Families: Work Incentives

Lord Flight Excerpts

Tuesday 27th October 2015 Lords Chamber

[Lord Freud]

Universal credit is a wide-ranging transformation of the welfare system, so it is difficult to pick isolated elements. It is now rolling out rapidly. At the same time, we are building a support network incorporating, among other things, universal support delivered locally. One of the key factors is that it delivers a gross value to this society of £7 billion every year. One reason it does that is that it directs its support far more efficiently at the people who need it most. The other thing it does is to make sure that it is always worth working and it is always worth working more. Finally, I try to keep the House up to date with universal credit developments because it is a really important transformation. I commit again to do that. I would like to find a way to do that in the Chamber, as I did a couple of months ago.

[Lord Flight (Con)]

My Lords, does the Minister agree that 30 hours of free childcare is one of the biggest incentives available? A huge disincentive has been where working mothers have to pay for childcare out of after-tax earnings and what is left over is scarcely worth having, so for mothers with children, free childcare is fundamental.

[Lord Freud]

Clearly one thing that has happened in universal credit is that the work allowances, as the noble Baroness pointed out, have come down. On the other hand, we have increased some of the costs that are directly tied to work incentives around childcare. As my noble friend pointed out, the effect of doubling free childcare from 15 hours to 30 hours is worth £2,500 per child per year. Another element of universal credit—childcare support going up from 70% to 85%—is worth in excess of £1,000 per child per year. There are real supports coming in for parents who need them.