Child Support (Miscellaneous Amendments) Regulations 2019
Baroness Sherlock Excerpts(5 years ago)
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Lord McKenzie of Luton (Lab)
My Lords, I have just two quick questions. First, where the recipient who is due to make payment is subject to a benefit sanction, what impact does that have on the amounts that are collectable, as proposed in this order? Secondly, the £8.40 can be an amalgam of the collection fee and the maintenance payment. So far as the government accounts are concerned, how is that split and dealt with?
Baroness Sherlock (Lab)
My Lords, I thank the Minister for her explanation of these regulations, and all noble Lords who have spoken, particularly my noble friend Lord McKenzie; he always comes up with questions I would never have thought to ask, and they are always excellent. I hope the Minister had thought further ahead than I did—although I see someone running to the Box so perhaps she had not.
I very much agree with the points made about child poverty and the role that child support plays in helping to provide a platform on which single parents can build an income which helps lift their children out of poverty. So we do not oppose these regulations. It is important, wherever possible, that both parents should contribute towards the cost of raising a child after a break-up. An adult may leave their partner but they do not get to leave responsibility for their children.
I accept that the regulations are designed to provide a series of changes and clarifications to make it easier to collect arrears and maintenance payments under the Child Maintenance Service scheme. I will concentrate on a few specific points: the proposal to allow deductions for child maintenance to be made from universal credit where a non-resident parent has earnings and meets the criteria to be eligible for the flat rate; the increase in the amount, plus collection charges, that can go towards paying arrears; extending the scope; and the enforcement points.
The proposal to allow deductions of £8.40 from benefits for arrears in cases where the non-resident parent is no longer paying ongoing maintenance seems sensible. I can understand that for someone on a low income, £8.40 is a lot of money, but it is entirely possible that the single parent on a low income could also be on benefits, and both parents may well have suffered from the cut in living standards brought about by the benefits freeze and the other cuts in benefits. That seems to be an element of fairness that has to be addressed.
It is also very important that non-resident parents are clear that they will be chased for any arrears they owe. I ask the Minister for a broader update on this. She mentioned that we debated some child maintenance regulations last November. At that point the key thing the Government did was to write off billions of pounds of arrears from the old CSA system, and the quid pro quo for that, because we pushed them at the time, was that they would promise to pursue enforcement. This really matters because otherwise there is a moral hazard question. If a message goes out to parents: “If you just hold off long enough and don’t pay, in the end the Government will give in and write it off”, clearly that creates a disincentive to pay the money that should be paid for your children. So it is really important that we do not get back into that question. Ministers made the case in those regulations for a clean break with the old system, but that places a huge onus on them to make sure that arrears do not build up again in the new system.
I looked at the latest statistics and I am a bit worried. Since the new Child Maintenance Service began, a total of £259.2 million of child maintenance is unpaid, which should now be paid through the collect and pay service. That is 11% of all child maintenance due to have been paid since the service began. In the last quarter of last year, only 66% of paying parents using that collect and pay system were compliant; and compliant does not mean that they pay all of it but that they are paying some of it. So only two-thirds who were using the actual statutory system of compliance were paying anything at all. I may have misread those figures, but can the Minister confirm whether that is right? If the figures are right, is she happy with them? If she is not happy with them, how much difference does she expect these regulations to make to that performance?
Baroness Buscombe
My Lords, I thank the noble Baronesses, Lady Janke and Lady Sherlock, for their contributions. I am pleased that the noble Baroness, Lady Janke, is supportive of the statutory instrument. We have been working hard since 2012 to ensure that this system is fairer. It is important that, wherever possible, we encourage both parents to support their children.
The noble Baroness, Lady Janke, referred to the two-child limit, which is not actually related to these statutory instruments but I will touch on it very briefly. We are very clear that people should take responsibility and think hard about whether they can afford additional children, in the same way that those who do not rely on the state often make the difficult decision to limit the number of children they have to how many they can afford. It is also important to point out that, although the limit was introduced for children born after April 2017 and the change of policy was notified a good two years earlier, people continue to receive child benefit for as many children as they have.
On the benefit cap, it is very important to note that the cap is lifted when the parents are working a sufficient number of hours. Indeed, a couple with three children have to work only 24 hours a week between them—just 12 hours a week each. The benefit cap is then lifted and they are then in receipt of income equivalent to a net income of £35,000 a year, plus their housing benefit. I think most noble Lords would agree with me that that is generous. This is funded by the taxpayer.
The noble Lord, Lord McKenzie, asked what happens in cases where the parent has a fraud penalty or is sanctioned and is possibly in financial hardship because of the sanction. Some clients will have a fraud penalty or undergo sanctions while claiming benefits and may be eligible to claim a recoverable hardship payment. If a claimant has a fraud penalty or sanction applied to their universal credit award which is equal to or more than 40% of their standard allowance, the only deductions that can be taken at the same time are arrears of housing service charges or rent and fuel. These are to help protect the claimant and their family from being made homeless or having their fuel supply disconnected. All other deductions cease while the fraud penalty or sanction is being applied, so no child maintenance deductions will be taken. From October 2019, the 40% maximum deduction rule will be reduced to 30%.
I congratulate the noble Baroness, Lady Sherlock, on her ordination last weekend. That was very good to see, although it has not put her off from taking time out to ask me some difficult questions.
