Poverty
Lord Knight of Weymouth Excerpts(15 years, 6 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Knight of Weymouth
My Lords, we are grateful to my noble friend Lord McKenzie of Luton for instigating this debate, the subject of which brought so many of us into politics and public life in the first place. We have heard some excellent contributions, particularly the maiden speeches. Like my noble friend Lord Haskel, I am not sure what the collective noun is, but my noble friend Lord Boateng, as ever, gave us an outstanding oration and an uncontroversial appetiser for what I am sure will be substantial contributions to come. I was particularly pleased that he reminded us of the importance of giving a voice in your Lordships' House to looked-after children and other children at risk, for whom he has been such a great advocate throughout his career.
The noble Baroness, Lady Donaghy, treated us to a taste of her extraordinary range of experience and reminded us of the threat of joblessness leading to increased poverty—something that I will return to later. It was great to hear once again from your Lordships’ equivalent of a retread with the return of the noble Earl, Lord Clancarty. He made a passionate plea for attention to the dangers of stigma being attached to those dependent on benefits. Like him, I had an early career in the arts on the enterprise allowance scheme and I look forward to the Minister's answers to his questions on that.
The noble Lord, Lord Shipley, gave us an insight into his experience of tackling child poverty in Newcastle, particularly on the council there, especially reminding us of the links to health and education inequalities. As a former Schools Minister, I was particularly struck by his description of the excellent work done on family linking with schools. I was delighted to be here for the final maiden speech of the day, from the noble Lord, Lord McFall of Alcluith, which he explained meant “the rock on the Clyde”. For me, the noble Lord was the rock during my time in the other place, chairing the Treasury Committee and always leading off the Back-Bench contributions to the Budget debates as the measures flowed out from this place to the country. We look forward to more contributions from all these excellent new Members of your Lordships' House.
We have not yet heard from the Conservative Benches, but I am sure that it would be unkind to suggest that they are contracting out concerns for poverty to their coalition partners. In the lead-up to the general election, in response to questions about fairness from the Child Poverty Action Group, the Deputy Prime Minister, as he now is, said:
“The Liberal Democrats want to make sure that the burden of controlling spending falls on those who can afford it… so that closing the gap doesn’t bear down on those who already have too little”.
I welcome the coalition’s commitment to continuing the work undertaken by my party to eradicate child poverty by 2020 but, taking on board the findings of numerous non-governmental studies, I believe that this Government’s economic policy risks not only delaying that target but plunging further families into poverty. Cuts in allowances, the VAT hike, decreased incomes and increased outgoings—the right honourable Chancellor is going to hit the poorest hardest. As my noble friend Lord McKenzie said, it was his choice. As the noble Baroness, Lady Jones of Whitchurch, reminded us, that was the choice made in the 1930s, when the then coalition Government, encouraged by business, pursued austerity and then took us into the great depression. From that situation, Keynes developed his great economic theories, now abandoned by the Liberal Democrats. As the noble Lord, Lord Touhig, reminded us in the context of disabled children, if we want to raise children out of poverty, we need to raise their household incomes, and this Budget promises anything but. While the Chancellor may claim that his cuts are not expected to raise measured child poverty, there is little of any comfort in it to those families already below the poverty line. I share the fears of Save the Children that, as a result of this Government's regressive approach to tackling the deficit,
“those families living in poverty will have less income and fewer or less effective services to mitigate the worst affects of poverty”.
Despite the welcome, if menial, increase in personal tax allowance and child tax credits, the Work and Pensions Secretary’s mangling of the benefits system and the axe-wielding of the Chancellor will undoubtedly cost lower-income families more than they can hope to gain. As the noble Lord, Lord Watson, reminded us, more than half of those 3.9 million children whose families live in poverty come from households where at least one of the adults is in paid work. For these families, child tax credits, which many noble Lords have spoken about, are vital. Yet many will see that lifeline disappear in the immediate future. A family with one child on as little as £15,000 will see their tax credits fall next year. The following year, a one-child family earning just £30,000 will lose all their tax credit. Meanwhile, the promise of a £210 increase in that benefit for those eligible over the next two years is, of course, when isolated, a great step forward—but not if that increase ultimately leaves lower-income families worse off than they were previously. Failure to correspondingly amend the way in which housing benefits are calculated will have exactly that effect. At present, the child tax credit is not disregarded in calculations for housing benefits. Resultantly, the coalition's proposed rise in child tax credits, increasing the family income, will lead to cuts in that family's housing benefits.
