Welfare Reform Bill

Lord Freud Excerpts

Tuesday 31st January 2012 Lords Chamber

[Lord McKenzie of Luton]

My Lords, we support the amendment moved so comprehensively and eloquently by the noble Baroness, Lady Meacher. This has been a powerful debate with a strong ethical strand, as my noble friend Lord Peston said that it should be. My job is made easier by the contribution we have just heard from my noble friend Lady Hollis, who dealt comprehensively with those who argue that we should deal with this in regulations. The fact is that we have tried at earlier stages to reach the position that the amendment now provides and have been unsuccessful—as my noble friend said, possibly not because that is where the Minister wants to be but because that is the policy imposed on him. I think that my noble friend is absolutely right: if we pass this amendment today, we will put down a clear marker on proportionality, which will strengthen those who have to go and argue with the Treasury about resources.

As we have heard, the amendment seeks to prevent the interests of one group of disabled people being played off against those of another by limiting the ratio between the higher and lower levels of disability support. At present, as we have heard, the Government’s proposals would lead to a significant cut in the amount of support for disabled children on the lower rate of support, amounting to some £27 a week, or over £1,300 a year, with around 100,000 families seeing this drop in their support. We have heard some graphic descriptions from my noble friend Lady Wilkins about what support meant for her family. We also heard from the noble Lord, Lord Wigley, and the noble Baroness, Lady Browning, who made the very telling point that this is about the whole family—siblings as well—for whom the level of support can make a real difference.

The Government have suggested that this money would be recycled into higher levels of support for disabled adults on the higher rate, but we do not believe that this is a trade-off that anyone wants to see. The interests of adults with severe disabilities should not be played off against those of children with lower-level disabilities, which, as we have heard, may well include conditions such as Down’s syndrome and profound deafness. Such children have no opportunities themselves to increase their income, and we know the problems that parents caring for these children can face when trying to find paid work or increase their hours.

The amendment does not seek to prescribe the levels of support, which will of course be a matter for the Government of the day and will depend on what resources allow, but it does seek to embed the principle that, although there is a need to recognise that some conditions require a higher level of support than others, this should not be used as a reason to downgrade the needs of the many disabled children—and their families—who currently rely on the lower level. Perhaps the Minister could outline in his response, first, what he believes the ratio between the two rates should be and, secondly, how he intends to ensure that those on the lower level do not see a dramatic fall in the support that they receive.

We will doubtless hear again that transitional relief will protect some claimants. However, we know that this is not a protection in real terms and in any event it does not help new claimants. Perhaps we can hear from the Minister what changes in household circumstances he considers would break even this partial protection. In making these judgments, what weight do the Government give to the fact that disabled children are more likely to live in poverty than other children? The Minister may justify the current ratio as aligning support for adults and children. However, is it not the case—a point made by the noble Baroness, Lady Meacher—that the routes into the benefit are quite different: for disabled children through the DLA and for adults through the WCA? Is there not a disability disregard for disabled adults who can access work?

Much of our debate on the Bill has focused on its impact on children. We would all, I hope, recognise the necessity of combating poverty among children because it carries with it the prospect of greater poverty in later life. However, it would seem that on this matter the Government are shifting resources in the other direction from children to adults.

It is perhaps appropriate that today we heard from the UK’s four Children’s Commissioners, who have put out a notice. I should like to finish by quoting them:

“Families who receive welfare benefits are particularly vulnerable because they live in poverty—small changes in their household income can have a big effect on their welfare. We are concerned that many more families and their children will be pushed into absolute poverty over the coming years if these proposed changes go ahead”.

We support the amendment.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, I think that I have to take up the challenge of the noble Baroness, Lady Hollis, and try not to read anything at all in order to convince her that I actually believe in what I am going to say.

I preface my remarks by reminding noble Lords that the amendment is in the same territory as the one we discussed on Report that was moved by the noble Baroness, Lady Grey-Thompson, and on which there was a Division. I confess to feeling slight surprise when I saw it come back in such a similar guise. If my arguments sound somewhat familiar to noble Lords, it will be because they have heard many of them before. I need to go through them in the context of this skilfully drawn-up amendment.

I start by making it absolutely clear to all noble Lords—in particular, to my noble friend Lady Browning—that this is not about deficit reduction. Every penny of the money will be recycled to increase support for severely disabled children and adults. None of the money that we are talking about will go to Her Majesty's Treasury, with which I have absolutely cordial relations at all times. The principle that was picked up by my noble friends Lord German, Lord Newton and Lady Thomas concerns the cliff edge that exists at 16 when youngsters transition from childhood to adulthood. As my noble friend Lady Browning pointed out, many of these youngsters are in practice dependent on their families for a long time. The cliff edge is something that we wanted to smooth out. This will be essential to protect work incentives in adulthood.

