Welfare Reform Bill

Baroness Hollis of Heigham Excerpts

Tuesday 4th October 2011 Grand Committee

[Baroness Campbell of Surbiton]

My Lords, I do not wish to comment on the overarching universal credit and associated issues, but I commend the noble Lord, Lord Kirkwood, on raising the issue of language. Language is absolutely essential not only to the dignity and self-worth of people who receive benefits, but also to what our message is to the world about those who survive because of the support they receive from what will be these welfare reforms. I remember writing about three years ago a very important article entitled Sticks and Stones, But Words are Hurting! It was about the issue of language as it pertains to disabled people. I remind noble Lords that disabled people have spent the last 25 years trying to get away from welfare and talk about rights. I would like us to think about this as we go forward.

I, too, will be raising the issue of language when we come to personal independence payments. Noble Lords will recall from the Second Reading debate that I have questioned the term, because it does not fit with what we perceive to be the original and, what we thought would be the enduring, intention of disability living allowance. So language is important and I thank the noble Lord, Lord Kirkwood, for raising the issue at this point. Welfare versus rights is something that we disabled people talk about all the time.

[Baroness Hollis of Heigham]

My Lords, like others, I thank the Minister and his Bill team for being so accessible and helpful; I genuinely congratulate them. When we can get the material in hardcover rather than on e-mail, I shall be even more enthusiastic and enduring in singing the Minister’s praises, which I am sure we all want to do.

I want to make two points, both of them triggered by the remarks of the noble Lord, Lord Kirkwood, and my noble friend Lord McKenzie, which I thought were spot on. First, the main thing is to talk about language. The noble Baroness, Lady Campbell, is exactly right. Until recently, when we introduced a Bill like this, it would not have been a welfare reform Bill; it would have been a social security Bill. The gap between social security and welfare is precisely the gap between entitlement and stigma. We forget, when using words like “welfare reform”, what is the structure of who pays and who gains in our welfare state. We all know that a very substantial part of “benefit expenditure” is actually a redistribution of resources through people’s lifetimes, particularly from the working years to retirement. Our pension work falls into that.

A second key group of redistribution is what we would call the category benefits. They go to children and to disabled people. There are more methods of redistribution than merely from rich to poor. Instead, they go from those without children to those with children; they go from those who are in good health to those in poor health. That is something that all civilised societies would sign up to. Only the third category of benefits, those which are means tested, reflect a straightforward redistribution from rich to poor. They have been allowed to dominate and cloud the language and to stereotype claimants in ways that portray them as dependent on handouts and the goodwill of others. We should return instead to the more appropriate, all-inclusive language of social security. Apart from the very lucky few, who are probably white millionaires, male and in very good health indeed, all the rest of us will need recourse to the welfare state, to the social security state. We should all hold that firmly in mind and refuse to engage, wherever it is spoken, in language that seeks to make distinctions between the deserving and the undeserving poor—or, as the Victorians would have said, God’s poor, poor devils and the devil’s poor.

The second point I want to make, which follows that, is the point made rightly by the noble Lord, Lord Kirkwood. I strongly support the principles and much of the structure of the Bill, although, like others, I have real concerns about what I regard as the pressure points. In dealing with the Bill, we must not only be concerned with the question of language, but we must encourage the Minister to respond to those adjustments we need to make, particularly where the language of the amendments run by the Minister, or his replies, may suggest what I call the econometric model of the Treasury, which is that people have to be pained or punished into work, because the only stimulus that they will respond to is an economic one.

What many of us said in our Second Reading speeches, and what I hope we will all remember, is that when we ask people to move from being on benefit to coming into work, whether they have a disability, whether they have been a lone parent, whether they have struggled for a long time with being chronically unemployed because of the demography and the economic structure of their region, the issue for them is not just about whether they are better off; it is primarily about risk. Unless people understand—and I fear that too often the Treasury does not—the issue of risk and the abatement of risk that needs to go on, we are not going to make a success of the Bill. I think that the Minister understands this perfectly well. I think and I hope that he will accept arguments and that where, in future amendments, we seek to abate risk as well as reward work, he will understand that this is in order to make a philosophy that so many of us sign up to to work today.

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[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, before I deal with the amendment, the stand part debate and the clause, I have to take on board what the noble Baroness, Lady Campbell, said, and her expression of concern. I do not have an answer for her now, but I will go back and get one and make sure that her concerns are addressed in the most thorough way possible. If things have not gone appropriately, I apologise unreservedly.

Before I turn to the amendment in the name of my noble friend Lord Kirkwood, let me talk a bit about the universal credit. Clause 1 establishes universal credit as a new benefit under the provisions of Part 1 of the Bill. This is a modern, simplified benefit, available both to people who are in work and those who are out of work, instead of claiming a number of benefits and tax credits from different sources, as happens currently.

