Welfare Reform and Work Bill

Baroness Lister of Burtersett Excerpts

Monday 21st December 2015 Lords Chamber

All that this second amendment does is to say that the Secretary of State must take account of what is happening to household income in those households before he takes the decision to change the level of the cap. Any civilised Government should want to take account of the consequences of their decisions before repeating or adjusting them. The amendment would require Ministers to look at the impact on those households. As I said at Second Reading in relation to other measures, if Ministers will the ends, they must will the means. They should be forced to consider the effect on poor households, most of which have young children, before reaching a decision that could make it very difficult for many parents to clothe, house and feed them. I beg to move.

[Baroness Lister of Burtersett (Lab)]

My Lords, I shall speak to Amendments 74 and 93. I am grateful to the noble Lord, Lord Kirkwood, for his support for both, and the noble Earl, Lord Listowel, for his support for Amendment 93. The aim here is to ensure that we debate the human rights implications of the cap, particularly regarding children and women. I am grateful to CPAG for its help with these amendments, and I declare an interest as its honorary president. I also support the other amendments in this group.

Amendment 74 would require the exemption of households from the benefit cap where necessary to avoid a breach of convention rights within the meaning of the Human Rights Act 1998. It would send a clear message that Parliament intends a cap to be implemented in a human rights-compliant way. It would enable tribunals and courts to exempt families from the operation from the cap so as to avoid a breach of human rights without having to make a declaration of incompatibility. This is necessary because by incorporating the list of benefits included in the cap in primary legislation in Clause 7, which was not the case before, rather than leaving them in regulations as now, it appears that the Government are trying to avoid legal challenge under the Human Rights Act other than by way of such a declaration.

Amendment 93 would require the Secretary of State’s review of the cap to take into account the need to safeguard and promote the welfare of children. The phraseology echoes that in Section 11 of the Children Act 2004 and Section 55 of the Borders, Citizenship and Immigration Act 2009. In ZH (Tanzania) the noble and learned Baroness, Lady Hale, found that this effectively incorporated Article 3 of the UN Convention on the Rights of the Child, which requires the welfare of the child to be treated as “a primary consideration”.

[Lord Blencathra (Con)]

The noble Baroness quoted the noble and learned Baroness, Lady Hale, which I presume was from the Supreme Court case which ruled just a few months ago. However, the noble Baroness will be aware that the Government were taken to court on this very point of not implementing the UNCRC, the court ruled by three to two against Lady Hale and the judgment was that the Government were perfectly correct. The court went on to say, quoting some other distinguished noble Lords in this House, that it would be quite inconceivable for an unincorporated charter like the UNCRC to be given force in English law.

[Baroness Lister of Burtersett]

I am grateful to the noble Lord. I will come on to that case; I was talking about an earlier case that the noble and learned Baroness, Lady Hale, was involved in. I am quite aware of the outcome of the case heard earlier this year, but I thank the noble Lord for providing a trailer for what I will say later.

These amendments are prompted in part by the inadequacy of the Government’s own assessment of the human rights implication of the cap and in part by the judgment in the Supreme Court case that the noble Lord mentioned on the cap earlier this year. Both the Joint Committee on Human Rights, of which I was then a member, and the Office of the Children’s Commissioner have emphasised that child poverty is a human rights/children’s rights issue. Lowering the benefit cap clearly has implications for the number of children living in poverty. An internal assessment leaked to the Guardian in May suggested that if parents are unable to avoid the cap through paid work, it could plunge a further 40,000 children into poverty.

The impact assessment says nothing on the subject of child poverty, yet when I tabled a Written Question to ask what the impact on the number of children in poverty would be, I was referred to that impact assessment. As I said in our first session, I consider that rather insulting, as the implication was that I had not read it. I remind the Minister that the Companion makes it clear that Ministers should be as,

“‘open as possible’ in answering questions”,

as this is,

“inherent in ministerial accountability to Parliament”.

I therefore ask the Minister now, what is the department’s estimate of the impact on child poverty of reducing the cap, given that we know from the Guardian that such an estimate exists? I am quite happy to accept any provisos about possible behavioural responses but this is not a good enough reason for refusing to provide Parliament with such a crucial piece of information. Also, can the Minister tell us how the Government responded to the questions from the UN Committee on the Rights of the Child on whether a proper child rights impact assessment had been conducted and,

“the measures being taken to mitigate negative impact on the enjoyment of the rights of children, particularly those in vulnerable situations”?

The impact assessment has a section entitled “What are we doing in mitigation?”. I could summarise the contents by saying, “Not very much”. It says nothing at all about mitigation of the negative impact on the rights of children, despite the request from the UN committee. The Equality and Human Rights Commission, too, has criticised the impact assessments and the human rights memorandum which accompany the Bill for failing fully to assess the impact on equality and human rights. It warns that there is a risk to the UK’s compliance with its obligations under national and international human rights law, particularly with reference to children, women and disabled people, and therefore it gives its firm support to these amendments.

The impact assessment does at least acknowledge that women are more likely to be affected than men, as 64% of claimants who have their benefit reduced are likely to be single females—mainly lone parents. Sixty-three per cent of households capped to date have contained a child under five, and in total more than twice as many children as adults have been hit by the cap.

In the human rights memorandum, the Government note the Supreme Court’s decision, which I shall come to now. They assert that they have fully considered their obligations under the UNCRC—in particular, Article 3, which concerns the duty to treat the best interests of the child as a primary consideration. However, their analysis of the best interests of the child seems to rest on the proposition that it is in the best interests of children overall to have parents in work and that work remains the surest route out of poverty.

That would be laughably inadequate if it were not for what is at stake. As the EHRC observes, it betrays a particular lack of understanding regarding compliance with the UNCRC. It may well be in the best interests of many children for parents to find work but it will depend on the work available and on the circumstances—as has already been discussed on earlier amendments, work can represent a cul-de-sac rather than a route out of poverty. Moreover, this bald statement ignores the fact that, as my noble friend said, the great majority of those who were already subject to the cap did not find work as a result. Is it really in the best interests of children to have their standard of living reduced even further when a survey, reported in the first-year review of the operation of the cap, found that more than a third of those affected had already had to cut back on household essentials and many had incurred debt?

