Welfare Reform Bill Debate
Full Debate: Read Full DebateLord Grayling
Main Page: Lord Grayling (Conservative - Life peer)Department Debates - View all Lord Grayling's debates with the Department for Work and Pensions
(12 years, 10 months ago)
Commons ChamberI beg to move, That this House disagrees with Lords amendment 15.
With this it will be convenient to consider the following:
Lords amendment 17, and Government motion to disagree.
Lords amendment 18, and Government motion to disagree.
Lords amendment 19, and Government amendment (a) thereto.
Lords amendment 23, and Government motion to disagree.
Throughout the process of the Bill in both this House and the other place, we have listened carefully to the concerns that have been raised. We have taken them on board wherever possible and provided important clarifications on the Government’s position and responses to technical concerns. However, let us be clear that we stand firmly behind the aims and detail of our reforms.
As you indicated, Mr Speaker, Lords amendments 15, 17, 18 and 23 impinge on the financial privileges of this House. I ask the House to disagree to those amendments, and I will ask the Reasons Committee to ascribe financial privilege as the reason for doing so. It cannot be denied that we are in extremely difficult financial times, and that the Government have no choice but to take measures to address the situation. Tackling the unsustainable rise in spending on benefits and tax credits, as part of the Government’s overall deficit reduction strategy, is undeniably important. However, I emphasise that the affordability of the welfare system is just one objective of the reforms being introduced in the Bill.
We are making principled reforms that will finally tackle the trap of welfare dependency. Universal credit will ensure that work always pays, lifting 900,000 individuals out of poverty, including more than 350,000 children and about 550,000 working-age adults. The Bill will also deliver fairness for claimants and for the taxpayers who fund the system. We will discuss the benefit cap in the next group of Lords amendments, but it is clearly not fair, for example, that households on out-of-work benefits should receive a greater income from benefits than the average earnings of working households. Finally, our reforms will radically simplify the system, ensuring that it is easier for claimants to understand and for staff to administer. Hon. Members should be clear that those are vital principles, of which financial considerations are only one part.
I turn specifically to the provisions on employment and support allowance that are dealt with by this group of amendments. I shall set out the Government’s full rationale for rejecting the Lords amendments. First, Lords amendment 15 was simply a paving amendment that had no effect. Lords amendment 17 would increase the time limit for claimants receiving contributory ESA in the work-related activity group from the proposed 365 days to a minimum of 730 days, which would have to be prescribed in regulations.
On contributory benefit, does the Minister accept that giving a person who has made a recovery after suffering from cancer only 365 days to get back into work is a little prescriptive? Does he accept that the Lords amendment would allow them additional time—up to two years—to get back into work? The amendment is about fairness for those people alone.
I will talk in more detail about cancer, which is one of the measures we are addressing. I accept that there are anxieties in respect of cancer, but the approach that we are taking to all our reforms, and particularly those relating to sickness and disability, is that we should not write off automatically any individual with a particular condition. Applying a one-size-fits-all measure to any one condition is the wrong thing to do.
The Minister initially said that the Government are introducing their measures because they need to save money on the welfare Bill, but he also said—I hope there is great support in the House for this—that their measures will shape behaviour. Are the national insurance measures designed to shape and change behaviour, and in what way will they do so, or are they merely just to save money? In other words, is the Minister doing what the Treasury has required him to do on national insurance?
The important thing about that measure is that we must have a welfare system in which people have confidence. The principle of our proposal reflects the principle used in the jobseeker’s allowance system—people should get something back for what they have contributed, but not indefinitely. The Government’s measures simply seek to extend that principle to the group on ESA.
The principle I described is a long-standing one that has been applied to other benefits, such as jobseeker’s allowance. It is important to state that the Government are not taking benefits away from people who have no other form of income, or from people in the support group who need long-term, unconditional help. The measure simply affects those in the work-related activity group. It applies to them the same principle that exists in jobseeker’s allowance.
Does not the Government’s proposal conflict with what they are trying to do? The Minister says that benefits will not be taken away from those who have nothing, but their measure will take away benefits from, for example, a couple in which one partner is in part-time work. They could be asked to dig into what they have saved for retirement.
The principle of the welfare state that I described—that it is there to provide a safety net for those who have no other form of income—has operated for a very long time, including under the previous Government. The welfare state provides a degree of support to those who have another form of income, but it is a long-standing principle of the jobseeker’s allowance system that such support is not unlimited. We are simply applying that same principle to ESA for people who are deemed to have the potential, in due course, to return to work.
Is the Minister aware that many of us are grateful for what the House of Lords has done? It has acted as the conscience of Parliament. It is extremely unfortunate that the Government are today determined to reverse its decision. What is so obnoxious about the Government’s measures is that the most vulnerable are being hit, meaning not only cancer patients, but others with life-threatening diseases. It seems that the Government are totally indifferent to the group of people who will be harmed as a result of their proposals.
I do not doubt the hon. Gentleman’s views, but he is a member of a party whose leader and shadow Secretary of State made speeches a fortnight ago on the need to take tough decisions on welfare. I am afraid that what the hon. Gentleman says is another example of the disconnect that exists within the Opposition.
What taxpayers in my constituency find obnoxious is people who use the welfare state as an alternative lifestyle choice rather than as a safety net, for which it was first intended. Does my right hon. Friend agree that the Government, through this measure and their other changes, are trying to go back to what the welfare state was initially intended for, namely a safety net rather than an alternative lifestyle choice?
My hon. Friend is absolutely right that we have to have a system that is fair both to the taxpayer who pays for it and to the recipients. As a result of these reforms, we will have a system that is fairer to those receiving support and also fairer to those who are paying for that support.
Support to find work, for those people who will be affected, will be available for all ESA claimants from the outset of their claim, through Jobcentre Plus on a voluntary basis until the outcome of the work capability assessment and, following the WCA, for those claimants placed in the work-related activity group, through Jobcentre Plus or through the Work programme. Every single person who is on ESA, including those on a contributory basis, has access to the Work programme.
