Welfare Reform and Work Bill

Baroness Meacher Excerpts

Monday 21st December 2015 Lords Chamber

[Baroness Manzoor]

My Lords, I shall speak to Amendments 72 and 92 in the names of the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie, which I support. As I said at Second Reading, although we on these Benches agree on the need for a cap, we do not see the logic in reducing it to £23,000 a year for households in Greater London and to £20,000 for those in the rest of the country. Nor do we see the logic behind breaking the link between average earnings and the cap, as has already been said. I agree with the Child Poverty Action Group, which states that:

“The reduction in the level of the benefit cap severs the link with median earnings, and instead is based on an arbitrary figure, leaving it unclear what the fairness test is now”.

The Government’s rationale is that the benefit cap will deliver strong work incentives. However, the real concern here is that the requirement to find housing at an affordable level may force families away from areas where there are high levels of work opportunities, such as in London, to places of high unemployment. This would undermine the ultimate aim of getting people off benefits.

Although the Government demonstrate that the existing benefit cap successfully strengthens work incentives, as evidenced by the greater proportion of those capped moving into employment as compared to those under the cap, in-depth interviews conducted by DWP itself in 2014 show that many households responded to the cap by,

“being willing to accept low-skilled, low-paid jobs, rather than pursuing further qualifications which they hoped would help them get a better job in the future”.

As the noble Baroness, Lady Sherlock, has already said, the Institute for Fiscal Studies, which undertook a peer review of the DWP research, concluded that its analysis told us:

“that the large majority of affected claimants responded neither by moving into work nor by moving house”.

Forfeiting further education and training for low-skilled, low-paid jobs limits an individual’s long-term human capital and earning prospects, which lowers potential tax revenues paid to the Government and, on an aggregated level, hinders economic productivity and potential output.

Long-term reductions in welfare spending will be realised only by increasing people’s income through employment and by reducing their outgoings, primarily through improving access to affordable housing. I urge the Minister to maintain the benefit cap as currently set.

At Second Reading, I asked whether the Government intended to undertake a distribution analysis of the levels of housing benefit that the average person hit by the benefit cap would receive and where they might be able to secure suitable housing. I wonder whether the Minister is in a position to answer this question more fully on this occasion. Will he also say what impact the further lowering of the benefit cap will have on single parents and how the rights of children will be protected? This has been very clearly highlighted by the noble Baroness, Lady Lister. Gingerbread quite rightly is concerned. Lowering the benefit cap will continue disproportionately to affect single parents, of which as many as 70%—I think that the noble Baroness, Lady Lister, quoted 69%—will have a child under the age of five. That cannot be acceptable.

[Baroness Meacher (CB)]

My Lords, I speak to Amendment 94—I emphasise that it is a probing amendment. I do so in the hope that we can highlight the need for a comprehensive and regular review of the impact of the totality of the benefit cuts on specific groups—who are the most vulnerable—applied during the past few years, including those in the Welfare Reform Act 2012, in more recent legislation and in this Bill. The amendment requires that in carrying out a review of the benefit cap, the Secretary of State must include an assessment of the impact of the benefit cap on disabled people, their families and carers. I for one have not fully grasped the full impact of the multitude of cuts. At the very least, I believe that the Government have a moral obligation to understand the implications of their policies for the most vulnerable citizens in this country and to make public that information. That is what this amendment is about.

The benefit cap applies even to benefits designed to compensate for the extra costs of disability or caring for disabled people, including ESA WRAG, incapacity benefit, severe disablement allowance and carer’s allowance. We know that one-third of disabled people—fully 3.7 million—live below the poverty line already. The benefit cap combined with the freezes and cuts to employment and support allowance for those in the WRAG group will see disabled people’s incomes reduced significantly again. This significant reduction is from a level which is already below the poverty line.

The Government argue that the new lower, tiered cap has been designed to strengthen the work incentives for those on benefits. When I met the Minister from the other place, he said, “The whole point of this is to encourage people to work for more hours”. I find that so cynical, when most of these people simply cannot work more hours for a range of reasons. However, as we have argued previously in Committee, the Government have provided no evidence to back up the claim that cutting benefits that disabled people receive will incentivise them to work. As I have already indicated, the Government’s reference to an OECD study failed to point out that the study did not even refer to disability throughout, and rightly so—of course, people who are disabled are in an entirely different position from those who are healthy and able bodied. We have evidence that reducing disabled people’s incomes will make it harder and not easier for them to move into work.