I said many times in the debate that we are overhauling the whole support system for people who rely on benefits. It simply does not make sense to concentrate on any one element. The universal credit will provide a package of support for families to meet a range of their needs. That is why we need to look at the overall impact of universal credit on families rather than look at individual components. If some families get a bit less on one component, it does not mean that they will get less overall. I will pick up on the point raised by the noble Baronesses, Lady Meacher and Lady Wilkins, about some of the social activities that are required to have a good quality of life. The intention is for DLA to pay for those facilities. The purpose of universal credit is income replacement. The two benefits do different things.

I also remind noble Lords that, contrary to some estimates that have gone around this afternoon on the impact of universal credit, clearly the impact will be that families will be much better off. I remind noble Lords that I and my friends in the Treasury are managing on a steady-state basis to put £4 billion a year into the pockets of the poorest people through universal credit. That is the context in which we are making these changes. Noble Lords should not underestimate what it took to get that out through a government process: a steady-state £4 billion a year in universal credit for the poorest.

[Baroness Meacher]

My Lords, I think that I am right in saying that about £18 billion has been taken out in cuts. We are not getting extra benefit payments, but I applaud the Minister for having retrieved £4 billion; that is wonderful, and great news.

[Lord Freud]

I am very grateful for the applause. I am not hearing a lot of it. The modelling that we have done in the department shows that, as a result of this measure on the reform of disability payments, the number of disabled children living in relative poverty will be negligible. The support for families in the universal credit package includes generous disregards for parents, plus the disability addition to the child element. Of course, we are also supporting formal childcare costs right the way down the hours spectrum in universal credit.

[Lord McKenzie of Luton]

I do not know whether the Minister is going to say anything further about poverty figures, but how does he deal with the report from the Family and Parenting Institute, prepared by the IFS, showing that relative child poverty will increase between 2010-11 and 2015-16 by around 400,000, and that absolute child poverty, as defined in the Child Poverty Act, will increase between those years by around 500,000? Does he dispute those figures?

[Lord Freud]

My Lords, we have spent a lot of time on child poverty, and the IFS projections do not take account of quite a few matters. They certainly do not take account of any change in government policy. Child poverty, to people’s surprise generally, actually went down last year, and it is projected to go down this year. What happens in future will depend on how we respond. I should point out to the noble Lord that the IFS had some very positive things to say about the impact of universal credit on child poverty, and it has pointed out the impact that universal credit will have as it goes in the direction that he and indeed I want to see.

Let me go through some of the figures on what happens under universal credit for a parent with a disabled child who works 20 hours a week on minimum wage. That parent, and that family unit, is likely to be £73 a week better off in work under universal credit, compared with £13 in the present system under tax credits. There are some 30,000 more families with a disabled child in work than out of work, so that extra money is being targeted pretty effectively.

Let me remind noble Lords again about the figures for the support that we are providing. Under universal credit, an out-of-work family with a disabled child can receive just over £8,000 a year in benefits for its child after introduction of universal credit, compared with just over £4,000 for an out-of-work family with a non-disabled child and around £1,000 for a family that receives only child benefit.

[Baroness Wilkins]

The Minister said that those children will receive £8,000. They are receiving £9,500 under the current rules.

[Lord Freud]

The figure that we have on the average amount is £8,800. There is a 5 per cent difference in the overall package for that family under universal credit. Those are the figures that we have worked out for the average. Taken overall, it is a small decline, and clearly there is a substantial incentive for the family to look at work. Work becomes much more attractive. Even a few hours of work under universal credit becomes attractive in a way that is completely impossible today.

[The Countess of Mar]

How can a single mother with a severely disabled child go out to work?

[Lord Freud]

My Lords, we are talking about severely disabled children receiving the full rate of £77. That is the point: we are trying to direct the money towards the people with the greatest need regardless of their age. That is what we are trying to do here.

[Baroness Meacher]

We have to be very clear about this. One of the main reasons for this amendment is the fact that it is so difficult to divide those who are eligible for the higher rate from those who are not. There is often a very narrow—and fairly arbitrary—margin. They just happen not to need to be disturbed at night, but during the day the costs may be even higher—the disruption to the family, the impossibility of working—all those issues are possibly just as great for those who will not qualify for the higher rates. It is really important to hang on to that.

