Welfare Reform and Work Bill (Third sitting)

Corri Wilson Excerpts

Tuesday 15th September 2015 Public Bill Committees

[The Chair]

Thank you. We are moving on.

[Corri Wilson (Ayr, Carrick and Cumnock) (SNP)]

Q 183 Much of the proposed legislation is born out of the assumption that those on benefits face the same choices as those in work. Does the panel agree?

Matt Padley: No. There is lots of evidence to suggest that people living on benefits, or with very low incomes, have very restricted choices across the board. Some of the language in the Bill does nothing to encourage integration across society; a lot of it is divisive.

Alison Garnham: I did not quite understand the question. What is the thing you think will be affected?

[Corri Wilson]

Q 184 Much of the proposed legislation is based on an assumption that people in work and people out of work are able to make the same choices.

Alison Garnham: Right. So you are thinking in terms of cutting different benefits? Is that what you are thinking?

[Corri Wilson]

Q 185 Is somebody who is out of work and relying on benefits able to make the same choices as someone who is in work and who has all the trimmings of being in work?

Alison Garnham: There are big differences between people in work and people out of work in terms of the choices they can make; that is absolutely evident. We know that children living in poverty, including those in working families—part of the problem we are talking about today is that two thirds of poor children live in working families—face constraints on what their families are able to afford. Children are not able to take gifts to birthday parties, they do not have adequate clothing and so on. That affects all low-income families.

Dr Callan: My understanding is that what the Bill is trying to achieve is to equivalise the choices—not to say, “You already have them,” but to say, “We need to make the benefit system work in such a way that you have the same choices around things like the numbers of children you have and being able to afford the number of children you have.” So I read it in a slightly different way.

In terms of us leading the world, our UNICEF reports on child wellbeing, very sadly, do not tell a good story about how well Britain has been doing, despite having leading child poverty indicators. I think we need to be very realistic about how our children are faring.

Professor Gordon: People do not choose to go on to benefits. The DWP’s own research shows that. They go on to benefits because they have little or no choice. Most people—the overwhelming majority—would choose not to be on benefits if they were able to get off them. So the idea that people on benefits have the same choices as people in work is just not supported by any evidence.

[Corri Wilson]

Q 186 Following on from that, Dr Callan, you talked about helping and supporting people to get off benefits. Surely that works only when there are decent work opportunities out there, and not things like zero-hours contracts. Does the cap on child tax credit not cause a bigger disconnect, making it even harder to get off benefits?

Dr Callan: There are more jobs out there than people realise, often not at the skill level they currently have. We have a massive skill shortage in this country. You are absolutely right: people have been stuck in very poor jobs, very poor working conditions. If the Government is doing what it said it would, and helping people at every stage to go through the income levels and to up their skills, and there is a culture that says, “That’s what’s expected,” that is where we will begin to see similar choices. A lot of people in work—certain professional people—think, “I want to improve myself.” Well, everybody in this country wants to improve themselves, and that is why we need to create a benefits culture to encourage, rather than dampen, people’s feeling that they can change their life circumstances.

[The Chair]

We have 12 minutes left for this session, colleagues. Three colleagues wish to ask questions, so can I ask, please, for brief questions and brief answers? I will call Peter Heaton-Jones, followed by Neil Coyle, followed by Emily Thornberry, who will ask the final questions.

--- Later in debate ---

[Corri Wilson]

Q 200 Julia, your recent report suggested that the Bill will have a major impact on lone parents. What protections should be included in the Bill to ensure that children of lone-parent families are not unfairly impacted?

Julia Unwin: All the evidence we have gathered over many decades makes it very clear that lone parents suffer a huge penalty for being widowed, divorced or single in the first place. That creates a very high incidence of women in poverty and therefore their children being raised in poverty.

Legislation argues or recommends that all parents—lone parents or two parents—go to work when their child is three. That takes you directly to the quality and quantum of childcare available. While the childcare allowance is hugely welcome, if it is also captured in the freeze, childcare in London will remain unaffordable. Investment in childcare—both the provision and purchase of it—matters enormously, but I believe there will always be a need for tax credits for people at the bottom end of the income distribution while they are raising their children, because raising children is such an important aspect of the next generation’s wellbeing.

[Corri Wilson]

Q 201 I would like to ask you the same question that I asked the last panel. Much of the proposed legislation is borne out of an assumption that those on benefits face the same choices as those in work. Do you agree with that?

Julia Unwin: I do not agree that there is a huge distinction between those on benefits and those in work, because we know that a significant proportion of people in work are on benefits and tax credits—there was an earlier discussion about housing benefits, for example. People are moving around the labour market in a very dynamic and frequently very damaging way, but once you are on benefits and out of work, it is very hard to make the sorts of choice that better-off people are able to make. We ask people on benefits to take enormous personal risks, and I think that point is very well made.

Dr Niemietz: Ideally, they should be in a situation where they broadly make the same choices and the same trade-off. That is not the way the benefits system is currently structured, because you have ring-fenced elements for particular expenses—you get an amount for childcare, an amount for housing and an amount for something else. If that were somehow wrapped up in a single payment and it was then left to people to make their choices, their everyday lives and the trade-offs they make would become more similar to those of working people.

[Anna Turley]

Q 202 What are your views on—this is one of the most controversial aspects of the Bill—limiting tax credits to two children? What do you think the impact of that will be, particularly for the most disadvantaged and larger families?

Julia Unwin: One thing we know is that tax credits do not influence behaviour in the linear way that many people expect. Given my description of people coming in and out of dependency on benefits and tax credits, there is no way of knowing at what stage in someone’s life they will require those tax credits. I simply do not believe that people choose to have more children in the sure and certain knowledge that tax credits will bail them out. That is not how decision making works in most households that I have come across.

I think the impact could be very damaging for larger households. I would go back to the even more substantive issue, which is the concern about where families on benefits with more than three children will live and how they will afford to live. That strikes me as deeply problematic for families who have been on benefits for some time, and particularly those who find themselves on benefits.

Dr Niemietz: This links back to the earlier question about whether people on benefits make the same choices in the same way as people who are not on benefits. If you do not qualify for child tax credits, your income does not automatically go up because you have a third child. I do not see anything wrong with replicating that situation for people whose income mostly consists of state transfers.