Welfare Reform and Work Bill

Lord Freud Excerpts

Wednesday 9th December 2015 Lords Chamber

[Lord Hylton (CB)]

My Lords, I have much sympathy with the amendments in this group, but at the risk of appearing pedantic I ask the proposers of Amendment 25 what the meaning of “equivalised” is. It occurs four times. Does it mean “equivalent” or something else?

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

I can answer that. It is a general way across the world that social scientists compare family to family of different sizes so there are ways of weighting each child or adult in the family.

[Lord McKenzie of Luton (Lab)]

My Lords, this has been a thoughtful and extensive debate. Amendments 24 and 26 in the name of my noble friend Lady Lister and the noble Lord, Lord Kirkwood, would cause data on low-income families where one or both parents are in work—that is, in-work poverty—to be reported.

We support these amendments. We know, as we have heard, that some two-thirds of children living in poverty are in working families and that whatever the climbdown on tax credits, the Government have in-work support in their sights. If we are concerned with measures that look at the current experience of poverty as well as the risk of poverty, there seems no logic in including out-of-work but not in-work poverty, although the policy levers may be different.

Amendment 25 in the names of the noble Baroness, Lady Grey-Thompson, and the noble Earl, Lord Listowel, seeks to retain the current income measures in the Child Poverty Act. We, of course, support that. Our Amendment 46 does the same but retains that Act’s targets as well.

The absence of income measures cannot be justified and runs counter to pretty much all the evidence or views of those engaged with child poverty. The Government’s suggestion that income measures are a symptom of poverty, rather than a cause, is too simplistic. My noble friend Lady Blackstone gave us a great example relating to educational attainment. If people are poor they do not have the same opportunity to have the same equipment at home; they do not necessarily have books at home and they do not necessarily go to school with a meal inside them so that they can be more attentive at school. It is simplistic to say that one is looking at the experience of poverty and that it is not a symptom of poverty.

In its July 2015 response to the Government’s child poverty statement—a number of noble Lords referred to this—the Social Mobility and Child Poverty Commission stated:

“The commission has argued in the past that a more rounded way of measuring poverty—taking … account of causal risk factors—is sensible. The life chances of children, the poorest especially, depend on many things … It is not credible, however, to try to improve the life chances of the poor without acknowledging the most obvious symptom of poverty, lack of money”.

Pretty much every noble Lord who has spoken in this debate, with the possible exception of the noble Baroness, Lady Stroud, agreed with that proposition. She asserts that looking at simplistic measures of income contains a number of flaws, but my noble friend Lady Hollis made clear that the Child Poverty Act 2010 had four measures. You need to look at the circumstances in aggregate, not just at one snapshot in time.

CPAG says:

“We believe that poverty is a condition marked by a lack of adequate resources, some of which may not be financial. Nonetheless, an inadequate income remains the decisive characteristic of poverty and must remain central to any poverty measurement”.

A number of noble Lords referred to the Centre for Analysis of Social Exclusion at the LSE and the work that it did. It looked at the responses to the DWP’s consultation on child poverty measures, which sought to test the level of support for replacing the existing measures with new dimensions, including those provided for in the Bill. As we have heard, the research shows that there is a very high level of support for the existing measures in the current Act. Most wanted no change and those who countenanced additional dimensions saw this as supplementary information, but not as measures of child poverty itself. Most respondents were of the view that lack of material resources— income—was the very core of child poverty. We agree with that. It is suggested that respondents to the consultation saw the proposals to change the measures as bringing to an end the official measurement of child poverty in the UK. How does the Minister respond to that? He will doubtless tell us that the HBAI figures will still be published as now, but we know from our prior deliberations—the noble Baroness, Lady Grey-Thompson, made this point—that what gets reported under Clause 4 will be the focus of the Government’s attention. That is why they are approaching it this way.

[Lord McKenzie of Luton]

I thank my noble friend for that intervention. I doubt there is much that she does not understand or is incapable of understanding, but she asked a highly relevant question. I hope that the Minister will give that assurance.

We have had a number of contributions to this debate. My noble friend Lord Liddle took us back in history but stressed the importance of the work that went into developing these measures in the first instance, enjoining the skills of Tony Atkinson. The right reverend Prelate the Bishop of Durham recognised the value of having worklessness and educational attainment as part of a measure. However, he said that that was not sufficient; there needs to be a focus on income if life chances are to be influenced and addressed.

The noble Earl, Lord Listowel, supported the existing measures in legislation. I think that the Child Poverty Act was the first legislation that the Minister worked on in opposition when he joined this place. At the end of the day, I thought that we had pretty much cross-party agreement, although it is fair to say that the Minister said there were other aspects of poverty which he thought should be reported as well. However, I do not believe that is the same as tearing up the Child Poverty Act, which is what this piece of legislation seeks to do. This is a very important issue because, unless we look at income, we will not address the here and now of poverty. It is all very well looking at some of those factors which have medium and long-term effects on people’s life chances, but we also need to address how people without resources exist today. That is why we need these amendments.

[Lord Freud]

My Lords, if we are taking a trip down memory lane, I remind the noble Lord, Lord McKenzie, that he unceremoniously threw out my amendment to put in four key life chance measures, which I said at the time would better reflect the real drivers of poverty, so clearly the debate has not moved on a lot.

[Lord McKenzie of Luton]

Does the noble Lord accept that the issues he was talking about were quite properly to be included in the building blocks of the strategy, which the Bill also required? It did not eschew the measures themselves.

[Lord Freud]

I shall address the amendments. I am sure the noble Lord will come back to me on some of these issues as I go through my remarks. Amendment 25, in the names of the noble Earl, Lord Listowel, and the noble Baroness, Lady Grey-Thompson, seeks to expand the report to include data on children living in households with low relative income combined with the other three income measures in the current Act, as we have discussed. The reason that we do not want to include those is that they fail to tackle the root causes of child poverty and focus on symptoms, which we want to replace. I will set out my argument in full. The effect of Amendment 46, in the names of the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie, is wider still. It would prevent the repeal of those measures from the Child Poverty Act 2010.

I shall try to explain why we find the four income-related measures unfit for purpose, particularly as regards treating them as targets. The income measures they are based on are a poor test of whether children’s lives are really improving. As my noble friend Lady Stroud pointed out, in the past, they have shown child poverty falling when the economy was in recession. Much more importantly, when you look at them as a driver of decisions by a Government, they are inherently unpredictable and would lead a Government to spend finite resources on action that does not produce the best results for children.

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[Baroness Hollis of Heigham]

And low earnings, my Lords. It says, in brackets, “low earnings”.

[Lord Freud]

It referred to “low earnings” out of worklessness; that is why the brackets are there.

[Baroness Hollis of Heigham]

My Lords, that is one reading of it. I am sorry to trouble the Committee with this but the review makes it clear that while worklessness with both parents out of work is obviously a primary driver, if only one parent is in work there is still a very substantial risk of in-work poverty, as has been explained time and again. That is why in the Government’s own research they are brigaded together.

[Lord Freud]

I will come to the point about the in-work and the workless in a little while. Let me go on.

Clause 4 will remove the existing measures and targets in the old Child Poverty Act and provide a statutory basis for much-needed reform to drive real change to improve children’s life chances and tackle the root causes. It introduces a new duty on the Secretary of State to report annually on children living in workless households and children’s educational attainment in England at the end of key stage 4. In response to the point made by the right reverend Prelate the Bishop of Durham about the other indicators, alongside these statutory measures we will develop a range of non-statutory indicators to measure progress against the other root causes of child poverty, which include but are not limited to family breakdown, addiction and problem debt. Anyone will be able to assess the Government’s progress here. The Government are saying, “Judge us on that progress”.

I turn to Amendments 24 and 26. With Amendment 24, the noble Baroness, Lady Lister, and the noble Lord, Lord Kirkwood, seek to expand the duty placed on the Secretary of State to publish and lay before Parliament a report containing data on children living in low-income families,

“where one or both parents are in work”.

I think I can add the name of the noble Baroness, Lady Hollis, to that amendment in practice. Amendment 26 would add “low income” and “in work” to the list of terms to be defined in the annual report.

It is important to pick up the point raised by a number of noble Lords, including the noble Baronesses, Lady Lister, Lady Blackstone and Lady Hollis, and the right reverend Prelate, about two-thirds of children in relative poverty being from working families. It is correct that the HBAI figures show that 64% of children in relative poverty are from a family where at least one adult is in work. But this situation has developed over the past couple of decades due to the improved progress in tackling poverty in workless families. In 1996-97, the earliest period for which data are available, around 2 million children in relative poverty—around 60% of them—were from workless families, and around 1.5 million, or 40%, were in working families. During the 2000s, progress was indeed made in reducing the number of children in poverty from workless families by focusing spending on income transfers. Unfortunately, this had the unintended consequence of weakening work incentives and has resulted in hardly any change in the number of children in poverty from working families, which stood at 1.4 million in 2009-10. In other words, it was down by only 100,000.

This illustrates why we are transforming the benefits system and introducing the combination of out-of-work and in-work benefits in universal credit: it is to get rid of the position where you do income transfers one way and undermine the incentives for people to work. I ask noble Lords to think about this issue carefully. With the income transfer process under the old policy, which was not in the Act before, we drove straight into this conundrum of where the incentives were to get people into work.

As for the evidence we have on work being the best route out of poverty, according to the latest statistics, the risk of a child from a working family being in relative poverty is 13%, which compares to the risk for a child from a workless family of 37%. It is clear that a child in a workless family is almost three times more likely to be in poverty than a child who lives in a family where at least one adult works, meaning that the risk of a child being poor is dramatically reduced if at least one parent works.

Furthermore, earlier this year we published analysis on the transition into and out of poverty. This showed that 74% of children who are in poor, workless families will leave poverty altogether if their parents move into full employment. It also made clear that the more work parents do, the more likely they are to leave poverty, with 75% of children from poor families that are partly employed leaving poverty if their parents enter full employment.

[Baroness Hollis of Heigham]

We are putting a lot of emphasis on full-time employment, but children in persistent or recurrent poverty will usually be the children of lone parents, who by definition, because they are bringing up children, have limits on the hours they can work. Another such group would be disabled people. It is the combination of low pay in work and limited hours that keeps them in poverty, although they are in work. To say they must go into full-time work when they have young children shows no understanding —if I may say this—of what it is like to be a single parent bringing up several children on your own.

[Lord Freud]

I can only provide the noble Baroness with these relative statistics on what is happening—where the risks for being in poverty are much higher when you are entirely workless. Clearly, as we look at our statistics for the workless, we will have quite a lot of analysis behind what is really happening there.

[Baroness Blackstone]

My Lords, would the Minister agree that most of those who have taken part in this debate have no objection to collecting information about worklessness or work as it affects those in relatively low-income groups? That is not what we are arguing about. What we are asking the Government to do is to go on counting the number of children who are living in poverty, whether their parents are in work or not in work.

The bewilderment about this that I expressed earlier is now somewhat reduced, because I think I understand why the Government do not wish to go on collecting this information—even though it is entirely wrong not to, because if you want to get rid of something or end it, you count it, otherwise you do not know where the hell you are. I think it is because of something he revealed earlier, which is that the Government do not want to have targets. I can see why the Government may not want to have targets, because it is often difficult to meet them, as we have seen in a lot of other areas, for example with the migration statistics. However, I am not asking that the Government necessarily stick to having targets. What I am asking, and what everyone else who has spoken in this debate, with the exception of the noble Baroness, Lady Stroud, wants, is that we retain proper, basic information—which any good Government who are concerned with evidence when developing their policies must have—on how many children, whether their parents are in work or not, are living in poverty. That is all we are asking for. Why are the Government not prepared to do this? Abandon the targets if you like, or do not call them targets, but do the measurements.

[Lord Freud]

I actually think the difference between us here is not as great as it might look. The division is between the income measures and targets. A legal target is, as I said, financially terrifying but we will publish income measures. This issue was raised by—

[Baroness Lister of Burtersett]

Given what the Minister just said, will he now accept the case for keeping the income measures in the Bill even if he abandons the targets? As my noble friend said, the argument has really been purely about targets. I thought targets were quite helpful for the same reason as the noble Lord—my noble friend—Lord Kirkwood, but if that is what frightens the Government and there is really not much difference between us, then okay. What is stopping the Government keeping the measures supported by 99% or whatever of the scientific community that responded to their earlier consultation on child poverty that they seem to have completely ignored?

[The Earl of Listowel]

Before the Minister replies, it might be helpful to remind him that the amendment on targets is in the next group. I quite understand why he might choose to address it here but the amendment he is addressing that I and my noble friend tabled is simply about the measurement. I think the noble Lord, Lord Kirkwood, began the argument on targets but my amendment was intended to be strictly on the measurements.

[Lord Freud]

In practice, that is not the case. There are two sets of amendments in this group and Amendment 46 from the Opposition deals with the targets so I must deal with both issues. That is what I have been trying to do. I hear around the Chamber that more noble Lords are concerned about measures than targets.

In reality, there is only one word between us: statutory. I made a commitment that we will go on publishing HBAI and that is a protected position. Let me just explain how that works. The HBAI is a national statistic. That means that it complies with the code of practice for official statistics, which states that it must be produced independently of political influence. Any changes to HBAI in future would therefore be made only following the judgment of the head of profession for statistics in the Department for Work and Pensions. Any such changes would be subject to formal consultation with users, as required under the code of practice for official statistics. I think I am on reasonably safe ground in assuring noble Lords that we currently gather HBAI with a full documentary analysis. Like the noble Baroness, Lady Lister, I have that on paper in front of me or on my shelf. That has on it not only the Excel tables but also a clear commentary. By implication, I am saying that that will go on being published in a similar format.

[Baroness Blackstone]

My Lords, though the Minister makes a commitment, will he accept that, as is so often said in this House, if there is no statutory requirement and nothing on the statute book any one of his successors could abandon that commitment? That is why we who have concerns about children in poverty want this measure to go on being collected and to be done under statute.

[Lord McKenzie of Luton]

I agree that we should have this in legislation but can the Minister confirm that his personal commitment will cover the circumstances and the work that needs to be done to identify whether somebody is experiencing material deprivation? That is not just an income issue.

[Lord Freud]

I think the noble Baroness, Lady Lister, will support me here but my memory is that the material deprivation figures are in the HBAI statistics. She nods that that is the case, so I can confirm that.

I shall summarise briefly. I am not in a position to give noble Lords the one word they want, but hope I have indicated that the measures will be available to see what is happening to relative child poverty. I am convinced that it is our new life chances measures—the measures rejected six years ago by the noble Lord, Lord McKenzie, which focus on the key drivers of worklessness and educational attainment—that will make the biggest difference to children, and that these amendments, were they on a statutory basis, would dilute that focus. We want to focus on the measures that make a real difference to children’s lives. I therefore invite the noble Baroness to withdraw her amendment.

[The Earl of Listowel]

I am grateful to the noble Lord, and, in particular, to the noble Baroness, Lady Stroud, for raising the questions that she did. As I said earlier, I am particularly concerned about the life chances of care-experienced adults and young people leaving care. In earlier debates the Minister assured me that there were strategies, and I know that there are many welcome investments, in terms of statute and finance, to improve outcomes for care leavers and care-experienced adults. However, the latest figures on 19 year-olds coming out of care who are not in employment, education or training are the worst for many years. Only 6% of young people leaving care are going on to university, compared with 40% in the general population. Despite massive investment by this and previous Governments in improving educational and work outcomes for young people leaving care, it is still not being as effective as one might wish. I think that what is being done is very good, but there needs to be a lot more work.

Then there are the young people on the edge of care, who do not reach the threshold. There are many more young people and children in need, who will have even worse educational and work outcomes. That is relevant to this debate, because what happens to these young people as they become adults, when they have such low educational qualifications that they cannot get on to apprenticeship schemes, have very little prospect of getting work and are likely to remain uneducated? One should always remember that many of them do do better in later life; because of early trauma, it takes them time to catch up. This large group may not be as susceptible to the incentives to work, or go on to further education, that the Minister is talking about. They might be particularly helped by measures of this kind, which focus on those in long-term poverty, and which would keep Parliament’s mind on them and how they are doing. I hope that that makes sense to the Minister. He might like to write to me if he cannot respond now.

[Lord Freud]

I will write, because the issues that the noble Earl raises are genuinely important and difficult. We are all struggling with them. As we develop the life chances suite, we need to bear in mind the particular problems for those people, because as a group they have much poorer outcomes than they should.

[Baroness Lister of Burtersett]

I am very grateful to all noble Lords who have spoken. It has been a remarkably well-informed and genuine debate, where Peers have responded to what others have said. Sometimes it does not work like that. I think the message that has gone to the Minister has been pretty overwhelming. I thank him for genuinely engaging with noble Lords in his speech. However, I have not heard one convincing argument from him about why income and deprivation measures should not remain statutory. I heard his arguments for why targets should not be statutory; I do not agree with them, but he made an argument, and that is fair enough, but he has not responded convincingly to my noble friend Lady Blackstone or anyone else who made that case. We have heard such strong argument on that, but I have not heard one convincing reason why an in-work poverty measure should not be in the Bill. We can trade statistics until the cows come home. I have seen the recent transition statistics, and they support my case as well as the Minister’s, and actually they are irrelevant. The point is that we need to know what is happening to those in work as well as to those out of work. There has been no convincing argument from the Minister in response to the very well-informed points that have been put by noble Lords.

I remind the Minister and the noble Baroness, Lady Stroud, that when the Prime Minister was leader of the Conservative Party he welcomed this. He said:

“We need to think of poverty in relative terms—the fact that some people lack those things which others in society take for granted. So I want this message to go out loud and clear: the Conservative Party recognises, will measure and will act on relative poverty”.

How can it if it does not have the measures in the statutes as they now exist?

I will withdraw the amendment, but I think we will want to come back to this issue on Report because it is so important. Perhaps by then, the Minister will have come up with some rather more convincing arguments than he has done hitherto. I beg leave to withdraw the amendment.

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[Lord McKenzie of Luton]

My Lords, I shall be brief because I know that we want to make progress today. I support wholeheartedly my noble friend Lady Lister, with her brilliant exposition as to why we should substitute “life chances” for “social mobility”. I join her in opposing the proposition that Clause 5 stand part of the Bill. We have a very specific amendment in this group, Amendment 41, which is merely to delete the words, “on request”, so that the commission, whatever its final title and remit, can be proactive in offering advice to the Minister. That obviously carries the implication that the commission must be appropriately resourced. Perhaps the Minister will tell us what is intended in this regard. I hesitated to raise that issue, because I feared that the Minister was going to tell me that we put it there when we were in government, but I hope that he will not. Even if we did, it seems to be entirely reasonable that it should now be expunged from the provision.

