Welfare Reform Bill

Lord Kirkwood of Kirkhope Excerpts

Monday 23rd January 2012 Lords Chamber

[Baroness Butler-Sloss]

My Lords, I totally understand why the Government require it to be said that not everyone should get child benefit. There are two groups of those who are not employed and to whom the cap will apply about whom I am particularly concerned. I should declare an interest as the president of the Grandparents’ Association.

A considerable number of grandparents, particularly grandmothers, have been in perfectly good employment over a number of years and then for one reason or another find themselves obliged to take on the care of children, who are sometimes extremely young, in addition to their own teenage children. As well as grandparents, there are also other kinship carers, as they call themselves, who take on the care of other people’s children, usually their nephews and nieces and sometimes their great nephews and great nieces. They give up their jobs. They have to, because they cannot care for these young children, who have in a sense been dumped on them without any prior warning on some occasions. They will give up their jobs for the care of their grandchildren or other kinship children, then find themselves in real difficulties with this cap.

We are not just talking about one or two children—this is my second point. There are families with a considerable number of children, not all of whom are their own. There are single mothers who have gone through a number of different partners by whom they have had a child. They end up sometimes with five different successive partners, and with more than five children. How on earth will that group of families cope if they are unable to have additional child benefit? I can understand their coping perhaps with one or two children but not three, four, five or six. Such families make up a smaller percentage; the figures were given in our previous debate. However, they do exist and they will be in real difficulty. Unless there is some sort of hardship allowance for families who cannot cope on this £26,000 cap without child benefit, I fear that I will go the way I would prefer not to go—against the Government.

[Lord Kirkwood of Kirkhope]

My Lords, this is a very important subject and this is the most important amendment as it seeks to deal with some of the problems that will flow from Clause 94.

I want to make it clear that I am implacably opposed to a household benefit cap in principle. People’s eyes glaze over when I try to explain my main reasons. I tried it in Grand Committee and by the end people looked at me as though I was possessed. However, there is a point that has not been made and it is very important. I am talking to my own side as much as to anyone else. I have spent my entire life fighting for benefit entitlement to be enshrined in law. That is to say, if you meet the eligibility criteria you get the amount due. That has been hard fought for and it is a very important part of our social security set-up.

Clause 94 changes that. It is a ministerial override. The Chancellor of the Exchequer or the Secretary of State for Work and Pensions will decide, arbitrarily in my view, although the Minister says that it is to do with mean or median average income. These are not figures that are easily pinned down in our systems of legal entitlement in social security Acts. A Minister of the Crown now says that he can, by regulation, override who gets child benefit if it is counted in a cap and if they are over the arbitrary limit. That is a change. We are giving powers to Ministers that I do not think it is safe to grant them.

If the Government think that housing benefit is too high in some circumstances, let us reform housing benefit. I would be up for that. We have heard powerful speeches. My noble friend Lord Greaves just made a very powerful speech about the amount of money that is being diverted to landlords. It is £2 billion a year in housing benefit. Anyone sensible would want to take a look at that, but this is looking at it over too short a period and doing it in a technical way that strikes at some of the protections that we have in Parliament. When we set entitlements in the uprating Statement every year, we can be confident that if people meet those entitlements they will get that money. We cannot say that any more because a cap may be applied. Look at the regulations and look at Clause 94; it is very general. This is a very targeted debate, which it should be as it is about child benefit. I say to noble Lords that, in future, child benefit amounts can be attacked in a way that we will not be able to control. Local authorities will have to reduce child benefit entitlements to enforce this cap. That is not something that this House should accept casually.

What I should really like to do with Clause 94 is vote against the whole thing. However, my noble friend Lord German and one or two others took me into a dark room, sat me down and said, “That wouldn’t be sensible because the great British public know the square root of next to nothing at all about the detail of the technicalities”. He has persuaded me that I should mitigate Clause 94, and I am prepared to do that. This amendment is the best form of mitigation because it protects a universal benefit that people earning just shy of £80,000 a year will qualify for until we look at that. The Government say that they are on the case. Those people will get that benefit, while people subject to the housing cap in future may not. I do not see the equity in that situation and it would not be safe for us to run with the clause if unamended. I am grateful to my noble friend Lord German for showing me the error of my ways in getting the mitigation.

I want to say two other things as well. This does not attack universal credit. If I believed that the amendment did that, I would certainly vote against it. Why do I not believe that? The amendment is to Part 5 of the Bill, whereas universal credit is in Part 1. If this is an essential part of universal credit, why is it not in Part 1—in the first 43 clauses? It is not. It is there only because of something called the Treasury claw-back, which we discussed at great length in Grand Committee. I was absolutely persuaded that I would die in a ditch to save universal credit. I pay credit—universal and otherwise—to the Minister for achieving it. As someone said earlier, it is an achievement. It will transform and improve dramatically the way that the welfare and benefits system is rolled out. We will certainly be in a much better place when the economy recovers.

However, the Treasury claw-back is £18 billion over the CSR period. The amendment, give or take the new version of the impact assessment, which I have not yet studied, will save £113 million. My point is simply this: the deal was done by the department in 2010, when it was absolutely reasonable to expect that the green shoots of the economy would start to be seen in 2014. Is there anyone in this House who now believes that that will happen? The circumstances of 2010 are now changed, so we are not lashed to the mast. If you want to give some protection to the people at the lower end of household income distribution, this is the amendment to mitigate that affect.

There is a lot of misunderstanding in this debate about the difference between a poverty indicator before housing costs and a poverty indicator after housing costs. After housing costs, the families that will be hit by this household benefit cap will be as poor as church mice. When you measure the amount of income available to a household and divide it by the number of people in it—these are big households—they will get tiny sums of money. I saw an article in the Guardian today that referred to 62p per family member after the household benefit cap in one case that had been worked out. What are we doing here if we are approaching that kind of thing?

The Government will not be able to control this. The child benefit that will be withdrawn will be withdrawn by local authorities. Once the regulations are passed, we will lose control of what will happen to these households. I contrast that. Colleagues may know that the DCLG is running a very interesting programme on troubled families. The Prime Minister tells us that there are 120,000 troubled families—I am sure there are—just in England. We are spending just shy of £450 million on getting alongside them, getting them back into work and getting their kids into school. That is a much better way of dealing with some of this stuff. Why, on the one hand, are we helping troubled families? People who are hit by the housing benefit cap will very quickly become troubled. Maybe they will get help from this left-handed scheme. Meanwhile, they have to face the reductions that are being made by the right hand of the Government.

I am very worried about this. Child benefit is a universal benefit and a mitigation that is essential to protect the interests of children. It does not affect universal credit. If it did that, I would not vote for it. However, if it is pressed, I will vote for this amendment with enthusiasm.