(6 years, 5 months ago)
Lords ChamberMy Lords, it normally gives me great pleasure to speak in your Lordships’ house, but this evening I speak with some sorrow. I am hoping that the proposals made by the Government—involving, I am sure, the Treasury, the Department for Education and the Department for Work and Pensions—are perhaps the result of the complexity of those interlocking interests and have inadvertently left what surely cannot be intended. The consequences of this policy run counter to everything that the Government have said about the principle of universal credit, which I and many others have supported. If the consequences are unintended then I shall be delighted and relieved to hear the Minister say so.
I have looked at these regulations and concluded that they drive a coach and horses at some speed through the defining principle of universal credit—a principle I wholeheartedly endorse—that work should pay. They create an arbitrary cliff edge at a low-income threshold, off which many risk falling. For working families just below the current threshold, this proposal would very clearly not make extra work pay. They would be better off not seeking more paid work and leaving their children on free school meals, unless their family income increased by some considerable margin. Those just above the threshold will be worse off under the regulations, facing school meal charges. They would be better off working less. That is at best an anomaly, but I am tempted to describe it as an absurdity.
I do not, however, see this as pointing to a flaw or a contradiction in policy design. Rather, it points to the real, pressing and increasingly difficult circumstances that, over the years, families will face. More often than not, this will affect people who are already in work who earn very little—people whose weekly budgets already have little or no slack.
Some Members of your Lordships’ House may recall that recently I chaired a briefing for Members of both Houses. A number of your Lordships may remember Clare, who spoke to us. Her oldest child currently receives free school meals. She and her husband do not want to live on benefits, credits or allowances; they want to get on and get up. Clare’s husband had been made redundant, and after 18 months volunteering in a local school he now works as a teaching assistant and earns £8,000. Clare had worked for 15 years as an NHS dental nurse, but her clinic closed. I quote Clare with her permission. She said:
“We both never, ever thought we would be in this situation. We feel terribly ashamed to have to rely on help”.
Clare is retraining as a solicitor. When she has done so, her husband will complete his own retraining as a teacher; both will incur significant debts. Hers will be £56,000. Clare told me that they have many working years ahead of them and look forward to a future in which taxes are spent helping the vulnerable in society. She feels blessed to live in a society that has a safety net in place for them and others facing short-term difficulties.
These regulations will not help Clare and those like her overcome these short-term challenges. They will add to them and hinder her from creating a long-term future for herself and her family, because Clare has no slack. She told us her family of four,
“survives on £10 a day for our food and petrol … with no luxuries”.
Clare does not understand how the figure of £7,400 has been arrived at. Nor does she understand how introducing an earnings threshold as low as that could possibly benefit people in her situation. I do not understand either. She knows her eight-year-old daughter will, for now, continue to receive free school meals, but what of her son, who starts school in September and other children of their ages? As she observes, initially it seems nobody will lose out, but in the long term more and more people—and more specifically, more and more children—will.
We are potentially creating anxiety, even despair, when we should offer hope and support. We are creating a cliff edge so that work does not pay. The job of this House is often to ask the Government to think again about what may be the unintended consequences of policy. The outcomes of this one are severe. I ask the Government to think again this evening, and I do so from the bottom of my heart.
My Lords, in his very moving opening speech, my noble friend Lord Bassam quoted lain Duncan Smith when he was Secretary of State, saying that universal credit would always make work pay and people would be better off for every hour they work. I want to focus specifically on the question of work incentives. I reassure the noble Lord, Lord Patten, that I trade in facts, which I offer to the House for its consideration.
Iain Duncan Smith’s quote was not a throwaway comment. It was in the foreword to the White Paper which explained why the Government were planning to abolish all the main means-tested working-age benefits and replace them with universal credit. That process is now ongoing. It has had its challenges, as we all know. There have been problems with the system and computers, design and implementation challenges and severe delays. It has been subject to repeated budget cuts with the result that it has gone from being what was originally designed as a benefit to claimants to being a net saving to the Treasury. The whole point of this enormous exercise, which will eventually include some 7 million people, was that it would always “make work pay”. Even small amounts of work and every extra hour would pay. That quote was the aim of the system in a nutshell.
Yet this SI reintroduces the mother of all cliff edges into universal credit. At the moment, if parents work, there comes a point when they lose free school meals, but at that point they gain access to working tax credit, which is worth more. Under this system it would mean if a parent were offered a pay rise—like the mother of the noble Lord, Lord Bassam—or the chance of an extra hour a week working which would take their earnings over a cash limit of £7,400 a year, they would either have to turn that down or take it knowing their children would all lose free school meals.