I also support those who argue that there should be proper strategies, so that you do not just have odd reporting obligations: there must be an intent to come forward with a strategy focused on life chances and on fuel poverty. As the noble Baroness, Lady Grey-Thompson, said, if we do not have a strategy, where is all this reporting going to lead? Given the hour, I think I will leave it there.

[Lord Freud]

I hope that what I have to say on this group of amendments will be a little more pleasing, although I do not think it will please everyone on everything. I will divide my remarks into two areas: the first on strategy and targets, and the second on the commission. It is a wide group of amendments, and that is the way they break down.

Starting with Amendment 33, I think that noble Lords who put that forward would accept that we have dealt with that pretty thoroughly when we considered Amendment 25, so I shall not reiterate all of my arguments on that matter. Noble Lords have heard my concerns about the implications of legal targets when the financial figures are so difficult to forecast.

Amendment 31 sets out exactly what information should be in the Secretary of State’s report. I think that I am going to please the noble Baroness, Lady Lister, when I explain where we are. We will publish a strategy on life chances, so that is the noble Baroness’s strategy. We will then publish an annual statutory report on the new measures: I think that is effectively what the noble Baroness is driving at. The Government have produced major new strategies, and I think that noble Lords all around the Chamber will accept that we have tried to transform all the structures of the benefits system and the support we provide for people in a coherent way.

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[Baroness Maddock]

I thank the Minister for reiterating that. I raised this at Second Reading and if he had answered my points then, I might not have needed to table the amendment today to make sure that this was taken into consideration.

[Lord Freud]

I apologise to the noble Baroness for not dealing with the matter earlier, and I am pleased with the outcome.

Amendments 47 and 48, tabled by the noble Baroness, Lady Lister, would prevent the repeal of the duty to publish and lay a triennial UK strategy. In practice, I dealt with that when I was describing in an earlier amendment what our approach would be. Amendment 49, tabled by the noble Earl, Lord Listowel, would place a statutory duty on local authorities in England to,

“prepare a joint child poverty and life chances strategy”.

While commending the noble Earl for his focus in this area, the Government do not believe that burdening local authorities with a one-size-fits-all strategy requirement would help to transform children’s lives on the ground. Local authorities will have the freedom to determine the approach they want to take in their area, building on the partnerships already in place. The Government will look to local authorities to use this freedom to take effective action to tackle the root causes of child poverty and improve children’s life chances. We will continue to support local authorities in tackling child poverty and improving life chances in their areas by providing data to inform them of their progress and where best they can focus their resources. This includes publishing local level life-chances data on children and workless households and educational attainment for all children, particularly disadvantaged children.

Local authorities can make decisions at the local level to ensure that actions are complementary and fit with local timetables and circumstances to deliver maximum effect. That is something that the centre cannot do. When looking at low-income measures in relation to local authorities, their unpredictability, which as I said is so difficult for central government, has the same volatility for local government, making it spend money on action that does not produce the best outcomes.

Clause 5 will reform the Social Mobility and Child Poverty Commission to become the Social Mobility Commission. Some noble Lords have indicated that they do not want Clause 5 to stand part of the Bill. The Government want to galvanise action on social mobility which calls for concerted effort by the Government, business and the third sector, operating alongside our focus on improving children’s life chances. The Government’s reforms to the commission will add impetus to its efforts to promote and improve social mobility and strengthen and expand its remit in this important area. The reformed commission will perform a key role in ensuring independent scrutiny of progress to improve social mobility in the UK. It will promote social mobility in England and, on request, provide advice to Ministers—I am not quite sure whether I can blame the noble Lord, Lord McKenzie, for this, but I am checking—on how to provide social mobility in England. The commission will be an integral part of the Government’s drive to promote opportunity and remove barriers to progress towards a society where everyone is able to play their full part and realise their potential regardless of their background.

The reformed commission will no longer be tasked with tracking progress against the current set of income-based measures, and will instead be able to focus single mindedly on the crucial role of improving social mobility. The commission will build on its history of insightful work and continue to publish robust evidence-rich publications not only for the Government but for employers, schools, parliamentarians, parents, families and citizens of this country. Its publications have been instrumental in moving forward the debate on social mobility in this country, and I look forward to it continuing to do so. I particularly want to thank the commissioners who have volunteered their time freely to carry out this vital role, and the leadership of the commission’s chair, the right honourable Alan Milburn and its deputy chair, the noble Baroness, Lady Shephard of Northwold.

Amendments 36 to 45 seek to rename the commission as the life-chances commission rather than the Social Mobility Commission. They would also amend the duties placed on the commission, including placing a statutory duty on it to provide advice to Ministers on social mobility in England, whether or not at Ministers’ requests. I shall turn to Amendments 36 to 40 and 42 to 45 tabled by the noble Baroness, Lady Lister and the noble Lord, Lord Kirkwood, which would rename the commission and amend the duties placed on it to promote and improve life chances instead of social mobility.

I have already set out the importance that the Government place on social mobility and the commission’s role in its scrutiny and advancement. It is the Government’s view that the reformed commission should have the single-minded focus on social mobility. Our proposals will strengthen and expand its remit on this important issue. The commission’s independent scrutiny of social mobility will help to build a society where someone’s starting point does not determine their end point. Our proposals will give the commission a clear remit and focus that will enable it to fulfil these new duties effectively.

Alongside the commission’s scrutiny role, our new statutory measures on worklessness and educational attainment will bring greater transparency to the Government’s actions to improve children’s life chances. As I have explained, we will have an annual report on progress in that area, which will allow anyone to scrutinise and hold the Government to account.

Amendment 41 tabled by the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie, would require the Social Mobility Commission to give advice to a Minister of the Crown about how to improve social mobility in England rather than to do so on request. The commission already has a statutory duty to publish a report setting out its views on the progress made towards improving social mobility in the UK. It is implicit that such reports can provide and offer advice about areas for future action as well as assessing past progress. That is certainly the way in which the commission has interpreted its remit in the past. It is not appropriate for the Government to start dictating to the commission as an independent body how it should discharge its functions in future.

Every year the commission undertakes a number of research projects, publishing reports and recommendations and developing the evidence, based on a range of subjects relating to social mobility. Through these research projects and its annual report, the commission provides a wide range of evidence-based analysis, all of which is published and available for anyone to see which can speak powerfully to government and other players.

The provision for the commission to provide advice to a Minister of the Crown on request serves an important purpose. It enables the Government to draw on the commission’s expertise in areas that particularly matter to it beyond those already covered in the commission’s reports, and it is important that we do not lose this provision. Noble Lords should note that the current provisions relating to the commission are amended as a result of repeals set out in Clause 6 and amendments to its name and functions set out in Clause 5. Should Clause 5 not stand part of the Bill —some have indicated that they intend to vote against it—the commission would cease to exist entirely. I look forward to working with the reformed commission in the coming years to make further progress in transforming social mobility.

[Baroness Lister of Burtersett]

I asked a specific question about the future of the Child Poverty Unit. Would the Minister answer that before I wind up?

[Lord Freud]

We will ensure that there is a full range of Civil Service support to drive forward the agenda. We will set out arrangements for the Child Poverty Unit in due course. With that, I urge the noble Baroness to withdraw her amendment, and other noble Lords not to press theirs.

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[Baroness Lister of Burtersett]

The noble Baroness, Lady Grey-Thompson, has made a very powerful case as to why cutting benefits actually makes it harder for people, particularly disabled people, to find work. That has also come out in other research. For example, Community Links has said that if you push people into survival mode, then they just have to focus on surviving.

I want briefly to respond to the noble Lord, Lord Lansley, who talked about the incentive structure. We have heard a lot about the famous OECD quote, which has been bandied back and forth. I thought it might be worth reading out the paragraph from which that quote came:

“A policy of no welfare would be the best solution to maximise labour supply, if equity issues were not a concern”.

I shall miss out the next sentence, but it does not change the meaning:

“distributional issues are a primary concern when designing policies to help people return to self-sufficiency through work and, in this context, studies show that in-work benefits can maximise social welfare”.

The message coming from the OECD report that has been quoted so often is in fact that the answer lies in improving support for those in work—which, of course, the Government are making worse—rather than cutting benefits for those out of work.

Another OECD report that came out only two years earlier, on incapacity benefits—so I am surprised the Government have not mentioned it—called Transforming Disability into Ability, refers to the benefit traps and incentive problems that the noble Lord talked about. However, it said:

“The evidence concerning such types of benefit traps is inconclusive”.

I suggest that it remains inconclusive, and the evidence prayed in aid by the Government does not support the case for this really quite savage cut in benefits for disabled people.

[Lord Freud]

Clauses 13 and 14 remove the work-related activity component and limited capability for work element for new claims for ESA and universal credit. These clauses do not affect the support group component, the UC equivalent or the premiums that form part of income-related ESA.

ESA was introduced by Labour in 2008, and the work-related activity component was originally intended to act as an incentive to encourage people to participate in work-related activity and therefore return to work quicker.

The original estimates were that far more claimants would move into work. Indeed, the White Paper Raising Expectations and Increasing Support: Reforming Welfare for the Future, published in 2008, stated that the then Labour Government aimed to reduce the number of people on incapacity benefits by 1 million by 2015. However, only around 1% of people in the work-related activity group leave the benefit each month, so clearly the existing policy is not working as intended and is failing claimants.

While financial incentives are only part of the answer on what impacts on claimant behaviour, they are an important part. This has been recognised for a long time. Going even further back, a Green Paper, A New Deal for Welfare: Empowering People to Work, published in 2006, highlighted that most people who came on to incapacity benefit expected to work again but many never did; that the longer a person remained on benefit, the less chance they had of leaving; and that incapacity benefit reinforced this by offering more money the longer that someone was on benefit. I am sorry to say that although that Green Paper was talking about incapacity benefit, a similar sentiment could now be expressed about ESA. Too many people with disabilities and health conditions are still being excluded from the world of work and not fulfilling their ambitions. I am grateful to my noble friend Lord Lansley for pinpointing this issue.

I turn to the international evidence on incentives that we have been bandying around. The OECD report argued:

“Financial incentives to work can be improved by either cutting welfare benefit levels, or introducing in-work benefits while leaving benefit levels unchanged”.

The findings cover the whole population, and although not specifically focused on the disabled population, do not indicate that such incentives would not apply.

[Baroness Lister of Burtersett]

I just read out the whole paragraph that that quote is taken from, which makes it quite clear that it sees the answer as lying in improved in-work benefits, not in cutting out-of-work benefits.

[Lord Freud]

I am not now looking at recommendations for action. I am just looking at what evidence we have that incentives either way work for the disabled community because that is the issue that noble Lords are querying. Let me go on. A paper by Barr et al, published by the Journal of Epidemiology and Community Health in 2010, asks:

“To what extent have relaxed eligibility requirements and increased generosity of disability benefits acted as disincentives for employment?”.

It finds that eight out of 11 studies reported that benefit levels had a significant negative association with employment. To pick up the point made by the noble Lord, Lord Low, about the level of the evidence, while they state that they cannot quantify the size of the effect, they conclude that there definitely is one. The most robust study in that paper, by Hesselius and Persson from 2007, demonstrated a small but significant negative association. The final paper, by Kostøl and Mogstad from 2012, is about evidence from Norway regarding a positive incentive structure allowing disabled claimants to retain more of their benefits when moving into work, which resulted in more claimants starting work. The study shows the impact of financial incentives on disabled people able to undertake preparation for work or work itself, which is a group synonymous with our WRAG population.

[Lord Low of Dalston]

I am sorry to have been a little slow in coming back to the Minister; it took me a little while to find the reference. With regard to the Barr study, the Minister will recall that I pointed out that Barr et al said that, with regard to whether there was a negative association between benefits and employment rates, there was insufficient evidence of a high enough quality to determine the extent of that effect.

--- Later in debate ---

[Lord Freud]

That is the point that I just made: they could not determine the extent but they could determine the direction. Lastly, the Sheffield Hallam report, which the noble Lord, Lord Patel, mentioned, says that it is unlikely that they will move into employment because of the obstacles that they face. However, we are providing additional support. Indeed, that report did not look specifically at the WRAG.

A number of noble Lords have questioned why we are suggesting that claimants who have been found to be “not fit for work” should be expected to be able to work. I stress that ESA claimants in the work-related activity group have been found to have limited capability for work. The same is true for universal credit claimants. This is very different from being unfit for any work and, although they are not required to look for work, ESA explicitly recognises that claimants may be able to undertake some work via the permitted work rules.

On the question from the noble Baroness, Lady Meacher, about adding employability to the WCA, the Secretary of State announced his intention to look at how assessments can be better geared towards those preparing for work. As a number of noble Lords have pointed out, we have announced a White Paper to set out our reforms to improve support for people with health conditions and disabilities.

There may be limitations on the type and amount of work that people in the WRAG can do, and they may also need workplace adjustments, but employment is not ruled out. This is an important distinction; we know that many people with disabilities and health conditions are already working, and many others want to do so. The move to universal credit, an in-and-out-of-work benefit that supports small or fluctuating amounts of work, means that many of the barriers in the current system that claimants face when moving into work are removed. Those are the kind of issues that the noble Baroness, Lady Hollis, was talking about with regard to linking rules. This is particularly helpful for people whose health condition means that they can work only some of the time.

To pick up the points from the noble Lord, Lord Low, and the noble Baroness, Lady Grey-Thompson, about the way in which some of these costs are used when either finding work or being in work, travel-to-work costs can be met by the Access to Work scheme, and travel-to-interview costs can be met by the flexible support fund, which is run in JCP. The Government are committed to ensuring that disabled people are able to participate fully in society, and we have set out our ambition to halve the disability employment gap. It is a duty of the Government to support those who want to work to do so and, as I have already mentioned, most people with disabilities and health conditions want to work, including the majority of ESA claimants. Some 61% of those in the WRAG tell us that they want to work, and we mean to put those people’s ambitions at the centre of what we do.

On the point raised by the noble Baroness, Lady Meacher, and touched on by my noble friend Lord Blencathra, about whether employers would employ disabled people, we recognise that that is an issue and have pushed the Disability Confident campaign. We have Access to Work behind that, not to speak of the incentive structure of universal credit to get people into work.

In 2012, the UK had a disability employment rate gap of 34 percentage points, which was higher than that in France and Germany, with 19 and 22 percentage points respectively. Therefore, we know it is possible for us to do better and ensure that people with health conditions do not get trapped in the benefits system. That leads to why we are committed to halving the gap.

[Lord Kirkwood of Kirkhope]

Could the Minister give us some assurance about the impact of the 60% reduction in the departmental expenditure limit between now and 2020? I hear what he says, but to get the kind of service that he aspires to needs specialist help and experienced people, who will be harder to find because the department will have less money to pay them.

[Lord Freud]

That is a massive question. The short answer is that because universal credit is a much more efficient benefit to administer, we are able, in practice, to put more people on the front line to support those who we need to support. The department has been working very hard, with very precise ways of helping quite a lot of new people doing quite a lot of new things; work progression is one part of that and disability another.

The changes I have been talking about will be accompanied by new funding of up to £100 million per year by 2020-21, which is part of where the money is coming from, to help claimants with limited capability but some potential for work to move closer to the labour market and, when they are ready, to get back into work. We will provide more details on this kind of support next year. In the Autumn Statement, the Government announced an increase of nearly 15% to help people with health conditions return to and remain in work.

There is a great deal of interest in this House and elsewhere about how we will make this employment offer. We will set up a task force, which will include external experts, disabled people and disabled people’s organisations to make sure that we do this in the best possible way.

In this context, I will pick up one other point from the noble Lord, Lord Low, who said that the Work Programme had failed disabled claimants. More generally, the Work Programme clearly has had some astonishing outcomes. In this area, it has taken a group that is traditionally very difficult to get into work and, in the latest cohort, it has got one in 13 people into work for at least three months since joining the scheme. That figure is higher than the expected level of one in 14, and has effectively doubled since the Work Programme started. Then, when it was trying to find its way into what was working, the figure was one in 25.

The noble Baroness, Lady Howe, raised the issue of mental health, which has been of acute concern to us for a number of years and is an issue that I personally have pushed for five and a half years now. We now have a programme of £43 million over the next three years to build our evidence on what works for those who have been long-term unemployed and have mental health conditions. A range of pilot schemes is going through to test what actually works. I am enormously proud of getting that kind of money to this kind of issue, which I suspect has been but a dream for previous Ministers in my position.

Let me address the amendment tabled by the noble Lord, Lord Patel, the noble Baroness, Lady Meacher, and the noble Lord, Lord McKenzie, which seeks to do two things. First, it requires the Secretary of State to publish a report, before subsections (2) and (3) come into force, on the impact that these provisions will have on those affected by the change, particularly the impact on a person’s health, finances and ability to return to work. A similar amendment was laid and debated in the other place. We have, of course, already published our assessment of the impacts, which was made available on 20 July. I can assure noble Lords that the Government are committed to a fair tax and welfare system, and that every individual policy change is carefully considered. How the changes affect individuals will depend on their circumstances, including the nature of their illness or disability, which can vary considerably.

I point out to the noble Lord, Lord Patel, that the proportion of people in relative poverty who live in a family where someone is disabled has actually fallen since 2010. PIP is the benefit that provides a contribution towards some of the extra costs arising from a long-term health condition, and that is protected. I know that the noble Lord is particularly concerned about the effect of this change on people with cancer. I am delighted to be able to confirm that the vast majority of people with cancer claiming ESA are in the support group. This includes anyone who is either preparing for, receiving or recovering from chemotherapy or radiotherapy that will significantly limit their ability to work. Only a small proportion of individuals whose initial diagnosis is cancer will be placed in the WRAG. Employment can obviously play a vital part in supporting an individual’s recovery. Macmillan itself recognises this and stated in a report:

“Many people who are working when they are diagnosed with cancer would prefer to remain in work, or return to their job, during or after treatment”.

I will pick up on the point made by the noble Baroness, Lady Manzoor, and my noble friend Lord Blencathra about Parkinson’s. On its website, Parkinson’s UK recognises that many people with Parkinson’s continue to work for many years after their diagnosis, although to do so they may need changes to the way in which they work. I also need to reassure the noble Baroness, Lady Meacher, that no one who has motor neurone disease is currently in the WRAG.

As other noble Lords have mentioned, we are now committed to replacing Work Choice and the Work Programme with a combined work and health programme, so the support systems should now start to ratchet up, benefiting from the considerable amount that we have learned in the last few years.

There is a large body of evidence to show that work is generally good for physical and mental well-being and that, where their health condition permits, sick and disabled people should be encouraged and supported to remain in or to re-enter work as soon as possible. That is why an important part of this change is the extra resource that we are putting into support to help bring that about.

