Welfare Reform and Work Act

Philippa Whitford Excerpts

Wednesday 21st March 2018 Westminster Hall

[Dr Philippa Whitford (Central Ayrshire) (SNP)]

I beg to move,

That this House has considered the effect of the Welfare Reform and Work Act 2016.

It is an honour to serve under your chairmanship, Mr Gapes. This debate marks two years since the passage of the Welfare Reform and Work Act, which received Royal Assent on 16 March 2016. It brought in several key changes: the four-year benefit freeze, a further reduction in the benefit cap, a cut to the family element of tax credits and the introduction of the two-child limit, and removal of the work-related activity group component from employment and support allowance. It also saw changes in the work allowance within universal credit, leading to a 63% taper, and further housing benefit cuts. Those cuts had hit people in the private rented sector previously, but were now brought in to hit the social rented sector.

The problem is that we cannot look at the 2016 Act in isolation, because it comes on top of the cuts in the Welfare Reform Act 2012 and, in fact, Budget changes going right back to 2010. We have seen eight years of relentless attacks on the most vulnerable in our society. Two groups particularly hit were the disabled and children. In 2008 incapacity benefit was changed to employment and support allowance; and, as the National Audit Office has highlighted today, 70,000 people were underpaid because their right to income-related employment and support allowance was not recognised. The Government are undertaking to pay back all that money by next year, but people have spent nine years without money that they were owed. Interestingly, the Government will pay back only to October 2014 and not any earlier arrears. That is a bit funny, because when we have to pay the Government, somehow there is never a statute of limitations.

In 2013 there was the move from disability living allowance to personal independent payments. Those are meant to cover the additional costs relating specifically to disability; they are not meant to be work related. They are also meant to allow someone with a disability to study or work and achieve the best that they can.

Both employment and support allowance and personal independence payment require a fair assessment of someone’s disability, or indeed ability. Instead, people got work capability assessments. Those are really the key problem for people who are disabled. The process was outsourced initially to Atos and is now outsourced also to Capita. The Government aspire to depend predominantly on face-to-face assessments. A key issue is the gradual reduction in sourcing other evidence, despite the claimant assuming that the Department for Work and Pensions will source other evidence regarding their underlying condition.

I can accept that we would want to look at someone’s capability and not pigeonhole them, but knowing what underlying condition they have can tell us whether that is something that will change, improve or never improve. There have been repeated assessments of people with chronic conditions and deteriorating conditions, congenital abnormalities and permanent injuries, such as amputations or spinal injuries. People with terminal diseases have been recalled for repeated assessments.

There is a particular problem regarding the assessment of people with mental illness or learning disability. I am sure that every MP will have had cases in which there has been poor recognition of how a mental illness affects someone’s abilities. I had to raise in this place the case of a constituent who had complex post-traumatic stress disorder after serving in the Gulf war—to the point where he struggled ever to leave the house. He was on DLA at the highest rate. He was moved over to PIP at the highest rate and then called for reassessment, at which point he was moved to the lower rate. He appealed, which of course many people do because of the high rate of change of assessment when people appeal. That shows how poor the original assessments were.

However, following my constituent’s appeal, all his points were taken away, and what my caseworker heard back when inquiring was, “PIP is really for people who can’t carry out the basic tasks of daily life. People with mental illness can of course wash themselves, cook, clean and shop.” Well, that is said by someone who has never seen profound depression, which looks like the batteries have simply been taken out of someone. That issue appears again and again in all our casework inboxes. The other conditions we are talking about are those that wax and wane. Someone may attend for assessment on a good day and they are often bullied into saying what they can achieve on their best day. That is not a realistic assessment of what their life is like.

As Scotland takes over some of the benefits, we are aiming to treat people with greater dignity. We will ensure that we have sourced the medical information and try to ensure that the assessor is equipped with the clinical skills to assess the person they are viewing, because that process has become really traumatic for people who are suffering from disability.