In fact, the Government’s position pretty much ignores the judgment of the noble and learned Baroness, Lady Hale—echoed by the noble Lord, Lord Kerr— that it,

“misunderstand[s] what article 3(1) of the UNCRC requires”.

The final decision does not alter that fact. She continues:

“It requires that first consideration be given to the best interests, not only of children in general, but also of the particular child or children directly affected by the decision in question. It cannot possibly be in the best interests of the children affected by the cap to deprive them of the means to provide them with adequate food, clothing, warmth and housing, the basic necessities of life. It is not enough that children in general, now or in the future, may benefit by a shift in welfare culture if these are also the consequences. Insofar as the Secretary of State relies upon this as an answer to article 3(1), he has misdirected himself”.

She also pointed out that the children affected suffer from a situation which is none of their making and which they themselves can do nothing about. Can the Minister now give a more convincing response to the weighty charge that the cap, and therefore these clauses, are not in the best interests of children? As it is, the failure to give proper consideration to the best interests of the child could leave this measure vulnerable to a further future legal challenge.

In his judgment, Lord Carnwath referred to a point—mentioned by my noble friend—made during the passage through this House of the Welfare Reform Bill, which became an Act in 2012. That point was that most of the savings from the cap resulted from the inclusion of child benefits and child tax credits, even though these will be received by the great majority of those on median earnings. I shall return to this when I speak to Amendments 76 and 77. Although ultimately, Lord Carnwath sided with the judges who did not allow the appeal, he still considered that the cap did not comply with the UNCRC, and he expressed the hope that the Government would address the implications of this when it came to reviewing the cap. Even Lord Reed, who spoke for the majority in disallowing the appeal, linked the proportionality assessment to the fact that the cap was set at median earnings. Now that, as my noble friend has made clear, there is no clear rationale for the level of the cap, as it is pushed to be below median earnings, that proportionality judgment might start to look rather different.

I have focused mainly on the implications for children’s human rights, but, as I said, the human rights of women and disabled people are also at issue. I am sure we will hear more about the more recent High Court case that found indirect discrimination against disabled people through the impact on carers, but I will not go into that now. These wider implications are another reason for my amendment to Clause 7, which requires general human rights compatibility.

I believe that these amendments should be uncontroversial. After all, if the Government are so confident that the cap is compliant with human rights instruments, they have nothing to fear from them. I hope, therefore, that the Minister will be willing to take them away and consider them.

--- Later in debate ---

[Baroness Lister of Burtersett]

Perhaps I can explain. Unfortunately all the evidence shows that far too many people get stuck in low-paid work which does not take their children out of poverty. A very large proportion of children in poverty have a parent in work. One of the points made by the Joseph Rowntree Foundation against the cap is that, even in that minority of cases where the result has been for someone to move into work—it is a very small minority, as we have heard—the danger is that in the long term it is counterproductive because it pushes them into unsuitable, insecure and low-paid work.

[Lord Lansley]

I understand the point that the noble Baroness is making, but I am afraid that I do not agree with it, for two reasons. The first is by virtue of the other measures that this Government are taking in relation to availability of childcare, the further extension of personal tax allowances and the increase in the national minimum wage, leading to a national living wage. All of these enable people who are in work to achieve more of a living income through being in work. The second and most important reason is that work in itself changes the character of a household; it changes the character of people’s lives. Frankly, in the long run, it changes people’s employability.

--- Later in debate ---

[Lord Blencathra]

My Lords, it is a pleasure to follow the noble Baroness, Lady Hollis. She said at one point that the public do not understand how social security works. That is very true; I spent many years as a Member of Parliament and understood only a fraction of it, and I believe that very few people understand the details of the 70,000 regulations. However, what the public do understand is that when they have to move to another part of the country and cannot afford a mortgage on £26,000, or if they have to live in a house which they would ideally like to be bigger, better or different, or in a better street, and they cannot afford that, but then they see someone else or a family getting £26,000 or more in benefits, they feel it is unfair. You do not have to know how the regulations work to have that instinctive feeling. That is why all parties strongly supported the benefits cap when it was introduced by the previous Government. I appreciate that the Labour Party now has some reservations about it and I will comment on that later.

I had intended to talk only about the level of the cap and how it was fair. However, in view of the comments of the noble Baroness, Lady Lister, on the UNCRC, which I thought I would be dealing with on another amendment, perhaps I could make those comments in this speech in answer to her and I will not speak again on UNCRC matters. On the level of the benefits cap, as politicians we have different views but this was part of a case before the Supreme Court last year. It was just decided a few months ago and five of the noble judges ruled in the Government’s favour that the benefits cap was not contrary to the rights of the child and not in breach of the ECHR.

In looking at the level of the cap, Lord Reed for the court said that:

“In relation to the related criticism that children in households affected by the cap are deprived of the basic necessities of life, that argument was rejected by the courts below, and I see no basis for reaching a different conclusion. As I have explained, the cap for a household with children is equivalent to a gross salary of £35,000 per annum, higher than the earnings of half the working population in the UK, almost three times the national minimum wage, and not far below the point at which higher rate tax becomes payable”.

That was of course in relation to the level of the cap then and we are now talking about a reduction of 12.5%—but, based on the strong views of the court, I can see no reason why it would come to a different conclusion if the cap were lowered by 12.5%.

In looking at how families had been forced to move, the learned judge went on to say:

“In relation to the argument that households with children cannot reasonably be expected to move house … Millions of parents in this country have moved house with their children, for a variety of reasons, including economic reasons. It is, in particular, not uncommon for working households to move out of London in order to find more affordable property elsewhere. It is also necessary to recognise that transitional financial assistance is available for households affected by the cap who cannot move until suitable arrangements have been made in relation to the children, as I have explained”.

