Welfare Reform and Work Bill (Seventh sitting)
Debate between Damian Hinds and Emily Thornberry(9 years, 1 month ago)
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Damian Hinds (East Hampshire) (Con)
The amendment seeks to delay the Government’s proposed changes to the family element of child tax credit until April 2022. The Government were elected on a mandate to reduce the deficit and restore order to our public finances. As part of the plan to get us into surplus and to continue the progress made in the previous Parliament, the Government have committed to making a further £12 billion of welfare savings.
To set the scene, the most recent statistics show that, in 2011, the level of UK expenditure on family benefits was the second highest out of the 34 countries in the OECD and almost double the average. Child tax credits are there, of course, to provide support to low-income families to help them with the costs of raising children.
Damian Hinds
The OECD has done a survey based on percentage of spend to GDP. The hon. Lady has not asked this question but let me clarify further: it takes together family benefits, cash benefits, tax breaks and childcare. Of course, the mix is different in different countries. Nordic countries tend to spend more on direct childcare and Anglophone countries tend to spend less on that but put more into tax breaks. Our country has tended to spend a little bit more on cash benefits and on childcare.
As I said, child tax credits are there to provide support to low-income families to help them with the cost of raising children, but the system has grown unsustainably—a family with three children that earns up to almost £40,000 could still be eligible for some support. The previous Labour Government let public spending on tax credits rocket out of control so that, in 2010, nine out of 10 families with children were eligible for tax credits. That was not targeted support for low-income families.
Emily Thornberry
Does the Minister agree that we have in this country a unique system that in fact helped us to weather the international storm caused, not by Gordon Brown being at Lehman Brothers throwing dollar bills out the back window, but by an international financial crisis, and that we did not have higher levels of unemployment because measures such as in-work benefits meant that people could continue to work and employers did not feel the need to continue put up wages because they felt that it was easier to continue to employ people? Does he agree that in-work benefits have resulted in people remaining in work?
Damian Hinds
The hon. Lady tempts me into a wider debate about the deficit, which would be interesting to get into, particularly with some of the news this morning about her own party’s interesting deliberations on how the deficit should be dealt with. I do not think that anybody denies that there was an international financial crisis in 2007-08, but it is also true—I doubt that many people will deny it, though she may be one who does—that it came on top of a structural budget deficit that was out of control because we had spent too much and borrowed too much, even in the good years.
Damian Hinds
I say that these are major structural changes. I think you would admonish me, Mr Streeter, if I went too far down this road, because we had this debate on the Floor of the House and there will be other opportunities to discuss the matter.
We are talking about helping people through the national living wage and increases in the income tax personal allowance, but also through measures such as childcare support and, most important of all, the general strength of the economy. We see real wages rising very strongly at the moment, and we have very low inflation and very strong economic growth. Those are the things that most help families with their budgets and living standards.
In the summer Budget, the Government took steps to put tax credit spending on a more sustainable path, including by limiting the individual element of child tax credit to two children and by removing the family element of child tax credit for those who are not responsible for a child or qualifying young person before 6 April 2017. The average family size in this country has decreased over recent decades. The average number of dependent children in families in the UK in 2012 was 1.7.
Damian Hinds
I will not, if the hon. Lady will forgive me.
The Government believe that it is fair and proportionate to limit support through tax credits and universal credit to two children per family. The measures in clause 11 will ensure that there is greater fairness between those receiving benefits and those paying for them, and will ensure that, in the future, families in receipt of benefits face the same sorts of financial decisions when they consider having children as those supporting themselves solely through work. The Government decided to implement the measures from April 2017 to give families time to make decisions about having more children. That provides sufficient time for those considering whether to have more children to make plans, while at the same time putting tax credits on a more sustainable footing.
The hon. Member for Livingston quite rightly raised some of the difficult issues. We have already been clear about multiple births, and there will be more detail forthcoming on that. We will also have a chance discuss that in debates on further amendments. The Government have been absolutely clear that if parents have twins or triplets and previously there were fewer than two children in the household, that will be treated as a single birth. In the most difficult circumstance—a child conceived as a result of rape—it is right that the Government take a careful and sensitive approach to working out how best to deal with those circumstances and support women through that situation in relation to the tax credit system. There will be more detail in due course.
