Welfare Reform Bill Debate
Full Debate: Read Full DebateDepartment: Department for Work and Pensions
Charlie Elphicke
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Welfare Reform Bill
Charlie Elphicke Excerpts(12 years, 11 months ago)
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Stephen Timms
As far as I can see, the arrangements for pension credit have worked perfectly well up to now, presumably with the feature that the Minister is now deprecating. My case is that if the Government want to change the rules for pension credit to discriminate against people who have a spouse under pensionable age, they should do so openly. They should announce the change: it should have been in the Budget, the welfare reform announcement or the Pensions Bill. We have a Pensions Bill going through Parliament at the moment—why was it not included there? Instead, the change was slipped into a schedule to this Bill and no Minister, until asked, said anything about it.
Charlie Elphicke (Dover) (Con)
I am a little unclear about whether the right hon. Gentleman’s position is that this measure is wrong in principle and he disagrees with it, or he agrees with it but thinks it should have been announced with a fanfare. Will he explain which it is?
Stephen Timms
I certainly think that the arrangement should have been announced, and our amendment proposes that it be removed. I shall be interested to hear the Government’s response.
Charlie Elphicke
Let me understand fully what the right hon. Gentleman is saying. If a retired man, say, of 66 is married to a spouse who is 45, she should be able not to have to work and they should be able to double-claim pension credit—is that correct?
Stephen Timms
I do not recognise the policy that the Minister describes. We have had a long-standing arrangement for pension credit which appears to work perfectly well. If he has found abuses of pension credit, I shall be eager to hear those examples from him when he responds to the debate. I notice that when asked recently about this by my hon. Friend the Member for Leeds West (Rachel Reeves), the Pensions Minister stated:
“We recognise that it is important not to undermine the stability and outcomes for existing pension credit customers, so there will be no change for couples already in receipt of pension credit at the point of change.—[Official Report, 9 June 2011; Vol. 529, c. 422W.]
That is welcome and helpful. I do not know whether the Minister of State, the right hon. Member for Epsom and Ewell (Chris Grayling) has satisfied himself that the abuse that he has just described is not a problem at present. But even that reassurance from the Pensions Minister is not on the face of the Bill. For many couples who have planned around receiving pension credit and been reasonably able to do so, and who are now approaching retirement, the change will come as a severe shock.
We will support the principle of universal credit, despite the holes in the policy about how it will work and despite the perverse incentives that the Government have added for savers and the self-employed, but this is not, as Ministers have frequently claimed, a panacea for all the problems in the system. It is therefore vital that sufficient welfare advice is available at the point of transition. People will find any transition difficult, even one which, unlike this, is to a simple system. Yet at precisely the moment when the Government are embarking on this massive upheaval to the system, funding for welfare advice is being cut.
A large part of the funding—for example, to Citizens Advice—comes at present through legal aid, and the Government have announced that there will be no legal aid funding for welfare advice at all in future. About a quarter of the current funding for Citizens Advice comes from that source and it is being taken away. Most of the rest of the funding comes from local authorities, and that is also being cut. Demand for welfare advice will rocket and funding will plummet. This is a perfect storm for advice services. Our amendment 26, therefore, requires the Secretary of State to report, before universal credit is introduced, on the availability of welfare advice, and to satisfy himself that it is adequate to support people through the transition that the Government envisage.
New clause 5 aims for clarity about how claimants will be informed about their universal credit. It stipulates that every claimant should be provided with a record of the amount of their award, including details of the separate elements that make it up. I understand that the Government intend to provide each claimant with the equivalent of a payslip. I hope the Minister will be able to confirm that when responding to the debate. Will that payslip be provided on payment, as with payslips for those in work? Will it be provided directly by the Department or through the employer, and will it set out the various elements of the award—child care, housing support, support in respect of children and so on? A full statement would ensure transparency between the Government and claimants and would be a welcome feature.
Amendment 30 addresses support for families with disabled children under universal credit. It amends clause 10 to ensure that the amount that those families receive is not less than under the current tax credit and benefits system. My hon. Friend the Member for Glasgow East (Margaret Curran) raised this important point in Work and Pensions questions earlier this afternoon. Under universal credit, a family receiving the higher rate care element of DLA for a disabled child will receive £74.50 through the severe disability addition. At first glance, that seems broadly in line with the current position, but there are worries, because we are told that the higher level of the disability addition will be uprated in future only as resources allow, so it is very likely that families with severely disabled children will lose out over time.
For families with disabled children not receiving the higher rate care element of DLA the situation looks a great deal worse. The amount available under the universal credit disability addition will be £26.75 a week, compared with the £53.62 available under child tax credit, so support will be halved. The Minister has justified that in terms of aligning the support given to children and adults and easing the transition, but we know that children helped under the disability addition will not automatically be helped under adult universal credit.
Amendment 61 proposes that the elements of universal credit paid in respect of children must be paid to the designated carer of the children, except in prescribed circumstances. That is crucial for safeguarding the interests of children. Let me simply quote from the briefing that Oxfam has sent every Member: “We know from our work on the ground that money in households is often unevenly distributed and that women in poor households can have little or no access to money. As mothers usually take the main responsibility for feeding and clothing children, this affects both women and their children. This sometimes means that women themselves go without eating in order to pay the bills or put a meal on the table for their children. This lack of access to income in their own right leaves women open to the risk of financial abuse and can also reduce their chances of escaping domestic violence. As a crucial first step, the Bill must be amended to allow payments intended for children to be labelled as such and paid to the main carer, who is usually female. This change will make it more likely that this money is spent on children.” That would be the effect of the amendment.
Amendment 68 would provide for a minimum amount to be paid to any claimant who has caring responsibilities. It is vital that people who give up their time and energy to look after the most vulnerable in society, saving the taxpayer considerable sums in the process, are properly supported when they move on to universal credit, in line with the help currently available through carers allowance. I hope that the Minister will make it clear how he will ensure that that happens.