Those views were taken from a 95-page report of the Supreme Court, having heard days and days of argument.

[Baroness Lister of Burtersett]

I may have misheard, but I think that I heard the noble Lord say that all five judges said that the cap complied with the UNCRC on the rights of the child. Is that right or did I mishear?

[Lord Blencathra]

If I said that, I misspoke. It was three out of five: a majority verdict of the Supreme Court.

[Baroness Lister of Burtersett]

So some of the five said that it did not comply but the fact is that the UNCRC is not incorporated into UK law, and therefore that was not sufficient for the appeal to be allowed.

[Lord Blencathra]

I take the noble Baroness’s point but that was not the view of Lord Reed, which I read. I can see nowhere in his judgment where he said that we did not comply with the UNCRC but that nevertheless, because it was not incorporated, he was going to find in the Government’s favour. That is not my interpretation of reading those pages whatever.

Let me move on to the UNCRC, since we have got there. First, the judge made the point:

“As an unincorporated international treaty, the UNCRC is not part of the law of the United Kingdom (nor, it is scarcely necessary to add, are the comments upon it of the UN Committee on the Rights of the Child)”.

Then comes the crucial point:

“‘The spirit, if not the precise language’, of article 3(1) has been translated into our law in particular contexts through section 11(2) of the Children Act 2004 and section 55 of the Citizenship, Borders and Immigration Act 2009”.

The judge was making it very clear that although the exact wording of the UNCRC was not applicable in the UK, the Government, through legislation, had incorporated the principles of it and were therefore complicit.

The judge went on to say that,

“it is therefore inappropriate for the courts to purport to decide whether or not the Executive has correctly understood an unincorporated treaty obligation”.

He then quoted Lord Bingham of Cornhill’s comments from a famous judgment, which I will leave aside, before noting:

“Lord Brown of Eaton-under-Heywood expressed himself more emphatically … ‘It simply cannot be the law that, provided only a public officer asserts that his decision accords with the state’s international obligations, the courts will entertain a challenge to the decision based upon his arguable misunderstanding of that obligation and then itself decide the point of international law at issue’”.

The noble Baroness, who I greatly respect and who is very knowledgeable in this matter, quoted extensively I think from the noble and learned Baroness, Lady Hale, who took a rather more fundamentalist view of incorporating the UNCRC into English law. She has held that position for some time, but it was not the view that the court collectively took.

I will conclude taking extracts from these turgid 95 pages shortly. The judge went on to say:

“Finally, it has been explained many times that the Human Rights Act entails some adjustment of the respective constitutional roles of the courts, the executive and the legislature, but does not eliminate the differences between them: differences, for example, in relation to their composition, their expertise, their accountability and their legitimacy. It therefore does not alter the fact that certain matters are by their nature more suitable for determination by Government or Parliament than by the courts. In so far as matters of that nature have to be considered by the courts when deciding whether executive action or legislation is compatible with Convention rights, that is something which the courts can and do properly take into account, by giving weight to the determination of those matters by the primary decision-maker”.

That decision is,

“relevant to these appeals, since the question of proportionality involves controversial issues of social and economic policy, with major implications for public expenditure. The determination of those issues is pre-eminently the function of democratically elected institutions. It is therefore necessary for the court to give due weight to the considered assessment made by those institutions. Unless manifestly without reasonable foundation, their assessment should be respected”.

In conclusion, the judge says:

“Many of the issues discussed in this appeal were considered by Parliament prior to its approving the Regulations … Furthermore, that consideration followed detailed consideration of clause 93 of the Bill, which became section 96 of the 2012 Act. It is true that the details of the cap scheme were not contained in the Bill which Parliament was debating, but the Government’s proposals had been made clear, they were challenged by means of proposed amendments to the Bill, and they were the subject of full and intense democratic debate. That is an important consideration. As Lord Bingham of Cornhill observed in R (Countryside Alliance) v Attorney General … ‘The democratic process is liable to be subverted if, on a question of moral and political judgment, opponents of the Act achieve through the courts what they could not achieve in Parliament’”.

He went on to say:

“The same is true of questions of economic and political judgment”.

I apologise for quoting extensively from those bits of the judgment. I shall not speak again on UNCRC issues, but the noble Baroness provoked me in the sense that she relied heavily on the UNCRC to somehow suggest that the Government were acting improperly or illegally and had something to fear from the Human Rights Act. That was not the view of the majority of the court.

[Baroness Lister of Burtersett]

I do not want to provoke the noble Lord any further, but would he not accept that Lord Carnwath, in accepting that the appeal was unfounded—whatever the legal term is—and that the issue was one for Parliament, specifically asked the Government when they reviewed the benefit cap to consider what the judges had said about Article 3.1 of the UNCRC? That was my point—the Government have reviewed the benefit cap, and it will be even less in the interests of children than it was at the higher level.

[Lord Blencathra]

I thank the noble Baroness. I think that the comments of Lord Justice Carnwath are what the lawyers would call obiter dicta—they did not go to the heart of the judgment. He was making an observation that it might be nice if the Government considered it, but there was no suggestion that the Government’s action in imposing the benefits cap was somehow contrary to the European Human Rights Act because we had failed to look after the interests of the child, as set down in the UNCRC.

--- Later in debate ---

We have seen dramatic proof of the importance of that in recent years. Every year, within my memory, reputable outside experts—the IFS and others—have predicted another increase in child poverty and, so far, at least, every year we have seen a decline in child poverty. That is because—in my view; I do not know whether it is the Government’s view—the dynamic effects can be much more important than the static ones.

[Baroness Lister of Burtersett]

I said to the Minister that I am quite happy for any estimates of the impact on child poverty to be qualified with reference to possible dynamic effects. Has the department assessed the likely impact on child poverty, taking account of the dynamic effects it hopes to see as a result of the cap?