[Lord Freud]

My Lords, this is a really important point. It may very well be that the concern of the House actually boils down to a discomfort with the dividing line between severely disabled and disabled. If that is the case, the way to do it—and I pick up what my noble friend Lord Newton was saying—is not to look at aspect or concrete ratios but at the precise issue that noble Lords are actually worrying about, which is the relationship. I will commit to having a very close look at this. It is clearly tied up with DLA definitions, which are under constant review and are being reviewed.

If we move the children from DLA to PIP, we need to look at this and there will be a real consultation process. I will review this dividing line and look at that very closely, and when we come to the regulations on this, I will report back to noble Lords on exactly what we find. My sense is that this is the real issue underneath all this. I know noble Lords had to find an amendment that had to weave through, to express this concern, so we all know what is happening on a technical basis. Let us go to the real issue. The real issue is: are we getting the dividing line right? People ask me if I am listening—I hear what noble Lords are saying; this is what I think noble Lords are saying, and I will go and do something about that.

[Baroness Howarth of Breckland]

I do not think that is the whole issue that is concerning noble Lords. There is another issue, about the context. If you expect a single mum to get work in order to benefit from universal credit, you should go out on to the highways and byways with these women, as I do, and try to get a job. You need to be part-time, you need to work within certain time constraints, and you need to be able to get specialist childcare if you are going to go out. It is about more than being proportionate, it is about understanding the nature of life when you have a disabled child, however severely along the spectrum that might be, because some behaviour disorders, which sometimes can be assessed as reasonably manageable, can be extraordinarily difficult to get someone else to manage outside your family home. As I said to the noble Lord recently on another point, if you compare the unemployment figures and the numbers of part-time jobs with the number of those women who would like to work getting into those jobs, there is also that contextual issue that I am sure is concerning their Lordships.

[Lord Freud]

Not just your Lordships—I share those concerns, clearly. One of the things I have been trying to do is to really hone in on the help for people to get them into the right kind of work. We have now substantially rebuilt the payment by results element of Welfare to Work. That is not about saving money; it is about making sure that the support is very individualised for people. We will have the formal national statistics on this later this year, but the anecdotal feedback that I am getting from providers is that that individualisation of support for people is really beginning to work. That is a real issue that needs to be addressed. We need to support people back into the workplace when they can work, but we also need to get severely disabled children, who will move into adulthood still needing to be supported, to this higher rate and not have this cliff edge.

The blunt truth is that if we got rid of this cliff edge and maintained higher levels for less disabled children—that is the set of choices that we are playing with here—the cost would be £200 million a year. When things are better, I can quite imagine any Government being very keen to put money in that direction. However, as noble Lords will know, you get an amendment here and an amendment there and pretty soon the amounts add up in a way that really damages our national finances. We can blame the Treasury if we like, but that is a real constraint. We have already looked at amendments the proposals of which we have totalled up to cost in excess of £5 billion over five years, and just taking that on the chin and continuing to get rid of the cliff edge would cost another £200 million, as I said. Those are the choices. We have done a lot of soul-searching on this, and our view is that it is right and fair to align the extra amounts payable for disabled children and disabled adults.

I will close with two points. First, we are trying with the universal credit to bring coherence and simplicity to our benefit support for people. I cannot tell noble Lords how difficult that is to do in practice. I spend every moment of the day when I am not here with your Lordships trying to do that and wrestling with issue after issue. It is very simple; if you are asking someone a set of questions, when do they turn off? How many questions can you ask? You have to simplify the whole system. One thing that I have appreciated more than anything else in the weeks in which we have gone through this Bill is that this House has supported absolutely consistently the introduction of a universal credit. It has understood what we are trying to do and the pressure and the need for coherence and consistency, and I am really grateful for that support. I ask the House please to maintain that support now, especially as we have already voted on this principle.

Finally, I will pick up the point made by my noble friends Lord Newton, Lord German and Lady Thomas that this is a matter for regulations and not for primary legislation. Noble Lords have sent a very strong message to me and to the Government. I will look at this issue and we will be able to discuss it in our debate on the regulations.

[Lord Patel]

My Lords, on a point of order, will the Minister confirm that we cannot amend regulations? He has asked us to give them consideration and committed to bringing them back, but whatever he brings back will have to be either accepted or rejected.

[Lord Freud]

My Lords, I hope that noble Lords by now have got a flavour of how I try to work with them. I listen and I take on board what people say. I will aim to shape the regulations in the light of that. I am more than happy to—

[Baroness O'Cathain]

I have listened avidly to this debate and been very moved by a lot of it. I also have some experience. I can see that the position is extremely difficult. On the point made by the noble Lord, Lord Patel, about not being able to amend regulations, I should like to ask my noble friend whether he can throw out regulations and put new regulations in their place. I know that we have mixed up concrete and aspic. It is not that regulations are fixed in concrete and cannot be changed—I understand that. However, if we voted saying that the regulations were not appropriate, could we have other regulations?