On the question of write-off statistics, up to the end of March 2019 217,500 cases held on the CSA computer systems with non-paying historical debt had the debt adjusted or written off. Some cases on the CMS system with debt below representation thresholds have also had their debt adjusted or written off. Activity on CMS system cases started later than on the CSA system and the data we need to report on them is not available yet. However, the CSA case load continues to reduce: the number of CSA cases held on CSA or CMS IT systems decreased from 809,000 in December 2018 to 674,00 in March 2019. The reduction in case load is mainly due to the closure of cases with government-only debt—a debt owed to parents of less than a thousand pounds. This historic debt continues to reduce, but the CSA has written to 125,200 parents with care to ask if they want a last attempt to be made to try to collect the debt owed to them.
We have not written off any debt without authority. As part of the case closure process, we brought to account some outstanding payments and activities and tidied up details of some cases. A significant number of CSA cases involved moneys being transferred directly between the two parties, and the case records have been adjusted to reflect this.
In July last year, the Government published their new compliance and arrears strategy for the Child Maintenance Service. This sets out how we are tackling the legacy of the failed Child Support Agency and the steps we will take to prevent arrears accruing at such a high rate again. Where it is cost effective and reasonable to do so, we are offering parents the choice of whether they would like us to make one last attempt to collect their debt. Where the collection of the outstanding debt is not possible or appropriate, we are writing it off. It was a difficult decision—we took some time to come to it because we strongly believe in enforcement—but many of the sums involved were very small. At the same time, it was costing the Government—in other words, the taxpayer—a lot of money to maintain this system and the debt within it. We prioritised the collection of maintenance for today’s children over historic debt where no child stands to benefit. The majority of the historic debt was owed to parents, not the taxpayer.
There was another question on how many parents on “collect and pay” actually pay. In the quarter ending March 2019, 67% of paying parents using the collect and pay service were compliant, up from 60% for the same period in 2018. This includes parents who transferred from the direct pay service having failed to pay their liabilities.
The noble Baroness also asked whether parents would be encouraged to be non-compliant, as they have seen outstanding CSA debt being written off. The write-off of CSA arrears is a one-off exercise and the regulations allowed us to do this only for debt accrued on the CSA schemes. These were historical arrears and this was in recognition that the majority of the CSA debt could not be collected, given its age and the circumstances of the parents. Where there is a possibility of successful collection at a reasonable cost to the taxpayer, we continue to do that. Looking forward, we believe that we are building a better CMS. In this package of regulations, we are making further provision to collect payments and stop arrears like this building up again.
Have we made use of the new enforcement powers? We have started to use the powers from the previous package of regulations, which allow us to deduct from joint and business accounts and disqualify a parent from holding a passport. In these early stages, the new enforcement powers are proving successful, and we continue to monitor their implementation. Where a parent fails to pay on time or in full, we aim to take immediate action to re-establish compliance before enforcement action is needed, but new powers introduced in the 2018 regulations enable disqualification from holding or obtaining a UK passport and deductions from joint and business bank accounts.
Moving on, we are proposing to change our power of entry process so that inspectors must seek a judicial warrant to access premises where they have previously been refused entry or may apply for a warrant to enter premises at which they expect to be refused. Inspectors will also be able to apply for a warrant authorising entry if they are unable to contact the occupier of the premises in advance. A judicial warrant is a safeguard, which will allow occupiers to make representation before a magistrate as to why an inspector should not be allowed to enter, but we expect this to be quite a low-impact change, with the Child Maintenance Service expected to apply for fewer than 20 judicial warrants a year. This change brings us into line with the Protection of Freedoms Act 2012, and we believe that it adds a modest protection in a very small number of cases.
Deductions from universal credit will come into force on the day after the day these regulations are made.
I think that I have covered most of the questions. The fee for an application to the Child Maintenance Service is £20. This is intended to encourage parents to consider whether they really need a statutory scheme case, but it is not so high that it creates an obstacle to entering the scheme. Where an applicant has experienced domestic abuse or is under the age of 19, they are exempt from paying the application fee. It is not our intent to create a barrier of any sort for vulnerable claimants.
These regulations build on our earlier changes as part of the child maintenance compliance and arrears strategy. They will make deductions from benefit more consistent, allow writing-off of unenforceable debts suspended on the CMS systems, improve our information-gathering processes and update the CMS calculation and fees regulations. I commend this statutory instrument—
Baroness Sherlock
My Lords, before the Minister sits down I want to thank her for her kind words. I should perhaps have reminded the House of a now rather historic interest, as a former board member of the Child Maintenance and Enforcement Commission. Can I press her on a couple of questions which I think she did not pick up?
In one question, I was asking whether the Minister was happy with the compliance rate. I think we agree broadly what it is, at 66% or 67% of those paying something. That seemed quite low to me. I wondered whether the Government were satisfied with that and, if not, what difference these regulations might make. The other question I asked was about the proportion of parents who currently have an effective child maintenance arrangement in place, and how that compares to before when there was a more widespread statutory system. Is she able to comment on either of those points?
Extreme Poverty and Human Rights: United Nations Report
Baroness Sherlock Excerpts(5 years, 1 month ago)
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Baroness Buscombe
My Lords, we are tackling poverty across the country. I refer noble Lords to the leader article in the Times of 25 May:
“The failings of Mr Alston’s report are legion … it is padded out with such accusations as that the government evinces a ‘punitive, mean-spirited and often callous approach’”.
This is the Times. It said, “This is nonsense”. It goes on:
“yet poverty in this sense does not exist in Britain in the 21st century”.
We are responding to reports with care but, in all seriousness, we must say that many things in this report are exaggerated and inflammatory.
Baroness Sherlock (Lab)
My Lords, perhaps I may offer the Minister a quote about the report:
“we did a fact check of that report. He made a lot of good points. It was factually correct … in terms of the facts, of austerity, cuts to local government funding, of the reliance that we have on the labour market and the risk that we face if there was a recession, all of those things were really good points that we have taken on board”.