[Lord Freud]

I am clearly not in a position to comment on the work that we do, but I can say that estimating dynamic effects is extraordinarily difficult. We are working on improving how we do that. One of the reasons why we can often get into sterile debates is that getting hold of the real figures and the real behavioural impacts is very difficult. I quoted our child poverty experience. The latest Universal credit at work, in which we outlined theses new approaches, set out big behavioural changes. Many more people—13% more—are going into work, compared with the comparable JSA. That is an example of behavioural effects that is very difficult for us to pre-estimate.

Amendments 92, 93 and 94 are tabled by the noble Baronesses, Lady Meacher, Lady Sherlock, Lady Pitkeathley and Lady Lister, the noble Lords, Lord McKenzie and Lord Kirkwood, and the Earl of Listowel. These amendments would require the Secretary of State, when reviewing the level of the benefit cap, to have regard to any impacts on disabled people, their families and carers; the relationship between the level of the cap and median household income; the promotion of the welfare of children in the United Kingdom; households affected by the cap; and public authorities, local authorities and registered social landlords.

The noble Baroness, Lady Sherlock, asked whether we will go on reducing the cap. The Bill requires the Secretary of State to review the level of the cap at least once during a Parliament and provides him with the power to review it at any other time if he considers it appropriate. We believe that this provides the most effective means of ensuring that the cap stays at the appropriate level, while also providing the stability that households on benefits require. Any changes to the benefit cap level will be sensitive to its key principles of maximising work incentives, bringing fairness for working households and providing a reasonable level of support for capped households.

The noble Baroness, Lady Pitkeathley, spoke about carers. I emphasise that the Government recognise the contribution carers make to society. I will deal with carers when discussing the amendment that appears in a later grouping.

The power to review the level of the cap is necessarily broad and has been drafted to allow the Secretary of State to take into account any matters he sees relevant—for example, the wider impacts on families and children. I do not think it right to prescribe in legislation any particular factor which must be considered as part of this review.

Amendment 94 requires the Secretary of State when reviewing the level of the benefit cap to take into account the impact on disabled people, their families and carers. As I mentioned, there are exemptions from the cap for people who are a member of a household that includes somebody who is entitled to attendance allowance, disability living allowance and PIP.

That has been in place since the cap’s introduction and reflects the fact that these benefits are paid in recognition of the extra costs that disability can bring. There is also an exemption for those who are entitled to the support component, and the equivalent in UC, whose health conditions mean that they are unable to undertake any work-related activities. Those exemptions are not changing.

The new provisions will allow the Secretary of State the ability to consider the context of the cap and its level in a broad and balanced way. For example, he may take into account, although he is not limited to these, factors such as: earnings, housing costs and the wider impact on disabled people, families and carers.

--- Later in debate ---

[Lord Freud]

Thank you.

The revised cap levels are being set to create a strong work incentive to ensure fairness for both working households and those receiving out-of-work benefits, while providing a safety net of support for the most vulnerable. Amendment 92 would require the Secretary of State to have regard to the relationship between the level of the cap and median household income—a point reinforced by the noble Lord, Lord Beecham. Additionally, it would require that the impact on households affected by the cap was considered along with the financial impact on public authorities, local authorities and registered social landlords.

In future, when reviewing the levels of the cap, the Secretary of State must take into account the national economic situation and, where necessary, he will be able to consider any other matters that he might consider appropriate. Earnings and housing costs may be very much a part of this, but other factors also may be, such as inflation, benefit rates, the strength of the labour market and any other matters that may be crucial and relevant at the right time. Any decision when taken in the round will balance these factors with the impacts of the cap on its principal aims: to incentivise work and bring greater fairness to those in work while maintaining support for the most vulnerable.

Reinstating any direct link between future cap levels and the median household income undermines the changes we are introducing. Many working families earn less than the level of average earnings of £26,000 a year. It is important that relevant matters are looked at in the round. We want the Secretary of State to have the flexibility to consider a broad range of social and economic factors when reviewing the level of the cap in the future. Legislating for these specific factors to be considered unnecessarily reduces the scope for that.

Amendment 93, tabled by the noble Baroness, Lady Lister, and the noble Lord, Lord Kirkwood, would require the Secretary of State to take into account the need to safeguard and promote the welfare of children when reviewing the cap. I reiterate that we consider the impacts with regard to all relevant legal obligations when formulating the provisions of the Bill.

Now I move, at last, to the point made by the right reverend Prelate the Bishop of Durham. The welfare of children is at the heart of our reforms. It is important that children grow up recognising the value of work. Work provides purpose, responsibility and role models for children. The evidence shows that, for families responding to work incentives, the cap provided clear positive impacts on children and family lives through additional income and from the long-term positive role model effect provided by parents being in employment. There is clear evidence that children in workless families suffer worse educational outcomes compared to those in working families. That is why, as we discussed earlier, we are introducing new measures of worklessness and educational attainment.

The benefit cap is a key part of our aim to reduce long-term welfare dependency. The revised cap levels are being set to create a strong work incentive, ensuring fairness for working households and those receiving out-of-work benefits. These principles will guide a review of the cap levels in the future. It means the Government will be able to review the level of the cap in the light of any significant economic events that occur. The clause as drafted provides the best approach to allow for any future review to set the cap at the most appropriate level.

Before I ask the noble Baroness to withdraw her amendment, I await to be intervened upon.

[Baroness Lister of Burtersett]

My Lords, I will do so on the question of the welfare of children. First, there is no difference between myself and my Front Bench on this issue—there may be on some issues but not on this one. The noble Lord has not dealt with the point I made when I referred to what the noble and learned Baroness, Lady Hale, said, although I did not do so simply because she said it. Noble Lords have quoted from the IFS peer review, which showed that the great majority of those affected by the cap did not move into paid work; indeed, the House of Commons Library said:

“There is no general consensus that the … cap … is proving an effective means of moving claimants into work”.

