Welfare Benefits Up-rating Bill

Debate between Baroness Stowell of Beeston and Baroness Sherlock

Tuesday 19th March 2013 Lords Chamber

[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.

Welfare Benefits Up-rating Bill

Debate between Baroness Stowell of Beeston and Baroness Sherlock

Tuesday 5th March 2013 Lords Chamber

[Baroness Sherlock]

My Lords, this has been an interesting brief debate, introduced by my noble friend Lady Lister with her now characteristic blend of expertise and passion. I am sure that we are all grateful to her for opening up the question so well. The quotes that she shared with the Committee about children arriving hungry at school and mothers missing meals and going without themselves to protect their children from the effects of poverty were, on one level, not a surprise to any of us, but they are still shocking. They should be profoundly shocking.

I found the point made by the right reverend Prelate very interesting and I understand why he would like those assurances from both sides of the Committee. My noble friend Lord McKenzie of Luton made Labour’s position clear at the beginning of our first day in Committee. It is this: if we were in government right now, we would be uprating benefits in line with inflation. However, we cannot make a commitment at this stage for the next Parliament. My view is that that is not a good idea anyway. We are fundamentally opposed to the whole principle in the Bill of fixing the levels of uprating for a period. We have perfectly good mechanisms for uprating benefits annually in line with inflation in the light of prevailing economic circumstances. To be honest, I would not want to be tempted into anything other than maintaining that position, but I fully understand why the right reverend Prelate is pressing the concerns that he is pressing.

I also found the comments made by the noble Lord, Lord Kirkwood of Kirkhope, very interesting. He drew in the spatial dimensions of poverty and the wide-ranging regional issues. That is something that we may come back to. I particularly agreed with his point about the need to monitor what is going on. The next amendment that I shall move encourages the Government to look specifically at the impact on child poverty. I also support the noble Lord’s point about the need for a cumulative assessment of all the changes between 2010 and now—a point made very strongly by my noble friend Lady Hollis at earlier stages of debate.

Since the Bill cannot help but drive down standards of living for families, what assessment have the Government made of the likely impact on the well-being of the poorest adults and children of what is effectively a real-terms cut in benefits and tax credits, not just over the year ahead, but over the three years covered by the first uprating and the two years of this Bill? It would be very helpful to the Committee to understand what assessment the Government have made. At a time when three new food banks are opening every week and even families in work are finding it a struggle to make ends meet, the state needs to take particular care to demonstrate that resources are gathered and distributed in a way that is fair to everyone. In the light of that, I shall be very interested to hear what the Minister has to say.

[Baroness Stowell of Beeston]

My Lords, I am grateful to the noble Baroness, Lady Lister, for moving this amendment and explaining her thinking. Of course, I recognise the serious issues that she and other noble Lords have raised during the course of this debate. I would not claim first-hand experience of living on benefits, so I do not bring to this debate any presumption about those on benefits finding what we are doing anything other than difficult, but is an inescapable fact that when setting benefit levels successive Governments have sought to strike a balance between the needs of claimants, maintaining work incentives and affordability.

Indeed, the current uprating legislation recognises this explicitly. The Social Security Administration Act 1992 requires the Secretary of State to make his annual review of benefit levels based on the increase in prices. He is then given discretion as to how to uprate certain benefits, having regard to the national economic situation and any other matters that he considers relevant. Parliament therefore requires the Secretary of State to take certain issues into account when considering the level at which the benefits in question are set. In bringing forward this Bill, we have considered these issues carefully and struck a balance between providing a cash increase, protecting certain key benefits and making necessary savings.

Benefit levels also have a significant bearing on work incentives. The complexity of the current system largely arises from successive Governments’ attempts to balance benefit income against work incentives. That is why universal credit is such an important measure as it applies a single set of rules focused on maintaining the incentive to take up work or more work. In response to some of the points made in this debate, I shall say something that I know is shared around the Committee. This Government believe that work is the best route out of poverty, and that is why we are focused on making sure that work pays.