Emily Thornberry
I should like to speak to new clauses 5 and 6 in particular, which are grouped with the amendments. New clause 5 would prevent the Secretary of State from limiting entitlement to housing benefit based on family size, and new clause 6 would do a similar job with universal credit. There is no mention in the Bill of limiting housing benefit on the basis of family size. That is odd. It is a radical proposal, it is pernicious, it needs scrutinising and it is not there, but we are told that it is coming. The Red Book mentions that there will be a limit on tax credits to a maximum of two children and then states, on page 38:
“An equivalent change will be made in Housing Benefit to ensure consistency between both benefits.”
It is coming—it is linked with the limits on tax credits—but the Government have not yet told us about it. We therefore want to pre-empt that and have a discussion now, putting in our new clauses.
Another removal of money from poor families is the getting rid of what is called the family premium. The premium is an acceptance that families are expensive and that a working family ought to have more of its income disregarded when assessing entitlement to housing benefit. On getting rid of the family premium, Shelter has said:
“Exploiting the complexity of housing benefit and tinkering with means tests and tapers is a clever ruse to extract savings from housing benefit in a technical way that doesn’t attract attention in the way that big, visible cuts like the bedroom tax did.”
Well, we have noticed.
If the Government get their way, they will be abolishing the family premium for housing benefit. That means that families—working families—will have £17.45 a week in earnings held against them when a decision is being made on whether they can get help with their housing costs. I do not know what the Government intend. Do they think that families are not expensive these days? Do they believe that the contribution of working families to the Osborne economic miracle by way of the cuts to tax credits is not enough, so the family premium ought to be cut as well? I would be grateful if the Minister enlightened us.
May I go back to limiting housing benefit to two children and how that will work? As I have said, the Government have stated their intention. I have a few questions because I do not understand it. Perhaps no such provision is included in the Bill because the policy has not been thought through yet. We might be being helpful to the Government if we raise some of the likely problems if they place a two-child limit on housing benefit. For example, will local authorities presented with a homeless family with four children be obliged to house them in housing that means that they are not statutorily overcrowded? If so, and the family is not working and the property is a local authority one, will anyone pay the rent? Will the Government pay rent only for two bedrooms and the other two bedrooms will not be paid? Or will the family be expected to pay the rent out of the child benefit?
The Minister repeated today that child benefit is not affected by the reforms, because the Government want to ensure a fair start in life for children in all families. That is certainly part of the Tory script at the moment, but it is not true—we have a script alert here for my hon. Friends. The irony is that there is an enormous difference between the level of support provided through child benefit, which is subject to a four-year freeze, and that provided by tax credits. For a third child, a family can claim £712.40 a year, compared with £2,780 in tax credits.
The Government say of such families, “Don’t worry, they are still getting child benefit. They’ll be fine.” They will not be fine. In particular, families will not be fine if there are no tax credits for the third child and housing benefit is being taken away. The Government are therefore presumably expecting parents to pay for their rent out of—I do not know—jobseeker’s allowance, child benefit or something. How will that work? Will people simply have to end up living in cars, because that must be what the Government’s policy is about?
How will the Government assess whether they are giving housing benefit to a family with only two children, as opposed to three? Would they expect families possibly to split up, so that two children live with a parent at one address and two with another parent at another address? Housing benefit for four children could be paid in that way. Or would that be wrong? Given that there is a housing crisis in London, I cannot see how that would work because there is not enough accommodation for all the families as it is. In my constituency, I have 19,000 families waiting for accommodation. If the Government are to restrict housing benefit for larger families, where will they go? I would be interested to hear from the Minister as to what might happen.
