Welfare Reform Bill

Baroness Turner of Camden Excerpts

Monday 10th October 2011 Grand Committee

[Lord McKenzie of Luton]

My Lords, I speak in support of my noble friend’s amendment and to catch up on one or two points. We understand the need to merge two different systems of dealing with capital: the tax credit rules and the tariff rules in the benefit system at the moment. One question to the Minister is: why did the Government opt to do it that way round rather than the reverse way round? It could lead to complexities. Someone whose income swings around that £16,000 cut-off point could be in benefit or in the universal credit one day and out the next.

My second question is: can the Minister say something about the practicalities of how this is going to work? What is going to be the process for reporting capital, and how often will that have to be updated? Will it be on a six-monthly basis? Will there be a look back if the capital has changed during an assessment period, giving rise to adjustments to universal credits? I am picking away at some of the complexities around this, because we often promulgate universal credit on the basis that it is a simplified system, and we accept that in some respects it is. However, it still has attached to it these sorts of complexities from the changes in people’s lives. It would be good to know which of the existing exemptions will be carried forward into the new system.

The £16,000 cut-off point will penalise savers, making it harder for low-income working families to save. It will particularly penalise families with high tax credit awards such as high childcare costs or indeed disabled children. Therefore, we see this as a disincentive to save. I was going to ask whether this is wise when there are rumours about auto-enrolment being deferred, but I am advised that that is not now in the Government’s mind.

I was a little surprised in the briefings that we had from the department by comments about it being right that people should, over a period in some circumstances, disinvest their assets before wholly relying upon state support. However, the briefing note quotes in aid,

“earlier means-tested benefits including National Assistance required applicants to exhaust all or most of their savings (and to sell personal possessions regarded as unnecessary)”.

That has a resonance for many people, particularly on the left, and it is why, for a period, reference to means-tested benefits was a derogatory and hated term because it took you back to circumstances in which people knocked on the door, entered the front room and told you to sell every stick of furniture you had before you could rely on benefits. Reverting to references to national assistance and those practices is probably not going to be the most helpful way for the Government to sell this policy.

I support my noble friend on the one-year rule in relation to disposals of properties because the current market is extremely difficult, and even if individuals have the cash to make the purchase, people get caught up in chains and it is difficult for them to complete and sell on so that a satisfactory result can ensue. It is therefore very reasonable to request simply extending that period and that disposals from the sale of property are excluded from the calculation.

[Baroness Turner of Camden]

My Lords, I, too, support these amendments. I understand that this is a rather difficult question, but one can hardly pick up a magazine directed at older people without encountering articles urging people to save so that when they are older enough money will be available for them to be provided with social care. We do not yet know what the Government intend to do with the report that we have had on social care, but it could very well involve people having to have a lump sum available at a particular time. Quite obviously, it is in everybody’s interests to ensure that people have cover for when they are ill and require social care, particularly as the report includes a general recommendation that people are best off being looked after in their own home. You have to take account of these sorts of possibilities when assessing what is a reasonable amount of money to be regarded as suitable to be retained by the individual concerned when assessing the requirement for benefit.