Draft Bereavement Support Payment Regulations 2017

Caroline Nokes Excerpts

Monday 27th February 2017 General Committees

[The Parliamentary Under-Secretary of State for Welfare Delivery (Caroline Nokes)]

I beg to move,

That the Committee has considered the draft Bereavement Support Payment Regulations 2017.

These regulations were laid before both Houses on 12 January. They provide the details of a new benefit—bereavement support payment—that was first considered by this House as part of the Pensions Act 2014. Bereavement support payment will replace bereavement allowance, widowed parent’s allowance and the bereavement payment for those who lose a spouse or civil partner on or after 6 April 2017. The regulations set out the amounts to be paid, the duration of payments, payments for those who are prisoners, and the territories in which a person must reside in order to receive the new benefit. I am satisfied that this instrument is compatible with the European convention on human rights.

Losing a spouse or civil partner is a tragic occurrence; bereavement benefits provide important financial support during this deeply distressing time in a person’s life. Previous reforms have tended to be limited and in response to specific pressures. No one had really considered how this support fits in with the wider changes to the benefits system and, indeed, to the social landscape as a whole. Consequently, the current benefits are out of date, difficult to administer and hard to understand. Reform is essential to simplify and modernise the system.

The history of bereavement benefits is rooted in the Widows, Orphans and Old Age Contributory Pensions Act 1925—a time when most women were wholly dependent on their husband’s income. Then, if a woman was widowed, her sole source of income would disappear completely, so it was considered necessary to provide a replacement for that income in order for her to survive. Thankfully, that is no longer the case. Women as well as men are active participants in today’s workforce, and many households are now made up of and benefit from dual careers and dual incomes.

Where the loss of a spouse equates to the loss of the sole breadwinner, income-related benefits are available to make sure that nobody is left without sufficient money to live on. The bereavement support payment is designed to be significantly simpler than current bereavement benefits, with a uniform payment structure and a single contribution condition. The aim is to provide targeted financial support when it is needed most, without affecting access to additional forms of support available through other parts of the welfare system.

The reform of bereavement benefits has been welcomed by both the Social Security Advisory Committee and the Select Committee on Work and Pensions; the latter heralded many of the changes as long overdue. In addition to the scrutiny provided by those two bodies, the bereavement support payment was also the subject of a public consultation exercise that was launched in 2011. Responses to the consultation played a major part in the design of the bereavement support payment, including the carefully considered decision to structure the payments as a series of instalments as opposed to a single lump sum, and the decision that the bereavement support payment will not be subject to income tax. The evidence from our public consultation exercise found that the financial impact of spousal bereavement is particularly acute in the early months. The bereavement support payment will therefore provide a significant cash lump sum for people when they need it most. It will be a single payment followed by 18 monthly instalments.

Recognising that those with children need greater support, a higher rate will be paid to those who are pregnant or who have dependent children when they are bereaved. The duration of the payments is not intended to equate to the period of an individual’s grief; nor is it intended to provide ongoing income replacement. The fundamental design principle of the new benefit is that, as a short-term payment, it aims to address the additional costs of bereavement, rather than contribute to everyday living costs.

As the bereavement support payment is clearly distinct from income replacement benefits, we will disregard the payments for the purposes of universal credit and legacy benefits, as well as discount them from the calculations that count towards the benefit cap. This will clearly benefit the least well-off, as they will for the first time be able to receive payments of bereavement benefit in full, alongside any other benefit entitlements. Let me be clear that this reform is not about saving money; it is aimed at providing targeted financial support when it is most needed. Analysis shows that, overall, over half of new recipients will be better off after the reforms.

Looking at the welfare system as a whole, I believe that the best way to provide meaningful support to those who have been bereaved is through a shorter-term payment of bereavement benefit, combined with longer-term means-tested benefits if needed. As I have already stated, losing a spouse or civil partner is a tragic occurrence, the effects of which are likely to be felt for many years after the event. We need to keep in mind that the support we provide should be more than just help towards the initial costs; we also have a responsibility to help the bereaved to adjust to their change in situation.

