It produced a report last year which considered these research findings and set them against various explicit and implicit assumptions in government policy. One of the points made in the report was that if forthcoming social housing and housing benefit reforms obliged low-income households to relocate, this might most affect those with the strongest connection to their existing neighbourhood. Surely this goes against so much of government policy. These reforms will make it harder for people to find work because social networks are very important in helping low-income people find work. They will make it harder for those with children to enter or sustain work because social networks are so important in terms of help with childcare. The reforms will undermine the big society. Social networks are the capillaries of the big society. The report suggests that the reforms will reduce people’s feelings of security, safety and sense of belonging. I am sure that this is not what we want. I do not know whether the Minister will respond positively to my suggestion. However, if he does respond positively, as he did with regard to the suggestion of the noble Lord, Lord Best, for a review, I hope that he will take on board the impact of this change on social support networks.
Lord German
My Lords, I commend the thrust of this amendment. However, as has been demonstrated, the way in which it is drafted may mean that it does not include everything that we would wish it to include. I would expect the Minister to comment about the way in which a review should be conducted. I do not wish to sound like a well-worn record but I have a long-standing view about the way in which major shifts and changes should be reviewed. It is absolutely essential that any part of the Bill which has profound implications for change should be reviewed in a proper manner. I wish to use two analogies—a route map and a set of milestones. We use a route map to get a sense of direction, find out where we can turn off a route and make diversions, whereas a milestone signifies the distance that we have travelled. Reviews which rely solely on milestones do not necessarily fulfil the point to which the noble Lord, Lord Best, referred: namely, to make changes on route. That is one of the key issues for any form of review of major change.
The Government’s principal success in this field was their appointment of Professor Harrington to undertake a series of milestone reports. One of his reports was colloquially referred to as his report number one and a half. He continually places on record what he sees as being the changes which are necessary. He has followed different routes and different avenues in looking at the whole issue of the WCA and the way in which it is adopted. That has enabled the Government to make changes as they are going along. I commend the suggestion to the Government that they should think carefully about appointing independent people to conduct a continuous evaluation so that we not only have the milestones when formal reports have to be submitted but changes can be made as the need for them arises. Such a process gives flexibility to the people who are conducting the evaluation to address problems as they emerge.
I make no apologies for returning to the issue of foster carers. I raised it in Committee, on Report and I raise it again today. As we have just heard, the sum of £30 million is intended to support 40,000 households which contain disabled people or foster carers. What analysis has been done of the adequacy of that sum or of whether 40,000 households is the correct figure to cover people who fall into both those categories? I refer specifically to foster carers. We have a distinct shortage of foster carers in our country. Only 65 per cent of children in care are in foster care, which means that many thousands of children who could benefit from this provision if appropriate foster homes could be found for them are missing out. However, it is natural and reasonable that social services departments and fostering services place increasing emphasis on the importance of finding a good match vis-à-vis a child and a foster carer. That has inevitably led to a longer time span in appointing foster carers. Did the Government take that extended time span and the increased demand for foster carers into account when calculating the support that they would make available to the groups I have mentioned? We do not know how many of the 40,000 households include disabled people and how many include foster carers. I should be grateful to my noble friend if he could respond to those points.
In conclusion, I commend to the Minister the review process proposed in the amendment. As has already been pointed out, some noble Lords may think that the amendment should include other matters. Its proposed new subsection (3B)(g) would allow other matters to be taken into account. One might want to refer to the problems caused by disrupted education. I believe that noble Lords have referred to that in previous debates on the Bill. It seems to me that the amendment may not have the right wording but its sense of direction is very appropriate. I hope that my noble friend the Minister will be able to accommodate its main thrust.
Jobseeker’s Allowance (Domestic Violence) (Amendment) Regulations 2012
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Lord German
My Lords, I will follow the noble Lord’s questions with a number of other issues that relate to these regulations. The first concerns the title. I am always in favour of government being connected across the piece. The regulations refer to page 11 of the handbook for health professionals. On page 10 there is a straightforward definition of domestic abuse that was provided by the Home Office and adopted across government. I will read the subsequent paragraph because it refers to something that is in the title of these regulations and to a change that it is seeking. Perhaps the Minister will consider it.
