Welfare Reform Bill

Lord German Excerpts

Monday 21st November 2011 Grand Committee

Tabled by

[Lord German]

98ZA: Clause 91, page 61, line 33, leave out “the first”

[Lord German]

This group of amendments was designed to test the arrangements that we have in Parliament for reviewing and looking in detail at the operation of PIP. In view of the offer that we have just had from the Minister to take back all the reviewing and reporting arrangements for the whole of PIP, I think that it would be unwise of me to move the amendment.

Amendment 98ZA not moved.

--- Later in debate ---

[Lord Skelmersdale]

My Lords, as I understand it, everyone with children gets child benefit, so you can cut that out quite regularly because you know that it is going to come under subsection (4)(c)—that is inevitable. As I said at the beginning, we will find out from my noble friend what exceptions the Government are currently planning in order to change what the noble Baroness, Lady Hollis, calls apples and pears into apples and apples or perhaps pears and pears.

[Lord German]

My Lords—

[Noble Lords]

Oh!

[Lord German]

I hope that I have followed your Lordships’ normal pathway by allowing those who have put their names to amendments to speak first. I understand that that is what your Lordships’ House wants and therefore I have done the appropriate thing. If I had had an amendment in my name, I would have spoken earlier. However, I am quite happy to speak now if your Lordships will permit me. I pay tribute to the right reverend Prelate the Bishop of Ripon and Leeds for introducing this issue, and particularly for his amendment relating to children. That is probably the subject on which I shall focus primarily. It is also an issue where there are unintended consequences, on which some of this debate will focus.

I think it is worth starting with what is in the impact assessment for this proposal, which outlays the Government’s objectives in achieving some policy ambitions and states quite clearly that it is intended to deliver fiscal savings. The other two matters relate to dealing with the fundamental unfairness of working families seeing families on benefits living in homes which they cannot themselves afford, and the incentives to help people to work.

I believe that a cap is an appropriate device for accomplishing ambitions of this sort and later I shall give some of my reasons for saying that. However, it is important that whatever the cap or caps may be, they must fit the heads on which they are placed. I do not believe that the cap as currently constructed does the job or serves the purpose that the impact assessment lays out. That is because there are of course some unintended and perverse consequences as a result of the way that it is currently being calculated and laid out. As currently crafted, the cap produces a number of these unintended consequences but exploring them does not negate the importance of having a cap or caps. The evidence demonstrates that the current approach will need amendment in order to fulfil its intended purposes.

I should like to address the issue of fiscal savings. I am sure that all noble Lords will have seen the letter from the Secretary of State for Communities and Local Government to the Prime Minister, sent via their Private Secretaries, in which the Secretary of State says of this proposal that there are,

“serious practical issues for DCLG priorities”.

The letter continues by stating that an additional 20,000 people will be accepted as homeless, according to the DCLG modelling. That is presumably done by those who would know what the outcome would be in a set of circumstances described by government. The letter goes on to say that this would mean additional expenditure in dealing with homelessness and for temporary accommodation, and further that the £270 million savings that the DWP budgets expects to make would be negated by the additional expenditure elsewhere. That is not my interpretation—those are the words I have read. There would, indeed be a net cost to the taxpayer. If these figures stand up to scrutiny—and I certainly have not seen any rebuttal of those figures—the cap as crafted will be at an additional cost to the taxpayer. I should like my noble friend the Minister to tell me: has there been or is there a rebuttal of the figures from the Secretary of State for Communities and Local Government?

However, that does not deal with the second policy objective that we have to face: the unfairness of working families seeing benefit recipients living in homes that they could not themselves afford. The challenge is to satisfy this need and at the same time avoid the consequential homelessness that the Secretary of State for Communities and Local Government has indicated. This issue has been left to fester for far too long. The previous Government placed it in the “too hot to handle” or “too difficult” category, or put it in the long grass pile—whatever metaphor you wish to use. However, as is always the case with very difficult issues such as this, they will simply not go away without some form of policy intervention.

Lord Boswell of Aynho: I regret that I was unable to attend the earlier part of this discussion, although I am very interested in what is being said. On the matter that my noble friend just raised, has he been able to discern a clear position from Her Majesty’s Opposition as to the principle and, further, as to the levels or basis of execution of policies in this area of benefit cap? I am not sure where they stand.

Lord German: I have not been able to get a clear position. However, I was somewhat interested to hear yesterday the Shadow Chancellor declare that his party is in favour of having limits. Perhaps other noble Lords might explain what those limits are. However, as the Secretary of State for Work and Pensions said in the House of Commons—as I believe I am now allowed to call it—the benefit cap,

“is about those who we believe should be able to go to work but are not doing so”.—[Official Report, Commons, 15/6/11; col. 882.]

Therefore, the purpose of this set of clauses seems to be to try and achieve a balance of fairnesses. Very importantly, we cannot see a rise in costly homelessness that penalises mainly children who are in large families and in high-rental areas.

The cap, as proposed, would punish children for the decisions of their parents. Children have little or no control over the upbringing they receive. I wonder whether the current cap, as defined here, could encourage family breakdown as families split up in order to get their benefit entitlement under the cap level. In terms of maintaining family structures, this surely cannot be right.

The first issue to be tackled is the one mentioned by the right reverend Prelate the Bishop of Ripon of Leeds—mean and median. The Bill clearly refers to,

“the average weekly earnings of a working household in Great Britain net of tax and national insurance contributions”.

However, as many noble Lords have pointed out, there are of course working households with children and working households without children. Working households with children also receive child benefit and possibly tax credits, and other benefits as well. Therefore, if you do the mathematics, a cap measured across average earnings based on working families with and without children can only be tougher on those households with children and easier on those households without children.