Universal Credit

Lord German Excerpts

Wednesday 4th February 2015 Lords Chamber

Asked by

[Lord German]

To ask Her Majesty’s Government what are the results of the review into the setting of universal credit conditionality when children are in distress.

[Lord German (LD)]

My Lords, I thank all noble Lords who are going to speak in this debate, as this is an issue of great importance to the well-being of many children in our country, and I am grateful for the interest shown. This matter came to its head in your Lordships’ House during the passage of the Pensions Act 2014. The issue being debated then was the universal credit regime covering those who are bereaved. Changes to the benefits system for widowed parents means that those with ongoing income support needs, with the conditionality requirements it brings, would claim universal credit.

On Report, my noble friend the Minister announced that he was to conduct a wider review of the impact of universal credit in circumstances where children could be in considerable distress. I am most grateful for the time my noble friend has spent in undertaking the review, and for the way in which he has engaged with myself and other noble Lords in progressing the terms of reference and in discussing the outcome.

Since the debate in your Lordships’ House on 24 February 2014, the review has concluded and the relevant regulations were laid before the House in November 2014. This review came about because of the concerns of Members of your Lordships’ House. It was a review made in the House of Lords and delivered in the House of Lords. It was personally entrusted to my noble friend the Minister, and I am sure that noble Lords on all Benches recognise his efforts in bringing this to a conclusion.

I put down this Question for Short Debate because it provides a first opportunity for this House to deliberate on the findings of the review and its implementation. While I have some concerns, which I will come to later, there is much in the structure of the outcome of the review which is to be welcomed. Claiming universal credit brings work-related conditionality requirements. Following the review the Government have created a carve-out from these requirements for a group of circumstances all related to children in distress. The Government intend to switch off these conditionality requirements for up to six months in circumstances where a child is in distress because of bereavement or domestic violence and abuse. This switch-off is mandatory, not discretionary. After that period, those caring for a child affected by distress can ask for the conditions attached to universal credit to be suspended for a further three occasions, one month at a time, but only once in every six-month period. For other circumstances of distress—witnessing violence and abuse—the setting aside of conditionality is for one month in every six for up to two years.

I turn to the matters which I welcome in these Government actions. First, there is the recognition of a need for exemptions and a different approach for those who care for children in distress. The scope of the exemptions currently applies to children in distress as a result of bereavement, fleeing from violence, or experiencing or witnessing violence and abuse. I hope that my noble friend would also consider adding to that list children who are made homeless. There may be others to be added at a later date, but it is particularly important and welcome that there is no required definition of distress, simply the circumstances in which distress can occur.

Secondly, the solution provides a light-touch requirement on the evidence to establish distress. I understand that a wide range of acceptable evidence of the impact on the child is acceptable. It could be as straightforward as a description by a carer or a parent, a note from the child’s school or a local charity.

Thirdly the focus on the needs of the child is at the heart of this solution. The issue of the needs of the parent or carer is an obvious concern but this new structure is rightly focused on the absolute concerns of the child. But the distress or unavailability of the parent or carer can be transmitted to the child and become a source of distress for them. The new structure is wide in the evidence it requires of distress, but clearly understanding the complexity of the relationship between the carer or parent and their distress, and distress transmitted and experienced by the child, requires a sensitive understanding by work coaches who conduct the interviews. I would be grateful if my noble friend could explain that relationship between these easements in conditionality and easements for the parent or carer under the already existing domestic emergency or temporary circumstances provisions.

I also welcome having a structure which can grow to accommodate additional circumstances. Encompassing two additional areas which can lead to distress is welcome, but there may be more, and as I said earlier the obvious one which comes to mind is that of a child being made homeless.

The key question, therefore, which I wish to ask my noble friend is this: is the six-month easement sufficient for children in bereavement circumstances? Perhaps more importantly, are the one month every six months easements of the correct length or timing? We need to understand the evidence behind the policy to be able to establish whether it covers the widest possible range of circumstances, to ensure that there is adequate protection for children whose needs possibly still require close parental or carer engagement, and this may go beyond the seven-month maximum consecutive time period allowed. Research evidence in this area appears to be somewhat incomplete, and some of the main sources were published some considerable time ago. But common experience will tell you that the way in which children respond to bereavement will vary from child to child.

In the current regime—pre-universal credit—York University research showed that most bereaved partners retain work or enter work within 18 months of bereavement. Is it appropriate to try and compress what is already happening as a normal state of affairs? So the question remains: are the six-month and then the three one-month easements adequate and proportional? A secondary question is that of the revolving-door nature of the requests. Despite the light touch on evidence the continual requirement for producing evidence each time a request is made for an easement can be a tough challenge for a parent caring for a distressed child.

It will come as no surprise to my noble friend if I ask him about the interaction between widowed parents allowance and universal credit for those who would claim both. For the purposes of universal credit, widowed parents allowance will be treated as “income other than earnings”. This means that it will be deducted at a pound-for-pound rate from the claimant’s universal credit entitlement. That means, in turn, that the actual value for a widowed parent with no other income will be £0 per week. However, widowed parents allowance will also continue to be treated as taxable income. For this reason, working claimants may not only have their WPA deducted in full from their universal credit entitlement, but also pay tax on it. The outcome is that working widowed parents in receipt of both universal credit and the widowed parents allowance could end up overall paying £7.90 per week on account of their receipt of the widowed parents allowance.

I understand that those who are moved on to universal credit will get transitional protection, but this will only be until the first change in their circumstances. Will an application for a further one-month easement under the new regime be classified as a change in circumstances? If that is the case, as soon as the new system is applied, the parent could end up paying an extra £7.90 a week.

I appreciate that this is a complex issue but I wonder if my noble friend could give consideration to four possible solutions: first, removing widowed parents allowance from the list of benefits treated as income other than earnings; secondly, partially disregarding WPA for the purposes of UC entitlement; thirdly, treating WPA as earnings rather than income for the purposes of universal credit; or fourthly, continuing to treat WPA as income other than earnings, but introduce a “widowed parents element” as an additional component within universal credit. A similar approach is seen in the interaction of carers’ allowance and the carer element in universal credit.

In conclusion, there is much to be welcomed in the outcome of this review, but there are also some large questions, and beyond that, the experience of the system in action. I would be grateful if my noble friend could give us an assurance to give us confidence that the Government are monitoring this carve-out as it happens, and are willing to make changes as appropriate in the light of experience.

I am grateful for the Minister’s close interest and commitment to these matters, and I very much look forward to his response.