Welfare Reform and Work Bill

Lord McKenzie of Luton Excerpts

Monday 25th January 2016 Lords Chamber

Moved by

[Lord McKenzie of Luton]

27: Clause 7, page 9, line 39, at end insert—
“( ) After subsection (11) insert—
“( ) Persons who have been placed in temporary accommodation by a local authority which has found them to be in priority need as defined in section 189(2) of the Housing Act 1996 (priority need for accommodation) are exempted from the benefit cap.””

[Lord McKenzie of Luton (Lab)]

My Lords, Amendment 27 stands in my name and that of my noble friend Lady Sherlock. This is also a rerun of an amendment that we moved in Committee, then part of a trio of similar amendments, so I will be brief.

The amendment would cause those families to be outwith the benefit cap if placed in temporary accommodation under the 1996 Housing Act. Regardless of whether the benefit cap has played a role, local authorities are legally obliged to rehouse families who are homeless through no fault of their own, are vulnerable in some way or are in priority need for rehousing. Families will be placed in temporary accommodation while a council decides whether it owes them a rehousing duty and then until a settled home can be found. The wait can be considerable, as can the costs. Invariably the temporary accommodation is leased by councils from the private sector, which charges the tenant a rent to cover these costs and expenses. These costs are commonly paid for by housing benefit with some top-up from DHPs.

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[Lord Freud]

Amendment 27 seeks to exempt people in temporary accommodation from the benefit cap. I do not agree that it is appropriate to have a blanket exemption from the cap for people living in temporary accommodation. Rather, the best approach is to provide targeted support early so that people may better address their barriers to work. As I said in Committee, an exemption might, in fact, prolong a stay in temporary accommodation if it is likely that the cap will apply when a household moves to more permanent accommodation. That is an incentive both on the local authority and on the family.

I have already explained how £870 million in discretionary housing payments will be available for those households that need additional support in adjusting to the cap. Provision already exists to support the most vulnerable people who might be affected by the cap. Housing benefit paid to households in specified accommodation is disregarded from the benefit cap, and we included refuges within the definition of “specified accommodation”. While this does not mean that such households are exempt, by not including housing benefit in the calculation we expect that the vast majority of these cases will not be affected in practice by the benefit cap.

From April 2017, the weekly management fee in respect of temporary accommodation, currently £40 in London and £60 elsewhere, will be abolished and replaced with a grant that devolves this funding to local authorities. Unlike the existing management fee, this new grant will not count towards the benefit cap and that will help local authorities tackle homelessness more effectively. I therefore ask the noble Lord to withdraw his amendment.

[Lord McKenzie of Luton]

I thank the Minister for his reply. None of it was a surprise, and I will, of course, withdraw the amendment in due course. I would just like to ask the Minister a few questions. He said that if there were a blanket exemption, this would prolong the stay of people in temporary accommodation. What evidence is there for that? Is it not generally the case that temporary accommodation is not of the best quality, and some of it pretty grotty? Why would families not want to move out of temporary accommodation as soon as they could to put down their roots in a more permanent arrangement? In relation to the grant, that seems helpful in principle, but on what basis is that grant going to be made available? Is it going to be ring-fenced for these situations, or just generally devolved to local authorities and caught up in the morass of funding and cuts that they are having to face?

[Lord Freud]

One of the most worrying aspects about temporary accommodation is that many cases have not been temporary. There have been cases where people have been kept in temporary accommodation for months, stretching to years. One of the reasons for that was that the only way it could be extinguished was by going into social housing. People were quite keen on that route through. That was changed in the 2012 Act so that it can be extinguished by going into private housing. Nevertheless, we want to incentivise councils to move people into settled housing as quickly as they can. Indeed, I think that the limit is 13 weeks. There are just too many examples; I do not have the exact number, but there are too many cases where it has gone on too long.

On the fee, funding previously paid to local authorities will become an upfront payment no longer tied to households remaining in temporary accommodation. The fund will be administered by the DCLG and the devolved Administrations. We will be able to give further details of that process in due course. That is all I have at the moment.