The excellent briefing from the Children’s Society and the CPAG modelled the impact on a single parent in 2022 at the then-expected minimum wage raising two children in a rented house. She wants to raise her hours from 12 to 16 a week, exactly the kind of thing universal credit is meant to help. Her earnings would go up by £1,893 a year but she would end up £174 worse off by the time she had lost universal credit and free school meals. Other families would actually be better off by cutting their hours or taking a pay cut. This undoes all the progress made by tax credits and all the aims of universal credit of getting away from precisely those problems in the old-fashioned benefit system. Does the Minister acknowledge that there is a problem here?
(8 years, 8 months ago)
Lords ChamberMy Lords, my concerns about this measure, along with those of other faith groups and organisations, are set out in the briefing note that my colleague the right reverend Prelate the Bishop of Durham circulated to all Members of the House prior to the Second Reading debate. In that note we expressed our belief that children are a blessing and that anything that sends an implicit or explicit message that a child is unwanted or burdensome should be strongly resisted.
The stated rationale for the policy outlined in this measure is to ensure that people on benefits and tax credits face the same financial choices around the number of children they can afford as do those supporting themselves through work. I understand, and support, the Government’s desire to encourage responsibility through the welfare system. However, it is important that personal responsibility is not defined too narrowly or in purely financial terms, and that it encompasses our responsibilities to our families and neighbours, and to the communities to which we belong.
I turn to the amendments in this group. Kinship carers, for example grandparents, older siblings and other relatives and friends who step in to care for children, many of whom would otherwise be in the care system, are affected by these proposals. We have a responsibility towards these people and the Bill does not adequately reflect the share we all properly have in caring for and supporting them. These children are unable to live safely at home because of domestic abuse, their parents’ mental health problems, alcohol or drug misuse or the death of a parent.
In purely financial terms, becoming a kinship carer is an unwise decision. Kinship carers face significant additional costs and often a loss of income as the majority are forced to give up work temporarily or permanently to look after these children. Yet many people take on this responsibility sacrificially out of a commitment to love and care for their extended family, often at great personal expense to their own emotional and physical health. Thanks to their dedication, children in kinship care do significantly better than children in unrelated care, despite having suffered similar adverse experiences. In personal financial terms, it is an unwise decision: in social and community terms, it is a generous and good decision.
For example, Jane is a paternal grandmother and kinship carer. She and her husband are raising four grandchildren who are all under six years old. The children cannot live with their parents due to severe physical abuse. Although Jane and her husband get some special guardianship allowance support from the local authority, they are reliant on tax credits.
Jane tried to continue at first working full time when she and her husband took on the children, but it was too much. The children were suffering with their health and their well-being. They were upset, too. And she did not get any help with child care. Eventually her husband gave up his business to care for them so that Jane could work three days a week. If their tax credits are reduced, she would obviously have to go back to work full time in order for them to manage financially, at the expense of the needs of those very vulnerable children.
It has been estimated by the Family Rights Group that there are around 200,000 children being raised by kinship carers across the nation. More than one in five kinship-care families contains three or more children, and nearly two-thirds of these receive tax credits—around 18,000 families in total. The changes proposed in the Bill with the consequent reduced financial support for these families could well stop potential kinship carers from being able to take on the care of a sibling group of children, or lead to the splitting of a group of three or more siblings, or discourage carers from taking on an additional child if they already have dependent children of their own.
This is clearly not in the children’s best interests, nor in society’s—and nor is it in the Chancellor’s best interests. Exempting this group from Clauses 11 and 12, as I and others are proposing, would reduce the savings to the Exchequer by an estimated £30 million in 2020-21. That is down from £1,365 million in savings to £1,335 million. It would require only 200 kinship carers to be financially prohibited from taking on a sibling group of three or more for the extra care and court costs to outweigh any public savings. In care, the cost per year of a child is about £40,000: the one-off court costs are about £25,000.
The Government’s long-standing commitment to ensuring that families are stable is welcome. Will the Minister be able to agree with us that creating the best possible environment for children to flourish would be best enabled by reviewing this proposal? The moral case for supporting this group of amendments is sufficient, in my view, but the economic case is strong, too.
My Lords, I rise to speak to Amendments 16 and 17 in my name and that of my noble friend Lord McKenzie of Luton and to support the other amendments in this group. I fully support the case on kinship care set out so carefully by the right reverend Prelate the Bishop of Portsmouth. There are some common arguments that apply to adoption and kinship care, the two subjects in this group, and reasons that the Government should think very carefully before deciding not to provide tax credits and universal credit to third and subsequent children in those settings.
First and most obviously, we should not be putting financial barriers in the way of families willing to take on what are often very vulnerable children. As the right reverend Prelate has pointed out, if such families are deterred, the state is likely to find that the costs go up, albeit not to the Department of Work and Pensions, but I hope the Minister would not be so parochial as to allow that in any way to influence him.