The handbook states:
“The term ‘domestic violence’ obviously covers a wide range of abuse—physical and otherwise. It also covers issues that mainly concern women from minority ethnic backgrounds, such as forced marriage, female genital mutilation and so-called ‘honour violence’. Throughout this handbook, we use the term ‘domestic abuse’ instead of ‘domestic violence’ wherever possible, because we are concerned that the latter might be interpreted as physical abuse only. We have, however, made use of information and statistics on ‘domestic violence’ and so have kept to that terminology in those instances”—
of straightforward domestic violence. Over the page are the definitions, which the regulations refer to. They are really a set of examples—physical, sexual, psychological, financial and emotional. If there is a cross-governmental approach to this, why do the regulations not use the term “domestic abuse” instead of “domestic violence”? It is a wider definition. The examples on page 11, which the regulations refer to, are not examples of domestic violence but of domestic abuse—the term used on the previous page. Perhaps my noble friend will consider whether the title of the regulations is wholly appropriate.
My second question concerns the evidence that should be provided. A broad range of people—Members of the House of Lords are not mentioned—can produce evidence on behalf of a claimant. The group includes the police. I presume that this is because when someone has resorted to making a complaint to the police, the police will be required to provide that evidence. Perhaps my noble friend will explain what evidence the police will be expected to provide in order to justify the continuation of a claim before them for discretionary easement.
My third question concerns discretion levels. There is a clear process that moves from four weeks to a total of 11, with individual weeks being added up as necessary rather than being taken en bloc, and with nine of the 13 weeks being taken in blocks as necessary. However, sometimes in the first four weeks that people have to provide the evidence, it may not be possible to provide that evidence if they require a public body such as the police to provide a letter or a pro forma to be completed, because sometimes the public bodies are not quite as quick as you might wish them to be. Is there any discretion for the Jobcentre Plus adviser to ease that four-week period and make it a little longer, if evidence is on its way from a public body that might exceed the four-week exemption period, and extend it to a further nine weeks?
I welcome the order before us. It seems a very sensible and very helpful move, and I commend the Minister for bringing it forward.
Baroness Lister of Burtersett
My Lords, I, too, welcome the order. I particularly welcome the very broad consultation that appears to have taken place, and the fact that—for once—there have been changes as a result of that consultation, which is very good to see.
The Explanatory Memorandum says that concerns were raised about some of the detail. In particular, it discusses:
“imposing time limits on the time a claimant can have to obtain evidence, and about having a maximum allowable deferral period”.
Were any other concerns raised that are not discussed in the Explanatory Memorandum? If so, perhaps the Minister could relay them.
The main issue I want to raise is in support of what my noble friend Lord McKenzie said about this being confined to victims of domestic violence or abuse where the perpetrator is living at a different address. Research in the United States shows that it is not unusual for a man who is abusing his partner to use violence to prevent her seeking paid work—for the obvious reason that he wants that woman under his control and if she gets paid work she can be independent of him economically. We know that economic dependence is linked to psychological dependence and makes women much more vulnerable to abuse. I am not aware of similar research having been done in this country but it seems quite plausible, now that partners are subjected to conditionality rules, that there will be situations in which someone may be prevented from seeking work by the violence or abuse of someone they are living with—and this will not allow for that. I would welcome the Minister’s response on that.
Lord Freud
My Lords, as one would expect, this has been an interesting debate with some valuable contributions. I shall try to deal with the questions—slightly at random, if noble Lords will forgive me.
The evidence can be supplied by a very wide range of bodies: healthcare professionals, the police, registered social workers, employers, trade union reps, and public, voluntary or charitable bodies. My noble friend Lord German was concerned about the process being slow, but that is probably a pretty rare circumstance. Clearly there is the back-up of the domestic emergency discretion that is allowed to Jobcentre Plus when, after four weeks, the letter has not arrived and it looks as though the body is being slow in supplying it.