In addition, the impact assessment provides no detail on the impact of lowering the cap on disabled people who are in receipt of DLA/PIP—those who are severely disabled and cannot do much about their situation. This amendment has no financial consequences. I hope that the Minister will take this matter away with a view to bringing back a government amendment on Report.

I support Amendment 93 tabled in the names of the noble Baroness, Lady Lister, the noble Lord, Lord Kirkwood, and the noble Earl, Lord Listowel. The case for the amendment has been eloquently spelt out and, fortunately, I do not need to add to that. I hope that the Minister will assure the Committee that this crucial issue will be dealt with on Report.

[Baroness Pitkeathley (Lab)]

I add support to the amendment just spoken to by the noble Baroness, Lady Meacher, to which my name is added. While an exemption for households including a DLA or personal independence payment claimant exists, this does not protect all families affected by disability or all carers from the cap. That is because of the way in which “household” is defined in the benefits system. For the purposes of the benefits system, a household is considered to be an adult, their partner if they have one and any children they have under the age of 18. If any other adult relatives—for example, older parents, brothers or sisters, or even adult children—live in the same house, they are considered to be part of a different benefits household even though they all live together. This means that while carers looking after disabled partners and disabled children aged under 18 are exempt from the cap, those caring for adult disabled children, siblings or elderly parents are subject to it.

The Government’s impact assessment for the introduction of the benefit cap estimates that 5,000 households containing carers would be affected by it. That seems to be completely contrary to the Government’s policy on supporting carers. In its 2015 manifesto, the Conservative Party committed to provide more support for full-time carers. The fact that the benefit cap continues to apply to carers and the further lowering of the cap are entirely contrary to that commitment. The inclusion of the carer’s allowance in the list of capped benefits also goes against the commitment to protect vulnerable families that are coping with the extra costs of disability and ill-health. I will have more to say about the inclusion of carer’s allowance and the recent judgment in a later set of amendments.

Carers struggle every day with the extra costs of caring and it is clear, as the noble Baroness said, that many carers are absolutely unable to work as a result of heavy caring responsibilities. Therefore they cannot afford any reduction in their income at all, and yet the Government continue to cap their benefits, with those carers who fall within the scope of the cap losing up to an estimated £169 a week under the new cap compared with the position before the introduction of the policy. The benefit cap places an increasing financial and emotion strain on families, pushing carers to breaking point and ultimately threatening the sustainability of those caring relationships. Surely the Government must be prepared, at the very minimum, to assess the impact of these changes.

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[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.

[Baroness Meacher]

The noble Lord, Lord Lansley, is making an incentives argument, which I accept completely. Does he accept that, when people are unable to work more or at all because they are carers or severely disabled, the incentive argument really falls down?

[Lord Lansley]

The point I was answering was in relation to people in work, so that is a slightly different point. In relation to that point, too, as the noble Baroness has brought it up, the structure of the benefit cap is designed to ensure that people who are in a support group under the employment and support allowance, those in receipt of personal independence payments, and so on—there are number of exceptions—are not covered by the benefit cap. Those households are not covered by the benefit cap. We are focused, to a large extent, on those who have a capability for work even if that capability may be restricted in some ways.

I did not complete the point I was making in response to the noble Baroness, Lady Lister. Many years ago I was deputy director-general of the British Chambers of Commerce— and I do not think it has changed in the slightest—and I know that what matters to employers is that people have been in work and have all the attributes of somebody who has been in work. The longer one is out of work the less likely one is, as we know, to have those attributes. Therefore, the entry into work, even if it might not necessarily be the right job or be regarded as suitable or appropriate, will by its very nature make someone more likely to have those attributes necessary for work.

That is just one of the reasons why the benefit cap is needed. It is also needed because of a sense of the fairness between those who are in work and those who are not. The noble Baroness, Lady Sherlock, said there was a relationship with average earnings. That was true when the benefit cap was introduced, but to assert that it is some kind of mechanistic or scientific relationship is misleading. It is a judgment. A judgment was made, when there was previously no benefit cap to try and establish a benefit cap at a level that was regarded as fair.

I have to tell noble Lords—again coming from recent experience of fighting elections and being in the other place—that the public support the benefit cap. They regard it as still generous—too generous in many respects. When one looks at the relationship with those who are in work—the four in 10 households, broadly speaking, as was mentioned—who are not earning any more from their work than would be available through the benefit cap by the accumulation of benefits, they do not regard it as fair or reasonable for people to accumulate more by way of benefits than they are able to access by work.

