Welfare Reform and Work Bill

Baroness Lister of Burtersett Excerpts

Monday 7th December 2015 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, I rise—albeit a little slowly—to move Amendment 11 in my name and that of my noble friend Lord McKenzie of Luton. This is a very simple amendment which would ensure that the two-child limit applies only to children born after 6 April 2017. The impact assessment for this measure states:

“Entitlement will remain at the level for two children for households who make the choice to have more children in the knowledge of the policy”.

That simply is not true. If someone has more than two children and needs to make a claim for universal credit after 6 April 2017, and if they are not getting tax credits or UC and they have not in the past six months, this measure will apply to them. Entitlement will remain at the level of two children for those households, even though they quite clearly have not made the choice to have more children in the knowledge of the policy.

I suppose that it is just about possible that there will be those who manage to conceive and deliver a child between the passing of the Bill and April 2017, though they would have to get a move on, but most of the children affected by this will be living, breathing, existing children, conceived and born when this policy was just a glint in the eye of a cost-cutting Chancellor.

I know that various attempts have been made to get the Government to explain their rationale for this. I understand that it was indicated to Peers during a briefing session that the reason was that, if someone had not needed to claim benefit or tax credits during the past six months, they clearly have enough money to protect themselves against unforeseen events, so should not have access to the full support of the welfare state. I may be mistaken, but if I am the Minister can correct me. If that is right, however, surely that is precisely what the welfare state is for—to protect all of us against unforeseen circumstances.

Let us suppose that a couple have two primary-school children, and then they have two year-old twins. One day the husband dies or disappears or is paralysed in an accident and cannot work, and they turn to the welfare state. Those twins will be invisible for the purposes of universal credit, so you can see that the dream scheme that Ministers have boasted would swing seamlessly into action as soon as someone’s circumstances changed will not help that family feed, clothe and house the twins.

The family will potentially lose £5,560 a year every year until the twins are adults. We are talking about the best part of £90,000. How should the family have provided for that when they did not know they had to? What should they have done? Saved that much when they are raising toddlers? Maybe they should have bought a PPI policy, the cause of the biggest mis-selling scandal in modern financial history—and I should know, since I am the senior independent director of the Financial Ombudsman Service. But even if that were a good idea, why would they do it? They thought the welfare state was there to help them at such times. That was what they had been led to believe when they had those children.

As I indicated in the previous debate, I think that this whole measure is a terrible idea. But perhaps I can pass on some advice to the Minister from the greatest Cabinet Secretary of modern times, the legendary Sir Humphrey Appleby. Sir Humphrey once said to his Minister: “If you’re going to do this damn silly thing, don’t do it in this damn silly way”. If the Minister is going to reduce support for larger families on the grounds that families on universal credit will have to make the same choices as those who are not, he should at least not apply it to people who have already made their choices because their children are already here. I beg to move.

[Baroness Lister of Burtersett (Lab)]

My Lords, I support my noble friend, who made a very powerful case. The joint briefing from the churches and faith groups that was circulated to all Peers made a very good point. It said:

“A policy designed to incentivise families to make responsible choices, becomes an unavoidable financial penalty for anyone confronted by relatively common life events”.

This amendment in particular puts that quotation into relief. The Office of the Children’s Commissioner has raised similar concerns.

I made the point at Second Reading that this provision sits oddly with the Government’s own emphasis in this and earlier legislation on the importance of a dynamic perspective on family behaviour. Indeed, in a letter of 13 October to the EHRC about impact assessments for the current Bill, the Secretary of State made as his main point the need,

“to take fully into account the dynamic nature of people’s lives”.

So why are the Government refusing to do so now, especially, as my noble friend said, in relation to existing third or subsequent children where there is a new universal credit claim? What is the justification?

