Welfare Reform Bill

Baroness Tyler of Enfield Excerpts

Tuesday 13th September 2011 Lords Chamber

[Baroness Tyler of Enfield]

My Lords, I support many of the objectives of the Bill, in particular the Government’s stated aim of simplifying the current, highly complex welfare benefits system and increasing fairness within it. I fully accept that for most people work is the best route out of poverty and that work must pay and be seen to pay. Therefore, I welcome the simplification of the system that will result from the introduction of universal credit and congratulate Ministers on the progress that they have made so far.

That said, I have a number of serious concerns about the impact on families and children of the changes to the benefits system, particularly the hardship that they will create for some of the neediest and most vulnerable. As with any changes to a hugely complex system, some of the consequences may be unintended, but—from my reading of the Bill—others are part of the policy intent. For this reform package to achieve widespread support it must both look and feel fair. I want to highlight, therefore, some areas which I think are socially unjust and seem to fly in the face of the Government’s other commitments to be family-friendly, to reduce child poverty, to tackle intergenerational disadvantage by early intervention and to promote social mobility.

There are many areas that I should like to talk about but in the limited time available I shall focus primarily on the impact of the benefit cap on children and families. This policy is designed to ensure that a household on benefits does not receive more income than the average working household. I understand the arguments for this, including the importance of creating incentives for work and promoting fairness between those in work and those receiving benefits, as well as the need to reduce the rapidly growing benefits bill. As we have already heard, the cap on benefits for out-of-work households is expected to be set at around £500 per week per household for couples and lone parents. The Government estimate that approximately 50,000 households will be affected by the cap, losing some £93 per week on average in benefits.

At the level at which the cap is currently set, there are serious risks in the policy which may not be properly understood and which have so far received too little public debate. What are the facts and figures? Of the 50,000 households whose benefits will be reduced by the policy, the majority will be families with children—often large numbers of children—and those who live in areas where housing costs are high. The Children’s Society, whose work is highly respected, recently estimated that the number of children affected could be more than 200,000, and that 80,000 children could be made homeless. Thus the cap will have a disproportionate impact on children. How can this be fair?

It is instructive to look at the nature of the households most likely to be affected. Broadly speaking, they are one-third couples and two-thirds single women—generally single mothers. Ninety per cent have children and 60 per cent will have more than four children. What type of communities will be most affected? Certainly, people living in places such as London, where housing is more expensive, will be affected, as will some religious and ethnic groups, as they tend to have larger families, and people in private rented accommodation. What is likely to happen as a result of the cap being set at this level? Families will be far more likely to have to move abruptly to cheaper areas, which risks children having to move school, possibly in the middle of the year, thereby disrupting their education and their current support networks. Families could end up splitting up—they may indeed decide to create two households instead of one, as both parents would then be entitled to up to £26,000 in benefits.

Two groups yet to be mentioned are foster carers, who perform such a socially valuable and vital role, and kinship carers, who might be an aunt or an uncle taking in a child from another member of the family to avoid the child having to go into care, with all the trauma and expense for the state that that creates. These people, too, may be disadvantaged. I understand that the Government are planning to make special provision for foster carers to recognise their unique role, and I look forward to hearing the details from my noble friend the Minister, particularly in relation to housing costs.

Families who can will continue to pay their rent, of course, but they will have less money to spend on food, clothes and other essential items. Families who will not be able to pay the rent may be evicted and become homeless. Children are a priority group for council housing, so that will lead to pressure on temporary accommodation. There is also a very real danger of at-risk children simply disappearing from the scene. That, as we all know, has real child protection and safeguarding issues. I would very much welcome hearing from Ministers what plans the Government have to ensure that that does not happen and that we do not have another tragedy as a result.

Finally, there will be a reduction in mixed communities, as poorer families are moved out of expensive areas. That is particularly likely to be the case in London. That may lead to social segregation between the rich and the poor which would be worrying in terms of social cohesion and pressures on public services in some poorer areas.

In summary, the cap as currently set impacts disproportionately on children, large families, women and various black and ethnic minorities. The last two groups, as we have already heard, are already having a tough time in a tough jobs market. A little discussed fact that has not been raised so far is that the benefit cap will affect couples substantially more than lone parents. Indeed it could damage incentives to enter into new relationships—for example, for two new lone parents thinking of living together and setting up a household—and it could risk breaking up families, a matter very close to my heart as chief executive of the charity Relate, which is a declared interest, and to the heart of the Government. Surely this couple penalty is an unintended consequence of these reforms. I welcome hearing the Minister's response on that point.

Like others, I am deeply concerned about the reduction in financial support to an estimated 100,000 disabled children under the universal credit, to young carers where a child is trying to look after a sick or disabled parent and the proposed reduction in support for childcare. There is no time for me to go into any detail. I would simply say, as other noble Lords have said, that support with childcare is a hugely important issue, particularly for those on benefits who need to enter the jobs market at this difficult time.

There are a number of ways in which we can mitigate some of the concerns that I have highlighted in relation to the benefit cap, particularly the level at which it is set. Those would include calculating the figure using average earnings of families with two or more children, various grace periods and transitional arrangements, perhaps linking the cap to levels of conditionality set out in the work-related requirements of the Bill and perhaps exempting certain benefits from the calculation of the cap. I look forward to hearing my noble friend's response to these points.