My noble friend also made a point about those who are not expected to move into paid work anyway. The point is: what happens to the welfare of children in those households which are still out of work? It cannot be in their best interest, which is supposed to be a primary consideration, to reduce the incomes of their parents further and further below the poverty line.

I also quite accept what was said about role models and the value of work, and so forth, but I remind the Minister that in one of our earlier debates I referred to some research from the University of Bath. That showed that where a lone mother goes into work then cannot maintain that job for whatever reason in an insecure labour market and falls out of work again, it raises big questions in those children’s minds about the value of work, and that it can be totally counterproductive if you push people into paid work in a way that is not helpful to them and their families.

[Lord Freud]

On the last point, there are always particular cases such as those referred to by the noble Baroness, but the broad evidence shows that on balance children gain from their parents going to work. One other point is that noble Lords may not have clocked how the benefit cap works. Quite a lot of people have rather small amounts—£50 or so—capped. In many cases, if you do a small amount of work and earn £50 over a week, we cannot take the money away from you twice—we have capped you at that level—and those extra earnings are not then withdrawn, as they would be in many cases under the legacy system. We do not have data on that as they are very hard to get, but it would not surprise me if quite a lot of people earn small amounts of money which, in most cases, is 100% in their pocket.

--- Later in debate ---

[The Earl of Listowel]

I rise to speak to my Amendment 90B which would exempt kinship carers from the benefit cap. I am most grateful to the noble Baroness, Lady Drake, for adding her name to the amendment.

I will be brief as the Committee has already discussed kinship care and the Minister has knowledge of it through his charitable work. One does not need to believe in an afterlife to know that there is a hell. One need only hear some care-experienced adults speak of their experience. The experience of too many is: to grow up without love; to be betrayed by those they trust; to be left in that position for years before the state intervenes; to experience rootlessness in care often; to look to alcohol or drugs for respite from guilt and the inability to relate to others; and to give birth to child after child only to have each baby removed by the state.

Our amendment increases the chance that these souls will know heaven rather than hell, and increases the chance that they may know love and security and then go on to love and be loved themselves. The best rehabilitation we can offer children taken for their protection from their parents who cannot love them is the chance that these children can find love themselves and go on to be adults who will start healthy families and have children they can love and who love them.

We know that 30% of kinship carers are on housing benefit and 36% of the larger of these families are on HB. There is a concentration of kinship care in London, with 1.7% of children in this city cared for under kinship care arrangements. Brent has 2.8% of its children in kinship care—the highest level in England. Failure to amend this Bill will put more of these families into poverty and, I fear, uproot others.

What kind of choice is it that the state is forcing families to make when in order that an aunt or uncle should do right by their niece and/or nephew, they must uproot their own children from their home, friends and school, leaving behind their own support network, to live in poverty somewhere they may not know? A grandmother carer said of the Bill as it stands, “I had a really well-paid job and now I worry constantly about money. I always listen to what the Government are doing as the changes with universal credit will affect me and my little one. I am scared of losing my home and being homeless”. I beg the Minister to accept our amendment and ensure that this Bill makes the welfare of these particular children paramount.

[Baroness Lister of Burtersett]

I shall be very brief. I support what the noble Earl, Lord Listowel, said about kinship carers. I am delighted that the Minister will come back before Report on the question of carers. I remind him of something he said during the passage of the 2012 Act. He said that one thing the Government were not looking to encourage was a change in the carer’s behaviour so that they stopped caring.

I hope that he will remember that statement—and what he has heard about how strongly Members of this House feel about the inappropriateness or “indecency”, as my noble friend put it, of applying the cap to carers—when he makes these considerations about how to respond to the High Court case.

[Baroness Pitkeathley]

Perhaps I might just add to that. I ask the Minister to bear in mind that we have already heard that many carers are working more than 50 hours a week. That is more than any full-time job and we need to keep that in mind when we consider pushing carers into work.

--- Later in debate ---

[Baroness Sherlock]

My Lords, I shall also speak to Amendments 77, 79, 82, 84 and 85, which are in my name and that of my noble friend Lord McKenzie of Luton. These amendments would exclude a series of benefits from the cap which relate to families with children, and I want to say a brief word about each of them. Once again, we have tabled these as probing amendments and I therefore encourage the Minister not simply to say yes or even no. If he said yes, I would obviously fall over in shock. I am trying to use these amendments as a vehicle to get him to explain more carefully to the House what he expects people affected by the cap to do to avoid it. That is all I am asking for here, so I encourage him to respond in that vein.

Amendment 76 would exclude child benefit from the cap and Amendment 77 would exclude child tax credit. Just to be clear, the Minister mentioned in the last group that he feels that all income replacement benefits should be included. Those are specifically not income replacement benefits but extra-cost benefits. Child benefit has traditionally been a universal benefit—it is still available to all but the highest-tax bracket households—and it is designed to be the classic extra-cost benefit. It is a horizontal transfer from taxpayers as a whole to households with children, out of a recognition that children are a public as well as a private good and therefore we should all share in the costs of raising them. The parents pay the lion’s share but we all make a contribution because it is in all our interests to raise children who are happy and healthy, and who will be the next generation paying for the rest of us. Why are they therefore excluded?

Amendment 79 would exclude guardian’s allowance from the cap. You can claim guardian’s allowance only if you are caring for somebody else’s children because their parents have died, or because one has died and the other cannot look after them because, for example, they have gone missing or are in prison. What behavioural incentives are the Government seeking by including guardian’s allowance in the cap?

