Under-occupancy Charge
Baroness Sherlock Excerpts(8 years, 3 months ago)
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Baroness Sherlock (Lab)
My Lords, I thank the Minister for repeating that Answer from the other place. The Court of Appeal ruled against the Government on two bedroom tax cases: one from a victim of rape who had had a panic room installed by the police, and the other from the Rutherford family, who care for their severely disabled grandson. In both cases, the court ruled that the bedroom tax was illegal and discriminatory. However, any relief for the families was short-lived because, astonishingly, Ministers have decided to appeal to the Supreme Court. References to the fact that families may receive the temporary discretionary housing payments from a pot being stretched in ever more directions are nothing but a fig leaf.
I would like to ask the Minister a couple of questions. First, can he confirm that 280 victims of domestic abuse have had a panic room installed under the sanctuary scheme and are affected by the bedroom tax? On the same point, is it true that exempting domestic abuse victims would cost the Government only £200,000 a year? Can he tell the House whether, in the wake of this judgment, the Government will consider withdrawing their appeal and instead taking the right decision of exempting severely disabled children and their families and victims of domestic abuse from the bedroom tax, in which the people of Britain have now completely lost confidence?
Lord Freud
I do not have the figures to which the noble Baroness referred, so I will have to check the figures we have and write to her on that.
Effectively, with this appeal we are joining these two cases to a number of others for the Supreme Court to look at the whole thing in one context. It is, essentially, about whether the discretionary housing payment system is appropriate for handling these particular hard cases, which the High Court has, in practice, accepted as the right way to ameliorate those cases, up to now.
Welfare Reform and Work Bill
Baroness Sherlock Excerpts(8 years, 3 months ago)
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Baroness Sherlock (Lab)
My Lords, I rise to speak to Amendment 40, in my name and that of my noble friend Lady Drake, and to support the other amendments in this group in the name of the right reverend Prelate the Bishop of Portsmouth, to which I have added my name. I thank him for introducing this group of amendments with what we are coming to see as characteristic clarity and compassion.
I shall say a word first about the two-child policy, which I regard as a regressive piece of social policy. In Committee, we found it hard to get Ministers to put up any kind of cogent argument for the policy as a whole, so why is it being done? Whatever one may hear behind the scenes, this is not about the small number of unemployed parents with lots of children. They would already have been caught by the benefit cap, which we now know would hit a couple with two children living in a modest house in Leeds or Plymouth. This is about a family with three children who are working but struggling anyway. It is about all those who had children confident that they could provide for them until, as the right reverend Prelate pointed out, something went wrong. Perhaps their spouse died, they got sick and could not work, a parent lost their job and so on. Those are all the things that the welfare state is meant to protect against. The nearest we got to a case was in the impact assessment, which states that it is about,
“ensuring those on benefits face the same financial choices around the number of children they can afford as those supporting themselves through work”.
So it is about choice, and my suggestion is that we should use that as a yardstick by which we test these amendments.
Let us take first disabled children. Parents may have felt that they could manage a third child, but then they find that the child is born, or becomes, severely disabled. The disabled child element of tax credits will still be paid, but it does not begin to cover the extra costs. The charity Contact a Family states that it costs three times as much to raise a disabled child as one who is not. It is also much harder for the parents of a disabled child to raise their income through working, because it is difficult to find suitable childcare and more expensive if you can. Did the parents really make a choice to be in that situation?
What about the situation, described so powerfully by the right reverend Prelate, where a family is happily married or settled and the very worst happens, in that one of the parents dies? He described clearly what would happen to that family. As well as the trauma, the finances are going to get worse, especially if the deceased parent had been the main earner. This is almost a classic example of a family that probably did not need benefits or tax credits before, but suddenly finds that it is catapulted into a position where it needs to rely on the welfare state. This is exactly the kind of thing that the welfare state is meant to protect families against. Where was the choice there?
The right reverend Prelate mentioned stepfamilies. Perhaps it is not so dramatic, but what if the relationship breaks up? If the children deserved support when they were living apart, why do they stop deserving it because they are living in the same house?
Then there are the people who literally did not make a choice at all—cases of domestic abuse. Sadly, a child may have been conceived under duress rather than as a clear choice. Abuse can include the refusal to allow a woman to use contraception. It can include pregnancy as the result of rape, which may never have been reported to the authorities because of fear of the partner. Moreover, the fear must be there that the two-child limit will make it harder for a parent to leave an abusive relationship. Too often, they end up fleeing in the clothes they are standing up in. They are homeless and they have to hide from the former spouse, which means moving to a new area, away from jobs, schools and families. It is tough enough anyway to rebuild a life without added financial pressures.
On the subject of rape more generally, I hope that the Minister is now able to explain how the proposed exemption for women who have been raped will work. I hope that he can address the questions I asked in Committee. Will the exemption apply only when a woman has made a complaint to the police, or when someone has been charged or convicted? If not, will she have to give evidence to the DWP, to whom and what kind of evidence, and can the Minister assure us that this process will remain confidential?
We come now to the subject of my Amendment 40, which would exempt children who enter a household as the result of adoption, kinship care or private fostering. I hope very much that the Minister can accept this amendment, as the arguments are completely compelling. Children raised by kinship carers are typically unable to live with their parents because of parental abuse or neglect, perhaps due to alcohol or drug problems, or because the parents are in prison or indeed have died. A grandparent, and sometimes an aunt or a sibling, will then step in and take the children in, often in a case of emergency. There is clear evidence that children in kinship care settings do better than those in unrelated care, even though they have often had similarly adverse experiences in early life.
But kinship carers pay a huge price for their kindness. They face significant additional costs when their family size increases, and sometimes it can double in size overnight. A Family Rights Group survey found that almost half of kinship carers had to give up work permanently to take on the children, thus pushing them into reliance on benefits. The state should not be putting financial barriers in the way of families willing to take on often vulnerable children. It also makes no financial sense. The average child tax credit claimed by families with three or more children is £3,670 a year; it costs £40,000 a year to keep one child in foster care.
A similar argument applies to adoption, particularly of sibling groups. It is the Government’s policy, and I welcome it, to increase the number of children being placed for adoption and to remove any unnecessary barriers to the speed of the process, but this measure will directly undermine that policy objective. Adoptive parents often already have a child or children, so there is a clear disincentive to adopt if it would mean that they would not get payments for each child, and a particular disincentive to adopt sibling groups. There is already a shortage of parents who are willing to take on sibling groups, and this will only make that situation worse. If it delays adoptions, that becomes a vicious cycle. Children grow older and it is harder to place them, and therefore it is even less likely that they will be adopted at all. The only alternative is to break up sibling groups, which damages the children because that is often the only remaining bond they have. I hope that the Minister will consider this carefully.
If we judge the Government by their own yardstick, have they passed or have they failed? Have the families we have described today, who are covered in the amendments tabled by the right reverend Prelate and myself, been reckless in having children or taking on additional children without understanding the consequences? I do not think they have. Even if we accept the premise behind the two-child policy—and I confess that I do not—the Government’s own rationale simply does not work. These amendments make absolute sense both financially and in terms of the Government’s policies, and above all they are right for the people affected.
Baroness Manzoor (LD)
My Lords, we on these Benches have added our name to Amendments 36 to 38. We also support Amendment 40. The amendment is similar to the one that we put down in Committee when it was debated at great length. Noble Lords will be pleased to know that I do not intend to rehearse that contribution again today. Excellent reasons have already been given by the right reverend Prelate the Bishop of Portsmouth and the noble Baroness, Lady Sherlock, as to why exceptions should be made to the two-child limit on receipt of tax credits and the child element of universal credit.
I want to pose a few questions. For those who did not sit through Committee stage, I will read out the exemptions we seek. Under Amendment 38, we seek an exemption if,
“the claimant responsible for children in the household is a single claimant as a result of being bereaved of their partner”—
I ask the Government, where is the choice in that?—
“the claimant has fled their previous partner as a result of domestic abuse”—
where is the choice in that?—
“the child or qualifying young person has a disability”—
where is the choice in that?—
“the child or qualifying young person is in the household as a result of a kinship care arrangement, private fostering arrangement, or adoption”—
where is the choice in that?—
“or … the claimant was previously entitled to an award for the child or qualifying young person and has re-partnered creating a household with more than two children”.
Of course, there is a little bit of choice in that. It is love, which we can believe in or not, but sometimes we do not choose who we want to partner.
Effectively, these circumstances are beyond the control of the claimants. This amendment attempts to demonstrate that the first responsibility is to the child. It must be so, otherwise what kind of society are we really creating? I was, and I remain, particularly concerned that, despite the Government’s laudable commitment to exclude women who have had a child as a result of rape from the two-child limit policy, the Minister did not explain to my satisfaction how this exemption would operate. I will not go into that debate again. It is such a sensitive area. Perhaps he will explain today. Should this amendment be voted on, we on these Benches will wholeheartedly support it.
Baroness Sherlock
My Lords, Amendment 46A, in my name and that of my noble friend Lady Hollis, would require the Government to produce and lay before Parliament a report assessing the impact on work incentives of the Universal Credit (Work Allowance) Amendment Regulations 2015, which passed through Parliament last year. In particular it would require the Government to analyse data on income and hours worked by household type, and the impact of the regulations on the levels of awards of in-work support payable to claimants who have moved, or will move before 2018, from tax credits to universal credit as a result of changed circumstances.
I shall address the matter of substance first and then move on to the politics of the matter. I raised these matters in Committee to get the Minister to tell the House what would happen to people who were moving across from tax credits to universal credit. The answers were deeply worrying. It is now clear that two big and distinct problems are emerging in relation to universal credit. First, the incentives to enter and progress in work have been severely damaged by a succession of changes made by the Government. As the director of the Resolution Foundation observed, universal credit was set to be £2.3 billion more expensive than the six benefits it replaced. Indeed, versions of the policy early in the last Parliament were even more expensive than that. No wonder the Treasury was nervous about a fast rollout—not, I suspect, the chief concern facing it at the moment. But after repeated chipping away, it seems that universal credit will now actually save the Treasury money—more than £2 billion a year once it is fully in place. Of course, if it saves the Treasury money, it costs claimants money, so universal credit is no longer going to do the job it was meant to.
The final straw was the reduction in the work allowances that went through Parliament last autumn. After weeks of pressure from all quarters and being asked to think again by this House through the Motion of my noble friend Lady Hollis, the Chancellor announced that he was scrapping the equivalent planned cuts to tax credits. I unreservedly welcomed that change. However, the Government decided to press ahead with comparable changes to universal credit. These various changes have done serious damage to work incentives, and, furthermore, the way that universal credit is now structured means that there is a significant problem with lack of work incentives for second earners and the position of self-employed people is a major problem.
Then we have the second problem: transitional protection. Iain Duncan Smith declared on “The Andrew Marr Show” in the wake of the tax credits change that no one would lose a penny from universal credit cuts. That is by no means clearly so. We know that if you take two working families with children in identical circumstances, but one on tax credits and the other on UC, the one on UC could be almost £3,000 a year worse off. How can nobody be a penny worse off? It depends on the transitional arrangements. Evidence given to Members of another place by the department suggests that there are two ways that people could end up moving from tax credits to UC. The first is “managed migration”, as the jargon has it. These are people who are moved over en bloc by the department, but that will not happen until 2018. They will get transitional protection.
The second way is by what is slightly oddly called “natural migration”. This happens when someone who is getting tax credits has a change in circumstances and is forced by the department to move across to universal credit. We now know that this can happen through all kinds of changes, some of which were alluded to by the noble Baroness, Lady Manzoor: if someone loses their job; has a baby or adopts a child; if a lone parents gets remarried or repartnered; if a couple splits up; if someone becomes a carer or ceases to be a carer; or even, slightly oddly, if a lone parent’s child reaches the age of five.
As I understand it, in all of those circumstances and indeed in more, a tax credit recipient will be forced on to universal credit and overnight could see their entitlement fall by up to £3,000 a year. Can the Minister confirm that that is the case? Further, can he tell the House whether any transitional protection will be forthcoming for the group of people in the category called “natural migration”? How many people does his department anticipate will be in that position during the first year of the new work allowance regime? We have a problem of transition and a problem of seriously damaged work incentives. Above all, there is an unacceptable lack of clarity about the impact on low-income working families.