Some have said that the limit is arbitrary. I do not accept that. As the Minister with responsibility for welfare reform explained in the other place, it is similar to that applied by several countries around the world, including France, Ireland and Spain, and strikes an appropriate balance between the needs of sick and disabled people claiming benefit and those who have to contribute towards the cost.
Can the Minister clarify, for the avoidance of doubt, that someone who has been in the work-related activity group on contributory ESA for two years who subsequently gets reassessed as belonging to the support group will have their ESA reinstated even though they do not have the national insurance contributions that would allow that to happen?
I can indeed confirm that that is the case. We have listened very carefully on this issue, and it was a point well made by my hon. Friend the Member for Cardiff Central (Jenny Willott) in Committee. We have listened and we have taken appropriate action. It is important that we look at such details to ensure that we get them right, but that does not detract from the overall principle of what we are trying to achieve.
I believe that a time limit of one year is the correct approach. It applies the right balance between restricting access to contributory benefits and allowing those with longer term illnesses to adjust to their health condition and surrounding circumstances. There is also a very strong financial argument. If accepted, this amendment would reduce the total savings in the spending review period by around a third by 2016-17, which is £1.6 billion. Given the current fiscal climate, we cannot afford to forgo these savings and this is one of a number of very difficult decisions the Government have had to make because, as the shadow Secretary of State pointed out at the time, there was no money left.
Lords amendment 18 would mean that no time limit would be applied to contributory ESA for those claimants receiving treatment for cancer if they have or are treated as having limited capability for work, or they have or are treated as having limited capability for work as a consequence of a cancer diagnosis. The whole point of our approach on these matters is that we have always looked at the effects of a condition on an individual, rather than at the condition itself. We can all think of other cases which could equally be regarded as special cases. We are trying to be sensitive to the very real concerns of individuals suffering from cancer, and since we took office we have made significant changes to improve the protection and support that we provide to them.
Most individuals with cancer are placed in the support group at the outset of their treatment. We have increased the scope of the support group for cancer patients. We have been working closely with Macmillan Cancer Relief to improve how the WCA assesses individuals being treated for cancer. We are now consulting on our proposals, following work by Macmillan and Professor Harrington, our independent assessor of the work capability assessment.
We are clear that our proposals, which are now out to consultation, include a presumption that someone with cancer will be in the support group. What we simply do not accept is that in all circumstances, regardless of the impact of cancer on an individual’s ability to work or otherwise, they should be guaranteed a position in the support group. We have not taken that approach with any other condition and we do not believe that we should take it with cancer.
I know that there has been some discussion in the last few days about whether, if a doctor or nurse were able to provide confirmation that a person with cancer was not able to work, that person would be automatically passported into the support group. Is that something that the Government intend to introduce?
It is very much our intention—especially for those who have finished their treatment but are not yet prepared to return to work—to have a simple system that enables a medical professional to indicate to us that that person is not yet sufficiently recovered to make a return to work. Our proposals are out to consultation at the moment, but our overall clear goal is that, in the vast majority of cases, someone who is undergoing treatment for cancer or is recovering from the aftermath of that treatment should be in the support group. What we cannot accept is a principle for absolutely all cases and regardless of circumstance, and some people with cancer do work—
The Minister mentioned Macmillan, which is a well respected organisation. It estimates that some 7,000 cancer patients could lose up to £94 a month. Is that right?
The issue comes back to the core principle of why we are imposing the time limit. We are not taking benefits away from people who do not have other financial means. The people who will be affected by the 12-month time limit—not just cancer patients, but generally—are those who either have another household income or who have many thousands of pounds of savings in the bank. They are the ones affected. We are not taking contributory support away from those people in the support group. Most cancer patients, as I have just described, will be in that support group. We are not taking benefits away from them, just from those with other financial means.
No, I have already given way to the hon. Gentleman.
If amendment 18 were accepted, it is estimated that it would cost around £90 million cumulatively by 2016-17 based on a two-year time limit, or around £140 million cumulatively based on a one-year time limit. That would be a significant additional cost for the taxpayer, and would fly in the face of a principle that we have tried to bring to this whole process, which is that we do not bracket any condition into one absolute position. We look at each individual case to understand the impact of the condition on the ability to work.
The third area of focus this afternoon is our proposed changes to the condition relating to entitlement to ESA on grounds of limited capability during youth. These changes are part of our principled approach to reform. We want to modernise and simplify the current welfare system, focus support, avoid duplication of provision and redefine the contract between the state and individuals, in advance of the introduction of universal credit. It cannot be right that, for example, where a claimant has qualified for contributory ESA under the youth provisions and some years later they receive a substantial inheritance, they should be able to continue to receive unlimited contributory ESA without the need to have paid any contributions and without any condition from the state.
These proposals will not affect those in receipt of income-related ESA. We expect that around 90% of those who presently receive ESA on youth grounds will be eligible for income-related ESA. It will be a simple transition from their point of view. Only some 10% will not qualify because they have other means available to them—and I emphasise that that means a partner in full-time work or capital of more than £16,000. We are merely targeting the support the Government can provide to where it is needed most. I do not think it is right that someone with independent income or capital should be able to access state support on a long-term, ongoing and unconditional basis.
Can the Minister clarify absolutely that a 20-year-old who will never work and who lives at home with their parents will be able to get income-related ESA? Obviously it cannot be contributory as they have made no national insurance contributions. Even if they live in a household above income support levels, will they continue to get income-related ESA in their own right?
I cannot give an undertaking in all circumstances, because every circumstance will be different. But 90% of those who presently receive ESA on youth grounds will be eligible for income-related ESA. It will depend on the circumstances of each individual case.
We have already mentioned the fact that the Government amendments allow claimants to re-qualify for a further award of contributory ESA after their ESA has ceased as a result of time limiting, and they are later placed in the support group because of a deterioration in their health. That applies equally to ESA youth claimants.