In rehearsing these concerns, I remind the House that the whole project of universal credit will depend on an enormous new IT system, which the Government claim will be ready in an implausibly short period of time. In truth, it will not be ready by October 2013, as claimed, which will give rise to serious problems as that deadline approaches.
Charlie Elphicke
I put it to the right hon. Gentleman, as I did in Committee when he made that point, that this Government’s approach to IT is far more thought through and better planned than the approach taken by the previous Government, who spent vast amounts of money without any consideration for the end, route or purpose of the policy. This Government are being far more direct and should get the IT ready on time and on budget.
Stephen Timms
I look forward to reminding the hon. Gentleman of that comment in September 2013.
The intention of universal credit is that work should always pay. Without decisions and policies on child care or passported benefits, we cannot know whether work will always pay, and all the indications are that the Government will in due course, when they finally put a policy together, introduce one that will mean that for many work will no longer pay.
On savings, I am afraid that the Government are heading to crush the hopes of many people in work. On the self-employed, the Government will crush the hopes of many who want to set up their own businesses. As Policy Exchange recently argued in its report, universal credit has been oversold by Ministers. I very much hope that the House will support our amendments so that universal credit can support the aspirations of families across the country.
Chris Grayling
Of course.
As the right hon. Member for East Ham will know, I have tabled several Government amendments to address the concerns that he and other Members raised in Committee. I will deal with those before I talk in detail about his amendments.
Government amendments 14 to 21 will make certain regulation-making provisions for universal credit, employment and support allowance, jobseeker’s allowance and pension credit subject to the affirmative resolution procedure when they are first used. I recognise the hon. Lady’s point, and it is a point that was made well by the right hon. Member for East Ham in Committee. I do not think that it would be sensible to make the provisions subject to the affirmative procedure year in, year out, but it is right and proper that the House should be able to debate them fully when they are first introduced.
Charlie Elphicke
I thank the Minister for his important announcement on the use of the affirmative procedure the first time the regulations go through. The process that the Government have taken of consulting informally and sharing the consultation document so transparently, so that we could all sit down and discuss the options for child care, is a great and important step forward. I would have thought that the Work and Pensions Committee would have stirred itself to take a proper look at the document before the regulations come in, and make constructive comments to add to the process of reforming our benefits system.
Chris Grayling
My hon. Friend makes an important point. Some of my colleagues and I have been in the House for longer than he has—and when the Labour party was in government, I do not recall once being called in to discuss the policy-making process for one part of a piece of primary legislation. I was not asked to go in and discuss education or health options; the decisions were always just made. What is different is that we have extended the hand of involvement to the Opposition and said, “Please come and be part of the decision-making process.”
Chris Grayling
The changes we made last year—the reduction from 80% to 70% support—merely returned us to the situation that applied before 2006. On the mini jobs, I want us to spend the money we have on supporting people from deprived backgrounds and in the most deprived situations into the work place so that they can make the most of their lives. The mini job is a perfectly reasonable way of doing that. I also happen to think that for many lone parents, a mini job during schools hours is a perfectly reasonable alternative that might mean that the need for child care is not great. None the less, the option should be there. We should not be writing—this is the key point about some of the Opposition amendments—into primary legislation rules that cannot be undone for two or three years, while we wait for a parliamentary slot. Instead, we need to set out straightforwardly a situation in regulations that can be amended if the situation requires. I could not possibly accept an amendment from the right hon. Member for East Ham that would write into primary legislation actual amounts of benefits that should be paid. The Labour party would never have done that while in government. It would not have happened, and I am not going to tolerate the idea now.
Charlie Elphicke
The detailed and comprehensive information that the Minister and the Department for Work and Pensions shared with members of the Bill Committee and the Work and Pensions Committee sets out clearly that joint working is the norm for couples in this country. In most families, mine included, with young children, both spouses or partners work. I, for one, resent the idea among some older people that mothers just sit at home and have primary responsibility for child care. Society has changed, and it is time people moved on from being old-fashioned and out-of-date and accepted that the reality of modern Britain is that both parents play a key role in bringing up children.
Chris Grayling
My hon. Friend makes his point in his usual forceful and inimitable way. He highlighted how Labour Members struggle to move on from traditional ways of things. Listening to the right hon. Member for East Ham, I am still not sure on which side of the argument he falls. Does he think that we are doing the right thing, but want to fine-tune it a bit, or is he trying to distance himself from the Bill, so that on Wednesday the Opposition can vote against it and so say to the pressure and lobby groups, “We are on your side”? I am genuinely not sure which is the case, although if they do vote against it, I will love it. I will look forward to arguing up and down the land that this Government have got it right on welfare reform, and that the Opposition have not. I wait with interest and enthusiasm to discover how they vote.
New clauses 3 and 4 provide an amount for school meals and health costs in universal credit. It is absolutely our objective to ensure that people on universal credit will continue to receive appropriate support for school meals and health costs, and that this support is withdrawn gradually to avoid damaging the incentives to work. However, entitlements to passported benefits are the responsibility of other Departments and devolved Administrations. We have been working closely with those responsible to consider the options, and we have commissioned the Social Security Advisory Committee to review passported benefits and how they interact with universal credit. The review was announced in a written statement on 23 May, and a copy of its terms of reference has been placed in the Library. To answer a question put to me earlier, I should say that the Committee will produce its interim report in September and a final report by January. The Committee provides a good way of considering this challenging and important cross-governmental issue. We are certainly well aware of the potential for a large cliff-edge reduction in a person’s income, if support for school meals is withdrawn completely when they reach a certain level of earnings, and we are working closely with other Departments on the matter, as well as on the review.
On health, we aim to ensure that passported benefits are awarded to broadly the same number of people as now. However, passporting is not the only source of help with health costs. Income-related help is also available through the NHS low-income scheme, which can be claimed by anyone on a low income who has capital of less than £16,000. For people on medication, pre-payment options can also significantly reduce the cost of recurring prescription charges. With a 12-month pre-payment certificate, the maximum cost of a prescription is £2 a week, although of course that is an issue only for England; for those with constituencies in Scotland, there are no prescription charges.
