Benefit Cap

Lord Freud Excerpts

Wednesday 2nd July 2014 Lords Chamber

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

Jobcentre Plus worked with potentially capped claimants from April 2012. By November the next year, 19,000 claimants in potentially capped and capped households moved into work, although we do not know to what extent those were additional moves or normal claimant churn. Since the cap was live, more than 5,700 households—around 40% of those who were capped but are no longer capped—are now exempt from the cap due to moving into work and claiming working tax credits.

[Lord Fink (Con)]

My Lords, I thank my noble friend the Minister for that comprehensive Answer, but will he confirm—

[Lord Fink]

Will he confirm that, for people who are potentially subject to the cap, work always pays? Are there any leading indicators of behavioural changes in people who are potentially subject to the cap?

[Lord Freud]

There are two ways in which the cap works to incentivise people to go to work. One is that people who qualify for working tax credit are exempt from it, but there is another way, in that anyone doing even small amounts of work will be capped by a lesser amount because it serves to reduce the level of the cap and effectively allows them to keep their earnings. Clearly, one always has to be very careful to distinguish causation from correlation, but in a survey conducted by MORI a quarter of capped claimants said that they had looked for work because of the cap and 45% said that they would look for work in the next 12 months because of it.

[Lord German (LD)]

My Lords, the dignity of work is probably the best way in which people can escape from the cap. However, the figures to which my noble friend has just referred indicate only a trend in the direction of travel. From the figures which the DWP is now collecting, will the Minister have formed a view by the end of this coming recess as to the whole period? Will he know many people have moved into work and whether the trend that we have seen in the initial figures has been carried through, so that we can say that this initiative has really borne fruit into work?

[Lord Freud]

The cap is doing quite a lot of things. It has an influence on the people who are capped but it also sends out a message. The total number of people who have been capped at one time or another stands at just over 42,000; the current number is just over 27,000. A substantial proportion of those who have moved out of the cap, which they might do for various reasons, have gone into work and taken working tax credit. Others will have taken advantage of the effect that I have just referred to, whereby doing even small amounts of work reduces their cap.

[Lord Foulkes of Cumnock (Lab)]

Would the Minister contemplate for a while how people struggling to survive on benefits will view an aggressive Question being asked by someone who donated £2.62 million to the Conservative Party?

--- Later in debate ---

[Lord Freud]

Well, my Lords, my job at the Dispatch Box is to answer questions from all Peers. I hope that I have established a track record in answering questions with as much properly sourced information as I possibly can.

[Baroness Wheatcroft (Con)]

Very often, those who are out of work are suffering from other problems as well, often drink or drug addiction or a very poor education. Can the Minister say what is being done to help with those issues?

[Lord Freud]

One of the things that we are doing is reforming the whole of the welfare system in order to find out the barriers to going to work that people have and helping to address them. In the particular case of the introduction of the benefit cap, we had an enormous initiative to work with those individuals through Jobcentre Plus. We wrote to them, talked to them and provided intensive employment support. We worked with local authorities to help them with budgeting, housing and childcare. In this particular case we worked hard, and that seems to be an effective set of interventions.

[Baroness Sherlock (Lab)]

My Lords, how much has been spent on discretionary housing payments to those affected by the benefit cap and what impact has that had on the planned savings from the policy? So, for 2013-14, how much was spent on discretionary payments, to what extent has that reduced the savings for central government and what impact has it had on local government?

[Lord Freud]

The department pays out a lump sum of discretionary housing payments that local authorities apply to the various policies that they are tackling. There is a specific amount, £110 million, that goes to this particular policy although actually, when you look at the analysis of how local authorities attribute the spend, it is rather less than the amount attributed to the benefit cap. The total AME savings set against that are £225 million. As I said, the importance of this policy is that it sends out a message about the direction of travel, which is that the way to get people out of poverty so that they have proper support is to get them into work.

[Baroness Farrington of Ribbleton (Lab)]

My Lords, the Minister complimented himself on always trying to answer the question. Of those people that he has referred to, how many of them have gone into full-time employment on a living wage? Will the Minister, who has refused to consider studying those people who go to food banks to survive, have a meeting with the right reverend Prelates, who know more than he does because of their involvement in food banks, about the very people that he is not counting?

[Lord Freud]

My Lords, we do not collect information on the living wage within the working tax credits. We have a policy in universal credit to ensure that people have enough to live on however much they work, which is a transformation. I am pleased to say that I am in regular dialogue with the Archbishop on this matter, particularly with regard to the initiative that he is running, and which we are talking to him about, of supporting the credit union movement.