The second part of the amendment seeks to require that any regulations made under this section of the Bill be made under the affirmative procedure. However, as these measures are being debated extensively throughout the passage of the Bill, I am not convinced that requiring further debates in both Houses on the regulations is a necessary or, indeed, appropriate use of costly parliamentary time.

I can confirm to the noble Lord, Lord Patel, that those who move from support to WRAG will be protected. It will not be regarded as a new claim, as he asked.

I turn now to the amendments tabled by the noble Lord, Lord Layard, and the noble Baronesses, Lady Hollins, Lady Tyler and Lady Howe, which seek to remove work rate requirements from claimants with a mental or behavioural disorder and refer them to IAPT. As already stated, there is a large and growing body of evidence over the last decade showing that work can keep people healthy as well as help promote recovery if someone falls ill. This includes mental health. By contrast, there is a strong link between those not in work and poor health. We also know that the majority of ESA claimants in the WRAG want to work.

At this point I would like thank the noble Lord, Lord Low, and the noble Baronesses, Lady Meacher and Lady Grey-Thompson, for the report that I received yesterday. They brought it to me, and I read it with great interest. I am particularly struck by the impact that being out of work has on people’s health—and that is, of course, the reason that we have announced our intention to have a White Paper. We will continue to monitor the impact of this change over time through regular national statistics.

Amendment 52 was spoken to by the noble Lord, Lord Layard, and my noble friend Lord Lansley. We recognise the barriers that people can face, which is why we are committing these resources to help them find what works best for them. I agree that access—and particularly early access—to treatment services can be crucial to achieving recovery. I genuinely support this part of the agenda, and the noble Lord, Lord Layard, knows that I do, but I do not believe that this particular Bill is the right mechanism to achieve these ends. The Secretary of State does not have the power to offer NHS services to claimants. Even if he did have that power, devolved Governments in Wales, Scotland and Northern Ireland have had power over the organisation and budgets of the NHS within their jurisdictions since 1999, so in practice this amendment would be constitutionally impossible.

I should like to conclude—noble Lords will be relieved to hear—by reminding the Committee that the Government committed in their manifesto to halving the disability employment gap and improving the support we provide to people with mental ill-health and long-term health conditions. The change to ESA and universal credit is an important part of that, so I urge the noble Lord to withdraw his amendment and support the proposition that Clauses 13 and 14 should stand part of the Bill.

[Lord Patel]

My Lords, we have now been talking for about two hours and seven minutes, with some 17 speakers. We cannot claim that we have not given enough time to this group. I do not want to prolong the discussion; I am tempted to take this opportunity to engage with the noble Lord, Lord Lansley—for which I have been waiting for a very long time—but I will wait a little longer. I thank all noble Lords who have taken part, whether they addressed my amendment or the other amendments. I sincerely appreciate very much—I say that on behalf of all of us—that the noble Lord, Lord Freud, does listen to us and his response at length demonstrates that. I am encouraged by some of the things he said relating to my amendment and cancer patients, but I hope that others might have felt that some of the things he said were encouraging. I have no doubt that there are others who did not. I, and, I am sure, others, will read very carefully what he said, encouraged by the White Paper. I thank the Minister and beg leave to withdraw my amendment.

Welfare Reform and Work Bill

Lord Freud Excerpts

Monday 7th December 2015 Lords Chamber

[Baroness Howarth of Breckland (CB)]

My Lords, I want to speak extremely briefly because the speech I might have made has already been made by other noble Lords in terms of detail.

Having listened to the Minister talk in various venues about wanting to ensure that there are no unintended consequences from this legislation, I want him to think carefully on the speeches that have been made and about what basis of philosophy or principle the Government have underlying this legislation. I know the basic tenet is that they want to make sure that parents can work and that all children are able to achieve the best educational outcomes—those are the Government’s own words. But some of these measures will undermine that and take families into greater financial hardship. I am particularly interested in the children, because taking those families into greater financial hardship will reduce the life chances of those children. Those of us who have worked with children down the years have seen the consequences of that, not only the emotional consequences but the financial consequences.

All the arguments around larger families, kinship care, adoption and the very many informal arrangements that families make to ensure that their children are emotionally cared for have been made. Again, I hope that the Minister will reflect on that in the context of his own Government’s policy and objectives.

We are a nation that should care. Indeed, the Minister’s party described itself as a “caring party”. I also admire the Government’s objective of ensuring that children make their own way and are not left in poverty because of parental behaviour. However, we know that you can affect that behaviour, as the noble Baroness, Lady Sherlock, and others have said, by the kind of care that they receive themselves and are able to reflect with their children. Therefore, will the Minister tell us how he intends to ensure that the Government’s philosophy and principles are reflected in the way that they deal with large families, particularly those from disadvantaged groups?

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

I thank noble Lords for some very good speeches. To pick up the point made by the noble Lord, Lord Kirkwood, I have listened to those speeches very carefully, although I am not in a position today to provide much satisfaction as I stand here. Let me begin by setting the context for the policy.

[Baroness Hollis of Heigham (Lab)]

Does that mean that the Minister will give satisfaction to us before Report?

[Lord Freud]

No, it means that I am not in a position to provide any satisfaction and, by definition, that position does not change.

Let me begin by setting the context for the policy, which will remain relevant for the other amendments on these clauses. At the 2015 summer Budget, the Government announced their plans to move from a low-wage, high-tax and high-welfare economy to a higher-wage, lower-tax and lower-welfare society. This is part of the Government’s plan to deliver a new deal for working families, which also includes incentives to ensure that those who are in work are rewarded fairly. As part of this, we announced reforms to child tax credit and universal credit to help put welfare spending back on to a sustainable footing.

The tax credits system has become too generous. As introduced by the last Labour Government, it was originally forecast to cost £11 billion in its first year. In fact, tax credit expenditure more than trebled in real terms between 1999 and 2010; and increased by £9.6 billion in real terms between 2004-05 and 2014-15. Currently, the benefit system adjusts automatically to family size, while many families supporting themselves solely through work do not see their budgets rise in the same way when they have more children. The average number of dependent children in families in the UK in 2012 was 1.7, so the Government feel that it is fair and proportionate to limit additional support provided by the taxpayer through child tax credit and the child element of universal credit to two children.

[Baroness Howarth of Breckland]

My Lords, I am sorry to interrupt the Minister, but may I ask him about the difference between those families who choose to have more children—which I understand, in relation to the policy—and those who find themselves with more children, which saves the state money because of circumstances that have been described today?

--- Later in debate ---

[Lord Freud]

That is the point of these amendments, which I am in the process of dealing with, so I will provide the government response to those exemptions.

Turning to the amendments themselves, these are intended to specify circumstances in which the policy to limit child tax credit and the child element in universal credit would not apply. Amendments 1, 9 and 17 are intended to allow exemptions where the child is a member of the household through kinship care or a private fostering arrangement, and Amendment 16 where the child is a member of the household through being adopted. Amendment 10 is an enabling amendment to allow for exemptions to be made in relation to Clause 12.

Amendments 1 and 9 are intended to provide an exemption for particular children who are,

“in the household as a result of a kinship care or private fostering arrangement”.

Amendments 16 and 17 would not apply to particular children or young persons but would exempt households from the limit of two children in child tax credit and universal credit where the specified circumstances applied to,

“a third (or subsequent) child”.

Thus a household with three children, limited to two children, who adopted a fourth child would then receive the child element for the four children. By limiting support to two children in child tax credit and in universal credit, the Government are ensuring that the system is fair to those taxpayers who fund it, as well as those who benefit from it.

The Government do recognise the vital role that kinship carers play. For example, in universal credit, kinship carers will have to attend periodic interviews only for the first year after a child joins their household, which enables the carer to focus on helping the child through this difficult period. To pick up the point made by the noble Baroness, Lady Sherlock, about the Government’s attitude to adoption, the Government take the importance of adoption very seriously. In the summer Budget, the Government provided £30 million to support the creation of regional adoption agencies to help speed the adoption process.

The noble Baroness, Lady Lister, mentioned the exemptions outlined at Second Reading. The Government have been consistent since the summer Budget in saying that we will exempt a third or subsequent child or young person who is one of a multiple birth where the multiple birth takes the number of children or young persons in a household above two, and that we will exempt a third or subsequent child born as the result of rape. Those are the exemptions that we have spelled out. We have also been clear that the exemptions will be dealt with in secondary legislation and we will provide more detailed information on those exemptions to noble Lords ahead of the next stage of the Bill.

The noble Baroness, Lady Sherlock, asked about the assessment that we have done in terms of the policy deterring adoption and the taking on of sibling groups. That was contained in the impact assessment of 20 July. We have considered the impacts, which in effect meet our obligations set out in the public sector equality duty.

Amendment 10 is unnecessary as regards recognising the need for exemptions to apply in certain circumstances. We have the power in Clause 12(4) to specify exemptions to the limit. As I said, as was set in the summer Budget, we will make those particular exemptions.

Amendments 16 and 17 propose to establish an appeals process. Comprehensive appeals arrangements already exist in relation to social security and tax credits, and these arrangements will apply to any decisions made under the provisions in the Bill, as well as to exemptions set out in regulations. There is therefore no need to establish a new appeals process. For the reasons I have set out, I urge noble Lords not to press their amendments.

[Baroness Lister of Burtersett]

At Second Reading, when the Minister talked about the exemptions that the Government have made clear will be included, he said:

“The situation with kinship carers is similar”.—[Official Report, 17/11/15; col. 125.]

Why is he today saying that he is now not prepared even to consider the situation of kinship carers? What has changed?

[Lord Freud]

If I misspoke at Second Reading, I apologise to the Committee. I was saying that they were a similarly important group; I was not trying to say that there would be an exemption. I did not make that statement.

[Baroness Hollis of Heigham]

My Lords, the Minister made much of the financial probity argument and said that tax credit expenditure had raced away out of control, with a threefold increase between its first year and today, at £30 billion. Will he confirm that, at the same time, the bill for income support has fallen from nearly £16 billion in 1996-97, when we inherited it from the noble Lord, Lord Fowler, to £2.9 billion now, because tax credits have helped people who depended on out-of-work benefits to come into work, as we all wanted? Will he also confirm what the OBR has told us: that welfare expenditure, including pensions, was 12% of GDP in 1983-84, was 12% of GDP in 1993-94 and today is 12% of GDP? So the untrue cliché that expenditure is racing away and out of control is not supported by the facts.

[Lord Freud]

I think the facts that the noble Baroness is comparing are somewhat spurious. Working age IS was £15.8 billion in 1996-97 in real terms, but when you apply that to lone parents—which the noble Baroness was, I think—the figure was only £6.4 billion. The best way to do this comparison is to take all the figures for tax credits and their predecessors—family credit, disability working allowance, child allowance, IS and JSA—and see where they have gone. Those figures have gone up from £7.1 billion in 1997-98 to £30.8 billion in 2010-11. It is really important, when we get into the figures in this area, that we look at like for like.

[Baroness Hollis of Heigham]

Would the Minister like also to give us the figures for the number of self-employed people who have been able to move into the labour market, alongside those for lone parents, whose median income is £10,000 a year, who are also dependent on tax credits and who, 10 or 15 years ago, were among the unemployed?

[Lord Freud]

Of course, one of the most interesting things about the way tax credit has moved is that people who might have gone into the benefits system may well have gone into the self-employed tax credit system, but the figures I have just provided are the best comparison and include the self-employed on tax credits. They show an enormous increase in the overall figure. Because this is clearly a complex set of figures, I am very happy to write formally to the noble Baroness setting out the true figures on this important matter.

[Baroness Sherlock]

My Lords, I wonder whether the Minister can help me. When I asked what assessment the Government had made about the impact on the likelihood of couples to adopt sibling groups, and whether costs would increase elsewhere, he kindly referred me to the impact assessment. I spent quite a bit of time this weekend reading the impact assessment, being a slightly sad person, and I cannot actually find the section which refers to adoption at all, to sibling groups in particular, or, indeed, to costs elsewhere in any government department. If he can point me to the page or paragraph number, it would be very helpful.

While I am on my feet, the Minister may have forgotten to answer the question raised by the noble Baroness, Lady Howarth of Breckland, who asked specifically about the impact on couples who had not made a choice. The Government mention in the impact assessment that one of their objectives is to ensure that families make the same choice about the number of children they have as might other families who are not in receipt of tax credits—of which more later; watch this space. I think the point the noble Baroness was making is that the kind of choice you get at midnight, when the knock on the door comes, as described by the noble Baroness, Lady Drake, is not quite the same as the choice other families make. Has any distinction been made?

[Lord Freud]

It is actually extraordinarily hard to draw up a system. Those choices are different for different groups. What we are trying to do in this measure is make the choices the same whether you are reliant on the state support system—tax credits—or whether you are reliant on your own resources. That is the parity we are looking for here. That, I am afraid, is the best I can do in terms of the government response.

[Baroness Sherlock]

Has the Minister responded to the question about the impact assessment? I am sorry, which page is it on?

[Lord Freud]

Again, all I can say is that the impact assessment looks at all the impacts. The costs and savings derived are based on the full gamut of impacts.

[Baroness Drake]

Perhaps I may say this to the Minister. That is why I was looking back at the reasoning for this policy. When it comes to kinship carers, it cannot possibly be directed at influencing the decision of the carers as to whether or not a woman conceives and has another child, because kinship carers are taking on other people’s children. The choice is whether you embrace a vulnerable child or you abandon them. That is a totally different choice from someone in a family where their parent decides to get pregnant and have three, four or five children. Therefore the reasoning that applies to the person choosing to become pregnant is not the same reasoning that is applied when someone says at midnight, “I will take on this child rather than see them abandoned to the care system”.

[Lord Freud]

Clearly there is a difference between the voluntary and involuntary taking on of children, whether they are your own or anyone else’s. That is what our exemptions are for. We are seeking to try to draw the line between where it is involuntary, as in the case of rape, and where it is not.

[The Earl of Listowel]

First, I thank the Minister for his response, in which he said clearly that he is listening to the concerns raised in what has been expressed in the debate. Perhaps I should speak only for myself. I feel very anxious indeed about the welfare of the children whom we are discussing. I am anxious that children in care or on the edge of care might not have the prospect of a secure home that they currently have if this legislation is brought into being. I would be grateful if the Minister could act as soon as possible to reassure me on this. I am sure that this is a concern for all noble Lords in the Committee.

The question I want to raise with the Minister relates to his introductory comments on the rationale for the two-child limit in terms of child tax credit. I am sure that he will correct me if I am wrong, but he said that the Government are assuming that people make a rational choice when they choose to have a third child, and therefore, given that they are making a rational choice, that it is fair to say, “Of course the state will allow you to have another child, but it will not subsidise that additional child, or at least not to the extent that it has in the past, so you should bear this in mind if you are thinking of having a third child”. That is my rough understanding of what the noble Lord is saying.

When I think about young people in care, I know that most of them come from poverty in the first place, and many of them will go on to have families in poverty. Many will not get good qualifications; only 6% currently go on to university compared with 40% of the wider young people’s population. Their educational attainment remains stubbornly low. On apprenticeships, one hears all the time that these young people do not have the basic mathematical and literacy qualifications to get on to an apprenticeship scheme. So many young people leaving care will end up in poverty.

But we also know that many of them will have children very early. Many young women have children while they are still in care, and many will have them immediately after they leave. This, I suggest, is not a rational choice on their part. One reason that is often given, which seems to me plausible, is that, because they have never been loved themselves, they want to have a child who they believe will love them—and they will have other reasons for starting a family so early. However, they are not starting from a rational point. So my concern—which we will debate this more fully—is that this aspect of the Bill will be particularly disadvantageous to care-experienced adults and care leavers. They will be penalised because their lives are sometimes so chaotic and unhappy that they will start large families and they will be poor, and this area of the Bill will make them poorer still. I wonder if the Minister might say whether he has thought through the implications for care leavers and care-experienced adults of this aspect of the legislation in terms of penalising people who seem to choose to have larger families and who are poor.

[Lord Freud]

I know that the noble Earl is very concerned in this area of the care leaver and I understand exactly where he is coming from. Clearly the Government have a great deal of concern about some of these outcomes for young people in care—the noble Earl touched on some of the figures—but the choices, rational or not, should not be different from those of people who have to support themselves. I know that we will come back to this issue slightly later so I will stop on that particular point because we are dealing with another one today.

[Baroness Armstrong of Hill Top (Lab)]

My Lords, I understand where the noble Earl, Lord Listowel, is coming from and, indeed, I talked about the outcomes for the individual children. On the financial side, have the Government considered the expenditure that other departments will now—or would probably—have to make if this provision goes through as it is currently drafted? My noble friend Lady Sherlock asked the Minister about that and I do not think that he addressed it. While the Department for Work and Pensions may save, other departments will then have to pay more—and the cost of care, of course, is much greater than the cost of tax credits for kinship carers. Have the Government built in the assumptions around that, which are clearly very important?

[Lord Freud]

My understanding is that when we do these assessments we look at all of these aspects. But I have now been asked this question twice and I will go back and double check in this area and write to noble Lords on exactly how we did that set of calculations.

[The Lord Bishop of Portsmouth]

My Lords, I am sure we are grateful for the very thoughtful contributions made in Committee and for the powerful case that these amendments bring to us. I am grateful to the Minister for his recognition of the vital role of kinship carers—albeit that it is a limited recognition in terms of the amendments. I was disappointed by—if I heard the Minister correctly—the inflexibility of his position but grateful for the courtesy with which he heard from us and responded to us, and offered to return with further information.

A lot of emphasis has been placed on the choice that is involved. I fear that a rational choice for many potential kinship carers, if these amendments were not passed, would be the agonising one of not really being able to accept the responsibilities that they would like to accept. I will add that the rational choice for the Government and our society would be to accept the amendments and support these people as they fulfil those responsibilities and offer that love and care.

There has been a lot of emphasis on the cost savings: the potential anticipated initial cost savings and the subsequent costs that might occur to other departments and elsewhere. The important costs are those borne by our society—by the children—which may be significant. Failing to do our best for children is always wrong. Doing less than the best for those who are in these challenging circumstances is a poor reflection on us.

I hope that the Minister may be able to give further consideration to the matters that have been raised this afternoon, to which we may wish to return on Report. I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Freud]

I thank noble Lords again for another interesting debate, to which I have listened very attentively. Without wanting to get into the evidence, I read this report when it came out, although I may have forgotten all the page numbers.

As I have already said, the current benefits structure adjusts automatically to family size and removes the need for families supported by benefits to consider whether they can afford to support additional children. The mean number of dependent children per family is 1.7, and 86% of families have only one or two children. The amendments that we are looking at now relate to exemptions from the policy.