That is a quote from the policy director for children, families and disadvantage at the DWP, giving evidence to the Work and Pensions Select Committee last week.
Given that we have received not just this report but one after another showing that families on low incomes are really struggling, and given the crucial point made by the right reverend Prelate the Bishop of Leeds that families are turning up at food banks all over the country, working parents are going to food banks and schools are feeding hungry children, something is going wrong. Please will the Minister look again at this?
Baroness Buscombe
My Lords, we continue to listen and to learn. The Government continue to spend more than £95 billion a year on benefits for people of working age. I say again, as I have said so many times before, that when the party opposite were in government, 20% of all working-age households in the United Kingdom—including Wales—were entirely workless. We have brought that figure down to 13.9% and we want to bring it down much further, but there are many different ways in which we are making a difference, listening and investing more money in real terms into the system to support and encourage people into the world of work and support those who cannot work.
Children Living in Poverty
Baroness Sherlock Excerpts(5 years, 1 month ago)
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Baroness Buscombe
My Lords, I have already made it clear at this Dispatch Box that we intend to end the benefit freeze next year. Again, the stats produced by the Social Metrics Commission last year predate much of the additional support that we have invested in the system since the last Autumn Budget.
We have done a huge amount to help families through transforming the welfare system so that people are not just helped into work. We are working hard on in-work progression, so that people preferably do not just have a full-time job—three-quarters of all jobs since 2010 are full time—because we want people to have good jobs, and are piloting new ways of supporting that. We are also boosting our capability to work with local businesses and working with jobcentre specialists to encourage local employers to support progression and good-quality flexible working which will support the children of those families in work.
Baroness Sherlock (Lab)
My Lords, the Minister has talked a lot about what the Government are doing to help people in jobs, but if the aim is to get families out of poverty, it is not working. The facts are clear: people are simply moving from one kind of poverty into another—that is, from out-of-work poverty into in-work poverty. The impact on children is very serious. Did the Minister see the recent research in the Archives of Disease in Childhood showing that child poverty has not only risen but will rise further? It looked at the impact on children of being in poverty in childhood and found that those in “persistent poverty” were three times as likely to have mental health problems and twice as likely to have a long-standing illness. The president of the Institute of Child Health said that we need,
“national targets to reduce child poverty backed by a national child poverty strategy, the reversal of cuts to universal credit and the reversal of public health cuts”.
Does the Minister agree?
Baroness Buscombe
My Lords, again, we are doing a huge amount, quite a lot of which is not reported or reflected in the additional support we have injected. I have just returned from the G7 in Paris, where we focused on labour. There is no question that, across the world, the changing world of work presents challenges. We are at the forefront on this issue; other countries look to us. Our living wage is way in excess of what other countries afford their citizens. We are setting an example and achieving a huge amount in having a transformational system that helps people into work, pays them to work and gives them in-work progression. Let me give an example: a couple with three children need to work for a total of only 24 hours per week to be exempted from the benefit cap; they can then receive from the state the equivalent of a £35,000 gross salary a year, plus housing support. That is not ungenerous.
Housing: Pensions and Deposits
Baroness Sherlock Excerpts(5 years, 1 month ago)
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Baroness Buscombe
I do agree. I am sorry that I am not the Housing Minister answering this Question, but it is important that we are committed to ensuring the housing market works for everyone. Of course, there is more to do. That is why we have announced an extra £17 billion in funding for Help to Buy since 2017 and reformed stamp duty so that 80% of first-time buyers will not pay tax. We are absolutely on a track that does not mean an increase in house prices. The important thing is that we focus on supporting first-time buyers. The number of first-time buyers is at an 11-year annual high.
Noble Lords
Baroness Sherlock
There is a first time for everything. When I read about this, like my noble friend Lord Kennedy I initially wondered whether it was April Fools’ Day. The Minister in charge of housing has a wheeze whereby young people should raid their pension pots to fund the deposit on a new house. I can immediately see three things wrong with this. First, frankly, most young people do not have enough money to put a deposit on a flat to rent—there is certainly not enough for fish and chips afterwards. Secondly, if they have enough money in their pension pots it should stay there, otherwise they will not have anything to retire on. Thirdly, as my new friend, the noble Lord, Lord Tebbit, points out, this will drive up the cost of housing. Given all that, and given that the DWP has had a multi-million-pound advertising campaign to encourage younger people to save, what will happen to James Brokenshire?
Baroness Buscombe
My Lords, I am very grateful that the noble Baroness has formed a new friendship over this topical Question. In short, our focus in the Department for Work and Pensions is on ensuring we support young people in every way we can to save for the long-term, for their retirement and security. I have to say to noble Lords opposite that, if they feel as I do, perhaps it is not right that we should be giving so much oxygen to this idea in the House of Lords.
Households Below Average Incomes Statistics
Baroness Sherlock Excerpts(5 years, 3 months ago)
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Baroness Sherlock (Lab)
My Lords, I thank the Minister for repeating that Statement and for advance sight of it, but, not for the first time, I rather wish Lords Ministers were allowed to make their own Statements. I do not blame the Minister for the rather partisan nature of that; I suspect it may be aimed more at the Secretary of State’s Back-Benchers than at this House. None the less, since she has had to put that on the record, I am now obliged to repudiate it before we can get on to talking about poverty figures. Bear with me while I do that briefly, then we can talk about what was actually in the Statement.