Sheila Gilmore
The debate we have had—in Committee and this evening—shows some of the pitfalls of saying, “We are going to simplify benefits.” The Minister and his colleagues have said to the country generally, “We're going to simplify benefits. This is a simpler system, so it must, by definition, be a good thing.” They expected and, indeed, got from many people the answer, “We agree that benefits should be simplified.” The problem is that when dealing with real people and real situations it all becomes much more complicated, as our debates tonight and on previous occasions have demonstrated quite clearly.
The details of issues such as school meals, health charges and the even bigger matter of child care are extremely important, and will have a real impact on whether the new system works for people, will make them better off, and enables them to get into employment, stay in employment, improve their circumstances and get out of poverty. We all agree that, except for those who suffer from real and deep health problems, employment is the best way out of poverty. If, however, such an important element as child care is left so undefined, we cannot know the answer to that question.
Frankly, we are being asked to buy a pig in a poke. We are told, “If you don’t accept it, don’t vote for it or don't agree with it, you are throwing over the whole issue of welfare reform.” I do not accept that. Nor do I accept the Minister’s view that he was given that sort of response by the previous Government and that there should be simply a framework—an empty bookcase, as he was wont to say in Committee—as there was before. It seems to me that if he thought it was wrong then—and it sounds as if he did—it may still be wrong now. As I said in Committee, people should not be asked to buy that empty bookcase without knowing whether it contains classics or cheap comics.
Charlie Elphicke
The Government have gone to great lengths to engage all parliamentarians, including the hon. Lady, in discussions about the nature and design of child care. Is she saying that she would prefer the Government to present a fait accompli, rather than listening to her and giving her a chance to inform, and possibly change, Government policy?
Sheila Gilmore
In general, I should prefer legislation not to be pushed through all its stages until more of the details have been dealt with. When the original Bill was presented to the House, some of the consultations with the public were still taking place. An important consultation about disability benefits, with which we shall deal later, had not finished before the Bill was printed, and consultations about child maintenance did not end until April, when proposals were already in writing. There are other ways of doing things, and the fact that they have or have not been done properly by past Governments does not strike me as a reason for not trying to do them properly now.
Child care is particularly important to people who want to improve their position. The hon. Member for Dover (Charlie Elphicke) said that we had been consulted, and indeed we were invited to a briefing at which we were presented with certain scenarios, but I am not sure that I gained a very clear understanding from that session of exactly what the Government were proposing. I subsequently received briefings from other organisations, as no doubt has the hon. Gentleman, expressing the view that the new child care arrangements, such as they were—the proposals had not been finalised—would not leave people better off. It is a question of what we accept and what we believe.
It is difficult for us to form a view, but it is possible that if we do not get the child care arrangements right, many people will decide that work does not pay. They will feel either that they must reduce their hours considerably, or that they cannot afford to continue their work and must give it up altogether. I do not think that that is the outcome that the Government seek.
Charlie Elphicke
The hon. Lady clearly supports the fait accompli proposed by the Opposition—including, it seems, the ending of the whole principle of the mini-job, which would imprison people with child care responsibilities in their homes. Does she really think that that is the answer?
Sheila Gilmore
I am not convinced that the new clause does away with the entire principle of the mini-job, although I would certainly have liked—preferably before we embarked on the Bill—a debate about what was, for me, a new idea, possibly good and possibly bad. I do not think we have fleshed out exactly what we are doing in this regard.
As I said in an intervention earlier, if the idea is to encourage people to undertake work involving all hours of employment—given that they are able to obtain such work—I am not sure where the so-called mini-jobs will be found or what their quality will be. Are we talking about six or eight hours a week, as some people seem to be? Where will the jobs be, to what extent will they increase earnings, and will the necessary child care be available?
Sheila Gilmore
I think that it often made a lot of sense for people to work for 16 hours and more, and issues such as child care were key to that. In many cases, child care costs kick in when hours like that are involved.
We should not try to justify reductions in child care provision simply by saying that they may help another group who need a certain amount of help—and, indeed, they may not do so. We need to examine the model thoroughly, because otherwise we will not know what will happen. Depending on which version of the proposals the Government decide to adopt, help for child care for people working 16-plus hours may be cut and there may not be a call on child care costs for people doing mini-jobs. If that is the case, money would be freed up. I am unsure as to whether there will be a call on it for the following reason.
Some mini-jobs will be at times such as 5 until 8 o’clock in the evening, and those doing them might not have another family member who can undertake child care at that time. Child care costs may therefore be incurred—although I am not sure from what source any child care might be found at such a time of day. When the hours of a mini-job fit in with nursery or school hours, however, child care costs may not be incurred. Therefore, if there is not a call on child care costs for people working fewer than 16 hours, I hope that the available money will be recycled for the people from whom it appears it is to be taken, regardless of whether we know there is a demand for it.
Charlie Elphicke
The hon. Lady speaks as though the idea that a woman looking after a child would work for fewer than 16 hours a week is novel and has never happened before. Let us consider the situation for one of the obvious age groups, however: for children aged five to six, some 61% of lone parents who are in work are in part-time work, and 65% of partnered mothers in work are in part-time work. Many of those people will be working for fewer than 16 hours as their children are so very young. Is it right not to help them with child care in those circumstances? Why does the hon. Lady want to persecute people who work fewer than 16 hours a week?
Sheila Gilmore
With all due respect, I think the boot is on the other foot. It appears that the people who are to be persecuted are those who work hours for which they require child care and who get assistance at present. Let us consider the proposals that were put before us at the briefing meetings—which I would not necessarily call fully consultative meetings. Under the proposals, it appears that people who currently get child care assistance will have that taken away, and that that will amount to a substantial loss which will lead possibly to their reducing their working hours. If they do that, their ability to move on with their work experience and their lives, and to get out of poverty, will be much reduced. I do not think positing one group against the other is helpful, therefore, and I would much rather we gave assistance wherever we can.