I should probably have declared an interest as I was an adviser to Gordon Brown as Chancellor of the Exchequer when tax credits were invented. He hired me away from the single-parent charity where I was toiling to support him in trying to work out what to do about the fact that we had the second-highest child poverty rate in the developed world. Child poverty had trebled under the previous Tory Government. We also had significant problems around lone parents not working. I worked with Gordon Brown to work out how the Government should tackle what was then a very low rate of single-parent employment. Tax credits made a massive difference. They helped to lift millions of British children out of poverty and led to the most dramatic rise I know of in the proportion of single parents in work. To see this Government damage work incentives that were so hard won breaks my heart.
I fully accept that the noble Baroness, Lady Manzoor, truly cares about the plight of working families, but I do not think that those families are helped by leading them to believe that this House can do things for them that it cannot do. It is clear to me, and I am sure it is really clear to Liberal Democrat Peers—I understand that we have to go with the politics of the age—that there is a distinction between opposing something and feeling that this House should vote it down. I oppose this entire Bill, but I did not vote against it at Second Reading because as a revising Chamber it is not our place to do so. As I say, we are a revising Chamber, and, if that is the case, we should do our job properly.
Rather than using primary legislation retrospectively to repeal regulations which have only recently passed through both Houses of Parliament, and are not even regulations flowing from this Bill, let us focus instead on taking appropriate action to hold the Executive to account. Let us not let the Government off the hook by playing politics with this issue. Let us not pretend that we all take the same view on tactics, but that does not mean we have different views on substance.
I understand that during the tax credits debate, the noble Baroness, Lady Manzoor, wanted to run a fatal Motion against all the conventions of the House. We did not back that; we backed my noble friend Lady Hollis in running a delay Motion which had exactly the right result but in an appropriate constitutional manner. That is the position we are in today. The Chancellor’s cuts are going to do significant damage to working families in Britain. Those people and this House have a right to know what that damage is. That is what we are pushing for today and that is what we on these Benches will be voting for.
Baroness Sherlock
“Universal Credit (Work Allowance) (No. 2)
(1) Within one year of the coming into effect of the Universal Credit (Work Allowance) Amendment Regulations 2015, the Secretary of State shall publish, and lay before each House of Parliament, a report assessing the impact of those Regulations on work incentives.
(2) The report prepared under subsection (1) must contain data analysis of—
(a) income and hours worked, by household type, and(b) the impact of the regulations on the levels of awards of in-work support payable to claimants who have moved from tax credits to universal credit as a result of a change of circumstances, or claimants who will move from tax credits to universal credit as a result of a change of circumstances before 2018.”
Baroness Sherlock
My Lords, I thank the Minister for his commitment to evaluation, but I regret that it is not enough. I therefore wish to test the opinion of the House.
Welfare Reform and Work Bill
Baroness Sherlock Excerpts(8 years, 3 months ago)
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Baroness Sherlock
Baroness Sherlock (Lab)
My Lords, I rise to move Amendments 46E and 46F in my name and that of my noble friend Lord McKenzie of Luton. In doing so, I remind the House of my declared interest as a senior independent director of the Financial Ombudsman Service in case it should prove relevant to the debate.
I will not go back over the substance of the matter, as we discussed it in some detail in Committee. However, I want to push two points that I did not feel, in the end, were satisfactorily addressed by the government response. Amendment 46F seeks to retain the SMI grant scheme for claimants who are in receipt of pension credit; in other words, our poorest pensioners. In Committee, I dubbed this the reverse Salisbury-Addison amendment, reminding the House that we were helping the Government to maintain their manifesto commitment to protect all pensioner benefits, since that is, in fact, who this is mainly aimed at. My concern is that the effect of this policy is essentially to wipe out what is usually the only asset of poor pensioners, and currently their safety net in case they need equity released for care or other emergencies. As I reported last time, Age UK expressed a concern that older people would be reluctant to take on extra debt, so whereas they might have taken a grant, they will not take out loans. They may indeed compromise their own well-being by limiting essential spending instead. I do not think the Minister addressed that, so I would be grateful if he would.
I also asked a number of other specific questions. I had answers to some at the time, and answers to others in writing later. Sometimes the answers in writing were not the same as those given in Committee, but we will come on to that in a moment. I just want to deal with a couple that are left.
I raised the issue of people who die without enough equity in the house to meet the debt and who might worry that it would not leave them with enough money to pay for their funeral. I had hoped to persuade the Minister to leave a cushion untouched, but he was not having it. His response was that the family could apply for a grant, a funeral payment, from the Social Fund. So will all SMI loan recipients be automatically entitled to access a funeral payment from the Social Fund? If so, how much is it? Will it be enough to cover the fast-rising costs of a funeral all around the country?
I also asked if the loss of SMI would result in someone no longer being entitled to pension credit and thereby losing access to passported benefits such as cold weather payments, help with health costs or access to funeral payments. After a series of questions, supported by the right reverend Prelate of Durham, about the advice that would be offered to people, and having reread the record and read the letter that was given, I wish to tell the Minister what I think has been said and he can correct me if I am wrong. I understood him to say that people will get generalised guidance rather than advice about their own particular circumstances and what they should do. Is that right? I gather that the claimant may have to pay for the advice. Is that right?
During the debate the Minister assured me that the provision of advice would be independent of the party recovering the debt. He assured me that that was the case but then wrote to me afterwards and said that in fact it was not the case. I assume that he did not change his mind but that he misread his brief. Either way, can he reassure the House about that because it seems to be a potential conflict of interest? If someone who is advising a pensioner to take out a loan is also making money out of the recovery of that debt, is that not a conflict of interest? If not, how not? I asked him whether a face-to-face option would be available, at least for vulnerable clients. Can he tell me that?
Amendment 46E would require regulations for the scheme to be introduced by the affirmative procedure. The House will recall that the Delegated Powers and Regulatory Reform Committee expressed significant concern about the fact that the draft regulations for the SMI loan scheme had not been made available to the House for debate, given the plan that the scheme be set up by negative regulation. Effectively, the Bill abolishes the grant scheme and empowers Ministers to create a loan scheme but there are no draft regulations before us. Under the proposals they would be introduced under the negative procedure. The committee therefore recommended that regulations under this clause should be subject to the affirmative procedure. It is usual practice that such a recommendation would be followed. Can the Minister confirm that this will happen? If for some reason he cannot, can he tell the House when the Government last refused such a recommendation from the DPRRC? I beg to move
Lord Young of Cookham (Con)
My Lords, we briefly went round this course in Committee. The noble Baroness has raised a number of points to which the Minister will want to respond. However, I am not sure that she made a forceful argument for her Amendment 46F, which seeks to exempt a group of people from this new provision.
Looking at the Bill as a whole, this seems the least painful way of reducing public expenditure, and the argument for looking to this clause for savings is not as strong as the case that could be made in other parts of the Bill. The Opposition recognised this because, in their amendment to the Bill on Second Reading in another place, they specifically said that loans for mortgage interest were a necessary change to the welfare system. So the principle of switching from grants to loans was conceded by the opposition party in another place.
The operation of what is proposed makes no difference to the pensioner at all—the money will simply be paid from the department to the lender—and the impact on the standard of living and the income of the pensioner is wholly unaffected; their day-to-day income is unchanged. The Government’s proposal is that they will continue to get exactly the same level of support as they do at the moment. The fact that the loan may eventually be recovered from their estate has minimal bearing on their financial position, although of course their heirs may take a slightly different view. One has to balance the expectations of the heirs against the taxpayer, who at the moment is footing the bill. Given the imperative to reduce welfare expenditure, it seems to me that this is one of the least objectionable ways of doing it, and I very much hope that the amendment will not be pressed to a Division.
Lord Freud
My Lords, Amendment 46E would apply the affirmative procedure to the support for mortgage interest loan regulations as recommended by the Delegated Powers and Regulatory Reform Committee. The committee opined that these are novel provisions which are likely to have a significant impact on a large number of people. This is true, but the part which is novel is the change in this support from a benefit to a loan. In all other aspects the level of support offered and the way the system will be administered will simply replicate the existing system. The committee made its recommendation before your Lordships debated these measures in detail. I have been quite clear about how the new loan system will be implemented and that the regulations we will bring forward will replicate the existing SMI system. Using the affirmative procedure for these regulations would therefore not be a good use of parliamentary time.
I will come to the government amendments, which may actually be the real palliative here because we will have SSAC reports in this area. If they come up with something there is space within the negative procedure to bring issues before the House. The committee did not have that information about what we were planning with SSAC. I should also point out that the current SMI regulations are subject to the negative procedure.
Amendment 46F would prevent the Government from changing the benefit into a loan for those on state pension credit. It would allow regulations to be made to create a system of grants for pensioners’ mortgage interest. This would mean that pensioners would receive help with their mortgage interest as a grant rather than a loan and that that would be the case indefinitely. In this context that would be unsustainable and clearly unfair on the taxpayer. It is not right that taxpayers, many of whom of course cannot afford to buy their own home, are subsidising the acquisition of what in many cases is a very substantial asset. Pensioners will have access to the same level of support for mortgage interest payments as the current system provides and the Government will not recover the loan until the property is sold. With pension credit claimants, it is most likely that this will be on their death and therefore will impact not on them but on the beneficiaries of their will. My noble friend made the point that they may not be that pleased, but the balance is between them and the taxpayer.
I shall pick up on some of the specific points. Pension credit claimants will have access to passported benefits such as funeral payments. We would normally provide advice through a telephone conversation and the advice will focus on the circumstances of the individual concerned with regard to their options, asking whether they have alternatives available such as downsizing or help from relatives or their heirs. I think that the noble Baroness should take my last word on the issue of who would do this as I wrote in my letter. To the extent that that contradicts what I said earlier, it should be the latter. Our view is that whatever theoretical potential conflict there might be, we will make sure as we set out the arrangements that there is no conflict in the way it is done. I think that that is what I expressed in my letter, although perhaps not using that language.
Let me reassure noble Lords that the Government will seek to recover the debt only up to the level of available equity when the property is sold. Any outstanding debt will be written off. The amendment would also provide powers to introduce regulations to introduce a waiting period for pensioners before they can receive help. There is currently no waiting period for help with mortgage interest for pensioner claimants and it is not the Government’s intention to introduce one. With those explanations, I urge noble Lords not to press the amendments.
Amendments 47 to 49 and 83 provide that loans for mortgage interest regulations made under the Welfare Reform and Work Bill are submitted to SSAC, the independent statutory body that provides impartial advice on social security and related matters for consideration. With the introduction of the new loans-based scheme, help with mortgage interest will no longer be a part of benefit entitlement. However, we recognise the important role that SSAC plays in the scrutiny of regulations and have accepted the recommendation of the DPRRC to provide that regulations relating to loans for mortgage interest fall within the remit of SSAC. I have just realised that I slightly misspoke when I implied that the committee might not have both those bits of information. Perhaps I may also withdraw that point.
The amendments also ensure that certain decision-making rules in the Social Security Act 1998 apply to decisions about SMI loans in the same way as they apply to decisions about benefits. In particular, this will ensure that an appeal may be brought against a decision relating to a mortgage interest loan in the same way as an appeal may be brought against a decision relating to a benefit. This means that applicants will have the same appeal rights as under the existing provision for support with mortgage interest, ensuring fairness for applicants of the new loan provision. They will allow the department to supply information about SMI loans within the broader welfare system to persons who are concerned with the provision of welfare services. For example, it will allow the Secretary of State to share information with those providing free school meals and health benefits such as free prescriptions, so that recipients of SMI loans can access these “passported” benefits. I think that that picks up on the point made by the noble Baroness about concerns with the passporting issues.
The final amendment is a minor and technical change to the Long Title. The purpose of SMI loans is to prevent repossessions. All types of mortgages and loans are eligible for support under the new loan system. This change ensures that the Long Title accurately reflects the contents of the Bill by including a reference to “other liabilities”.
Baroness Sherlock
My Lords, I thank the Minister for that response. I hope that he will take away again the point about the DPRRC. I certainly welcome the move to refer the regulations to SSAC but, welcome though SSAC is and much as I respect its expertise, it is not Parliament. Parliament should have the opportunity to debate this. He mentioned that the DPRRC recognises that regulations for loans for the grant scheme were negative. I am working from memory but I think that the committee pointed out that, had the draft regulations been available, it would have recommended negative in the ordinary run of things because the original regulations had been negative. In fact, the draft regulations were not available, which is why it recommended the affirmative procedure. Will he go away and think about that?