The Government have not put that measure in the Bill, which may be because they have not really worked out what they mean, how it will work and what the impact will be on homelessness and the number of people living in cars. If they have not worked that out, perhaps that is a good reason for them not putting it in the Bill yet. I applaud them for that. Of course, there is another possibility: they want to slip the provision into a statutory instrument. If they put it into a statutory instrument, they do not need to have any impact assessment—heaven forbid they have an equality impact assessment! We know they will not have an assessment, so we will not know how much money, if any, will be saved, who will be affected, how much more homelessness or how much more child poverty it will cause. That is why we want to have a debate now, so that the Government are given the opportunity to tell us their thoughts and enlighten us, and so that we can explain to them why that is one of the more horrible aspects of their so-called welfare reform and something that will have a devastating effect.
I should bring up another point—I forgot to raise it earlier and I apologise for the illogical order, but it is important. The Government have said that they will abolish the family premium a full year before the introduction of restrictions to child tax credit. I wonder why. Will the Minister say why they are doing that? They will restrict child tax credit but will take away the family premium a year early. The Government say that the measure will apply to new claims but have not made clear what it will mean in practice. For example, would a family moving into a new area, perhaps as a result of the Government’s welfare reforms, be treated as making a new claim if an existing housing benefit was simply transferred from one local authority to another? Will the Minister help us with that? The proposals to restrict entitlement to housing benefit are not included in the Bill and, as I have said, we have not had any details on how the restriction will work in practice. The Minister has quite a lot of explaining to do.
Entitlement to housing benefit is currently calculated on the basis of the number of rooms a family needs, as we know. Children under 10 are expected to share a room, for example, with a single mother. A single mother with four young children would be entitled to claim housing benefit for a three-bedroom property. Are the Government proposing that she should be entitled only to a two-bedroom property? Indeed, are the Government expecting to change the law on overcrowding in order to accommodate those larger families who do not have the money to pay rent on a decent-sized property? It would be very helpful to hear from the Government on those points.
Damian Hinds
The amendments serve a similar purpose: to increase, or indeed remove, the limit on the number of children or qualifying young people in respect of which a person is entitled to the individual element of child tax credit or the child element of universal credit, and to prevent limits being placed on the number of children for the purposes of calculating housing benefit or the housing costs element of universal credit.
I thank hon. Members for tabling the amendments. Despite the progress we have made towards reducing the deficit since 2010, we still ran a budget deficit of 4.9% last year and are expected to have the second highest deficit in the G7 in 2015. That is why it is important, indeed imperative, to get welfare spending under control, to help us get into surplus so that we can continue to increase our investment in our NHS, schools and pensions. As I have already mentioned, tax credit expenditure more than trebled in real terms between 1999 and 2010 and cost the taxpayer just under £30 billion last year.
Emily Thornberry
I wondered how much money the Government might save if they did not introduce their changes to inheritance tax?
Damian Hinds
Today’s debate is not about inheritance tax. If the hon. Lady is making a point about fairness in the tax system, that would be a fair question to ask. In fact, if we look at the overall package of what the Government have done in tax and spending since 2010, we see that the distribution of spending between different income groups and society has stayed pretty much the same.
Damian Hinds
The fault was all mine, Mr Streeter. I do not blame the hon. Lady and I apologise for my part in it. The last thing I was going to say was 27.5%.
The level of spending we have reached on tax credits—£30 billion—is unsustainable and carries a risk to our public services. That is why the Government have taken steps to ensure that the system is fair to those who pay for it as well as those who benefit from it. That is why the Government are limiting support to two children in child tax credit and universal credit from April 2017.
Amendments 45 to 48 and 50 to 54 would increase or remove the limit on the number of children or qualifying young people in respect of whom a person is entitled to the individual element of child tax credit or the child element of universal credit. If that policy were to protect six children in each household in terms of the payments or remove the limit completely, as suggested by SNP Members, there would be negligible savings from the measure and it would undermine our commitment to deficit reduction. It would also continue the unfairness that an out of work family with six children could receive over £17,000 per year in child tax credit in addition to other benefits if they are not subject to the benefit cap, while many working families would not see their budgets rise by anything like that when they have more children.