In Committee, Opposition Members were constantly expected to balance our suggestions against the costs that the Government have set up, but we would not start from that point. It is ludicrous to say that the Opposition have no right to make any spending suggestions as we do not support the Government’s model of deficit reduction. If we put more people out of work by cutting our deficit so quickly, as this Government seem intent on doing, benefit bills will rise and tax takes will fall, and we will not resolve the deficit problems in any case. That is one of the major reasons why we have opposed this Government’s stance. If we have a different view on how to tackle the deficit, the speed at which to tackle it, where to reduce spending and the impact of that, it is perfectly legitimate for us not to accept the spending envelope the Government have decided to impose.
I would hope that we would not just think about how we might take a little away from one group that happens to be a bit less poor than another group because we want to help the most needy. I noted in this afternoon’s departmental questions that Ministers were quick to take up one aspect of the Leader of the Opposition’s speech today: the comments he made about people on benefits. They were not so quick to mention his comments about the responsibility of those in our society who are a good deal better off, however. If we do not look at both those issues, we will be making the poor pay the cost of the economic crisis.
Charlie Elphicke
The hon. Lady speaks as though everyone is going to be terribly badly off under universal credit, but the figures in table A.2 on page 80 of the Red Book make it very clear that almost everyone is much better off, and that is especially the case in respect of part-time work. Does she not accept that that is positive, and that the Government have made sure that the transition will be managed in such a way that people will do better?
Sheila Gilmore
I shall try to unpick that question. First, it has almost been forgotten—I hope not entirely forgotten—that universal credit will be introduced after £18 billion has been cut from this country’s welfare spending, so many people will already be worse off before universal credit comes into effect. Secondly, we do not know when the transitional protection we keep hearing about will end. Will it end and begin only if somebody gets into work or falls out of work, or will there be other circumstances in which that transitional protection will cease, which would mean that many people would be considerably worse off? The third reason that I have concerns about the assertion that people will be better off under universal credit is to do with all the points raised in our discussion of these amendments. Unless we are clear about issues such as the cost of child care and school meals, and how they will be accounted for under universal credit, we cannot know whether the assumptions made, the figures given and the statements made about people being better off will prove to be true.
Charlie Elphicke
What would the hon. Lady say to a constituent of mine who earns £15,000 a year, has no savings, works really hard and pays their taxes? How would she justify their taxes going to pay benefits to someone who has £50,000 in the bank?
Harriett Baldwin
The hon. Lady underestimates the extent to which the 16-hour job has already become a trap. I think we all know people who have been trapped in one. I am proposing that when people move on to that slide and have greater support in those initial steps into work, they will become much more familiar with the world of work. When they move into taking on more hours and so on—let us not forget that once somebody has moved into the workplace they often find themselves eligible for a promotion or for the next move up the employment ladder, which might coincide with their children rising five and going to primary school—the fact that they are on more of a slide will mean that because they have extra work they will be able to share more of the cost of their child care. I would like to see some experimentation with the formula so that the child care support for the first steps into work is more generous, and the tapering begins further down the line.
Charlie Elphicke
Does my hon. Friend recall going to the seminar where we were consulted about the child care costs, and does she recall, as I do, that the idea that people lose out when they work more hours is a fiction? The Government are funding substantially more money for the system, which means that people will be far better off than under the current system even if they are working all hours, as well as benefiting when they are in 16-hour jobs.
Harriett Baldwin
My hon. Friend highlights the complexity of this area, not just because of the formulae and the mathematics but because of the financial behaviours of individuals who are making the choice between working and not working. This is an important behavioural area for people who are not in the benefits system. We all know people who have left work, had a baby and taken time out of the workplace. They make the trade-off and ask whether it makes sense for them to go back to work and pay for child care or not. That happens outside universal credit, in the world of people who are not touched by the benefit system in any way. This is a complex area.
Kate Green
I want to comment first on the proposed child care amendments. Owing to the funding envelope within which we work we face a difficult financial choice about which group of parents to assist with child care costs. I warmly welcome the implication in the comments of the hon. Member for West Worcestershire (Harriett Baldwin). Obviously, one would want to support funding for child care as far as possible, and in making an early selection about which group of parents should benefit we do not want to shut off the possibility of financial support for child care for more parents being an aspiration over time.
In saying that we wish to protect the child care support available for parents who work more than 16 hours, we are certainly not saying that we might not aspire in due course to see child care supported beyond that. The loss of financial support for child care will make working completely unviable and will be a dangerous and retrograde step that I do not believe Ministers have fully analysed.
It is important that we do not see child care provision simply as instrumentalising the return of parents to paid employment. Nowhere in the debate today have we said much about the welfare of the child. We do not know what short hours child care, if any, will be available in the child care market. It certainly seems to be a complicated and unlikely form of child care for parents to be able to access and it does not reflect the way in which child care provision is currently organised. Of course, child care providers might respond if more parents were seeking to buy shorter hours of child care, but the question that arises is whether it is a financially viable model for providers. I am not aware of Ministers investigating that, and I would feel more reassured about the validity of their proposals if they had been able to say a little more about what they meant for the market, its resilience and its potential for growth.
I would also have felt more reassured if Ministers had analysed the extent to which very short episodes of child care are or are not good for children. I genuinely do not know the answer, but I have a sense that putting a child in child care for two or three hours on two or three days a week presents an unstable stop-go approach. We certainly know that, for younger children, one-on-one care with a single main carer with whom the child can form a stable relationship is very important. Although I do not rule out the possibility that shorter episodes of child care could be good for children, I have not seen any sign that Ministers have investigated whether that is the case. It is extremely difficult for us to support a measure that has given no attention to the well-being of children.
On the proposals—or lack of proposals—in relation to free school meals, I do not blame Ministers for seeking to pass the problem to the Social Security Advisory Committee because it is an extremely difficult one to solve. The previous Government had been concerned about the cliff edge that exists as parents move off benefits and into employment and free school meals are removed wholesale. Parents have repeatedly told us as politicians that that is an incredible financial shock to low-income families as parents move into work. We have no idea what Ministers will propose in due course.