Will the Minister confirm that the case in question relates to a disabled young woman who is living with her British parents—in Spain, I think—but who was born and brought up in the UK?
It relates to someone who has not lived in the UK for most of the past 15 years, although she is a British national and has a link to the UK. The implication of the court case is that somebody who has a link to the UK but who has had no recent contact with it is none the less entitled to receive benefits. That is where we disagree with the European Court and why we think that its decision was wrong.
We think that the best way to close this door is to abolish the ESA youth provision, but it is not the only reason we are abolishing the youth provision. It is by no means the sole rationale for doing so, but as a matter of principle it is our view that we should make every effort to ensure that our benefits are paid only to those whom we think should be paid UK benefits—those who have recent connections to, or have lived in, the United Kingdom.
I want to try to follow the Minister’s logic a step further. Is he going on to propose that British citizens who have retired abroad—for example, to Spain—will not be able to receive their pensions in the years to come? Is that the logical extension of his argument?
Of course it is not. We are saying that somebody should not be able to claim a benefit for the first time having not lived in the United Kingdom for many years. That is the argument that we put to the European Court, and it is a principle that we stand by. I emphasise that that is one of the reasons, but by no means the only reason, why we are taking this measure.
Has the Minister talked to the Secretary of State about this? Would a more logical position not be that we get exemptions from the European Court ruling, and not distort our social security system to fit the European Court’s decisions?
I would love to secure a more pragmatic and sensible approach to the regulation of social security in Europe. I have been working on it for the past 18 months with my counterparts in other member states, and I hope that we will make progress as soon as possible. Right now, however, we must obey European case law as delivered to us by the European Court—much as it sometimes might be frustrating to do so.
I have a couple of technical points to make before I finish. As a result of providing for the new category of entitlement, in respect of claimants whose health has deteriorated to such a degree that they are placed in the support group—I referred to this earlier in response to the hon. Member for Aberdeen South (Dame Anne Begg)—it has been necessary to remove the substance of the ESA youth time-limiting measure from the original clause 52 and to insert it in clause 51 via a new subsection in section 1 of the Welfare Reform Act 2007. The Opposition amended that new subsection by changing the period of the time limit from 365 days to a period to be prescribed of at least 730 days. That is Lords amendment 19. As a result, the House will need to agree to amendment 19 but with an amendment consequential upon the rejection of the other amendments providing for entitlement to ESA to be for 730 days rather than 365 days. This will restore the Government’s intention.
A similar complexity surrounds amendment 22, which was voted for in the other place and which ensures that no new claims can be made under the youth provisions in the future—in effect, from whenever that provision is commenced by order. This amendment would amend clause 52 by removing the substance of ESA youth time limiting, which is now included in clause 51, but would retain the key provision in clause 52 preventing new ESA youth claims from being made.
I am afraid that this position is further complicated by the fact that also in the other place amendment 23 was not pushed to a vote and therefore also stands part of the Bill. Amendment 23 effectively allows claims to be made to contributory ESA under the youth provisions for those that are placed in the support group. We therefore now have two conflicting clauses for conditions relating to youth. Finally, if amendment 23 were to be accepted, it would reduce the expected cumulative benefit savings by around £17 million by 2016-17—savings that would need to be found elsewhere in the benefits system.
In the light of these arguments—the urgent need to address the fiscal deficit we have inherited and the need to deliver principled reform to our welfare state—I hope that hon. Members will feel able to support the Government.
The Government are determined to insert some terrible things in the Bill, and none of them is worse than the indefensible one-year time limit on contributory employment and support allowance for people in the work-related activity group. Amendment 17 removes that one-year limit. The Government are trying to put it back. Now, with the blanket appeal that we have heard for financial privilege, they are trying to prevent the other place from daring to disagree with them once again.
The measure is literally indefensible: the Government have been unable to defend it. The Minister made no effort to defend it in his speech, other than to point out that it would save a great deal of money. He referred to what happens in other European countries, but there, of course, the support that people fall back on is much more generous than here. There is no defence for the one-year time limit, and the House needs to be aware that this change will start to impact in two months’ time, at the beginning of April. According to the Government, 100,000 people will lose contributory benefits at the beginning of April this year, having already been in receipt of contributory ESA for more than one year, and another 100,000 will lose it as they reach the one-year stage of their claim over the following 12 months.
Some people argue that ESA should not be limited at all—for example, the Liberal Democrats. At their party conference, they opposed any arbitrary time limit on how long claimants can claim contributory ESA, and the Liberal Democrat peer Baroness Thomas of Winchester told Members of the other place that what troubled the conference last year was
“the arbitrary nature of the one-year cut-off.”—[Official Report, House of Lords, 11 January 2012; Vol. 734, c. 158.]
Liberal Democrat party policy is clear on this, but we understand that today its elected representatives will take no notice of it.
The Lords amendments that the Government want to overturn are much more modest. They argue that the time limit should be not less than two years and, crucially, that the limit should be set down in regulations rather than in primary legislation. If the Government get their way, absurdly it would require a new Act of Parliament to change the limit. Throughout debates on the Bill—many Members have been present in Committee and other stages of the Bill—the Minister has told us that the purpose of the Bill is to provide the structure and that the details would be in regulations. On this measure, however, with no explanation, the opposite approach has been applied. These debates provide a clear indication of whether Ministers mean what they say when they tell us these things, or whether they are simply reading the script put in front of them.
We do not quarrel with time limiting. As the Minister said, contributory jobseeker’s allowance has been time-limited to six months for many years. The rationale has always been that within six months more than 90% of jobseekers are back in work. If it is to be fair, however, a time limit for ESA must also give people a reasonable chance to get back into work. A year is not enough. The Government’s own figures suggest that 94% of those who qualify for ESA are still on it a year later, so fewer than 6% are managing to get into a job within a year.
