Welfare Reform Bill

Baroness Drake Excerpts

Monday 21st November 2011 Grand Committee

[Baroness Drake]

My Lords, I shall speak to Amendment 99AAA, to which I have put my name, and to Amendment 99C, particularly proposed new paragraphs (c) and (g). The cap as constructed fails to recognise the value of the non-waged work undertaken by family and friend carers when they embrace the responsibility for a vulnerable child or children who would otherwise go into care. Not only is that good for the child but it avoids a responsibility that would otherwise fall to the state and the taxpayer at a cost of £40,000 per year.

We know that a significant number of family and friend carers are older family members. Evidence from Grandparents Plus revealed that six out of 10 are over 55. I should like to quote highlights from a powerful speech that I read this weekend. It says that,

“we all gain hugely from the time and commitment that many older people give. We ignore this at our peril … we should not forget that many of the jobs they undertake would otherwise fall on the state. This is family doing what family does best—quietly, with great commitment, carrying out its duties … I’ve long believed that the state has become ambivalent about the importance of family structure, not just decent parenting but also the role of the extended family. In an increasingly atomised society, and in a context of growing family breakdown, it is all the more important that we continue to support, celebrate and hold together these wider relationships. Without them society would simply collapse”.

There we have it. I am sure that the Minister will recognise those as the words of Secretary of State Iain Duncan Smith in his speech on 31 October this year at the event organised by the Young Foundation and Grandparents Plus to celebrate the life of Lord Michael Young. There was no need for me to write my own words because the Secretary of State so powerfully makes the point that I want to make that it is better to use his. He makes a powerful case for recognising the contribution of these family and friend carers.

So we can see that there is no policy difference between us. The only issue, given that speech, is how we deliver that common policy. That is why the noble Baroness, Lady Tyler of Enfield, and I are expressing these concerns. However, the Secretary of State’s actual response to family and friend carers as currently provided for in the Bill is to cap their benefits, inclusive of child payments. In effect, the Bill has increased the barriers that these carers face. The state has moved from being ambivalent to actually being negative.

The Secretary of State concluded his speech by saying,

“We need to think hard”—

by “we”, I presume that he meant the coalition Government—

“about the way we recognise and reward caring, so that we don’t lose the invaluable support from friends and family that currently exists”.

I invite the Minister to do exactly that—to think hard about the cap on this community of carers, particularly as the Secretary of State has said publicly:

“I’ve specifically asked my colleague Lord Freud to look at the kinship carer issue”.

May I push the Minister to advise the Secretary of State to remove the cap for family and friend carers as set out in this amendment? When I read that statement, I had increased confidence that that would now happen.

I turn to Amendment 99C. There are three strands to the Government’s architecture for the welfare system: increasing efficiency, controlling affordability and reinforcing work incentives and positive behaviours. On that last strand, integrating in-work and out-of-work benefits into a single universal credit system has to be applied to two different constituencies: those who are out of work for long or sustained periods and those who are regularly in work. The Government have to build a single system for customers with different attitudes and experience of work, and a customer journey fit for both.

This is both a significant policy change and a behavioural challenge. If the Government want to avoid the universal credit resulting in disincentives and negative experiences for those who are fully engaged in work and have a clear work ethic, this challenge has to be met successfully. Otherwise, the Government may improve their process efficiency and affordability but they will fail to support the positive behaviour of millions of hard-working responsible people.

That is why I want to address the position of those hard-working people who suddenly lose their job involuntarily and the question of why there should be a period of 12 months before the cap is applied. The Government say that a benefit cap to limit benefit payments to those out of work is a fair and necessary measure—a driving principle, to use the Minister’s own words. However, to address the question from the noble Lord, Lord German, in a previous debate, a cap that is of itself a measure of fairness between those in and out of work must in my view be fair in its construct and proportionate in its impact. The benefit cap as proposed has significant shortcomings on both those criteria.