Amendment 82 would exclude maternity allowance from the cap. Maternity allowance is available only to those who are in work but cannot get statutory maternity pay. It enables the woman to take paid maternity leave. The Minister may mention the grace period but that applies only to people who have been in work for the last year at the point when they make an application for benefit, and that may not apply to everybody in this circumstance. Suppose that a woman finds that she hits the cap because her household benefits rise as a result of her maternity allowance. What is she to do? Let us say that she is single or that her partner is unable to work. What behavioural response does the Minister want? The two things that have traditionally been suggested are to work or to move house. Is she to work when she has a job but is going on maternity leave? Is she to move house when she is about to give birth? Neither of these seems an obvious response, although I may have missed something, and I very much hope that I have. I raised this at Second Reading or some other point during discussions on the Welfare Reform Bill in 2012, because I remember at the time I could not really believe that the Government genuinely meant to include a maternity benefit in the cap, when the way you got out of it was by working. However, I very much hope I have missed something and look forward to the Minister explaining that one.

Finally, Amendments 84 and 85 would exclude from the cap widowed mother’s allowance and widowed parent’s allowance, which are paid only to widows below state pension age who have dependent children. Those are contributory benefits, eligibility for which depends on the contribution record of the late spouse. I would be interested to hear the Minister’s reasons for including those benefits in the cap.

The impact of this on children will be quite significant. To date, more than twice as many children have been hit by the cap as adults. Children are disproportionately affected by the benefit cap, and 63% of households capped to date contain a child under five. Reducing the cap means that some families simply will not have enough income to manage. Even if they manage some weeks, there will come a time when their budgeting gets thrown off course; for example, when a winter heating bill comes in, both kids have a growth spurt, a child moves to secondary school and needs a new uniform, or the fridge breaks down. With access to hardship payments much reduced, and unable to repay loans or catalogue payments, parents will build up debts and miss rent payments simply to feed the kids and buy essential items. If the Government are going to cut benefits to families with children unless their parents take certain specified actions, the very least they can do is explain to us what those actions are and what they expect them to do about it.

[Baroness Lister of Burtersett]

My Lords, I rise to speak in support of Amendments 76 and 77, to which I have added my name. I apologise that we will be going over some of the issues raised in the first group of amendments, particularly by my noble friend Lady Hollis, but they are crucial because they go to the nub of some of the disputes among us as to what is fair and what is not.

The amendments follow on from my Amendment 93, discussed earlier, which was designed to safeguard and promote the welfare of children. In speaking to that amendment, I referred to Lord Carnwath’s judgment in the recent Supreme Court case on the cap, in which he made the point that the inclusion of child benefit and child tax credits in the cap raises,

“questions why the viability of a scheme, whose avowed purpose is directed at the parents not their children, is so disproportionately dependent on child related benefits”.

He also said:

“The cap has the effect that for the first time some children will lose these benefits, for reasons which have nothing to do with their own needs, but are related solely to the circumstances of their parents”.

This takes us to one of the “policy objectives” or “intended effects” listed in the impact assessment, namely to:

“Promote even greater fairness between those on out of work benefits and tax payers in employment (who largely support the current benefit cap), whist providing support to the most vulnerable”.

The “most vulnerable” are not defined, but in the impact assessment on the benefits freeze, the term is qualified with the phrase,

“who are least able to increase their incomes through work”.

Surely children fall into that category. Yet the justification for the way the cap is constructed and for the reduction in its level ignores this and, as Lord Carnwath observed, takes no account of children’s needs, relating instead solely to the circumstances of their parents. Moreover, it is worth repeating the observation of the noble and learned Baroness, Lady Hale:

“The children affected suffer from a situation which is none of their making and which they themselves can do nothing about”.

My noble friend Lady Hollis made the point that it is not a level playing field here—a horrible sporting metaphor—and that we are not comparing like with like when we compare in-work earnings with out-of-work incomes, although I will not go into more detail on that. I tried to find out by way of a Written Question how much the so-called hard-working families we hear so much about were likely to be receiving in benefits. This time the response I received rehashed the latest government mantra of their commitment to,

“a higher wage, lower tax, lower welfare economy”,

and referred me to the HM Revenue & Customs website. I enlisted the help of the Library to see whether it could elicit the answer from the website, but—surprise, surprise—it could not. In effect, a government Minister—in this case, the noble Lord, Lord O’Neill of Gatley—was encouraging me to waste my time by sending me to a website that would not supply me with the answer to the questions I was posing. Given that the Government were able to supply similar figures in answer to a Written Question during the passage of the Welfare Reform Bill in 2012, it is surely possible, and beneath the disproportionate cost threshold, to do so again now. I fear that, increasingly, government departments simply cannot be bothered to answer our completely legitimate questions, thereby ignoring their responsibility for parliamentary accountability.

Similarly, I tabled a Question to find out what the impact would be in terms of the total number of households capped, the number of children affected and the cost to the public purse, if children benefit and child tax credit were excluded from the cap. Once more, I was referred by the Minister to the impact assessment, as if that contained the answer. Yet again, such information was made available during the passage of the Bill in 2012, showing that nearly half the savings from the cap were being made as a result of the inclusion of children’s benefits: in other words, nearly half the savings were being made on the basis of a blatant piece of unfairness that drives a coach and horses through the Government’s claim to be creating that beloved level playing field between families in and out of paid work, giving rise to Lord Carnwath’s query about why the policy’s viability is so disproportionately dependent on child-related benefits when its avowed purpose is directed at the parents not the children. It is clear from the evaluation of the existing cap that one consequence is likely to be even greater arrears and debt, thereby aggravating what the Government themselves consider to be a root cause of child poverty.

On our first day, there was broad agreement among noble Lords who spoke that the two-child policy does not meet the Government’s own family test. Although it might not be quite so blatant here, I believe the same applies to the inclusion of children’s benefits in the children’s cap. Although the impact assessment for the cap is much more thorough than that for the two-child policy, I could not see any reference to the family test having been applied. Could the Minister confirm that it was applied and could he undertake to publish the documentation?

When we last discussed this issue, during the passage of what became the 2012 Act, as we have already heard, there was strong support in your Lordships’ House, under the leadership of the right reverend Prelate the Bishop of Ripon and Leeds, for excluding children’s benefits from the cap. I very much hope that that support will be there again now, because with a reduction in the level of the cap to an arbitrary two-tiered level below median earnings, the case for exclusion is stronger than ever.

