Social Fund Maternity Grant Amendment Regulations 2011

Lord Freud Excerpts

Monday 7th March 2011 Lords Chamber

I had hoped, particularly given the drubbing that they received in the Barnsley by-election, that we would at least see some Liberal Democrats speaking today to defend their position as champions of fairness. Sadly, though, we did not; the speech of the noble Lord, Lord German, was far from that. I hope that it is not too late for more Members opposite to support this regret Motion and to try to demonstrate that at least some of them have the interests of poor families at heart. I support the Motion.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, I start by thanking the noble Lord, Lord Touhig, for bringing forward the Motion, which has given us a chance to discuss the issues. I have listened with great interest to the points that have been made around the House.

Before I go into specifics, I apologise for the fact that these regulations were laid very close to the date on which they came into force, and for the lack of courtesy this showed the House. I have asked officials in the Department for Work and Pensions to review where the processes broke down on this occasion so that we can avoid similar situations in future. I hope this will reassure Members that we have taken the criticisms seriously and are striving to ensure that Parliament always has at least 21 days to consider regulations. During the period of policy formulation there were some difficult and sensitive issues to be resolved about how we defined the family unit and what, if any, exceptions would apply. These may, on the face of it, appear to be straightforward changes. However, it was important that we got the policy right before pressing ahead with the regulations. I acknowledge that we underestimated the time that was needed to undertake this work, which is a lesson learnt for future policy development.

As women can claim the Sure Start maternity grant up to 11 weeks before their baby is due, it was necessary for the regulations to come into force on 24 January for them to apply to babies due on or after 11 April of this year. If they did not, we risked reducing the planned savings by around £1.4 million for each week the change was delayed. Any delay could have impacted on our wider reform strategy, which is to refocus resources from small, poorly targeted, ad hoc payments on to a wider package of ongoing support for those in greatest need, initially through changes to tax credits and the personal allowance, and in the longer term through universal credit.

In response to the questions asked by the noble Lord, Lord Touhig, and the noble Baronesses, Lady Gale and Lady Hughes, I confirm that an impact assessment was published in January. I regret the misapprehension that has circulated. There were some criticisms of the extent of the impact assessment. In particular, it was thought that there was inadequate information on ethnicity. That was due to the fact that the data simply were not available for that piece of analysis. However, the impact assessment as a whole was available.

As noble Lords have already described, the amendment to the Social Fund Maternity Grant Regulations limits payment of the £500 grant made to low-income and benefit-claiming families to the birth of the first child only. It was announced as part of last year’s emergency Budget in June. The change will come into effect for all births on or after 11 April. It will also apply to adoptions and other similar arrangements. The previous policy, under which a family could receive a grant of £500 for each child, was a generous one. It was also expensive and poorly targeted. It took no account of the number of children the family had already or of the fact that families, whatever their income, do not buy new items for each subsequent child. Our new approach is the most equitable way of providing support to low-income households with a new child. This was one of a range of measures needed to reduce the deficit we inherited from the previous Government, which, as my right honourable friend the Chancellor of the Exchequer commented at the time, is the largest budget deficit of any economy in Europe, with the notable exception of Ireland.

The urgent need to manage the deficit has presented a series of difficult choices. We have not shirked from this responsibility. As a result we are dealing decisively with the country’s record debts, planning for the future, making sure that work pays, while at the same time remaining committed to protecting the most vulnerable in society. The decision to restrict the Sure Start maternity grant to the first child was not an easy choice. We believe, however, that the new policy targets support to those families who are starting from scratch, without any baby clothes or equipment, and so for whom the one-off costs are highest. The reason we have structured it so that the payment goes to the first child—this picks up the question asked by the noble Baroness, Lady Hughes—is because in this way we ensure that the mother will receive antenatal health advice and is connected to those services at the beginning of the building of her family.

The intention for this grant—picking up the point made by the noble Lord, Lord Touhig—was never to cover all the costs of healthy eating. It was related to maternity items and associated costs of having a new baby. The Healthy Start vouchers, which remain in place, are designed to cover that requirement.

My noble friend Lord German asked a series of questions on how the structure works. Currently, a family receives a payment for each child in a multiple birth. Under the new structure, a multiple payment will be made if the first birth is a multiple birth but not if a subsequent one is. My noble friend asked what would happen when a second child was born but there was no claim associated with the birth of the first one. The grant would not become available under those circumstances given the structure that we have.

We are mindful that this change may mean that some low-income families need to borrow to cover certain costs associated with the birth of the second or subsequent child. To protect the poorest from the risk of high cost or even illegal borrowing, my honourable friend the Minister for Pensions has included provisions in the Welfare Reform Bill, which is in another place, to extend access to budgeting loans for maternity items, which are currently exempt. This will ensure that the poorest households have access to interest-free borrowing. I hope that noble Lords will support this important measure when it reaches this House.

As noble Lords have pointed out, we recognise that there will be a gap of around nine months between the point at which Sure Start maternity grants are restricted and Royal Assent of the Welfare Reform Bill. However, families will continue to have access to existing financial support. For example, budgeting loans are already an important source of financial support to the most vulnerable families when they face unexpected financial pressures. Currently, people are able to apply for a loan for a broad range of needs, including new or replacement furniture, household items and clothing. While maternity items are specifically exempted from the current budgeting loan scheme, families expecting a new baby may require funding for items that fall within the broad categories that are currently met by a payment. I would encourage people to use this scheme in this period, where appropriate.