As my noble friend said, when this was explained to us I think the way it was put was that there would be an unfair advantage to richer families if they were able to claim universal credit for third and subsequent children. Perhaps these families were not claiming tax credits or universal credit before, but they could still be on a low income and simply not have claimed. We know that take-up is far from perfect. I know that the Government expect take-up to be higher for universal credit, but that remains to be seen. I have been around this game for quite a long time with the expectation that take-up would be improved by various benefits and so forth. However, it remains stubbornly at less than 100% for means-tested benefits. Even if they were better off—my noble friend made a powerful point here—financial circumstances can change very quickly in the event of life events or shocks. So where is the fairness in refusing support to, say, an early teenage child who is the third in the family and who was born many years ago?

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

I thank the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie, for bringing forward this amendment and I thank the noble Baronesses for making their points so succinctly, but effectively.

This amendment would change our approach to applying the two-child limit in universal credit so that it would apply only to children born on or after 6 April 2017. That effect would apply in existing and completely new claims for universal credit. This reform, which sees support for children in universal credit limited to two children, is primarily about fairness to the taxpayer. The tax credits system has grown unsustainably, and spending on tax credits for the 870,000 households which have three or more children is around £9.4 billion. To accept this amendment would, we estimate, increase projected universal credit expenditure by around £250 million in 2019-20. I am pleased that at least on this amendment I am able to provide the Committee with some costings.

The Government were elected on a manifesto commitment to reduce welfare expenditure by a further £12 billion during the lifetime of this Parliament, as part of the plan to eliminate the deficit and eliminate burdening the next generation with additional debt. There is no strong justification for the taxpayer to provide more generous financial support for completely new claims in respect of children born before 2017 than in respect of those born after that date.

Families already claiming universal credit or child tax credit, whether in or out of work, will not be affected in relation to children or qualifying young persons in their households before the key date while they remain entitled to benefit. Similarly, any household that has claimed universal credit or child tax credit in the past six months will be protected if their previous award included a child element for more than two children or qualifying young persons and they continue to have responsibility for them. I urge the noble Baroness to withdraw this amendment.

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[The Lord Bishop of Portsmouth]

My Lords, I tabled Amendment 21 to highlight the impact of this measure on different faith communities who share our concerns with this part of the Bill in particular. Noble Lords who attended the special briefing we organised two weeks ago will have heard Chaya Spitz, chief executive of the Interlink Foundation, speak passionately about the implications for the Orthodox Jewish community that she represents and is a member of. For her community, larger families are the norm and the central pivot around which everything else revolves. There is a positive, faith-based imperative to have children, to create the next generation in service of God. There is also a commonly held conscientious objection to the use of artificial contraception, except in prescribed circumstances, and to abortion, except in rare circumstances. By limiting financial support to the first two children, this policy is making a judgment that touches on deeply personal and strongly held religious and cultural beliefs about the family, and that threatens the viability of whole faith communities.

According to the 2011 census, 52% of Jewish children lived in families with three or more children, compared with a national average of 31%. In Muslim families, the proportion is even higher—60% live in larger families. This measure will have a hugely disproportionate impact on these particular faith communities. Although it is difficult to see how this could be framed as an exemption, the effects will be profound, and I do not believe they have received the consideration they deserve.

A recent report by the Child Poverty Action Group highlighted serious human rights concerns relating to this and other parts of the Bill and argued that the regulations would need to include “extensive exceptions” protecting women,

“family integrity and religious freedom”.

One of the issues it raises is the potential discrimination against members of religious groups who have a conscientious objection to the use of contraception or abortion contrary to Article 14, read with Article 9, of the European Convention on Human Rights. There are other hard cases as well, including situations where women in abusive relationships are pressured into having more children or where a woman uses contraception in good faith but it fails. In all these cases, the assumption that women have a free choice about whether or not to have a child is called into question.

For these reasons, I have tabled this amendment calling on the Government to consult and report on the economic and social impacts, focusing in particular on the implications for family life and for different faith communities. The Government’s own impact assessment is inadequate in this respect, offering only a superficial assessment of the likely effects. To argue, without supporting evidence, that substantially reducing the level of support for larger families will somehow increase their financial resilience and support improved life chances for their children seems wishful thinking at best and requires further investigation. As part of a more rigorous assessment, will the Minister agree to seeing the Government apply their own family test to this policy, using the guidance published by the DWP in October last year?

