Welfare Reform Bill

Ian Paisley Excerpts

Wednesday 9th March 2011 Commons Chamber

[Jonathan Reynolds]

The benefits changed, so I am afraid that the hon. Gentleman is not comparing like with like. If he goes to the Library, he will see that the overwhelming rise in sickness benefits occurred in the 1980s, when take-up doubled. That is because when we went through the process of deindustrialisation the Conservative Government threw people on to the scrapheap, encouraged them to take that benefit until they retired, and did not care one bit about them. That is where he should look if he wants to find a reason behind these figures.

[Ian Paisley (North Antrim) (DUP)]

Does the hon. Gentleman acknowledge that in Northern Ireland there is over £700 million in unclaimed benefit that people should be claiming and have not claimed? If that is the case in Northern Ireland, the same must be true across the rest of the United Kingdom.

[Jonathan Reynolds]

I thank the hon. Gentleman for his point; I am pleased that he has been able to put it on the record.

I am proud of the Labour Government’s record on welfare reform, which stands in stark contrast to what occurred in the 1980s and 1990s, when there was no such reform at all until the end of the Conservative Government. Only now are the Conservatives coming back to it, but against the backdrop of public sector cuts and deficit reduction. The question that people will ask is whether the Bill is really aimed at getting people back into work or, once again, merely pursues the Government’s ideological goal of reducing the size of the state.

In principle, I welcome the move towards a single, simplified universal credit; few would not do so. That has the potential to ensure that people are clear about the income they will have if their circumstances change, and in principle I wish that we had done it. However, only through scrutiny of the detail of the Bill will we determine whether the reality of these reforms matches the promise, or whether they are really a cruel camouflage to hide savage cuts targeted at the most needy members of our communities. The measures in the Bill will penalise savers. Estimates suggest that nearly half a million families could lose all eligibility for financial support. Some reforms, such as the removal of the mobility element of DLA, are simply cruel and unfair. The Bill leaves many questions unanswered, such as how some benefits—crisis loans and council tax benefit, for example—will maintain any consistency if eligibility is decided locally.

Furthermore, we still know far too little about the Government’s plans for the most important area of all—child care. For all the good that any reform might do, unless the Government continue to provide support for childcare, we will not make anything like the progress that could be made.

I believe that the principles behind the Bill are right, but there is too much in the proposals that is ill thought through, and will be detrimental to many vulnerable people. The Bill is not ready in its present form, and the Government should recognise that. Welfare reform has a great many supporters in all parts of this House. The Government should have built on that consensus in creating the Bill, but they did not. That is why I will not support the Bill today, but will vote for the reasoned amendment moved by my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne).

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[Yvonne Fovargue (Makerfield) (Lab)]

Like many other Members, I welcome the concept of simplicity in the welfare system—of which I have experience, having worked in it. I also welcome the aim of ensuring that work is a route out of poverty. However, I do not believe that the Bill demonstrates fully how that will be achieved. Among two groups in particular, it could actually increase the number of people falling into poverty and debt. Like others, I am seriously concerned that people who are ill or have an accident, and have to take prolonged time off work, will suddenly be negatively affected by the plans to replace disability living allowance with the personal independence payment and by the changes to employment and support allowance, and will get less help from the universal credit, particularly during the first six months of their illness or disability.

People in that situation are coping with significant stress and coming to terms with a fundamental change in circumstances, as well as a sudden and dramatic drop in income. I had worked out some examples, but I shall not have time to give them. Suffice it to say that in months three to six, a single person who has worked all their life but has had a stroke and can no longer work is likely to be more than £130 a week worse off unless the qualifying period for the personal independence payment is brought forward to three months.

The importance of the severe disability premium cannot be overstated. It is a source of extra help for people who do not have a carer and have higher costs because of that. If it is not included in the Bill, the drop in income for hard-working people who suffer a life-changing illness or disability will be catastrophic. If they have a mortgage, the position will be even worse. Almost 20% of the people who attended an advice desk run by the citizens advice bureau at the county court said that an illness was the major factor in their falling into mortgage arrears, putting them at risk of losing their home. No fewer than three measures in the Bill will substantially reduce the amount of financial support available to people in that situation.

I now turn to families, particularly those paying for formal child care. If, as has been suggested, only 70% of child care costs are covered, many second earners on a low income will not have a realistic option of returning to work until their children are older and need less care. In some cases it could cost people money to return to work, which was not the intention behind the Bill at all. In fact, somebody’s problems might start not when their baby is born, as is usual, but when statutory maternity pay or maternity allowance is paid, because it is unclear in the Bill whether that will be treated as “income other than earnings” and lost pound for pound.

Clarification is also needed on other issues, such as whether benefit will be paid to the household rather than to the main carer. That is a big issue for many families.