Damian Hinds
I am going to press on for the moment. The average number of children in families in the UK in 2012 was 1.7. The Government therefore think it is fair and proportionate to limit support through tax credits and universal credit to the payments for two children. To give families time to prepare, the change will not come into effect until April 2017. In child tax credit, the change will affect families who have a third or subsequent child born on or after 6 April 2017 only. In universal credit, the change applies to any third or subsequent children born, or joining the household, on or after 6 April 2017 and to families making a completely new claim to universal credit after that date.
Damian Hinds
I fear that that is another invitation to err from the path of the rightful debate.
On new clause 5, the intention seems to be to amend section 130A of the Social Security Contributions and Benefits Act 1992 to prevent the Secretary of State from making changes to housing benefit that would restrict the number of children who can be included in the housing benefit assessment. Housing benefit and the housing element in universal credit take into account the number of children for whom the claimant is responsible. There is no maximum number attached to that, and the Bill does not introduce one.
The only related changes to housing benefit, which will follow in regulations, are to ensure that a claimant’s housing benefit award is no higher than it would have been if the tax credit changes were not introduced. Obviously, without those changes, the tax credit change would have the unintended effect of awarding claimants with more than two children a higher amount of housing benefit, which would reduce the savings from the tax credit change.
Let me be absolutely clear, because the hon. Member for Islington South and Finsbury raised some very reasonable questions, which we need to address directly. As she knows, housing benefit is made up of a number of elements. That includes taking into account the number of children in calculating the family’s income. The family premium she mentioned is part of that calculation. The changes will affect the calculation of family income, but not the number of rooms allocated, which is a separate issue.
Emily Thornberry
I do not think that I have quite understood—it is my being slow, and I know he is trying to be helpful. The number of rooms allocated will be down to whether the local authority has accommodation available or access to private sector accommodation. It will also be a matter of need. However, the local authority will not be able to rent a larger property to a larger family if there is not enough housing benefit to cover that. What I really did not understand—I am so sorry, and I may understand it when it read it—is whether the Government will restrict housing benefit to larger families and say, “You may be a six-person family, but we are not going to give you enough money to rent a four-bedroom property”?
Damian Hinds
The change in the regulations will ensure that, for families with more than two children, housing benefit does not rise to offset the notional loss in tax credit or universal credit, because the amount saved in tax credit would then reappear in housing benefit.
Let me move on to new clause 6, which is related. The housing cost element in universal credit is an additional amount paid to a claimant to cover the costs of the accommodation they occupy as their home. The new clause seeks to amend section 11 of the Welfare Reform Act 2012 by making it clear that the Secretary of State will have no power to make regulations limiting the amount of the housing costs element based on the number of children living in the home.
In calculating the amount of a renter’s housing element under the universal credit regulations, a determination is, as the hon. Member for Islington South and Finsbury said, made as to the category of accommodation it is reasonable for the renter to occupy, having regard to the number of people in the household. Claimants in rented accommodation are currently entitled to one bedroom for each qualifying young person for whom they are responsible; one bedroom for two children who are under 10 years old; one bedroom for two children of the same sex; and one bedroom for any other child. Additional rooms are available in certain other circumstances. The Bill does not make changes to matters such as the number of rooms the claimant’s family is allowed as part of the local housing allowance or removal of the spare room subsidy.
It is right that families on benefits should in future face the same financial considerations when deciding whether to have more children as families who support themselves solely through work. I therefore urge hon. Members not to press the provisions.
Emily Thornberry
The Minister says from a sedentary position that, in the 21st century, we should not pay attention to the Catholic view of contraception and decisions made within Catholic families. I am surprised. I say no more.
As I was saying, the Government have not provided details about what might be considered exceptional circumstances, so new clause 16 has suggested a few examples, such as multiple births, adoptions or kinship care arrangements. I recommend to the Minister an article in The Guardian today, written by Patrick Butler, about kinship adoption and related difficulties. One difficulty, among the many difficulties that people who put themselves forward to adopt children face, will be a potential cut in tax credits. If someone adopts a child who has a little brother, and the little brother then needs to go up for adoption, will that person say, “No, I can’t do it, because I can’t get the tax credits”? Are they really going to say that? Is that right? No, it is not, so will the Minister please do something about that, and will Government Members pay attention to our arguments and vote with us on new clause 16? It is entirely sensible and fleshes out the exceptional circumstances, which we think are glaring.