[Lord Freud]

My Lords, this group of amendments seeks to exclude specified benefits payable for children and widowed parents from the list of those included within the cap. As I mentioned in relation to the other amendments, these amendments would undermine the fundamental principle that was established when the benefit cap was introduced: that there has to be a clear limit to the amount of benefits that a family can receive. That is a principle that has gained very broad support across the country and indeed from the Opposition.

The benefit cap is one part of our suite of welfare reforms which are restoring work incentives and fairness to the benefits system. That previous system was not fair on working taxpayers; nor was it fair on claimants, trapped in a life where it was more worth while claiming benefits than working. Our welfare reforms are about moving from dependence to independence, and the benefit cap is helping people take that important step into work.

We have always accepted that there should be some exemptions from the benefit cap. To incentivise work, the cap does not apply to those households in receipt of working tax credit, which, for lone parents, requires 16 hours of work a week. To recognise the extra costs that disability can bring, households which include a member who is in receipt of AA, DLA, PIP or Armed Forces independence payment are exempt. Those who have limited capability for work and are in receipt of the support component of ESA or the equivalent in universal credit are exempt. War widows and widowers are also exempt.

--- Later in debate ---

I urge the noble Baroness to withdraw the amendment.

[Baroness Lister of Burtersett]

I am very sorry to intervene. I may have missed it, but I do not think that the Minister addressed my argument, also made by my noble friend Lady Hollis, about the fact that the comparator families in work will be receiving child benefit and almost certainly child tax credit, so why are they being included in the cap as we are not comparing like with like? I also asked a specific question about the application of the family test, to which the noble Lord did not give an answer.

[Lord Freud]

We did apply the family test; I had better write to the noble Baroness with the details because I cannot recall what was in it. There was quite a lot of material going through in a short time.

I think that I have now dealt twice with the fact that we are looking at earnings and we are not making that comparison, even though I know that neither the noble Baroness, Lady Lister, nor the noble Baroness, Lady Hollis, like the answer. That is my answer—I do not have another answer, however much I am asked.

--- Later in debate ---

[Baroness Sherlock]

My Lords, a change of subject. I am pleased to say that these amendments are not about the benefit cap. Amendments 95 and 102 are in my name and that of my noble friend Lord McKenzie of Luton, and Amendment 100 is in our names and that of my noble friend Lady Lister.

Clauses 9 and 10 provide for the freezing of certain working-age benefits for a period of four years until 2019-20. This is estimated to save the Government £3.5 billion in 2019-20 when compared to an uprating by CPI. The benefits and tax credits included in the freeze are the main working-age components of income support, jobseeker’s allowance, ESA, housing benefit and ESA WRAG, together with the key elements of working tax credit and the individual element of child tax credit, universal credit and child benefit. It does not extend to disability premiums, allowances for caring responsibilities or pension benefits.

Amendment 95 would displace the automatic freezing of those items and require a review to take into account inflation and the national economic situation. Amendment 100 would have the same effect for child benefit, and Amendment 102 for the otherwise frozen elements of universal credit.

Clearly, even if they were accepted, such amendments would not preclude the various rates remaining unchanged, but they would require some consideration of their real value and the capacity for the economy to share more fully the benefits of growth. It would give the Government the opportunity to think again in the light of changing—the Government would doubtless argue, improving—economic circumstances.

A bit of a pattern has been developing here. Previously, the retail prices index was used for uprating. Then Ministers robustly argued that CPI was the right measure. Then, in 2013, they decided to limit increases to 1% as a temporary measure. Now, whatever happens to inflation, they will not uprate benefits and tax credits for the rest of this Parliament. First RPI, then CPI, then 1% and now 0%.

Our major concern with the way that this freeze is being done is that it both cuts the link between prices and earnings and widens the gap between the income of the poorest and the living standards of the mainstream of society. It uncouples eligibility for support from need, a feature also of changes to the benefit cap and the local housing allowance.

We have been living in fairly benign inflationary times, with CPI expected to rise from 0% in quarter 3 of 2015 to near the Bank of England target of 2% by the second half of 2017—although the components of CPI do not necessarily reflect the basket of costs which most impact poorer households. We know that GDP growth is projected by the OBR to be between 2.3% and 2.4% through to 2020.

In considering these matters, we must have some regard to the financial resilience of households and their ability to cope with what will be a sustained real-terms reduction in their resources between now and the end of the Parliament. If we look at the tax and benefit changes under the coalition Government, we see that austerity was used to introduce net tax rises of £13.6 billion and net benefit cuts of £16.6 billion, including pension increases of £5 billion. The IFS analysis shows that, in terms of changes to income, the poorest two deciles did the worst over that period, with working-age households with children particularly hit. The End Child Poverty Alliance reminds us that some 4.1 million families and 7.7 million children have already been affected by below-inflation rises over the last three years. Ministers will doubtless point to the Government’s manifesto commitment to freeze benefits, but I hope that the Minister will acknowledge that that commitment covered only a two-year period, not the four-year period that the Bill proposes.

I am really interested in process. We have a long tradition according to which Ministers are required to assess what people need to live on before coming to Parliament annually to propose what should happen to the levels of benefits and tax credits. Sometimes in this House there is just the noble Lord, Lord Kirkwood, and me in the Moses Room, along with the Minister; but the point is that we got to test the Government’s case before decisions were taken affecting the lives of millions of our citizens. I therefore have two questions to ask the Minister. First, what assessment are the Government making to ensure that there is some link between benefits and tax credits and what a family needs to live on? Secondly, will the Minister assure the Committee and the country that once this Parliament is over, it is the intention of the Government to return to linking the level of benefits and tax credits with inflation and to the practice of Ministers being accountable annually to Parliament for those decisions? I beg to move.