In an earlier intervention in Committee, the noble Lord, Lord Lawson of Blaby, spoke about perceptions of fairness in legislation, citing the example of family allowances. Would the Minister agree that the perceived fairness of these policies will be judged not only by their overall popularity but by the respect they give to deeply held convictions of faith communities that enrich our common life? I seek not an exemption but a clear analysis of the impact.

[Baroness Lister of Burtersett]

My Lords, in speaking in support of this amendment, I will pick up what the right reverend Prelate said about the inadequacy of the impact assessment. This point was also made by the Equality and Human Rights Commission from the perspective of equality and human rights. It argued that it does not “enable proper scrutiny” or meet the requirements of the public sector equality duty; nor is there an assessment of the “aggregate effect” of the changes on people.

In fact, the impact assessment is inadequate from any perspective. In particular, there is no assessment of the impact on child poverty, despite the Joint Committee on Human Rights recommending that the Government should assess the impact on child poverty of any new law, as child poverty is a human rights issue—I declare an interest as I was a member of the committee at that point. I asked a Written Question about the impact, only to be told to look at the impact assessment—the implication being that I had not read it, which I found rather insulting.

Not only is there no assessment of the impact on child poverty, but this is the quality of distribution analysis:

“The policy has the impact of redistributing income from Universal Credit/tax credit recipients to the Exchequer (i.e. society as a whole)”.

Actually it is not society as a whole, because when I last thought about it, universal and tax credit recipients were themselves members of society. The assessment continues:

“The policy therefore has distributional impacts”.

That is the distribution analysis—and the impact assessment on life chances is similarly risible.

I remind the Minister of what it says in the Companion—that Ministers should be as open as possible in answering questions, because this is inherent in ministerial accountability to Parliament. I therefore ask him again now: what is the department’s assessment of the impact of these clauses on the number of children living in poverty? I simply do not accept that it is not possible to make an assessment. I accept that there might have to be a fairly wide margin of error—we cannot just say that it will be exactly x thousand—but I do not accept that there is no assessment. It is not possible.

The right reverend Prelate also mentioned the family test. That is drawn up by the Department for Work and Pensions itself. It is supposed to be equivalent to the public sector equality duty. According to the DWP, its application should be documented and the relevant department should consider publishing it. Given that this clearly has a family impact, why did the department decide not to publish the family test? As part of its equality statement for reforming asylum support, the Home Office set out very clearly each of the questions that the family test is supposed to answer and gave its answer. I might not agree with those answers, but that was a model of how a department should deal with it.

Will the Minister undertake to provide noble Lords with the documentation of the application of the family test before Report? There must be documentation, according to the DWP’s own guidance. Given that the measure has a clear family focus, can he tell us what additional analysis was undertaken involving stakeholders, as is recommended in the DWP’s own guidance on the test? Finally, will the Minister tell us which other countries restrict payment of benefits for children to smaller families in this way? I am reliably informed that there is no other country, but I accept that I may be wrong. When I last looked at this, I found that countries that cared about family policy and child poverty tended to pay more to larger families, rather than less, but I would welcome elucidation on that.

[Baroness Sherlock]

My Lords, I rise to support Amendment 21 in the name of the right reverend Prelate the Bishop of Portsmouth. I fully support the requirement in the amendment to report on the impact on family relationships and functioning, for the reasons that have been articulated in the debates we have been having this evening. Until now we have not discussed in any detail the impact on faith communities, so I am going to concentrate on that.

As we have heard, larger families are strongly prevalent within some faith traditions and cultures, which leads to legitimate concerns about the differential ways this policy will be felt throughout society. There is an issue of equality for children born into families of faith. This measure will disproportionately affect families where, perhaps because of the parents’ faith, there is a devout desire to avoid contraception and abortion. As we have heard and discussed this evening, family planning is not infallible and many people of faith and other like-minded people are concerned that unexpected pregnancies could lead to a rise in the number of abortions. This point was made by the right reverend Prelate the Bishop of Portsmouth earlier.