Those exceptional circumstances are: multiple births, adoptions, kinship care arrangements, relationship breakdowns, including, but not limited to, cases of domestic violence, and the death of a partner. The Minister says, “We are doing this in order to make sure that people make the correct choices.” I have spoken from my own personal circumstances. Frankly, my example is out of date, but unfortunately, in the last 40 or 50 years, these things have continued. People die unexpectedly and people leave unexpectedly. It is not as though someone can make a “bad choice”—in the Minister’s words—to have a third child and then take it back because their partner has died. That seems exceptionally harsh to us.
The new clause also proposes an exemption for those who become unemployed. The point here is to emphasise that, even if we accept the Government’s suggestion that families should make their family planning decisions based on the Government’s welfare reform legislation—that is a tall order in itself, although I suppose having to sit up and read the Government’s legislation on welfare reform might be some form of contraception—and even if the Government are right that people will realise welfare reform means it will be a bad idea for them to have a third child, people in work will not see that as relevant. They will make decisions because they can afford to have their children, but something may then happen, such as their becoming unemployed, and they will be hit that much harder. Therefore, even if the Government are right, which they are not, that people will make decisions on how big their family should be based on welfare reform, those people who are in work at the moment, making decisions frivolously to have four children, will find themselves in great difficulties if they suddenly become unemployed. That is unfair, as I am sure the Minister will recognise. We need to acknowledge the realities of life, particularly in the 21st century job market. People work in an insecure market. People can lose their jobs. Hopefully, they will get back into work, but it is unrealistic to expect parents to make decisions about their jobs and income with 100% certainty over an 18-year period. It is just not right. There are also abusive relationships. Women should not be expected to make decisions based on the possibility that they might become victims of domestic violence.
The new clause raises the serious issue of a couple’s penalty. Couples with more than two children will be given an incentive to separate just to continue receiving the support that they need to feed their children. That will happen. It is especially ironic that measures of child poverty are being replaced by measures of family breakdown, among other things. The Government are to measure child poverty on the basis of family breakdown, yet their social policy seems to pressure families into a form of breakdown so that they can continue to receive the benefits and tax credits that they need. The Tory party used to be the party of family and marriage. Why is its social policy dividing people? The irony is especially acute given the Secretary of State’s claim at the Conservative party conference that this Government’s reforms are
“all about making families stronger”.
Clearly, they are not.
Damian Hinds
I welcome the hon. Member for Oldham East and Saddleworth to her place in the Committee and, more broadly, to the Opposition Front Bench. She has a hard act to follow in the shape of the hon. Member for Stretford and Urmston, but I know that she will execute her work absolutely admirably in this Committee and beyond. She and the hon. Member for Islington South and Finsbury have spoken powerfully about the challenges faced by the parents of disabled children. I echo them in acknowledging the invaluable work that such parents and families do in difficult circumstances.
The Government are protecting benefits related to the additional costs of disability and care by exempting them from the freeze and from the cap that we discussed on another day. Those benefits include personal independence payments, disability living allowance and the support group component of employment and support allowance. Additionally, we will continue to increase those benefits by inflation. The Government are committed to supporting disabled children. We have reformed the special needs system to support children continuously from birth to the age of 25 and increased our spend on the main disability benefits by more than £2 billion over the course of the last Parliament. Overall, of course, we continue to spend about £50 billion on disability benefits and services each year.
My understanding is that amendments 83 and 84 would have the effect of removing households with one or more children with a disability from the two-child support limit policy in child tax credit and universal credit respectively. Thus, a family with five children, one of whom is disabled, would continue to receive child tax credit or universal credit in respect of all five children, as well as the appropriate disabled child element in child tax credit and the additional amount in universal credit. The Government think it right that, just as families who support themselves solely through work must weigh up financial considerations when deciding to have more children, families in receipt of benefits should face the same sorts of financial consideration. That should apply to all families.