Both the noble Lord, Lord McKenzie, and the noble Baroness, Lady Lister, raised the issue of not living at the same address. Of course, that is how the primary legislation was framed; it says something about having to leave the address. The regulations provide financial support for a person when they have left the address, and the support is provided in order to help a person to move on. However, this is an interesting point. The noble Baroness, Lady Lister, talked about the interplay between conditionality and violence. I will bear that in mind as we look at universal credit, for which we are ramping up the conditionality. There might be households in which on the one hand the state says “go to work” and on the other hand the partner is using violence to prevent that. I suggest that that is an interesting, although I suspect rather narrow, group, but we need to keep it in mind. Overall, the purpose of this easement is to support changes in individual circumstances. That is what it is for, and clearly staying in the same place would not mean that such a change was made.
Social Security Benefits Up-rating Order 2012
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Baroness Lister of Burtersett
My Lords, I will focus on the Social Security Benefits Up-rating Order, particularly its implications for people of working age.
As someone who is always quick to criticise the Government when I think they are doing the wrong thing, it is only proper to acknowledge and applaud the Government when they are doing the right thing. As my noble friend Lord McKenzie said, they have ignored the siren voices calling on them to tamper with the normal uprating mechanism in order to save money simply because inflation happened to peak in the month on which the uprating is based.
One reason why it is so important that the uprating is maintained, as the Minister himself said in a Written Answer on 10 January, is that:
“The increase in the cost of living faced by those receiving benefits is likely to be higher than for other groups, as those on the lowest incomes spend a greater proportion of their incomes on food, fuel and energy, the prices of which are rising particularly rapidly”.—[Official Report, 10/1/12; col. WA 9.]
This was borne out by a recent Resolution Foundation report, which states:
“Because the costs of essential goods and services have been rising much faster than standard rates of inflation for some time, households on modest incomes have fared far worse than official data suggests … With the cost of an essential basket of goods now rising significantly faster than general inflation, more and more low to middle income households will not just fall behind those above them, but also behind what is widely considered to be a minimum acceptable standard of living”.
The report further states that,
“indices based on average spending, like the CPI or RPI, are much more appropriate for households at the average than for households on lower incomes”.
The Resolution Foundation suggests a new index based on the minimum income standard, which, as the Minister will remember, we discussed at some length in Grand Committee on the Welfare Reform Bill. It is an idea that is worth looking at. The Resolution Foundation report also points out how the switch from the RPI to the CPI aggravates the situation. This is where I have to part company with the Minister, as I am sure he would expect.
An Institute for Fiscal Studies press release on the September inflation rate points out that the adoption of the CPI means that many,
“benefit recipients will be worse off than they would otherwise have been … Over time this change will prove to be the biggest change to the welfare system so far implemented by the government”.
Although the impact so far is relatively small, it will compound indefinitely over time. Even a small impact is significant for people on very low incomes.
Like the Minister, I will not go into all the technical arguments that we had on the previous occasion about CPI. The Minister said something about economists being very supportive of this, but after our previous debate I received a letter from a retired economist who had written to the Minister challenging what he had said in the debate about the technical arguments. I will not bore the Committee with it now but I should just remind him that it is perhaps just as well that he did not repeat them today.
My noble friend Lord McKenzie referred briefly to my final point. Steve Webb in the House of Commons talked about the burdens on the low paid. He said:
“That is why we are keen to raise the tax-free personal allowance”.—[Official Report, Commons, 23/2/12; col. 1070.]
In that debate in the Commons, however, no one mentioned child benefit. I talked about this last year. I do not apologise for talking about it this year and I will talk about it again next year. As long as child benefit is frozen, it is crucial that we remind people of its significance and tell those who are too young to know that child benefit replaced personal tax allowances as well as family allowances. It therefore should be treated as the equivalent of personal tax allowances. It makes no sense to freeze child benefit when so much emphasis is being put on raising personal tax allowances as a way to help low income people in work, in particular those with children. Obviously, child benefit will help only those with children, but it helps those whose income from work is too low to pay tax. The more that the Government succeed in raising personal tax allowances, the more people will be in that situation every year and their child benefit will be frozen.