[Lord McKenzie of Luton]

I am grateful to the Minister for that. I will read the record, but I am not sure that I would agree with the proposition about local authorities not wanting to move people into more permanent accommodation as quickly as they can, and away from temporary accommodation, which is expensive for them. Having said that, and given the hour, I beg leave to withdraw the amendment.

Amendment 27 withdrawn.

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Moved by

[Lord McKenzie of Luton]

31: Clause 9, page 11, line 32, leave out from “to” to end of line 33 and insert “be reviewed annually by the Secretary of State having regard to—
(a) the rate of inflation, and(b) the national economic situation.”

[Lord McKenzie of Luton]

My Lords, in moving Amendment 31 in my name and that of my noble friend Lady Sherlock, I shall speak to our other amendments in this group. Noble Lords will be aware that this is also a rerun of the amendments discussed in Committee. We found the Government’s arguments on that occasion less than convincing. As they stand, Clauses 9 and 10 provide for the freezing of certain working-age benefits for four years until 2019-20. This would follow the 1% uprating imposed in 2013. Our amendments would require that these benefits instead be reviewed annually, taking account of inflation and the national economic situation.

We understand that the benefit freeze is designed to contribute to the Government’s cuts programme, and it is alarming that this measure will garner the Government some £3.5 billion in 2019-20, compared with a CPI uprating. This comes on top of benefit cuts and tax increases borne under the coalition, where the IFS reminds us—I raised this figure earlier—that, as a percentage of income, the poorest two deciles suffered the largest reductions. The End Child Poverty alliance reminds us that some 4.1 million families and 7.7 million children have already been affected by below-inflation rises over the last three years. As my noble friend Lady Lister pointed out in our previous debate, the inflation index does not properly capture the budgets of low-income families because they spend more on essentials, the costs of which have tended to rise faster than the average price index in recent years.

My noble friend Lady Sherlock articulated our major concern with the freeze, which is that it both cuts the link between prices and earnings and widens the gap between the income of the poorest and the living standards of the mainstream of society. It is part of a growing trend under this Government to uncouple eligibility for support from need. Our amendment would not preclude the Government freezing working-age benefits for four years, although it has manifesto cover for just two. It would at least cause the Government to confront the extent to which they are causing the poorest to miss out, and to account for their actions.

The Government’s rationale was that those on certain benefits—JSA was one—have done too well in the past few years in comparison with earnings and the minimum wage, and that the trend needed to be reversed. On 21 December, the noble Baroness, Lady Evans, told noble Lords that the Government had struck,

“a balance between the needs of claimants and affordability”.—[Official Report, 21/12/15; col. 2388.]

Perhaps we can hear how the needs of claimants have been assessed for these purposes. On what basis has it been determined that claimants can accommodate a real-terms reduction in their income for each of the next four years? What rate of inflation have the Government assumed in making this judgment? The noble Baroness told the House that 7% of global expenditure on social protection is spent in the UK, which has only 1% of the world’s population. Is it now the Government’s serious intent to benchmark UK social security spending against some of the poorest countries in the world?

So far as Amendment 32 is concerned, I look forward to hearing from my noble friend—and, indeed, namesake—but, so far as the support group is concerned, his amendment seeks to ensure that the full amount of the allowance is to be the subject of uprating, not just the support group addition. I wait to hear what he says, but it seems to me entirely reasonable, particularly since those in the support group are not able to work, so issues of work incentives have no application—but, equally, such individuals are generally unable to supplement their income. I support my noble friend’s amendment and I beg to move.

[Lord MacKenzie of Culkein (Lab)]

My Lords, I support Amendments 31, 33 and 34 in the names of my noble friends Lady Sherlock and Lord McKenzie of Luton. However, I shall concentrate on Amendment 32, which is almost but not quite the same as an amendment tabled in my name in Committee. I regret and apologise that I was unable to be in the House on that day. I am most grateful to the right reverend Prelate the Bishop of Durham for moving that amendment on my behalf—more importantly, perhaps, on behalf of people with life-limiting illnesses such as motor neurone disease.