Other conflicting and confusing measures have been discussed by noble Lords, including the proposed 10 per cent cut to housing benefit for those who have been on jobseeker’s allowance for 12 months or more, which the Child Poverty Action Group has called a stealth cut on JSA. The Chartered Institute of Housing has calculated that the cumulative outcome of the coalition's proposals means that by 2020 every tenant's housing benefit will be too low to cover their rent. The net outcome of this is clear: debt, overcrowding and homelessness. There are already 1 million children living in overcrowded households. Such living conditions affect children’s mental and physical health, their education and, ultimately, their life chances. As we have heard from speakers such as the noble Lord, Lord Best, reductions, restrictions and caps on the housing benefit that families can claim will force some of them to move, often into accommodation inappropriate to their needs. In addition, that might unnecessarily fracture the family unit and leave families out of reach of the services that they rely on. So much for being the party of the family. The Child Poverty Action Group warns that:
“There may be, in effect, an expulsion of low income families from some communities and a tendency for greater ghettoisation of poverty where there are concentrations of substandard housing stock”.
The coalition could go some way towards remedying this simply by altering the status of child tax credits so that they were disregarded in benefit calculations. Furthermore, the proposed cuts in public services present a severe indictment against the fairness of the emergency Budget.
Poorer households are higher users of public services. Thus, cuts to these services disproportionately hit lower-income families compared with those that are more affluent, owing to the larger contributions that they make to such a family’s income. One study projects that public spending cuts will be equivalent to 20.5 per cent of the poorest 10th of households' regular income, but equivalent to only 1.6 per cent of the richest 10th. These measures reverse any positive impact that direct taxation or government-provided subsidies and services might have for the poorest in society.
As my noble friend Lord Haskel has just argued so forcefully, the unfairness in the Budget manifests itself most significantly in the VAT rise. This will, as Save the Children has identified, simply widen inequalities and entrench existing unfairness. Not only does a rise in VAT, so nobly campaigned against by the Liberal Democrats at the election, risk economic recovery at such a fragile time but it disproportionately hits the pockets of low-income families. The VAT rise impacts on the entire population, regardless of earnings or income level. In that respect, it does what the Chancellor says it should—we all share in the pain.
There are exemptions, of course, and it is argued that these equalise such measures, assuming that lower-income families spend the majority of their income on exempted items like food, children’s clothing and household bills. But do poorer people not need beds to sleep in, clean clothes to wear or hot food in their stomachs? There are no exemptions on furniture, toiletries or household appliances like cookers and washing machines. Increasing VAT simply makes these items even more difficult to afford, making it harder for low-income families to stretch their budgets even further. Simply because the Budget does not discriminate, that does not make it non-discriminatory. These rising costs are likely to increase the number of households that fall below the poverty line.
There is much more to say but I do not want to delay your Lordships. The noble Baroness, Lady Greengross, reminded us of the health consequences of the Budget, especially for the elderly. On Tuesday I set out some of my concerns about unemployment rising due to cutting too fast and due to cutting employment programmes such as the Future Jobs Fund and the six-month allowance. As the noble Lord, Lord Bilimoria, said, work is the best route out of poverty, but the Government are pulling up that ladder.
Similarly, the free-market schools policy and allowing outstanding schools to be academies risks allowing the best schools to advance at the expense of the poorest, widening the gap and making it harder for poorer families to use education as a route out of poverty—as, again, the noble Lord, Lord Bilimoria, said. Mention has been made of ending free school meals and breakfast clubs, both fundamental to alleviating poverty. I will just argue with the noble Lord about the Labour Government’s record on schools; to take reading as an example, we ended a 30-year standstill in improvements in reading quality during the course of the previous Government with the introduction of the literacy hour.