Under PIP, more than half of people have lost some or all of their benefits, particularly the mobility element. Many of us have been involved in trying to hold on to mobility cars for some of our constituents. We have seen the distance that people need to be able to walk reduced to 20 metres. Frankly, that is the distance from the car park into the supermarket; it is not a distance that would allow someone to walk to their nearest bus stop, or to walk from the bus stop at the other end to wherever they are trying to go. Then people’s unpaid carers lose carer’s allowance. That means that the impact on a disabled family can be huge.

[Deidre Brock (Edinburgh North and Leith) (SNP)]

Is my hon. Friend aware of a recent report commissioned by the Equality and Human Rights Commission called “The cumulative impact of tax and welfare reforms”? It showed that, overall, the changes to taxes, benefits, tax credits and universal credit meant that households with at least one disabled adult and one disabled child would lose more than £6,500 a year, which is more than 13% of their annual income.

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[Dr Whitford]

I am, and I thank my hon. Friend for that intervention. The problem with all the changes, going right back to 2010, is that there never was a proper cumulative impact assessment to look at what changes on top of changes have done and what happens to people who are in more than one group. We know that lone parents are impacted by changes, but what if a lone parent is also disabled?

[Rachel Maclean (Redditch) (Con)]

Does the hon. Lady agree that all the changes in the welfare legislation should be seen in the broader context of other policies, such as the rise in the national living wage, which is lifting some of the lowest paid people in this country out of poverty?

[Dr Whitford]

I will come to that point later in my speech, if the hon. Lady is happy to wait.

In addition, carers are now subject to conditionality and treated as jobseekers, regardless of what their caring commitments are. That means that they may be open to sanctions. In 2013 we had the infamous bedroom tax, which thankfully in Scotland we have been mitigating, but which has impacted on people with disability, who will lose 14% of their housing benefit if they are deemed to have a spare room. Many disabled people require additional space, whether that is for complex equipment or because they need to sleep separately from their partner, or because they routinely or occasionally require someone to stay over when they are not well.

With the Welfare Reform and Work Act we also saw the removal of the work-related activity group component from employment and support allowance. We spoke out against that repeatedly. Taking £30 a week away from someone who has been defined by DWP assessors as not fit to work will most certainly not get them back into work. That impacts particularly on people recovering from major illness. As a cancer surgeon, I have seen for myself the impact on people who have gone through a year of intense surgery, radiotherapy and chemotherapy and the time it takes to get back to work. We are talking about extra heating, because they are at home. In England, we are talking about prescription charges and car parking charges at hospitals, both of which, thankfully, patients in Scotland do not have to pay. Is it any wonder that this Government have been criticised by the United Nations for breaking the convention on the rights of persons with disabilities? It has been a relentless attack.

The stress has increased the mental health issues suffered by people with disability. A survey has shown that over 40% have at some time considered suicide. What kind of society are we, if we are not willing to look after those who are vulnerable? We can judge a society by how it looks after its most vulnerable. As these disability benefits come to Scotland, it is our aim to use a human rights approach and ensure that dignity is at the centre of how we treat people.

Carers should also be supported and valued. They save the state millions of pounds by providing virtually free care. In Scotland, one of the first Acts that will come in next year will increase the carer’s allowance to at least the level of jobseeker’s allowance. It is little enough, but it is at least a declaration of intent. It is envisaged that employment support allowance is to support those who, due to their disability, are simply unable to work. PIP is meant to allow those with disability to reach their full potential. We should not be sticking people in their houses, because we take away their mobility, and then saying, “We are trying to get them into work.” People with disability who are working have extra costs, and that is the whole point of PIP, so the Government should put their money where their mouth is.

We also know that child poverty is rising and is expected to rise further. We have seen it climb by about 5%. The poorest areas in the UK now have child poverty rates of around 50%. How can that be right, when we know the impact that will have on children? But while we talk often about child poverty, we should recognise that it is actually family poverty, and that children cannot be separated from the experience of their family. Their income has been hollowed out since 2010. We saw the benefit cap in 2013 set for families at £26,000 a year. That affected about 20,000 families. The Welfare Reform and Work Act 2016 cut that to £23,000 in London and to £20,000 elsewhere in the UK. That affected 88,000 families, who lost either £3,000 or £6,000 from their income.