[Ian Paisley]

Does the hon. Lady accept that there is a huge policy contradiction? The Government claim that they want to eliminate child poverty, yet at the same time they want to cut the social security payments that go right to the heart of benefiting children from low-income households.

[Yvonne Fovargue]

I totally agree with the hon. Gentleman, and I have evidence that some lone parents will not be able to work their way out of poverty.

To return to the question of to whom benefits are paid, I have seen mothers whose only source of stable, reliable income is child benefit, and many more mothers who do not know what their partners earn and who are given an allowance every week. That problem will be exacerbated if benefit is paid to main wage earner, which is usually the man.

Finally, if there is a query about one element of a claim there is often a delay, particularly when housing benefit and private landlords are involved. I can only hope that the other elements of the universal credit will be paid while such matters are investigated, and that the benefit is not so universal as to be “all or nothing” in such cases.

On sanctions, it is quite right that people refusing reasonable work should be penalised, as indeed they are under the current system. However, I urge the Government to ensure that great care is taken when sanctioning vulnerable claimants. For example, I dealt with a client who was sanctioned for not turning up for an interview to discuss his claim. Hon. Members might think that that is perfectly reasonable, but that client was in a secure institution—a secure mental health unit—and the letter requiring him to turn up for interview was sent there.

The £50 civil penalty for claimant error should be withdrawn. I am sure that, like me, many hon. Members deal almost daily with constituents who have been the victims of official error. The focus on claimant error is out of proportion. People who claim those benefits include the most vulnerable people in our society. They are the most likely to make errors, particularly with official forms, and the least likely to be able to afford the penalties. We should not simplify the benefit alone; the claiming process should also be simplified.

I hope that the amendment will be supported, because the Bill lacks clarity and detail. In fact, it will have the opposite effect of what is intended in terms of the Government’s stated broader goals and obligations, such as making work pay, reducing child poverty and protecting vulnerable groups.

[Harriett Baldwin (West Worcestershire) (Con)]

This is a profoundly important Bill. It is born out of the Secretary of State’s deep passion for helping people to get out of poverty—he has spent the last decade looking at that. There are few ways in which people who are born and grow up in poverty can find a way out. I can think of some, but winning the lottery does not happen very often and it is unlikely that someone will get a surprise inheritance from a relative whom they did not know existed. Marrying a top footballer is rare, and it would probably be quite hard work. The hon. Member for Makerfield (Yvonne Fovargue) spoke of work as “a” route out of poverty, but it is “the” route out. If Opposition Members have alternatives to work as a route out of poverty, I would be interested to hear of them.

The Bill removes the barriers that the welfare system puts in the way of people working their way out of poverty, which is important. We must recognise—this is why I am so disappointed that Opposition Members will not support Second Reading—that there are many barriers in the system’s construction that prevent people from getting the important message that they need to go out to find a job and to work, and that that is how they will improve their economic circumstances.

[Ian Paisley]

I appreciate what the hon. Lady says about people who are able-bodied and who can work working their way out of poverty, but how do people find their way out of poverty if their impoverishment is a result of disability?

[Harriett Baldwin]

As the hon. Gentleman knows, there are many provisions in our welfare system for exactly that sort of situation. I do not think that anyone is suggesting that people with no capacity for work should get out and work. We should have a generous safety net, as we do for people in those situations.

However, the system as currently constructed has many barriers that send the message that taking on full-time work is not worth while. With single parents facing a withdrawal rate of 96%, what kind of message does that send to people about the sense in going to work? We have all met people who work 16 hours a week. As we know, the way that working tax credits work gives people an incentive to find a job working 16 hours a week. At the moment, those working 15 or 17 hours a week find themselves financially worse off. That is why it is so important that the Bill tackles those cliff edges, ensuring a much smoother process and a linear relationship between the time that people work and the amount that they take home. At the end of the day, we all respond to the financial incentives that are inherent in the system.

As we heard earlier, the current benefits system also pays couples more to live apart than to stay together. I believe that I am right in saying that 2 million people in this country would identify themselves as being in a relationship but living apart. No one can deny that, in large part, that is down to the messages and the financial incentives sent through the welfare system, which will be reformed by this Bill.

I am sure that Opposition Members will welcome the fact that the distributional analysis of the universal credit shows that the vast proportion of additional money in the system will go to those in the lowest income deciles, with 85% going to those in the four lowest-paid deciles.