Because of this Budget, the founder of the Child Poverty Action Group, Peter Townsend, warns that we risk perpetuating the exclusion of already impoverished children from the,
“ordinary living patterns, customs and activities”,
of average families. Accordingly, the Budget elevates the risk of negative life outcomes. These measures condemn to poverty those kids from lower-income households—families looking not for a handout but for a foot up.
One of the key measures of the success of this Government and their Budget will be how they tackle poverty. Like so many others, I am worried that they will fail miserably.
Employment and Support Allowance (Transitional Provisions, Housing Benefit and Council Tax Benefit) (Existing Awards) Regulations 2010
Lord Knight of Weymouth Excerpts(15 years, 6 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Knight of Weymouth
My Lords, I am most grateful to the noble Baroness, Lady Thomas of Winchester, for tabling this Motion, which has allowed for an excellent debate. It also allows me to reassure the noble Lord, Lord Kirkwood of Kirkhope, that the regulations are not some kind of incendiary device planted by me and my noble friend Lord McKenzie to cause the Minister a problem.
The situation in which I find myself is slightly odd. This is my first time at this Dispatch Box scrutinising the legislative work of the noble Lord, Lord Freud, but I am afraid that it is not a chance to show my great forensic skills in unpicking the inadequacies of the regulations. That is, of course, because the regulations were inspired by the previous Government’s White Paper, which was written by the Minister before he jumped ship and joined the other side. They were then signed in March by my friend Jonathan Shaw, when he was working with me as a Minister at the Department for Work and Pensions. Therefore, the Labour Government’s regulations are now being tabled by the Tory Minister who inspired them when he was a Labour adviser. As the shadow Labour Minister, I can assure your Lordships that I am not opposing the regulations.
Instead, I want to ask the Minister a series of questions, similar to those raised by the noble Lords and the noble Baroness who have already spoken, about the policy context in which these regulations will now operate. That context has changed with a change of Government, in particular with the introduction of the work programme. The basis of the regulations, which we fully support, is that we should move people in incapacity benefit through a work capability assessment to then decide which sort of employment support allowance they should be on or whether they are fit for work and can go straight on to jobseeker’s allowance. I assume that, under the work programme, this would determine not only the level of benefit but also what support people would receive under the work programme. The contractors under the programme would then be paid on the basis of the numbers that they would get into work.
The first set of questions then arises. If you go through the assessment and are moved on to JSA, you suffer a benefit cut after a transition period, as set out in the order. The theory is that then you will be helped into work. However, given that, according to the impact assessment, 93 per cent of incapacity benefit customers have been on the benefit for over a year, what assessment has the Minister made of the numbers who will go into work, given their distance from the labour market? Has he allowed for a worsening labour market? Will he not listen to the Social Security Advisory Committee and wait until recovery in the labour market is secure?
I know that the right honourable Chancellor of the Exchequer, George Osborne, predicted that due to his Budget more than 2 million jobs would be created in the private sector in the next five years, but the OECD said two weeks ago that it expected the UK recovery to be,
“too muted to result in strong job creation”.
The OECD also said that Labour’s active labour market strategy had prevented unemployment from rising as rapidly as in previous recessions, and said:
“While the large fiscal deficit makes it essential to focus on cost-effective programmes and target the most disadvantaged groups, labour market policies should remain adequately funded. In this context, it may also be of concern that the new Budget ends funding for two crisis measures, namely, the Future Jobs Fund and the Six Month Offer”.
So it looks as if government action will make things more difficult for disadvantaged groups in the labour market because of the ending of those programmes.
Has the Minister convinced the Treasury that the market is able to raise the finance for the work programme, given that it is paid by results in a highly uncertain labour market? What assessment has he made of the impact on those communities, particularly former mining communities, where there is a high concentration of incapacity benefit claimants? Will those areas get special help as £25 per week is cut from many people’s benefit?