In speaking to that amendment, the right reverend Prelate reminded the Committee of the promises made by the Conservative Party in the run-up to the general election. I want to refer to that promise again, writ large in its manifesto, which was to always protect the benefits for the most disabled. Despite that promise, the Bill before us does not fully protect people with life-limiting illnesses such as motor neurone disease and other similar rapidly progressing ghastly conditions. Either the words in the manifesto say what they mean and mean what they say or they do not. As of this moment, these promises are not being kept. Going some of the way is what has happened in the Bill—and some of the way is not fully protecting, and is not always protecting, benefits for the most disabled. Unless this amendment is agreed, or the Government come forward at Third Reading with something to produce the same outcome, they will have failed to keep that manifesto promise. I do not believe that is good enough in a modern, civilised society, where people with life-limiting illnesses should not be expected to suffer any more financial hardship than is the inevitable consequence of their illness.

People with motor neurone disease frequently end up having to build bedrooms and wet rooms downstairs, adapt furniture and face all sorts of costs. Couples who may have been reasonably comfortably off rapidly find themselves in considerable debt. As the right reverend Prelate the Bishop of Durham put it:

“Those whom we cannot reasonably expect to support themselves should not be expected to shoulder the burden of austerity”.—[Official Report, 21/12/15; col. 2405.]

The most disabled will lose perhaps more than £250 per annum by 2020 because the basic rate of the employment and support allowance is not exempted. I appreciate that the amendment in my name is rather complicated, but it is a serious attempt to right a potential wrong. If it is too complicated, I do not believe that it is beyond the wit of government to find another formula to produce a result that will give the full protection that is needed.

In Committee, the right reverend Prelate the Bishop of Durham expressed the hope that Ministers would give the matter further and serious consideration. The noble Baroness, Lady Evans of Bowes Park, said in response that benefits,

“are designed to provide a basic standard of living to those who are not in work but at a level that does not disincentivise moving into work”.—[Official Report, 21/12/15; col. 2406.]

People with life-limiting illnesses such as motor neurone disease are not disincentivised from going to work. They cannot go to work—would that they could. There is no behavioural change that people with these dreadful illnesses can make to get back into work. The noble Baroness, Lady Evans, concluded by agreeing that,

“we absolutely must provide suitable protections for disabled people”.—[Official Report, 21/12/15; col. 2407.]

However, she then did not support the amendment. The meaning of “suitable” is very different from the meaning of “full protection”, as was promised in the manifesto. A great many people with life-limiting illnesses, and their organisations such as the Motor Neurone Disease Association, take a great interest in what the Government will now do. I hope the Minister, for whom I have the greatest respect, will be able to say that he will bring something back at Third Reading along the lines of this amendment, which will honour the promise that the Government made in their manifesto in the run-up to the election.

[Baroness Evans of Bowes Park (Con)]

I thank noble Lords for tabling these amendments. I do not wish to spend too much time restating the same points that were made in Committee so I will keep my remarks brief. First, I address the amendments tabled by the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie, which replace the provisions in the freeze with a duty on the Secretary of State to review the benefits in question, having regard to inflation and the national economic situation.

I remind noble Lords that the provisions in Clauses 9 and 10 contribute £3.5 billion of the £12 billion of welfare savings by 2019-20 that the Government are committed to. The Government have a £35 billion consolidation plan, as the Chancellor set out in the summer Budget and the joint Autumn Statement and spending review, and we are on target to achieve a surplus of around £10 billion by 2019-20. The savings that the freeze provide therefore represent a significant proportion—10%—of the work that remains to be done through this Parliament to restore the nation’s finances.