This message is perhaps as much for Liberal Democrat colleagues. I hope that they will take it back to the Deputy Prime Minister in the very public negotiations that are going on about the Budget at present.
Lord Kirkwood of Kirkhope
My Lords, I am happy to add that to my long list of things that I will be taking to the Deputy Prime Minister from time to time. I am pleased to make a short intervention in this debate. I, too, was massively relieved that the full uprating undertaking was delivered. It must have been very difficult for Ministers. I was frightened to death that the pressures on them would make them buckle and I am genuinely pleased, as well as massively relieved, that the commitment was held to. It is a very important signal. I do not care who gets the credit in the coalition. Ministers did well and I want to recognise that openly.
I have a couple of technical, almost philosophical matters with which to worry the Minister. We always have these arguments. I know that this is a pay-as-you-go system and that this is not money just lying in a bank. The thing that has changed for me is the table at item 6, where the Government Actuary is looking at projections beyond April 2013. The balance in the National Insurance Fund goes from 55 per cent in 2010-11 to 30 per cent in 2016-17. That is a dramatic drop. Can the Minister explain that? It may be a deliberate contribution to deficit reduction, but the balance in the National Insurance Fund has been quite high for some time. Perhaps that reflects the buoyancy of the economy. I am not an actuary, but perhaps the Minister could say a word about that. If he cannot, a letter would do. The Committee would like to hear a little more about going from 55 per cent to 30 per cent in that relatively short space of time, because we may want to return to it.
Lord McKenzie of Luton
Perhaps I may intervene. I am sorry, but I did not know whether the Minister was about to wind up, so perhaps I could revert to a couple of the questions which are left outstanding.
In relation to the savings credit and passported benefit, the issue is that if there are, as we now know, 30,000 fewer people claiming savings credit, presumably there are some savings in respect of passported benefits that would go with that. The question is whether those savings are factored into the savings needed to produce the guaranteed credit upratings.
There were a couple of other items. In relation to non-dependant deductions, it was asked whether we could be told what the reduction in housing benefit and council tax benefit is estimated to be as a result of those changes. In relation to the small business issue, and the £45,000 threshold, I was trying to determine whether, because of increases in national insurance and fiscal or national insurance drift, the same thing would happen as with tax drift, where effectively more people are being excluded from the benefit of 100 per cent reimbursement, because in real terms it is declining.
There is one other issue—perhaps the Minister could deal with it in writing—which is the relationship between the uprating of guaranteed credit and the basic state pension. I am indebted to my noble friend Lady Drake for bringing to my attention some interesting material produced by the PPI showing the impact of pension credit over several years. The component that would produce the biggest reduction in the percentage of pensioners living below 60 per cent of median income would be if the current policy plus guaranteed credit were indexed to the triple lock. That would have a more beneficial outcome than the current policy, where guaranteed credit is indexed to earnings, although I accept that this year it is earnings-plus, but that is still not the same as earnings plus the 5.2 per cent.
Baroness Lister of Burtersett
To save the Minister getting up and down, I would appreciate a comment on the point that I made about child benefit. Perhaps it is more appropriate for the noble Lord, Lord Sassoon. What is the logic of putting so much emphasis on increasing personal tax allowance in real terms and then freezing child benefit, which is the equivalent of a personal tax allowance?
Lord Freud
Perhaps I may deal first with the point made by the noble Baroness, Lady Lister, although I am sure that my noble friend Lord Sassoon will provide a much more sparkling answer. My answer is that, as we look forward into a world where the poorest are supported by universal credit, which is very targeted—
Welfare Reform Bill
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Baroness Lister of Burtersett
As an amendment to Motion D, at end insert “but do propose Amendment 23B as an amendment in lieu”
“Condition relating to youth: review
In section 1 of the Welfare Reform Act 2007 (employment and support allowance) after subsection (3A) there is inserted—
“(3B) The Secretary of State shall conduct a review of the impact of the provisions of subsection (3A) on such persons as are affected by those provisions.