As my noble friend Lady Lister pointed out, the most damning evidence about the differential impact of this measure on equality grounds comes from the Equality and Human Rights Commission. I declare an interest, in that I am a former commissioner of EHRC. It says:

“The proposed changes may have a disproportionate negative impact on people from particular ethnic or religious groups … The impact assessments and human rights memorandum which accompany the Bill do not assess the effect of the Bill on equality and human rights in sufficient detail to enable proper scrutiny of the legislation”.

It is not kidding.

Disgracefully, the Government have resisted all pressures to conduct cumulative impact assessments of these measures, giving impact assessments only for individual measures. Even within that, however, I was staggered to find that there had been no attempt to conduct an equality impact assessment on the two-child policy. The short section in the IA on the impact on protected groups mentions gender and disability in passing, acknowledges that ethnic minority households may be more likely to be impacted, though offers no detail, but makes no reference at all to the protected characteristic of religion and belief. Can the Minister explain why there is no such reference, when even a cursory glance at the data suggests the possibility for significantly differential impacts on the grounds of some protected characteristics, particularly religion and belief?

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[Lord Freud]

I thank the right reverend Prelate the Bishop of Portsmouth and the noble Earl, Lord Listowel, for this amendment. On the ECHR point, the Government set out their assessment of the impacts of the policies in the Bill on 20 July, as I think I have already said. It is important to ensure that the dynamic behavioural effects of the changes are considered within that. Many of these analyses suffer from the fact that they are too static when considering gains and losses and too focused on notional changes.

On the question posed by the noble Baroness, Lady Lister, on child poverty impacts, I say that the intended impact of our reforms is to incentivise work, ensure that it always pays, and to allow people to keep more of what they earn. That is why, as we will go on to discuss, we are moving towards a life-chances analysis of poverty as our approach.

[Baroness Lister of Burtersett]

I am sorry to intervene, but that is no answer, my Lords. I asked a very clear, factual question. At present, the Child Poverty Act still holds; therefore this House deserves the respect of being given an analysis of the impact of the increase in the numbers of children in child poverty on the measures, which are still the law, and which will still be measured under the HBAI statistics, as the Minister has said. I do not expect to have it now, but I hope that the Minister will give us those figures before Report.

[Lord Freud]

As I said, projections on the HBAI are difficult, and everyone gets them wrong because they are done on a static basis.

I pick up the point from the noble Baroness, Lady Hollis: she will be pleased to know that universal credit does not recognise polygamous marriage.

On the family test raised by the right reverend Prelate, the noble Baroness, Lady Lister, and the noble Earl, it is not a tick-box, pass-or-fail test but is about looking at how policies support or potentially undermine family relationships, and about trade-offs. The family test ensures that family considerations are explicitly considered and recognised when making those trade-offs. These measures will ensure fairness for all families, both encouraging parents into work and giving a fair deal for the taxpayer.

[Baroness Lister of Burtersett]

I am very sorry to intervene again. As I said, the Home Office, which is not the author of the original family test—the DWP was—published the questions in the family test and how its policy met those questions. Of course the department must have carried that out not on a tick-box basis—I am not saying yes or no—but by carrying out a considered analysis around these questions. I simply ask why, therefore, the Department for Work and Pensions is not prepared to make available to this House the documentation of how the family test was applied to this clause?

[Lord Freud]

As I said, the documentation that we have published is the documentation that we need to publish to comply with our public sector equality duties. We have done that, even though the noble Baroness may feel that it is inadequate.

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[Lord Freud]

That is a good point but, in essence, if you are not achieving the target in the earlier stages, you will know you are not going to get to the right point at key stage 4, so I think in practice this is built into the process.