[Baroness Lister of Burtersett]

My Lords, I will speak in support of all of the amendments in this grouping. The only reason that my name is not on the first one is that I did not spot it in the Marshalled List. The four-year freeze in most working-age benefits represents the largest of the many cuts in the Bill. Conveniently for the Government, it is an invisible cut; gradually people will find that the benefit that they rely on is able to buy less and less, but they will probably blame the cost of living, not realising that it is the result of deliberate government policy. As the Joseph Rowntree Foundation study commented a few years ago, upgrading policies have big effects over time:

“They are among the most significant decisions taken by Chancellors … Their gradual effects seem imperceptible on a year-to-year basis, yet they carry immense implications for the future”.

So let us not underestimate the significance of Clauses 9 and 10.

Benefits have already been cut in real terms due both to below-inflation increases and to the switch to the use of the CPI rather than the RPI. Moreover, as the latest JRF Monitoring Poverty and Social Exclusion report points out, essentials have risen faster than the average price index in recent years. Since low-income families spend proportionately more on essentials,

“low-income families have in effect experienced a higher rate of inflation than other families”,

meaning that their benefits have been able to buy even less than before.

This latest cut in real value has been described by the IFS as,

“highly regressive, with the bottom three deciles losing most”,

which is hardly surprising. If any noble Lord suggests that benefits are adequate, and that therefore those reliant on them can afford to take such a cut, I suggest that they try living on benefits—not for a week as a benefit tourist, but for months without savings or the kind of stocks that we all take for granted.

The briefing note that we were given spells out two main objects as the policy’s rationale, the first being to deliver savings to contribute to deficit reduction,

“while maintaining support for the most vulnerable”.

To be more accurate, it should say “some of the most vulnerable” since, for instance, children’s and some disability-related benefits will not be protected, as the EHRC points out. Nor does it protect protected groups, with women and black and minority-ethnic groups disproportionately affected. Whatever one thinks of the primacy given to deficit reduction—and eminent commentators such as Martin Wolf of the Financial Times question it and the extent to which it is to be achieved by spending cuts—it is a political choice to make those with the narrowest shoulders bear so much of the burden, particularly when others have enjoyed tax cuts. These, as it happens, were, in effect, paid for by benefit cuts under the coalition Government, according to CASE at the LSE.

As my noble friend Lady Hollis has pointed out in previous discussions, it is a myth that social security spending is out of control. As the OBR analysis shows, over the past 30 years, the real increase in spending has been broadly in line with growth in the economy, so there has been no significant change in the proportion of national income devoted to social security spending. The largest contribution to the increase in spending since 2008 has been the rise in the real value of pensions.

The other main objective given is to,

“help to reverse the trend where earnings growth has been slower than the growth in benefit rates”.

However, this is a very recent trend. Professor Jonathan Bradshaw has used the DWP abstract of statistics to show that the adult rate of unemployment benefit was worth 21% of average earnings in 1972, the earliest date for which there are consistent data. By 2008, the JSA rate had fallen to 10.5%, half of what it was in 1972. It is true that the short-term trend, to which the Government refer, means that it has increased slightly now to 11.7%, but now that wages are expected to start rising again it will no doubt fall back again, even without this freeze.

The other justification given in the impact assessment is, once again, that it will increase work incentives. It is worth pointing out that some of the benefits affected are paid to those in work in any case, a point to which I will return in the next grouping. As the famous OECD quote used by the Government to justify ESA for new WRAG claimants made clear, work incentives can be improved in a distributionally fairer way by improving in-work benefits rather than adopting this Poor Law mentality of cutting out-of-work benefits. Indeed, a cross-national study reported in the 2009 British Social Attitudes survey concluded that,

“employment commitment is stronger in countries with higher levels of welfare state generosity”.

Therefore, I really do not believe that there is any justification for freezing benefits, not just for two years, as stated in the Conservative manifesto—as my noble friend pointed out—but, in effect, for the whole of this Parliament. I accept that, at present, it looks as if inflation will remain low, but who knows what shocks might hit the world economy and with what effects? It therefore behoves a responsible Government to keep benefit levels under review and to accept these amendments.

[Lord Kirkwood of Kirkhope]

My Lords, I will add a few comments to what has already been said. I think that Clauses 9 and 10 are terrible. I object in principle, as did the noble Baroness, Lady Lister, to the idea that we can forecast need. I am speaking for myself: I do not know what my party position is or will be, but I am convinced that nothing is more emblematic of the approach of this Government of attacking the working poor and dealing with austerity disproportionately.

That does not mean to say that austerity does not mean to be addressed. The low-income households in this country—in or out of work—will suffer; thankfully, that distinction will become less relevant as universal credit rolls out. I do not think universal credit will come on stream fast enough to help everybody. We have been waiting for the rollout; there are around 155,000 in full compliance with the universal credit system. That will be a much better place to be once the whole country is there but, in the interim, these four years in which we will be freezing these benefits will cost low-income families dear. Why? It is because it is on top of everything else, and I have said that before. One of the biggest disappointments—and I have said this before as well—in the coalition government days was the fact that we did not evaluate the results of the totality of the integrated cuts that were made. That applies to services as well. Now, we are having another four years’ freeze, which is £3 billion or more on top of everything else, without any metrics that begin to contemplate what that might mean for people caught in different, unforeseeable ways by a combination of the cuts.

I have been looking at this area of policy for as long as anybody here, and I am not sure that we will be able to look as far ahead as 2018, 2019 or 2020 with any confidence whatsoever about the conditions that some of these households will face. That is disgraceful and completely unjustified. Of course, the Government are able to found this on the fact that there was a mandate, as it is called, for these measures. Well, there was certainly not in Scotland—the evidence for that is pretty clear. I have said before in this Committee that I worry about the political aspects of this Bill and some of the consequences that will be felt in the coming weeks and months of the Scottish elections for the next Holyrood Parliament. This Bill will not have escaped the notice of some of the more hard-line nationalists north of the border, which is not in the long-terms interests of the United Kingdom. I am sure about that and feel really cut off at the knees in trying to explain to people north of the border what is going in.