We have been struggling to find the model that will work. Models have been bandied around that could leave parents able to afford school meals on Monday, Tuesday and Wednesday, but not on Thursday or Friday, or that might mean that they can afford school meals for some children in the family, but not for others. There is a real concern that what Ministers propose will still lead us to a cliff edge.
We need to be clear about the principles that we seek to achieve. I would like absolute clarity from Ministers that when they receive the recommendations and advice of SSAC, they will ensure that support is available for all children who need free school meals; that the system that is put in place will be simple for families, simple for schools to administer and simple for the Government, too; that child health will not be compromised because children currently eligible for free school meals and therefore accessing a healthier diet are in future shut out of such provision; and that the design of the system will not create work disincentives.
I have not yet seen any evidence that all those circles can easily be squared, unless Ministers are prepared to look again at the direction of travel that the Labour Government were following, which was, over time, to move towards extending the reach of free school meals. I accept that in the present financial climate it will be difficult to get all the way there, but Ministers need to think now about how they design the cliff edges and the tapers, because that is the foundation on which a future extension of free school meals to more children would be built.
The most comprehensive option would be to include a per child school meal element in the universal credit, which crucially would be paid directly to schools to provide meals, so that parents were not—by force, in many cases—obliged to use the money to meet other bills. I would like us to consider how a model could be designed that, when funding allows, would allow the money to be paid in full until the family reached their earnings disregard level, at which stage it would be withdrawn from universal credit at the taper rate, which we would like to have been maintained at 65%. That would mean that both DWP and families were contributing to the cost of school meal expansion. Entitlement could end when universal credit payments end, preferably when the imputed value of the school meal had been fully tapered out.
Achieving that vision immediately would undoubtedly create additional cost, which I recognise that Ministers want to avoid. Nevertheless, it is important that they give us assurances that they will seek at the outset to design a system that could be developed in that direction over time and as funding allows.
Amendment 68 relates to carers. A small group of carers seems to have slipped the notice of Ministers when considering the impact of the design of universal credit, specifically in relation to earnings disregards. We know that many carers can work only a very small number of hours because they are seeking to balance paid employment with substantial caring responsibilities. We also know that those few hours of work are very precious to them. They enable them to maintain contact with the labour market, they widen their social and external circles, and they provide a bit of a respite for the carers from the stress and strain of caring.
Where those carers are in receipt of income support, they can at present earn up to £20 a week from doing a few hours of paid employment without it affecting their benefit. In their proposals for universal credit, Ministers have provided for disregards for carers in a number of situations, but there seem to be some groups who will lose the benefit of that disregard as a result of the proposals before us. For example, some carers are caring for someone who does not live in the same home as the carer. Those carers may no longer enjoy the benefit of the earnings disregard. That seems completely at odds with the aspiration that Ministers have expressed for the universal credit, which is that every additional hour of work will pay.
I hope that Ministers will give careful attention to amendment 68 and consider what can be done to ensure that all carers are incentivised to take on even a few hours of work. What assessment have Ministers made of the number of carers who are left outside the ambit of the current disregard for carers, and of the cost of extending such support to all carers?
Finally, we cannot stress often enough how important it is that we ensure that payments for children go to the main carer of the child. Ministers seem to think it is good enough that couples have the option to make that decision, but very many families will, by default, allow all payments of universal credit to go to one member of a couple in a couple household, and we know from the evidence of the way in which the pension credit has been received in couple households that that is most likely to be the man.
Kate Green
I will, but the hon. Gentleman will tell me that life is different now and that families share child-caring responsibilities more equally. I am sorry to tell him that although I would love that to be the case, all the research evidence says that it still is not. This is not in any event a gender point, although it would mean more money for women, because women are the main carers of children. Therefore, if we want to ensure that money is spent on children, we need to route it to the main carers, and that primarily means that we need to route it to women in couples.
I am surprised that the Conservative party has been so reluctant to accept that. The last time we had such an attack on the principle of money being paid to mothers for the care of children, it was Conservative ladies who were the best defenders of the interests of mothers and families, and I do not think the picture has changed that much. I know that the hon. Gentleman has an idealistic and ambitious view on the issue, and it would be good to hear it.
Charlie Elphicke
I thank the hon. Lady for her generous introduction to my intervention. I take issue with her argument not in relation to who has primary responsibility for child care, but in relation to culture. In times gone by there was a much more divided culture, which is why older people see life very much in the way she puts it, but the reality is that joint working has changed that. My issue is not about economic power and management, but about sharing in the family unit as a whole, and that is backed up by the figures, which show that 76% of partnered mothers are working. Life has changed, and she should understand that the economics are much more shared these days than they used to be.
Yvonne Fovargue
I thank the right hon. Gentleman, and I agree totally. The amendment would simply give people the opportunity to receive advice about their rights and responsibilities. That is crucial at any stage, but particularly when a new welfare benefit system is brought in. I urge all Members to support the amendment.
Charlie Elphicke
I rise to speak against new clause 2. One of the major achievements of the reform of introducing universal credit is enabling people to have greater flexibility in taking on part-time jobs—so-called mini-jobs. I have made the point several times in interventions that it is critical that we enable people with child care responsibilities to have the maximum flexibility in how they organise their child care and for how long they wish to work, so that they are reintroduced to the world of work.
I praise the Government particularly for making the effort to consult all parties in their recent seminar. It was not just members of the Public Bill Committee who were there, but members of the Work and Pensions Committee. Such engagement is important, because it enables us to get everything right. The Government have introduced a Bill that is a bookcase into which the books will later be slotted, and they are making an effort to ensure that the books read well and effectively.
One of the most telling parts of the briefing that we were given in the seminar was about what parents had told the DWP that they wanted. It informs the decision on whether new clause 2 is right. The DWP publication—“briefing” is probably a better description—is entitled “Childcare support in Universal Credit” and dated May 2011. It states:
“Recent findings from a survey of lone parents on Income support and with a child aged 5-6 found a strong preference for working part-time.”