As the Committee will know, the Government are determined to reform the welfare system to make it fairer and more affordable while addressing the problems of poverty and dependency on welfare. Universal credit is at the heart of this strategy. I welcome the support from the noble Lord, Lord McKenzie, for the principle of universal credit. While I am on that point, a number of noble Lords have thanked my Bill team for their accessibility and requested that that continue and I can again give an assurance that we will lean over backwards to continue that accessible approach. The reason is entirely one of self-interest, and when I say self-interest, I mean the interest of the governance of this country. It is vital that we have a proper debate on this very important Bill. A number of noble Lords have pointed out that this is a really important, transformative Bill and it is important that we address the issues properly and with full knowledge. That is why we have this very accessible approach.

We are currently updating the impact assessment—we have been working with a rather out-of-date one—and I am hopeful that we will be publishing that soon.

[Baroness Hollis of Heigham]

Could the noble Lord help us a little more? Some of us, in our amendments, are relying quite heavily on the impact assessment figures and we would not want to mislead the Committee by using figures that will be replaced quite quickly.

[Lord Freud]

Yes, I think that they will be replaced quite quickly. I cannot give the actual date or time now, but I think I am safe to say, “Soon”.

[Baroness Hollis of Heigham]

A week? A month?

[Lord Freud]

“Soon” is closer to a week than a month.

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[Baroness Hollis of Heigham]

Thank you.

[Lord Freud]

We will get a code. But even the current impact assessment shows the transformative effect of universal credit when it is fully implemented. The combined impact of take-up and entitlements may lift hundreds of thousands of individuals out of poverty, including as many as 350,000 children. The vast majority of gains from universal credit will go straight to the poorest households.

I shall pick up the point made by the noble Lord, Lord Wigley, and the noble Baroness, Lady Meacher, on risk. By combining, effectively, out-of-work benefits and in-work tax credits, we effectively de-risk moving from one category to the other and that is a very powerful incentive for the poorest people to take a risk. One other aspect of it which I have been very conscious of as we develop the whole approach is that it is the best way of dealing with fluctuating conditions. You can move, take a risk and work for some months without being terrified that, if it does not work out, you have lost your benefit support structure, because you are just moving up and down the taper. So, from the aspect of risk, universal credit has huge advantages and it is one of the main drivers of our expectation to see many fewer workless households.

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[Lord McKenzie of Luton]

On the impact of the taper rates, does the Minister agree that, if you have council tax benefit or its replacement outside the system, you simply cannot be sure what the effect of the withdrawal and taper rates will be? Can you include that benefit?

[Baroness Hollis of Heigham]

I reinforce my noble friend’s point. As every council tax taper will differ from district to district, and there are some 300 to 400 of them, it will be impossible for anyone to predict who gets what.

[Lord Freud]

We will have a debate on this matter rather soon, but maybe not today. The only way I can respond is to point out that, depending on how we adjust the system to have what is effectively a tax rebate system outside the universal credit, we could see different effects. Rather than prejudging this, I will reserve that information for another day. We will have plenty of time to deal with it.

I have been asked about IT by a number of noble Lords, including my noble friend Lord Newton, the noble Lord, Lord McKenzie, and the noble Baroness, Lady Meacher, among a few others who have some concerns. We have gone through a huge process of external assessment by the Major Projects Authority, which is a continuous process in stages. The most recent independent review stated a high level of confidence that the expert teams that we have assembled will see us deliver the programme. The review team said that we had made an impressively strong start.

The programme is on time and on budget. It is being developed in a radically new way to government programmes. The difference is that in a traditional government programme the whole system is built, trialled for a few months and then introduced. This system is being built in layers so that we can trial each layer as it develops and test it with customer insight. That process is happening. One of the things that we can do today is take some particular claimant types through the system. I am planning a demonstration for noble Lords later this month to take them through this process, because when they start to see the different elements coming together there will be a much better basis for understanding.

In my confidence, I can quote only these external sources; my own views are perhaps less relevant. The external sources are holding the programme up as an exemplar of how the Government should develop IT. We will be getting these external reviews regularly at each of the difference gateways, so it will be monitored externally very carefully. I have no knowledge of where this is on anyone’s risk register, so I cannot answer that particular question put by the noble Lord, Lord McKenzie. Obviously, though, any big programme is going to be looked at to ensure that it is being done to time and to budget. That is just governance.

I think there is a lot of confusion in the external world between what is an appropriate level of governance and external monitoring of an important, big programme, and the fact that there are always risks involved in developing it. I responded to the article in the Telegraph, saying that this was a programme on time and on budget. Basically, the article was misleading and I stand by that letter.