Since the Secretary of State chose to attack what she called “Labour’s welfare splurge” and what we called lifting children out of poverty, I have to put to rest once and for all that old canard that the Government were forced to cut spending on the poor because of Labour’s record. A detailed study, by Ruth Lupton et al, of the coalition Government found that,
“the poor bore the brunt of its changes to direct taxes, tax credits and benefits”.
Meanwhile, with the exception of the richest 5%, those in the top half of the distribution were net gainers from the changes.
“Perhaps surprisingly, overall the ‘welfare’ cuts and more generous tax allowances balanced each other out, contributing nothing to deficit reduction”.
Those coalition austerity cuts were not needed to reduce the deficit or to do anything about Labour’s spending in the past; they were to pay for tax cuts. The benefits of those tax cuts are felt primarily by higher earners. If you increase the personal allowance, someone earning £80,000 a year benefits from all of it. A single mum working 35 hours a week during term time at the minimum wage does not earn enough to benefit at all.
I have now taken a deep breath and will move on to today’s Statement. One thing that the HBAI—households by average income—does is to give us an interesting sense of perspective, and I want to remind us of that today. It tells us that, to lie in the top half of the income distribution, a single individual last year needed a net income over £17,700. A single individual with an annual net household income of over £34,900 would be in the top decile. In other words, he or she would have an income higher than 90% of the population. We all tend to assume that other people earn similar amounts to us and that is a really good reminder that, if that is what the average is, think what the poor are living on.
The Minister mentioned relative poverty today. Normally, Ministers in this Government end up talking about absolute poverty because it is the only figure they can find that does not appear to be rising. Under these figures, they have not looked at the international measure, which is relative poverty, but even today’s figures show that the number of children living in absolute poverty before housing costs increased by 300,000 and after housing costs by 200,000. It is staggering to see absolute poverty rising in our country.
But that is inevitable. Ministers may not wish to come into politics to make people poorer, but I am afraid that if one wills the ends one must will the means. It is inevitable that, if you keep cutting benefits to children, families with children will get poorer. The benefit freeze alone will now save the Government some £4.4 billion a year. That is £4.4 billion that has gone into the Treasury and come from the pockets of some of the poorest families in our country. That means that the Government have cut the value of all the main means-tested working age benefits—all the classic ways in which people keep body and soul together, including personal allowance, income support, jobseeker’s allowance, ESA, housing benefit, universal credit, lower disabled child addition—I could go on. According to the Joseph Rowntree Foundation, the effect of the benefit freeze carrying on for yet another year next year means that families will lose another £560 a year on average.
Perhaps even more surprising is that these figures show that the number of pensioners living in poverty actually rose by 100,000 last year, which means that it has increased by 400,000 since 2010. What are the Government planning to do about that?
I have three questions for the Minister. The last Labour Government set out to reduce and eventually eliminate child poverty. They had a clear strategy. What is now the Government’s strategy? Do they aim to reduce child poverty? If so, by how much, by when and on what measure? Or do they think it acceptable that 30% of British children are growing up below the poverty line, half of whom are under five?
Secondly, given that the Government repeatedly stress the importance of people being in work, what will they do about the fact that the proportion of poor children who are in working families has risen again, to 70%?
Finally, will the Government please rethink the benefit freeze? If they would invest just enough to stop it now and not continue it for another year, that could make a real difference to some of the poorest families. These families have suffered enough. When food bank use is at record levels and we keep reading about teachers having to bring in food and clothes to schools simply to help children be well enough, clothed enough and fed enough to learn, surely something has to be done. Please will the Government act?
Baroness Thomas of Winchester (LD)
My Lords, I am afraid that I am a very inadequate substitute for my noble friend Lord Kirkwood of Kirkhope, who is unavoidably absent today. I am a very poor stand-in—or rather, sit-in.
Today’s figures come as a result of a deadly combination of high inflation, weak pay growth and big cuts in benefit support for working-age households, as we have heard. The most shocking figure is that there are 200,000 more children in absolute poverty. I echo the noble Baroness, Lady Sherlock, in asking the Government to use the upcoming spending review to restore the remaining £1.3 billion taken out of universal credit work allowances in 2015 and consider introducing a work allowance for second earners to help get both parents into work.
As for getting more disabled people into work, which was mentioned in the Statement, the National Audit Office report which is out today is pretty critical of the department, saying that it cannot assess, for example, whether disabled people receive a consistent service between jobcentres or over time. It also says that the department underspends its budgets by overestimating the take-up rate of some of its programmes. Will the Minister say whether the department will undertake to look seriously at the recommendations from the National Audit Office?
Finally, disabled people themselves are very keen to help the Government to get this right. There are a lot of brilliant disabled people who would be very keen to engage with the department on employment.
Social Security Benefits Up-rating Order 2019
Baroness Sherlock Excerpts(5 years, 4 months ago)
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Baroness Sherlock (Lab)
My Lords, I thank the Minister for her introduction to this order and both noble Baronesses who have spoken. As we have heard, the purpose of the order is to make changes to the rates of those benefits which have been fortunate enough to escape the Government’s freeze, which is causing so much damage, as we have heard from the noble Baronesses. We now have a series of different categories of benefit which get treated in different ways when it comes to uprating time.
We have a category which is going to be uprated by at least the increase in earnings: the state pension because of the triple lock; the standard minimum guarantee of pension credit; and some aspects of widows’ and widowers’ pensions in industrial death benefit. They all get to go up by 2.6%, which is the increase in earnings.
Then we have a category which will have to be increased by at least the increase in prices. This includes attendance allowance, carer’s allowance, DLA, PIP, severe disablement allowance, other aspects of widows’ benefits, the additional state pension, graduated retirement benefit and increments to the state pension. They all get to go up by CPI—inflation.