Among those looking for work or expecting to do so in future, the majority stated a preference for 16 to 29 hours’ work a week, with 45% giving a preference of exactly 16 hours. Why exactly 16 hours? It has been drummed into everyone that they have to go out and work for 16 hours, not a moment less, or they will not get any help with child care. Subsection (5) of new clause 2 makes it clear that the Opposition want that prescribed minimum number of hours a week to remain. In other words, they do not want the mini-job, and yet we know that lone parents show a strong preference for working part-time, which should be respected. People are not here to dance to the Government’s tune: Governments should dance to the tune of the people, and be as flexible, helpful and enabling as people wish.
Ms Buck
While the hon. Gentleman is on the subject of the survey of parents’ opinions, does he know how many of the 250,000 parents who are expected to lose between £30 and £35 a week under both options in the Government’s proposals said that they wanted less support with their child care?
Charlie Elphicke
I have not conducted a detailed survey on that. I am also unsure what the 400,000 or 430,000 who will win approximately £50 say. There will always be winners and losers, but what I like about this policy programme is that there are almost twice as many winners as losers, and they will win an awful lot more money, which helps the transition to the policy.
Let me return to the evidence of parents. The Government document states:
“Many out of work mothers, both lone and partnered, are looking for jobs that will fit in with their children’s schooling—i.e. jobs that are part-time and preferably within school hours.”
That is obvious and self-evident—any parent knows that—but it is important to have survey evidence so that the argument has an element of objectivity. The document goes on to say that out-of-work mothers
“tend to look for work that is local and flexible, so that they can be available if, for example, their child is taken ill.”
All of us parents have been there—have we not?—when our children get sick and we send them off in the morning, tying their scarves up tight and hoping that no one notices. When they do notice, we get a call. I have had to make that run—even though, as I am told, as a man I have no rights in respect of child care responsibilities. Some of us in the younger generation are new men, although I hesitate to apply that description to myself.
The document also states that those factors—locality and flexibility—
“are often seen as being more important than the type of job they move into.”
It is all about flexibility, which we need. All of us parents have been there and understand that. Child care is quite often a nightmare, and always a juggle. Half the time parents are terrified that they will get a call just when they have an important meeting to go to.
The document also states:
“A study of lone parents who had recently moved into work had overwhelmingly chosen jobs where their hours fitted with looking after their children. It was common for interviewees to be working between 16 and 29 hours per week.”
Again, there was almost certainly not the flexibility to have a mini-job. Mini-jobs are important in enabling such flexibility. It is not right for parents, particularly parents of little children, to be forced into endless hours of work, or to work for more than 16 hours. New clause 2(5) is therefore extraordinarily unhelpful, and a retrograde step.
On parental employment, what happens when children are five and six is telling. This is about the youngest tots. When children are that age, parents are just going out into work, having previously perhaps been full-time parents. Employment of lone parents of children that age is about 55%, but the employment of partnered mothers is 75%, which is the parental employment rate. We can see, therefore, that there has been a massive societal shift into joint working among couples. There has been a move away from the traditional old-style model, whereby the bloke goes off to work and the woman stays at home to mind the kid and the kitchen sink, to more economic sharing and greater equality, which is a positive thing.
Richard Graham
My hon. Friend is developing a powerful case for greater flexibility, which is precisely what the Bill proposes, and which the new clause would not reflect. Does he agree that there is perhaps not enough understanding in the wider world of the flexibilities in the Bill that will help single mothers to take jobs on a flexible basis?
Charlie Elphicke
My hon. Friend makes an extraordinarily powerful point. Part of the reason for that is that a lot of scaremongering is going on. The scaremongers deny that the Bill provides that flexibility and say that people will lose out, but we know, from the detailed figures in the Budget and the briefing document to which I have referred, that most people will be far better off under the reforms, that they will have more money, and that work will always pay.
Ms Buck
On the subject of scaremongering, is the hon. Gentleman aware that in their letter to the Secretary of State on this issue, the organisations that could fairly be said to have a good grasp of the issue—from the Daycare Trust to Gingerbread, Family Action, the Child Poverty Action Group, Working Families, the Children’s Society, Save the Children and the Resolution Foundation—said that they were concerned that the proposals could effectively end the prospect of full-time work for single parents and second earners, and for couples on low and middle incomes who need support with child care costs, and that that will have the result of hampering their ability to find work, and making it more difficult for them to lift their families out of poverty?
The hon. Member for Dover (Charlie Elphicke) supports the flexibility for people to work fewer hours—in principle, we all agree with that—but he wants to restrict the flexibility for people who want and need to work longer hours.
Charlie Elphicke
I do not make my money out of campaigning, and I never have. Anyone who has done that will know that maximum fear is the way to get the most subscriptions, the largest membership and the highest amount in grants. I make my money out of my only job, which is serving my 71,000 or so constituents and trying to do what is best.
Perhaps I am old-fashioned, but I occasionally open the Budget Red Book and look at the detailed figures. Table A2 on page 80 makes it clear that a lone parent with one child working 35 hours a week would have £105 without universal credit, and more or less the same with it. However, when parents work 10 hours, things change. A lone parent working 10 hours rises receives £20 without universal credit, and £53 with it. If we move to universal credit, those people will end up, broadly, with more money. That mini-job is massively incentivised by universal credit, which makes part-time working much easier.
Why does part-time working matter, and why should we give greater incentives for it? To answer that, we must look at the proportion of parents with child care responsibilities who are in work. Some 61% of lone parents who have children aged between five and six, who would find things difficult under new clause 2(5), work part-time, as do 64% of partnered mothers of children of that age: 64% of all mothers work part-time. The statistics are pretty clear that we have had a joint working revolution: there is much more sharing of economic power in couples, and more pooling of income. To a great extent, universal credit recognises that in the system.