The fact that the Minister said that the service normally will be by telephone gives me a glimmer of hope that the department might be willing to consider a face-to-face service for vulnerable consumers. I hope he will consider that. I will not take on the point made by the noble Lord, Lord Young, although I disagree with him. Given the lateness of the hour and the fact that we went around this issue fairly effectively in Committee, I will set that to one side. I thank the Minister for his other comments. I hope that when he looks at the record he will check the presumptions that I have made as to the operation of the scheme. Should any of those prove to be wrong and not to have been corrected by him, I hope that he will write to me. On that basis, I beg leave to withdraw the amendment.
Family Test
Baroness Sherlock Excerpts(8 years, 3 months ago)
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Baroness Altmann
My Lords, I assure the House that the family test is indeed incorporated into every new domestic policy consideration by this Government.
Baroness Sherlock (Lab)
My Lords, I spoke recently to a woman called Ruth, who had adopted three siblings aged under four. The children were placed with her only because she agreed to stay home in their early years, because they were very damaged. However, her husband was a vicar, and she could only afford to give up work and feed the children because of tax credits. She got in touch to say that if the Government push through the plan tomorrow to limit all benefits and tax credits to the first two children in any family, she would not be able to adopt those children in future, and they would stay in care at a cost of £40,000 per child per year. I asked the Minister how that policy passed the family test. He would not tell me. Will she?
Baroness Altmann
My Lords, as I said, the family test is not a tick-box exercise. Policy is always about trade-offs, but the family test ensures that family impacts are explicitly considered when making those trade-offs.
Housing Benefit: Social Housing Units
Baroness Sherlock Excerpts(8 years, 3 months ago)
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Lord Freud
My Lords, we are looking to double the housing budget to more than £20 billion over the next five years. We are committed to 400,000 new affordable housing starts worth £8 billion—£1.6 billion of that is going to the rented sector. This is from a Government that are really trying to get housing back after the last Labour Government in 2010 left housing starts at the lowest level ever since the 1920s.
Baroness Sherlock (Lab)
My Lords, let us put a couple of facts on the table. The Government said they are going to spend £20 billion on housebuilding this Parliament, of which only £1.6 billion will go on affordable housing. Under the welfare reform Bill that the Minister is dealing with at the moment, the OBR has said that 14,000 fewer social housing units will be built as a direct result of the plan to force housing associations to cut rents. How does that help bring the housing benefit bill down?
Lord Freud
I just repeat what I said: we are spending £20 billion to have 400,000 new starts. That is more than this country has seen. Where there might be a policy that may have a pressure, we will look at that but, overall, we are determined to get the houses built in this country.
Welfare Reform and Work Bill
Baroness Sherlock Excerpts(8 years, 3 months ago)
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Baroness Hollis of Heigham (Lab)
My Lords, very briefly, I support the amendment in the name of the right reverend Prelate the Bishop of Durham.
I am puzzled. When we considered the 2012 Welfare Reform Act, the Minister rightly commanded the respect of the entire Committee and allowed the proceedings to be lengthened from the original 10 or 11 days to 17 days, in the process of which he negotiated, discussed and shared information because he was determined that the introduction of universal credit would be, as far as was possible, evidence-based. That was something that we all responded to: we were not being motivated by the latest piece of journalism or an ideological twist; it was evidence-based.
What puzzles me about the Government’s position is not that they are seeking to get analysis of the impacts of poverty in terms of well-being measures, adult worklessness, child educational attainment at 16, and so on—it is perfectly sensible to have information about that. But this is not an either/or situation. We all know that we need to know about the income going into a family as well as about the impact of that lowered income on the outcomes that affect the family and the children, as the noble Lord, Lord Northbourne, said. This is not an either/or situation. We need both because, above all, government need to know where they can most effectively intervene to ensure that, as far as possible, children and their families have good, strong, decent and well-funded lives. We cannot know that unless we collect the information on both income and on what the Government believe to be the impact. It is not a question of which comes first, which drives one or the other, or which is the gateway. That does not matter—we need both. On the basis of that evidence, we, as a House and as Parliament, can come in behind government to see what levers are most effective in addressing the issues that that evidence has identified.
The Minister is an evidence-based Minister, which is why he has our respect. Therefore, in the light of that and all the work that he did on the 2012 Bill, I urge him not to sabotage it by ignoring crucial evidence of how best the Government should use the resources at their disposal. I hope that he will accept the right reverend Prelate’s amendment.
Baroness Sherlock (Lab)
My Lords, we on these Benches are fully supportive of Amendment 2, to which I have appended my name. The right reverend Prelate the Bishop of Durham has made a strong case for his amendment, backed up ably by my noble friends Lady Lister and Lady Hollis, and I will not add a great deal to the fundamental case that they have made. However, I do wish to say a brief word.
The Bill has a lot in it which will have a serious impact on the incomes of millions of families in Britain, particularly families with children and households with disabled people in them. I would love to send the whole Bill packing, as I would love to dispatch various statutory instruments recently passed through both Houses, but that is not what we are going to do; it is not our job. Our job over this week is to send back to the Commons for further consideration parts of the Bill where they have simply not begun to understand the consequences of some of what they have done; where the costs can be significant but often have just been shunted rather than taken away.
The great advantage of this amendment is that it does not cost any money and yet it would be incredibly powerful in holding the Executive to account, something which this House always takes seriously.
I have been struck, not only in listening today but in re-reading the excellent debate on this subject in Committee, that the Minister was signally unable to persuade Peers from around the House of the case that he made. Let me summarise the Government’s case. The report to Parliament by the Secretary of State for Work and Pensions on the drivers of child poverty said this:
“From the range of academic and institutional evidence reviewed we can confidently conclude that”—
brief pause—
“The key factor for child poverty now is parental worklessness and low earnings … The other main factors include low parental qualifications, parental ill health, family instability and family size”.
It also highlighted child education attainment as a key factor in increasing the risk of a poor child growing up to be a poor adult.
So what have the Government done in response to that evidence? This Bill guts the Child Poverty Act 2010, removes the requirement to report on income poverty at all and requires Ministers in future to report on only two factors—worklessness and educational attainment. That leaves a couple of key questions.
First, Ministers are not saying that these factors equal poverty but that they drive it. So presumably the Government will seek to address those factors and, if they are successful in addressing them, child poverty will fall—but how will we know? If we do not expect the Government to report on the effect on child poverty of the work they are doing, then how do we know whether their strategies are succeeding or failing? The Minister may point to the fact that data on households below average income are currently published, but, as the right reverend Prelate pointed out, there is no guarantee that that will carry on indefinitely without a statutory routing. If the Government are so confident, why will they not report on the impact of their policies on child poverty and be accountable for it?
Secondly, Ministers have cherry picked some of the factors on their own list and ignored others. In particular, as has been mentioned, why have the Government ignored the key factor of low earnings, which is the first in their line of analysis of drivers for staying in poverty. Is it because, by definition, it must be an income measure, to which there was therefore a political objection? Or is it because, as the noble Earl, Lord Listowel, pointed out, they know full well that two-thirds of poor children are living in households where a parent is in work. I will return to this issue in a later group but I remind the House that if the Government continue to damage work incentives by attacking universal credit and cutting the value of in-work benefits they can hardly be surprised to find that work is no longer a route out of poverty.
No one is arguing that money is all that matters—the right reverend Prelate the Bishop of Durham expressed that very well. I fully recognise his comment that the idea that money does not matter is often most closely held by those who have plenty of it. I make an exception in the case of the noble Earl, Lord Listowel, who despite, as he said himself, having always been comfortable has shown an impressive concern for those who have not had the benefits to which he found himself entitled. I commend him for that. Nobody is arguing that, but when 202 out of 203 responses tell you that you have got it wrong, it really is time to think again. The odds on that only one being the one that is right have to be pretty small.
Welfare Reform and Work Bill
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Baroness Manzoor
We totally support this amendment in the name of the noble Baroness, Lady Lister. I also totally agree with my noble friend Lord Kirkwood, who has amply identified the arguments as to why it should be supported. The noble Baroness, Lady Hollis, rightly said that we need levers. If we do not have such levers, how are we to address the issues about people who work, those who are not in work and in-work benefits? We will talk about the universal work allowances and the implications and ramifications of that. I hope that the Minister is listening very carefully. If the amendment is called to a vote, we on these Benches will support it.
Baroness Sherlock (Lab)
My Lords, I thank my noble friend Lady Lister for tabling this amendment and for introducing it so well. In Committee, she made a very compelling case and I share her view that the Minister’s response was more than usually unpersuasive. In fact, she may have identified the reason for that and may be on to something. It is not as though we lack evidence. We have heard that two-thirds of children in poor households have a parent in work. I think we all accept that the risk of poverty is lower in families where parents are working and that the risk rises as the hours worked do not. But that does not change the fact that today large numbers of children are in poverty even though their parents are in work.
My noble friend Lady Lister and I clearly had the same weekend reading. How sad am I? I, too, dug out the State of the Nation 2015 report from the Social Mobility and Child Poverty Commission and the original evidence command paper from 2014. The commission put it really clearly. It states that,
“today 1.5 million children are in poverty because their working parents do not earn enough to secure a basic standard of living and the risk of absolute poverty for working families after housing costs has increased over the last decade”.
We clearly have a problem. In their command paper, from which my noble friend Lady Lister quoted, the Government analysed what drove how long a child stayed in poverty. They state:
“The main factor is lack of sufficient income from parental employment … this is not just about worklessness, but also about working insufficient hours and/or low pay”.
They did not mention something which was picked up by the noble Lord, Lord Kirkwood—namely, that another crucial determinant is the nature and level of in-work benefits and the way in which they apply. But the Social Mobility and Child Poverty Commission did raise that. In its 2015 report, it commented:
“Many families will find it very difficult to increase their earnings enough to make good the cuts in state support even if they benefit from the welcome introduction of the National Living Wage … we recommend that the Government should, as the public finances improve, revitalise employment incentives in Universal Credit”.
However, as we know, things are going in the opposite direction. The Government have done real damage to work incentives—the very thing that UC was designed to tackle—by cutting work allowances. In this Bill, they are cutting the value of the main in-work benefits through the benefits freeze. They are abolishing the family premium in universal credit for all families and significantly cutting child tax credit for families with more than two children, both of which will hit working families with kids. On Saturday, the Times reported that cost-cutting means that 240,000 families will be denied the free childcare promised to them in the Conservative manifesto.
In Committee, the noble Lord, Lord Freud, argued strongly against targets on relative poverty because he believes that they drive government decisions on allocation of resources and he does not like the way they do it. He got his way on that, if not on measurement. But the information should at least be recorded. The risk of failing to measure and to discuss the trends in in-work poverty is that the Government will not do anything about it because it somehow legitimises the idea that poverty is not about money but about worklessness, as though, by definition, children with working parents could not be poor. If we do not focus on that, it could distort policy-making too.
If the Government are focused only on worklessness, they could end up pursuing policies that just move children from being poor in households where they see their parents a lot to being poor in households where they do not see their parents very often because they are out working unsocial hours in order to be able to make ends meet. With all the consequent damage to family life that that does, that is not the answer. I live in hope that the Minister will accept this amendment, having been persuaded by the brilliant arguments of my noble friend Lady Lister, but just in case, unaccountably, he is not going to do that, will he tell the House one very specific thing? Does he accept that it is possible to be poor if your parents are in work and you are a kid? If so, what are the Government going to do about it?
Welfare Reform and Work Bill
Baroness Sherlock Excerpts(8 years, 3 months ago)
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Baroness Lister of Burtersett (Lab)
My Lords, Amendment 25 would remove child benefit and child tax credits from the benefit cap. I return to this amendment, which raises an important point of principle together with children’s rights questions, partly because in Committee it was grouped with various other exemptions from the cap, but, more importantly, because—and at the risk of being accused of being vituperative—once again, the response from the Minister was inadequate. He was challenged a number of times to justify why these benefits should be subject to the cap for those out of work when they are received by those in work, so that the cap is premised on a comparison between earnings in work and income out of work, but he failed to do so.
The argument boils down to what we believe is fair. According to the impact assessment, the clause promotes even greater fairness between those on out-of-work benefits and taxpayers in employment. Our view is that fairness requires that old cliché of the level playing field, on which, if you ignore the child benefit received by all taxpayers in employment on wages of £20,000 to £23,000 and the child tax credits received by a good proportion of them—how many and how much the Government refuse to say—you must ignore it when calculating the income of those on out-of-work benefits.