Then there is a category over which the Secretary of State has discretion. She has decided to use that discretion by uprating some benefits by CPI—by inflation—including statutory sick pay, maternity and paternity pay, adoption and parental leave pay, the support group components of ESA, disability and carer premiums, the carer element of universal credit and the limited capability for work and work-related activity element of universal credit. They go up by 2.4%.
Then there are the benefits which are not being uprated at all. These include all the main means-tested working-age benefits, including: the personal allowance elements of income support; jobseeker’s allowance; the personal allowances and work-related activity components of ESA and housing benefit; and the standard allowance, limited capacity for work element and the lower disabled child addition of universal credit. Those are the main things on which most of our poorest fellow citizens depend. However, they have been frozen at the 2015-16 cash levels, having previously been increased by only 1%. Now, as we have heard, we have to add to the list bereavement support payment. It will be paid at the same cash rate as it was last year, which means that, like all those benefits, its value is being cut yet again. There is no triple lock for anybody except pensioners.
Baroness Buscombe
Yes, I noted somewhere in my papers and will say now that of course it is right that we look at every way to incentivise the second earner to go back into the workplace; that is very much our thinking at the moment. We are looking to find different ways to help and incentivise people. We also have to think about affordability. We touched on that when we debated these uprating measures a year ago; it has to be taken into account as well. The noble Baroness, Lady Janke, talked about how much was spent at the last Budget, but actually quite a large proportion of that—£4.5 billion—went towards the work that we are doing at the Department for Work and Pensions in supporting people, so we have to ensure—
Baroness Sherlock
On the affordability question, will the Minister address the point that I and another noble Lord made: the Government are likely to save half a billion pounds more on this freeze than they did from the 2014-15 Budget, so why could that money not be put to this purpose? While she is at it, her comments about work are very interesting, but if I could bring her back to the order under discussion, if the aim of this freeze is to incentivise work, why are the Government freezing payments made to some of the people on employment and support allowance whom they have deemed not fit to work? Why does the freeze include benefits paid to mothers of very young children, whom the Government do not require to work? Why does it apply to in-work benefits designed to make work pay?
Baroness Buscombe
Because of the issue of affordability, we have to make some difficult choices. I will not pretend that we are not constantly looking at this; indeed, the Secretary of State for Work and Pensions made a speech only today amplifying the fact that we are looking at different ways of supporting people with disabilities. They may not attract a price tag, if I may put it that way, but they are going to help transform the lives particularly of people with severe disabilities, because the reality is that we cannot simply take that difficult leap and say that we are going to lift the benefit freeze. As my noble friend said last night in another place, we have to face the fact that under the previous Labour Government, welfare spending increased by £84 billion—the equivalent of £3,000 additional cost for every working household in this country. We have to strike a fair balance between those who are funding the welfare system and those who are in receipt of it. It is always a difficult balance, but again, I thank noble Lords who are making suggestions and encouraging me to amplify the fact that we have a particular interest in supporting those who may not have been in work for a number of years, or who may never have worked, to have the confidence to do so.
Social Security Coordination (Council Regulation (EEC) No 1408/71 and Council Regulation (EC) No 859/2003) (Amendment) (EU Exit) Regulations 2019
Baroness Sherlock Excerpts(5 years, 4 months ago)
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Baroness Janke (LD)
My Lords, I too have some questions. In May 2018, the Commons European Scrutiny Committee raised very strong concerns about providing legally binding arrangements to protect existing rights. We have already heard mention of non-emergency healthcare; these regulations apparently do not provide that. There are also issues about EU-wide dealings or the need for bilateral arrangements with EU and third countries.
The noble Baroness spoke about data and information sharing. Again, this is a vexed area of negotiation. Certain laws govern the ability to share information and, unless we have some form of legally binding agreement, I cannot really see how this can happen, having looked at the evidence of various people who have looked into data sharing with the EU after Brexit.
We are talking about removing inoperable clauses, under the withdrawal Bill, in relation to the administrative commission. We have mention of disputes; who will settle disputes? There will be a need for medical assessments if they are not provided by individual countries.
It is not clear what is meant by “evidence”. I know that, in my own city, EU citizens have had a very hard time providing evidence of residence in this country, even though some of them have lived here for 40 years. I would like to know what sort of guidance will be given on the quality of the evidence, and how that will be provided to people.
On disputes and the removal of provisional payments, again it is not clear how and under what authority disputes are to be resolved. What is the final authority? This is left fairly open, and could be open to legal action. How will rulings be managed if we come out without a deal and are not proposing to recognise the European Court of Justice?
I am sure it is important that the Government look ahead to the possibility of no deal, but it seems to me that there are lots of very open areas in these regulations that need to be fleshed out. We are talking about the rights of individuals and how they can manage without benefits—where there are disputes, for example.
I very much echo the calls made by other Members here for an impact assessment. It seems to me that there is a fundamental need, given the potential impact of these systems not working after Brexit day, for an impact assessment to be carried out.
Baroness Sherlock (Lab)
My Lords, I thank the Minister for her introduction and all noble Lords for their contributions. I start with an apology, because I will not be brief. I do not often make lengthy speeches in this House, but I have been through these regulations as best as I can—and there are a lot of them—read the Explanatory Memorandum and listened carefully to the Minister’s introduction, and all that I have read in the Memorandum and the introduction implies that these are simply technical amendments which will not make much difference or have much impact. I must therefore have misunderstood them, so I apologise because I will ask quite a lot of questions, since I can only conclude that my understanding of their impact is in some way erroneous. I look forward to having that corrected.