Amendments 2, 4, 5, 6, 12, 13 and 14 isolate five different groups: victims of rape; kinship carers; those who have previously claimed tax credits as a single parent but are now part of a step-family or cohabiting multiple family; those who have fled domestic violence; those who have suffered a bereavement of their husband, wife, civil partner or cohabitating partner. Amendment 15 would allow an exemption where the child is a member of the household through being part of a multiple birth. Amendment 18 would allow for an exemption in exceptional circumstances, as defined by the Social Security Advisory Committee. Amendment 20 would allow couples to claim the child element for three or four children plus any children to which an exemption would apply.

I make clear to noble Lords that most of these amendments are not actually necessary for inclusion in the Bill because we have already identified the need for exemptions to apply in certain circumstances. Clause 11(4) and Clause 12(4) provide the necessary powers to specify exemptions to the limit of two children or young persons for the purposes of calculating the child element in the two different benefits.

We already have special provisions in the benefits system for people fleeing domestic abuse and suffering bereavement, and we have already talked about kinship carers. On bereavement, to pick up the point made by the noble Baroness, Lady Manzoor, and the right reverend Prelate the Bishop of Portsmouth, we are introducing a system of paying a lump sum of £5,000, with 12 payments of £400. Those payments will be disregarded from other benefits such as universal credit.

On the point made by the noble Earl about care leavers, we recognise, as I said before, the additional barriers that care leavers experience and we have a series of policies to support them already.

As I have mentioned, we will exempt a third or subsequent child or young person who is one of a multiple birth where the multiple birth takes the number of children above two—clearly, if it is more than twins, that is covered in that category. I cannot at this stage go further on exemptions, but, as I said earlier, I will provide more information on them on Report.

I turn now to the exigency offer—that is how I read it—from the noble Baroness, Lady Sherlock, to bring in SSAC to define exemptions. The committee clearly has an important role to play in scrutinising draft social security legislation, but it is not right or proper, in our view, for the committee to have a role in policy development and delivery. Accepting this amendment would mean the Government handing policy, and therefore expenditure decisions, to the committee. I should point out, however, that the committee has an independent research capability and so is fully able to look at particular things that it thinks are of interest. The committee can then discuss those with us in some detail. I know that because I have had several of those discussions and found them rather valuable.

Amendment 20 would apply additional support for families that are larger than the average family and have a significant additional cost. Clearly, this amendment goes straight to the heart of the Government’s aim to get welfare expenditure under control and reduce its costs by the significant amounts for which we are aiming.

Amendments 15, 18 and 20 propose to establish an appeals process similar to that which we discussed under Amendments 16 and 17. We already have those arrangements in place.

Amendment 7 has three primary objectives. It would allow claimants to receive additional individual elements of child tax credit where they believe that an exemption applies to them, and where there is no evidence to the contrary. It would require HMRC to have regard to the claimant’s right to respect for privacy and family life under Article 8.1 of the European Convention on Human Rights. It would also mean that HMRC could not ask for information about the claimant’s private, medical or sexual history in seeking to determine whether the exemption applies.

We are looking at exactly how this exemption will be applied. In response to the question from the noble Baroness, Lady Sherlock, we talked to a number of stakeholders to ensure that these exemptions are delivered in the best possible way. Clearly, to the extent that JCP is involved in doing it, we will be providing that training. We are already required by the Human Rights Act 1998 to respect claimants’ right to a private and family life, so the specific provision introduced by the noble Baroness, Lady Manzoor, is not necessary, as it is already in place through that mechanism.

As I said, we are working on the best way to deliver this exemption; there is clearly a difficult line between voluntary and non-voluntary, which we discussed under the last group of amendments. It is interesting—I remind noble Lords—that we recognise domestic violence in universal credit, and we have got that process organised. Some of the other areas are extraordinarily difficult to introduce in practice, as noble Lords will appreciate, because of the complexity that they would bring to the operation of universal credit, but some of them are more straightforward than others.

Turning to the amendment on making a claim without evidence, if the Government were to allow a presumption in favour of the claimant for all exemptions, it would regrettably leave the policy open to very significant levels of fraud and error. However, we are now working on a way to do it without undermining claimants’ rights to privacy and family life.

The noble Baroness, Lady Sherlock, asked about applying the two-children policy to all means-tested benefits. Clearly, universal credit will combine all of the means-tested support for families once it is introduced. There will be a need to adjust the calculation of housing benefit to ensure that it remains at current levels, and it will not affect the room allowances in that particular measure.

[Baroness Sherlock]

Just to clarify, I was talking in this case about the exemption for multiple births, although it applies to all of them. Will the exemptions apply to all means-tested benefits—for a family not getting universal credit, for example?

[Lord Freud]

I am trying to think of another example because, as the noble Baroness knows, we are trying to incorporate all means-tested benefits. The main one is housing benefit and the other one that the noble Baroness may be thinking of is support for council tax where we have not made any provision because each council has its own policies. I cannot think of any other means-tested benefit to which, once universal credit is in and working, that would apply. I think that I have dealt as best I can with all the points raised and, for the reasons set out, I urge noble Lords not to press their amendments.

[The Earl of Listowel]

My Lords, I am grateful to the Minister for his responses. I am reminded by what he said of the importance of universal credit, which I think we all support in terms of enabling more people into work. I pay tribute to the Government one more time for their achievement in getting so many of our people into work after a time of such austerity. It is hugely important for families and for all of us.

I also thank the Minister for his acknowledgement of the work that I do and the interest I take in looked-after children. I have a specific question. The Minister talked about important strategies that the Government have developed for care leavers, which are very welcome indeed. But we know that outcomes, despite this good work, are often still very poor for care leavers. Will the Minister consider making an exemption among those that he is considering specifically for care leavers in this regard? Separately, will he consider making a similar exemption for care-experienced adults? These young people and adults have had a disastrous start in life and often their experience in the care system is unsatisfactory, with much instability. As a society, we should consider exempting them because of the histories that they have experienced.

I listened with interest to the noble Lord, Lord Lawson, in his riposte to the noble Baroness, Lady Hollis. If I understood him correctly, he said that we should bear in mind that for the taxpayer, payments of this kind are not popular. Hard-working taxpayers may well not wish to pay other people to have more children when they have had to make hard choices themselves about clothing and schooling their own children. I take his point, but just because a measure is not popular, it is not necessarily not the right thing to do.

As an example, the decision by the Prime Minister to make a commitment of 0.7% of gross national income to the Department for International Development seems to have been pretty unpopular, but I certainly think that it was the right one. It becomes clearer and clearer that it was the right decision when we look at what is going on in Syria. I may well be mistaken, but my personal view is that it seems more and more right when we consider the instability in Syria and other places.

--- Later in debate ---

[The Earl of Listowel]

I thank the noble Lord for drawing that to my attention and I shall make it my business to read that finding.

Perhaps I chose a poor example, but often decisions that are unpopular can be the right decisions to make. Governments have a little more time to reflect and can decide that the cost of bringing children up in poverty has such long-term problems in terms of poor educational outcomes, imprisonment and later dependency on the state that despite such a policy being unpopular it is worth while investing in large, impoverished families to prevent their offspring becoming dependent on the state later on.

The Minister said that the average size of families was 1.7 children. What is the average size of families on benefit and the average size of a family in poverty? My sense is that they tend to be larger families and that this particular legislation will penalise larger families.

[Lord Freud]

Taking the noble Earl’s points in order, we need to have good strategies for care leavers. Clearly, the statistics are disturbing, and they have been for decades. I am not utterly convinced that exemptions in this particular area are the best way of supporting care leavers. There are other things that we can do that are way ahead of this. However, we do now flag care leavers in the benefit system so we know who they are and we can look at what they are doing, certainly with JSA, and I hope that we will be putting that into UC, although I am not absolutely up to date on where we are with that system.

On the noble Earl’s point about popularity, it is important that the benefits system does not become unpopular because that will undermine its legitimacy. It could be argued that one thing that we are doing now is creating a benefits system that has legitimacy and acceptance because it is perceived to be fair and to drive the right outcomes, which is not something that people feel about the legacy benefits system. That is a subtle point and closely related to what we are doing here.

The figures that I have seen, which I am afraid I cannot recall off the top of my head, show that very rich families and very poor families tend to be larger than those in the middle—thereby hangs a tale that goes to my noble friend’s point about who can afford to have large families. But I will have to write to the noble Earl with the exact figures.

[Baroness Sherlock]

When the Minister does that, will he look at the study circulated to most noble Lords which specifically used ONS statistical data to assess the population? One of the things it concluded was that:

“These data show that socio-economic class, perhaps contrary to popular belief, does not affect family size”.

In the higher managerial and professional classes, 6.8% of families had three or more children compared with 6.4% at the very bottom. I can share the reference with the Minister but the data are not as he suggested. Maybe we can compare notes and come back at Report, but as I understand it—and I pay tribute to the noble Earl’s passion for caring for the very poor—one of the reasons that these things are popular is a presumption that poor people have lots of children, which is not true. Even if they did, if they were not working the benefit cap would cut them off once they had two children, if they were renting anywhere—even modest—in Plymouth.

[Lord Freud]

We can cut through debating this by getting the facts, which I shall get to noble Lords.

[Baroness Manzoor]

My Lords, this has been a fascinating and passionate debate and I thank noble Lords who have taken part. I particularly thank the Minister. I know that he is a kind and caring man and I have spoken to him about some of these issues. But I want to bring him back to the exemptions, which are really very important. I hope that he will forgive me if I did not hear him correctly. I assume that he was saying that other regulations addressed some of the issues that noble Lords and I raised. I will certainly read what he said very carefully to see if that is the case. If those regulations do not apply elsewhere—and they cannot, because we are talking about tax credits and universal credits limited to two children—would he please think again very carefully about these exemptions? It really will make all the difference to some of these very hard-working, low-income families we all want to support and help. I beg leave to withdraw the amendment.

Welfare Reform and Work Bill

Lord Freud Excerpts

Monday 7th December 2015 Lords Chamber

[Baroness Tyler of Enfield (LD)]

My Lords, very briefly, I lend my support to these very important amendments. We have heard some extremely powerful arguments. I want to draw attention to one point in Amendment 3, which refers to child tax credits and says that the limit should not apply,

“where one or more of the children or qualifying young persons are disabled”.

I remember vividly a meeting that I attended during the course of what became the Children and Families Act, organised by the noble Baroness, Lady Pitkeathley. The very point which she was talking about was the impact on parent carers trying to bring up disabled children. One of the mothers was bringing up three disabled children. I remember that vividly because I think it brought tears to most of our eyes, including those of the Minister. Can the Minister say what the Government’s thinking is about households which have more than one child who has a disability?

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

I thank noble Lords for this debate and, particularly, I heard the point made by the noble Baroness, Lady Meacher, about how the lone parent—the mother—is so often left on her own with a disabled child. That is a very moving point and clearly rings true.

Perhaps I may look at the technical position. Amendment 3 would exempt those families who have at least one disabled child from the policy which limits support to two children. The intention of this amendment is to allow families with a disabled child to claim the child element of child tax credit for an unlimited number of children. Under Amendment 19, that intention would apply to both tax credit and universal credit. I should point out, as a matter of information, that the difference in having the child element allowed for a third child is not actually that great, if you look at the statistics. That is because the number of parents who go on to have more children is actually very few, as the noble Baroness, Lady Meacher, will probably know, so there is not a lot of difference in the cost. I know that she will appreciate the thinking behind that point. Amendment 8, meanwhile, which goes on to the point about paying the child element, is technically a bit misdrafted, but I know that the intention of the amendment is to allow that child element to be paid.

The noble Baroness, Lady Sherlock, drew on the issue of whether a choice has been made. Clearly, we have considered the issue of disabled children carefully and looked at the challenges which these families face. We are committed to supporting those families with disabled children by paying the disability element of child tax credit and the equivalent in universal credit. That is true for all disabled children, although there are in practice rather few—I mean that there will be some, but relatively few—so, however many there are, it will be for not just the first disabled child but all of them. From what I am hearing, I think that the debate is now around the child element as well as the disability element and that that is where the differences lie in practical terms.

I acknowledge broadly the figures to which the noble Baroness, Lady Meacher, drew attention in regard to the reduction without the child element. When that is in UC as a unified benefit, it will be only one part of the total payment. On the amount that the family gets, the reduction will be much less than the “down to a quarter” figure to which she was referring. On top of the disability element that we are exempting, we are exempting from the benefit freeze all those benefits which relate to the additional costs of disability, including PIP and DLA.

On Amendment 19, which would create a duty for an appeals process, I repeat the point that I made earlier: we already have comprehensive appeal arrangements and therefore do not need this amendment.

The noble Baroness, Lady Lister, made a point about what happens to HBAI figures. As we have found out year after year, it is impossible to predict with accuracy future HBAI figures. As is customary, the noble Baroness, Lady Hollis, has a solution to it all, but I am not convinced that the discretionary approach would be the optimum one in this area. Whatever happens, I do not think that any kind of solution would come from that.

[Baroness Hollis of Heigham]

Given the amendments that we have debated so far—in the first group, the second group and now this one—what proportion of the estimated £1.3 billion in savings that I think the Government were expecting to make from this would therefore be lost to the Government?

[Lord Freud]

I am simply not in a position to deal with what are entirely hypothetical issues. I am not in a position today to offer very much satisfaction in these areas, as noble Lords know.

[Baroness Hollis of Heigham]

Can I push the Minister on this? In earlier debates, he was saying that the two main drivers for these proposals on the two-child policy were, first, the need to get financial control—he quoted very large figures that he expressed great concern about—and, secondly, the need to produce a level playing field between working families and non-working families. He must know the cost of all these amendments, because he will have had the briefing from the Box about them, but I have not heard him tell us that. How much would the cost be of the previous exemptions and, in addition, the exemptions referred to so powerfully by my noble friend Lady Pitkeathley and the noble Baroness, Lady Meacher? How much of those savings would the Government lose if they were to meet the exceptions that all the Committee has, so far, argued for today?

[Lord Freud]

I am not in a position to answer those questions because I have had all kinds of amendments tabled—including one from the noble Baroness, which would remove the policy and lose all of the £1.3 billion. I am not in a position to go through the exemptions at this stage like that.

[Baroness Hollis of Heigham]

So are the Government really saying, “We are opposing amendments because we can’t afford them”, but do not know what they will cost?

[Lord Freud]

I have given out as much information as I can on the questions at this stage and indicated what the relative positions are. On this amendment in particular, I was careful to make it clear that there is not a huge difference in cost terms—and I will double-check this—between allowing a child element for the disabled and exempting the family which has a disabled child. That is the main cost implication which I have been able to provide today.

[Baroness Pitkeathley]

If the Minister is not in a position tonight to answer those questions, can he give an indication of when he might be?

[Baroness Sherlock]

My Lords, before the Minister answers that, can I just say that I have found his responses today a little surprising. Many noble Lords have experience of being in Committee with him and having careful, detailed and well-informed debates. We are used to the Minister regularly getting up and telling us how much things cost and I find it almost impossible to believe that his department does not know how much these elements will cost. They have been proposed a long time. The department has had every opportunity and there are very good statisticians and modellers in the DWP. I can conclude only one of two things—either they know and have not told him or he knows and is saving it up for Report to launch it at us from the Box when we try and press a vote. Which is it?

[Lord Freud]

I would never launch something at noble Lords on Report in that way. Let me go and think about how I might present some useful figures in a reasonably timely way. That is not a promise to produce anything more than I have but I will look and see whether I can be more helpful, given that I clearly have not been now.

[The Earl of Listowel]

My Lords, will the Minister consider writing me a letter about improving access to childcare for disabled families?

[Lord Freud]

Can I look at that? I am not sure quite how much of this is in my own purview. If I can, I will.

[Baroness Hollis of Heigham]

I am amazed this information was not available at the Commons stage of this Bill, given it has been discussed in Parliament for several months— I think it was back in July that Second Reading took place—and to still not to know these figures surprises me enormously. While the Minister is being helpful in producing information, given that we know that 85% of the welfare cuts proposed by the Chancellor will fall on women and given we know that nearly all the “victims”—the recipients of concern in the exempted groups that we were talking about in previous amendments—are women, will he also do us a gender breakdown? He is absolutely right, as other noble Lords have also said, that it is usually the mother who is left caring for disabled children. I remember meeting vaccine-damaged children—part of the Minister’s responsibility, I think—and every parent there with a disabled child was a woman. Can I ask the Minister if he will add a gender analysis to the financial analysis of where some of these cuts fall and who the exemptions, therefore, would help to protect?

--- Later in debate ---

[Lord Freud]

I think I have to fall back on the position that we have produced an analysis that is published and is available to noble Lords. I just make the point that often these statistics refer to households with both a man and a woman in them and it depends on who the recipient is. It is a household payment, not a payment to women specifically. One has to be rather careful of that when one looks at those statistics in the way that the noble Baroness has.

[Baroness Lister of Burtersett]

The noble Lord is correct but women still tend to bear the main responsibility for the care of children, so the impact on a household is borne particularly by the mother.

[Lord Freud]

We are getting way off but our evidence is that the vast bulk of households share financial resources, so although someone in a household may receive a particular amount of money it does not necessarily mean that they do not share the burdens evenly. One can make a lot of false assumptions out of some of these data if one is not careful. I urge noble Lords not to press these amendments.

[Baroness Meacher]

My Lords, I thank the many noble Lords who have spoken in this relatively short but very powerful debate. The Minister certainly got a clear message that this is a matter of considerable concern to Members in most parts of the House. Perhaps I can say again that one-nation Tories of the past have always supported families with disabled children. I still hope that this Government too can show that they will follow the traditions of their party and not leave these families bereft and in severe straits. That is what these provisions will do in the absence of any amendments to them. I thank the Minister for his thoughtful responses as always. I think he always gives us a pretty good innings, but I hope that before Report he will feel able to clarify the relative costs of these various amendments, and then we can perhaps sit down and really think where the need is the greatest. If we are all in the dark it really is quite difficult to make sense out of things, unless the Government have implacably decided they will not change anything in this Bill at all. I hope that is not the view of the Government and of the Minister. I thank all noble Lords and the Minister and beg leave to withdraw the amendment.

--- Later in debate ---

[The Lord Bishop of Portsmouth]

My Lords, I express my strong concern about these clauses remaining part of the Bill. I offer three straightforward and, I hope, succinct comments: first, about the implications of these clauses; secondly, about the motivation of parents that is implied; and, thirdly, about where responsibility lies.

