Welfare Benefits Up-rating Bill

Baroness Stowell of Beeston Excerpts

Tuesday 19th March 2013 Lords Chamber

[Baroness Howe of Idlicote]

My Lords, it is good to get back to the subject of the Bill. I support the amendment of the noble Baroness, Lady Sherlock. Although everyone is inevitably suffering under this economic disaster, it is surely completely counterproductive for the Government not to make specific arrangements for those who produce and support children. This is a particularly important generation of children. We will all need to depend upon them and will need to help them develop to their full potential if we are to have a brighter and more economically successful future. Not to do so will also specifically disadvantage—I would argue even discriminate against—women.

Whatever hopes there are for both parents to share childcare in future, to include statutory maternity pay at present would clearly disadvantage women, on whom the main responsibility remains for their children’s upbringing. It will also particularly disadvantage single parents, the vast majority of whom are women. While 30% of all households with children are affected, 95% of lone parents—that is 2 million—are affected by the Bill. The Government have already estimated that the Bill will push a further 200,000 children into poverty, so what effect will this economic deprivation have on this vitally important next generation of children and their well-being?

First, there is their health: the 2010 Marmot review highlighted how poor health is strongly linked to low socioeconomic status. Children in the lowest-income households, for example, are three times as likely to suffer mental health problems as their more affluent peers. At the age of 33 they are at increased risk of severe long-term and life-limiting illness.

Next is their education. The link between economic disadvantage and educational underachievement is widely recognised by academics, as well as by parliamentarians. Children’s cognitive development, related to parental social status, is evident as early as 22 months. The earliest high-achievers from deprived backgrounds are overtaken at five years, with this gap widening by the time children reach 10. DfE figures also show that only 26.6% of secondary school pupils eligible for free school meals achieved five or more A* to C GCSEs, compared with 54.2% for all the rest.

In employment, inevitably, the educational and health inequalities drive a similar divide. Young people who are NEET are more likely to have grown up in socially disadvantaged households, for example, from single-parent households and those where parents also have low educational qualifications.

Finally, there are family relationships and children’s subjective well-being. Living on a low income is stressful and difficult and can, and often does, adversely affect family life and intra-familial relationships, as well as children’s assessment of and satisfaction with their lives. Poverty can make strong parent-child relationships more difficult, and research shows that children growing up in poverty are more likely to suffer from low self-esteem and to be socially isolated.

Having listened to the excellent speech of the noble Baroness, Lady Sherlock, and a range of other subjects also brought into the conversation, I hope that the Government will find a way to accept this very reasonable amendment.

[Baroness Stowell of Beeston]

My Lords, I must say to noble Lords on the Benches opposite that we have had a number of debates about the economic context in which we are making these changes, and I have been disappointed that more noble Lords have not found themselves moved to contribute to them so far. I am glad that there have been more contributions to this debate.

[Baroness Hollis of Heigham]

My Lords, I thought that we had discussed this already. Can the noble Baroness help me by describing how we could have made our contributions? As she knows, four or five of us have regularly taken part in social security debates—including my noble friends Lady Lister and Lady Donaghy, and me, among others. If we had made our contributions, does she think that we would have got to the important debates on disability and the 3% trigger amendment before dinner? If not, does she think that it would have been fair to disabled people to exclude them from the possibility of Parliament reconsidering a foolish decision?

[Baroness Stowell of Beeston]

In my short time in this House, we tend to sit until about 10 pm and have debates on amendments at all times that we are sitting. I did not realise that we were expected to have debates before a certain time at night.

Let us focus on statutory maternity pay. I remind the House that the UK has a strong and effective maternity and parental regime. The UK is significantly more generous than the requirements of the EU pregnant workers directive. The directive states that a woman should benefit from 14 weeks paid maternity leave; we provide 39 weeks. The directive states that a woman should receive at least the amount that would be paid for sickness; our standard rate of maternity pay and maternity allowance is £135.45 per week. That compares to the statutory sick pay rate of £85.85 per week. In addition, the latest available data from the OECD show that the proportion of our GDP spent on maternity and parental pay is higher than that in Germany or France.

It is also worth reflecting on the fact that in the past decade, the length of time for which statutory maternity pay was payable more than doubled. Under the previous Government, it was doubled. It is important to be aware of the baseline that we are starting from.