First, my understanding is that the current rules about social security co-ordination within the EU are based on four principles: the single state principle, which means that at any point in time I am covered only by the social security system of one country and pay contributions only in one country; equal treatment, which means that if I am in another member state then I am treated by it the same way as one of its nationals; aggregation, by which periods of insurance, employment or residence in another member state count when determining my eligibility for benefits; and exportability, which means I can receive benefits from one member state even when I am living in another one.
If we have a deal, the withdrawal agreement will cover the transition period during which EU social security co-ordination will continue to include the UK and our citizens, and the political declaration says that the UK and the EU agree to consider future social security co-ordination in the light of future movement of persons. I guess that the presumption, therefore, is that the UK will seek to strike a single deal with the EU rather than bilateral agreements with member states.
However, if there is no deal, there are no provisional transitions, and in the absence of comprehensive alternative arrangements, problems could arise on all those fronts, including whether you can aggregate contributions, export benefits to other member states, the risk of having to pay double national insurance contributions, a lack of clarity about which country is responsible for paying someone’s benefits, and no mechanism for resolving disputes.
The scale is significant. The House of Commons Library briefing on the immigration Bill said:
“In 2017-18, UK benefits totalling around £2 billion were exported to around 500,000 claimants living in EEA countries. Over 90% … was on State Pensions, and over 90% of the recipients … were UK or Irish nationals.”.
In addition, more than 1 million people will be affected by the aggregation issues, according to evidence given to the Commons committee on the immigration Bill by British in Europe.
My first question for the Minister is this. There were some bilateral agreements between the UK and some EU member states, which predate either their or our entry into the EU. Would any of those still be applicable in a no-deal scenario? Would we seek to update them, would we want to negotiate additional unilateral arrangements with other member states, or is it our intention to seek a whole EU deal in the event of there being no deal?
If we end up with no deal, we could see UK citizens returning to the UK, perhaps in significant numbers, and needing help. DExEU published a policy paper on 6 December called Citizens’ Rights—EU Citizens in the UK and UK Nationals in the EU, which accepted the importance of returning UK nationals being able quickly to access benefits and housing. Paragraph 24 stated:
“Arrangements will be made to ensure continuity of payments for those who return and are already in receipt of UK state pension or other UK benefits while living in the EU. We are considering how support could be offered to returning UK nationals where new claims are made and will set out further details in due course”.
Given that “in due course” is running out, can the Minister tell the House what continuity arrangements have been put in place for those whose benefits are already in payment, and what support will be offered to new claimants?
The European Commission has called on member states to protect citizens by taking account of periods of work or insurance in the UK before Brexit for both EU 27 and UK nationals, by ensuring the aggregation benefits for those who carry on living in the UK, and more crucially, by encouraging member states to carry on exporting pensions to the UK even though it will then be a third country. But we do not know what will happen in practice. The Government’s website has a page entitled “UK nationals in the EU: benefits and pensions in a ‘no deal’ scenario”. However, it tells you very little at all, except that if someone is already getting UK benefits for a state pension transferred to another member state, that can carry on being paid there, and that their entitlement to any in-country benefits will depend on what the EU decides. So we are very much in the dark.
As my noble friend Lord McKenzie said, the whole system of social security co-ordination relies on reciprocity, which cannot be assumed in a no-deal world, so we cannot make other states give us information or co-operate, or require them to apply the current rules to us. The Explanatory Memorandum said—and the Minister has said—
“These regulations aim to address deficiencies in retained law caused by the UK withdrawing from the EU and ensure citizens’ rights are protected as far as possible in a no deal scenario”.
In other words, they are designed to maintain the status quo. I have never liked this language of “deficiencies”, because these are not accidental deficiencies but a direct consequence of the Government refusing to rule out no deal. Those deficiencies are a loss of all kinds of rights, acquired in some cases over decades, which people may experience. This is entirely avoidable—it is simply because we could be in a no-deal situation.
These regulations are intended to maintain the status quo, so I want to try to test the veracity of that claim in a no-deal scenario. The current rules allow you to use periods of insurance contributions elsewhere which can be aggregated together. So someone who has worked in other member states can make one application to the relevant agency in the country in which they live. In the UK, this is the International Pension Centre in Newcastle.
The Commons brief on the immigration Bill gives a really good example, if noble Lords will allow me to describe it. Someone called Jo worked in France, after leaving university, before returning to the UK in 2008. He carried on working here, paying UK national insurance contributions until he reached state pension age in November 2018. As things then stood, Jo did not have to make separate claims to get his French and UK pensions. He had to submit a single claim to the international pension authority, and the centre in Newcastle contacted the French pension authorities. They calculated his entitlement to a French pension and put it into payment. The centre also calculated that Jo was entitled to 9/35ths of a full UK state pension because he had paid nine years of contributions here. That was put into payment as well. The only reason he got it was because his period of insurance in France meant that this tipped him over the minimum of 10 years of national insurance contributions that you have to have to get into the British state system in the first place.
My primary question is: do these regulations preserve the right of UK and EU nationals to aggregate periods working in other EU member states when determining entitlement to UK benefits and the state pension? Where is this spelled out? Is it in domestic legislation? Is it remaining unchanged? Does it include EEA states? Where is it laid out unequivocally?
Secondly, the regulations allow the DWP to ask claimants to provide the relevant evidence where the EU member state cannot or will not. The Explanatory Memorandum says, at paragraph 7.2:
“in the event that the information provided by the claimant is insufficient, the UK will no longer be required to fulfil any obligation under the Coordination Regulations”.