(3C) The review under subsection (3B) shall commence twelve months after subsection (3A) has come into force; and a report of the review shall be laid before both Houses of Parliament within three months of the review commencing.””
Baroness Lister of Burtersett
My Lords, I admit that this is not the amendment that I had wanted to move but I have been prevented from moving that one by the—and I hope that this is not unparliamentary language—sneaky amendment that the Government passed on the evening of 11 January, which ran contrary to the earlier decision made by your Lordships’ House to protect the ESA youth provision. This amendment simply calls for a report on the impact of its abolition so that the young people affected are not left completely in the lurch.
Noble Lords will recall that we are concerned here with the abolition of a provision which has been an accepted and uncontested part of social security legislation since 1975. It enables young people who have been disabled from birth or childhood to access contributory employment and support allowance without having paid the necessary contributions on the grounds that they cannot be expected to have paid them.
I shall not go over all the arguments that have already been made but I want to pick up one point that the Minister made—that young people who do not qualify for income-related ESA have independent means. I find it strange that the Government, who have such concern about so-called welfare dependency on the state, do not seem to understand that in the 21st century an adult who has to depend totally economically on another finds that demeaning. It is not right.
The abolition of the youth ESA provision was originally justified on the grounds of administrative simplification, as the noble Lord has said. That argument did not stand up well to scrutiny, so the Government shifted their ground and argued that its abolition was necessary to protect against the effects of a European Court of Justice decision in the case of Stewart, as the Minister has explained. This decision is dated 21 July 2011. The Grand Committee discussed the youth condition on 8 November—three and a half months later—yet the Minister did not mention it. If the implications of the decision were so significant, surely someone in the DWP would have noticed them during those three and a half months. The first that noble Lords heard of it was in January. Interestingly, in January the department was also rebuked by the UK Statistics Authority for rushing out figures on benefit tourism with insufficient regard to weaknesses in the data. The National Institute of Economic and Social Research argued that these same figures disproved ministerial claims about benefit tourism. I raise this only because I wonder whether the ESA youth condition has not become the victim of a moral panic in the DWP about the much exaggerated problem. That is not to say that I am defending benefit tourism, where it happens.
More importantly, I have received advice from Dr Charlotte O’Brien, a law lecturer at the University of York. She is an expert in this area and I am very grateful to her. She disputes the department’s interpretation of the implications of the Stewart case. In her view, the Government’s “claim that ‘we could end up paying this benefit, on a long-term unconditional basis, to more people who have never lived in the United Kingdom but who can simply demonstrate a link to it’; and the suggestion that the ruling makes ESA in youth much more widely available are not supported by either the rules on social security co-ordination or by the wording of the judgment”. I shall not wear the patience of your Lordships’ House by going into detail. I just wish to say that it is unlikely that in many such cases the UK will be the “competent state”—a necessary condition of entitlement. However, where it is, it is still open to the UK Government to apply a “real link test”, which would not be deemed to be arbitrary in the way that the residence test was in Stewart. When I put it to Dr O’Brien that it would appear that the Stewart judgment had been seized on as a pretext, she agreed, adding, “I think it is a very flimsy pretext”.
If, however, the department’s interpretation were correct, it might also raise questions about entitlement to DLA/PIP and attendance allowance. Can the Minister please give the House a firm assurance that there will be no attempt in future to abolish those payments using the same pretext?
Finally, I come to the question of money. The impact assessment for this measure did not include financial savings in its list of policy objectives, yet Ministers have subsequently used these savings as an argument to justify it. What savings are we talking about? The amendment overturned by the House of Commons would have cost a mere £17 million by 2015-16. That is a cumulative cost. It would be really helpful if the Minister could stick to annual costings, or are they so minimal as to be unquantifiable on an annual basis? Surely it is an abuse of financial privilege to slap it on an amendment, the cost of which falls easily within the normal margin of error.