In recognition of the costs of supporting disabled children, we will create a separate disability element of child tax credit that will be payable for all disabled children, regardless of whether they are the third or subsequent children or otherwise. We will continue to pay the relevant additional amount for disabled children in universal credit, regardless of whether those children are the third or subsequent children or otherwise.
The hon. Member for Bermondsey and Old Southwark rightly raised the subject of childcare. He will know that, in the tax-free childcare system that we are introducing, there is, quite rightly, a special addition to recognise the additional costs of childcare that pertain for children with a disability. In the overall offer of 15 hours and 30 hours of childcare there is, as he will know, rightly a statutory duty on local authorities to ensure proper provision for children with disabilities in the nurseries that their families trust.
Damian Hinds
I do not dispute for a moment what the hon. Gentleman says. I agree with him entirely that we—the Government and Members of Parliament—must be vigilant in ensuring that families, including those with disabled children, have access to good childcare. It is a duty on local authorities but vigilance is always required to ensure that such measures are delivered. The hon. Gentleman asked about the roll-out of universal credit. I am not quite sure of the specific context in relation to the measures—I will just say that it is on track. It will be in every jobcentre by April 2016, with the bulk of migration complete by 2019.
New clause 16 seeks to specify exemptions to our proposals, including a new role for the Social Security Advisory Committee, and to establish an appeals process. The Government have already given a clear commitment that multiple births, for example twins or triplets, will be treated as a single birth with a child element for each sibling where there were previously fewer than two children in the household. We have also set out that there will be protections—we discussed this earlier—for women who have a third child as the result of rape. We will set out exemptions in regulations after discussions with stakeholders and careful consideration. Using regulations to set out exemptions provides the Government with greater flexibility to adjust exemptions in the future without needing to secure primary legislation. That is more appropriate because we may wish to act relatively quickly in the light of operational experience.
The Social Security Advisory Committee, as its name suggests, is a valuable body for advising the Government on our secondary legislation. It does not, however, have the remit to design legislation. That is the proper job of the Government and we consult with the committee as appropriate. Amendments 83 and 84 relate to the proposed exemption of households where any child or qualifying young person is disabled. I have responded on that issue.
Finally, the new clause requires the Secretary of State to set up an appeals structure. Social security and tax credits already have comprehensive appeals arrangements that will apply to any decisions made under the provisions in the Bill or exceptions set out in regulations. The provision is therefore not required. For the reasons I have set out, the new clause is not appropriate for inclusion in the Bill. We have recognised that there will be a need for some exemptions, for example in relation to multiple births, but those are much better dealt with in a considered way in collaboration with stakeholders through secondary legislation. I urge the hon. Member for Islington South and Finsbury to withdraw the amendment.
Emily Thornberry
I am very grateful to the Minister for the answers he has given but the reason for our view that the Social Security Advisory Committee should define the exceptional circumstances is that that decision should not be made by politicians. The Social Security Advisory Committee, which is an expert body on the matter, can look at exceptional circumstances. The Government may have come round to the idea of an exemption for multiple births—we are glad to hear that—but they will not necessarily have thought of all the exceptional circumstances, so an expert body, such as the Social Security Advisory Committee, is important.
We are always concerned about dealing with such matters in secondary legislation because the level of democratic accountability in secondary legislation is not the same as that in primary legislation. If the Bill had been thought through properly, it would not be for the Opposition to table such amendments—the Government would have thought through the most difficult effects of their policy and would have done all they could to counter them. It is our duty in Committee to point out such things. I hope the Government come back with amendments to the primary legislation so that it can be scrutinised properly rather than knocked off into the long grass. It is an important aspect. In such circumstances, we will press the amendment to a vote.
Emily Thornberry
I beg to move amendment 18, in clause 12, page 13, line 23, at end insert—
“unless this would result in an amount no longer being paid in respect of a child or young person who was born before 6 April 2017, in which case a payment shall still be made in respect of this child or young person.”