First, the Government place great emphasis on choice and personal responsibility for family size. I have to say that that assumes a remarkable assumption about the fail-safe effectiveness of contraception—or, if not, an apparent willingness for abortion to be appropriate as a sort of emergency contraception to keep family size to two children. I doubt the assumption, and would deeply regret driving people to seek termination on economic grounds. Is that really what the Government wish?

Secondly, over 35 years now I have played some part alongside others in preparing engaged couples for marriage and have often heard myself saying, “If you wait until you are sure you can afford children, you will never have them”. Religious traditions other than my own go further and specifically enjoin the blessing of children and family life. Are the Government aware of how these clauses will be received?

Thirdly, as I mentioned earlier in Committee, we—that is, a number of faith groups and organisations—made clear, in a letter circulated to all Members of the House prior to Second Reading, our belief that children are a blessing and not burdensome, a problem or a difficulty. To consign a child to being a financial problem over which the child himself or herself has had, and has, no control is indeed a singular responsibility—a responsibility for the mother and father indeed but, if these clauses go forward, it is a responsibility in which we shall all share. How sad it will be that a child growing up, becoming increasingly aware, will one day hear or discover that he or she is responsible in part for the family’s level of income simply by having been born. Although the Government seem to place that responsibility wholly on parents, I fear that the responsibility for this change would rest with us all. Is that what the Government want, and are we all prepared to accept that responsibility?

[Lord Freud]

My Lords, Clauses 11 and 12 introduce the Government’s reform to the child element of child tax credit and universal credit, which was announced by the then Chancellor in the Summer Budget of 2005. The purpose of child tax credit is to provide support to low-income families to help them with the cost of raising children, while universal credit, which replaces the child tax credit, is a unified benefit that provides support to low-income families both in and out of work. As it is being rolled out across the country it is providing a clearer and simpler system of support for families and provides real incentives for work. However, it is important that universal credit is kept on a sustainable basis and encourages families to make similar decisions to those who support themselves fully through work. The Government believe that child tax credit has become unsustainable, with expenditure trebling in real terms between 1999 and 2010, and going up the income scale to a level where a family with three children earning up to £40,000 will still be eligible for support. Last year the Government spent almost £30 billion on tax credits.

I will deal with the issue raised by the noble Baroness, Lady Sherlock, on the dependency ratio. In recent decades Britain has had a higher total fertility rate than the average of the older EU member states. Most families will not be affected by this measure. The mean number of dependent children per family is 1.7, and 86% of families have one or two dependent children. In fact, those families with two or fewer children are remarkably stable, whether they are lone parents, at 88%; opposite-sex cohabiting couples, at 87%; or married couples, at 84%.

[Baroness Hollis of Heigham]

My Lords, the point my noble friend was making was not just about replacement fertility rates. Given the time all of us hope to live longer, one of the responses of government has been to say that unless we can improve the worker-to-pensioner ratio we have to defer the age at which people begin to draw their state pensions, even if they have had hard lives previously. We do not have the resources to pay for it from existing workers as we do not have enough of them to sustain that pensioner support in the future. Nothing the Minister has said has challenged that.

[Lord Freud]

We are going way off the core issues by looking at the times people retire. A lot of things are changing, and it is almost impossible to fine-tune for that.

I will address the challenge set by the noble Baroness, Lady Sherlock, on what our rationale for this is. It is very simple: the Government want to ensure that the system is fair to those who pay for it as well as those who benefit from it. That is the government position. I should add that the Bill should not be taken in isolation. We are introducing a number of measures to support households in work by reducing income tax through increasing personal allowances, increasing wages and increasing free childcare.

The right reverend Prelate the Bishop of Portsmouth and the noble Baroness, Lady Sherlock, raised the issue of those areas where there is a cultural disposition for larger families. To that, we make the point that all families need to think carefully and ensure that they can afford to provide for a new child in their household.

I make it clear that these changes will not mean a reduction in entitlement for those families already receiving child tax credit for children born before the 6 April 2017. In universal credit, for families already receiving the child element of universal credit, the changes will apply only to children joining the household on or after that date. I think that we have another amendment on which we can go into that in more detail.

Families moving to universal credit from child tax credit and receiving child tax credit for more than two children, and families claiming universal credit within six months of a previous universal credit or child tax credit claim that included the child element, will continue to be able to receive the child element for those children.

On the point raised by the noble Baroness, Lady Lister, on the EHRC, as she knows, the Government set out their assessment of the impacts of the policies in the Bill on 20 July, and the memorandum to the Joint Committee on Human Rights was published on 8 September. Ministers have considered impacts with regard to all the relevant legal obligations when formulating the welfare policies announced in the Bill. The intended impact of these reforms is to incentivise work and ensure that work always pays.

[Baroness Lister of Burtersett]

Subsequent to that, the Equality and Human Rights Commission has produced its own assessment, which says very clearly that it believes that the human rights statement from the Government was inadequate. I welcome the fact that the DWP produced such a statement but given its inadequacy, will the Minister now respond to what the EHRC is saying?

[Lord Freud]

I believe there has been correspondence with it, which I think is public.

[Baroness Lister of Burtersett]

That is not an answer.

[Lord Freud]

That is the best I can do at this stage. However, I accept that that is a bit tentative as an answer, so I will look to get the noble Baroness a better answer, or as full an answer as I can provide after talking this through with colleagues.

The Government believe that these changes strike the right balance between protecting the vulnerable—we have discussed the extra support for families with disabled children—while encouraging families which receive both child tax credit and universal credit to make the same financial decisions about the number of children they can afford as are made by those families who support themselves solely through work. They help to make the welfare system sustainable and the move towards a high-wage, lower-tax and lower-welfare country. Clauses 11 and 12 should therefore stand part of the Bill.

[The Earl of Listowel]

Before the noble Baroness responds—and I do not wish to keep the Committee from its dinner—while I thank the Minister for reminding us about the very welcome new higher minimum wage that the Government are introducing, looking at figures from the Institute for Fiscal Studies on projections for the difference that that will make, it has been clear to me that the complex way in which the tapers work will often mean that, for instance, lone working parents will not benefit that much more from this new, very welcome offer. Therefore I encourage your Lordships to keep that in mind. It is a very welcome offer but it may not make that much difference to the families that we are concerned about today.

[Lord Freud]

I will just deal with that. In universal credit we are producing something very clearly tapered, without the trap at the 16-hour point, which is in the current legacy welfare system. Therefore we have a pathway. One of the things we are doing, particularly for lone parents, is that once you are freed from that tyranny of the 16-hour rule, it is interesting how firms in the north-west, where that is already happening, are able to work with those people and start moving them up the earnings progression—not just as regards the number of hours but earnings progression—and we are beginning to see signs of a transformation. That is behind some of these changes—we want to make people independent of the state as much as we can.

[Baroness Sherlock]

My Lords, I have debated a lot of subjects with the Minister over the last few years, and I am not sure I have ever been as disappointed in a Dispatch Box performance as I have been today. I know that the Minister knows these issues very well, and that he normally comes back. When noble Lords take a lot of care to mount arguments, take apart his arguments and engage, as many have done today, he normally does us all the courtesy of taking them on and responding to them carefully. He simply has not been doing that today.

I asked him only two questions and he did not answer either of them. I deconstructed the argument, and all he did was repeat it. He did not even engage with it. This is only a suspicion, and I am sure I am wrong, but it may just be that the Minister does not have any more enthusiasm for these provisions than I do. However, I am sure that that cannot be the case, and we will find that he comes back from supper enthused with zeal to take on and defend these proposals—which, frankly, has been sadly lacking so far.

I will say a couple of things. One is to reassure the noble Lord, Lord Kirkwood. He mentioned worrying about constitutional implications. He need not worry, of course, as he will well know, being much longer-serving than I am. Since this is primary legislation there is absolutely no reason why we should not send matters back to the House of Commons. The Companion makes this very clear at paragraph 8.181, where it says that,

“with regard to Commons financial privilege, the Lords may properly make amendments to Commons bills (other than supply bills) which, when they come to be considered by the Commons, are deemed by them to infringe their financial privileges. It also follows that the Lords need not anticipate what view the Commons may take of any Lords amendments with respect to”,

that. I hope that as a result he will sleep more easily tonight and will feel able to pursue this at a later stage.

I will make just one final point. I agree with the point made by many noble Lords that this two-child policy is qualitatively different from all the other measures. What we have traditionally done in support is to recognise in social security that children are a public and a private good and therefore that the costs of raising them should properly be shared between the taxpayer and the family. Traditionally, in the case of child benefit, we have said that we should all contribute something to the raising of all children; that where there are particular needs—for example, for disabled children—we should all contribute more; and that where people’s needs are greater, we should contribute more through means-tested benefits. This is a very dangerous day indeed if we move away from that and I hope very much that we will return to it at a later stage in the Bill. But I beg leave to withdraw my opposition.

Welfare Reform and Work Bill

Lord Freud Excerpts

Monday 7th December 2015 Lords Chamber

[Baroness Lister of Burtersett (Lab)]

My Lords, I support my noble friend, who made a very powerful case. The joint briefing from the churches and faith groups that was circulated to all Peers made a very good point. It said:

“A policy designed to incentivise families to make responsible choices, becomes an unavoidable financial penalty for anyone confronted by relatively common life events”.

This amendment in particular puts that quotation into relief. The Office of the Children’s Commissioner has raised similar concerns.

I made the point at Second Reading that this provision sits oddly with the Government’s own emphasis in this and earlier legislation on the importance of a dynamic perspective on family behaviour. Indeed, in a letter of 13 October to the EHRC about impact assessments for the current Bill, the Secretary of State made as his main point the need,

“to take fully into account the dynamic nature of people’s lives”.

So why are the Government refusing to do so now, especially, as my noble friend said, in relation to existing third or subsequent children where there is a new universal credit claim? What is the justification?

As my noble friend said, when this was explained to us I think the way it was put was that there would be an unfair advantage to richer families if they were able to claim universal credit for third and subsequent children. Perhaps these families were not claiming tax credits or universal credit before, but they could still be on a low income and simply not have claimed. We know that take-up is far from perfect. I know that the Government expect take-up to be higher for universal credit, but that remains to be seen. I have been around this game for quite a long time with the expectation that take-up would be improved by various benefits and so forth. However, it remains stubbornly at less than 100% for means-tested benefits. Even if they were better off—my noble friend made a powerful point here—financial circumstances can change very quickly in the event of life events or shocks. So where is the fairness in refusing support to, say, an early teenage child who is the third in the family and who was born many years ago?

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

I thank the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie, for bringing forward this amendment and I thank the noble Baronesses for making their points so succinctly, but effectively.

This amendment would change our approach to applying the two-child limit in universal credit so that it would apply only to children born on or after 6 April 2017. That effect would apply in existing and completely new claims for universal credit. This reform, which sees support for children in universal credit limited to two children, is primarily about fairness to the taxpayer. The tax credits system has grown unsustainably, and spending on tax credits for the 870,000 households which have three or more children is around £9.4 billion. To accept this amendment would, we estimate, increase projected universal credit expenditure by around £250 million in 2019-20. I am pleased that at least on this amendment I am able to provide the Committee with some costings.

The Government were elected on a manifesto commitment to reduce welfare expenditure by a further £12 billion during the lifetime of this Parliament, as part of the plan to eliminate the deficit and eliminate burdening the next generation with additional debt. There is no strong justification for the taxpayer to provide more generous financial support for completely new claims in respect of children born before 2017 than in respect of those born after that date.

Families already claiming universal credit or child tax credit, whether in or out of work, will not be affected in relation to children or qualifying young persons in their households before the key date while they remain entitled to benefit. Similarly, any household that has claimed universal credit or child tax credit in the past six months will be protected if their previous award included a child element for more than two children or qualifying young persons and they continue to have responsibility for them. I urge the noble Baroness to withdraw this amendment.

[Baroness Sherlock]

My Lords, I congratulate the noble Lord on being able to cost one of tonight’s amendments. I find his defence genuinely impossible to understand. I think he actually said that there is no stronger justification for exempting existing children than children who have yet to be born. I simply cannot understand how he can say that with a straight face because he has spent much of this evening telling us that this was all about choice and that parents who are on tax credits should make the same choices before having additional children as parents who are not. These are parents who already have children. These children already exist. They are not making a choice at all. The only reason they are making a claim for tax credits, or universal credit in this case, is because something has happened which means they have then had to fall back on the support of the welfare state. I do not understand how that is a justification and I invite him to think about it and maybe come back before I sit down and give me a choice.

The Government need to think very carefully. They keep giving justifications about choice until they do not hold, in which case they suddenly go, “Oh, look over there. Look at fairness”. This is either about choice or it is not. It cannot be about choice and when that breaks down a different defence is pulled out. It surely has to be one or the other. If it is about choice, how can it apply to people who have not made a choice? If it is not about choice, will the Minister please stop telling us that it is. Can I tempt the Minister to explain to me again why there is not a stronger justification for existing children than new claimants because I think I may have misheard? Is that what he meant?

[Lord Freud]

No, that is exactly what I meant.

[Baroness Sherlock]

At least my hearing is better than my understanding. I find that a profoundly disappointing response, even by the standards of tonight. But given that we are in Committee, I beg leave to withdraw this amendment.

--- Later in debate ---

[Baroness Hollis of Heigham (Lab)]

Can the Minister help me? I was just checking, and as far as I can see from handbooks, we continue to support various partners in polygamous marriages and we do not say, “After two partners you won’t get any more support for your third, fourth or fifth member of a polygamous marriage”. Why is it okay to have several spouses who are financed by benefit, but if you have more than two children they are not?

[Lord Freud]

I thank the right reverend Prelate the Bishop of Portsmouth and the noble Earl, Lord Listowel, for this amendment. On the ECHR point, the Government set out their assessment of the impacts of the policies in the Bill on 20 July, as I think I have already said. It is important to ensure that the dynamic behavioural effects of the changes are considered within that. Many of these analyses suffer from the fact that they are too static when considering gains and losses and too focused on notional changes.

On the question posed by the noble Baroness, Lady Lister, on child poverty impacts, I say that the intended impact of our reforms is to incentivise work, ensure that it always pays, and to allow people to keep more of what they earn. That is why, as we will go on to discuss, we are moving towards a life-chances analysis of poverty as our approach.

[Baroness Lister of Burtersett]

I am sorry to intervene, but that is no answer, my Lords. I asked a very clear, factual question. At present, the Child Poverty Act still holds; therefore this House deserves the respect of being given an analysis of the impact of the increase in the numbers of children in child poverty on the measures, which are still the law, and which will still be measured under the HBAI statistics, as the Minister has said. I do not expect to have it now, but I hope that the Minister will give us those figures before Report.

[Lord Freud]

As I said, projections on the HBAI are difficult, and everyone gets them wrong because they are done on a static basis.

I pick up the point from the noble Baroness, Lady Hollis: she will be pleased to know that universal credit does not recognise polygamous marriage.

On the family test raised by the right reverend Prelate, the noble Baroness, Lady Lister, and the noble Earl, it is not a tick-box, pass-or-fail test but is about looking at how policies support or potentially undermine family relationships, and about trade-offs. The family test ensures that family considerations are explicitly considered and recognised when making those trade-offs. These measures will ensure fairness for all families, both encouraging parents into work and giving a fair deal for the taxpayer.

[Baroness Lister of Burtersett]

I am very sorry to intervene again. As I said, the Home Office, which is not the author of the original family test—the DWP was—published the questions in the family test and how its policy met those questions. Of course the department must have carried that out not on a tick-box basis—I am not saying yes or no—but by carrying out a considered analysis around these questions. I simply ask why, therefore, the Department for Work and Pensions is not prepared to make available to this House the documentation of how the family test was applied to this clause?

[Lord Freud]

As I said, the documentation that we have published is the documentation that we need to publish to comply with our public sector equality duties. We have done that, even though the noble Baroness may feel that it is inadequate.

[Baroness Sherlock]

I do not presume to know any more than others about this subject—no one knows more than my noble friend Lady Lister. But on a number of occasions this evening, Peers from different Benches have asked the Minister very specific questions and he has simply got up and said, “What we have published, we have published”. The question he was asked just now was: “The Government must have conducted this test, because they are required to do it, so why won’t they publish it?”. “We have published what we have published” is not an answer. I am getting increasingly anxious about the quality of the responses this evening.

Take the example of dynamic benefits. Could the Minister explain that to me again? If he does not think that static analysis is good then he needs to find another way of analysing it. He simply cannot come to this House and say, “I cannot tell you the impacts of this because it is all dynamic”, because otherwise we will never be able to assess anything that the Government are going to do before they do it. That cannot be reasonable, surely.

[Lord Freud]

This amendment is asking us to do an analysis over the next six months. In practice, that is what will be happening on a dynamic basis, because we have introduced as part of universal credit a test-and-learn approach in which we are able to assess what happens to families and learn the lessons in order to roll out universal credit. That is a pretty public process and we publish what we learn. So, in practice, we have a process that incorporates the dynamic effect of these changes in its overall impact, rather than taking individual bits and pieces of the policy. That is the best answer that I can give to the question. On that basis, I urge the right reverend Prelate to withdraw this amendment.

[Baroness Hollis of Heigham]

I want to come back at the Minister. I was not trying to make a cheap jibe but, unless I am misreading a handbook that I have used over the years, if you are in a polygamous marriage and your spouse is married to someone else, you may claim as a single person within it, which is an allowance for you, including if the other person still lives in the same household with you. In other words, under UC—this is on page 154—there is continued financial support for other partners in a polygamous marriage. If that is so, why is it acceptable to apply that to adults but not to children?

[Lord Freud]

The noble Baroness has a long memory. Polygamous marriages were recognised in JSA, income support and ESA. We took a decision not to recognise those marriages in UC. Only the first marriage is recognised for universal credit purposes.

[Baroness Hollis of Heigham]

Except that financial support will, presumably, continue to be given to the other women who are in a polygamous marriage by virtue of their polygamous status.

[Lord Freud]

No. If there is a third person in that household they would be treated as a single person.

[Baroness Hollis of Heigham]

The point I am making is that they may be treated as a single person but they are getting financial support by virtue of that polygamous marriage, whereas the third or fourth child will get nothing.

[Lord Freud]

This is really becoming arcane. We have said that we do not recognise polygamous marriage in universal credit. But clearly there is an individual there, and we will treat them as a single person. It is actually, ironically, a little more expensive than treating them as a wife.

[The Lord Bishop of Portsmouth]

Can I make what I hope is not an arcane point? I invite the Minister, in responding to my amendment, which relates quite specifically to faith communities, to add something about that. He has not mentioned the word “faith” in his response, unless I have misheard.

[Lord Freud]

No, I have not; the right reverend Prelate is correct. In this policy we have looked through that to people’s choices, whether they are those in the benefits system or the people supporting those on the benefits system. I have not made an explicit comment on race or religion.

