Welfare Reform Bill

Kate Green Excerpts

Wednesday 9th March 2011 Commons Chamber

[Mr Duncan Smith]

I shall make a little more progress.

May I confirm that we shall move from the universal credit making inroads into the couple penalty to a subject on which I am sure many right hon. and hon. Members will want to speak—child care costs in universal credit? I can confirm that support for child care costs will be provided by an additional element paid as part of the universal credit award. We will invest at least the same amount of money in child care as in the current system, and we will aim to provide some support for those making their first moves into work, so that the support available is not restricted to those working more than 16 hours.

This is an important point. Although there is a debate about it, we must remember that working tax credit gives that child care support to those in the relevant band. Universal credit will allow claimants to adjust their hours of work to suit their child care responsibilities. It will allow people to set their hours of work more in line with their caring responsibilities. It will cover all the hours that people are planning to work. We will be much more flexible, and we intend to work closely with relevant groups to take further advice about the rates that we will set. By the time the Bill reaches its Committee stage, we will be able to be more specific.

[Kate Green (Stretford and Urmston) (Lab)]

Can the right hon. Gentleman confirm that as a result of that further consideration, there will be no circumstances in which, as a result of child care costs, a parent could be faced with a marginal deduction rate of more than 100%, as some models prepared for us by Family Action have suggested?

[Mr Duncan Smith]

That is not our intention, and it is why we were are proceeding carefully and consulting about our proposals. The purpose is to maintain incentives to go to work. Universal credit is designed to encourage lone parents to go to work, but it recognises their need to meet their child care responsibilities. We can debate the various elements, but the principle is that the measure should be more than helpful to them. We will move on to the finer detail as we get to Committee stage.

As we increase support to make work pay, it is right to ensure that claimants do everything they reasonably can to find or prepare for work. As the House knows, we will tailor conditionality to individual circumstances, and require all claimants to accept what I call a claimant commitment. From the outset they will be asked to sign up to the idea that we will provide them with the necessary support and access to universal credit, but we will also expect them to recognise that the sanctions regime is applicable. It is easy to understand. If they do not comply with that as they go further through the process, they are likely to encounter that sanctions regime at key moments.

The toughest sanctions will apply to those who are expected to be seeking work but fail to meet important conditions. They should understand that if they keep on crossing a series of lines, they will invoke the sanctions regime. The problem at present is that the regime is often confusing. I have visited jobcentres a number of times—and I see on the Opposition Benches one of the Members who used to be a Minister in the Department. As he knows, if one talks to jobcentre staff, they will say that the problem is that when claimants reach the point where they are about to hit sanctions, it comes as a big surprise to many of them that sanctions will be imposed and that the situation is real and serious.

By letting claimants know much earlier and by introducing a regime that is easy to understand, with a simple tripwire process, they will know from the word go. That should disincentivise people from taking the wrong turns. Benefits will be taken away for three months after a first failure, six months after a second, and three years after a third. That will apply to those at the top level—in other words, those who are fully able to search actively for work and to take it. There are, however, other categories. The same conditions would not apply to lone parents, for example.

--- Later in debate ---

[Kate Green (Stretford and Urmston) (Lab)]

Time is tight, so I shall mention a small number of issues which have not yet come up specifically in relation to the impact of the universal credit on women and children. My hon. Friend the Member for Glasgow North East (Mr Bain) alluded to the design of the universal credit as a breadwinner model benefit and the disincentive that that creates for second earners and households to work. That is important because women’s financial independence, whether in couples or on their own, is an objective that Ministers ought to be seeking, given their proclaimed wish to use the benefits system to help everyone stand on their own feet.

I am concerned, first, that the benefit will not deliver well for women. Half of women in poor households already do not have any money to spend on themselves. Money will now be paid only to one member in a couple. As the evidence of the pension credit shows us, where there is a choice as to which member of the couple is to receive the benefit—I understand that that is what Ministers intend for this benefit—77% of payments went to the man. I urge Ministers to examine closely the design of the benefit that they have created and its implications for women’s independence. That is important because women are more likely to spend money on children.

That leads me to my second concern: the impact of the benefits cap, particularly in relation to children. As other hon. Members have mentioned, the housing cap will force many families to go into arrears or to move. One of the important dimensions of forcing families to move is the disruption that that will create for children’s schooling, children’s social networks and child care arrangements. I urge Ministers to take careful note of the lessons to be learned from what happens to children who have been in temporary accommodation, and the damage that house moves can do to young children. I hope they will think again about the imposition across the board of that benefits cap.

The third thing that I ask Ministers to give attention to is payment of the universal credit on a monthly basis. I understand why they want to do that—to mimic the way in which many people receive their pay—but we know that one in four low-income families run out of money before the end of the month. Ministers must tell us what will be put in place to ensure that those families are not left struggling or destitute because of the design of a benefit payment that does not meet the needs of lower-income households.

The fourth aspect on which I would welcome clarification is an issue that has been highlighted to me. In some cases, because payment is made to one member of a couple in a household, benefit could be paid to a member of a household in relation to a cost borne not by them, but by another member of the household. That is the case particularly in relation to housing costs. One member of a couple could receive the universal credit, including the housing component; the other member of the household might be responsible for that rental obligation. I would welcome Ministers’ clarification on whether that is also to apply to mortgage interest assistance. That matters because it is likely to deter women from forming couple relationships, which Ministers are keen to promote, if women think they will be put in a position where money which is important for them to keep their home is to be paid to somebody else.

Finally, like other hon. Members, I am distressed that proposals are being introduced in the Bill so early on in the process of consultation on child support, when we are still waiting for the responses from the many experts in the field. I am concerned that we are moving to a system that will be almost entirely voluntary, with only a residual compulsory system. We all know that when voluntary arrangements are put in place—if they are put in place—it is women and therefore children who are most likely to lose out. Introducing the payment of a fee to access a voluntary child support system is highly likely to leave many women and children completely unprovided for, and I urge Ministers, on that point in particular, to think carefully and to think again.