The exchange between my noble friend Lady Hollis of Heigham and the Minister on this point could have come straight out of a pantomime: “Oh, yes, it’s earnings”, “Oh, no, it’s income”; or that old song, “Let’s Call the Whole Thing Off”: “I say income, you say earnings”. But whereas my noble friend, as you would expect, offered argument, the Minister offered only assertion. He just kept repeating:
“We are looking at the level of earnings”,
without ever saying why, other than, as my noble friend put it, “Because I say so”. Therefore, I thought it only right to give him the opportunity to offer an argument today in justification so that noble Lords can decide whether it is indeed fair to base the policy on such an uneven playing field.
Other arguments that did not get addressed properly by the Minister concerned the impact on children. How did the policy fare against the family test, which was not even mentioned in the income assessment? He assured me that the family test was applied, but, as he could not,
“recall what was in it”,—[Official Report, 21/12/15; col. 2378.]
he promised to write to me with the details. I do not believe that I have received them, so perhaps he could provide them now. What is the likely impact on child poverty? That was conveniently circumvented on the spurious ground that it is all too difficult to estimate the likely dynamic effects of the policy. There is no reply to the argument that the policy has a disproportionate impact on children.
In the judgment in the recent Supreme Court case on the cap, which we spent some time debating in Committee, Lord Justice Carnwath made the point that the inclusion of child benefit and child tax credits in the cap raises the question as to why,
“the viability of a scheme, whose avowed purpose is directed at the parents not their children, is so disproportionately dependent on child related benefits”,
and said:
“The cap has the effect that for the first time some children will lose these benefits, for reasons which have nothing to do with their own needs, but are related solely to the circumstances of their parents”.
The noble and learned Baroness, Lady Hale, observed that, as a result, the children affected,
“suffer from a situation which is none of their making and which they themselves can do nothing about”.
This brings me to the children’s and human rights implications of the policy, which, as the Equality and Human Rights Commission has complained, were dealt with inadequately in the Government’s human rights assessment and the impact assessment. What is at issue is whether the inclusion of children’s benefits in the cap is in the best interests of the child in line with Article 3 of the UN Convention on the Rights of the Child.
In the human rights memorandum, the Government note the Supreme Court’s decision and assert that they have fully considered their obligations to treat the best interests of the child as a primary consideration. However, their analysis of the,
“best interests of the child”,
seems to rest on this proposition:
“The best interests of children overall is to have parents in work and work remains the surest route out of poverty”.
As the EHRC observes, this betrays,
“a particular lack of understanding regarding compliance with the UNCRC”.
It may well be in the best interests of many children for parents to find work, but it will depend on the work available, the circumstances and the durability of any work found. Moreover, this bald statement ignores the fact that the great majority of those already subject to the cap did not find work as a result. Is it really in the best interests of their children to have their standard of living reduced even further when a survey reported in the first-year review of the operation of the cap found that over a third of those affected had already had to cut back on household essentials and many had incurred debt, which the Government identify as a root cause of poverty? In fact, the Government’s position pretty much ignores the judgment of the noble and learned Baroness, Lady Hale, echoed by the noble Lord, Lord Kerr, that they,
“misunderstand what article 3(1) of the UNCRC requires. It requires that first consideration be given to the best interests, not only of children in general, but also of the particular child or children directly affected by the decision in question. It cannot possibly be in the best interests of the children affected by the cap to deprive them of the means to provide them with adequate food, clothing, warmth and housing, the basic necessities of life. It is not enough that children in general, now or in the future, may benefit by a shift in welfare culture if these are also the consequences. Insofar as the Secretary of State relies upon this as an answer to article 3(1), he has misdirected himself”.
In his response, the Minister did not address the substance of these arguments, but took refuge behind what he called the “sterling work” of the noble Lord, Lord Blencathra, whom he described as “utterly masterful” on the legal aspects and who he said had certainly taught him a lot. I am no lawyer, and I am sure the Minister will not consider me masterful on the subject. I am diffident about getting involved in legal disputation once more, but I am assured by the CPAG’s solicitor, to whom I am grateful—I make my usual declaration as the group’s honorary president—that the interpretation by the noble Lord, Lord Blencathra, is open to challenge. The Minister’s law lesson might, therefore, need some revision. It is not the case, as the noble Lord, Lord Blencathra, asserted, that the Supreme Court found the Government to have been “perfectly correct” when they were taken to court on not implementing the UNCRC, nor that five of the noble judges ruled, in the Government’s favour, that the benefits cap was not contrary to the rights of the child. Rather, the court found, by a majority of three to two, that the benefit cap regulations are in breach of Article 3(1). It is true that they went on to find that, as the convention is not incorporated into domestic UK law, it should be for Parliament, not the courts, to decide how to remedy the breach. Lord Justice Carnwath advised that the court’s concerns about the rights of the child would need to be addressed in the political arena. In other words, the court was looking to us—to Parliament—to find a way to ensure that the Government upheld the UK’s obligations under international law with regard to the cap.
That is what the amendment seeks to do. Just because the UN convention is not directly enforceable in UK courts, the Government cannot simply ignore it when their claims to have complied with it are challenged by the Supreme Court. It must concern us that, far from responding to the Supreme Court’s ruling and to the specific recommendation of the noble and learned Baroness, Lady Hale, that the Government consider removing children’s benefits from the cap, the Government are now compounding the infringement of children’s rights by reducing the cap to below median earnings, thereby bringing many more families into its net. I suspect that it is only a matter of time before the matter is before the courts again, as this could now mean that the cap is in breach of the European Convention on Human Rights because of its disproportionate impact.
On grounds of both fairness and the rights of children, I believe there is a strong case for the exclusion of children’s benefits from the cap. I hope that today the Minister will actually engage with the arguments, rather than continue with the “because I say so” approach. Given that that approach tends to be used when there is not a valid case to be made, better still, he should accept the amendment on grounds of both fairness and children’s rights. I beg to move.
Baroness Sherlock (Lab)
My Lords, I thank my noble friend Lady Lister for the way she has introduced the amendment and for her persistence and expertise on this subject. My noble friend raised this issue in Committee but did not get an adequate answer. One of the things I find most depressing about the debates on the benefit cap is that Ministers increasingly lump all benefits together as just welfare payments. No distinction is made between the various kinds of benefit we have traditionally had in the British social security system: between contributory and non-contributory benefits or between income-replacement benefits and those designed to compensate for extra costs. The failure to make such distinctions tends to demonise recipients. It also muddies the policy-making waters, because Government are reduced to making fairly broad claims for the behavioural impacts of benefits the purposes of which are, in fact, quite distinct from each other.
Child benefit is a good case in point. It has traditionally been a universal benefit and is still available to all but the highest-earning households. In effect, it is a horizontal transfer from taxpayers as a whole, including those who do not have children, to those who have children. Originally, it replaced an allowance in the tax system and it is there because, as a society, we recognise that children are a public as well as a private good. We all have a stake in ensuring that parents can afford to raise the next generation healthily. Child benefit goes to parents in and out of work, of course, as does child tax credit—the two benefits that are the subject of this amendment.
Baroness Sherlock
My Lords, the amendment would exclude guardian’s allowance from the cap. I shall briefly set out the regulations on exactly who gets guardian’s allowance, because I think it is worth doing. You can get it only if you are caring for somebody else’s child, you are entitled to child benefit for the child and both of the child’s parents are dead, or one of the child’s parents is dead and at that time the whereabouts of the other parent is unknown and you have made all reasonable efforts to find them, or one of the child’s parents is dead and the other is in prison with a minimum sentence of two years remaining to serve, following the death of the other parent. People do not get this allowance lightly. It is not paid to foster parents or prospective adopters. My noble friend Lady Hollis, with a precision and a lyricism that I could not begin to match, set out the effects of taking this away from a group of people who are reaching out to some of the most vulnerable children in our country. I hope that that has persuaded the Minister how important this is. But given those effects, and given how few these people are in number, and given how vulnerable the children are, I would like the Minister to explain why they do not fit into the category that he described under the last amendment, when he said that the Government wanted to incentivise work but also to protect the most vulnerable. Why do they not count as the most vulnerable?
In Committee on 21 December I asked the Minister what behavioural incentives the Government were seeking by including guardian’s allowance in the cap. He said:
“Recipients of maternity allowance and guardian’s allowance will be affected by the benefit cap only if they are in receipt of a significant amount of other welfare payments”.—[Official Report, 21/12/15; col. 2378.]
That is not a justification. Either it is right to include guardian’s allowance in the cap or it is not; it cannot be right because you get other benefits as well. So if the Government believe that it is right, can the Minister please tell the House what behavioural response the Government are looking for from people who receive guardian’s allowance as a result of the cap? If he cannot provide one, will he accept that the fact that they will be affected by the cap only if other benefits are also received is not a good argument for guardian’s allowance itself to be counted towards the cap? That argument could be made for any benefit. I look forward to the Minister’s explanation.
Lord Freud
Amendment 26 seeks to remove guardian’s allowance from the list of those that are included within the benefit cap, so that it is disregarded when calculating the total amount of benefits a household can receive before the cap is applied. Guardian’s allowance is paid to those who are responsible for a child or young person and either both parents or in some circumstance one parent have died. The Government recognise the crucial and valuable role that recipients play in helping children to recover from the loss of their parents, but I do not agree that it should be excluded from the benefit cap. That is about the principle that there is a clear limit to the amount of benefits that an out-of-work family can receive.
In the interests of time, I shall not repeat my previous arguments, but will provide the best information that we have, which is that the noble Baroness, Lady Hollis, is right to say that this affects very few people. On our sums, the inclusion of the guardian’s allowance within the cap affects fewer than 50 claimants—those are the figures that I have. Rather than a blanket exclusion of this benefit, it is better that targeted support is offered to those who need it. That is where the discretionary housing payments of £870 million come into play. On that basis, I ask the noble Baroness to withdraw her amendment.
Baroness Sherlock
My Lords, this amendment, in the name of my noble friend Lady Hollis, would exempt from the cap women who are at least 29 weeks pregnant or responsible for a child under nine months of age. I thank my noble friend for making it clear to the House just what a perilous situation these women will find themselves in if things proceed as planned.
Some very strong arguments were made to me by Gingerbread as to why this particular group ought to be excluded. It suggests, first, that the group will find it most difficult to move into work to escape the cap and therefore will simply be pushed deeper into poverty. Of course, that is the last thing that it wants for a woman who is pregnant or has a very young child. Secondly, it points out that the Government want families on benefits to make the same choices as those who are in work. Parents in work have pregnancy and maternity rights, including an expectation that they will have some time away from work both when they are in the later stages of pregnancy and in the first months of their child’s life, so this exemption would mirror the rights of working families.
As my noble friend Lady Hollis pointed out, pregnant women and those with very young children are not listed as a priority group for discretionary housing payments, despite the complex challenges that they face as they move into work, and therefore they cannot have that to fall back on as other vulnerable groups might. I would be very interested to hear the Minister’s response to these challenges.
In Committee, I tabled an amendment that would have excluded maternity allowance from the cap. I did so to probe the Government’s reasoning and particularly to try to find out what behavioural responses the Government were expecting of pregnant women. However, as I explained earlier, I could not get an answer from the Minister. The only thing that I got on maternity allowance was the same as for the guardian’s allowance: the response was that people would not be affected unless the household was also getting other benefits. As I have said, that is not an answer.
This amendment from my noble friend seeks to protect a very narrow group of people at a very vulnerable time. The Government’s usual response is that if someone wants to escape the cap, they should either get a job or move house. Can the Minister explain to the House what he thinks the chances are of a woman who is 29 weeks pregnant getting a job? How strong does he think her chances will be out there in the job market if she has not worked previously? Secondly, if that is not a practical thing for her to try to do, maybe he thinks she should move house. I do not know whether he has ever had to help a very heavily pregnant woman move house, but would he really suggest to her that moving house when she is very heavily pregnant or has a brand new baby is either desirable or practical, unless of course she is forced into it in the circumstances described by my noble friend because she ends up being evicted for rent arrears?
I just want to get the Minister to address the practicalities of this situation. This is a very narrow group of people. What do the Government expect them to do if they find themselves hit by the cap? Will he please tell the House?
Lord Freud
My Lords, as I have already set out, those with a sustained work history benefit from a nine-month grace period before the cap is applied to them. Therefore, those households that have been in employment for at least 50 out of 52 weeks will be exempt from the cap. This gives time for households, including those with a new child, to adapt to their new circumstances before the cap is applied to them.