--- Later in debate ---

It suggested that the Government should consider ways to cover this more effectively in the “current material deprivation measure”. But given that this measure is to be abolished, how else do the Government consider that the matter should be addressed in their consideration of life chances?

[Lord Freud]

My Lords, by virtue of Clause 4 the Government are committing themselves to reporting annually on their life chances measures of children in workless households, including long-term worklessness in England and the educational attainment of children, including disadvantaged children, in England at the end of key stage 4. The collective purpose of all the amendments in this group, laid by the noble Lord, Lord Ramsbotham, the noble Baroness, Lady Manzoor, and the noble Earl, Lord Listowel, is to place additional duties on the Secretary of State to publish and lay before Parliament further reports, information or data about a range of other areas. The question for us to consider is: what is the most effective way of harnessing primary legislation to achieve these aims?

We want to make a difference by taking action in the areas that will improve the life chances of all children and I think that is the answer to the question from the noble Lord, Lord McKenzie, about the policy. It will be addressing the life chances of those children, tackling the root causes of poverty, not the symptoms. Our new approach focuses government action on the most important drivers of poverty—worklessness and poor educational attainment—and on reporting progress in those areas annually. We will prioritise action in those areas and follow up our clear commitment to publishing a life chances strategy. As part of this we will develop a wider set of non-statutory measures on the root causes of child poverty, including family stability, problem debt and addiction.

The noble Lord, Lord Ramsbotham, by virtue of Amendment 22 seeks to expand the duty placed on the Secretary of State to include a duty to report on the progress of children living in England at age five, including disadvantaged children, in their cognitive, personal, social and emotional, and physical development. It is vital that all pupils thrive and develop in their early years and I recognise the importance of understanding where pupils are at the start of their school journey. Monitoring a child’s personal development is a core function of every education setting, enabling teachers to tailor their support based on how each individual is progressing. However, there are two key issues at the heart of the life chances reforms—action on work and education. Lives can be transformed through focusing on those two key drivers of poverty.

The end of key stage 4 is a vital point in a young person’s education. It represents the culmination of primary and secondary schooling and provides a consistent point at which to measure attainment across all young people. Pupils who fail to achieve at the end of key stage 4 are at higher risk of not being in employment, education or training. That is why the Secretary of State is making a commitment through the life chances measures in this Bill to report annually to Parliament on educational attainment at key stage 4.

Noble Lords will be reassured to know that the Department for Education already publishes a great deal of data on the progress of pupils—how well they are doing in the earlier stages of their career, including key stage 1 and key stage 2—and the annual reporting at different stages of primary schooling already provides significant detail on the progress and attainment of disadvantaged pupils.

The noble Baroness, Lady Manzoor, by virtue of Amendments 23 and 27 seeks to expand the annual reporting duty placed on the Secretary of State to include data on the educational attainment of children and disadvantaged children at the key stage 1 point. I recognise the importance of understanding and tracking pupils as they make their way through the key stages. It provides a basis for teachers to look at how each child is progressing. I am pleased to reassure noble Lords that the department already publishes a statistical first release each year on the assessment of key stage 1 pupils in reading, writing, maths and the results of phonics screening. That includes disadvantaged pupils.

[Baroness Manzoor]

Just on that point, I have heard this evening that various departments do their own thing, but coming new into the House I find that maybe we need a little bit more joined-up thinking. When you look at the Bill it would be nice to have something that says very clearly that key stage 1 is very important and this is what the Government are doing to track from key stage 1 to key stage 4.

[Lord Freud]

That is a good point but, in essence, if you are not achieving the target in the earlier stages, you will know you are not going to get to the right point at key stage 4, so I think in practice this is built into the process.

Amendment 28, in the name of the noble Earl, Lord Listowel, would place a statutory duty on the Secretary of State to publish and lay before Parliament a report on children in care and care leavers. As I think we indicated earlier this evening, we share the noble Earl’s commitment to improving life chances for this particular group. We publish a wealth of information on both children in care and care leavers. There are two annual statistical publications, the first of which provides data on the numbers of children in care and the numbers entering and leaving care. It also includes data on placements, children who go missing from care and outcomes for care leavers, including their economic activity. The second publication deals with educational attainment at both key stage 2 and key stage 4, so I hope that noble Lords will be reassured that we already have the comprehensive data that the noble Earl is looking for.

We are also taking action. We recognise that children in care often need special attention at school. The Government’s own measure of educational disadvantage includes children who have been in care. Children in care also attract the highest rate of funding through the pupil premium plus and, from December, will be recognised in the education performance tables. At a local level, we have given local authorities £44 million over three years to support all young people to continue living with their foster families after the age of 18, helping to provide a stable setting at the key point of transition.

In Amendment 29, the noble Earl looks to do much the same with children who are “homeless” and “at risk of homelessness” every year—in other words to create a duty to lay an annual report. The noble Earl will be pleased to know that I have been a member of the ministerial homelessness committee now for the last five and a half years, so I am absolutely informed in this area. We agree of course that care and attention are required in the case of children who are at risk in this area, and we publish relevant data. Local authorities collect and publish data on the number of households with children who are eligible as homeless and in priority need and data on the number of children in temporary accommodation, which is published on a quarterly basis. I think that the last figures came out in September. This area is a key priority. Since 2010, we have invested over £500 million to support local authorities and voluntary sector agencies to help the most vulnerable back into society.

On Amendment 30, problem debt clearly is a key factor in trapping families in poverty and adversely impacting on their living standards, mental health, family stability, financial inclusion and well-being. This is a well-chosen issue. We intend to develop a range of non-statutory indicators, which will include that one, as well as family breakdown and drug and alcohol dependency, and set these out in our life chances strategy.

[Baroness Lister of Burtersett]

I have a couple of points, the first on problem debt. Will the Government also be assessing the impact of the Bill on debt? We have had briefings from a number of organisations that give debt advice, such as StepChange, which are very concerned that the Bill, in particular the clauses we have just been debating on the end of financial support for families with three or more children, are going to increase debt significantly.

I also wondered whether the Minister could comment on another point. He has twice referred now to addiction, which the Government talk about as a sort of root cause of poverty. A couple of years ago I put down a Written Question asking what the Government’s estimate was of the proportion of children living in poverty with at least one parent addicted to either drugs or alcohol. The Minister’s answer was that the Government do not have such an assessment. Drug or alcohol use is not recorded on the survey used for UK poverty national statistics. I wonder therefore—how do the Government know that this is a root cause of poverty, when they seem to have no relevant information?

[Lord Freud]

There have been studies showing the numbers who are addicted to one or the other. I remember producing some figures on that in the debate on the last Welfare Bill. Clearly, one of the points of developing a life chances strategy is to get a better grip both of those areas and, indeed, the figures on debt. As the noble Baroness hinted, the figures are imperfect, and that is one of the reasons we want to get a better grip on it. When we look at the levels of debt, that will tell us about impacts, and we can start to analyse what those impacts are. That would of course include any government measures and the impacts would be revealed.

[Lord McKenzie of Luton]

I am still a little unclear on one fairly key point. When responding to the consultation on the measurement of poverty, the commission recommended almost a two-pronged approach. One was that there should be a multidimensional focus on the causes of poverty, but a clear focus on recording the experience of poverty and dealing with poverty here and now with an income measure. I understand what the Minister has been saying about focusing on the causes. One can see the longer-term impact of that; but what, precisely, are the Government going to do differently in respect of the here and now of people’s actual experience of poverty—people who simply do not have enough income today, and will not tomorrow or the day after, to get by and play their part in society? That is what I find to be missing, so far at least, from the Minister’s response.

[Lord Freud]

I am not sure that the Government would do much different from what they are doing. They have a safety net and there are various measures to support people. We are building at speed now the universal support system in which we are combining with local authorities to help the most vulnerable, but in a very different way from how people have been helped in the past, which was through crisis loans that they went on and on building in a random way, without anyone looking at the root causes of their problems and trying to help them out of them. This approach accords with that. Clearly, we will be spending our money on the root causes of poverty and on life chances. But there will be income measures published, because we have said that we will go on publishing the HBAI. If people want to see what is happening, that gets a lot of publicity every year. That is the change: the money that we will be spending on life chances. Those are some of the mechanisms by which we will do it. Universal support is one of the key things, but there are a lot of other things. Getting mental health right is something that has evaded Governments for a long time, and we are now spending more money on that than any Government have before.

I urge noble Lords not to press these amendments.

[Lord McKenzie of Luton]

Could we perhaps have one more brief run-through of the issue of income? The Minister says that the Government are not doing anything specific to address income poverty other than the application of their current broad benefit regime, with all the cuts that that is now having to endure. Is that it, in terms of actually tackling current poverty? How does the Minister deal with the point that pretty much every expert out there has concluded—certainly the commission has—that we need to have consistent, robust measures of poverty? What the key driver is, and all the other stuff, is subsidiary to that. There seems to be an overwhelming view coming from the experts on that. Is that not a view that the Government share?

[Lord Freud]

No. Every year I stand here because there is a forecast that says that child poverty is going up, has gone up or will go up, but when we actually see the figures we find that child poverty has actually gone down; the Government have been impressed and shocked by that. When you transform the economy, change the culture so that work is what has been driving things, and move up the employment rates and the earning rates in the way that we have, you find that the behavioural impacts are very different from the static analysis that many of the external experts tell us about.

[The Earl of Listowel]

My Lords, it is late so I will ask just two brief questions. I thank the Minister for his response. Can he give an indication of when a homelessness strategy might be produced, or is there already one that I am not aware of? He has mentioned that there are various kinds of homelessness, such as overcrowding and unfit accommodation. The one that is of most concern, though, is housing insecurity, when families just do not know where they will be from one day to the next. What is the strategy to deal with that? Is one forthcoming? How often does the interdepartmental group meet? Perhaps he might like to write to me on that last question.

I have been talking with practitioners working around the troubled families initiative, which I warmly welcome. Their work is much undermined by the fact that they build a relationship with a family, as they must and do very effectively, but then that family is moved somewhere else because the accommodation was private and temporary, and there just is not the security of tenure that there needs to be. Perhaps the Minister could help me with those questions.

[Lord Freud]

As I said, we will be putting out the life-chances strategy in time. The interministerial meets every quarter, I think.

[The Earl of Listowel]

Sorry, but I am asking about a homelessness strategy, dealing with the particular issue of housing security for families.

[Lord Freud]

Is the noble Earl talking about the interministerial meeting, which deals with those issues? Yes, I think it meets quarterly.

[The Earl of Listowel]

That is very helpful.

[Baroness Lister of Burtersett]

The Minister talked about working with local authorities on child poverty, which obviously is welcome, and I think that he said something about not wanting to do that in a random way—excuse me, it is a bit late so I cannot remember exactly what he said. If that is the case, though, why are the Government removing the duty on local authorities to develop strategies? The letter that the Minister received from the Children’s Commissioners just the other day underlined how valuable that duty has been. I know that local authorities, within the constraints that they are having to work in, have been quite imaginative in trying to think about what they can do as partners of central government in combating child poverty, so I really do not understand why that has been taken away, given what the Minister said about wanting to work with local authorities.

[Lord Freud]

It is the same answer that I have just given: we want local authorities to focus their time on action to get at the root causes, not at the symptoms.

[Baroness Lister of Burtersett]

But surely the strategy could be a strategy to get at root causes. The Child Poverty Act does not say that local authorities have a duty to deal with symptoms. It says that they have a duty to help to eliminate child poverty, and of course that is about trying to get at root causes.

[Lord Freud]

What we are doing is working with local authorities to support them in getting at the root causes. That will be our strategy.

[The Earl of Listowel]

While I am grateful to the Minister for that information about the interdepartmental group and how often it meets, I wonder if he could give an indication of whether it is looking to develop a strategy specifically for housing security for families, or whether he might be prepared to take back to that group a request from this House—at least, from myself—that such a strategy should be developed. This seems a very important area.

[Lord Freud]

I will be pleased to do that.

[Lord McKenzie of Luton]

I will follow up on the point about local authorities that my noble friend Lady Lister raised. The Minister will be aware that we are in the era of devolution deals, particularly with combined authorities—Manchester was the first, and there are others as well. As part of that process, is the department engaged in inputting into the package with a particular focus on child poverty issues?

[Lord Freud]

As noble Lords will be aware, the Government’s emphasis is to put authority into the hands of local authorities, which is what devolution is about. Therefore they cannot have devolution on the one hand and then send a whole series of specific requirements down on the other.

[Lord Ramsbotham]

My Lords, I thank all noble Lords who have contributed to this group of amendments. I also thank the Minister for his response. However, it contained one of the most disappointing sentences that I have ever heard from a Dispatch Box, when he said that he was not sure whether the Government could do more than they are doing. The Government could do a great deal more than they are doing and more than they have indicated they are willing to do tonight.

[Lord Freud]

I thank the noble Lord very much, but I do not want to let the noble Lord leave the Chamber tonight so disappointed. When I said the word “do” I meant that our approach to what we are trying to do would not change. That does not mean that we are satisfied with our level of energy and input. I want to make that clear so that the noble Lord does not think that I was making a complacent remark when I was talking about our approach.

[Lord Ramsbotham]

I am grateful to the noble Lord for that explanation. He knows perfectly well that on previous occasions he has earned the respect of the House by the way he has responded to questions and has been willing to take part. If I have another disappointment, it is that he has not responded to my suggestion that we should meet and have a discussion about all these issues. I do not feel that I have had an answer, particularly to the problem of mental health which was raised in Amendment 34.

I have always been worried about strategy as far as its production in Whitehall is concerned. I was once berated by a senior civil servant in the Home Office, who said to me, “I wish you’d stop talking about strategy. We don’t need strategy—all we need is strategic direction”. I said to her, “What do you mean?”, to which she replied, “Top down, of course”. I said, “Well, that’s where you’re absolutely up the creek. Just because somebody says something from the top does not make it a strategy”. A strategy is something which unites everyone in the delivery of something, which includes all the ministries that have been mentioned tonight. For example, when it is mentioned that the Department of Health knows about mental health or the Department for Education knows about attainment at key stages 1, 2, 3 and 4, why not get together and have an information-gathering strategy at which each of the ministries is required to produce what is required to have an overall strategy which feeds all the government departments that need to draw on that to process legislation.

I very much hope that we will be able to talk through this. I have listened to what has been said from the Floor of the House throughout today’s proceedings and there is a great deal of expertise that could help the department to produce better legislation, which is surely what we are all about. While I am happy to withdraw the amendment at this stage, I promise the Minister that we will return to it on Report and possibly at Third Reading.

Welfare Reform (Northern Ireland) Order 2015

Lord Freud Excerpts

Thursday 3rd December 2015 Lords Chamber

Moved by

[Lord Freud]

That the draft Order laid before the House on 26 November be approved.

Relevant documents: 16th Report from the Secondary Legislation Scrutiny Committee, 11th Report from the Joint Committee on Statutory Instruments

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, the order will ensure that the people of Northern Ireland, at the request of their Executive, can benefit from the welfare reforms enabled by the Welfare Reform Act 2012 in Great Britain.

The UK Government have no intention or desire to legislate on an ongoing basis for welfare in Northern Ireland. Welfare is devolved to Northern Ireland and will remain so. The enabling Act time-limits the Government’s power to legislate so that an order cannot be made after 31 December 2016.

The legislative approach we are taking has arisen at the request of the Northern Ireland Executive and the Assembly has granted its consent. The content of the Order in Council broadly corresponds to the 2012 Welfare Reform Act, which was debated at length and in great detail in this House. It introduced a number of changes to ensure that work pays, that the most vulnerable in society continue to receive the support they need, and that taxpayers’ hard-earned money is spent responsibly. These principles underpin the Welfare Reform Act 2012 and are the same principles that underpin the Order in Council before the House today.

The Order in Council is based largely on the Assembly’s Welfare Reform Bill that fell at its final stage in May of this year. It includes the reforms made in Great Britain by the Welfare Reform Act 2012; the various flexibilities agreed between the Northern Ireland Department for Social Development and the Department for Work and Pensions; the amendments agreed during the passage of the Assembly Welfare Reform Bill; and provisions that allow for Northern Ireland Executive-funded top-ups.

This order is a fundamental part of the agreement reached last month. As part of that agreement, the Government are committed to delivering welfare reform in Northern Ireland. We would, of course, have preferred not to take this approach. I assure noble Lords that the Government are taking only the action necessary to ensure that welfare reform is no longer an issue undermining the political process in Northern Ireland. We believe that this is the only way to resolve the welfare reform impasse in Northern Ireland.

As I have said, welfare is a devolved matter in Northern Ireland. However, it has in principle maintained parity with Great Britain, meaning that benefit claimants have been able to avail themselves of the same rates of benefit as those in the rest of the United Kingdom. However, as a result of the failure to implement welfare reform, the system in Northern Ireland is becoming increasingly different from that operating in the rest of the United Kingdom. This difference is not sustainable and will cause particular problems in the delivery of people’s benefits. Once Great Britain moves entirely to the new system based around universal credit, Northern Ireland will need to create and maintain its own, separate system and meet the significant costs of the IT needed to support it.

The order means that Northern Ireland’s welfare system will be placed back on track. A legacy welfare system that makes people dependent on benefits is no more sustainable in Northern Ireland than it was in Great Britain. The order will provide real benefits to people in Northern Ireland by helping to tackle worklessness and delivering real economic benefits.

The order provides the legislative framework to implement these reforms in Northern Ireland, including: replacing DLA with the PIP, which helps towards additional living costs caused by a long-term health condition or disability and is based on how a person’s condition affects them, not on the condition they have; reforming contributory benefits so that they align with universal credit conditionality, including introducing a claimant commitment as a condition of entitlement; time-limiting ESA to underline the principle that, with the right support, claimants are expected to return to work; introducing tougher penalties for benefit fraud; and bringing in a benefit cap to ensure that those on benefits face the same choices as people in work. It reflects the agreements with the Northern Ireland Executive to make provision for agreed Northern Ireland-specific welfare-related administrative flexibilities and top-ups.

It is important to remember why the order is necessary. It is not intended to diminish Northern Ireland’s devolution settlement. The legislative approach that we are taking has arisen at the request of the Northern Ireland parties, and the Assembly has given its consent. The order reflects the draft Northern Ireland (Welfare Reform) Bill, which has been debated at great length in the Assembly over the past three years. Accordingly, the order includes a number of amendments that reflect the will of the Assembly, including an 18-month limit for higher-level sanctions and discretionary payments.