I should point out, however, to the Secretary of State that it was still a shock to realise that even under the changes that we are discussing today, the benefit withdrawal rates for those going into work will still be 65p in the pound. That is still a shockingly high marginal deduction rate, when our higher-rate taxpayers are on 51% or 52%. The Child Poverty Action Group, the Centre for Social Justice and Family Action have all argued for a withdrawal rate of 55%, with Save the Children arguing for a 50% withdrawal rate. I hope that everyone in the House will welcome the fact that the Bill gives the Chancellor in future the ability to stand at the Dispatch Box and say that he is making a change in the marginal withdrawal rate, because we would all like it to be reduced over time.

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[Mr John Leech (Manchester, Withington) (LD)]

I am delighted to have the opportunity to contribute to this important debate on the future of the benefits system.

I think that the whole House would agree that the way in which a Government treat the most vulnerable will always be a good measure of whether they can claim to have been fair. When the last Labour Government failed to restore the link between pensions and earnings during their 13 years in power and introduced the infamously derisory 75p pension increase, people rightly saw that as unfair. Similarly, their cut in benefits for single parents—described by one former Labour Member of Parliament for Halifax as “punitive and cruel”—was vindictive and unfair.

If the coalition Government are to be able to make that claim of fairness, we must ensure that we protect the most vulnerable. We have made a good start by restoring the link between pensions and earnings with the triple lock and committing ourselves to raising the personal allowance to take hundreds of thousands of the most poorly paid out of tax altogether. However, changes in the benefits system present a real challenge. If the Bill is not amended during its passage, it will certainly not receive my support.

I want to concentrate on housing benefit and possible changes in disability living allowance. Let me begin with the positives. Ministers in the Department for Work and Pensions have certainly been listening. I have had the opportunity to meet all of them to discuss the proposed changes and am pleased that the plans to restrict housing benefit to 90% of the full award after 12 months for claimants on jobseeker’s allowance have been abandoned. That terrible idea would have resulted in numerous people who were actively seeking work being worse off through no fault of their own. Many people and organisations inside and outside the House have worked hard to ensure that that does not happen, and I am glad that Ministers have recognised that it would have caused real hardship for many vulnerable people.

A great deal of attention has been paid to the proposal to remove the mobility component of disability living allowance from people in residential care. Last month, in an interview in The Guardian, the Minister sought to reassure disabled people in care homes and their families that the Government would not remove their ability to get out and about. I have no doubt that that is the Government’s intention and welcome their commitment to reconsider the proposal. Unfortunately, I do not share the Minister’s optimism that the mobility needs of those in care homes will be met if disability living allowance or its replacement is taken away, and I urge her to abandon any such plans.

The proposal has caused concern to organisations such as the Muscular Dystrophy Campaign, whose petition I submitted to Parliament only last night. The petition stated that the mobility component

“helps to meet the higher costs of accessible public transport”.

It also stated that

“without DLA mobility component, thousands of adults of all ages with severe disabilities who are supported by the state to live in residential care will be unable to retain voluntary employment or simply to visit family and friends”.

I urge the Minister to ensure that that does not happen.

[Ian Paisley]

I agree with much of what the hon. Gentleman has said. Does he believe that linking benefits to the lower consumer prices index rather than the retail prices index is “punitive” and “unfair” to those who have to claim benefit?

[Mr Leech]

I was just coming to that. Yes, I do think it is unfair.

The Bill proposes that from April 2013 the local housing allowance should be uprated in line with the consumer prices index rather than real rent increases. I shall avoid the temptation to reopen the debate about whether RPI or CPI is a better measure to use. I merely point out that the Government do themselves no favours by picking and choosing which measure to use. If CPI is a better measure of inflation, we should not allow train operating companies to increase train fares in line with RPI, but that is a debate for another time. I recognise that the current arrangements do little to keep rents low, but there is a real danger that rents will increase at a much faster rate than CPI. The Government must be prepared to keep a watching brief on increases in rent and to take further action if the changes fail to keep housing benefit in line with rent increases.

I do not think that any Member has raised the issue of under-occupation so far. The decision to restrict housing benefit in social rented homes when tenants are under-occupying properties is ill thought out, and will cause significant hardship to many families who are existing tenants. I recognise that this is designed to bring housing benefit for social-rented property into line with the private-rented sector, but it does not take into consideration local circumstances. In Manchester, for example, under existing rules a family with one child is entitled to queue for a two or three-bedroom property. That is intended to allow for the possible growth of young families and reduce the need for future moves caused by overcrowding. Similarly, in low or no-demand areas where there are a lot of two-bedroom flats, property has been provided to single people or childless couples either to allow children who live elsewhere to visit, or simply to fill the vacancies in hard-to-let properties. As a result, a significant number of families on housing benefit could face a reduction in benefit through no fault of their own. We need to look at this again and recognise that a one-size-fits-all approach will not work. I suggest at the very least applying a gross under-occupation test whereby restrictions to housing benefit could be applied if more than two rooms were unoccupied.