Households in receipt of working tax credits or which meet the UC earnings threshold will be entirely exempt from the cap. Although some single mothers will not be immediately able to move into work, for those households consisting of couples, the partner need work only 24 hours a week for the household to qualify for the exemption. Around 45% of households that include a maternity allowance claimant who will be affected by the new cap levels are households consisting of a couple, meaning that a partner can help to exempt a household from the cap through work. Households that include a claimant in receipt of maternity allowance may also be entitled to working tax credits and so be exempt from the cap.
Although I am grateful to the noble Baroness for speaking on this issue and for the research that she has put into it, I am not sure that the amendment would do what is intended. It would not create a disregard or exemption from the cap for the specified group; it would, however, appear to make the group subject to a different prescribed list of benefits to be defined by the Government in regulations. That would of course go against the approach that the Bill adopts of providing certainty about the capped benefits by including them in the Bill. I therefore ask the noble Baroness to withdraw the amendment.
Lord Freud
The Delegated Powers and Regulatory Reform Committee recommended in its report of 23 November a number of amendments to the benefit cap clauses in the Bill. Amendments 29 and 30 are technical and consequential amendments as a result of the committee’s recommendations. Amendment 28 is a tidying amendment and not as a result of the committee’s recommendations.
Before I do that, I would like to explain that, although the committee recommended that Clause 7 should be amended so that new Section 96, which it inserts into the Welfare Reform Act 2012, should reference single persons, couples and lone parents, and provide for the meaning of those terms to be specified in regulations, the Government do not consider this to be necessary. Redrafting the provision in the way suggested would overly complicate the legislation. The Government have been very clear in debates and briefings that the higher tier of the cap levels will apply to lone parents and couples, and that the lower-tier levels will apply to single people without children. I am happy to formally put on record again here today that this is the policy.
Turning to the amendments that are being taken forward, the committee recommended that the affirmative procedure should apply to any regulations amending the level of the benefit cap, using the power introduced in new Section 96A of the 2012 Welfare Reform Act to be inserted by Clause 8. As currently drafted, the affirmative procedure is applied only if the level of the cap is lowered. The amendments to Clause 8 mean that any change to the levels of the cap will be subject to parliamentary debate in line with the committee’s recommendation. This is a considerable level of extra parliamentary scrutiny for these future decisions. I am sure that these amendments to Clause 8 will reassure noble Lords’ concerns that for any future review of the cap this House and the other place will have the opportunity to have the decision explained and debated, and to agree it.
The committee also highlighted that currently regulations pertaining to the benefit cap are not required to be referred to SSAC. It has recommended that an amendment be made to provide that regulations pertaining to the cap must be referred to SSAC. After careful consideration, the Government accept this recommendation in principle and will table an amendment at Third Reading to reflect this. However, the Government do not accept that regulations relating solely to the level of the cap should be referred to SSAC, as that is a matter for Parliament.
A consequential amendment to Clause 7 has been identified. It has arisen as a result of the removal of Section 97(3) of the Welfare Reform Act 2012. Section 97(3) provided that the first set of regulations made under Section 96 were affirmative. As the first set of regulations has been made, the removal of the word “other” from Section 97(4) is purely consequential on that. I beg to move.
Baroness Sherlock
My Lords, I thank the Minister for that explanation. We welcome the move to affirmative regulations and are happy to accept his assurance that the other amendments are technical and consequential. I look forward to his returning at Third Reading with details of the amendments relating to SSAC. I would like to ask him to come to Third Reading armed with some specific information. If the Government are not minded to make reference to SSAC in relation to the level of the cap, and given that all the benefits affected by the cap are now in the Bill, will the Minister come back and detail for us precisely what those regulations might refer to that are still available to be sent to SSAC? Will he come back at that point and give a better explanation, of appropriate length—I am not blaming him for not doing it now—as to why the Government do not think that the level of the cap should be referred to SSAC, given that that is probably the single biggest determinant of the impact on those affected by it?
Social Housing Sector
Baroness Sherlock Excerpts(8 years, 3 months ago)
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Lord Freud
We are talking to the relevant supported housing associations—it is a variegated sector. There are a couple of issues that are concerning them at the moment, and this is one of them. We are looking, as we develop a dialogue, to get a policy that works for this sector as soon as we possibly can.
Baroness Sherlock (Lab)
My Lords, the other issue that is probably concerning the sector is that the Welfare Reform and Work Bill is forcing all housing associations to cut their rents by 12% over this Parliament—money that will almost all go directly to the Treasury. It is a double whammy. I spoke this morning to the head of Depaul UK, a small charity that houses 700 young homeless people in the north-east and around the country, dealing with kids who have come out of prison or have escaped abuse and exploitation. It has already absorbed cuts of 30%. If this policy goes through, the support workers who teach the young people how to live, cook, pay the rent and go to work and get them ready for independent living simply cannot be paid for. If this goes ahead, Depaul will pull out of hostel provision altogether. Is that what the Government want?
Lord Freud
As my noble friend Lady Williams made clear on Monday night, this area is under active consideration within the timetable of the Bill.
Lord Freud
This is a variegated sector, which is exactly what we are discovering now. Supported accommodation or specified accommodation, using the other definition, effectively looks at the services that are provided to support people. I suspect that some of them will supply aids of some kind, but the real thing is the actual service elements that are provided for people.
Baroness Sherlock
My Lords, perhaps the noble Lord could ask his noble friend Lord Strathclyde to do the review. That might speed it up.
Lord Freud
I constantly consult my noble friend Lord Strathclyde about absolutely everything.
Welfare Reform and Work Bill
Baroness Sherlock Excerpts(8 years, 4 months ago)
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Baroness Sherlock
“( ) A report prepared under this section must include information regarding the adequacy of resources given to local authorities to fund the support provided for troubled families.”
Baroness Sherlock (Lab)
My Lords, in moving Amendment 70 in my name and that of my noble friend Lord McKenzie of Luton, I will speak in support of Amendment 71 in the name of the noble Baroness, Lady Manzoor.
We are supportive of the recognition by successive Governments of the need to invest intensively in co-ordinated support for families facing multiple challenges, many of whom are involved with a number of agencies. Labour began work in this area, and in 2012 the coalition Government launched the first phase of what they called the troubled families programme. The Prime Minister, David Cameron, was reported as saying that he would put “rocket boosters” under efforts to turn around the 120,000 troubled families in the wake of the riots of 2011. I declare an interest as one of the four members of the Riots Communities and Victims Panel set up by the Prime Minister in the wake of those riots.
My experience as a member of the panel really stays with me. The panel was unpersuaded that there was much overlap between the rioters and the surprisingly precise number of 120,000 families who were then the target of the troubled families programme. In a poll we conducted of 80 local authorities, only 5% felt that there was much overlap between the rioters and the troubled families. One of our concerns was how we should support the roughly 500,000 forgotten families, who would not be reached by the government programme because things were not bad enough. They were bumping along the bottom, not coping but not doing badly enough to get help.
Those families need our help. I have never felt that the challenges families face are just about money, although its absence can be and often is a significant or at least aggravating factor. I will be interested to see the evaluation of the various programmes local authorities set up under the banner and funding regime of troubled families. I welcome the proposal in Clause 3 to require the Secretary of State for Communities and Local Government to report annually to Parliament on the progress of families supported by the troubled families programme. Amendment 70 would require that report to include information,
“regarding the adequacy of resources given to local authorities to fund the support provided for troubled families”.
I find it hard to work out the detail from the published financial framework so I hope the Minister can help. Can she say for the record what the longer-term funding proposals are, now that the Autumn Statement is out? Councils are being asked to design their own programmes to work with an agreed number of families, using criteria set out by central government. I understand that the original troubled families programme offered £4,000 per family. The financial framework says there will be a £1,000 attachment fee when an authority first works with a family, then an extra £800 on a payment-by-results basis depending on certain outcomes. Satisfactory outcomes are either “continuous employment” or “significant and sustained progress” over the five-year period.
I have some questions for the Minister. First, what work have the Government done with local authorities to ensure that that is an appropriate amount to incentivise them to choose the right outcomes for each family, rather than the ones that are the easiest to evidence, to make sure that they get the money that they are going to depend on to be able to run the provision? Secondly, are the Government talking to local authorities to make sure that the reporting requirements are not so onerous that they drain valuable resources or create incentives to focus on more readily documentable activity or more easily evidenced outcomes?
On the reporting point, one local authority representative said in the evidence session on the Bill in another place that the troubled families programme is addressing behaviours built up over decades or even generations. It is not,
“a 12-month, quick-fix, dip-in dip-out programme”.—[Official Report, Commons, Welfare Reform and Work Bill Committee, 10/9/15; col. 17.]
How will the Government ensure that annual reports reflect the need for longer-term interventions?
Have the Government considered the extent to which other proposals in the Bill may obstruct the success of the troubled families programme and, if so, how they might mitigate that? The reduced benefit cap and the two-child limit are likely to force some families to move in pursuit of cheaper housing. One Member of Parliament reported that 1,000 families had already moved from her inner London borough to cheaper areas. But as the cap is reduced, they could end up moving again. Losing track of families who move has been a recognised problem for social services for years and it features quite often in serious case reviews, including some very well-known and damaging child protection cases.
Having to move is worrying because after families have been given support for the first time, when they move they can simply drop out of sight. They also lose access to community support services such as preschool activities, parenting classes, health visitors or support workers in mental health. I am particularly worried about children having to move schools—I will return to this on a later group—when a lot of work could have been done to get that child and school working together and keep them in school.
The family will also lose their troubled families support worker and that is a relationship based on trust, which can take a long time to establish. On the assumption that the worker will not move to the new boundary, how can the programme ensure that the work that has been invested in that relationship of trust is not lost? That relationship between the worker and the family is not the icing on the cake; it is the cake. Louise Casey, who runs this programme, has talked movingly about the missing ingredient in these settings often being love. This is based on relationships. My concern is that a significant investment in those families, both emotional and financial—as taxpayers’ money—will be thrown away if that relationship is broken. Can the Minister tell the Committee what arrangements have been made for transferring support for families if they end up moving across boundaries, especially as a result of the Government’s own policies? I beg to move.
Baroness Manzoor (LD)
My Lords, I shall speak to Amendments 70 and 71. I do not want to repeat what has already been so well put by the noble Baroness, Lady Sherlock, concerning Clause 3 and reporting obligations. I want briefly to summarise something that the Guardian found under a freedom of information request in November 2015. That request showed that in the 120 councils that responded, only 79,000 families were turned around through a family intervention, which is meant to be an integral part of the troubled families programme. The research also found that more than 8,000 families in more than 40 local authorities had not received any kind of family intervention but had instead been turned around solely on the basis of data-matching exercises. The research found that councils might, for example, trawl through employment, youth crime and truancy data to identify a family that would have been eligible for the programme and which, without receiving any help from the troubled families programme, fulfilled the criteria for being turned around because school attendance had improved or one of the parents had found a job.
My Amendment 71 is an attempt to prevent this. It asks that a report prepared under this section must include an assessment of,
“the types of interventions provided by local authorities in the previous financial year, and … the success or failure of the types of interventions provided by local authorities in the previous financial year”.
I hope that the Minister will feel that this amendment would enable an improved assessment of the interventions provided by local authorities and will accept it because without this kind of data, we are not going to get underneath exactly which services local authorities are providing. I believe that the Government believe they must have an evidence-based approach, and this amendment will enable them to do so.
Baroness Evans of Bowes Park
I believe that the full scope of the reports has yet to be decided. I am certainly happy to take back those two suggestions to the department.
Baroness Sherlock
My Lords, I thank all noble Lords who contributed to this short debate. I thank the noble Baroness, Lady Manzoor, the noble Lord, Lord Kirkwood, and my noble friend Lord Beecham for their support.
We heard a lot of emphasis on evaluation. When the Minister takes this back to the department, I urge her to reflect a bit more carefully on that. I was a little concerned that, towards the end of her remarks, she seemed to imply that we do not need to assess either quality or funding because if the outcomes work it must have been okay. The question I would raise is that of causality. We are dealing here with very complex situations. Essentially, a family that is already engaged with lots of agencies and that may have multiple problems is an organic and dynamic unit—coming in and going out all the time. To assume, because it started at X and ended at Y, that what happened must have been the right thing is a very central government assumption and a slightly risky one in the circumstances.