The order is about delivering the fresh start agreement. It is about supporting hard work and aspiration, and creating the right incentives for people to fulfil their potential and create a safe, secure and self-sufficient life, supported by, but independent from, the state. It is about making sure that spending on welfare is sustainable and fair to the taxpayer, while at the same time protecting the most vulnerable. Building an economy based on higher pay, lower taxes and lower welfare is right for the UK and right for Northern Ireland. I commend the order to the House.

[Lord McAvoy (Lab)]

My Lords, I am grateful to the Minister for outlining the order to the House and for his brevity. Before we get to the order, it is important to be mindful of the events that have led up to this point and the context of this debate.

It is now almost a year since the Stormont House agreement was finalised. Those negotiations made substantial progress on some of the most contentious issues, including flags and parades, while also seeking a way forward on matters such as welfare reform and the devolution of corporation tax. The agreement marked a turning point but, as your Lordships will be all too aware, during the last year, particularly in the past 12 weeks, it appeared that there was a genuine risk not just that the devolution settlement might collapse but that we might see a return to direct rule for the first time in almost a decade. It is to the Government’s credit that they have worked hard to come up with this agreement and, in doing so, they have our full support in bringing it forward.

--- Later in debate ---

[Lord Newby (LD)]

My Lords, I briefly echo the comments of the noble Lord, Lord McAvoy. In some respects, of course, this is an imperfect way of dealing with these very important changes. But the key point is that it is a way of dealing with them. They will now be able to be implemented in a way that is impossible to see via any other route. They do, as the noble Lord, Lord McAvoy, said, unlock other important developments in Northern Ireland. Therefore, we on these Benches welcome the order.

[Lord Freud]

I thank both noble Lords for the way they have approached this as something that we need to do to help the process in Northern Ireland and allow that country to function.

It is worth picking up just a handful of points before I close. The noble Lord, Lord McAvoy, indicated, I think, that he did not necessarily approve of some of the Government’s welfare measures. However, let me explain how the current Welfare Reform and Work Bill will work in the Northern Ireland context. As part of the fresh start agreement, the Northern Ireland Executive recognised the importance of addressing welfare reform more broadly and not just the 2012 measures. The legislative consent Motion passed by the Assembly made this clear. So if required, we will introduce a further order to implement the relevant provisions of the Welfare Reform and Work Bill for the same reasons that we are introducing the order currently before the House: to provide Northern Ireland with a fit-for-purpose welfare system that takes parity as its starting point.

The noble Lord, Lord McAvoy, mentioned the transitional provisions of the order, which allow the Secretary of State to exercise the vast majority of regulation-making powers in the first instance. In effect, this means that the Secretary of State has the power to introduce regulations until that power is handed back to Northern Ireland.

On the noble Lord’s point about some of the changes, the Northern Ireland Bill included a number of specific amendments which were agreed to help ensure that the reforms could be implemented. The Government remain convinced that the proposals introduced in Great Britain remain right for Great Britain. In Northern Ireland, we have agreed administrative flexibilities to allow payments to be made more frequently and for the rent element to be paid directly to landlords. This recognises the devolved nature of welfare and the ability for there to be different administrative arrangements in Northern Ireland. It will be up to the Northern Ireland Executive to work out their exact administrative procedures. The universal credit system in Great Britain also allows for us to make these alternative payment arrangements, which will be used where appropriate.

I emphasise again that this order fulfils a vital commitment made as part of the fresh start agreement and it has the support of the Northern Ireland Assembly. It does not diminish the devolution settlement but supports the future of devolution in Northern Ireland and paves the way for the introduction there of a modern, reformed welfare system. I commend the order to the House.

Motion agreed.

Welfare Reform and Work Bill

Lord Freud Excerpts

Tuesday 17th November 2015 Lords Chamber

Moved by

[Lord Freud]

That the Bill be now read a second time.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, this Bill will ensure that the welfare system is put on a sustainable footing, while continuing to support the most vulnerable. It will ensure that work always pays and it will restore fairness in the system.

It is important to remember that this Bill forms part of a broad package of reforms, which includes the introduction of the national living wage, increases to the personal tax allowance and an enhanced childcare offer. Our welfare reforms are focused on transforming lives by supporting people to find and keep work. There is a focus on employment, fairness and affordability, while supporting the most vulnerable.

We have already made some key achievements over the last Parliament: 2 million more jobs have been created; there are 2.3 million apprenticeships; the number of workless households has reached a record low, down nearly 700,000 since 2010; and there are 800,000 fewer people with relative low income. Perhaps most importantly, these achievements came during a Parliament in which welfare spending increased by the lowest rate since the creation of the modern welfare state. But we still have work to do.

We will continue to bear down on the deficit and debt, achieving a surplus by the end of the Parliament. We spend £3 billion on government debt interest payments alone every month: that is £33 billion a year or £1,230 per household. Every pound we spend on paying off the debt is a pound we are paying to others, such as overseas investment funds, rather than spending on public services such as schools and hospitals. We need to end the cycle of borrowing, which is burdening our children with an ever-increasing debt. Eliminating the deficit and paying off our debts is the moral and most effective thing a responsible Government can do for people on low incomes who rely on those services.

This is a Bill for working Britain, underpinned by three key principles: first, that work is the best route out of poverty, and being in work should always pay more than being on benefits; secondly, that spending on welfare has to be put on a more sustainable footing, but in a way that protects the most vulnerable; thirdly, that people on benefits should face the same choices as those in work and not on benefits.

In the past, we have seen that just throwing money at the problem is not the solution—it is much more complex than that. That is why we are bringing in changes to help support people back into work and drive real change in their lives, both now and in the future.

Everyone deserves to have the dignity of a job and the pride that comes with earning your own pay packet. We want to support everyone in society who can and wants to work, and that is why we are committed to progressing towards full employment.

We also need to make sure that today’s young people start off on the right track, with the skills and experience required to open up employment opportunities in the future. That is why we are committed to delivering 3 million more apprenticeships during the course of this Parliament. The measures in this Bill will help to drive these commitments by requiring us to report on each measure every year.

The £26,000 cap we established in 2013 has reintroduced fairness into the system. Most importantly, it has driven meaningful change in people’s lives. The cap has helped get people back into work. Capped households are over 40% more likely to go to work than similar uncapped households. More than 18,000 previously capped households have now moved into work.

The changes to the benefit cap in this Bill are underlined by three basic principles of fairness. First, the cap should be set at a level that ensures it continues to be fair and to provide the right incentives for people to move into work. Secondly, this measure ensures that the cap better reflects the circumstances of working families around the UK. We know that around four in 10 households outside London earn less than £20,000, with the same proportion of households in London earning less than £23,000. Thirdly, welfare spending needs to be put on a sustainable footing.

Let me be clear: we will continue to provide protection and support for the most vulnerable. That is why exemptions will still apply, including those households entitled to DLA, PIP or Armed Forces PIP, industrial injuries benefit, the ESA support group component, and the limited capability for work-related activity component in UC; those moving into work who are entitled to working tax credit; and war widows and widowers. We have provided considerable additional support through discretionary housing payments for those claimants who need temporary financial assistance to adjust to the reforms. This additional funding will continue, and we are making £800 million available for discretionary housing payments over the next five years.

For too long now, this country has been dependent on unsustainable borrowing, with government debt repayments currently costing each household more than £1,200 every year. We simply cannot continue this way. It is not fair to keep borrowing and burdening future generations with even more debt. That is why we are committed to achieving a surplus by the end of the Parliament. During recent years, since the financial crisis began in 2008, benefits have been increasing at a greater rate than average earnings. Between 2008 and 2015, the minimum wage increased by 17%, whereas the main rates of most benefits, such as jobseeker’s allowance, have increased by 21%, and the individual element of child tax credits has increased by 33%.

The Bill will freeze working-age benefits for the next four years, helping to bring welfare spending under control. As part of our commitment to protecting the most vulnerable, benefits reflecting the additional costs of disability are excluded from the freeze. This includes PIP, DLA and the support group component of ESA. Pensioner benefits and statutory payments will also be excluded from the freeze.

During the last decade, growing evidence has shown that work can keep people healthy, as well as helping to promote recovery if someone falls ill. We are committed to ensuring that everyone who is able to has the opportunity to take advantage of the financial, social and health benefits which employment brings. However, perverse incentives in the benefits system and the lack of appropriate support can mean that some miss out. The work-related activity group component of ESA was never designed to help towards the additional costs of disability.

It is clear that the current system is failing claimants. Some 61% of WRAG claimants want to work but only 1% leave the benefit each month. People on ESA receive nearly £30 a week more than those on JSA, but receive far less support to move closer to the labour market and, when they are ready, into work. For new claims, the Bill will end this disparity between what people receive. Current claimants will not be affected, and new funding rising to £100 million a year in 2020-21 will be provided to help new claimants with limited capability for work to move closer to employment. A similar change will be made to the limited capability for work element of universal credit, ensuring that we provide the same level of support under the new system as we do through the current one. We are committed to ensuring that everyone who is able to has the opportunity to take advantage of the financial, social and health benefits which employment brings.

The Bill will also enable the Government to recover the expenses they incur for administrating benefit diversions to the Motability scheme. This is a purely administrative change which will not affect Motability’s users. The change involves less than £1 million a year and has the support of Motability, and I am sure that noble Lords would not wish such a minor issue to occupy too much of the Chamber’s time.

We also want to support parents claiming universal credit to get into and stay in work after having a child. We found out just last month that the number of children living in workless households is at a record low, down by 480,000 since 2010. That is really good progress and we want to build on it. The Government are introducing a far-reaching childcare offer. With universal credit, people will get up to 85% of their childcare costs paid from April 2016, up from 70% under the previous system. Working parents of three and four year-olds will receive an additional 15 hours of free childcare a week, while tax-free childcare will benefit up to 1.8 million working families. In line with that, we think that parents claiming universal credit should be required to look for work when their youngest child turns three, and to prepare for work when the youngest child turns two. In addition, the Bill will create a statutory duty to report on our progress supporting troubled families with multiple, highly complex problems. This will include how we have supported them to move closer to work.

We are also making provision to tackle social rents, which have increased by 20% since 2010. The Bill will reduce rents in social housing in England by 1% a year for four years from April 2016, protecting taxpayers from the rising costs of subsidising rents through housing benefit and protecting tenants from rising housing costs. This will reduce average rents for households in the social housing sector by around 12% by 2020 compared with current forecasts. It will also mean that people who are not on housing benefit and not subject to “pay to stay” will be better off by around £12 per week by 2019-20.

The Bill reforms the way support for mortgage interest will be paid in the future. The current system of providing benefit payments towards the cost of mortgage interest payments will be replaced by a system of interest-bearing loans which are secured against the claimant’s property. Loans will not be repayable until the home is sold. This change will ensure that claimants receive the same level of protection from repossession that they enjoy now, while providing a better and fairer deal for the taxpayer.

We are ensuring that people on benefits face the same choices as those in work and not on benefits. Families in work have to make careful choices about what lifestyle the money they earn can support, and what their income can provide for. People who receive child tax credit should make the same financial choices about having children as those who are supporting themselves through work. Therefore, from April 2017, the Bill will limit the child element of child tax credit to the first two children. A two-child limit will also apply in universal credit in relation to third or subsequent new children in the household, and to completely new claims. Again, we are ensuring that this change is fair, so it will not affect existing claimants at the point of change.

Finally, I turn to how we will tackle the root causes of child poverty and improve children’s life chances. We want to see substantial and sustained improvements in the life chances of our children. The past approach, enshrined in the Child Poverty Act, has focused on dealing with the symptoms of child poverty rather than addressing the root causes. It has incentivised Governments to move families a pound above the poverty line, not to help them transform their lives.

Evidence tells us that worklessness and educational attainment are the factors that have the biggest impact on child poverty and children’s life chances. We want legislation to focus government action where it can have the biggest impact. The Bill will provide a statutory basis for much-needed reform to drive real change to improve children’s life chances and tackle the root causes of child poverty.

The Bill will remove the existing measures and targets in the Child Poverty Act and introduce a new duty on the Secretary of State to report on worklessness and educational attainment. Alongside these statutory measures, we will develop indicators to measure progress against other root causes of child poverty, including family breakdown, addiction and problem debt. Our new approach will drive action which will make the biggest difference to the most disadvantaged children, both now and in the future.

This Bill is an important legislative step. It will ensure that the right support and incentives are in place, so that people are always better off in work rather than trapped on welfare, and it will protect the most vulnerable members of our society. We acknowledge that these are difficult decisions to make, but we think they are the right decisions. They are decisions that put work first, drive sustainable welfare spending and allow us to continue to protect the vulnerable and those most in need. I beg to move.

--- Later in debate ---

[Lord Freud]

My Lords, I was expecting some excellent contributions to this debate, and I was not disappointed. We have all been privileged to enjoy the quartet of maiden speeches this evening. I was particularly struck by my noble friend Lord Lansley saying that we need to add value in our measures of poverty. No one could mistake the passion with which my noble friend Lady Stroud has devoted her life to tackling the root causes of poverty. My noble friends Lord Lupton and Lord Polak concentrated on the importance of the troubled families programme. As my noble friend Lord Lupton said, we need to intervene, not just look at statistics. I also thought that we had a complete variety of styles from the four—you could not get a more varied set of contributions—and I look forward to many more contributions from my noble friends.

This Bill builds on the principles first introduced in the Welfare Reform Act 2012. In the past, Governments spent money in an attempt to solve problems rather than drive real change in people’s lives, and our approach is different: we believe that we should reward work and support aspiration, that we must have in place a fair, affordable and sustainable welfare system, along with the appropriate protections for the most vulnerable, and that we must relentlessly focus on tackling the root causes of child poverty to improve the life chances of our children. It is also worth remembering that the measures in the Bill must not be taken alone. We must also take into account the national living wage, increases in the personal tax allowance and the reforms of childcare, all of which will help to ensure that work pays.

Let me address some of the points that were made in the debate. There were quite a lot, and I will attempt to answer as many as possible. We will have a chance to go into them all in Committee. To help that process, I will, as the noble Lord, Lord Kirkwood, asked, make sure that we have the same process that we had with the Welfare Reform Bill. I will make briefing sessions available for noble Lords on the specific policy in good time, so that we have an informed process.

Let me begin with the first three clauses of the Bill: the statutory duties to report on full employment, apprenticeships and troubled families. The noble Lord, Lord McKenzie, asked why we are not setting the target for full employment there. We set out in our manifesto the aspiration for the UK to be the best place in the world to start a business, and to achieve the highest employment rate in the G7. Producing an annual report will illustrate our progress towards that goal.

The noble Baroness, Lady Donaghy, asked whether underemployment as a result of working part-time is contributing to low earnings. The figures show that 85% of people who are working part-time are doing so through choice. The number of vacancies are now pretty substantial—in excess of 700,000 at any one time. In answer to the question asked by the noble Baronesses, Lady Manzoor, Lady Doocey and Lady Hollis, full employment will allow support for those with disabilities. We have already found 450,000 people in the Work Programme sustained work. We need to continue to support individuals into work through successful programmes such as Access to Work, and to work with the health system to improve access to treatment.

Closing the disability gap and improving employers’ attitudes to disabled people is a theme that was picked up by the noble Baronesses, Lady Doocey, Lady Meacher, Lady Hollins, and Lady Grey-Thompson, and by the noble Lords, Lord Rix and Lord Young. Clearly, it is a challenging ambition and we are committed to it. We have extended Access to Work and launched specialist employability support. We continue to work with employers through our Disability Confident campaign, and announced funding of a further £100 million per year for additional practical support. Clearly, progress here is a key factor in achieving full employment and closing the gap.

The noble Lord, Lord Young, my noble friend Lord Blencathra and my noble friend Lady Stedman-Scott asked about the quality of apprenticeships. Improving quality has been central to our reforms, and employers are developing new standards to ensure that apprenticeships meet the skills needs of their sectors.

The Government ensure that small businesses are engaged in the development of those apprenticeship standards, and we have made significant progress in making them easier for small businesses to take on. In answer to the question of my noble friend Lord Hodgson, there are 40,000 people with disabilities or learning difficulties starting an apprenticeship. More clearly can be done. My noble friend Lady Eaton asked about care leavers. The Government provide full funding for apprenticeship training for entitled 19 to 23 year-old care leavers. They can also get access to programmes such as traineeships for the support they need to get ready for an apprenticeship.

I turn to life chances. We have made it clear that our focus is on the symptoms of child poverty—excuse me, the existing statutory targets focus on the symptoms of child poverty—and we have a new approach, the life chances one, focused on transforming lives through tackling the root causes of child poverty. Clause 4 therefore places a duty on the Secretary of State to report annually on the key life-chance measures of worklessness and educational attainment.

[Baroness Hollis of Heigham]

How is the Minister going to account for poverty among children of working families?

[Lord Freud]

The HBAI measures are still there. We will have all the measures that we normally have.

The noble Baronesses, Lady Hollis, Lady Sherlock and Lady Lister, were concerned about the impact of this on the Budget. Our reforms are designed to incentivise work and ensure that it always pays, and then to allow people to keep more of what they earn. The new life- chance measures will drive continued action on work and education, which will make the biggest differences to disadvantaged children now and in the future.

Numerous noble Lords argued that we should keep income-based measures and measure in-work poverty, as the noble Baroness has just reinforced. The existing statutory framework set around the four income-related targets is unfit for purpose. The framework does not drive the right action, so instead we will focus on the root causes such as worklessness and educational failure. The income measures led Governments to spend their finite resources on action that did not produce the best results for our children, and that is the reason for our new approach. As I just said, though, and in response to the noble Lord, Lord Kirkwood, we will still be publishing all the income measures and the HBAI report. I remind him that no other country in the world uses those measures as a target as opposed to a measure.

I am flattered by the vigorous quoting by the noble Lord, Lord McKenzie, from that small piece of work. I should point out that when I say there were some remarkable changes, there were no remarkable changes in the number of NEETs, which went up through the longest boom in history, nor in the amount of worklessness or social housing, which plateaued whether one was at the top or the bottom of the cycle, and I recommended a major effort to pull the disabled back into the labour market and into society. Of course some of the figures that I was so pleased with then fell straight off a cliff when we had a rather remarkable recession—probably the worst recession that this country has had since the 1920s. However, we took £60 billion out of the welfare bill over the last coalition Government, and up until the time for when we have the latest data, the relative measure of people in poverty had declined in that period by 800,000 people. So it is wise to use not people’s forecasts of income but what has actually happened.

I turn to the benefit cap. It is not fair for someone on benefits to receive more than many people in work; reducing the benefit cap to £23,000 in London and £20,000 elsewhere better aligns the level with the circumstances of hard-working families across the country. On the question raised by a number of noble Lords—the noble Baronesses, Lady Sherlock, Lady Hollis, Lady Lister and Lady Warwick—about whether the level was too low, we originally set the cap at £26,000 but we want to balance the key aims of strengthening work incentives and promoting fairness between those in work and those in receipt of out-of-work benefits.