There has also been a revolution involving women in the workplace. Often they work part-time, because even now there is a bias towards women having primary responsibility for child care. Finances might be shared, but the responsibility for child care tends to fall to women. That is what comes out pretty clearly from the figures. For that reason, we should allow women maximum flexibility. Why have a 16-hour cut-off, as new clause 2(5) proposes? I, for one, cannot agree with that. It is not the right way to go; it is a retrograde step.
Sarah Newton
My hon. Friend makes an extremely good case. Does he agree that the letter referred to by the hon. Member for Westminster North (Ms Buck) was a response to a consultation, the whole point of which was to receive critical feedback to help the Government to develop appropriate policy?
Charlie Elphicke
I completely agree. That is the whole idea of consultations. The Government have reached out to all those groups. I am disappointed that the Opposition have used this opportunity just to throw rocks, when the Government have reached out to all parties in the House in designing the fine detail of the Bill, and truly sought to engage.
Richard Graham
It seems extraordinary that the hon. Member for Westminster North (Ms Buck), with whom I sat on the Work and Pensions Committee, does not recall the stream of anecdotal evidence from our constituents about how many women are at home on benefits because they have worked out that under the current system it is impossible to take a job and be better off. The whole concept of work paying, which drives this Bill, must surely unite Members on both sides of the House.
Charlie Elphicke
I would hope so. New clause 2(1) mentions
“a childcare element for claimants who are in work, except in prescribed circumstances.”
One of the problems with the current system is that 52,000 families already in receipt of tax credits are entitled to, but did not claim, the child care element in 2008-09, whereas 55,000 families were entitled to the child care element but did not claim tax credits in the same period. We need to ensure that real help is available for children. Universal credit will ensure that we do not have thousands of families who do not receive their full entitlement. That is a really important aspect of the Bill.
I am not sure that new clause 2 is the right way forward. I am concerned that it would cost the vast extra sum of £400 million in Government spending. It would be expensive, but retrograde, and it would make life harder for those who want to be in part-time work.
My other concern about the new clause is that the maximum award for the child care element is far higher than was set out in the consultation document. I can only assume that in drafting it the Opposition thought, “What high figure can we come up with that will be a substantial number so we can appear to our constituents to be much more generous in spending other people’s money?” That is not a sensible approach. The right approach is to have the consultation that the Government are having so that the book, when it is written, is slotted into the bookcase and is as effective as possible.
The Government have made a real effort to make strides on this issue and they have come up with a really great plan. They have also gone to considerable lengths to put up various options for discussion. Nowhere in new clause 2 does it canvass the possibility of a different rate for children under five, although the Government have canvassed that possibility. Nowhere does the new clause mention the differences between what people would get with 70% child care costs and with 80% child care costs: it just assumes that the figure should be 80% or 90%—figures that, on the face of it, appear to have been plucked out of the air. Nowhere does the new clause discuss the working of the hours rules, which would create great problems especially for lone parents and the parents of the youngest children who are just starting to find their way back into work. We must support them in going back into the workplace. That is the sort of discussion that we should be having, and I would hope that the Opposition would work positively with the Government to try to achieve a system that works for everyone.
These reforms are important because we need to reduce child poverty. In recent years, the figures have not been pointing in the right direction, if one includes after-housing costs. I will be challenged and told that that is the wrong figure to use and that I should use before-housing costs, but as I said in Committee people have to live somewhere. We cannot expect them to live in a garden shed or on a remote Hebridean island at very low expense where perhaps they could find shelter and the odd sheep. Indeed, the hon. Member for Stretford and Urmston (Kate Green), who is no longer in her place, nodded in Committee when I said that this was the right measure.
In 2004-05, some 3.6 million children were below the 60% median for after-housing costs and now it is 3.8 million. I regard that figure as worrying in terms of the mischief that the universal credit and new clause 2 are aimed at combating. The Government’s plans would substantially reduce child poverty. New clause 2 and the Government’s plans are presumably aimed in the same direction, but the latter would reduce child poverty by at least 50,000 in 2011-12. I see that as a positive move. I asked the Secretary of State today about the effect of universal credit on poverty and he said that 90,000 fewer people would be in poverty. That is the right direction.
The Opposition have tabled amendments 23 and 24, which propose that the prescribed maximum should be £50,000. In other words, if someone has £50,000 in the bank but their earnings are very low, they will be able to claim under universal credit. Earlier, I put an example to the hon. Member for Edinburgh East (Sheila Gilmore). If a person earns £50,000, has no savings—probably a young person—and pays tax, they will be subsidising an older person on lower earnings but with £50,000 in the bank. If we asked people in the street whether that was really justifiable, they would say no. The reason we save is to have a rainy day fund. The whole idea of such a fund is that when it rains, we should spend it—because we believe in taking responsibility for ourselves.
Today, the Leader of the Opposition gave a little speech about responsibility. He said:
“Labour—a party founded by hard working people for hard working people—was seen, however unfairly, as the party of those ripping off our society. My party must change.”
But I looked at the amendments and saw that Labour wants to give benefits to people who have £50,000 in the bank. Are we being ripped off? Is that a party that believes that hard work brings rewards and that believes in responsibility, in a messianic conversion, or is it a party that simply wants to hand out other people’s money like confetti?
I read on in the speech and I realised that the amendments had been tabled for the sake of a sound bite. The Leader of the Opposition said:
“Just take their current welfare reform bill.
It punishes people in work who save, denying them the help they currently get through tax credits.”
Well, there is saving and there is saving, and if we polled people I am sure that we would find conclusively that someone with £50,000 in the bank should not get any out-of-work benefits. They should take responsibility and seek to get back into work as quickly as possible.
Paul Uppal
As usual, my hon. Friend is making an excellent speech. Does he not highlight the fact that this is a moment for the Opposition to decide on which side of the fence they stand? They talk about reform, but it will be interesting to note how they vote today and on Wednesday.
Charlie Elphicke
I agree. In fact, let me use the words of the Leader of the Opposition, who said:
“Finally we will never encourage a sense of responsibility if society is becoming more and more unfair, and more and more divided.”
We know that Labour divided our country more between the rich and the poor when it was in office, and we know that giving people who have £50,000 in the bank out-of-work benefits would be deeply unfair to the ordinary working person in the street.