For those who are not in work or who have given up working in order to care for a terminally ill spouse, part of the process of adjustment is making plans to return to the workplace. It is well known that prolonged periods away from the labour market can have a negative effect on a person’s financial, emotional and psychological wellbeing. Growing up in a workless household is known to have a detrimental impact on children, affecting everything from socialisation to educational attainment. This responsibility needs to be balanced with the need for the surviving parent to be able to spend time with their children to help them to process their grief.

In keeping with current bereavement benefits, the bereavement support payment has no work-related requirements attached. Universal credit claimants who are bereaved are exempted from work search requirements for six months. After that period has passed, we will take a flexible approach to conditionality, allowing it to be tailored to the individual. This progressive reform to bereavement support is an important aspect of the system; by providing greater flexibility and tailoring conditionality in this way, we are seeking to make it far more sympathetic to people who have suffered a tragic loss.

The bereavement support payment should not be seen as just the latest in a list of reforms to bereavement benefits. It is a brand-new approach to helping those who have been bereaved. First and foremost, it is about providing fast and direct financial help in the crucial months following the loss of a spouse. Secondly, it is about helping widows and widowers to rejoin the labour market and providing them with the right level of support to make that a reality. It is a new approach with the interests of the bereaved, of families and of children at heart. With that in mind, I commend the regulations to the Committee.

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[Caroline Nokes]

I thank hon. Members for their contributions. As I have already stated, the Government are absolutely committed to supporting those who have lost a spouse or civil partner; financially in the shorter term by way of these payments, and then practically, if and when it is appropriate, to return to employment.

I express my appreciation for the consideration that hon. Members have given to these regulations, in what I see as the first step to ensuring that we align bereavement support with other welfare policies. I want to respond to comments made by hon. Members and the shadow spokesman. We do not believe—nor could we—that the period of payment should be equivalent to the period of grief following spousal bereavement. We heard from several hon. Members that grief is not linear; it impacts different people in different ways and at different times.

We learned through the consultation process carried out with SSAC and the Work and Pensions Committee, as well as the wider public consultation, that grief will impact at different times in different ways. It will particularly impact on anniversaries. That is one reason we listened to the comments of the Work and Pensions Committee and chose to extend this provision from 12 months to 18 months, so that there would be no coinciding with the anniversary of the death.

It is right to put on the record that we considered providing a simple, lump sum payment at the moment of bereavement, which could be described as a death grant. However, the consultations said that was not wanted and that there should be some level of ongoing support during those critical first few months.

Bereavement support is designed to support people with the additional costs associated with bereavement, rather than to provide an income replacement. That is a really important distinction to make. Income-based benefits are more suited to provide the longer-term assistance with everyday living costs. By investing an additional £45 million, the Government are seeking to provide financial support for the acute period to facilitate the process of readjustment.

[Alex Cunningham]

The Minister heard the quotes I used from young Sam, who tells us that he is still hurting after four years. People can hurt with bereavement after almost a generation has passed. Surely there is some concession to be made by the Government for the likes of Sam, whose mother took two and a half years to get back to work and still needs some support to drop him off and pick him up from school.

[Caroline Nokes]

I thank the hon. Gentleman for that. I was going to move on to refer to Sam’s comments. Like the hon. Gentleman, I have seen a copy of the letter that he sent to his MP, and there are some important reflections on that. On universal credit, it is important to note that the conditionality can be lifted or someone can be completely exempted. It is important to recognise in the arena of universal credit that we want a much more tailored relationship between individuals and their work coaches.

[Alex Cunningham]

Will the Minister explain how somebody can be exempted unconditionally into the future?