Amendment 28, in the name of the noble Earl, Lord Listowel, would place a statutory duty on the Secretary of State to publish and lay before Parliament a report on children in care and care leavers. As I think we indicated earlier this evening, we share the noble Earl’s commitment to improving life chances for this particular group. We publish a wealth of information on both children in care and care leavers. There are two annual statistical publications, the first of which provides data on the numbers of children in care and the numbers entering and leaving care. It also includes data on placements, children who go missing from care and outcomes for care leavers, including their economic activity. The second publication deals with educational attainment at both key stage 2 and key stage 4, so I hope that noble Lords will be reassured that we already have the comprehensive data that the noble Earl is looking for.

We are also taking action. We recognise that children in care often need special attention at school. The Government’s own measure of educational disadvantage includes children who have been in care. Children in care also attract the highest rate of funding through the pupil premium plus and, from December, will be recognised in the education performance tables. At a local level, we have given local authorities £44 million over three years to support all young people to continue living with their foster families after the age of 18, helping to provide a stable setting at the key point of transition.

In Amendment 29, the noble Earl looks to do much the same with children who are “homeless” and “at risk of homelessness” every year—in other words to create a duty to lay an annual report. The noble Earl will be pleased to know that I have been a member of the ministerial homelessness committee now for the last five and a half years, so I am absolutely informed in this area. We agree of course that care and attention are required in the case of children who are at risk in this area, and we publish relevant data. Local authorities collect and publish data on the number of households with children who are eligible as homeless and in priority need and data on the number of children in temporary accommodation, which is published on a quarterly basis. I think that the last figures came out in September. This area is a key priority. Since 2010, we have invested over £500 million to support local authorities and voluntary sector agencies to help the most vulnerable back into society.

On Amendment 30, problem debt clearly is a key factor in trapping families in poverty and adversely impacting on their living standards, mental health, family stability, financial inclusion and well-being. This is a well-chosen issue. We intend to develop a range of non-statutory indicators, which will include that one, as well as family breakdown and drug and alcohol dependency, and set these out in our life chances strategy.

[Baroness Lister of Burtersett]

I have a couple of points, the first on problem debt. Will the Government also be assessing the impact of the Bill on debt? We have had briefings from a number of organisations that give debt advice, such as StepChange, which are very concerned that the Bill, in particular the clauses we have just been debating on the end of financial support for families with three or more children, are going to increase debt significantly.

I also wondered whether the Minister could comment on another point. He has twice referred now to addiction, which the Government talk about as a sort of root cause of poverty. A couple of years ago I put down a Written Question asking what the Government’s estimate was of the proportion of children living in poverty with at least one parent addicted to either drugs or alcohol. The Minister’s answer was that the Government do not have such an assessment. Drug or alcohol use is not recorded on the survey used for UK poverty national statistics. I wonder therefore—how do the Government know that this is a root cause of poverty, when they seem to have no relevant information?

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[The Earl of Listowel]

That is very helpful.

[Baroness Lister of Burtersett]

The Minister talked about working with local authorities on child poverty, which obviously is welcome, and I think that he said something about not wanting to do that in a random way—excuse me, it is a bit late so I cannot remember exactly what he said. If that is the case, though, why are the Government removing the duty on local authorities to develop strategies? The letter that the Minister received from the Children’s Commissioners just the other day underlined how valuable that duty has been. I know that local authorities, within the constraints that they are having to work in, have been quite imaginative in trying to think about what they can do as partners of central government in combating child poverty, so I really do not understand why that has been taken away, given what the Minister said about wanting to work with local authorities.

[Lord Freud]

It is the same answer that I have just given: we want local authorities to focus their time on action to get at the root causes, not at the symptoms.

[Baroness Lister of Burtersett]

But surely the strategy could be a strategy to get at root causes. The Child Poverty Act does not say that local authorities have a duty to deal with symptoms. It says that they have a duty to help to eliminate child poverty, and of course that is about trying to get at root causes.

[Lord Freud]

What we are doing is working with local authorities to support them in getting at the root causes. That will be our strategy.