To ensure that the reduction of the child element of Universal Credit to two children only affect children born after 6 April 2017.
The point of the amendment, which largely echoes points made earlier, is that it is unrealistic and unfair to expect families to make long-term decisions based on the proposals in the Bill. Even if it were not, it would still be unfair to include families with children born before the policy was even announced, which is what the clause does. As far as I understand the clause—I would love to stand corrected if I have misinterpreted it—proposed new subsection (1A) in clause 12(2) makes it clear that, regardless of when a child was born, when universal credit is brought in people will be penalised. It is as if the policy is being sold as, “Let’s get people to make responsible decisions” and “This policy will make all the difference in terms of the decisions that people make”, but when universal credit finally comes over the sunlit mountains and changes our world it will not matter at what stage people have decided to have their children—“We will penalise you anyway.”
I do not want to reiterate the points that have already been made about the assumption that people will make decisions about their next 18 years based on Tory party policy, or how likely they are to know whether their partner is going to die or be abusive towards them in later years, but a particularly troublesome area of the Bill is that it would force women to stay with abusive partners. On the other hand, there is an equally perverse couples penalty that will provide a strong financial incentive for couples with more than two children to separate. The clause is particularly vicious in that it goes in the opposite direction from the Conservative party rhetoric that is used to justify this unfair piece of legislation, so that is why we tabled the amendment.
Damian Hinds
The amendment would see the policy that limits support to two children applied only to children born after April 2017, rather than also applying to entirely new claims for universal credit. The part of clause 12 that the amendment would change is primarily about fairness to the taxpayer and ensuring that where people can provide for themselves, they do so. We estimate that the amendment would increase universal credit expenditure by £245 million in 2019-20. We have committed to protecting universal credit claimants at the point of change and new claimants who have been in receipt of universal credit or tax credits in the previous six months. The policy will therefore apply only to claimants who have been supporting themselves entirely outside the benefits and tax credits system for more than six months and who will therefore not see a cash loss.
We also need to remember that child benefit will remain in payment for all eligible children, continuing to provide support beyond the child element of universal credit.
Emily Thornberry
Can I just rewind a little? New claims for universal credit will be affected by the two-child policy. When universal credit comes in, people will need to make a claim for it. If someone is on benefits or tax credits when universal credit is brought in, will there be a seamless transition whereby they will not be seen as a new claimant and not be adversely affected?
Damian Hinds
It is an untold pleasure to put the hon. Lady’s mind at rest. We are referring to entirely new claims and not to an existing recipient of tax credits for a third or subsequent child under either universal credit or the predecessor tax credits system. There is also the six-month window, so the Bill strikes the right balance between those needing support and the taxpayer.
Emily Thornberry
Why, then, is there a discrepancy between clause proposed new subsection (3A) in clause 11(4) and proposed new subsection (1A) in clause 12(2)? Clause 11(4) spells out that a qualifying young person is born on or after 6 April 2017, but clause 12 does not state a date of birth. That is the reason for the misunderstanding. I am glad to hear what the Minister says here in Committee, because that has some legal standing, but it would have been easier if it had been in the Bill.
Damian Hinds
I will have to ask for the hon. Lady’s forbearance and forgiveness for my lack of photographic memory of proposed new subsection (3A). However, I can reassure her that the point is about new claims or those with a gap of more than six months since receipt of either universal credit or the predecessor tax credits system. The Bill strikes the right balance between the support that people need and the taxpayer. I therefore urge the hon. Lady to withdraw the amendment.
Emily Thornberry
In those circumstances, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question put, That the clause stand part of the Bill.
Welfare Reform and Work Bill (Sixth sitting)
Debate between Damian Hinds and Emily Thornberry(9 years, 2 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Damian Hinds
The hon. Gentleman is absolutely right that people in receipt of a number of benefits will have contributed to the system. It remains the case that we fund benefits out of current contributions. It remains the case that we have a budget deficit of 5% of national income. It remains the case that we need to get that down to start paying down the national debt. In order to do that, we need to find £12 billion of welfare savings.
