Welfare Reform Bill

Baroness Hayter of Kentish Town Excerpts

Tuesday 13th September 2011 Lords Chamber

[Baroness Hayter of Kentish Town]

My Lords, I thank the Minister for opening the debate and I look forward, as does the rest of the House, to the maiden speech of the noble Lord, Lord Feldman of Elstree.

Given our support for the objective of the Bill, which is to make work pay and to simplify the system, it is deeply regrettable that it fails to achieve this. It fails partly because, despite the words we have just heard, it is taking place alongside a commitment to cut benefit expenditure and partly because it is work in progress, with far too many unanswered questions. In the previous speech, I think we heard the words “in due course” more than any other.

First, however, as vice-chair of the Webb Memorial Trust, perhaps I may quote three principles from Beatrice Webb’s 1909 minority report on the Poor Law, when she said that poverty has structural causes—it is not the fault of the individual—that the state has responsibility for preventing and alleviating poverty and that dependency should be avoided. I have no trouble with a no-dependency model of welfare, but Beatrice Webb also believed that the state is responsible for tackling the causes of poverty: the lack of jobs. Today, with 2.5 million unemployed there are six people chasing every job and in places such as Merthyr Tydfil, 84 for each vacancy. There is a responsibility on government to grow the jobs market because unemployment costs each of us—it is perhaps £500 per household—because we need jobs to enshrine a culture of work in every community, recognising the injury to childhood of a home without work, and because without jobs parents cannot return to work, no matter how hard they try.

We must help those who cannot work through age or infirmity but also assist those who have been out of work back into employment. The Work and Pensions Select Committee in another place goes further, calling on the Government to pay as much attention to getting employers to take on someone who has been out of work as they do to getting the claimant “work ready”. It is not alone in feeling that the Government are putting the onus on the individual rather than society. The most reverend Primate the Archbishop of Canterbury has written of,

“a quiet resurgence in the seductive language of ‘deserving’ and ‘undeserving’ poor”,

while the Government, I have to say even just now, seem to suggest that there is a “them and us”—taxpayers and the rest. I see it differently: we are all taxpayers, if only through VAT, and we are all potential recipients. Yes, the welfare state should reward work, but it must be there in times of crisis, where there is illness, unemployment or disability. It should be there for the vulnerable and it should be there to support families with young children, sharing the cost of the next generation throughout our life stages. We want to see a welfare system that is fair and straightforward, without the need for specialist help from hard-pressed Citizens Advice, especially with the threat to legal aid for welfare advice. We want a system that does the job, provides what is needed when it is needed and, yes, a system that is affordable. The Bill fails those tests. It is not fair or transparent, it does not help some of those most in need and it will not be affordable if it leads to homelessness, poverty, disincentives to save or family break-up.

I touch upon some of our concerns; first, childcare, especially in London, where it can cost £11,000 a year —perhaps a quarter higher than elsewhere. Childcare is key to whether parents are better off in or out of work, but in extending it to those working under 16 hours within the same fixed budget, there will be losers, with existing recipients getting less. On the savings cap, claimants will start losing universal credit with £6,000 in savings and will lose all of it with £16,000. While most claimants will never have such savings, this new rule will hit in-work families for the first time, as there is no such savings cap for tax credits. The savings cap undermines incentives to save, whether for a mortgage, tuition fees, social care or to top up one’s pension. The IFS has warned that the savings cap will give some families a strong incentive to lower their capital below £16,000.

Then there is the abolition of the discretionary Social Fund’s community care grants and crisis loans, devolving responsibility to local government, but without ring-fenced funding for cash-strapped councils—what the CABs have warned could be a return to the Poor Law. These safety nets—for cookers, beds, cots—help some of our most vulnerable in times of crisis, often as a result of family break-up. Family Action has warned that, for women setting up home after fleeing domestic violence, such financial support is precious to them and their children. Meanwhile, 22,000 people per year leave prison without accommodation. They need early help to prevent them falling into debt, with all the associated temptation to return to crime. As Sir Richard Tilt has said:

“The discretionary social fund has been the ultimate, final safety net for the poorest and most vulnerable”.

What will replace these half a million grants and 3 million loans? Food parcels instead of cash? A postcode lottery of handouts? Loan sharks instead of regulated grants? The Social Fund Commissioner has called for any replacement to be targeted at the most vulnerable, to be concentrated on one-off needs, to be fair and transparent, with national criteria, and to have an independent grievance process. So we ask the Government today: will they delay devolving responsibility until such a framework is in place?