May I ask the right hon. Gentleman how he has factored into his considerations the typical six-month period that somebody in that position would have spent on statutory sick pay before they started on contributory ESA?
The question is: how long do people need to be on ESA before they get back into work? According to the Minister’s figures, only 6% are off the benefit within a year, whereas 90% are off contributory jobseeker’s allowance within the period that is being allowed for that benefit.
I would be grateful if the right hon. Gentleman answered my question. I asked him to what extent he had factored in the additional six months that most people would have had on statutory sick pay before starting 12 months on contributory ESA.
I answered the Minister’s question. What his figures show is that only 6% of those who go on to ESA—no doubt many of them will have been on statutory sick pay before that—are in a position to come off the benefit within one year. That is not a reasonable chance to get back to work, as I think the Minister will recognise if he reflects on the matter.
As the Minister said, Lords amendment 18 specifically addresses cancer. I do not think that anyone in this House will be surprised to learn that, for many cancer patients, 12 months is not long enough to become well enough to get back into work. At 12 months, many people are still experiencing debilitating physical and psychological effects from the cancer and from its treatment. People cannot go back to work in those circumstances, and that is why Macmillan Cancer Relief, which my right hon. Friend the Member for Cynon Valley (Ann Clwyd) referred to, says that
“proposals that ESA claimants who are expected to carry out work-focused activities will only receive the benefit for one year, without being means-tested, will hit cancer patients particularly hard”.
Macmillan also says:
“Three quarters…of people with cancer placed in the ESA Work-Related Activity Group are still claiming ESA 12 months later.”
My right hon. Friend is absolutely right. I am afraid that the message that this measure is sending to people in that situation is, “You’ve wasted your time.” Indeed, that is the case not only if they have a partner with an income, but if they have any savings. If they have more than £16,000 saved, there will be no means-tested support at all.
Members need to be clear about what the Government will be doing if they get their way. Under this measure, people who are in the middle of a health crisis will be plunged into a financial catastrophe. People who have worked and paid into the system all their lives—people who have, as my right hon. Friend says, done the right thing—will find that the system is not there to help them when they need it.
The shadow Minister has just talked about the position of somebody who has a spouse who is earning £7,500 a year. Will he confirm to the House that as a result of a diminution of household income, they would also be entitled to working tax credit, housing benefit, council tax benefit and possibly to child tax credit, and that therefore the amount of support that they will receive is substantially more than he is suggesting?
The hon. Gentleman is absolutely right. The young person will be robbed of their independence.
If someone is living independently, they will be entitled to income-based ESA.
The hon. Member for North Antrim (Ian Paisley) was talking about young people who are living with their parents, who might have a little bit of income or savings. My hon. Friend the Member for Aberdeen South was seeking an assurance on that point, and if the Minister were able to give her that assurance, it would be most welcome.
Can the Minister tell us at what age a person becomes an adult?
To be fair to the Ministers, I think that there is some confusion on the Front Bench over the position on this. The Minister was asked by my hon. Friend the Member for Aberdeen South, who chairs the Select Committee, to give the House a straightforward assurance. He failed to do so—
Let us be absolutely clear: when someone leaves child benefit—which can be at the age of 18 or 19, depending on their circumstances—they are deemed to be an independent adult. The only issue around the savings rule comes in if they actually hold and own the money themselves. So, if someone gets a £1 million inheritance, they will not carry on getting benefits. Surely the right hon. Gentleman does not disagree with that principle.
The Minister talks about people getting £1 million, but people who have £16,000 will get absolutely nothing. That is the system that he is putting in place, and I am not surprised that he is ashamed of it.
I am pleased to welcome the vast bulk of what the Government are doing. It is a pleasure to hear that people are not being defined by their condition and are not being forced to have decisions taken about them on the basis of a label or a particular condition. That is why, as I say, I strongly welcome much of what the Government are doing.
I would, however, like to reflect briefly on amendment 23, which relates to the youth passport. It is not that I particularly disagree with what the Government are doing, but I wish to focus on a few questions, which I hope the Minister will answer, about how we intend to ensure that these young people are given, as it says in the impact assessment, the “equal footing” that the Government rightly want them to have.
My primary concern is that these young people have not been able to acquire national insurance contributions because they are severely disabled. I would welcome some clarity about the expectation that they will accrue these contributions and be protected in the welfare system at the point at which they become an adult. Despite reading the impact assessment and all the debates in the House of Lords and listening carefully to what has been said today, I am still not entirely clear how that will be achieved.
Before my hon. Friend moves on and in case I do not have a chance to respond at the end of the debate, I would like to draw his and the House’s attention to the fact that people who leave contributory ESA will still be able to accrue national insurance credits in the same way as happens today for those who are not on contributory JSA. Ultimately, they will still have the same pension entitlement they would have done had they been in work.
I thank the Minister for that helpful clarification.
Secondly, I want to reflect on the comments pre-empted by what was said by the hon. Member for Makerfield (Yvonne Fovargue) and perhaps go beyond the implementation of this system to look at the wider impact on the ability of individuals to form independent relationships.
As the right hon. Member for Birkenhead (Mr Field) has recognised, we are talking largely about the impact on human behaviour. I am concerned—it is possibly a mistaken fear—that if people were to enter into a relationship and cease to be an independent household, they might become dependent on their partner’s income. That could be a deterrent to forming a meaningful relationship. I may be a simple Member of Parliament who fails to understand this complex issue, but the all-party parliamentary group for young disabled people, which I chair, has asked me expressly to raise this issue, which is at the heart of its concerns about this amendment. I would welcome some clarification of how the Government think people will behave in real life as opposed to in the benefit system.
I shall not detain the House any longer. The Government have my full support on these amendments, but I would like more clarity about how they view their implementation.
I understand the hon. Lady’s concern, and the issue has been raised over a number of years by those on both sides of the House.
It is important that we put it on record for the House once again that, possibly with a tiny number of exceptions, no appeals have yet been completed following the introduction of the Harrington reforms. Every appeal that has been discussed up to now took place under the system that we inherited, rather than since we changed the system last summer.