Any changes to the cap level will require the passage of regulations. I can assure the noble Baroness, Lady Sherlock, who was concerned about this, that the regulations which lower the level of the cap will follow the affirmative parliamentary process. In response to the question from the noble Baroness, Lady Lister, and the noble Lord, Lord McKenzie, carer’s allowance is included in the cap. The Government fully acknowledge and value the very important role that carers provide to society but 94% of households in receipt of carer’s allowance will have a benefit income above the new cap level. They are, anyway, exempt from the cap.

The benefits freeze is a vital part of the Government’s welfare reforms, providing £3.5 billion of savings by 2019-20—without any cash losers—which would otherwise need to be found elsewhere. The noble Lord, Lord Low, asked about the impact of the freeze on the disabled. We have exempted the benefits which contribute to the additional cost of disability and care from the working-age benefit freeze. The noble Baronesses, Lady Hollis and Lady Bakewell, raised the issue of the two-child limit. Families on benefits should make the same financial decisions as those families supporting themselves solely through work. Families on lower incomes will continue to receive child benefit for all children in the household, including a higher rate paid for the eldest qualifying child or young person. The noble Baronesses, Lady Sherlock and Lady Manzoor, both raised questions about involuntary two-child families. The Government will look at the important issues around exemption through secondary legislation and will provide more detail in due course. The situation with kinship carers is similar.

The noble Baroness, Lady Sherlock, raised the point of the impact on disabled children. Parents of disabled children will continue to receive the disabled child element and severely disabled child element in child tax credit and, in UC, the additional amount of the child element in respect of all disabled children, regardless of the total number of children in the household. The noble Baroness, Lady Manzoor, asked for assurance that the architecture of UC will not be lost. I appreciate her support on that and give credit to the Liberal Democrats, who were utterly supportive of universal credit and our efforts to bring it into reality under the previous Government. I am delighted to see that they maintain that level of support.

I turn now to the clauses which remove the work-related activity component in ESA, and its equivalent in universal credit, for new claimants from April 2017. The noble Baronesses, Lady Sherlock, Lady Manzoor, Lady Doocey, Lady Browning, Lady Meacher, Lady Howe and Lady Gale, asked for evidence that the WRAG component is a disincentive. A report by the OECD in 2005 argued that:

“Financial incentives to work can be improved by either cutting welfare benefit levels, or introducing in-work benefits while leaving benefit levels unchanged”.

On the other hand, employment support provides an opportunity to begin talking to ESA claimants about their ability to work. A positive relationship with a work coach, combined with evidence-based methods for goal-setting and striving, offers a promising way towards moving ESA claimants back into work. We will be increasing the practical support with new funding. The noble Baronesses, Lady Sherlock, Lady Manzoor, Lady Doocey, Lady Browning, Lady Meacher and Lady Gale, the right reverend Prelate the Bishop of St Albans and the noble Lord, Lord Patel, argued that these claimants have been found unfit for work. The ESA claimants in the work-related activity group have been found to have limited capability for work. This is very different from being unfit for any work and, although they are not required to look for work, ESA explicitly recognises that claimants may be able to undertake some work via the permitted work rules. This change, combined with the new funding, is about providing the right incentives and support to encourage more people to move closer to the labour market.

The noble Lord, Lord Patel, made a point about those with cancer. The vast majority of those with cancer claiming ESA are actually in the support group, a point that he himself made. This includes anyone who is preparing for, receiving or recovering from chemotherapy or radiotherapy that will significantly limit their ability to work. Only a small proportion of individuals whose initial diagnosis is cancer will be placed in a work-related activity group.

On mental health conditions, raised by the noble Baronesses, Lady Manzoor and Lady Howe, and the noble Lord, Lord Layard, it was clearly acknowledged that returning to work can improve mental health, which is why we are committed to ensuring that as many people with mental health conditions as possible receive effective support to return to and remain in work. We will actually be investing £43 million over the next three years in trialling ways to provide specialist support for people with common health conditions to get back into the workplace.

On conditionality for parents, raised by the noble Baroness, Lady Sherlock, we believe that more can be done to support parents with young children to prepare and look for work. Where childcare is not available, requirements will be tailored around caring responsibilities.

On the clauses to turn support for mortgage interest into a loan, the noble Lord, Lord McKenzie, and the noble Baroness, Lady Sherlock, raised issues around pensioners. Pensioners will have access to the same level of support for mortgage interest payments as the current system provides. This will be provided via a loan, but that will not have to be repaid until the individual’s property has been sold—which often, in the case of pensioners, will be on their death, so the people who actually pay are the inheritors; that is not something the party opposite would have a huge problem with, I would have thought.

A large number of noble Lords talked about social housing rents. The answer to the noble Lord, Lord Smith, is that the Government were elected with a mandate to put welfare spending on a sustainable footing to reduce the deficit. We are confident that housing associations and local authorities will be able to find and make efficiencies to accommodate the new settlement.

On specialist supported accommodation, which a large number of noble Lords brought up, we are proposing that there will be some exceptions from the rent reductions. We have set out some of those in the Bill and we will be setting out further exceptions in regulations. Our intention is to align exceptions with the equivalent provisions of the rent standard. At present these include specialised supported accommodation, residential care homes and nursing homes, and intermediate rent and private finance initiative housing. We will work with the sector to ensure that the most vulnerable people are not adversely affected—indeed, I am planning to meet St Mungo’s.

Regrettably, I cannot deal with all the questions and must draw to a close. I thank all noble Lords again for their contributions. Welfare reform is about much more than simply money. Our reforms seek to change the state of the nation, break the cycle of dependency, create the right kinds of incentives, have a fair welfare system, provide the best possible start in life for children, and bring lasting change that directly affects attitudes and behaviours. This Bill is a real opportunity to make a difference to the lives of some of the poorest, the neediest and the most vulnerable people in our society. It is an important and necessary piece of legislation. I commend this Bill to the House and ask for it to be given a Second Reading.

Bill read a second time and committed to a Committee of the Whole House.

Housing: Underoccupancy Charge

Lord Freud Excerpts

Tuesday 3rd November 2015 Lords Chamber

[Baroness Quin]

To ask Her Majesty’s Government whether they have plans to undertake a regional study of the effects of the under-occupancy charge.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

We commissioned a two-year independent evaluation in 2013, which included looking at the regional effects. The final report will be published in due course. There is already clear evidence that regions are adjusting to the policy. In the north-west, for example, there has been a 22% fall in the number of households subject to a reduction over the past two years.

[Baroness Quin (Lab)]

My Lords, I believe that recent studies show a wide variation between and, in some cases, within regions. In the north-east, in Newcastle for example, there has been no overcrowding problem—a problem that the Government said they wanted to address—but there is a huge shortage of one-bedroom flats, so that people cannot downsize but bear the full brunt of the bedroom tax. The Newcastle University study showed that many people had been forced into debt for the first time and that their health and well-being, contrary to the Government’s claims, have suffered hugely as a result. I urge the Minister—indeed, I invite him—to visit Newcastle and the north-east to meet with people directly affected and listen to their experiences.

[Lord Freud]

The noble Baroness is right that there is quite a lot of variation in the regional responses. I gave the example of the north-west, where there had been a reduction of 22%. The two regions that have reduced the smallest amount in England and Wales are the north-east, and Yorkshire and Humber. Other areas, such as London, the east of England and the north-west are the outliers on the upside. The other two have had the least-efficient response to this policy.

[Lord Best (CB)]

My Lords, I know that the Minister feels immense sympathy for those people who are unable to move, such as the tenants in Knowsley, where I was on Friday, who cannot downsize even though they wish to. They have taken a big hit in their standard of living. Will he join with me in commending the resilience and fortitude of those families that have taken a drop in income as a result of the so-called bedroom tax and borne a disproportionate share of the burden of deficit reduction?

[Lord Freud]

The noble Lord is quite right to make the point that this is about deficit reduction, for which this has been an important policy. It has now had savings of £1 billion over that period. People have had a range of responses, but the most important is that many people have gone into work or moved off the benefits system, mainly by going into work. That is 70,000 of the 90,000 reduction.

[Lord Kirkwood of Kirkhope (LD)]

Does the Minister accept that there is an important regional dimension to all this? I support the request made by the noble Baroness, Lady Quin, for a regional look at some of this, and also her idea of looking again at the Newcastle study, which demonstrated not only that the bedroom tax increased poverty but that it had an adverse effect on health and well-being, and on social responsibility and networks within neighbourhoods. When the final report is published, will he use his best offices to get a regional dimension into it, so that it considers the community-wide impact, not just the household impact, and the totality of the policy across the piece? I hope that the report will be published before the end of the year.

[Lord Freud]

Yes, the current plan is to publish the report before the end of the year. It does incorporate the regional effects, and I will take the noble Lord’s points about how thoroughly it does so when I go back and talk to the team. For very obvious reasons, I have not seen what is inside that report before it is published, but I will transmit those thoughts to the team.

[The Lord Bishop of St Albans]

My Lords, back in 2013 the Environment, Food and Rural Affairs Committee urged that social housing in rural areas should be excluded from the underoccupancy charge, because of the near impossibility of finding alternative accommodation in many rural areas, where it simply is not available for people to downsize. Already people in rural areas have higher social and housing costs, and there is some evidence that the underoccupancy charge is pushing some families further into debt. Will the Minister tell the House whether Her Majesty’s Government would be willing to undertake a reconsideration of their policy and exclude social housing in rural areas from this measure?

[Lord Freud]

We are actually sympathetic to that point about rural communities, and we ramped up the amount of discretionary housing payments which were particularly targeted at the most remote rural areas, so that the policy could be dealt with by that route.

[Baroness Eaton (Con)]

My Lords—

[Baroness Eaton]

Could my noble friend the Minister say what Her Majesty’s Government have done to support local authorities in mitigating the effects of this policy?

[Lord Freud]

The key route is through the discretionary housing payments, on which we have now spent £470 million in total—£175 million on this particular policy. We have had a range of initiatives to support people, including those living in social housing, into sustained employment. The figure for those in social housing who are workless has now dropped to an all-time low of 39%.

Families: Work Incentives

Lord Freud Excerpts

Tuesday 27th October 2015 Lords Chamber

[Baroness Sherlock]

To ask Her Majesty’s Government what progress is being made on work incentives for families with children.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

Universal credit improves incentives to enter into and progress in work. Early results show that current UC claimants do more to look for work, enter work quicker and earn more than current JSA claimants. Childcare costs are a key issue for working families, which is why we are increasing support and provision.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister. I appear to be inadvertently topical, for which I apologise.

As well as the tax credit cuts of recent celebrity, the Government have announced that they are reducing the work allowances in universal credit. The Work and Pensions Select Committee in the Commons heard yesterday that when the minimum wage is fully rolled out in 2020 a single parent, who is now able to work 22 hours a week before losing universal credit, because of these changes will be able to work only 10 hours a week before losing universal credit.

Increasingly, commentators are worried that the Government’s vision that universal credit would make work pay is getting eroded by a series of changes, so I shall ask the Minister’s for reassurance on two points. First, can he assure the House that when universal credit comes in fully the gains to work will be as strong as the Government promised us when the Welfare Reform Bill went through? Secondly, would he consider running a briefing session—perhaps after the CSR—to unpick some of the detail about how work incentives work in practice with all the changes that are going on? I am aware of the complexity with which many noble Lords have wrestled in recent debates, and that might be a useful way forward.

[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.

[Baroness Manzoor (LD)]

My Lords, fewer than one in 10 people with learning disabilities are in work. The Government’s welcome objective is to halve the disability employment gap. Will the Minister say what progress the Government are making in order to hit their target?

[Lord Freud]

The target to halve the disability employment gap implies that we need to find work for 1 million more people in this category. We are currently working pretty hard on the strategy for that. It was announced by the Secretary of State in August, and we are now consulting with the various interest groups to find out the optimal way of achieving it. One group that is particularly important is people with learning disabilities; they have had a tough time in the work market.

[Baroness Lister of Burtersett (Lab)]

The Minister acknowledged that work allowances have “come down” as if that was somehow an act of God. The fact is that the Government first froze them and are now abolishing them for non-disabled workless households and reducing them for most other households. Yet when the Welfare Reform Bill was going through this House, the Minister constantly told us that the new improved work allowances were absolutely key to making work pay. Will he explain why they have been cut back so drastically?

[Lord Freud]

As the noble Baroness will know, a reduction and a cost saving are going on in this part of the benefits system. We had to make a decision about how to structure that. We decided that the taper was critical because it moved people right the way down at 65%. We have maintained that level. We have taken it out and reduced the work allowances in other areas. In particular, in our experience, for singles the removal has meant that people move straight through the work allowance out of UC. We have tested people carefully and seen a significant, measurable increase in the amount of work that they do and in their earnings. The work allowance impact seems to be less in those areas.

[Baroness Walmsley (LD)]

My Lords, in some disadvantaged areas parents are finding it difficult to access 15 hours of good quality childcare. Can the Minister guarantee that all parents, in all areas, will receive 30 hours of free, good quality childcare, to enable them to go to work confident that their children will be very well looked after?

[Lord Freud]

It is clear that when you put up people’s rights, the provision has to catch up. It has been doing so, but there is some way further to go and we will be working on that.

[Baroness O'Cathain (Con)]

My Lords, my noble friend is surely right. You cannot just manufacture people from the ground and say, “you will be a childcare assistant”. If this 30 hours of free childcare is to be a new thing—and it seems to be—it will be an incentive for people to go into childcare. However, you cannot ask the Government to guarantee it.

[Lord Freud]

It is important that we have a dynamic economy with real work incentives. That is what we are trying to create, and childcare is part of it. My noble friend is right; we need to set up the incentives to make sure that that part of the market grows. In a dynamic economy, guarantees are something that you cannot necessarily time.

Benefits: Sanctions

Lord Freud Excerpts

Thursday 10th September 2015 Lords Chamber

[Baroness Sherlock]

To ask Her Majesty’s Government what plans they have to review the operation of sanctions on benefits.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

We have made a number of improvements to the sanctions systems and are implementing further changes following recommendations made by the Oakley review. We are now focusing on embedding those changes and improvements. We will keep the operation of the sanctions system under review to ensure that it continues to function effectively and fairly.

[Baroness Sherlock (Lab)]

I wonder if the Minister has read the leaflet that his department published for disabled people, which featured Zac and Sarah. Sarah had been sanctioned for failing to produce a CV, but it ended happily. Sarah said:

“My benefit is back to normal now and I’m really pleased with how my CV looks. It’s going to help me when I’m ready to go back to work”.

An FOI request established that Sarah does not exist. The picture was a model and DWP invented the quotes. Real people’s experience of sanctions is very different. Food banks repeatedly see desperate people sanctioned for trivial or, frankly, mystifying reasons, and the scale of sanctions is now such that a fifth—no, almost a quarter—of all JSA claimants were sanctioned in the last five years. Will the Minister please now do what the DWP Select Committee asked: respond to its report and conduct a major review of sanctions before the whole system is discredited?

[Lord Freud]

Let me clarify this. The sanctions level runs at around 5% on a monthly basis. That level is the running rate of sanctions and other figures are simply wrong. On the first point that the noble Baroness made, we do use illustrative examples where they are real, and we make it clear where they are not. In this case, it was wrong—and we have said it was wrong—to have made illustrative examples look as if they were real.

[Baroness Meacher (CB)]

My Lords, I was involved in an inquiry earlier this year on behalf of the Fawcett Society into the effects of the welfare reforms. One of the greatest problems for clients seems to be the errors on the part of staff, as a result of which a woman can go to a post office for some money at the end of the week and be told, “Sorry, you are sanctioned”, because the message had not been passed on that her child was ill so she could not attend an interview—that sort of thing. Can the Minister tell the House what action his staff are taking to stamp out these errors in communications with clients?

[Lord Freud]

Clearly, one error is one error too many. We work to try to eliminate the error rate, and we have layers of safeguards, for both JSA and ESA, to make sure that we review these cases at each level so that we get it right. Some, of course, will creep through.

[Baroness Eaton (Con)]

Do the Government have any evidence that sanctions are effective?

[Lord Freud]

We have done surveys on this and found that people say that the sanctions regime encourages positive behaviour. According to the figures we have, which have been published, 72% of JSA claimants and 61% of ESA claimants say that it impacts on their behaviour.

[Lord Foulkes of Cumnock (Lab)]

My Lords—

--- Later in debate ---

[The Lord Bishop of Peterborough]

My Lords, the Feeding Britain report showed that some people have been sanctioned for missing or being late for appointments when it is not their own fault. Is it not possible for the staff at Jobcentre Plus to be given some discretion in whether or not to apply sanctions? Along the same lines, is it fair that some people in rural communities have to spend £7 or more on bus fares to get to routine appointments when the likes of me, who can well afford bus fares, are entitled to a free bus pass?

[Lord Freud]

Jobcentre Plus people do have discretion. There is some, although less, discretion for Work Programme providers. We layer up that discretion with decisions from our decision-makers. It can then go to mandatory reconsideration and on to appeal, so there is a system to allow these things to be reviewed very flexibly. On the other point, the decision that older people should get free travel is one which was made by several Governments in the past.

[Baroness Thomas of Winchester]

My Lords—

--- Later in debate ---

[Baroness Thomas of Winchester]

My Lords, would the Minister consider asking the Social Security Advisory Committee to conduct a review of sanctions policy on ESA claimants, as they did for JSA claimants with the Oakley review?

[Lord Freud]

The reality is that the number of ESA claimants being sanctioned is very small—it is running at around 1%—and we look at those cases very carefully. We do not have any plans to look at that specifically at this stage, given that it has steadied out.

[Baroness Hollis of Heigham]

My noble friend Lady Sherlock’s figures on the number of appeals are absolutely right: they are based on the annual figures. The DWP is sheltering behind monthly figures, which will not do. We know—as I am sure the Minister will agree—that over 50% of those who appeal after being sanctioned have their sanctions overturned, having lived for many weeks, sometimes months, without their benefit. Can the Minister tell the House how many of those sanctioned have mental health problems?

[Lord Freud]

Where people’s sanctions have been found to be wrong, they recoup that money. Meanwhile, we have an established process of hardship payments, by which people can now get paid within three days where that is appropriate, to deal with that problem.

[Baroness Hollis of Heigham]

Will the Minister answer the second question?

European Union (Approvals) Bill [HL]

Lord Freud Excerpts

Wednesday 22nd July 2015 Lords Chamber

Moved by

[Lord Freud]

That the order of commitment be discharged.

Relevant document: 5th Report from the Delegated Powers Committee

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.

Motion agreed.