Welfare Reform Bill

Baroness Tyler of Enfield Excerpts

Monday 23rd January 2012 Lords Chamber

The Minister has said that this is a matter of principle. Frankly, that is the one thing it is not. He has decided on a cap but he has told us—and we already know—that certain types of payment will be exempt, such as disability living allowance, attendance allowance and some payments to war widows. All we are suggesting in the ame benefit to that list and saying that payments of child benefit specifically should be exempt as well. If we cannot do that for the children of our community, what can we do? I am pleased to support the amendment.

[Baroness Tyler of Enfield]

My Lords, I support the amendment, to which my name is also attached. We have heard a lot today about fairness. It is important that people in work feel that there is fairness in terms of how much money can be received by those out of work and on benefits, and that there is a clear incentive for all those capable of work to do so in order to r themselves and their families. I place on record that I welcome the measures being taken by the Government, such as the work programme, to give intensive help and support to people needing a lot of help to get back into the jobs market.

There is another aspect to fairness, though: fairness to children, irrespective of the circumstances of their birth. I shall run through the reasons why I feel that child benefit should be exempt from the calculation of the benefit cap. First, as we have heard, it is a non-means-tested benefit paid to all households with children. We have already heard this question posed today, but is it fair that children born into small families with earnings in excess of £80,000 a year receive child benefit while those born into larger families with a benefit income of £26,000 a year do not? I do not think that that passes any fairness test.

Secondly, child benefit is paid to assist with the costs of raising children. In my view, it is not about sending signals or penalising adults who do not work—and I add that all adults who can work should do so. Thirdly, this measure would have a disproportionate impact on children. We have heard the figures from the noble Lord, Lord Wigley, and the right reverend Prelate, and I do not intend to go through them again. Fourthly, it is a question of a compromise solution between children in large families receiving the full current level of state support and receiving nothing at all, which I perceive to be unfair. Fifthly, reducing the impact of this policy on large families would reduce the couples penalty that is currently built into the benefit cap.

The reason why I am concerned about the current situation is the issues raised compellingly in the debate earlier by my noble friend Lady Walmsley. This is about families having to move abruptly to cheaper areas and the disruption that that will cause to children’s schooling, often halfway through a school year. It is about families feeling, rightly or wrongly, that they will have to split up because if they created two households instead of one, parents would then be entitled to £26,000 a year in benefits. That cannot be right. Experts in the field have said that there is a substantial couples penalty built into the cap that is completely at odds with my own view, and that of the Government, of the need to support strong and stable families.

I am concerned about the impact on children who might find themselves homeless, perhaps in unsuitable and expensive temporary accommodation. With children and young people’s services already very overstretched, there is a real danger of children at risk simply disappearing from view below the radar, which raises child protection and safeguarding concerns.

I will summarise by saying, as was said earlier today, that children should not be the innocent victims of this policy. The vulnerability of children is very important to people on these Benches, and I look forward to hearing what safeguards the Minister has to offer in this area. I heard him say in the previous debate that he saw the transitional issues as a second-order issue. I do not consider the welfare of children to be a second-order issue at all.

[Lord Greaves]

My Lords, I have not spoken in the Welfare Reform Bill debates so far and I will be brief now. On the specific issue of child benefit, the Government seem to have got it seriously wrong. What is being proposed undermines the whole principle on which child benefit—and before that, as many of us will remember, the family allowance—has been based. If the Government are going to do that, I fear that that is the beginning of a slippery slope, and they will have to explain to us very carefully why they think the basic principles no longer apply.

In illustration, I go back to the example given by the noble Lord, Lord Best, about typical, ordinary—perhaps very ordinary—accommodation in the East End. There has been lots of fancy new development in the East End in the past decade or two, but most of it is still not regarded as being the most desirable part of London. People living in other parts of London in particular usually find themselves paying a great deal more than £350 a week for an ordinary two or perhaps three-bedroom flat. According to the paper today, for a four-bedroom house in the least salubrious part of Kingston—I did not know that such places existed, but it appears that they do—£400 a week is not unusual. That is four times what you would pay for an ordinary, perfectly decent house in my part of the world, but there you go.

If as a family whose benefits are being capped you receive £500 a week, and you are paying out £400 a week for rent, that leaves you £100 for everything else. I challenge any Members of your Lordships’ House to tell us how well they would do at bringing up a family of two, three or four—or perhaps more—children, plus one or two adults in the house, on £100 a week. It can be done, and many people in many parts of the world survive on far less than that, but this country is now almost the most prosperous that it has even been, if you take away the last five years. We are still incredibly well-off. If Members of your Lordships’ House think back—most of us are getting on a bit—to our childhoods and the circumstances that we were brought up in, they will see that this country is now incredibly rich and well-off. To require families to bring children up on £100 a week for everything apart from their rent is unacceptable.

