Welfare Reform Bill

Baroness Farrington of Ribbleton Excerpts

Monday 23rd January 2012 Lords Chamber

[Baroness Wheatcroft]

I would refer only to the recent riots as evidence of a society that was not entirely at ease with itself. If the noble Baroness is content and happy with the state of society, I am happy for her. I have qualms myself, particularly when I look at the number of children who have no aspiration to education or a career. That is one of the things that I believe the Ministers who are pushing this legislation through are committed to.

As I said, the worst sort of child poverty is poverty of aspiration, and in this country there are many households with no experience of paid employment. That is a terrible condemnation of what has been allowed to grow up in the name of a welfare system.

One of the greatest welfare benefits that we can bestow on children is an aspiration to acquire education and then a career. Growing up in a household where the concept of working for a living is understood and embraced is important for starting youngsters on the right path. A cap on benefits is a sensible step towards encouraging people into work. If we are going to have a cap, in the end we have to have a cap. There is no saying where child benefit is spent. It may go to the women but, I am afraid, not every woman devotes her time to spending her money on her children. That is what we might like to think, but there are others who have drug habits to fund and so on. Women are not infallible and I would be the first to agree with that.

The Government have assured us that they are not approaching welfare reform in a truly one-dimensional way. This is not just about cuts and saving money. The problem households that are locked in a cycle of benefits dependency are known to the authorities. We are told that the authorities are ready to work with those households between now and when this legislation comes into force. They can produce results. I can believe the Government when they say that they are committed to doing that. If they do, and they produce long-term benefits for children in those households, it will be a far more caring result than just handing out cash.

[Baroness Farrington of Ribbleton]

My Lords, I also had not intended to speak in this debate, but I have just been reminded that we are celebrating the work of Charles Dickens. I do not know why that came into my mind in the last few moments. Is it the deserving poor or the undeserving poor?

In answer to the noble Baroness, I actually stand in the middle as regards the broken society. To me, as an individual, parts of our society are broken, and the ones that are the most broken are those who lack empathy for those less fortunate than themselves. That is the root of our problem: whether the lack of empathy is the teenager who is incapable of understanding that the pensioner at the bus stop whose handbag he tries to take is a human being like his mother or grandmother; whether it is someone who has made it in life and believes, “It is all due to me and other people could be like me”; or whether it is the elderly person who says—and we are all in danger of doing this—“It was not like this when we were young”.

When I fought against the threat to what was then family allowance many years ago, some of the people who said, “I don’t agree with you, Josie”, were people who said, “I didn’t get it when my kids were young”. They then went on to tell me about the miseries they went through because they did not get it. Today, we are debating family needs and the issue of what makes a good society. I cannot understand how, on the same weekend when this debate was around in the media, someone suggested that we should give a new tax allowance to people who were working, given that any tax benefit, any cut in taxation, benefits those who earn most at the expense of those who have least.

We have a Prime Minister who has talked about the importance of marriage. That is a matter for him. To me, the important issue is that of families with children: how we provide a society in which the next generation has more empathy. I know that I am not alone in coming from a large family. There is among large sections of this country, certainly in focus groups, the view: “Why did they have all those children? They didn't need to”. Among some people, there is prejudice that there is something morally wrong about having children. You can argue that case, but the child born into the large family should not be penalised. My work as a councillor leads me to know that there will be those who will blame their children for the fact that their income has gone down. They will say, “If I had not had you little devils, I would have had more money to spend on us”. That is the harsh reality of some children's lives.

I cannot understand how the Minister is talking about fairness. We need to be fair to families with children. Anybody who believes, as was hinted at on the radio this morning by a member of the Government, that people have children in order to get money, has never brought up a child. Child benefit does not cover the cost, however little you give those children. We are facing a system that will penalise children to appease those who think that the children ought not to have been born. There, I have said it. That was what made me remember Charles Dickens. He knew that there were huge sections of society who believed that the undeserving poor ought not to have children.

The Minister has told us that large chunks of the people who will lose their child benefit are people who cannot work, by the Government's own admission, yet sweeping changes will affect them. I appeal to everyone who knows what is fair and what is right. We did not fight the issue of income tax allowance; we must fight to keep child benefit. We know that we are not dependent on those children for our old age, because they are too young to be supporting us; most of us will be long gone; but we need them for a good future and we do not want to inculcate in them grinding poverty, and grinding poverty is what we will be condemning them to. I remember in my childhood that the best meal of the week after Sunday was Tuesday night, when the family allowance was paid out. That was a very common experience. We need to ensure that those people who have children can provide the basic necessities—they are basic necessities—and support the right reverend Prelate the Bishop of Ripon and Leeds.