The average child tax credit claimed for a family of three or more children is £3,670, but, as the right reverend Prelate has pointed out, the NAO found in 2014 that it cost £40,000 a year to foster a child, aside from the one-off costs. How can that make sense? In many cases, had those children been able to stay with their birth families, tax credits would have been payable for them anyway, so it is not as though the cost is increasing. As we have heard, there is clear evidence that children in kinship care settings do better than those in unrelated care, despite having similar adverse circumstances.
My Lords, I highlight two particularly vulnerable groups in my Amendments 5, 6, 13 and 14, groups that I believe should be exempted from this measure. These are bereaved parents and victims of domestic abuse. In focusing so heavily on promoting personal responsibility, there is always a danger with welfare reforms that we neglect our collective responsibility to look after those who fall on difficult times, people we will probably never meet but whom we support through our taxes in their time of need so that we, too, will be supported when we need help.
It is not as simple as there being two groups in society, those who contribute and those who receive. I know that one of the most tragic events a child can experience is the death of a parent. When my first wife died, I was the sole parent of my children and a recipient of some benefits. Quite apart from the emotional upheaval, the impact on a family’s situation can be drastic, much more drastic than the situation I faced. It is common for families to require additional support in these circumstances, either because the main earner has died or because the surviving parent must give up work or reduce hours to care for the children. According to the Childhood Bereavement Network over 23,000 parents died last year, leaving around 40,000 newly bereaved children. One in three of these children live in larger families with two or more siblings and will potentially be affected by the two-child limit, if it goes ahead in its current form. It feels particularly unfair that the families who have experienced such a traumatic event should have to cope with additional financial pressures on top of it.
Likewise, parents who are the victims of domestic abuse should not be put in a position where they have to choose between staying with the abusive partner and leaving them for a life in poverty for themselves and their children. I understand that, at any given time, there are around 250 children staying in refuges for women fleeing abusive relationships and that one-third of those are from larger families. Many women remain in abusive relationships for long periods, in part due to the financial considerations. Unless this group is exempted from Clauses 11 and 12, this could prolong their abuse and put them and their children at risk, making it even harder to leave their partner.
As with kinship carers, who we considered in the last group, the cost of exempting bereaved parents and victims of domestic abuse would be relatively small by comparison with the total projected savings, and would help to address the most obvious cases of injustice. I therefore bring before the Committee these amendments in my name, seeking to reflect the circumstances of these children and their parents.
My Lords, I shall speak to Amendments 15, 18 and 20, which are in my name and that of my noble friend Lord McKenzie of Luton. I shall also speak to the other amendments in this group.
Amendment 15 seeks explicitly to exempt from this measure children entering a household as a result of a multiple birth. In the light of the Minister’s commitment on the record that such children will be exempted, I will not dwell on this for very long but ask him to clarify a couple of things. First, he mentioned that this will be done by regulation. Will the regulations be of the affirmative or negative kind, given the question raised by the Delegated Powers Committee on that point? Secondly, can he confirm that the Government intend that the exemption will apply to any means-tested benefits, not just tax credits, and irrespective of the number of children who may come along at the same time in that multiple birth?
Amendment 18 is a simple amendment which provides for exemptions to apply in exceptional circumstances, as defined by the Social Security Advisory Committee. The thinking behind this amendment is that, as we have heard already today, there are a number of special circumstances which Ministers may not have thought about when devising the Bill. I know that Ministers never like to admit that things can crop up which they have not already thought of but, just every now and again, things that none of us has been clever enough to work out may suddenly turn up and make a difference. To protect the Minister from the exigencies of such a disastrous situation befalling him, I offer the Committee this amendment today. It would enable the Social Security Advisory Committee—a statutory body with huge expertise—to spot these things that, unaccountably, none of us had managed to spot and to bring forward to the Minister recommendations for exemptions which could then be put into legislation. I commend this idea to the Minister; he may have it free of charge. If he does not like it for any reason, and I cannot think that he would not, he might instead like SSAC to undertake a formal review of the impact of this policy 12 months, say, after its enactment and to advise him and his colleagues of any additional exemptions that might be needed. I would settle for that.