I ask her to take that back, along with the suggestion of my noble friend Lord Beecham about longitudinal studies and peer review, to try to think very carefully about how we can capture the learning. With respect to the noble Lord, Lord Farmer, the point of these programmes is that what one authority does may not be the best thing for another authority. It depends on the circumstances, as my noble friend Lord Beecham described.
I also take the point made by the noble Lord, Lord Kirkwood, about terminology. Certainly, when I was on the riots panel I talked to a number of families who felt that being stigmatised got in the way of their trying to deal with things. It was not that they did not know they had problems; it was just that everybody constantly telling them that they had problems did not help. They wanted help to get themselves out of those problems, not to be branded. We need to find a way to ensure that that does not happen. I encourage the Government to think some more on that.
I am also grateful to my noble friend Lord Beecham for pointing out to the noble Lord, Lord Farmer—whose interest in this subject I recognise—how many local authorities are struggling with funding, especially in the poorest areas where so many of these families will be. We need to be aware of that. I am grateful for the subject having been aired in this debate and I hope that the Government will come back to us on this on a regular basis. Given that, I beg leave to withdraw this amendment.
Baroness Sherlock
Baroness Sherlock
My Lords, I shall speak also to Amendment 92. These amendments were tabled in my name and that of my noble friend Lord McKenzie of Luton. I shall also speak to the other amendments in this group. In doing so, I thank the many organisations which supplied briefing on this subject, including CPAG, Gingerbread and Shelter.
When the benefit cap was introduced, the Government made much of the fact that they were setting it at the level of average earnings. In May 2011, the then Minister, Chris Grayling, sought to defend the rationale for the cap by saying in another place:
“Our policy approach, and the Government’s clear intent, is to have a cap that bears reference to average earnings. That is necessary for the credibility of our benefit system. It is the right place to set the cap”.––[Official Report, Commons, Welfare Reform Bill Committee, 17/5/11; col. 952.]
We in this House debated at length whether the test was fair, and we voted to exclude child benefit from the cap—a move that was overturned in another place. Now the Government have simply abandoned any such rationale and have plucked figures out of the air. The Bill reduces the cap to £23,000 a year in London and £20,000 elsewhere.
Even more worryingly, in future the Secretary of State can review the cap whenever he wishes without reference to any external benchmark and change the level simply by regulation. This could become a vehicle for Ministers to ratchet down the amount of help given to needy families without adequate parliamentary scrutiny. Our amendments seek to remove the subsection which would enable a reduction in the benefit cap. The effect would be to leave the cap at its current level.
Now that the Government have abandoned any external benchmark, it is hard to understand their rationale for choosing these levels. The impact assessment sheds little light. The nearest it comes to justifying the lower rate outside London is on the grounds that one in four households in London earns less than £23,000 a year while one in four households outside London earns less than £20,000. Is that the new benchmark? Is it to be set at a level equivalent to 40% of median earnings or is this, as I suspect, a post hoc rationalisation of an arbitrarily chosen figure? Once again, the rationale is misleading by referring only to household earnings rather than to income and in doing so failing to acknowledge that many households earning below the cap will also be receiving benefits covered by the cap, such as child benefit, child tax credit or housing benefit.
The new threshold will drastically change the impact of the cap. It will more than quadruple the number of capped households. The DWP estimates that as many as 90,000 additional households will be affected, and they could see their housing benefit reduced substantially. Rather than hitting large families in expensive areas, it will hit small families right across the country. For example, Shelter says that the new cap would affect a family with one child living in Guildford, a family with two children in Leeds or Plymouth or a single-parent family with two children sharing a room in almost one in five areas in England.
As the Government’s evaluation shows, relatively few households have been able to move into cheaper accommodation to escape the benefit cap. The lower thresholds will make it even harder for families to move to cheaper accommodation as ever-lower rents must be found. Without the availability of cheaper housing in areas where there are also suitable jobs and childcare, families are going to be put in an impossible position. If they find it hard to escape the benefit cap, their only choice is to become poorer.
Once again the people most affected by this policy are poor families with children. The impact assessment says that 330,000 children will be hit further by the reduced cap, 24,000 for the first time, and the benefits of the rest, who are already in capped households, will be cut further still. They will include families who have been forced to move to cheaper houses or areas only to find that they are now above the new cap and could have to move again, with the children having to move to new schools.
Can the Minister reassure the Committee that it is not the Government’s intention to keep cutting the cap repeatedly? Otherwise, these families, some of whom will have very good reasons for being unable to work, as we will hear in the next couple of debates, could face being shunted around the country, moving repeatedly, damaging their children’s education and destroying family stability in the process. How will that help the Government’s desire to focus on improving educational outcomes for poor children?
Lord Freud
It was a small report on, I think, 14 children, and we aim to look at things on a much safer basis. I ask the noble Baroness to withdraw her amendment.
Baroness Sherlock
My Lords, I thank all noble Lords who have contributed to this extensive debate. There are three more groups to come on the same subject, so we are going to do it very good justice. Given the extent of the debate, I will not try to respond to all the many points that were made. I am grateful to all those who have contributed, particularly in trying to highlight the impact of this lower benefit cap on a number of different groups: on single parents, as the noble Baroness, Lady Manzoor, said; on disabled people, as the noble Baroness, Lady Meacher, said; on carers, as the right reverend Prelate the Bishop of Durham and my noble friend Lady Pitkeathley pointed out; and on children.
I decline to rise to the noble Lord, Lord Blencathra, and engage in political debates about who said what and when, but I confirm that it is the policy of the Labour Front Bench in both this House and another place that we oppose the reduction in the benefit cap to the new levels. I was hoping to respond to the noble Lord, Lord Lansley, but, sadly, he is not in his place. Perhaps when he comes to read this debate he will start to reflect that it is important for us as a House to understand what the Government are trying to do here. They have always offered two arguments for this measure: one is that it is related to work incentives; the second is that it is fair.
On work incentives, the noble Lord may not be aware that significant work incentives are already built into the system. In fact, the CPAG did a report on this very recently showing how much better off families with children already are if they work. The point is that this is comparing individual wages and household income. Someone may earn a certain amount in wages but how much the household needs depends on where they live, how many children there are, whether they have a disability and whether they are carers. As my noble friend Lord Beecham said, this is primarily driven by high housing costs in the private sector. Most people do not get anything like these amounts of money in benefits. Where they do, it is almost always because they have very high rents. That is not their fault; it is the fault of the state, which has failed to get a grip on the housing market, have enough supply and make sure that people can afford to rent in places where there are jobs without driving themselves into this situation. I urge the Government to consider that very carefully.
The point about the comparator really matters. Whether or not the Government are going to set it at 50% or something else, there needs to be a way of understanding at what point the Government would do this. I can create brilliant work incentives tomorrow: I will abolish all benefits. That would be a fantastic work incentive but it would not be reasonable. The point of a social security system is to support people who cannot work—to enable them to meet their needs and feed their children—and then, where appropriate, to support them in work. We have to get an appropriate balance between, on the one hand, the needs of families, and particularly of children and vulnerable people, and the ability of the state to afford it; and, on the other hand, work incentives.
It is not unreasonable for this House to want to understand how the Government reach that judgment. Once you take away any external benchmark, it can simply become an annual whim. That is not appropriate, but it is completely appropriate for this House not to get into the micropolitics but to say, “We want to understand the impact on individual families, and we press the Government to make clear their thinking so that each year we can judge what is a fair amount of money to give to families”, as the noble Lord, Lord Kirkwood, pointed out.
In this country we have a very long tradition of Parliament looking carefully at what families need to survive and building up components of a social security system to address the different sets of needs. The benefit cap overrides all that, so it matters very much how it is constructed and it matters very much that the Government are transparent and accountable in the way that they go about creating it.
I shall not go into the other areas as we have a number of different debates coming up, but on the question of work incentives I point out that 85% of those who are capped at the moment are not in categories required to work, as we will come on to look at in two of the next three groups. Given all that has gone before and given all that we have yet to come, I beg leave to withdraw the amendment.
Lord Blencathra
The noble Baroness makes an interesting point. We addressed the capacity for work test at an earlier stage. There are concerns and it may not be perfect. It is very difficult to assess. We can have 100,000 people with MS and every single one is different, so it is very difficult to come to a firm conclusion. I know that the Government are continually improving it. Labour improved it. The coalition improved it and the current Government are trying to improve that test. I hope that my noble friend will continue with that.
Baroness Sherlock
My Lords, I rise to speak to Amendments 87 to 90 in our name, and to comment briefly on the other amendments in the group. Ours are probing amendments designed to encourage the Minister to talk to the Committee a bit more openly than he has been able to do so far. What behavioural responses are being sought from some of the groups of people affected by the cap?
I thank the noble Earl, Lord Listowel, for talking about kinship carers so powerfully. I shall be listening very carefully to what the Minister says at the end, and I hope to hear him engage rather more substantially with the issue than I feel he did when this came up in earlier stages, particularly in relation to the two-child policy.
Amendment 87 would exclude from the cap anyone claiming carer’s allowance. I am very happy to press pause on that and come back to it on Report. The Minister should be aware that expectations are now running exceedingly high in this House. I am sure that what he has to say when he comes back will be a delight to all of us, and I very much look forward to that.
There are two things from the judgment that he might still take, even if the Government decide to accede to the very small number of people who were there. The first goes to a point made by the right reverend Prelate the Bishop of Durham. At the opening part of the judgment Mr Justice Collins said that,
“to describe a household where care was being provided for at least 35 hours a week as ‘workless’ was somewhat offensive”.
That was a very good point and one we could all do well to remember.
The other point that Mr Justice Collins made, which is of wider relevance, was that what often seemed small capped sums for the DWP could be such a loss to these families as to “tip them into destitution”. One of the cases he gave as an example was of somebody who was losing £11 a week. These may seem small sums to the department but they can make the difference in Dickensian terms between happiness and misery to individual families. I hope that we will all bear that in mind.
Amendment 88 would exempt from the cap those who are claiming universal credit and are not subject to all work-related requirements. Amendment 89 would exempt people in receipt of ESA in the WRAG group, which was just addressed by the noble Lord, Lord Blencathra. Amendment 90 would exempt claimants of income support. In the impact assessment, the Government talk about reducing the levels of the cap for those not making a “behavioural response” by an average of £63 a week. That is a lot of money.
These amendments require the Government to explain what behavioural responses are being sought. The Minister says that this is hugely successful in getting people into work. In fact, as we have already heard from the IFS, the majority of people affected are not responding by either moving house or moving into work because 85% of them are not required to work as a condition of receiving benefits. Therefore, the cap will try to push into work certain people who would otherwise not be required to do so because they are on ESA, or they are the parents of very young children, or they are carers—a point made very strongly by my noble friend Lady Hollis on an earlier amendment.
The only ways to escape the cap are to move into work of at least 16 hours a week—to open a working tax credit claim, or be on the minimum wage while on UC—or move home. In the case of people on ESA—the point made by the noble Lord, Lord Blencathra, notwithstanding—does the Minister accept that some people in the ESA WRAG group will either not be capable of working at the moment, or will not be able to sustain 16 hours’ work a week, or will not be able to work consistently because of the nature or their illness or disability? If that is the case, can he explain to the Committee what behavioural responses he wants from them and, if they are not capable of making any of the available responses—working or moving house—does he think it fair that they should simply have their income cut because they are incapable of doing the thing he wants them to do?
In the case of parents who are capped, the normal work requirements do not apply, so a single parent or main carer could have two children, including a very young baby, and be expected to work if the cap means that they could not otherwise afford to pay their rent. Whenever we talk about single parents or parents working, the Minister tells the House that the Government are putting lots of extra money into childcare and that parents of three and four year-olds will have extra childcare, as will disadvantaged parents of two year-olds, but here we are talking about children who could be one or two years old. There is no free entitlement to childcare when a child is under two. Even the provision of childcare for disadvantaged two year-olds is for only 15 hours in term time, which would not match the requirements of someone moving into a job for 16 hours a week throughout the year to escape the benefit cap.
Research undertaken by the Family and Childcare Trust found significant gaps in provision for young children in 136 local authorities surveyed in England and Wales. The evidence bears this out. It shows that single parents with younger children are already less likely to move off the cap than other groups, presumably because they are struggling to find suitable flexible jobs and suitable childcare while combining them with minding very young children.