In 2011 we saw the local housing allowance brought in to cut what was paid for those living in the private sector. It reduced housing allowance from the median in their area to 30%. But in 2016 that was frozen and in a third of areas it does not even come close to 30%. In London, housing benefit for those in the private rental sector will cover only 16% of their housing costs, meaning that they fall about £1,000 a month short. That is significant for anybody’s wallet, but for those at the lower end of income earnings it is a severe hit. That has led to over 4.5 million people in the private rented sector struggling as rents have soared.

In 2016 the Government cut the family premium that was allowed with a new claim or a new birth, leading to a loss of £907. The bedroom tax also affects families, particularly in situations of separation or divorce, because the parent with minor caring responsibilities is not recognised. For example, a man—most likely—now living on his own in a small flat is not allowed a bedroom that would enable his children to stay over when he has them for the weekend. What does it say about us that we are not trying to strengthen families, but actually trying to undermine them?

Tax credits, which had such a big impact on child poverty, have faced attrition since 2011, when the first thing to go was the baby element, removing over £500. The 2012 changes saw families over £700 worse off. We all remember the haggling in the Chamber about changes to tax credits and the Chancellor stepped back from doing it after the Lords objected, but that was because he knew that those tax credit changes were simply hidden within universal credit and that, therefore, eventually they would hit everyone. The Government have removed the family element for the first child, again over £500, and now tax credits are claimable for only the first two children. The third child in a family loses out £2,780 a year. That has a huge impact on such families.

Universal credit has also reduced the work allowance. That means that it will often not be worth the while of the partner in a family—the second earner—going out to work, because they would lose so much and, particularly when childcare is taken into account, could end up worse off than if they did not take the extra work. The Government always talk about making work pay, but they do not always follow through.

The policy from the 2016 Act that has had the biggest and widest net, dragging more people into poverty, is the benefit freeze. Again, that comes on top of a 1% cap that was in place from 2013. The holding down of all working-age benefits has been in place for a number of years.

[Alex Burghart (Brentwood and Ongar) (Con)]

Will the Scottish National party and the Scottish Parliament use the powers they have to raise taxes in order to end the freeze on benefits in Scotland?

[Dr Whitford]

We are already looking to raise more money to mitigate some of the cuts from here but, frankly, with our budget dropping over 8% between 2010 and 2020, it is simply not possible for a Government to mitigate everything that comes from here. This place has to take responsibility. We are already spending £450 million on mitigating changes that came from here. So all the hon. Gentleman is asking is that the Scottish Government should keep sending their budget back to Westminster.

[Alex Burghart]

If the benefits freeze was to be unfrozen in Scotland, people in Scotland would be receiving additional benefits that people in the rest of Britain would not receive. Consequently, it would seem fair if that came out of Scottish tax take. The Scottish Parliament has the ability to raise taxes, but the hon. Lady is declining to do so. Why is that?

[Dr Whitford]

That is what I am saying; we are already mitigating £450 million in benefit cuts from this place. We are not here to talk only about Scotland; we are actually talking about the suffering right across the UK. Some hon. Members in this place like to imply that Scottish National party MPs do not care about people in the rest of the UK, but I have friends and family here, as many of us do. The source of the benefit freeze is the Department for Work and Pensions—this place—and it has to be fixed at source.

[Neil Gray (Airdrie and Shotts) (SNP)]

I commend my hon. Friend for her meticulous and erudite speech. Does she agree that the benefit freeze, even by its own measure, is going beyond what was predicted? That is suggested by the DWP’s own figures and the figures that the SNP has obtained from the House of Commons Library, which suggest that the increase in inflation means that £3 billion extra will be saved by the DWP from the benefit freeze.