This sounds quite harsh. What would happen to Jo if he retired after a no-deal Brexit? He would have to do two things. First, he would have to access his French pension. Would this be done through the International Pension Centre, as it is at the moment? Or would he have to apply directly to the French authorities? Crucially, would he definitely be able to have that French pension paid to him in the UK? In other words, would France export the pension, as requested by the Commission? If not, Jo could be in an impossible position. He might need to return to the UK to care for elderly parents, but if he could not get the bulk of his pension here, what would he do? What if some of our citizens found that they had no residence rights anywhere else, so were forced back to the UK and yet could not access the benefits or pensions they needed because they had entitlement in other member states? What would happen to them?
Then Jo would need to access his UK pension. To get that, he would need evidence that he had paid national insurance contributions in France, as he would need a minimum of 10 qualifying years to get into the UK system. This would raise other questions. Would the International Pension Centre in Newcastle contact the French pension authorities to get this evidence for Jo, or would he have to get it himself? Either way, if the French did not oblige, what would Jo have to produce? If he did not have documents that the DWP liked, he would get no pension at all in the UK, even though he was legally entitled to it. Would he have to pay to get documents translated and notarised? How long would this all take?
As the noble Baroness, Lady Janke, said, it is crucial to know what would count as evidence. I could not produce payslips from 20 years ago, and I think a lot of noble Lords could not either. So, if the authorities in another EU state refuse to co-operate, what should people do? They could go back to their employer, but firms go out of business or merge. In most countries, they would not be required to keep records dating back decades. So, would other forms of evidence be accepted—for example, witness statements from co-workers, neighbours or doctors? Has the evidential basis been published? If not, will the Minister guarantee to conduct a consultation on it at once, so that we can see what would happen?
If a UK firm posted a worker abroad, could the firm be compelled to provide the necessary information to the DWP? If Jo were legally entitled to a state pension here, but could not prove it because the French Government would not co-operate, who would decide that he would not get that to which he was entitled? How could he appeal a refusal?
I have a few more short questions. The Commons brief points out that these regulations remove entirely article 4 of EU regulation 883/2004 which contains the equal treatment provisions to which I referred at the outset. The Explanatory Memorandum does not explain why this provision has been removed. Can the Minister tell us why it was? UK nationals working in the EU and EU residents working in the UK could be required to pay national contributions here as well as paying contributions in another EU member state, so a worker posted to Germany by her British company could end up paying double national insurance contributions. Did the Government consider waiving NICs for someone in this country, which would of course replicate the status quo rather more precisely that what seems to be in here? If not, as my noble friend asked, how could they then say that there are no costs attached to these regulations?
The regulations abolish provisional payments while a dispute is being resolved with an EU member state. The memorandum says that these provisions are hardly ever used, but since there will not be any resolution mechanisms in the future and there will not be a common rulebook, it is entirely possible that the situations which might require them to be used could be far more numerous. What assessment was made of the likelihood of disputes arising in no deal which would trigger payments of this sort? While these regulations are operational, if they ever come to be, what is the status of post-Brexit contributions in other EU states? Will UK state pensions be uprated when paid in other EU member states after no deal? Ministers have said that they will be for 2019-20, but what happens after that?
I want to say a brief word on the point raised by my noble friend Lady Lister about the Immigration and Social Security Co-ordination (EU Withdrawal) Bill, which has been debated in another place and which in its territory overlaps very much with this instrument. As we have heard, that Bill contains eye-watering Henry VIII powers that basically would allow Ministers to rewrite the social security co-ordination rules at will. I am not a Brexit specialist, so can the Minister can explain this to me? If there is no deal, does that Bill fall? If it does not, how do the Government intend to honour the commitments spelt out by the Minister herself and spelt out in the memorandum when they have the power to rewrite them entirely? Will they commit to use those Henry VIII powers only to replicate the provisions of these regulations?
Finally, if there is a deal, what is the status of these regulations?
I apologise for asking so many questions, but they are all important for the great many people who could be affected. I gave the Minister notice of my technical questions, albeit only yesterday, but my priority is to get things answered on the record. The date of 29 March is only three weeks away. If the Government allow a no-deal scenario, these problems will become a reality for many UK citizens living in the EU and vice versa. They and I look forward to the Minister’s reply.
Employment and Support Allowance Payments
Baroness Sherlock Excerpts(5 years, 4 months ago)
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Baroness Sherlock (Lab)
My Lords, I thank the Minister for repeating that Answer. When, as part of their reforms, the Government moved people across from incapacity benefit to contributory-based ESA, they failed to consider whether or not those people might have been entitled to an income-related ESA, which would have brought with it a potential entitlement to enhanced or severe disability premiums or to housing benefit, council tax benefit and passported benefits. As the Minister has explained, the number of people estimated to have missed out has now gone up from the original 70,000 to 210,000, with a potential bill of £920 million. It took the DWP six years to even begin to sort this out. Even by recent DWP standards, I think we could reasonably say that this is a right mess.
I have two questions for the Minister. First, the department estimates that around 20,000 people have or will have died before payments reach them, so what steps is it taking to identify the families of people in those circumstances? Secondly, the Treasury guidance is very clear that in cases of maladministration or service failure it should seek to,
“restore the wronged party to the position that they would be in had things been done correctly”.
When the Minister spoke in October, I asked her about what was happening to people who had missed out on passported benefits. She said the department was in discussion with other departments about that. Could she please update the House and assure us that no one will miss out or fail to be compensated because they should have got housing benefit, council tax benefit, free prescriptions or free eye tests?