What is the Minister’s analysis of how the saving of £1 billion in the impact assessment will be drawn geographically? Has he then looked at how that will relate to the over £1 billion of additional savings in a few years’ time shown in the Budget through changes to the disability living allowance? Will those DLA claimants be protected under this order?
I have a few other concerns about how things are being planned in practical terms, especially given the Government’s fiscal position. First, the order is dependent on contractors being able to carry out the assessments, and a number of important points have been raised about these. I am pleased that the Government are so supportive of the changes for those going through chemotherapy, which we agreed before we left office, that they re-announced them in their Written Statement. I hope that they are also sticking with the changes that we were making for sufferers of ME.
Can we go further to meet the concerns of those with mental illness, especially given the worries faced by these individuals following the Government’s announcement of the ending of primary care trusts and the consequent breakup of the NHS? Has the Minister considered automatically moving those with complex mental and physical illnesses straight on to the appropriate ESA without an assessment, to relieve them of the concerns of going through such an assessment?
There is one other worry regarding assessments, which was raised by the noble Lord, Lord German. When I was a DWP Minister a few months ago, there was only one contractor capable of doing this work—Atos Origin. Does the Minister share my concern that that contractor is already struggling to do the current amount of work on time? What is he doing to get more contractors into that market? Can he guarantee that the capacity will be there, especially to meet the needs of the Treasury in scoring the savings on this programme and the DLA cuts? Perhaps the noble Baroness, Lady Thomas, was right to call for a review.
Like the noble Lord, Lord German, I worry about appeals. The Tribunals Service is already overloaded, as we have heard from the noble Lord’s speech. This work will mushroom under the programme and the DLA changes. Has the Minister agreed with the Treasury and the Justice Ministry that the budget for the Tribunals Service will be protected so that he can guarantee a service? Otherwise, people will wait an age for their appeal and remain on the higher benefit, and the Treasury will not get its savings.
Will the Minister give us an update on how the extra work for Jobcentre Plus and its contractors, referred to in paragraph 10.2 of the Explanatory Notes, will be delivered and paid for? Is there new money for this? Is it contracted?
That work would currently be part of Pathways. In government, we found that in the end that programme was disappointing, after such a good start in the pilot phases. It showed no extra gain from using the private sector over Jobcentre Plus. Does this cause the Minister to pause and wonder whether the backdoor privatisation of Jobcentre Plus embodied in the work programme will work? Does he agree with our conclusion that we need to ensure that those who are moved straight to jobseeker’s allowance should get extra help, given that their health may not be perfect and their distance from the labour market may be significant? Will this be priced into the work programme? Will this in turn include specialist help for those with mental illness, as was so brilliantly provided by the mental health co-ordinators in Jobcentre Plus who were put in following the work of Carol Black? Will the access to work programme continue so that we can ease the ways into work for some of those customers?
I am sorry to ask so many questions—I note that the Minister was scribbling away frantically and I hope that he can answer them. I suspect that he may not be able to answer them all, but those that he cannot need an answer. I urge him, and those listening on his behalf, to ensure that, if he cannot answer them now, he does so in writing and places a copy in the Library.
Disabled People: UN Convention
Lord Knight of Weymouth Excerpts(15 years, 7 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Freud
The United Nations convention is not a matter of law in this country or in Europe. It is a convention that holds us to account on our performance, and on which we report back to the UN. We will do that in July.
Lord Knight of Weymouth
My Lords, Article 28 of the convention promotes the right to an adequate standard of living. Elsewhere, the convention requires that all activities must include the participation of persons with disabilities. How have persons with disabilities been involved in the decisions in the Budget that show, in table 2.1 of the Red Book, that £360 million in 2013 and then over £1 billion in 2014 will be cut from the disability living allowance?
Lord Freud
My Lords, this is the first time that I have had a chance to welcome the noble Lord to these Benches. As he points out, part of the convention says “nothing about us without us”, and we take that seriously. We will go through the normal Budget processes in terms of ensuring that equality and human rights issues are dealt with.