I do not blame the Minister, but in both Houses Ministers have tried to justify the abolition of youth ESA as part of what they have called the Government’s “principled approach to reform”. I believe that this mean-minded little measure and the justifications put forward for it, together with the application of financial privilege and the manner in which the Government moved their own amendment on Report, are totally unprincipled. I beg to move.
Lord Freud
My Lords, I am always delighted to take the advice of someone who occupied my room in the department for so many years—although I think that there is a progression and that ignoring it early on does not mean that it will not come back. I will not go into this in too much detail. I am sure that the noble Baroness did not mean to say that I was making it up, because I was not.
Baroness Lister of Burtersett
Before the noble Lord moves off the point, will he give us the assurance I asked for that, whether or not this is a pretext this time, the argument will not be used to bring forward proposals to abolish attendance allowance, DLA or PIP on the grounds that it is the only way to deal with such cases?
Lord Freud
My Lords, that is an enormous question. In this context, I am in no position to give the undertaking. We will have to look very carefully at how we frame our benefits if we do not want them all to be very freely and widely used. That is all I am saying. How we will frame them in the years ahead I do not know. I have not started to think about it. Clearly, we are going through a huge exercise to introduce PIP and it is very unlikely that anything will reverse it for many years. I cannot answer the question because it is too big. However, these are real concerns.
I will go back to a narrower point. We want to modernise and simplify the welfare system. We want to avoid duplication of provision, and to redefine the basis of the contract between the individual and the state. We need to do that in advance of universal credit coming in. We want to place claimants on the same basis as everyone else. All those who do not qualify for contributory benefits will qualify for income-related benefits. The effect in practice will be a streamlined system for these youngsters to receive passported benefits.
The amendment does not work, but I take the point. We will monitor this very closely and keep the outside world, including the Chamber, informed.
Baroness Lister of Burtersett
My Lords, I am grateful, first, to my noble friend Lady Hayter of Kentish Town for her very helpful and supportive speech. I also thank the Minister. Of course he is right that the amendment in its current form is not appropriate. As I said, it is not the amendment that I wanted to table. However, it has done what I hoped it would do. It has elicited from the Minister a commitment to monitoring. That is very welcome.
The Minister has acknowledged that monitoring cannot be simply statistical. I hope that it will pay particular attention to the nine out of 10 people who will qualify for income-related ESA. We will want to know how much money they will get relative to what they would have received under a contributory scheme. As my noble friend said, the income assessment suggested that there would be an average loss of £25 per week for some young and vulnerable people. That is a lot of money for them. We will want to know about the situation of the one in 10 who will not qualify. Will it be because of the great inheritance they have received? Or will it be the case, as I suspect, that their parents have scrimped and saved to ensure that when they die, their son or daughter has a financial cushion—as a result of which they could lose all entitlement to benefits. I cannot believe that the House would want that.
I hope that the monitoring will look at that and will include research to find out how young people feel when they have a partner and no entitlement and so come to depend economically on their partner, on whom they may already depend for physical assistance. Their dependence will become total. I hope that the Minister will discuss with researchers and others—perhaps including Members of this House and the other place—the appropriate monitoring that will take place. I very much welcome what he said about monitoring, and the fact that he will report to the House and to the other place. The time period of three months is too short and we do not want just a one-off report. I hope that there will be a mechanism for enabling us, on a regular basis, to hear what is happening to this group of young people. As my noble friend said, they are very vulnerable.
One thing I found worrying in the Minister's reply was that he was not able to give the assurance that I asked for about the other benefits. I thought that I was asking for a simple thing. It makes me worry about whether there is a plan—I will put on the record that the noble Lord is shaking his head to indicate that there is no such plan—to abolish these benefits. However, I would have felt much happier if we had had a clear assurance that it simply would not happen and that the Government's interpretation of EU law would not be used in that way.
It is not with a heavy heart that I withdraw the amendment because I completely accept, as the Minister said, that it is not terribly good. However, it is with a heavy heart that I feel that we in this House and the other place have let down young disabled people who look to Parliament to preserve their independent income. I feel disappointed that we have not been able to protect that group of people. Having said that, I beg leave to withdraw the Motion.