Baroness Buscombe
First, my Lords, I repeat that these errors should never have happened, and the department is working extremely hard to make sure that the wrongs that have been done are put right at pace. I want to make it clear that we did not do nothing, as it were, for six years; we started work on this back in 2013. We are working hard with increased support to make sure that we get this right but we want to do it with care. It is very unfortunate that an estimated 20,000 people have deceased since this work began but we are working extremely hard to identify the families.
On passported benefits, I am able to say to the noble Baroness that we are engaging with a number of authorities that are responsible for passported benefits to raise awareness of the ESA underpayment exercise and the potential issues arising from it. This will enable departments across government to understand the impacts on the passported benefits they administer. However, the department does not hold information on what people may or may not have claimed.
Benefit Reforms
Baroness Sherlock Excerpts(5 years, 6 months ago)
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Baroness Buscombe
It is not to use up time, it is to set out our case. A working couple on universal credit with three children aged four, six and eight, for example, could be eligible for childcare support alone of up to £18,000 per annum from this Government. That is a long way from where we were when, under the last Labour Government, nearly 20% of all households were entirely workless: one-fifth of the entire household population of the United Kingdom. That is down to 13.9%. We are not complacent. We are making real progress to support families.
Baroness Sherlock (Lab)
My Lords, I have spent time in food banks. I have seen working parents embarrassed and ashamed at having to go there to bring home food for their children. I do not think that anyone goes to a food bank unless they are desperate.
The Minister mentioned working parents getting childcare support. Parents of very young children are now required to take a job when their youngest child is three. They can be sanctioned if they do not. Yet the way in which universal credit pays out childcare help is that the parent has to pay the money up front and then claim it back. A lot of parents just cannot afford to do this. How can it be right for parents to risk being sanctioned when they are faced with a choice between taking a job and getting into debt, or not taking it and being sanctioned?
Baroness Buscombe
The noble Baroness will have heard that we are doing a lot through cash injection for childcare support, but I accept that it is important to look at the process of how and when it is paid. We are doing this at the moment. We know that 30 hours is already making a real difference to families. The independent evaluations of our early delivery found that 78% of parents reported greater flexibility in their working lives. Nearly a quarter of mothers reported being able to increase their working hours as a result. In particular, we want women in households to be liberated and empowered, just like every noble Baroness sitting in this House. I note that the noble Lord, Lord West of Spithead, is in his place. One of the things in which I am particularly interested is flexibility of spousal employment for those women in the Armed Forces who support their husbands or partners. We are doing everything we can, working holistically across government, to achieve more to enable both parties to work and support their family.
Universal Credit
Baroness Sherlock Excerpts(5 years, 6 months ago)
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, with the leave of the House, I will repeat as a Statement an Answer given to an Urgent Question in another place by my right honourable friend the Minister for Employment. The Statement is as follows:
“Mr Speaker, universal credit is a vital reform that overhauls a legacy system that trapped people out of work. With six different benefits administered by three different government departments, it was utterly confusing for claimants. All new claimants now receive universal credit. In the future, we will move claimants who have not changed circumstances from legacy benefits to universal credit in an approach known as managed migration.
It is right that the Government should seek to align provision for all, in order to eventually operate one welfare system. The department has long planned to initially support 10,000 people through this process, in a test phase, before increasing the number of those migrated. This first phase will give us an opportunity to learn how to provide the best support, while keeping Parliament fully informed of our approach.
Universal credit is proceeding as planned, with no change to the timetable of completing managed migration by December 2023”.
My Lords, that concludes the Statement.
Baroness Sherlock (Lab)
My Lords, I thank the Minister for repeating that Answer. I woke on Sunday to news suggesting that universal credit rollout was being delayed. Joy, I confess, was unconfined in Sherlock Towers and doubtless all around the land. But it was not so. It seems that the Government are pressing ahead with the 1.4 million people currently getting universal credit, and another 1.5 million people will join them in the next year. So any delay seems to relate only to the regulations on managed migration, which Ministers had told us were incredibly urgent. These are very controversial because, rather than transferring people across to universal credit, in practice the DWP will simply end legacy benefit claims and invite people to apply for the new benefit. The DWP was to pilot it this summer and roll it out to some 3 million people from next year.
Our Secondary Legislation Scrutiny Committee urged Ministers to take only the powers and regulations to run the pilots and then come back to the House before going for the full rollout—so I hope that maybe that is what the Government are doing. But Ministers down the other end could not confirm this at all.
I do not want a general bit of debate or flannel: I just want to know what is being delayed and until when. So will the Minister tell the House whether the Government are delaying consideration of the managed migration regulations until after the pilots have been evaluated? If so, how will they get the powers to run the pilots and introduce the concession they have made on the severe disability premium? If they are not doing that, what on earth is going on?
Baroness Buscombe
I will respond by saying first that perhaps we should ask the press what on earth is going on. The news that there is a delay is wrong. The Government previously committed to hold a debate on the affirmative regulations in relation to managed migration, and that will happen in due course on the Floor of the House. We will debate them as and when parliamentary time allows, but we will also make sure that we meet our commitment to severe disability premium recipients. To ensure a start date from July 2019 for those 10,000 people, we have long said that we will work with a test-and-learn process.
The noble Baroness talked about a pilot. We have always called it a test. It is perhaps just different terminology. In my response to a debate put to the House by the noble Lord, Lord Bassam of Brighton, on 1 November, I made it very clear that we were always going to have the test-and-learn phase starting at the end of July 2019, whereby we would manage-migrate only 10,000 people through the following 12 months. A debate will be held on the regulations to allow for the managed migration.