--- Later in debate ---

[Lord Freud]

My Lords, on the figures in that new impact assessment, the majority of people have full or partial conditionality in ESA, given the proportions of ESA. Most people on ESA in the support group will, in practice, be on DLA and therefore will not be affected by this cap, so we can look at the majority looking for work. Even if there is no formal conditionality, the message to families is that work is a solution in this circumstance. I need to remind the House that the coalition Government firmly believe that there has to be a limit on the overall level of benefit it is appropriate for the state to provide for those who are not working. Let me be absolutely clear about the structure because this is a point raised by several noble Lords. The noble Baroness, Lady Corston, made the point most emphatically. The structure of this does not take money out of the carer’s pocket because we are not stopping payments of child benefits. Those families will still continue to obtain their child benefit, and there is an offset in the other benefits to get the cap to work. It will not work through child benefit. I know all money is fungible and households will operate within the same overall money, but there is no need for this concern that the money is taken away from the carer directly.

[Baroness Farrington of Ribbleton]

My Lords, will the Minister just give a categorical assurance to the House that those affected by this government proposal, who the Government assess as not able to work at that time, will keep their child benefit? Then we can all go home.

[Lord Freud]

My Lords, I am obviously not going to make that commitment because that is not how this cap is structured. It is based on the premise that payment at unrestricted rates ultimately serves nobody. It does not serve those who are paying the taxes to fund it, and it does not help those who are trapped in dependence by providing little or no incentive to move off the benefit.

Let me answer a point about how it works that was raised by the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie. They asked why we need it when we have universal credit. Universal credit is designed to provide an incentive to get people back into work or to reduce the disincentive. The cap does two things. While UC is the carrot, the cap is the stick, but it also provides the message to people much more widely than the families that are affected that a life dependent on benefits is not the way to go. There are other solutions, work being the main one.

It is vital that the benefits system is seen to be fair. We do not believe that households getting out-of-work benefits should receive a greater income from benefits than the average weekly net wage for working households. That is why the cap is set at £26,000 a year net or £35,000 a year gross. Even there, significant amounts of financial assistance will be available from the state.

Like other welfare benefits, child benefit is provided by the state and funded by taxpayers. Therefore, we believe it is right that it is taken into account along with other state benefits when applying the cap. The effect of excluding child benefit would simply be that families on benefit would have an income higher than average earnings. There would be no upper limit to the amount of benefit a household could receive. Clearly, that would depend on the number of children. My noble friend Lord Newton hit on the head the point of why one would want to tell people that that is not a solution to a life on dependency.

We are trying to achieve a simple rule for the level of the cap and a simple set of exemptions. We have already recognised that there are some households for whom it would not be appropriate to restrict the amount of benefit that they can receive; that is, households in receipt of DLA, constant attendance allowance and PIP when it is introduced. We will also exempt war widows and widowers. These households do not need an exemption for child benefit as well.

For other households, work should be the way out of the cap. We have said that we will exempt households entitled to working tax credit and that there will be a similar exemption for working households on universal credit. This will encourage people who could be capped to seek work, reinforcing the improved incentives that will come with universal credit. Excluding child benefit will only dilute our aim that being in work, even part time, must always pay better than relying on benefits alone.

I want to pick up the important issue of kinship carers raised by the noble and learned Baroness, Lady Butler-Sloss. In Committee, I made clear that I am looking at kinship carers in the round. In practice, the numbers affected are pretty small. In dealing with those issues, clearly, we need to get it right in regulations. The most effective point made by kinship carers, at least where I am concerned, is that when you take on a child or children, there is quite a period—a year is suggested—during which a big adjustment factor goes on because many children being taken on are quite troubled by the time they are transferred. I am very conscious of that issue, which needs addressing generally. That is what we propose to do.

When we introduce the cap we intend to use a method which looks at median earned income after tax and national insurance for all working families. We believe that this will strike the right balance between providing support for families, promoting fairness between those out of work on benefits and those in work, and ensuring clear financial incentives to work. In summary, I repeat the fact that this is the kind of figure that the general public see as appropriate.