Welfare Benefits Up-rating Bill

Lord Touhig Excerpts

Tuesday 5th March 2013 Lords Chamber

Freezing the disability element will mean an even greater loss. Current parents will receive transitional protection, but their award will be frozen until their entitlement under universal credit reaches that level. These families are facing a very difficult next few years because of the freezing of child benefit and child tax credit. If the disability element does not increase with inflation, these families will face an even bigger drop in real-terms value when they transfer to universal credit. They will face several years with lower-than-inflation rises. Their benefit will then be frozen on universal credit for an even longer period while food, housing costs and fuel prices continue to rise.

[Lord Touhig]

My Lords, these amendments, to which I have added my name, are essential to protect the basic well-being of the very poorest children. Those seeking to justify restrictions to our social security system have continually argued two things: first, that we must fairly distribute the burden of national economic hardship, and secondly, that we must take tough decisions in order to ensure a sustainable future. Yet driving down the value of child-related benefits achieves neither of those objectives. Instead, it unjustly shifts the burden onto the most vulnerable section of our society and damages the future prospects of hundreds of thousands of young people.

The Government’s own impact assessment highlights that the Bill as it stands will disproportionately affect families, with lone parents experiencing the most significant real-term cut to their income of £5 per week. Noble Lords might think that £5 is not much, so let us put that figure into context: it is the equivalent of half an average weekly heating bill or two lunches for a child. The loss of it is a significant challenge to the increasing number of parents currently struggling to cover utility costs or turning to local food banks for their children’s meals. In practice, the actual shortfall is likely to be larger still owing to above-inflation rises in the cost of necessities such as groceries, fuel and gas and electricity. The net result will inevitably be more child poverty and greater family suffering, making a mockery of any notion that this is a fair or just mechanism for securing cost savings.

As Helen O’Brien, the chief executive of Caritas Social Action Network, said recently,

“it is absurd to suggest that a child going to school hungry or coming home to a cold house is shouldering their fair share of austerity measures; rather they are being deprived of a basic standard of living to which all children are entitled”.

Removing child-related benefits from the scope of the Bill will not completely prevent or reverse this hardship, as low-paid and unemployed families will still face a rapidly widening gap between their outgoings and their core benefit income. However, specific parts of the safety net designed to cover essential costs of caring for their sons and daughters will be crucially safeguarded if these amendments are agreed.

This is particularly important given that the relentless squeeze on the support available for poor families has already left considerable numbers of children not only without the facets of a good childhood but growing up in simply unacceptable living conditions. Reflecting on cuts to local housing allowance and the pending introduction of the household benefit cap, Alison Gelder, chief executive of Housing Justice, recently noted that,

“across the country we are seeing increasing numbers of children suffering from a life in sub-standard housing and being forced into overcrowded accommodation”.

Taken in conjunction with this April’s intended ending of council tax benefit and the imposition of social housing underoccupancy penalties on approximately 220,000 families with children, these measures are putting the income levels of the poorest parents under unprecedented strain. On top of this, child benefit is already subject to a three-year freeze, which stands to create a further annual real-term loss of £130 by 2014.

More than ever the most vulnerable families require protected child-related benefits in order to mitigate the most damaging effects of this rapid and extensive cut to their income. At the very least, the Government should allow sufficient time for the impact of recent and pending benefit changes to be properly examined in relation to child poverty. The result of committing to another three years of real-term cuts before many key restrictions have even come into force will be disastrous for children whose parents are struggling to keep a roof over their heads and food on their table.

Ultimately, increased levels of child poverty are not only devastating for individuals and families but stand to have a profoundly negative effect our society. One of the most significant risks is to children’s education, an issue previously recognised in the DWP’s impact assessment on restrictions to housing benefits. It stated that overcrowding resulting from the cuts could hamper children’s ability to do homework and affect educational attainment. Last year, more than half of teachers surveyed reported that financial hardship among families had resulted in children arriving at their classes hungry, with significant consequences for concentration and behaviour. A report from the Children’s Food Trust last week reinforces the picture of children going to school hungry. Of 250 staff surveyed, 84% said they had seen children without enough to eat and 68% said they had seen an increase in this over the past two years. If child-related income is driven down further this is only likely to worsen, jeopardising the potential of even more young people and undermining the prospects of the next generation.

When parents struggle to afford basic necessities for children, there is also the very real risk of running into long-term personal debt. The shocking findings by the magazine Which? last year showed that payday loan companies now spend over half a million pounds targeting cash-strapped mothers and fathers by putting their adverts on television during children’s programmes. This is indicative of the increasingly desperate situation that so many families now face. A growing number of parents are turning to these lenders, while some 25% now use credit cards to meet everyday living costs. The abolition of community care grants and crisis loans in April only stands to deepen this problem by closing the door to interest-free emergency funds.

It is difficult to see how pushing even more parents into debt by slashing the value of child-related benefits will contribute in any way to our future economic recovery; yet increased levels of debt are precisely what will result from this Bill. Children still need healthy meals, warm houses, winter clothes and new shoes. When parents are faced with a real-term cut in child benefit and tax credits, alongside above-inflation rises in the prices of these goods, they will have to turn somewhere to make up the shortfall. It is as simple as that.

These amendments are not only right, but imperative. Capping up-rating of child-related benefits at 1% for the next three years will exacerbate the already unsustainable pressure that parents are under. It will cause serious damage to our communities in the long run and, most critically, it will drive down the living standards of millions of children. Protecting the basic level of income required to meet young people’s most intrinsic needs is a fundamental test of our society and one that we cannot afford to fail.

At the general election, the leader of the Opposition, Mr Cameron, now the Prime Minister, said that we lived in broken Britain. I paid little attention to him at the time because I believed he was wrong. However, after two and a half years, we live in a Britain where multi-millionaires are about to receive thousands of pounds a week in tax cuts; we live in a Britain where corrupt bankers who fiddled the LIBOR rate are rewarded with pay-offs when they should have gone to prison; we live in a Britain where those who operate our transport system cannot run the trains on time but get big bonuses; we live in a Britain where energy companies have more than trebled their profits yet require pensioners to pay an extra 6% for gas and electricity; and we live in a Britain where hard-working low-income couples with children will now see their weekly income slashed, the unemployed and poor will have their benefits cut and disabled people will see what help they get now cut or taken away altogether. Now, in 2013, I have started to understand what Mr Cameron meant by broken Britain.

[Baroness Massey of Darwen]

My Lords, I want to make some very brief comments on the amendments, mainly to follow up some things I said at Second Reading. As my noble friend Lord Touhig just said, these amendments are imperative, crucial and brilliant, and I congratulate the movers on putting them so powerfully. Any amendments that will mitigate against benefits having a negative impact on children are very forceful and follow very well from earlier, powerful speeches about child poverty.

I suggested at Second Reading that anything that might increase child poverty should be removed from the Bill. I say that again and support these amendments. The Government should really think about listening very carefully to the organisations and experts who work closely with children and families and who understand child poverty. These organisations and experts have pointed out the negative implications of this Bill. Surely their analyses should be taken very seriously.

The Government have already announced that the Bill will directly increase relative-income child poverty by 200,000 children, of which 100,000 will be in families in work. Nearly all the highly vulnerable children that Barnardo’s works with are receiving in-work or out-of-work benefits. This Bill will impose a real-term cut to their income. One in 10 families will be affected by this Bill, the poorest families most.