Work and Pensions (CSR)

Chris Leslie Excerpts

Thursday 4th November 2010 Westminster Hall

[Kate Green]

No, I will not. I also want to highlight the fact that when we look at which households will particularly feel the brunt of those changes, we see that women will bear much of the pain. Women are hit twice as hard as men as a result of the reduction in income that will result from those changes.

Women receive 70% of tax credits, 60% of housing benefit and 94% of child benefit—perhaps unsurprisingly, because that payment is particularly well targeted at mothers—and 65% will be affected by the changes in the rules for savings credit as part of pension credit.

The disabled are suffering several reductions to their benefits: the removal of higher rate disability living allowance for those in residential care; the changes to eligibility for employment and support allowance, which my hon. Friend the Member for Aberdeen South (Miss Begg) highlighted earlier; the impact of the work capability assessment, which seems to be proving harsher than was acknowledged earlier and harsher than the previous or present Governments might have expected; and the loss of contributory ESA after a year.

Families with children in every income decile are being hit hard by the changes—harder than households without kids. I am concerned about the differential impact of the changes on different kinds of household structures, and I would be interested to hear the Minister’s comments on that.

Another area that I would like to open up for debate and would be interested to hear the Minister’s comments on is how the measures will work against the Government’s absolutely correct wish to incentivise people to move into increased hours of paid work. The first prerequisite of being able to look for work is a stable income. It is hard for people to motivate themselves to go out and look for a job if they are struggling to hold things together day to day, and worrying about creditors banging on the door, or whether they can afford to pay the bills, keep healthy food in the fridge, keep the house in a decent state of repair and keep their clothes clean and laundered. With all those basic needs proving a barrier, it is difficult to think about going out to look for work.

The second thing that is crucial for people looking for paid employment—we hear this again and again from homeless charities—is a stable address. Many of us are concerned that the impact of the housing benefit changes will be to force people to move, perhaps more than once or twice, as the changes are introduced in waves. In some cases, lack of a stable address is likely to prove a barrier to moving into paid work. Clearly, a third important prerequisite for parents being able to move into paid work is having child care in place.

Changes to housing benefit will not only disrupt the stability of a family’s accommodation but may move them further from areas where jobs can actually be found, and from the support networks on which they rely. I am concerned that reducing the element of working tax credit support that is available to help meet child care costs will make it more difficult for parents to afford those costs.

A number of the measures that the Government have already announced will actually worsen marginal deduction rates. The cuts to working tax credit will worsen the return that people get from paid employment, and the loss of free school meals for some families who were expecting to receive them from this September, and the increases in VAT and travel costs, will make the decision to return to work much more economically unattractive than the Government might wish. I would be interested to hear the Minister’s comments on that.

Another thing I would like to consider is the support the Government will put in place to enable people to move into paid work. We look forward to receiving details about the single Work programme, which I believe Members across the House are keen to welcome. Labour Members in particular see many elements of the single Work programme, in so far as we know about it, drawing on the new deal and the recent flexible new deal. In fact, I have been struggling to identify the philosophical differences between the single Work programme and the flexible new deal. I would be interested to hear the Minister’s comments on that.

There is potential for more risk being put on providers, who will be required to perform over the longer term. That may make it more difficult for some smaller providers and, in particular, voluntary sector providers to join in with provision of the single Work programme. I know that Ministers are concerned about that, and I look forward to hearing the Minister’s comments on it.

There is perhaps even more alliance than we saw with the flexible new deal on the so-called black box approach. My worry about such an approach is whether the most vulnerable will transparently receive appropriate support and be properly advocated for in a system where there are conditions, requirements and obligations on them. Who will negotiate for them if the requirements that are imposed are unreasonably onerous? The black box approach has some merits, obviously, in that it offers flexibility to good providers, but how we will ensure that the actions of providers who may put inappropriate pressure on clients to take up unsuitable employment, or to take up unsuitable programmes to prepare them for employment, will be transparent and exposed in the single Work programme that Ministers intend to introduce?

My final point is about the universal credit, which I think many Members on the Government Benches have suggested will provide a solution to concerns about the measures that are being introduced more immediately. First, even if the universal credit proves to be the panacea that we are assured it will be, I am concerned about the hardship that will be experienced by households now, before it is actually in place. I am not setting out today to oppose the universal credit by any means, but it might be helpful, as we are clearly at an early stage in the Government’s thinking on what it might look like, if I highlight some concerns about where care will need to be taken in its design.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

I apologise for being here for only part of the debate. On the universal credit, does my hon. Friend have any insight into the logic of how the Government’s announcement on, for example, the localisation of council tax benefit—and, by the way, the 10% cut—fits with the DWP’s approach of trying to design a universal credit, but apparently without that element in it?

[Kate Green]

I absolutely agree with my hon. Friend. Points raised in favour of the universal credit were that it would remove administrative complexity and clarify people’s entitlements in and out of work. Clearly, where there is variance across the country in terms of entitlement to help with council tax, we have lost all the advantage of administrative simplicity, and transparency and clarity. That is one of the anomalies that I would be interested in hearing the Minister address.

I would be interested to hear the Minister’s comments on some of the risks of putting all our eggs in one basket. That may have the virtue of simplicity, but as we know, administrative systems and Government are not famous for smooth running in favour of low-income claimants. If the universal credit should happen to fall over, perhaps because of IT difficulty or for other reasons, there will be absolutely nothing else coming into households to carry them through. I very much hope that the IT will perform smoothly and that there will be no such administrative difficulties, but there are risks. It is important that we hear from Ministers what the contingency plan is, because both DWP and Her Majesty’s Revenue and Customs have been quite slow to compensate for difficulties in getting payments through quickly; for example, emergency payments and social fund payments have not been particularly easy to access when things have gone wrong.

From the point of view of low-income households, there is some merit in having payments coming in at different times through the month. It assists household budgeting if people know that another chunk of money will be arriving in the next few days.

I hope that the design of the universal credit will recognise that there is an issue not just of distribution of income to poorer households but of its distribution within those households. I want to be sure that we design a credit that does not disadvantage women in the household in particular by assessing and paying a credit at household level that in practice may not reach her and, therefore, may not be particularly effective in reaching her children.

The intention to introduce real-time calculation of entitlement to the universal credit will also mean real-time clawing back of benefit overpayments. It would be exceptionally difficult for low-income families to plan for that, and I would welcome the Minister’s comments.

In conclusion, the Secretary of State and the Department have an ambitious vision, and an extensive range of changes will be introduced in the near term in somewhat indecent haste, without the implications being clearly thought through. I am grateful that we have had an opportunity to raise some of our concerns. As my hon. Friend the Member for Aberdeen South said earlier, there are real concerns about the devastating impact that the loss of even a few pounds can have on low-income households, and I look forward to the Minister’s response.