The impact assessment also talks about the aim being to improve work incentives, but I wonder whether the Minister has read the report from the Child Poverty Action Group, which showed just how strong work incentives were, even for families who might be getting significant amounts of benefit. It gives the example of a very rare occurrence of a lone parent with four children, who would be better off by £105 a week working just 16 hours a week on the minimum wage. Therefore, work incentives already exist so, if parents are not working, something else may be going on.
When the Minister responds, I hope that he will address these probing amendments by talking about individual cases. He has talked a lot about how he wants to move to a much more personalised situation so that advisers can engage with individuals and understand that their circumstances differ, yet this measure feels like a very blunt tool, indeed. Therefore, could he tell us a little more about what it might mean in practice?
The Lord Bishop of Southwark
My Lords, I rise to express my support for the intention behind the amendment in the name of the noble Earl, Lord Listowel, which makes sound social and economic sense. If a child can be cared for within the family network, and that is not to be parents or step-parents, that is in most cases preferable for the emotional, physical and spiritual well-being of the child. Churches have watched and participated for centuries in the patterns of such relationships and know that while they can hide dangers, they provide in the main the best setting for the formation of life. Better that than the anxiety, grief and hardship imposed by benefit rules not designed for such scenarios, and that a proportion of such children be an economic charge on local authorities and reap the emotional deficit that will all too often occur.
We have heard that there are an estimated 200,000 children raised by kinship carers across the UK. Some 50% are grandparents and a little under a quarter are siblings bringing up younger brothers and sisters. If 95% of children living in kinship care arrangements are not looked after by the local authority, can we imagine what the cost would be if there were any sort of shift in that figure—yet we expect the carer to bear that cost? It is a cost often undertaken at short notice and in an emergency. Kinship carers face significant additional costs in terms of both equipment needed and maintenance costs. Their family size increases and can even double overnight. Unlike adopters, they are not entitled to a period of paid leave for the children to settle in. The largest survey of kinship carers in the UK, conducted by the Kinship Care Alliance, found that 49% of respondents had to give up work permanently as a result of taking on the kin children, a further 18% had to give up work temporarily, and 23% had to reduce their hours temporarily or permanently. In many cases, this plunged the household into poverty and debt. One grandmother carer responding to the survey said:
“We are struggling to buy food and pay our bills. We have to get food vouchers every three months”.
The Kinship Care Alliance survey found that 30% of kinship carers’ households were currently receiving housing benefit. The figure rose to 36% among larger kinship care households with three or more children—kinship care households such as that headed by Rachel, a grandmother in her 50s who lives near my diocese in south London. She took on the care of her three young grandchildren when her daughter died in a car accident last year. The children’s father is in prison. She has had to give up work to raise the oldest grandson, who is six years old and her two youngest granddaughters, who are three and one years old. She is also grieving the loss of her daughter, just as the children are grieving the loss of their mother.
I would be grateful to the Minister if he could tell me whether the Department for Work and Pensions has undertaken an assessment of the likely impact of this measure on kinship care households and, if so, whether he could provide the detailed figures. Furthermore, if the Government do not favour this amendment, will they bring forward their own amendment to address the points I have raised? Is the Minister not concerned—as I am—that the numbers in care may rise if action is not taken?
Many of the children arrive to live with kinship carers following a crisis and are deeply traumatised. Many have severe needs and some have suffered prior abuse. The survey to which I have referred found that kinship carers reported that a staggering 43% of the children had emotional and behavioural problems. Forcing carers into work cannot always be a just and appropriate response.
The right reverend Prelate the Bishop of Portsmouth, who spoke earlier in these debates, dearly wished that he could have spoken today, and I pay tribute to his endeavours in this regard. I welcome the focus of the Government’s own family test on stable and strong family relationships and the explicit reference to kinship carers in the test. This amendment is entirely consistent with the application of the family test and I hope that the Minister will accept it.
Baroness Sherlock
Baroness Sherlock
My Lords, I shall also speak to Amendments 77, 79, 82, 84 and 85, which are in my name and that of my noble friend Lord McKenzie of Luton. These amendments would exclude a series of benefits from the cap which relate to families with children, and I want to say a brief word about each of them. Once again, we have tabled these as probing amendments and I therefore encourage the Minister not simply to say yes or even no. If he said yes, I would obviously fall over in shock. I am trying to use these amendments as a vehicle to get him to explain more carefully to the House what he expects people affected by the cap to do to avoid it. That is all I am asking for here, so I encourage him to respond in that vein.
Amendment 76 would exclude child benefit from the cap and Amendment 77 would exclude child tax credit. Just to be clear, the Minister mentioned in the last group that he feels that all income replacement benefits should be included. Those are specifically not income replacement benefits but extra-cost benefits. Child benefit has traditionally been a universal benefit—it is still available to all but the highest-tax bracket households—and it is designed to be the classic extra-cost benefit. It is a horizontal transfer from taxpayers as a whole to households with children, out of a recognition that children are a public as well as a private good and therefore we should all share in the costs of raising them. The parents pay the lion’s share but we all make a contribution because it is in all our interests to raise children who are happy and healthy, and who will be the next generation paying for the rest of us. Why are they therefore excluded?
Amendment 79 would exclude guardian’s allowance from the cap. You can claim guardian’s allowance only if you are caring for somebody else’s children because their parents have died, or because one has died and the other cannot look after them because, for example, they have gone missing or are in prison. What behavioural incentives are the Government seeking by including guardian’s allowance in the cap?
Amendment 82 would exclude maternity allowance from the cap. Maternity allowance is available only to those who are in work but cannot get statutory maternity pay. It enables the woman to take paid maternity leave. The Minister may mention the grace period but that applies only to people who have been in work for the last year at the point when they make an application for benefit, and that may not apply to everybody in this circumstance. Suppose that a woman finds that she hits the cap because her household benefits rise as a result of her maternity allowance. What is she to do? Let us say that she is single or that her partner is unable to work. What behavioural response does the Minister want? The two things that have traditionally been suggested are to work or to move house. Is she to work when she has a job but is going on maternity leave? Is she to move house when she is about to give birth? Neither of these seems an obvious response, although I may have missed something, and I very much hope that I have. I raised this at Second Reading or some other point during discussions on the Welfare Reform Bill in 2012, because I remember at the time I could not really believe that the Government genuinely meant to include a maternity benefit in the cap, when the way you got out of it was by working. However, I very much hope I have missed something and look forward to the Minister explaining that one.
Finally, Amendments 84 and 85 would exclude from the cap widowed mother’s allowance and widowed parent’s allowance, which are paid only to widows below state pension age who have dependent children. Those are contributory benefits, eligibility for which depends on the contribution record of the late spouse. I would be interested to hear the Minister’s reasons for including those benefits in the cap.
The impact of this on children will be quite significant. To date, more than twice as many children have been hit by the cap as adults. Children are disproportionately affected by the benefit cap, and 63% of households capped to date contain a child under five. Reducing the cap means that some families simply will not have enough income to manage. Even if they manage some weeks, there will come a time when their budgeting gets thrown off course; for example, when a winter heating bill comes in, both kids have a growth spurt, a child moves to secondary school and needs a new uniform, or the fridge breaks down. With access to hardship payments much reduced, and unable to repay loans or catalogue payments, parents will build up debts and miss rent payments simply to feed the kids and buy essential items. If the Government are going to cut benefits to families with children unless their parents take certain specified actions, the very least they can do is explain to us what those actions are and what they expect them to do about it.
Baroness Lister of Burtersett
My Lords, I rise to speak in support of Amendments 76 and 77, to which I have added my name. I apologise that we will be going over some of the issues raised in the first group of amendments, particularly by my noble friend Lady Hollis, but they are crucial because they go to the nub of some of the disputes among us as to what is fair and what is not.
The amendments follow on from my Amendment 93, discussed earlier, which was designed to safeguard and promote the welfare of children. In speaking to that amendment, I referred to Lord Carnwath’s judgment in the recent Supreme Court case on the cap, in which he made the point that the inclusion of child benefit and child tax credits in the cap raises,
“questions why the viability of a scheme, whose avowed purpose is directed at the parents not their children, is so disproportionately dependent on child related benefits”.
He also said:
“The cap has the effect that for the first time some children will lose these benefits, for reasons which have nothing to do with their own needs, but are related solely to the circumstances of their parents”.
This takes us to one of the “policy objectives” or “intended effects” listed in the impact assessment, namely to:
“Promote even greater fairness between those on out of work benefits and tax payers in employment (who largely support the current benefit cap), whist providing support to the most vulnerable”.
The “most vulnerable” are not defined, but in the impact assessment on the benefits freeze, the term is qualified with the phrase,
“who are least able to increase their incomes through work”.
Surely children fall into that category. Yet the justification for the way the cap is constructed and for the reduction in its level ignores this and, as Lord Carnwath observed, takes no account of children’s needs, relating instead solely to the circumstances of their parents. Moreover, it is worth repeating the observation of the noble and learned Baroness, Lady Hale:
“The children affected suffer from a situation which is none of their making and which they themselves can do nothing about”.
My noble friend Lady Hollis made the point that it is not a level playing field here—a horrible sporting metaphor—and that we are not comparing like with like when we compare in-work earnings with out-of-work incomes, although I will not go into more detail on that. I tried to find out by way of a Written Question how much the so-called hard-working families we hear so much about were likely to be receiving in benefits. This time the response I received rehashed the latest government mantra of their commitment to,
“a higher wage, lower tax, lower welfare economy”,
and referred me to the HM Revenue & Customs website. I enlisted the help of the Library to see whether it could elicit the answer from the website, but—surprise, surprise—it could not. In effect, a government Minister—in this case, the noble Lord, Lord O’Neill of Gatley—was encouraging me to waste my time by sending me to a website that would not supply me with the answer to the questions I was posing. Given that the Government were able to supply similar figures in answer to a Written Question during the passage of the Welfare Reform Bill in 2012, it is surely possible, and beneath the disproportionate cost threshold, to do so again now. I fear that, increasingly, government departments simply cannot be bothered to answer our completely legitimate questions, thereby ignoring their responsibility for parliamentary accountability.
Similarly, I tabled a Question to find out what the impact would be in terms of the total number of households capped, the number of children affected and the cost to the public purse, if children benefit and child tax credit were excluded from the cap. Once more, I was referred by the Minister to the impact assessment, as if that contained the answer. Yet again, such information was made available during the passage of the Bill in 2012, showing that nearly half the savings from the cap were being made as a result of the inclusion of children’s benefits: in other words, nearly half the savings were being made on the basis of a blatant piece of unfairness that drives a coach and horses through the Government’s claim to be creating that beloved level playing field between families in and out of paid work, giving rise to Lord Carnwath’s query about why the policy’s viability is so disproportionately dependent on child-related benefits when its avowed purpose is directed at the parents not the children. It is clear from the evaluation of the existing cap that one consequence is likely to be even greater arrears and debt, thereby aggravating what the Government themselves consider to be a root cause of child poverty.
On our first day, there was broad agreement among noble Lords who spoke that the two-child policy does not meet the Government’s own family test. Although it might not be quite so blatant here, I believe the same applies to the inclusion of children’s benefits in the children’s cap. Although the impact assessment for the cap is much more thorough than that for the two-child policy, I could not see any reference to the family test having been applied. Could the Minister confirm that it was applied and could he undertake to publish the documentation?
When we last discussed this issue, during the passage of what became the 2012 Act, as we have already heard, there was strong support in your Lordships’ House, under the leadership of the right reverend Prelate the Bishop of Ripon and Leeds, for excluding children’s benefits from the cap. I very much hope that that support will be there again now, because with a reduction in the level of the cap to an arbitrary two-tiered level below median earnings, the case for exclusion is stronger than ever.
Lord Freud
I will try one last time. If noble Lords are dissatisfied, that is the reality.
We currently have a benefit cap in operation at a single rate of £26,000, and we are taking that down. That has mainly affected London. We are now spreading it out to affect just short of 100,000 people—90,000-odd on the impact assessment, although it is interesting that, in 2012, a smaller number were involved in practice than in our original impact assessment, so let us just see.
Our experience of running that benefit cap and the reaction to it were such that the Government decided that we could safely reduce the level and put it into two tiers, so that its impact is spread through the country more evenly. We have taken it down by 12.5%. It is the experience of running it live that has led the Government to think that we could move it to these levels and get the incentive effects that we are looking for to operate. I do not have any more information to provide for the noble Baroness—much though I know that she would like more. I apologise to the extent that she is disappointed.
