Children and Families Bill

Lord Freud Excerpts

Wednesday 29th January 2014 Lords Chamber

The Minister has a choice. He can either go back and change the housing benefit regulations following this amendment, so that children are taken out of their application, or he can rely on his principle of means testing, knowing that it has failed repeatedly. We have a Pensions Bill at the moment which is taking means testing out of the system because we know of its inadequacy. The Minister is now importing that back into the relief of children in poverty, which he does not need to do. I hope very much that he will listen today to the powerful speeches made on behalf of children because his policy is a cul-de-sac. It is a dead end and the sooner that it is abandoned, frankly, the better.

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

My Lords, as one would expect, this has been an interesting debate with some impassioned and important contributions, which I welcome. Let me start by reminding the House of the fiscal environment that led to this measure’s introduction. In the final year of the previous Government, borrowing had risen to £150 billion. In cash terms, over the previous 10 years, expenditure on housing benefit had nearly doubled to £24 billion. Left unreformed, annual expenditure on housing benefit would have exceeded £26 billion per year by the end of this Parliament. Nearly four years on, the range of economic indicators are showing that our policies are working and have led to the number of workless households, the number of lone-parent workless households and the number of children in workless households all being the lowest since comparable records began in 1996.

I will not spend a huge amount of time responding to the policy issues raised because we have already spent a lot of time in this House dealing with the policy as a whole. I want to deal with the issues raised by the nature and form of this particular amendment.

The Housing Benefit (Amendment) Regulations 2006 are secondary legislation, which contain detailed provisions that set out how local authorities should administer housing benefit. It is very unusual to seek to amend secondary legislation through primary legislation in this way. The amendment itself is imprecise and ambiguous, unlike the rest of Regulation B13. For example, under proposed new paragraph (5A) it is unclear what “restriction to one bedroom” or the concept of,

“in the interests of the welfare of a child”,

means in this context. Because of this, the amendment may have unintended consequences that go far beyond those desired by the noble Baroness.

The effect of the amendment is potentially to allow local authorities to determine that the removal of the spare room subsidy does not apply where the household contains children, as it is not in the interests of their welfare. So this amendment is likely to add around £160 million a year to the housing benefit bill, reducing the savings from the policy to around £330 million a year. It would extend only to the social sector and so reintroduce the inequity in treatment between housing benefit claimants that we have sought to remove with the implementation of this change. Applying the spirit of the amendment to the local housing allowance to re-establish fairness is likely to more than double the cost of making this amendment to around £460 million a year. This amendment does not deliver the intended outcome. If accepted, we do not intend to amend it and it will be sent to the other place in its current defective state.

It may be helpful if I remind noble Lords that we have already taken account of the interests and welfare of children in developing this policy. In March, we amended the regulations to allow an additional bedroom for foster and kinship carers. We have also made £5 million of discretionary housing payment funding available specifically for foster carers who require further additional rooms to allow them to foster two or more children, including groups of siblings. The discretionary housing payment data for the first six months indicate that foster carers are applying for and receiving payments, as intended. In March, we also issued guidance to local authorities indicating that they should allow an additional bedroom for disabled children who would ordinarily be expected to share a room but are unable to do so because of their disability. This was put into a regulatory framework in October. We have provided £180 million of discretionary housing payment funding for this year, and £165 million for next year, to enable local authorities to support the most vulnerable families affected by the reforms. This funding is already meeting the need that the noble Baroness seeks to address through this amendment.

Perhaps I might pick up on two of the vital points raised by the noble Baroness, Lady Meacher, on the costs and benefits for children who go into residential care as a result of the removal of the spare room subsidy. We have not looked at this specifically. The independent evaluation of the policy will look at the effects on families. We are not currently aware of any evidence to support the assumption that this would be an outcome of the policy.

Picking up the example that the noble Baroness raised about Mary Jane and focusing on the uncertainty that that family had with that poor girl, I am aware that some local authorities, following the introduction of the policy, have understandably taken a very cautious approach to awarding discretionary housing payments, as they assess the level of need in their area. I have instructed my officials to amend the guidance to local authorities to encourage them to make longer-term awards where the circumstances are unlikely to change. The revised guidance is being prepared and will be shared with the local authority associations in draft before being issued for the start of the financial year.

At this stage, we have not seen anything to suggest that this policy is having a detrimental impact on the welfare of children living in affected households. We are closely monitoring the effects of the policy and have commissioned an independent two-year evaluation which—among other things—will look at the effects on families. The interim findings are due to be published in spring this year.

I hope I have been clear. I have already reflected on the noble Baronesses’ amendment. I cannot undertake to reflect further between now and Third Reading. If the noble Baroness wishes to test the opinion of the House, she should do so now.

[Baroness Jones of Whitchurch]

My Lords, I very much thank all noble Lords who have spoken. I also thank the Minister. I welcome him to this Bill for, I think, the first time. Some of us are long veterans of this Bill. We have been debating it since last June. Our focus has, perhaps, been very different from the values and priorities that the Minister has been enunciating this evening. We have been very much focused on the child welfare issues and have seen those as a priority in the progress of the Bill. We have reached quite a lot of cross-party and cross-Chamber consensus on all of that.

Once again the Minister put great emphasis on the discretionary housing payment scheme. The fact is, in ways that were never foreseen when the original bedroom tax was introduced, it has already had to be increased and increased. This very much demonstrates that the policy, as originally planned and thought out, was not working and is still not working. It is making the evaluation of the costs very difficult. Indeed, the savings that were originally envisaged are now not being met. The whole policy is being turned on its head.

In all the calculations that I have heard the Minister cite, he does not take into account some of the extra costs. Noble Lords around the Chamber have given us examples, including the whole issue of managing evictions, debt, arrears, the extra costs to local authorities of going back to people to try to collect those debts and arrears, and the more ill defined, but nevertheless very much present, extra social problems that arise from some of these issues.

I am very pleased to hear that there will be an evaluation but, in the mean time, we are trying to deal with some of the problems that exist now. I say to the noble Lord, Lord Storey, who said that some of the discretionary fund was not always being used, that, for that very reason, the discretionary fund is not always the answer to those families. It is quite traumatic to go through that means-testing process. There is also an administrative on-cost for the local authorities that are trying to administer it. This is a murky area. It is not surprising that money in and money out are not always working effectively with the administration of that scheme.

Meanwhile, we have to respect the fact that the Tory-led Local Government Association is saying that there is a problem here and that other budgets are having to be raided to cope with the surge of applications. It is not me who is saying that; it is the Local Government Association. The chair of the Local Government Association’s finance panel says:

“This will have a significant impact on local government budgets, which are already stretched to breaking point by the deepest cuts in the public sector”.

Again, those are not my words; they come from the chair of the LGA finance committee.