I am grateful to the Minister, and I hope that when the figures flow through on appeals that have taken place under the new system, we see a reduction in the number of decisions overturned, and in the number of people who go to appeal. That would suggest that the assessment was working properly.
If we make sure that the assessment works properly, it will reduce the arbitrariness of the timetable, but as the Minister mentioned in an intervention on the Opposition spokesman, the right hon. Member for East Ham, it is important that we recognise that many people will receive six months’ statutory sick pay before they go on to the ESA, so they will be receiving benefits for 18 months. It is important that the Government continue the work that is being done to look at ensuring that employers work with staff when they become disabled or fall sick, and do not immediately push them on to ESA. Instead, employees should get the support that they need, possibly to stay in work over an extended period, and get their full entitlement to statutory sick pay and ESA, so that they get the full 18 months’ support to which many of them will be entitled.
If I understand correctly, the hon. Gentleman has just described the very sad case of someone who will not be able to work again and would therefore certainly be placed in the support group and would not be affected by the measures. I am not sure that I understand the point being made.
He may well work again, but not at this moment. He writes that when the Welfare Reform Bill becomes law in April he, and others, such as cancer sufferers, people with psychiatric problems and those with other life-threatening illnesses will have their benefits “stripped” from them once 12 months is up. If his partner earns the sum I have mentioned of as little as £149 a week and if they have modest savings, he will receive nothing at all once he is means-tested. If that case is an illustration of the Government’s intentions, there is all the more reason for a reluctance to support the measures and a recognition of what the House of Lords has tried to do.
As I listened to the hon. Member for Cardiff Central (Jenny Willott) and to the Liberal Democrat Minister of State, who intervened on my right hon. Friend the Member for East Ham (Stephen Timms), I asked myself whether, if they were in opposition, they would have the slightest hesitation in upholding the decision of the Lords by majority vote. The answer is pretty obvious. To their credit, a number of Liberal Democrats in the Lords decided to vote against the Government, and Liberal Democrat MPs would, in opposition, have voted in the same Lobby as us at half-past 2. It is unfortunate that they are willing to sacrifice their principles so flagrantly as a result of being in the coalition.
Let me end on a quote:
“People who are sick, who are vulnerable…I want you to know we will always look after you. That’s the sign of a civilized society and it’s what I believe.”
That was the Prime Minister at his party conference. What he is now doing with his colleagues and with the support of the Liberal Democrats is hitting out at the most vulnerable people in our society—cancer patients and the rest, including the man I mentioned. Those are the people who will be penalised financially and harmed in so many ways as a result of what the Government are doing. That is a direct contradiction of what the Prime Minister said about protecting the most vulnerable in our society.
That is certainly the intention of the Government’s proposal, and it is absolutely outrageous.
To conclude, bearing in mind the time, I want to say that it is about time that we gave some dignity to the people we have mentioned—
It is important that the House understands the facts. Somebody who is diagnosed with cancer who goes through chemotherapy will spend an extended period in the support group, so they will not lose benefits after 12 months. Does the hon. Gentleman accept that, today, there are more cancer patients receiving unconditional ongoing support in the support group than under the previous Government?
What I will not accept is that everyone suffering from cancer will be in the work group. That is not the case. They might be in for a short time or a prolonged period, but they are not guaranteed to be in there all the time. That means their benefits will be cut.
I have received a report from the Tellers in the Division at 10.14 pm yesterday on the Question that new clause 11 be added to the Local Government Finance Bill. The hon. Members for Preseli Pembrokeshire (Stephen Crabb) and for Leicester South (Jonathan Ashworth) have informed me that the number of No votes was erroneously reported as 309 instead of 299. I will direct the Clerk to correct the numbers in the Journal accordingly. The Ayes were 225 and the Noes were 299, so the verdict is not altered.
Clause 93
Benefit cap
With this it will be convenient to consider new clause 1 and amendments (a) to (j) in lieu of Lords amendment 47.
As Mr Speaker has indicated, Lords amendment 47 impinges on the financial privilege of this House. I ask the House to disagree to it, and I will ask the Reasons Committee to ascribe financial privilege as the reason for doing so. Notwithstanding that, the House has an opportunity to debate the substance of the Lords amendment and I intend to provide the Government’s full rationale for rejecting it. I will also deal with the matters raised in the amendments tabled by the Opposition and explain why they should be rejected as well.
I should like to start by stressing that this debate is not simply about the financial aspects of what we are doing. The fact is that the arguments in favour of a cap are about fairness and about ending a situation in which, for some people, benefit rates are so high that it is not worth working. It is worth my saying that on this issue, the public of this country are overwhelmingly behind us.
I congratulate my right hon. Friend on disagreeing with the Lords on this point. He is absolutely right that the public are right behind us, but does he agree with many of my constituents who think that the cap is still being set too high? They find it incredible that anybody could possibly think that it was too low.
Indeed, and what my hon. Friend says makes all the more extraordinary the flip-flopping position that we have seen from the Opposition in the past few weeks.
A recent YouGov poll showed 76% support for the cap, confirming what all of us will know from our mailbags—that the vast majority of the general public agree with the Government. It is not just the general public as a whole who agree with us, it is Labour voters as well. More than two thirds of them support the principle of a benefit cap. They agree with us that it is wrong to pay people who do not work more in benefits than people earn on average when they do work.
The cap will set a firm upper limit on total benefit entitlement, which for families and lone parents will be equivalent to the average wage for working households. We estimate that to be about £500 a week or £26,000 a year, which is equivalent to gross earnings of £35,000 a year.
I would support entirely what the Minister says but for the fact that in my constituency, rents are so high and housing shortages so great that people do not have a choice. They are obliged to rent properties that entitle them to higher housing benefit, which costs more than the cap. That is the fault of landlords for the rents that they charge, not of the poor people who have no choice and will become homeless under the cap provision.