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Moved by

[Baroness Meacher]

75: Clause 7, page 9, leave out lines 1 and 2

[Baroness Meacher]

My Lords, in moving Amendment 75 I shall speak also to Amendments 78, 80, 81 and 83. The amendments seek to exempt those in receipt of carer’s allowance or disability benefits from the cap. I shall talk about the two groups, carers and disabled claimants.

As Carers UK has pointed out, unpaid carers save the state an estimated £132 billion per year. Clause 7 includes just one of a number of measures which will have a damaging impact on the finances of the 6.5 million carers in the UK. The lives of carers are already extremely hard. A Carers UK survey of 4,500 unpaid carers, mostly caring for 50 or more hours a week, shows that almost half of them, some 41%, are cutting back on essentials such as food and heating—one wonders what else they could cut back—while 45% said that financial worries are affecting their health. I want to draw to noble Lords’ attention the fact that Clause 7 breaches a Government election manifesto commitment to increase support for full-time unpaid carers. The cuts set out in Clause 7 and elsewhere in the Bill come on top of previous changes which Carers UK estimates will result in a cut to carers’ incomes of more than £1 billion between 2011 and 2018. I would be grateful if the Minister responded to this point.

The Government’s impact assessment identifies that 6% of carer’s allowance recipients will be subject to the cap. Those who have had their benefits capped at £26,000 will lose an average of a further £64 per week. The figure of 6% may seem small, but for every one of those families it will be devastating. The cumulative impact of the cuts, together with the cut to WRAG benefits and further reductions in local government funding, will inevitably undermine the capacity of many carers to continue their invaluable caring work. I know that carers looking after disabled partners and disabled children aged under 18 are exempt from the cap, but why are those who care for adult disabled children, siblings or elderly relatives not also exempt? I would be grateful if the Minister explained this. Why should one group of carers be given preference over another group? Surely that is an anomaly.

The Minister will be aware that on 26 November 2015 the High Court ruled that carers in receipt of carer’s allowance should be exempt from the benefit cap following a judicial review challenge to the policy and its impact on carers and the disabled, seriously ill or older loved ones they support. The judge’s comments will be known to the Minister, but I want to quote one short passage in which he concluded that, “With carers being unable to mitigate the cap, this endangers the sustainability of the caring role and indirectly discriminates against the disabled person, who will no longer be able to receive care”. What do the Government plan to do in response to this ruling? I hope the Minister will clarify the position for noble Lords.

Recent DWP research shows that households containing carer’s allowance claimants subjected to the cap are more likely to move into work than those not capped. To what extent has the cap already led claimants to abandon their caring responsibilities in order to return to work? How many disabled people have moved into residential accommodation as a result? The implications for social care services and costs to the public purse may be considerable. Does the Minister have information on this point? In fact, will the cap save money as far as it affects carers, or will it cost the Exchequer a great deal?

I will say a brief word about the amendments aimed at excluding disabled people’s benefits from the calculation of the cap for any household. We have already discussed the severe consequences of this Bill for disabled people, particularly if all the cuts go through unmodified. I want to say in the context of Clause 7 only that disability benefits were introduced to compensate disabled people for the additional expenditure they incur because of their disability. If these benefits are included in calculating the cap, families with a disabled member will be poorer than able-bodied families. They do not benefit in material terms from their disability benefits, because all those benefits do is compensate for the higher costs of travel, heating and so on than able-bodied families incur. Is it the Government’s intention to hit disabled people particularly hard with this legislation? If they wish to treat disabled people on an equal basis with others, disability benefits should indeed be excluded from the cap calculations. I would welcome the Minister’s comments on this point. I beg to move.

[Baroness Pitkeathley]

My Lords, I rise to strongly support the amendment moved by the noble Baroness, Lady Meacher. We have said already that the cap is applied unequally to carers. While I welcome the exemption for households in receipt of PIP or DLA, it means that carers who are considered to be not in the same household as the person they care for will be penalised.

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[Lord Blencathra]

I rise briefly to oppose the noble Baroness, Lady Meacher, because her amendment would remove the ESA part in Clause 7(4)(e). I do not think that removing it will serve people with disabilities well. To be fair, when the Labour Government introduced the ESA back in 2008, they had a noble aim: to help support many people with disabilities into work. I commend them on that. The work-related activity group—WRAG—within ESA was originally intended to act as an incentive to encourage people to participate in work-related activity and therefore return to work quicker.