The freeze has been extended to four years due to the current low-inflationary environment to ensure that it makes a significant contribution to the £12 billion reduction that I just mentioned. When originally announced as a two-year freeze, it was forecast to save £3 billion and to lead to a real-terms reduction in benefit rates of 4%. Due to the current environment, it would now save less than £1 billion. The Government have therefore extended the freeze to ensure that it generates at least the same level of savings, and more, than announced last autumn.
Emily Thornberry
Just to be clear, the Minister is not attempting to put forward a moral case. It is simply about saving money. It is about saving money from the poorest.
Damian Hinds
I am not quite sure how the hon. Lady managed to infer what she just said from what I just said. I was explaining—
Damian Hinds
I will be delighted to. I was explaining why what was originally a two-year freeze has been extended to a four-year freeze because of the current low-inflationary environment and the need to make the savings that form a substantial part of the £12 billion that we have been discussing.
While the Government have a clear mandate for the reforms, it is imperative that we protect the most vulnerable. We are protecting pensioners, with pension credit, the pension additions in other benefits, and the basic state pensions—they are all excluded from the freeze. We are also exempting benefits relating to the additional costs of disability, such as attendance allowance, disability living allowance, and personal independence payments. We have exempted the support group component of ESA, the limited capability for work and work-related activity component of universal credit, as well as additions and premiums in JSA, ESA and tax credits related to disability. Statutory payments, including statutory maternity, paternity and adoption pay, statutory shared parental pay and statutory sick pay are also all exempt. Those exemptions ensure that the most vulnerable in society are protected from the benefit freeze.
Let me speak directly for a moment to amendments 95 and 96, which seek to exempt disabled people from the freeze by ensuring that any of the relevant sums of working-age benefits and tax credits are increased in line with inflation, if they are claimed by a person who is disabled. In bringing forward our policy to freeze benefits and tax credits, we have been extremely mindful of the protections that we believe it is right to put in place to support the most vulnerable.
We are exempting all the benefits relating to additional costs of disability, as I just listed. Similarly, we are protecting the disability premiums and additions in working-age benefits, tax credits and pension-age benefits. The support group component in employment and support allowance and the limited capability for work and work-related activity element of universal credit are also protected. Those elements are paid to those with the most severe work-limiting health conditions in recognition of the fact that they are less likely to be able to increase their income by moving into work and may have additional needs as a result. Those are vital protections alongside the very acute need to make savings.
Welfare Reform and Work Bill (Third sitting)
Debate between Damian Hinds and Emily Thornberry(9 years, 2 months ago)
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Emily Thornberry
In the way that it is being introduced.
Julia Unwin: The way that the benefit cap is being introduced has huge implications for childcare costs, and we know that reliable childcare is the only way for parents to get back into sustainable work. It also has huge implications for housing costs, which will make some parts of the country uninhabitable for people on benefits.
Dr Niemietz: This links back to what I said earlier. It seems to me that the benefit cap is really just a clumsy way of capping housing benefit. There is actually no way in which someone could substantially exceed that cap unless they are in receipt of housing benefit, and probably in receipt of fairly large sums. This is a roundabout way of capping housing benefit, whereas, as I said before, I would have started at the other end. Build enough houses, and you will not need a cap of that kind any more, because rents will fall automatically and housing benefit rates will fall with them.
Damian Hinds
Q 209 I want to ask Julia a quick question for clarification. We were talking earlier about single parents, and we have talked about the importance to tackling poverty of being in work and having access to enough hours. Obviously, a big part of that is ensuring that childcare support is there. You talked about the childcare allowance in tax credits. Can you talk us through your understanding of the full set of childcare changes to come?
Julia Unwin: As I understand it, by introducing a childcare allowance, the Government made big steps to enable people to go back into work. However, by making that part of the cap, we have reduced its value. In some parts of the country, and in London specifically, the costs of childcare have gone way above what can be covered by that allowance.