The right hon. Lady uses the evocative word “homeless”, but what happens to people in her constituency who are bringing up a family and earning a salary of £35,000 a year? Should they pay for those who are not working to have a home at the taxpayer’s expense?
As the Minister will know perfectly well, families in work are entitled to housing benefit, and approximately half of housing benefit recipients in my constituency are working families.
Of course people on lower incomes can receive housing benefit, but I am not aware that it is paid to families earning £35,000 a year. Surely that is the point. We are setting a dividing line.
I am sure that my right hon. Friend has seen that, in recent years, a large number of new jobs in this country have gone to people who have recently arrived. They have not seemed to be attractive to people who have been settled here longer and are unemployed. Does he think that is because it is not worth their while, as benefits are too high relative to pay?
That is exactly the problem. Many people are taking a hard look at the financial situation and asking, “Why would I return to work?” Surely that has to end.
Although most of us agree that there should be a cap, does the Minister not accept that the situation is different for people living in different parts of the United Kingdom? Costs are different, so common sense says that the cap should be different.
I was going to come on to the Opposition amendments, but I should make the point that, although this debate is not simply about money, there is no getting away from the fact that their amendments would be costly. They would cut the savings that will be generated by £120 million in 2013-14 and £130 million in subsequent years.
I have great respect for the hon. Lady, and she makes an important point, but it would be altogether more credible if it had not been made at the very last minute. I do not ascribe the blame to her personally, but what we have heard from the Labour party has been quite extraordinary. Its latest effort, in today’s amendments, is to propose a regional benefit cap set by an independent body. The Opposition have tabled that idea and want to discuss it. However, did they table it on Second Reading? No. We had an extensive debate in Committee, which included many of the right hon. and hon. Members who are currently in their places, and I have no recollection of any mention of a regional benefit cap. We then had Report, and again I have no recollection of its being mentioned. My right hon. Friend the Secretary of State led on Third Reading. I have asked him, and he cannot remember mention of a regional benefit cap. There were then the debates in the House of Lords, in which there was no mention of it. I believe that the first time we heard about it was on the “Today” programme about 10 days ago. Frankly, it is a proposal designed to get the Opposition off the hook.
Can I assume that if the Government accepted the Opposition’s proposal, the £26,000 cap would apply to London and the south-east and my hon. Friend the Member for Shipley (Philip Davies) might get the smaller cap that he wants in his constituency?
That may well be the case, but of course it is not clear. We do not quite know what is in the mind of the Labour party. Is it suggesting—this is not in its amendments—that the cap should still be set at £26,000, in which case there is no reason why Labour Members should not back our measures? Or do they plan a higher cap in some parts of the country and a lower cap in others, accepting that our benefit system should be regionally based? Frankly, I am completely confused, and the House has every reason to be the same.
I, too, have a great deal of respect for the hon. Member for Vauxhall (Kate Hoey), but does my right hon. Friend agree that the logical conclusion of a regional cap is regional benefits? She cannot call for a regional cap unless she is also prepared to argue for regional benefits.
My hon. Friend is absolutely right, but that is not a conversation that the shadow Secretary of State will wish to have with his close friends in the trade union movement, who would not approve at all of the idea of beginning to regionalise how the public sector operates.
The Minister expressed surprise at the concept of variable caps and benefits. Is he not aware that that concept has applied since the time of Beveridge, in the form of local reference rents, which have existed up to now? Why does he not recognise that regional or area variations in the cap are appropriate, because rents vary enormously from area to area?
We need to be clear about what has happened. We have been through months of debate. The Labour party has got itself on to an almighty hook on the issue of the benefit cap—it is on the wrong side of the argument—and is desperately trying to wriggle free. The Government are having none of it. We are standing by our proposal. The benefit cap that we propose is the right thing and we will press ahead.
My right hon. Friend is right that in the 26 sittings of the Welfare Reform Bill Committee, which I had the pleasure of attending, we did not hear once about the regional benefit cap. Fifty-seven per cent. of those affected live in London. Does the timing of the Opposition proposal have anything to do with the London mayoral elections?
There might be an element of that—it is difficult to escape that conclusion. The Opposition proposal would have more credence had it not been made at the 59th minute of the 11th hour. We should not take them seriously when they make such ill-thought out, last-minute proposals.
The Government are clear that average earnings are the right way to determine the level of the cap. We do not need the Opposition’s proposed independent body—another quango, I hasten to say—to tell us otherwise. The cap needs to be a single, national one for the policy to make sense. The Government will lay before the House a report on the policy’s impact evaluation after a year of operation.
The Minister knows that the Committee extensively discussed the impact of housing costs and their interaction with the cap. If a household loses income through the benefits system through no fault of its own, can it claim legitimately to a local authority to be statutorily homeless, in line with existing homelessness legislation?
I am sorry, but I simply do not buy the homelessness argument that Labour Members keep making. We are talking about a cap equivalent to a salary of £35,000 a year. Labour Members were vociferous 12 months ago when the housing benefit cap was introduced, but we have not seen the consequences of which they warned in the terms they used. I simply do not accept that somebody receiving the equivalent of £35,000 a year should be categorised as homeless and unable to find anywhere to live.
Much was said in the other place on the importance of child benefit. Let me make it clear that the introduction of a benefit cap will not result in a single household losing its entitlement to child benefit, which will continue—rightly—to be paid to the current recipient. That important principle will not change.
We are, however, changing another important principle: households on out-of-work benefits should not in future expect to receive unlimited financial support from the state. Like other welfare benefits, child benefit is funded by taxpayers. We therefore believe that it is right for its value to be taken into account along with other state benefits when applying the cap.
I agree with where the Minister is coming from, but he should not doubt the sincerity of many London Members, particularly those of us who represent inner-London seats. We have deep concerns that some of our local residents will have to move. They will not be made homeless—I agree with him that we should not exaggerate—but they will have to move to other parts of London or the UK.