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[Caroline Nokes]

By discussion with their work coach. That is simply the way we expect that to happen. People will be able to develop that relationship and ask for that exemption. That is really important, reflecting what the hon. Gentleman, the hon. Member for Islwyn and Sam have told us: grief can strike at any time. It is not linear or necessarily over in the first 18 months, and we are not suggesting that it is.

[Alex Cunningham]

I have not seen anything offering guidance to work coaches. Will the Minister publish guidance to work coaches in the Library so that we can understand the advice that people are getting and how they can ensure that they get the support they require?

[Caroline Nokes]

We will be happy to publish that guidance when the legislation has been debated and completed.

Extending the provision of bereavement support payment to cohabitees was discussed during the passage of the Pensions Act 2014. Indeed, the eligibility criteria of a legal marriage or civil partnership with the deceased form part of that Act. The eligibility of cohabitees was therefore fixed in the primary legislation and is not a matter for these regulations, but I am happy to explain the decisions that Parliament took on eligibility in the Act. Marriage and civil partnership are legal contracts that are associated with certain rights, including inheritance and recognition in the tax system. Extending eligibility to cohabitees would not only increase spend but be complex to administer. Having to prove cohabitation at a time of bereavement could be a lengthy and complex process and might cause additional distress, which we seek to avoid.

Critics have suggested that those who choose not to formalise their relationship might be treated unfairly, since they can be treated as a couple for income-related benefits but not for contributory benefits. However, income-related benefits serve a very different purpose: the ongoing day-to-day needs of a household, irrespective of whether the relationship is formal. When assessing entitlement to income-related benefit payments, the state rightly assumes that couples have joint outgoings and share resources such as earnings or other income, whatever the legal status of their relationship. The position is different for bereavement benefits because they are contributory benefits; the founding principle of the contributory benefit system is that all rights to inheritable benefits derived from another person’s contribution are based on the concept of legal marriage or civil partnership.

[Alex Cunningham]

Surely if a man and a woman live together, have children together and are on the electoral register together, they are a couple for all intents and purposes. Why on earth are we penalising the child? I cannot understand why we can make the exception in some areas of benefits but not in this one.

[Caroline Nokes]

As I have explained to the hon. Gentleman, that question was discussed and debated during the passage of the Pensions Act 2014, in which the eligibility criteria for contributory benefits are clearly set out.

[Alex Cunningham]

I am sorry to be such a pain to the Minister, but if the person who has died has been a contributor throughout their working time, surely his or her children are entitled to something from that contribution.

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[Caroline Nokes]

Which indeed is a point that the hon. Gentleman could have made back in 2013 when we debated the 2014 Act. As I said, it is a long-established principle of that Act that contributory benefits are based on the concept of legal marriage or civil partnership, and this Committee cannot change that.

The draft regulations will make no changes to conditionality. Like the bereavement benefits that they replace, bereavement support payments have no work-related conditions; any obligation to participate in any work-related activity will come from claiming other benefits. Nevertheless, as I mentioned earlier, it is well known that long periods out of work can have a negative effect on an individual’s prospect of future employment. The Government therefore think it important that people are encouraged to maintain a link with the labour market. Recipients of the bereavement support payment who also receive universal credit, jobseeker’s allowance or employment and support allowance will be able to access Jobcentre Plus on a voluntary basis from three months after bereavement and will not be subject to conditionality for a further three months. Those exemptions can apply even when there is no entitlement to bereavement support benefit. At the end of the six months, advisers will use their discretion to ensure that individuals’ capabilities and requirements are taken into account, as the hon. Member for Stockton North and I have discussed.