Sheila Gilmore
I apologise for missing so much of the hon. Gentleman’s speech. I am sure I would have been greatly entertained. However, I was not aware that the amendment before the House would give out-of-work benefits to people with savings. This is about people who are working and trying to get themselves back on their feet, which he said he wanted.
Charlie Elphicke
If we asked the person in the street, “Do you think that benefits, even universal credit benefits, should be paid to someone who has got £50,000 in the bank?”, they would give us a pretty robust response. I represent a constituency with a lot of deprivation. Average earnings are about £20,000 a year—£50,000 is a king’s ransom to the people whom I serve. Most people could never dream of having so much money in cash. They might have it locked up in their house, but they could never dream of having that kind of money in ready cash. It would be an astonishing position to be in. If I went down Dover high street and said, “Do you think that people should get universal credit if they have £50,000 in the bank?”, the response would be demonstrative, pretty conclusive and probably pretty rude—it would be expletive-laden.
In my constituency, when I knock on a door, like my hon. Friend the Member for Wolverhampton South West (Paul Uppal), and say, “What are your concerns?”, after expressing vehement concerns about the number of overseas visitors, 1 million of whom have taken jobs in recent years, and about the 5 million people who could work but do not, people move on and say, “And that person down the street has a plasma TV and so on, and they have not worked a day in their lives.” We have discussed this important and serious issue. We need to encourage people to take responsibility and to work, and not encourage them through amendments such as amendments 23 and 24, which would allow people to claim benefits despite having £50,000 in the bank.
This whole strand of thinking is symptomatic of a way of thinking that has caused the number of working-age people in relative poverty, after housing costs, to rise from 6.5 million in 2001-02 to 7.9 million in 2009-10. That is a staggering rise. We have to bear it in mind that in those years this country enjoyed the most massive boom, yet a whole load of our countrymen slipped further into relative poverty. It is not just a question of intergenerational poverty or of households that have not worked for ever and ever; it is a question of going into relative poverty. The message sent by amendments 23 and 24 is not one of responsibility. It is not a message that says, “Look, we are on your side. You’re hard-working. We will support you.” The message sent by the philosophy of universal credit is one of responsibility: “If you work hard, you will be better off, and you will not be subjected to the dependency culture.” That has to be one of the most important and essential messages that the Government can send, and it is why the Bill will, in my view, be the most important Bill in this Parliament.
I hope that the House will indulge me on one more amendment—amendment 33, which deals with pensions. If a man aged 66 is married to a woman aged 45, how can it be fine for that woman not to be incentivised to work? I am deeply troubled by this. I put this issue to the right hon. Member for East Ham, and the Minister asked him whether he supported the principle, and thrice the cock crowed, yet he would not deny it—or, indeed, not deny it. It was wrong to table an amendment defending that principle, and to say, when an argument was made saying, “How can it be right?”, “Ah well, isn’t it bad of the Government to sneak it into a schedule.”
The House deserves a better argument than that for why previously people were not incentivised to work, and why the Government are wrong to take action on it. The Government are right to take action, and they are right to send the message that work should always pay, and that, if someone is of working age, they really should work. We have a massive mountain to climb: there are 5 million people in this country who could work but do not, who have been encouraged to live in a dependency culture, and who would be worse off if they went into work. There is much evidence that that sucked in 1 million people from abroad and overseas to fill the 1 million or so jobs created during the recent boom, while we cast 5 million people on to the slagheap of welfare dependency.
Stephen Timms
We have had an interesting debate, and I welcome the Minister’s concession on the affirmative procedure for the initial version of some of the key regulations that will be introduced under the Bill. I would have liked him to go further, but I welcome the extent to which he has changed the Government’s position and welcome the amendments he has tabled to effect that change.
Unfortunately, the Minister gave us nothing else that I can welcome. It is an extraordinary failure on the part of Ministers that we do not yet have Government proposals on child care, free school meals or concessions on prescriptions. The Minister said that it did not matter, because there were still two and a half years to go before universal credit was introduced, but actually it is only two and a quarter years now—it was two and a half years three months ago, but they failed to come up with their policy proposals and three months have passed. It is not simply an academic issue, because even if all the policies had been clear two and a half years in advance, it would have been a stretch to get the IT in place by October 2013. As it is, the Government have not decided on those key parts of the policy, and I suggest that there is now no chance that it will be ready. However, that is a discussion for another day.
The hon. Member for Dover (Charlie Elphicke) accused the children’s charities of throwing rocks at the Government. It is out of order to make that criticism of Barnardo’s, Citizens Advice and the Children’s Society. Let me quote their letter:
“We welcome the removal of the hours rule”—
they welcome the provision that the hon. Gentleman supports—
“but the evidence shows it is not possible to do this. . . within the current budget without a significant negative impact on work incentives for those working longer hours.”
That is not throwing rocks but simply setting out obvious home truths, of which the Government need to take account.
Stephen Timms
No, I will not. Our position is that the Government need to listen to what people are saying to them and that new clause 2 provides protection. We do not want the work incentives worsened in the way in which charities point out.
It sounds as though the Government have abandoned the idea of a payslip for every universal credit instalment. I am disappointed—that was a good idea. Sadly, the Minister reaffirmed the Bill’s extraordinary penalties on saving. He gave no firm assurances on self-employment income, even though the hon. Member for Aberconwy (Guto Bebb) recognised the importance of that. The Minister appeared to acknowledge that there was a problem, which, I suppose is progress from his previous position.
The Minister gave us no assurances on adequate welfare advice. My hon. Friend the Member for Makerfield (Yvonne Fovargue) made a telling case about that. Many will be dismayed by his dismissal of the case for retaining support for disabled children. There is genuine worry about the impact of his refusal to ensure that benefit for children is paid to their main carer.
I wish to divide the House on new clause 2 on child care, on amendment 23 on the saving cap and amendment 27 on support for self-employed people in universal credit.
Question put, That the clause be read a Second time.