However, all London Members have constituents who might be forced to move out of central London if they have a second or a third child because of the requirement for more space. Does my right hon. Friend think it perverse that the one category of people who are exempt from that is those on housing benefit?
That is important. I said at the beginning of the debate that our amendments are not simply about money, but about points of principle. What we are trying to achieve with our reforms is to replicate in our benefits system the realities of the world of work so that people can move quickly from one to the other—we need to do that as closely as we can. Fundamentally, that is what the our proposals are about.
I shall make some progress because we do not have that much time and other hon. Members will want to contribute.
The Government have said that there will and should be some exemptions from the cap, but we believe that work should be the primary way in which households can avoid it. We will therefore exempt households that are entitled to working tax credit. There will be a similar exemption after 2013 for working households on universal credit. Excluding child benefit will only dilute our aim. Being in work—even part-time work—must always pay better than relying on benefits alone.
We have always acknowledged that there will and should be exemptions from the cap among benefit recipients. Those will be households where someone is in receipt of disability living allowance. We will also exempt war widows and widowers. I can announce today that we intend to exempt the small number of households where someone is in receipt of the support component of employment and support allowance but not in receipt of DLA.
We have been clear that we are looking at ways in which to ease the transition for families and to provide assistance in hard cases. That is no different from what we did when we introduced the housing benefit cap a year ago. We used the time before the measure came in to work with those affected; we had flexibilities around the start; and we ensured discretionary funding for local authorities to support hard cases. It is our intention to take the same approach with the Bill.
I support the principle of the cap and appreciate the Government’s efforts to understand the difficulties of those hon. Members who represent high-cost housing areas. The house price in my constituency is roughly double the national average.
Can the Minister confirm what our right hon. Friend the Secretary of State told me in the House on 9 November 2010—that it is “the Government’s policy that” people should not be forced to move
“to a far-off community with which they have no links, and that the intention will always be that”,
if they have to move,
“they should ideally stay in the community or council area where they come from and where they have lived”?—[Official Report, 9 November 2010; Vol. 518, c. 166.]
The Secretary of State gave me that assurance. Will the Minister repeat it?
My understanding is that those were not the words used by the Secretary of State, but I want to reassure my right hon. Friend.
Let me set out in a little more detail how the transitional measures will work. First, those who are affected by the cap will receive and have access to immediate support from Jobcentre Plus and the Work programme, starting from April this year. We know who the families are. We need them to understand how the cap will work and how it will apply to them, because people in receipt of working tax credit will be exempt from the cap. So we have a 12-month period to work intensively with the families concerned to explain what steps they need to take, to provide support through the Work programme and to look for employment opportunities for them, which will address the issue and move them back into work.
We also always expected that we would provide a grace period—a degree of transition—for people who simply lose their jobs and find that their circumstances have changed dramatically through no fault of their own. We will not penalise those who are in work and doing the right thing. We will put in place a nine-month grace period for those who have been in work for the previous 12 months and lose their job through no fault of their own. We have always intended to make this measure, and I am happy to make that clear to the House today.
In addition, the Secretary of State and the Prime Minister have made it clear that we will provide transitional support to help manage families into more appropriate accommodation—as we did when we introduced the housing benefit cap. So we will follow the same model of additional money for discretionary housing payments that we adopted for the introduction of the housing benefit cap last year. We will ensure that resources are available in the right areas, such as London, where a larger proportion will be affected. We will provide short-term, temporary relief to families who may face a variety of challenges, such as not being able to move immediately for reasons of education or child protection, supporting minimum levels of access to the housing market.
My hon. Friend is absolutely right. As I have said, we have to seek to replicate the realities of working life as closely as possible in the benefits system. If we are paying for people to live in a part of town that they could not afford to live in if they were in work, we are trapping them in a way that will prevent them from getting back to work.
More than 1,000 households in my borough will be affected, as in that of the hon. Member for Cities of London and Westminster (Mark Field). Does the Minister realise the implications of what he is saying? It is easy to score political points, but more than 1,000 children will be taken out of their communities and sent not necessarily to other parts of London but to other parts of the country. That is happening now, and the Minister is complacent about it. Is he prepared to see the dislocation of whole communities in order to make a political point?
I am afraid that the hon. Gentleman is simply out of touch with the reality of what is happening in our country. He talks about the impact of the cap on children. But children are already having their life chances and opportunities damaged by growing up in households and communities in which no one is working. That is what we are seeking to change. The former Archbishop of Canterbury, Lord Carey, said last week:
“If we cannot make the rewards of hard work more appealing than a life spent on the dole then we will have failed a generation of children.”
That is the reality that we face today and it is why we seek to change the way in which our welfare state operates. The Government clearly have the support of the British people on the cap. If we do not reject the Lords amendment, the public will not understand why. This is a reform that is long overdue and the Government are determined to deliver it.
I rise to speak in favour of the amendment in my name and those of my right hon. and hon. Friends. I shall state at the outset that we wish to seek a Division on that amendment, and I am disappointed that the Government have tried to invoke financial privilege to defend against a vote on our amendment in the House of Lords, where they know very well that they will once again be defeated. I am, however, grateful that the Minister has incorporated half of our amendment, by ensuring that there will be a grace period of nine months, but I want to set out the dangerous flaws that have now been exposed in the “one cap fits all” approach and also set out what I think would be a better approach.
My hon. Friend did an extraordinary job of deconstructing the Bill as it went through Committee, and she is an acknowledged expert on this subject. Her point is absolutely right. The Minister was not able to confirm that somebody on £35,000 could receive, for example, housing benefit. I am reliably informed that that is, in fact, the case. Because the Government have not thought this measure through, we are now confronted with the extraordinary spectacle of a cap that appears to cost more than it saves. As was pointed out by the hon. Member for Shipley (Philip Davies), who is not in his place now, in some parts of the country that will not send the signal that people are better off in work than on benefits. Only the Government could have introduced a proposal that is, frankly, that much of a dog’s breakfast.