Yes, the decisions that we have to take on statutory maternity pay will mean a slightly smaller increase for people over the next few years, but that is in the context of a strong and effective maternity architecture in our country which will remain firmly in place. Indeed, the Government are committed to make this architecture even stronger. Noble Lords will soon be debating provisions in the Children and Families Bill which allow working parents to choose which parent takes parental leave and parental pay to care for their child in the early years.

It is also important to understand these changes in the context of other government reforms that support women, families and children and help make positive changes to their lives. I said this in Committee, but it is important, so I will repeat it. For example, a woman working full time at the national minimum wage for six months of the tax year who then receives statutory maternity pay for the next six months will still be better off overall as a result of changes to the income tax personal allowance.

We have debated universal credit many times before, and it is acknowledged that its purpose is to make it worth while for people to move back into work. Once universal credit is introduced, some 800,000 out-of-work lone parents would benefit significantly if they started to work just 10 hours per week. In nearly all such cases, these parents would see at least £40 more in their pocket per week than they would have done under the current system. Also as part of universal credit, £200 million extra is being spent to support families with childcare costs. For the first time, this support will be made available for families who work fewer than 16 hours per week. That means 100,000 more working families will be helped with their childcare costs.

Looking ahead, as my noble friend Lord Newby mentioned in one of the earlier debates today, we have set out changes that will increase eligibility of support to five times as many families as currently is the case through a new tax-free childcare scheme. As part of these changes, we have also announced today a further £200 million additional support in universal credit that will provide working families with the equivalent of 85% of their childcare costs where the lone parent or both parents pay income tax.

When referring to various different payments to families, the noble Baroness, Lady Sherlock, said that she could go on; so could I. There are other things that the Government are doing to support families and women. The support for families that the Government provide is about more than income transfers. I do not deny that families value them and they can make an important difference, but money is often better invested in interventions that really can change lives. In demonstrating this today, I have tried to explain what the Government are doing in addition to the comprehensive support that we provide to new mothers and to show how much there is in providing for families in the right way.

This amendment would reduce savings from the Bill by around £50 million in 2015-16. As I have said, we have taken none of the decisions in this Bill lightly, but we have to recognise that if the savings do not come from the measures set out in the Bill, that could clearly put additional pressures on to public services. The noble Lord, Lord McKenzie, mentioned alternatives that he would like to propose. They are not ones that I would point to because these amendments are part of a Bill that is about reducing by a smaller amount the increase that we pay in benefits.

To answer the noble Baroness’s question about why we are including statutory maternity pay, we have sought to address the very significant welfare bill, which I am afraid is unsustainable, but doing so in way to protect the most vulnerable. We discussed and debated that at length earlier today. Regrettable as it is to have to make any reductions or cap any of the increases in the way that we have, the infrastructure and architecture there for women and families are strong. They provide sound support that will make a real change to people’s lives. While I recognise that these are difficult decisions, I hope that I have provided enough assurance to the House to show that the Government take their obligations to parents seriously and that we will continue to provide a supportive environment for new mothers in the years to come. I hope therefore that the noble Baroness can withdraw her amendment.

[Baroness Sherlock]

My Lords, I am grateful to all noble Lords who have spoken in this debate, especially to my noble friend Lord Bach for his strong support, and to my noble friend Lady Hollis for her interventions. I am also grateful to the noble Baroness, Lady Howe, for a thoughtful and persuasive speech that highlighted the impact of these cuts on the next generation. I thank her for that.

In response to the noble Lord, Lord Bates, I would say three things. First, we have debated this a lot. We sat through the previous stages, and we have all contributed in long form to the Committee stage and reflected a great deal on this. I hope that we now know what each other thinks. Certain noble Lords contributed to every amendment but they did not make five speeches; they made the same speech five times. I am not sure that that took us much further. None the less, we are doing our best here today.

I say to the noble Lord that it is worth noting that the poorest mothers get the flat rate of SMP and are therefore unaffected by any impact on wage growth, so that point would not affect them. On the question of wage suppression, the consequence of that—in fact, of the whole Bill—is a double whammy for those who are finding that their wages are frozen or have been kept down, because these benefits and tax credits are the very things that will normally help to compensate the individuals as well as acting as stabilisers more broadly.