[Lord Freud]

That is exactly what happens with regulations—

[The Countess of Mar]

If the House of Commons throws the regulations out, they can be thrown out; but if we throw them out, the House of Commons can ignore it completely.

[Lord Freud]

No, my Lords. Without wanting to get into a huge constitutional debate about this, my understanding is that if the House of Lords threw them out, there would at some stage have to be a satisfactory set of regulations that both Houses could agree. So it is a very powerful thing to do. Clearly, I would hope never to get into that position, which is why—

[Lord McKenzie of Luton]

What the Minister says about affirmative regulations is right, but is he aware that it is the stated position of the Conservative Party in this House that it does not vote against affirmative regulations? In recent times we have had several such debates, and the Conservative Party has declined to do this on principle.

[Lord Freud]

When we were in opposition we certainly did not vote on a fatal basis, which was our policy. If the House feels strongly about a set of regulations and the Opposition do not have such a self-denying ordinance—which I think they do not—they can express their view in a vote on the regulations.

[Baroness Hollis of Heigham]

My Lords, the Minister is encouraging us to defy all the conventions of the House. Perhaps I may say gently that he really should not go down this path. First, the noble Lord, Lord Patel, is absolutely right: you cannot amend regulations. If you could, you would be in the game of primary legislation, because you would be toing and froing. Equally, if the House of Commons were to pass those regulations and we decided to overturn them, then the non-elected House would be overturning the will of the elected House. Both major parties have respected—I repeat, respected—that convention for the full 20 or so years that I have been in your Lordships’ House.

[Lord Trimble]

Before the Minister replies to that intervention, perhaps I may suggest that we are getting bogged down on the question of amending or rejecting regulations. I thought that the Minister indicated that, before we get to the point of regulations, he will look at this closely, consult people and speak to people. That is where the conversation should be and where the attention should focus at the moment.

[Lord Freud]

I thank my noble friend Lord Trimble for that. That is the position. I have heard strong arguments here and very great concern. I will talk to noble Lords before we get the regulations out to make sure that they find the regulations acceptable. I give that undertaking now. I beg the noble Baroness to withdraw her amendment.

[Baroness Meacher]

My Lords, I feel a huge weight of responsibility here. The Minister does not want me to test the opinion of the House, and I understand that, but hundreds of thousands of families all over the country with disabled and severely disabled children are desperate about this issue; I repeat, they are desperate. The pressure of that is difficult to bear. But I do want to say that I respect very strongly the Minister, the noble Lord, Lord Freud, for the huge amount of work that I know he does all the time on working towards a simpler welfare system. He has done a fantastic job on this. But, as he knows, the job of this House is to try to ameliorate the worst effects of legislation, and that is what we have done consistently throughout this process. The Minister has generously agreed to take back and think about these issues following the moving speeches that have been made by many noble Lords, but the fact is that we in this House do not have an assurance that anything will happen.

The Minister is under huge pressure from a Secretary of State who is an awfully long way from this. I think that he has little real understanding of what it is to be a poor family with a very disabled child and not able to afford to give to that child what they know it needs. I have concerns about that because we need the Government to understand the enormity of the pressure on these families. I have often said to my own children that I do not think I could have managed it at all because these things are so tough. That is the situation here.

The Minister referred to a cliff edge at the age of 16. The noble Lord in his place beside me referred to a cliff edge at the age of three. The worry is that what the Government are doing is introducing a cliff edge at birth and then at one, two and three, when severe disability hits. Do we want these families to fall off a cliff—and that must be how it feels—when they realise that they have made a lifelong commitment to care for a child but the state withdraws some of its support? That is a big issue for us.

The Minister referred to DLA funding swimming lessons, school holiday clubs and so on. The reality is that DLA does not cover adequately those expenditures, and that is the issue. Families do not have enough money, and it is why 40 per cent of them are in poverty. They need more money if they are to help their children fulfil their potential, whatever that potential may be. The Minister also referred to families being better off in work. I accept that, but the difficulty is that that is being achieved by impoverishing an awful lot of people, some of whom can work—speaking for myself, I support the Government’s quest to get more and more people back into work. But when we consider families with disabled children, particularly single parents with disabled children, as others have said, they cannot do this and it is terrible to impoverish them.

That is the dilemma we are facing. I know that the Minister is going to be deeply unhappy with me and I do not like making him deeply unhappy, but I owe it to the families out there to test the opinion of this House. We have to do it.