Amendment 20 proposes to exempt from this provision couples with dependent children who, if living in separate households, would not be affected by the two-child limit. This is a broader exemption than that proposed by the noble Baroness, Lady Manzoor, in Amendment 4, although I also support her amendment should mine not go forward. Her amendment would seek to exempt someone who is a single parent and previously claiming tax credits; my amendment seeks to address all such reformed families. This is one of the issues which exposes why this whole measure is such a bad idea. The Government have spent a lot of time advocating the importance of family life and making much of their support for marriage. I approve of them doing that, yet they are again proposing a policy which will run in direct contravention to that other policy objective. If two people meet and fall in love and they each have two kids, if they get married or partner and set up home together then overnight this measure alone will make them worse off to the tune of £5,560 a year. The irony is that they may find by coming together as a household—for example, if they are both working—their entitlement to benefits would go down naturally as a result of the means test. It seems particularly unfair to deprive them of support for the children when they would have been supported by the state had those two people decided to stay separate.
I have been struggling to get a handle on data on stepfamilies. Maybe the Minister can write to me. I have had to work my way through official statistics trying to make sense of them. It seems to me that more than 20% of adoptions registered in 2014 were in stepfamilies, and ONS data based on the 2011 census seem to suggest there are 326,425 children living in stepfamilies with three or more children where the parents are either married or in civil partnerships. There are another 196,173 children living in stepfamilies with three or more children where the parents are co-habiting. I make that more than half a million children. They will not all be eligible for tax credits or universal credit, but up to half a million children could be affected by a measure not because they themselves were third children but because their parents made the unconscionable error of falling in love with somebody else who already had children, and by coming together the household suddenly becomes ineligible for those benefits for the third and subsequent children.
I used to run a charity that worked with single parents. Unless the trends have changed significantly, there was a tendency that lone parenthood was a state someone would stay in for an average of five years. It tended not to be a lifetime choice. People tended to repartner or remarry. We are increasingly putting barriers in the way of people ever doing that. I wonder if that is wise. I also wonder whether it is an intention of the Government’s policy. If not, has the Minister given any thought and has the department done any assessment on the likely impact on second marriages or repartnering?
I want to comment briefly on the other proposed exemptions. The noble Baroness, Lady Manzoor, expressed the concern I think many noble Lords will share about how intrusive a process might have to be to establish that a woman had been raped. I certainly hope the Minister realises that he will find it a challenge to get the Bill through this House in its entirety without explaining how a proposal that somebody should be tested to see if they have been raped would be implemented. At the very least, is the intention that it is only when a woman has made a complaint to the police or someone has been charged or convicted? If not, who will she give evidence to in DWP and how will that be assessed? How will the Minister guarantee that the process will be confidential? If any other official in a benefit or tax office or school could see that a woman was getting benefits or tax credits for a third or subsequent child, there are only two ways at the moment that that could happen—a multiple birth, which would be evident, or the pregnancy being the result of rape. I wonder where that leaves us in terms of confidentiality. Has the Minister given any thought to that? Given that, has the Minister considered the impact on the child if at some point they discover they had been conceived as a product of rape—something the parents may have gone to considerable pains to disguise from them? The Government mentioned in the impact assessment that they would consult stakeholders before deciding how to deal with this. Can the Minister tell us who the Government have consulted and who they intend to consult?
I also asked at Second Reading—but got no answer—what the rationale was for exempting children in multiple births or those conceived as a result of rape. The Minister has indicated that this is about choice. Does he accept therefore that there are other circumstances where a woman may not be able to exercise choice? The noble Baroness, Lady Manzoor, mentioned domestic violence. The proposal, which I support, to exempt people in cases of domestic abuse rests on two arguments: first, that a child may have been conceived under duress, rather than as a result of a clear choice; and secondly, that the two-child limit may make it harder for a parent of more than two children to leave an abusive relationship as they would struggle to support the children.
We have heard how widespread domestic abuse is. Each year more than 2 million people suffer some form of domestic abuse. Its impacts are severe and hard to escape. About 42% of domestic violence victims have been victimised more than once. On average victims experience 20 incidents a year, which can often increase in severity every time. While 80% of victims report physical abuse, it is not just that—nearly 90% of high-risk victims report experiencing emotional abuse and/or coercive control or behaviours. Those are exactly the kind of things that could lead a woman to become pregnant without exercising choice. Abuse can include a refusal to allow a woman to use contraception. It can include rape and pregnancy as a result of rape which she may have been reluctant to report to the authorities because of fear of the abusive partner. Of course, the use of power and coercion are the very things that make it hard for someone to leave an abusive relationship. Sometimes they do manage to leave, often by getting advice or support and by meeting other victims; sometimes things go too far, such as when a child is caught in the cross-fire of domestic abuse. At the point at which they flee, they need all the help they can get. Too often they leave just with the clothes they stand up in. They are homeless and need to move and often hide from their abuser; they leave behind schools and jobs. It is hard enough to rebuild a life in those circumstances but this policy could act as a further barrier, so I hope very much that the Minister will consider this exemption very carefully.