Let us take the cost side first. In this debate, we are in the happy position of not simply having to rely on costing an assertion made by Opposition Members. We are very grateful that we have got the analysis that was presented by our good friend, the Secretary of State for Communities and Local Government. In a blunt warning—not to just anybody, but to the Prime Minister’s Office—the principal private secretary in the Department for Communities and Local Government said:
“we think it is likely that the policy as it stands will generate a net cost”,
and that was before the Government burnt all the money that they have sent up in smoke just this afternoon.
A cursory glance at some of the scenarios that we will see in, for example, the constituency of the hon. Member for Cities of London and Westminster (Mark Field) confirms exactly what is going on.
In a moment.
We are grateful to the Children’s Society for telling us that about half the families who will be affected by the current “one cap fits all” proposal will be families with five children, and on the basis of the first impact assessment—I think—the Children’s Society calculated that about 21,000 families would be affected.
The hon. Gentleman is making the point that we tried to make in our amendment—namely, that a “one cap fits all” proposal does not look as though it is going to work. We have heard the Minister’s reassurances this afternoon that certain families will be referred into the Work programme, but I am afraid that the Work programme is failing. The off-flow rate—the rate at which people flow off benefits and into work—in the last quarter of last year was the lowest since 1998. People are not getting back into work, because the Government’s back-to-work programmes are failing. Perhaps the Minister will tell us what he is going to do about that problem.
I have two questions for the right hon. Gentleman, to which I would appreciate simple answers. First, as there are not yet any statistics to demonstrate how the Work programme is working, how can he make assertions about it? He does not know, one way or the other. Secondly, as he is skating round this issue in a big way this afternoon, will he tell us whether he supports the principle of a £26,000 a year benefit cap in London? Yes or no?
As I have rehearsed this afternoon, we simply think that a “one cap fits all” approach is not going to work. The Minister has had to put his hand in his pocket and spend a fortune to fix the problem. He tells us that the Work programme is working well, but the rate at which people are flowing off benefits and into work speaks for itself. It is at its lowest point since 1998. That tells us, I am afraid, that the back-to-work programmes are simply not going to work.
I agree with my right hon. Friend. I give way to the Minister.
I referred to this earlier, but I would like to put it on the record that we certainly intend to carry out a review, as my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) said. We would automatically do so with a major policy innovation of this kind. We will carry that out in a transparent way. I also confirm that we are carrying out the other work that he talked about. I want that to be on the record for him.
I am grateful to the Minister for clarifying those points.
Finally, the Harrington process that has been put in place to review the work capability assessment has been an extremely effective way of getting outsiders to take an independent look at how Government policy is working. It has made significant improvements. I hope that we can learn from that process for the review of this policy to ensure that we are doing what is in the best interests of those who are affected by the cap and of taxpayers.
I need only a couple of minutes to ask three questions, particularly in relation to the Lords amendment on leaving child benefit out of the cap.
As has been pointed out many times, families earning £35,000 or £40,000 and families on benefits both receive child benefit—it is a universal benefit. First, then, how can it be right to have the same cap for a single, childless adult as for a family with children? Secondly, why are this Government, of all Governments, importing a new couples penalty into the benefits system? It might make more sense for a couple, each of whom might separately be below the cap, to separate than to stay together and incur it. I have never understood why this Secretary of State, of all Secretaries of State, wants to introduce such a policy.
Thirdly, how will the cap be uprated—if, indeed, it is to be uprated? What will happen if a family is forced to move to cheaper accommodation because its costs exceed the cap, and then rents rise in the new area and it is forced to move again and again and again? Until we know how the cap is to be uprated, children’s well-being and family stability will be put at risk, but I have yet to hear Ministers address that issue.
In the past hour and 45 minutes, we have listened to a debate that sums up the difference between the Labour party and the parties in government. With the leave of the House, I will respond briefly to the remarks that we have heard.
It is my view—and, I believe, the view of the public listening to this debate—that we have to change the nature of our welfare state. We have to move away from the world that existed under the previous Government, where children grew up, generation after generation, in houses where no one worked, and where entire communities had people with no experience of work in their family and who knew nothing about how to improve their lot in life. In the Bill, we have introduced a package of measures that will do nothing short of transforming our welfare state.
The great tragedy of this afternoon’s debate is that Labour just does not get it. We have seen an extraordinary attempt by Labour to get itself off a highly visible public hook over a policy that commands overwhelming public support in every constituency in the country. If we walked out on to the streets this afternoon and asked the public what they thought about a benefit cap, we would discover that virtually everyone was 100% behind this policy. Yet what we have heard from the Opposition over the weeks has been an exercise in dancing around the issue. There have been moments when they have said that they favour the benefits cap, but there have been moments when they have said that they oppose it.
Let us ask one of them who was on the Committee. Does the hon. Lady support the benefit cap?
I stood up to say that we cannot simply go to the population in the way suggested. When I was out on Sunday, one of my constituents said to me, “Yes, £26,000 seems a lot of money”, but when I asked her what she thought about so much money going in rents to landlords, she immediately changed her mind. We cannot create policy by giving people insufficient information.
You’d think they hadn’t been in government for a generation!
As we stand here, we still do not know exactly where Labour stands. I cannot, hand on heart, say, when the House divides in a minute’s time, whether Labour Members will vote for the benefit cap or against it. We asked the question again and again but they would not answer. They dance around the issue and come up with lame last-ditch excuses and new ideas that they did not discuss in Committee. At the end of the day, they do not want to give an answer to the public. In a moment, they will have to give that answer, because out there are millions of people watching us this afternoon, asking, “Will the House of Commons back something we passionately believe in?” We on this side of the House will be walking through the Division Lobby tonight in support of a benefit cap. We will be backing the views of our constituents; the question is: will the Opposition? Will the shadow Secretary of State, will the shadow Minister, will all the people who we have listened to in debates in Committee and in this Chamber—