Clause 93 as drafted, as was powerfully said by the noble Lord, Lord Kirkwood of Kirkhope, means that Parliament is forgoing influencing “fair and proportionate” in the issue of the measure of fairness, unless it changes that clause or starts to lay out specific exemptions. Comparing average earnings net of national insurance and tax with benefits is not comparing like with like, and other noble Lords have already articulated the problems with that approach.

Equally, most benefit payments will be included in the cap, including child payments. To me, the concept of fairness in constructing the cap cannot be blind to the existence of children, otherwise there is an implicit punishment on them for their parents being out of work, and that is not acceptable in the design of a benefit system. That point was powerfully put by the right reverend Prelate in speaking to the amendment. The cap will also have a negative and disproportionate effect on hard-working families and their children when the wage earner loses a job or work involuntarily—even more so where the loss of work happens quickly and when any redundancy payment is low or non-existent.

Unfortunately, over my working life I have been involved in one way or another with thousands of redundancies and it is never a pleasant experience. I remember a FTSE institution deciding to close one of its regional offices. Originally, it intended both to tell all the employees and remove them from the premises on the same day. I managed to persuade the CEO that the workforce were a hard-working, decent group of people who would not wreck the systems and that he could delay the closure for three months to give people a fighting chance to find alternative work.

I kept remembering a female employee’s buoyant comment to me some nine months previously, because this was a group of people with a clear work ethic who worked at that regional office. She said: “They will never close this regional office: we have the highest productivity and we win all the company awards”. The CEO did agree to delay on the condition that I stood next to him when he told the staff, who had no idea of what was coming. It was one of the most salutary experiences of my life. The tears from both men and women, the panic, the anxiety: how were they going to pay their mortgage or rent; how were they going to tell their kids? I remember that plaintive question so clearly, because it was repeated so many times.

When faced with job loss or redundancy, hard-working people do not clap their hands and say, “Oh goody—I’m off to a life of unemployment on benefits”. They are more likely to be stressed and anxious while rushing around trying to find another job, probably fighting feelings of depression. To hit them with a benefit cap straight away just adds further hardship to already difficult—maybe even traumatic—circumstances. Anybody who has been involved in the private sector and large-scale redundancies knows that some people even have to be put on suicide watch. That is the reality of dealing with redundancy situations, even when there is a compelling economic reason for doing so. That immediate impact of a benefit cap would make it even more difficult to deal with the essential bills; their efforts may be redirected into relocating into cheaper accommodation and relocating their children to different schools at the very time they should be putting all their efforts into finding a job. It could force a breakdown in childcare arrangements for lone parents when they so desperately need to leave them in place, because they need them so they can search for jobs and make the early transition to another job.

In couples and families, to defend the cap and the couple penalty by shifting tougher work conditionality requirements to the other parent, who is the primary carer, is not necessarily going to provide a sustainable solution for that family. The inclusion of child payments in their benefit cap will hit their children hard. In a difficult economic climate, such hard-working people and their children will need time on benefits before a cap takes effect, while they try to find work. They should be given 12 months. A modern welfare system has not only to incentivise people to work and address benefit dependency, but also to support hard-working families with a clear work ethic in managing a flexible labour market. The single universal credit has to address both communities.

The Government want to see an increase in the private sector relative to the public sector. They want to see an increase in the flexibility of the labour market. This has to be achieved in part by a reduction in employment rights. However, they appear not to want to design a welfare system that supports hard-working people to manage the realities of today’s labour market and other economic realities—realities which will become harsher as global competition intensifies. Such support is fundamental to fairness; taxation and national insurance should enable society to make efficient and fair collective provision to meet the citizens’ needs—often at the point of need—whether it be, for example, health, defence or welfare. The Government, in building a universal credit system for customers with different attitudes and experience of work, must not fail to support hard-working people managing today’s economic realities. There is a danger that that dimension is lost in the current debate in this Bill.

The universal credit system is supporting both those who are persistently out of work, or who cannot for valid reasons be in work, and those millions of people who have a very clear work ethic but from time to time need a national insurance-based welfare system that is intended to assist them through—with their clear work ethic—the challenges with which they are faced.