The hon. Gentleman raised uprating. Bereavement benefits are uprated by annual social security benefits uprating orders. The basic component—bereavement allowance and widowed parent’s allowance—must be uprated annually at least in line with price inflation, but there is no requirement to uprate the bereavement payment, which has been frozen since 2001. Bereavement support payment is a grant paid in instalments rather than an income replacement benefit, so it is treated in a similar way to the current bereavement payment: it is reviewed annually on a discretionary basis. Section 150 of the Social Security Administration Act 1992 provides for the rate of bereavement support payment to be reviewed annually. Regular review would allow the value of the benefit to be increased if that is considered necessary. Any decisions on future changes will be taken as part of the annual fiscal process in the context of wider public finances.

The Government have already committed to reviewing the 2013 impact assessment. We will do so when sufficient evidence is available to assess all aspects of the policy, including its effectiveness.

[Caroline Flint (Don Valley) (Lab)]

Since the regulations were laid before the House in January, what consideration have the Minister and her colleagues given to developing cost-neutral proposals that could spread the payments over three years to those with dependent children? The suggestion was made by the Childhood Bereavement Network as a way to work with the grain of the Government’s proposals while allowing families to receive the benefits for a longer period.

[Caroline Nokes]

I thank the right hon. Lady for that suggestion. I also thank my hon. Friends the Members for Lewes, and for Thornbury and Yate, who wrote to me on behalf of their constituents Heather Smith and Sarah Metcalfe to make exactly that point. I am conscious that the suggestion comes from the Childhood Bereavement Network, which has been in touch with me personally over the last few weeks.

When we considered the proposals, as I said originally, we considered making a one-off grant at the outset, but that was rejected by both the Social Security Advisory Committee and the Work and Pensions Committee. They suggested a period of 18 months, on which we consulted the Childhood Bereavement Network. I can see the merit in considering changing it to three years, but that would halve the monthly payments in the first 18 months. We did not think that gave families the best chance of lessening the fiscal impact of losing a spouse’s income. We considered it, but we came to the view that we should adopt the Work and Pensions Committee’s suggestion of 18 months.

[Alex Cunningham]

I do not know whether the Minister has acknowledged the £100 million saving, but surely it would go some way toward providing the extension to which my right hon. Friend the Member for Don Valley referred.

[Caroline Nokes]

The hon. Gentleman will of course be aware that over the first two years of the proposed reform we will spend an additional £45 million. Any savings will be for future Governments to reinvest as they choose.

It is important to emphasise that nobody in receipt of the current bereavement benefit stands to lose out as a result of the reforms. Recipients of the current benefit will continue to receive it for the natural lifetime of their award. Furthermore, households with dependent children will receive higher payments in recognition of that fact. Analysis shows that more people stand to gain than lose from the changes, particularly the least well off, because bereavement support will be paid on top of any income-related benefits that the household receives.

As I said, we are disregarding bereavement support payment in the calculation of other benefits, which will ensure that the immediate additional costs of bereavement are met while those requiring further support will be able to obtain it from other parts of the welfare system that are better placed to provide longer-term, means-tested financial assistance. As various Members have mentioned and I have confirmed, conditionality can be tailored through the ongoing relationship with Jobcentre Plus according to a claimant’s personal circumstances.

I meant to mention Sam—apologies for not having done so. I was particularly moved by his letter and thought that he conveyed his situation both movingly and incredibly intelligently. One can only feel for a child who has lost their parent. I must emphasise that families such as his, which are currently in receipt of the benefits as they stand, will not lose. Nothing will change for them. That is an important distinction to make. As I said, it was a benefit system meant to recognise widows—women, not men—way back in the 1920s. It is important that we heed the words of the Select Committee, which said that this reform and modernisation was well overdue.

In conclusion, I reassure hon. Members that this Government have the welfare of the bereaved and their families at heart. There can be absolutely no question but that the loss of a spouse is tragic, and it is doubly so for families with children. There can be no time limit on grief for such a loss, and nor is there a pre-defined way in which grief will manifest itself, but where we can help, we will do so. We remain committed to supporting widows and widowers to adjust to their new circumstances and to providing financial help in the difficult months following their loss. On that basis, I commend the regulations to the Committee.

Question put.