Benefit Cap (Housing Benefit and Universal Credit) (Amendment) Regulations 2016

Lord Kirkwood of Kirkhope Excerpts

Tuesday 8th November 2016 Lords Chamber

Moved by

[Lord Kirkwood of Kirkhope]

That this House regrets that the Government have not, in advance of the entry into force of the Benefit Cap (Housing Benefit and Universal Credit) (Amendment) Regulations 2016 (SI 2016/909), made additional support available to those individuals affected by the benefit cap to find work.

Relevant document: 9th Report from the Secondary Legislation Scrutiny Committee

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I am delighted to take the House to the much more straightforward issue of social security secondary legislation. The House has been hard at work all afternoon, so I do not want to detain it any longer than I can help, but I hope that this will be an interesting break from the important topics of children and social work that we were considering earlier.

It is my pleasure to move the regret Motion which stands in my name and would amend the Benefit Cap (Housing Benefit and Universal Credit) (Amendment) Regulations to provide that additional support be made available to individuals affected by the benefit cap to find work. I want to acknowledge how hard business managers have worked to find an appropriate time slot for this short but important debate. It was important to have a discussion about the implications of the new measures at roughly the same time as the change was made—which, as colleagues know, happened yesterday. I am grateful for the effort made to make the debate relevant in terms of its timing.

I am grateful too—as I always am, and as the House always should be—for the work that has been done by the Secondary Legislation Scrutiny Committee. I find what it does invaluable; it helps me to understand and interpret legislation that is sometimes complicated even for somebody like me who has done work in a field such as social security. Its report captured my attention and led to this debate.

I acknowledge that there are two important additional exemptions in the regulations. I pay tribute to the noble Baroness, Lady Pitkeathley, and her colleagues on the opposition side and to the Minister for achieving them. If they had not been in these regulations, I would have been tempted to try to annul them altogether. It was obviously a clever trick on the part of the Minister to put in a couple of exemptions so that we could not attack the regulations more fundamentally.

Anyway, that is by way of preamble. We are considering a fourfold increase to 88,000 in the number of households that the cap will now cover. The two significant differences are that it is set at a lower level and it is tiered. Both differences will change the incidence and the effect but not the fact that it will be out-of-work households of a working age that carry the weight of the changes. I cannot miss the opportunity to observe in passing that over the period since 2010 working-age families have carried more of the can than maybe they should. In retrospect we might look back on that and wonder why we did not spread the load more widely. We have had debates about that in the past.

I hope that in the new regime we are now under with the change of Government in the summer, there will be better consideration of these matters and the incidence of cuts falling on working-age families in the future. Certainly, some reassuring things were said by the Prime Minister in her early incarnation. The new Secretary of State is a man with whom I am certainly very happy to do business. He is a sensible man and I have known him a long while. I look forward to working with him in the social security field in future.

I will not labour the objection because the noble Lord, Lord Freud, has heard me on this ad nauseam. I am of the school of thought that benefits should be assessed by way of establishing need; that need should lead to the entitlement. This second raft of supporting mechanisms in our social protection policy is that there is an annual uprating, an undertaking that adjusts rates. We have a perfect system there for adjusting—reducing, increasing, or anything we like—that is well understood and has been in place since the Second World War effectively. It hurts me that we start having vanity projects unleashed by uncontrolled Chancellors of the Exchequer who know nothing about what the Department for Work and Pensions really wants to do, visiting cuts in an unexpected way. For example, these cuts will have the arbitrary outcome of particularly affecting large families, which is no surprise, in high-rent areas, which is not a surprise either. Indeed, the only way in our benefit system that you can get anywhere near £20,000 or £23,000 by way of benefits is by being in one or both of those categories. There is no other way. Jobseeker’s allowance pays £73 a week, not £23,000 a year. The general public find that difficult to understand but we in this House know better. The arbitrary nature of a policy such as the cap being introduced is dangerous and it hurts people.

Turning to the Motion, I worked as hard as I could to see if I could go with the grain of what the Government are trying to do. I agree that of the three objectives in this policy, getting more people into work is something that we all favour, but the so-called work incentives deployed in this measure are threatening to most people. They will continue to be threatening unless these people can be assured—as can we as policymakers—that they are being given a fair shot at getting into employment. Now, phase 1 of the cap substantially had its incidence in London. There is a labour market in London that is as vibrant as any in the United Kingdom. The tiered effect of phase 2 of the cap will produce difficulties all across the United Kingdom in varying labour market conditions. People will find it very much harder in phase 2 to respond to the exhortation that work incentives are being increased. It is very difficult for people to do that without substantial support and that is absent at the moment, so far as I am concerned. This Motion merely says, if I can put it this way, that it is not safe to introduce this yet—not until we get better provision made and help people into work.