Noble Lords have argued that these amendments would merely place a review on the freeze rather than remove it altogether, but they would remove the certainty provided by a legislated-for four-year freeze. This would lead to increased uncertainty about where the Government intend to find the necessary savings to restore the nation’s finances and could decrease market confidence in the Government’s ability to deliver their target surplus by 2019-20. Noble Lords have also raised concerns about the impact of this freeze. I reiterate that there are no cash losers to this policy and that inflation is still forecast, by the independent Office for Budget Responsibility, to be relatively low over the next two years, providing time for benefit recipients to adjust their finances to compensate. Furthermore, OBR forecasts at the Autumn Statement projected average earnings growth of around 3.9% by 2020, higher than projected inflation at around 2%, meaning many working families can expect to see the impact of the freeze offset by their rise in earnings. The annual average income of the poorest fifth of households has risen by £300 in real terms, compared to 2007-8.

I turn to the amendment in the name of the noble Lord, Lord MacKenzie of Culkein, regarding employment and support allowance. This amendment seeks to place into legislation a requirement for the support group component of ESA to be uprated by an additional amount above the amount it would otherwise be uprated by. This additional amount would be equal to the difference between the current main rate of ESA and that rate if it were uprated by inflation. I should remind noble Lords that, as said in Committee, those in the ESA support group receive an additional amount on top of the personal allowance—the support group component—which we have specifically exempted from the benefits freeze. Furthermore, the enhanced disability and severe disability premiums within ESA are also exempt from the freeze, as are benefits which contribute towards some of the additional costs of disability such as disability living allowance and personal independence payment.

Noble Lords will be aware that spending on main disability benefits went up by over £2 billion over the course of the last Parliament, and that the proportion of those in relative poverty who live in a family where someone is disabled has fallen since 2010. We believe that we are continuing to provide important protections for the most disabled through the exemptions we have from the freeze, and that this amendment is therefore not required.

In conclusion, the Government believe that the freeze strikes a necessary balance between making important welfare savings while having in place the protections for the most vulnerable and disabled. I therefore urge the noble Lord to withdraw the amendment.

[Lord McKenzie of Luton]

My Lords, I thank the noble Baroness for her response. If the Government are to be in surplus in 2019-20, why is it necessary for any benefits freeze to extend into that year, whatever the rationale for earlier years? The noble Baroness said that there are no cash losers, but we know what that means: in real terms, people are going to miss out. Specifically, I refer the noble Baroness to my question about what she said in the previous debate about the balance being struck between—in her words—the needs of claimants and affordability. I ask again: how were the needs of claimants assessed in that determination?

The response to my noble friend, who made a compelling case, was deeply disappointing. In any reasonable understanding of language, the commitment made in the manifesto has not been met by how this issue has been dealt with this evening. I ask the noble Baroness to reflect again to see whether the Government could at least come back on the issue raised by my noble friend. As he outlined, those with life-limiting injuries are the most disadvantaged and are missing out. This is simply not fair.

[Baroness Evans of Bowes Park]

As I said in relation to the disability element, we have exempted quite a number of elements from the freeze, so we believe that we are ensuring that disabled people continue to get support and that the most vulnerable are protected. In more broad terms, we need to ensure that benefit spending is sustainable in the long term.

[Lord McKenzie of Luton]

Is that it? Given the hour, I think there is no point in pursuing this, except to ask whether, on that point, there is nothing further the Government wish to say to my noble friend Lord MacKenzie in relation to those people who find themselves in the support group and are undoubtedly short-changed by the way that the Government have dealt with this uprating.

[Baroness Evans of Bowes Park]

As I have said, we are protecting certain elements of disability benefits. We understand the needs of disabled people which is why, as I set out in my response, a number of elements are being kept outside the freeze. Overall, we have increased spending on the disabled and will obviously continue to try to ensure that they have the support that they need.

[Lord McKenzie of Luton]

My Lords, we are clearly not going to make much further progress this evening. In the circumstances, I beg leave to withdraw this amendment but it is deeply disappointing that this issue of the support group has been dealt with in this way.

Amendment 31 withdrawn.