Baroness Sherlock
My Lords, I thank the Minister for trying, if not succeeding, to answer the questions. He must appreciate that we had some very good discussions during the passage of the Welfare Reform Act, which brought in the cap in the first place. One reason that they were good was because a lot of evidence was around. He was asked some searching questions from Peers from all Benches, he engaged with the argument, we had some good debates and I would like to think that the system that we now have in universal credit is better than it would have been had it not been for them. In fact, I think he was kind enough to say so at the time.
One reason why I have always enjoyed participating in debates in this House in this area is precisely because we have been able not just to trade in political slogans but get into detail and understand how we might improve current policy—which is the whole purpose of this Chamber as a revising Chamber.
Lord Freud
I say only that I remember with some fondness—not entire fondness, because 17 Sittings in Committee is too much for anyone—that we had some very valuable dialogues then. One of the most important was about universal credit and led directly to the creation of universal support, which is becoming a valuable tool that we are developing. I remember equally vividly that the benefit cap area was one where at least equivalent frustration was expressed by noble Lords about what I was saying. I remember that very distinctly. There were some very punchy discussions. I will say no more than that, but it was not an area where we had the most sweetness and light on that Bill.
Baroness Sherlock
I thank the Minister for reminding me of that joyous period; I think of it often.
The Minister mentioned that a lone parent could avoid the cap by going into work for 16 hours on working tax credit. He did not pick up the point that I made on the previous amendment, which was that, on universal credit, he always said that lone parents would be expected to work only if they could find a suitable job where they could get childcare. He has not responded to the fact that a lone parent with a baby would have to go to work. The offer of childcare for three and four year-olds does not apply to babies. The offer of childcare for disadvantaged two year-olds does not apply all year round. There is a real issue. Someone might find that the only response was to take jobs which either might not be available or for which they could not find suitable childcare.
I am sorry to say that I did not find the Minister’s response on maternity allowance persuasive at all. I think this is one of these oddities, and I think the Government just got it wrong and should have just put their hands up. These are generally probing amendments, but I think that that is just genuinely bizarre. The impact assessment says that, if people do the right thing and move into work, they will not be capped. How is it possible for a woman who is about to give birth to do the right thing and move into work? That just does not work. However, I fully accept that I am not getting any more than I have.
Finally, during Committee, my noble friend Lady Lister has given two or three examples of Written Questions that she has asked, the Answers to which have been, frankly, unsatisfactory. They have mostly referred her to another document or website in which the answer was not found—as she has established with the help of the Library. That is a very bad trend in which legitimate questions are being asked for information which would help to inform deliberations in Committee on a Bill, but the department, via its Minister, is not providing them. We will keep a close watch on this and, if it comes up again, we will raise it again on the Floor of this House.
In the mean time, I beg leave to withdraw the amendment.
Baroness Sherlock
“(a) the rate of inflation, and(b) the national economic situation.”
Baroness Sherlock
My Lords, a change of subject. I am pleased to say that these amendments are not about the benefit cap. Amendments 95 and 102 are in my name and that of my noble friend Lord McKenzie of Luton, and Amendment 100 is in our names and that of my noble friend Lady Lister.
Clauses 9 and 10 provide for the freezing of certain working-age benefits for a period of four years until 2019-20. This is estimated to save the Government £3.5 billion in 2019-20 when compared to an uprating by CPI. The benefits and tax credits included in the freeze are the main working-age components of income support, jobseeker’s allowance, ESA, housing benefit and ESA WRAG, together with the key elements of working tax credit and the individual element of child tax credit, universal credit and child benefit. It does not extend to disability premiums, allowances for caring responsibilities or pension benefits.
Amendment 95 would displace the automatic freezing of those items and require a review to take into account inflation and the national economic situation. Amendment 100 would have the same effect for child benefit, and Amendment 102 for the otherwise frozen elements of universal credit.
Clearly, even if they were accepted, such amendments would not preclude the various rates remaining unchanged, but they would require some consideration of their real value and the capacity for the economy to share more fully the benefits of growth. It would give the Government the opportunity to think again in the light of changing—the Government would doubtless argue, improving—economic circumstances.
A bit of a pattern has been developing here. Previously, the retail prices index was used for uprating. Then Ministers robustly argued that CPI was the right measure. Then, in 2013, they decided to limit increases to 1% as a temporary measure. Now, whatever happens to inflation, they will not uprate benefits and tax credits for the rest of this Parliament. First RPI, then CPI, then 1% and now 0%.
Our major concern with the way that this freeze is being done is that it both cuts the link between prices and earnings and widens the gap between the income of the poorest and the living standards of the mainstream of society. It uncouples eligibility for support from need, a feature also of changes to the benefit cap and the local housing allowance.
We have been living in fairly benign inflationary times, with CPI expected to rise from 0% in quarter 3 of 2015 to near the Bank of England target of 2% by the second half of 2017—although the components of CPI do not necessarily reflect the basket of costs which most impact poorer households. We know that GDP growth is projected by the OBR to be between 2.3% and 2.4% through to 2020.
In considering these matters, we must have some regard to the financial resilience of households and their ability to cope with what will be a sustained real-terms reduction in their resources between now and the end of the Parliament. If we look at the tax and benefit changes under the coalition Government, we see that austerity was used to introduce net tax rises of £13.6 billion and net benefit cuts of £16.6 billion, including pension increases of £5 billion. The IFS analysis shows that, in terms of changes to income, the poorest two deciles did the worst over that period, with working-age households with children particularly hit. The End Child Poverty Alliance reminds us that some 4.1 million families and 7.7 million children have already been affected by below-inflation rises over the last three years. Ministers will doubtless point to the Government’s manifesto commitment to freeze benefits, but I hope that the Minister will acknowledge that that commitment covered only a two-year period, not the four-year period that the Bill proposes.
I am really interested in process. We have a long tradition according to which Ministers are required to assess what people need to live on before coming to Parliament annually to propose what should happen to the levels of benefits and tax credits. Sometimes in this House there is just the noble Lord, Lord Kirkwood, and me in the Moses Room, along with the Minister; but the point is that we got to test the Government’s case before decisions were taken affecting the lives of millions of our citizens. I therefore have two questions to ask the Minister. First, what assessment are the Government making to ensure that there is some link between benefits and tax credits and what a family needs to live on? Secondly, will the Minister assure the Committee and the country that once this Parliament is over, it is the intention of the Government to return to linking the level of benefits and tax credits with inflation and to the practice of Ministers being accountable annually to Parliament for those decisions? I beg to move.
Baroness Lister of Burtersett
My Lords, I will speak in support of all of the amendments in this grouping. The only reason that my name is not on the first one is that I did not spot it in the Marshalled List. The four-year freeze in most working-age benefits represents the largest of the many cuts in the Bill. Conveniently for the Government, it is an invisible cut; gradually people will find that the benefit that they rely on is able to buy less and less, but they will probably blame the cost of living, not realising that it is the result of deliberate government policy. As the Joseph Rowntree Foundation study commented a few years ago, upgrading policies have big effects over time:
“They are among the most significant decisions taken by Chancellors … Their gradual effects seem imperceptible on a year-to-year basis, yet they carry immense implications for the future”.
So let us not underestimate the significance of Clauses 9 and 10.
Benefits have already been cut in real terms due both to below-inflation increases and to the switch to the use of the CPI rather than the RPI. Moreover, as the latest JRF Monitoring Poverty and Social Exclusion report points out, essentials have risen faster than the average price index in recent years. Since low-income families spend proportionately more on essentials,
“low-income families have in effect experienced a higher rate of inflation than other families”,
meaning that their benefits have been able to buy even less than before.
This latest cut in real value has been described by the IFS as,
“highly regressive, with the bottom three deciles losing most”,
which is hardly surprising. If any noble Lord suggests that benefits are adequate, and that therefore those reliant on them can afford to take such a cut, I suggest that they try living on benefits—not for a week as a benefit tourist, but for months without savings or the kind of stocks that we all take for granted.
The briefing note that we were given spells out two main objects as the policy’s rationale, the first being to deliver savings to contribute to deficit reduction,
“while maintaining support for the most vulnerable”.
To be more accurate, it should say “some of the most vulnerable” since, for instance, children’s and some disability-related benefits will not be protected, as the EHRC points out. Nor does it protect protected groups, with women and black and minority-ethnic groups disproportionately affected. Whatever one thinks of the primacy given to deficit reduction—and eminent commentators such as Martin Wolf of the Financial Times question it and the extent to which it is to be achieved by spending cuts—it is a political choice to make those with the narrowest shoulders bear so much of the burden, particularly when others have enjoyed tax cuts. These, as it happens, were, in effect, paid for by benefit cuts under the coalition Government, according to CASE at the LSE.
As my noble friend Lady Hollis has pointed out in previous discussions, it is a myth that social security spending is out of control. As the OBR analysis shows, over the past 30 years, the real increase in spending has been broadly in line with growth in the economy, so there has been no significant change in the proportion of national income devoted to social security spending. The largest contribution to the increase in spending since 2008 has been the rise in the real value of pensions.
The other main objective given is to,
“help to reverse the trend where earnings growth has been slower than the growth in benefit rates”.
However, this is a very recent trend. Professor Jonathan Bradshaw has used the DWP abstract of statistics to show that the adult rate of unemployment benefit was worth 21% of average earnings in 1972, the earliest date for which there are consistent data. By 2008, the JSA rate had fallen to 10.5%, half of what it was in 1972. It is true that the short-term trend, to which the Government refer, means that it has increased slightly now to 11.7%, but now that wages are expected to start rising again it will no doubt fall back again, even without this freeze.
The other justification given in the impact assessment is, once again, that it will increase work incentives. It is worth pointing out that some of the benefits affected are paid to those in work in any case, a point to which I will return in the next grouping. As the famous OECD quote used by the Government to justify ESA for new WRAG claimants made clear, work incentives can be improved in a distributionally fairer way by improving in-work benefits rather than adopting this Poor Law mentality of cutting out-of-work benefits. Indeed, a cross-national study reported in the 2009 British Social Attitudes survey concluded that,
“employment commitment is stronger in countries with higher levels of welfare state generosity”.
Therefore, I really do not believe that there is any justification for freezing benefits, not just for two years, as stated in the Conservative manifesto—as my noble friend pointed out—but, in effect, for the whole of this Parliament. I accept that, at present, it looks as if inflation will remain low, but who knows what shocks might hit the world economy and with what effects? It therefore behoves a responsible Government to keep benefit levels under review and to accept these amendments.
Baroness Evans of Bowes Park
As I said, by being upfront about the freeze, we are trying to ensure that people in receipt of these benefits understand that that will be the situation over the next four years. We are taking numerous other measures, including the national living wage and the childcare changes, to try to help these families in other ways. That is what we are doing with this freeze, and I urge the noble Baroness to withdraw her amendment.
Baroness Sherlock
My Lords, I thank all noble Lords who have spoken in this short debate. I thank my noble friend Lady Lister and the noble Lord, Lord Kirkwood, for highlighting the difficulties that the Government must have in understanding the implications of their decisions, since looking forward four years they have no way of knowing what economic conditions will prevail and what will happen to inflation.
I particularly want to thank the right reverend Prelate the Bishop of Durham for making a very obvious point: that when this House voted on tax credits, the Chancellor was in position to make a difference. The reason why he was able to overturn that decision was that he found £27 billion down the back of the sofa. It is not impossible that there might be some more money down the sofa, if he shakes it hard enough. It is not impossible that, if all the boasts the Government make about the marvellous things happening to the economy come to pass, a couple of years down the line he may find the economic situation is looking good. If the economy is growing again, he may want to reconsider his decision not to share the proceeds of that growth with the poorest in our country. Why on earth would he want to tie his hands?
I would put money on it that if I asked the poorest people affected by this whether they would rather have the certainty of benefits falling in real terms year on year, or keep open the possibility that they will rise if the economy improves, most would be willing to take a chance—unless the Government are suggesting they would in fact cut them. All this amendment does is to allow the Government, if they wish to do so, to have exactly the same savings in four years’ time, but it would make them do two things. Every year, they would have to come back and look the country in the face, via this House, look at what people have to live on and explain their decision, and they would have to account for it. All they would have to do is to put it to both Houses of Parliament every year. What are they afraid of? People out there have suffered enough. The very least the Government can do is stand up for themselves. Given that we are in Committee, I beg leave to withdraw the amendment.