When the media are encouraged, I have to say by some politicians in this country, to rant and rave about how these people are getting £26,000 a week and that everyone ought to be able to live on that—I apologise, £26,000 a year; some people are on £26,000 a week, but they are rather different—the debate really ought to start at what you have left after your rent. The state of the private housing market, and indeed rents in the public sector, is not the fault of people who have to live in these houses. There is a scandalous situation in which commercial landlords are ripping off people—indeed, they are ripping off the state, if people are getting housing benefit—by charging ludicrously high rents that are not justified by the cost of maintaining those properties but that are what the market will bear. If the Government and the rest of us want to do something about the state of the private housing market, we should look at housing policy and perhaps at the way in which the private housing market works. But that is a different issue all together. It is not the fault of the people. To try to do this—to try to force rents down or to try to regulate the markets and move people around the country by capping the benefits of the people living in those houses so that they can no longer live there—is penalising the tenants when the people who ought to be penalised are the landlords.

I have digressed a little from child benefit. I apologise for that. Child benefit, as my noble friend and others have said, has always been a non-means-tested benefit that goes as of right to families with children. It has always been paid on a per capita, per child, basis. That is a fundamental principle. The first child gets more nowadays, then each child after that gets the same, in order to assist the work of bringing up that child. To abolish child benefit, which is what is actually being done in this Bill, for people who are at the benefit cap and who are getting other benefits that take them up and beyond that cap, as is highly likely, is a fundamental attack on the whole principle of child benefit.

This ought to be resisted. Your Lordships ought to resist it, and we really ought to ask the Government very seriously to think again on this particular issue.

--- Later in debate ---

[Baroness Howe of Idlicote]

I am grateful for being put right. However, I still have differences of opinion with my noble friend Lady Flather.

However, my amendment was very much part, alas, of all the other amendments that have been debated. I have listened very carefully and, having had the benefit of being in the Chamber the entire time, I have been fully appraised before deciding which amendment to support and which not. The general impression that I have got from these debates is that there is a great feeling about families and about doing the best for children whatever household they are in. It is for that reason that I was happy to table the amendment for London—London Councils kindly provided me with the material—because London is such an obvious area where you have extremes of very expensive accommodation and fairly poor areas where it is not as easy to survive if you are living on benefits and are among some of the more disadvantaged and disabled.

All three of my amendments relate to the same issue which is why it is better to address them all together. If the Government want a benefit cap that fairly reflects average earnings, it would be logical and just for the cap to reflect geographical variations, not only in wages but in other important living costs such as those related to accommodation and childcare. The amendments would require the Secretary of State to take account of these variations: the average weekly cost of private rented accommodation, the average weekly cost of childcare and average weekly earnings.

By way of background, the most recent evidence regarding these factors shows that, as regards accommodation, London has the highest average private sector rents in the country at £222 per week. That is more than 36 per cent higher than the national average. Childcare in London and the south-east is at least 20 per cent higher than the national average. For example, a nursery place for a child costs an average of £113 per week in London and the south-east compared with the national average of £94 per week. Earnings in London are £31,935 compared with £26,133, a 20 per cent difference.

What would be the impact of the Government’s proposals on the benefit cap? Independent research by Navigant Consulting, commissioned by London Councils—I should emphasise that London Councils is a cross-party organisation speaking on behalf of all London boroughs and the City of London—has estimated that the impact on London of the proposed universal credit cap would be as follows. A total of 73,000 workless households would experience a shortfall in their benefits against living and housing costs. In aggregate, the cap would produce a loss of £8.2 million per week for workless households and more than £427 million per annum across London. There would be a significant impact on families with children and on larger families in particular. While less than 3 per cent of households without children will find their accommodation unaffordable, that rises to more than 30 per cent for families with children. The average weekly loss across London for households affected by the cap is £105.

The majority of the London boroughs are already reporting that a significant number of households are having to move home as a result of changes to housing benefit caps. That has led to an increase in the number of homeless households placed by boroughs in bed-and-breakfast temporary accommodation. The use of temporary accommodation recently reached a three-year high after 25 quarters of reduction since 2003. Now almost 1,500 families are living in bed-and-breakfast accommodation in London. That effect will be replicated elsewhere and will undermine efforts to retain and build sustainable mixed communities, a point that has been made very effectively by others in other debates. There is a genuine concern that reductions in benefit entitlements for workless households may lead to an increase in child poverty and safeguarding issues. With children and young people's services already stretched, the fear is that vulnerable children might slip through the net.

The Government have argued that they need to cap household benefit entitlement in order to reduce the £20 billion deficit bill and to return fairness to the welfare state. Of course, both of those objectives are laudable and entirely understandable. However, simply fixing a national limit and attempting to apply it across all households, regardless of variation in individual circumstances, is not only unfair but it is also likely to usher in a host of unintended consequences. We have heard about many of them in previous debates so I shall not go into the detail of those.