Previously in Committee, noble Lords suggested that people in the WRAG have been declared not fit for work, but that is not the case. They have been declared to have “limited capacity for work”, which is not the same thing, as most noble Lords will understand. That is an important distinction, for the purpose of this group is to encourage people into work. Indeed, when the Labour Government introduced the benefit White Paper, Raising Expectations and Increasing Support: Reforming Welfare for the Future, published in 2008, they stated that they aimed to reduce the number of people on incapacity benefits by 1 million by 2015. I am making no criticism or political comment. It was a wise and noble aim, yet the reality is that we have failed and only 1% of people in the WRAG leave the benefits system each month.

It is good that the Department for Work and Pensions is currently looking to reform this area and I look forward to seeing my noble friend’s White Paper in the new year. It would be a backward step to remove the ESA. We have already discussed this, and my noble friend has already stated today the tremendous success that the cap has in getting people into work. Removing the ESA would be slightly counterproductive.

[Baroness Meacher]

Very quickly, I just want to raise the question of whether the noble Lord, Lord Blencathra, thinks that there is a problem with the work capability assessment or with the ESA WRAG. I am aware that people with Parkinson’s are already assessed as having limited capacity for work. The idea that their capacity will grow is frankly inconceivable.

[Lord Blencathra]

The noble Baroness makes an interesting point. We addressed the capacity for work test at an earlier stage. There are concerns and it may not be perfect. It is very difficult to assess. We can have 100,000 people with MS and every single one is different, so it is very difficult to come to a firm conclusion. I know that the Government are continually improving it. Labour improved it. The coalition improved it and the current Government are trying to improve that test. I hope that my noble friend will continue with that.

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[Lord Freud]

I have already answered that question in the first of these amendment groupings. I repeat: there is a difference between having a state expectation—and conditionality attached—for people to go to work, and a financial incentive for them to do so.

The noble Baroness, Lady Sherlock, asked whether responsible carers would be set requirements that they cannot meet. We will ensure that any work-related requirements will be tailored to individual circumstances and compatible with childcare responsibilities.

I turn to the amendment tabled by the noble Earl, Lord Listowel, on kinship carers. The Government recognise the service that kinship carers and others provide, and the Bill continues the current provisions for foster carers, kinship carers, and family and friend carers. If they, or a child for whom they are caring, are in receipt of an exempt benefit the cap will not apply. In addition, any payments received from the local authority for providing care will be disregarded from the benefit cap. Finally, there is a nine-month grace period whereby the cap may not be applied to those who have recently left sustained employment. This will give time for kinship carers who may have had to leave employment to take on additional caring responsibilities to adapt to their new circumstances. Family and friend carers are treated in the same way as parents in the benefit system, so it is only fair to ensure that this principle applies to the application of the cap, too. The benefit cap is intended to promote fairness between those in and out of work, and to increase incentives for people to move into work—principles that I believe apply in the same way for family and friends carers as for parents.

Regrettably, I am not in a position to supply the specific data requested by the noble Baroness, Lady Drake, on what is happening in London. As I said, I will come back to the matter of carers at a later date but I cannot support the other amendments and I ask noble Lords to withdraw or not press them.

[Baroness Meacher]

My Lords, I thank all noble Lords who have spoken very powerfully in support of these incredibly reasonable amendments. My understanding is that what we are all about is seeking that the cap does not apply where it is completely inappropriate and unfair to expect that person to work. In the case of kinship carers as well as other carers, the impact on the disabled child or relatives is likely to be extremely serious. The impact on the Exchequer or the taxpayer is also likely to be extremely costly.

I thank the Minister for informing the House that Ministers will be returning to the issue of carers, but surely the arguments of the High Court and the judge in relation to carers in general apply equally to kinship carers. I cannot see any possible argument that they do not—they just have to—so I ask the Minister to take away that point and consider the relevance of the High Court judgment and comments on kinship carers, and the need for some consistency. I also ask him to think further about the importance of people who cannot work for whatever reason, whether they have a one year-old child or are disabled to such an extent that they simply will not get better. Those people should be exempt from the cap and I ask the Minister not just to put that issue away and think “Job done”, but to think seriously and say, “Now hang on—surely we should be doing something about this”.