There are three other things I will briefly canvass. Obviously, one of the other objectives in this is trying to persuade the Government—I hope the Minister will reflect on this—that it is madness to put this benefit cap into universal credit. None of the figures we are talking about this evening draws any experience from universal credit yet because it is too early in its rollout. However, putting the clauses of the benefit cap into universal credit will make it even harder to get people to understand what universal credit is trying to do. I do not think that it is too late to do that, although these regulations go through the motions of it. I just hope that the ministerial team will reflect carefully on opportunities in future under the new Government to try to strip out benefit capping from universal credit when it is properly introduced.

On the Government’s claims of success, I do not know if the Minister saw the IFS observation note published on Sunday, but there is some evidence of movement. However, the Government are vastly over-claiming the success of this policy. The IFS says that in 2015-16, phase 1 of the benefit cap saved directly some £65 million. In 2016-17, it expects it to directly save another £100 million on top of that. Yet that has been covered off by people claiming discretionary housing payments, in 2015-16 for £26,000 and in 2016-17 for the £20,000 cap. I am sorry—I did not make that very clear. The savings of £65 million and £100 million are, the IFS estimates, some 1% of the £12,000 million to be saved over five years, so it is not a huge amount of money.

The point I was garbling there is that the £65 million saving must be offset by £25 million in DHP awards in 2015-16. We now know that in phase 1, 40% of people subjected to the cap made successful applications for discretionary housing payments. It comes to the point where you really need to ask yourself whether the savings made, when measured against the discretionary housing payments paid at the moment, are worth the effort. The National Audit Office and Comptroller and Auditor-General, when they get round to it in due time once this whole policy area settles down, will start asking themselves that question: whether the totality of the spend to try to handle some of the transitional arrangements and mitigate some of the effects does not make the policy less than worth doing because it so affects the money actually saved.

I noticed a Motion that went through the House just after the summer where £585 million went to Northern Ireland for mitigating effects. That is for a community of 1.8 million people. When you look at the amount of discretionary money and some of the block grant Scotland is using—principally at the moment to mitigate the bedroom tax changes, but no doubt the Scottish Government will think about using their own money to mitigate some of the cuts under this policy too—the totality of public spend begins to be questionable. I am not sure that it can be claimed that this is a clear success in terms of making a significant saving to the public purse.

My next point, briefly, is that the evaluation is weak. I know that the Minister is very hot—and rightly so—on the research dished up for his consideration. I ask him to look at that again. There are dynamic effects, which I understand are difficult to measure. He has said that many times before. The Ipsos MORI survey was done with 490 people who had been subjected to phase 1 of the cap. Those 490 self-selected respondents do not seem to me to be a core collective statistical analysis of the experience across the whole cohort of those subjected to the cap. For example, I do not think that there has been any attempt at all to follow up offload destinations. There are people who just left and stopped claiming benefit. They have disappeared and we need to look at that very carefully indeed.

--- Later in debate ---

[Lord Freud]

I am sorry. I did not mean not to be serious. My best understanding of this is that where someone has been capped and will no longer be capped then we will inform them of the change. If that is not the case, I will write to the noble Baroness; if it is, I will not. However, I am pretty sure that it is the case.

To pick up on the concern expressed by the noble Lord, Lord Kirkwood, regarding the point made by the Secondary Legislation Scrutiny Committee, the committee wrote to my colleague the Minister for Welfare Delivery to express concern about the equality analysis. I imagine that the noble Lord saw that letter. Ministers fully considered the equality analysis at the same time as the regulations were made but there was simply a delay in publishing it. Perhaps noble Lords can cast their minds back to the peculiar period in our history following the June referendum, when the machinery of government perhaps was not working quite as smooth as it usually—or always—is.

On evaluation and the Ipsos MORI survey that the noble Lord talked about, the numbers came about because it was a longitudinal survey to understand what was happening; a lot of different levels of analysis went on, which looked at different outcomes, some of which were done on a quantitative basis, others on a qualitative basis; that was a qualitative one. We are committed to go on evaluating it and now we are developing the plans to understand behaviours and attitudes. The quarterly benefit cap statistics will continue to be produced, and the May 2017 release will be the first to show the impact of the lower levels.

I hope I have reassured the House that the Government have put in place measures that provide significant additional support to claimants affected by this policy to help them adjust, and wherever possible to move into work.

[Lord Kirkwood of Kirkhope]

My Lords, I am grateful to the Minister and to all colleagues who have contributed to this debate. I think it has been worth while. My difficulty with the Minister’s response—which I will study, as I always do; I have the box set of the Freud responses over 10 years—is that I was looking for “additional”, but I did not get that. It is also too passive. A lot of good work is laid in front of some of these people who are confronting quite catastrophic changes in their financial circumstances. I would have expected a benefit team to have been geared up to deal with that specifically, certainly for six months or so, and that is absent. That is inadequate, because people will suffer as a result of it not being there.

I trust that the Minister has taken the message that although we had important debates about this in 2010 and 2015-16, this is a clear and present danger if it is not got right, and it will continue to be considered in that vein by the department. However, because of the absence of the activity that I was looking for and the additional measures which were not produced, I fear I must test the opinion of the House.