The cost of life's essentials varies from place to place and family to family. One does not expect to pay the same to rent a two-bedroomed home as a four-bedroomed home. One does not expect to pay the same to rent a home in the south-east as one might in the north-west. If the welfare system is genuinely to support people and households, surely it is only fair that any support matches, in so far as it is possible, the scale of the challenges facing households, which, so often, through no fault of their own, find themselves in high-cost areas. I hope that the Government will agree to these very reasonable amendments.

I would like to stress that I hope that the Minister will agree to meet London Councils and go through some of its real concerns about this issue. That would reflect on whether I might wish to bring this matter back at Third Reading

[Baroness Tyler of Enfield]

My Lords, I would like to add some of my concerns about the impact of the benefit cap in London. The noble Baroness, Lady Howe of Idlicote, has set out very clearly and eloquently all the facts and figures and I certainly do not wish to repeat them. I shall pick out one which is particularly relevant to me.

The level of rents in London means that families with just two children will be subject to the cap in many parts of inner London and also in some parts of outer London, including Newham, Haringey, where I live, and Hounslow. I am concerned about the impact of this on mixed communities, or looking at it the other way, one might refer to social segregation as poorer families are moved out of expensive areas. This is a very particular issue in London in terms of social cohesion. It also puts pressure on public services. I think that London Boroughs is right to be worried. The migration and concentrations of workless households in some areas will potentially have significant implications for the full range of local authority services. Boroughs with an inward migration of households are likely to face significantly increased service pressures very quickly and with very little time to plan for them in relation to unemployment, poverty, housing and so on. On the other side of the coin, boroughs that experience reduced demand for such services—again very quickly and without time for planning to adjust—will certainly face challenges and costs in adapting to different, if reduced, demands.

Families, particularly larger families, will be very much affected. In London it will also affect families with two children. I share the concerns that have already been voiced by the noble Baroness opposite. I also hope that there will be an opportunity to meet the Minister and London Councils to discuss further the sort of measures that could be put in place to mitigate some of the harsher implications that I have just set out.

[Lord McKenzie of Luton]

My Lords, I start with the amendments of the noble Baroness, Lady Flather. I find them confused on a number of levels. I should explain that during Second Reading—the noble Baroness referred to my comments about not wishing to hear what she said again—she said that Pakistani and Bangladeshi communities have lots of children because of the money. I objected to that and I thought I objected in about as gentle a way as one can, without being rude, and that is consistent with how we do business in this House.

The noble Baroness has just made reference to Luton and supposed problems there. I know Luton well; I live there. One of the strengths of Luton is its great diversity. We have a range of communities and—I almost called him my noble friend—the noble Lord, Lord Hussain, would attest to that as well. Having diversity brings challenges but also joy and I believe that is a great strength of Luton. I do not believe the proposition that people in any community, particularly the Pakistani and Bangladeshi communities, have lots of children because they believe it will be beneficial in terms of child benefit. If people had children only on the basis of a cost benefit analysis, I suppose there would be no children at all, given all the challenges that come with them. My experience of communities in Luton, particularly the Bangladeshi, Pakistani and Indian community, is that there is great aspiration for their children. If you sit down with people, you hear them speak with pride about their children just having qualified as a doctor, or a lawyer, or even some as an accountant, which brings particular pleasure. I honestly do not see the picture painted by the noble Baroness.

Technically, it seems to me that the amendment that she moved is flawed. As I understand it, the “relevant amount” is that which is based on estimated average earnings and effectively sets the level of the cap. It does not, therefore, specifically include amounts in respect of children. If it were based on income, rather than earnings—depending on the definitions—of course it would. It could, for example, involve child benefit, but this is not how the Government wish to proceed and it is not how they have constructed the cap.

Universal credit will be, as we have discussed, an in-and-out-of-work benefit and we still do not know what the cut-off point will be for those treated as in work. Perhaps the Minister can give us an update on that. Presumably the calculation of earnings would not include any amount of universal credit. If the noble Baroness is arguing that an award of universal credit should involve reduced amounts for third and fourth children, in terms of the cap, of course, that would clearly lessen its impact. However, the family cap of £26,000 applies regardless of the number of children in the household, so larger families are likely to be particularly affected, as we have just discussed. Estimates are that 80 per cent of the households likely to be affected by the cap will include three or more children. We know from the DWP impact assessment—certainly the original one—that children from BME groups are more likely to be disproportionately hit by the cap. It would seem that what the noble Baroness intends would drive these families further into poverty and that is not something that we could countenance or support in any way.

The noble Baroness, Lady Howe, introduced some interesting amendments. Certainly the issue of the impact on London, particularly of high rents, featured in our earlier discussion and that is recognised. The broader issue of whether one could have benefits constructed on a regional basis is a very wide debate—we would be unwise to tick that through tonight—although we should recognise that it is done, for example in local housing allowances done on a local basis, structured by reference to local market areas.