I turn to housing. Londoners’ rent is already 50 per cent higher than the national average and 80 per cent of housing benefit recipients in private rented homes in central London face cuts in housing benefit. I have to tell the Minister that London landlords will not reduce their rents in response to this. There will be a flight from high-rent areas, regardless of the needs of the family or of children or, indeed, of the local economy; because who will do the jobs that they leave behind? Meanwhile, there are few jobs in low-rent areas. Westminster Council estimates that 5,000 households will be affected and,

“that a sizeable proportion … will need to move … Moving out of the borough is likely to be problematic for families with children at critical schooling points”,

which leads to the so-called underoccupation of social housing. Some 600,000 housing benefit claimants are deemed to need a one-bedroom property but only half that number of such properties exist. What if that family were helping to look after an ageing parent or perhaps were getting grandparent help themselves? How is this to be replaced if they are forced to move? Meanwhile, the household cap on benefit ignores variations in housing costs or, indeed, family size. The head of the Roman Catholic Church in England and Wales, the Archbishop of Westminster, identified these cuts as being likely to force thousands of poor families out of their homes. We know the likely effect of the changes to housing benefit, the underoccupation rule and the benefit cap because Eric Pickles’s private secretary helpfully told No. 10 about it, warning it that 40,000 families were likely to be made homeless. I remind the Government that even Dame Shirley Porter managed to move only 500 families when she tried her form of “social cleansing” from Westminster.

The £500 a week benefit cap will reduce the benefits of perhaps 50,000 families. This will hit carers as, unlike war widows, they will not be exempt. However, some carers will be forces’ wives whose injured husbands were fortunate enough to survive, but their carer’s allowance could go if they hit the cap. Will the Minister explain why the cap figure, mostly affecting families with three or four children in the south-east, has as its comparator the national average earnings for all families, including those with no children and those in low-wage areas? Furthermore, the comparator £26,000 income does not include child benefit, whereas the £26,000 cap does. Will the Minister agree to exempt child benefit from the new cap?

I believe that the change from DLA to the personal independence payment was probably aimed at improving the system, but—there are a lot of “buts”—it is taking place against a background of an arbitrary 20 per cent cut for some of our most vulnerable. There is as yet no decision on which rates of the daily living component of carer’s allowance will be due, but the words,

“those with the most intensive caring responsibilities”,

tend to suggest that other carers will be excluded. The qualifying period will be doubled from three to six months, but it is the first months of disability when one has lost a limb or is suffering from the effects of a stroke or serious illness when costs are highest and income falls as the ill or injured often give up work. Without PIP entitlement their carer similarly cannot qualify for carer’s allowance. The Minister suggested that he had heard concerns about the loss of mobility component for local authority-funded residents in care homes—I am not sure that he responded to them—which will make them virtual prisoners in what is, after all, their own home. How will they afford to go to weddings, funerals, shivas, christenings, bar mitzvahs, Eid prayers, the cinema, the pub, bingo or to shop for clothes without that mobility allowance? I recognise that Ministers have agreed to review this but with no terms of reference, no timetable, no involvement of disabled groups and no publication of the outcome. Will the Minister confirm what Maria Miller, the Parliamentary Under-Secretary of State for Disabled People, said:

“I can offer absolute reassurance to disabled people living in care homes … that this Government will not remove their ability to get out and about”.?

Cancer has been mentioned. We hope that the Government, particularly the Prime Minister, have now understood the concerns of Macmillan and have heard its three “asks”: first, that those on oral chemotherapy should get ESA without being reassessed; secondly, that support for cancer or stroke victims should kick in when their needs are greatest rather than having to wait six months; and, thirdly, that those taking more than 12 months to recover should not be penalised if they are not ready to return to work. After all, it is meant to be a contributory payment, often earned as a result of many years of contributions by today’s cancer sufferers. Without movement from the Government on this matter, someone’s health catastrophe will turn into a financial catastrophe.

The Bill is an assault on ambition. Without childcare support, how can parents return to work and proceed up the income ladder? The threatened cut in childcare, added to the reductions already made, will undermine the very purpose of the Bill, just as the savings cap will undermine incentives to save. This Bill is an assault on compassion. It risks watering down child poverty targets; it will force cancer patients into poverty or to seek work too early; and it risks trapping many disabled citizens in their care homes by the removal of mobility payments.

The Bill is still work in progress. It is not yet fit for purpose, yet your Lordships' House is being asked to scrutinise without the answers to some fundamental questions. We await details of the crucial element of making work pay: childcare. On PIP, the Government’s silence on the review of mobility payments has forced the Disability Alliance to launch a judicial review. The passporting of PIP to carer’s allowance will be decided only later this year. The loss of free school meals is perhaps the biggest cliff-edge disincentive to work and a blow to tackling child poverty. Council tax benefit will be localised, so its taper will be unrelated to the universal credit regime and it could vary across boroughs—a real postcode lottery.

The Bill is a leap in the dark for millions who rely on childcare to work, for the disabled and for the Government—for their IT project and their reputation—and because it appears to have no answer to the myriad questions that so worry the sick and the disabled. We support welfare to work, but for too many disabled and vulnerable people the question is: from welfare to where?

This is a bad Bill. We will seek to improve it to ensure that it becomes a better Bill, leading to a fair welfare system, rewarding effort and compassionate to those most in need.