[Dr Whitford]

Yes. That is exactly what I will move on to. Obviously, the former Chancellor, George Osborne, justified the benefit freeze because at the time inflation was 0.3%, but inflation now, due to Brexit and the fall in the value of the pound, is officially 3%, as measured last September. By 2020, low-income families will be over £830 worse off, just due to the benefit freeze. If we look at the cumulative cuts, an average family will be £1,300 worse off. But if we drill down into families that have three or more children, that builds up and becomes eye-watering.

[Rachel Maclean]

The hon. Lady is being extremely generous in giving way. I want to ask about the principle behind what she is saying. I was not an MP when the benefit freeze was introduced, but I believe the logic was that at that point benefit spending was rising much faster than average earning. Does she think it is right that spending on benefits should go up faster than the average earnings of people in the country? Does she think that should be the case, and is she advocating for that to continue now?

[Dr Whitford]

I am advocating that inflation is now ten times what it was when the policy was brought in, and that therefore this policy should be re-thought. It was never imagined to have such a punitive impact. As my hon. Friend the Member for Airdrie and Shotts (Neil Gray) said, the return to the Treasury has been much greater than planned, so the Government could easily afford to unfreeze benefits. That measure is having a particular impact on the poorest.

Like the point raised by the hon. Member for Redditch (Rachel Maclean), the Government and the Conservative party claim all the time that they are helping the poorest through other actions. The number one thing that is always quoted is the national living wage: not the real living wage, which is 95p an hour higher, but the pretendy living wage. The Office for Budget Responsibility, however, points out that this does not offset the benefit cuts. The increased earnings owing to the national living wage will be £4 billion a year by 2020. The benefit cuts are three times that: they will be between £12 billion and £13 billion a year. I am sorry, but the Government and the Conservative party cannot hide behind that claim. They are still taking £8 billion from the poorest families.

The other thing that is always quoted is the raising of the personal tax allowance. That obviously has a bigger impact if someone pays tax, but only £1 out of £6 spent by the Treasury on raising the personal tax allowance will end up being for people in the lower half of the income distribution curve. Unfreezing benefits would be much more targeted—even excluding child benefit from that and focusing on all the other benefits would have the biggest impact on helping poor families.

Other benefit cuts have specifically impacted on children and families with children. The health in pregnancy and Sure Start maternity grants were both cut, even though we know the importance of the first 1,001 days after conception. That is about the health and nutrition of the mother and the early years of the child. We know that the impact of poverty affects children life-long; it reduces their educational attainment and tends to limit their job prospects. They are much more likely to end up on benefits in the future. It also affects their health. They have higher rates of physical and mental health issues than those in affluent families. They are at greater risk of addiction, of ending up in the criminal justice system, of committing suicide and of being in a road traffic accident or a house fire.

All that costs money. Mitigating in later life the issues that come from child poverty is estimated to cost the Treasury almost £6.5 billion a year. If there is no change in direction from the Government, we expect 200,000 more children to be growing up in poverty by 2020. I suggest to the Minister and the Government that they do not spend £6.5 billion mitigating suffering in later life, but invest in early years now.

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[Dr Whitford]

Does the hon. Lady recognise that more than 60% of people who require support are working, but are stuck in low-income jobs? Surveys show that very few of them are out of working poverty 10 years later.

[Rachel Maclean]

I do not agree with that, because the evidence does not bear it out. Universal credit is an agile system that is designed not only to get people who are out of work into work, but to support them as they look for better-paying jobs. I will come to that in my speech.

I accept that reforming welfare is difficult, as the hon. Lady said. There can be no MP in this House who has not come across heart-breaking cases where the system has failed. Those are wrong, and we all stand up for our constituents, but they are not evidence of a failing system—rather, they are the inevitable consequences of a large and challenging public sector reform process. Since I have been in this House, I have seen Ministers listen to problems and make changes to fix the system. Recently, we have seen adjustments reflecting concerns raised on both sides of the House, which are welcome. We hear much criticism from the Opposition, both the SNP and the Labour party, on this. It is extremely easy to criticise from the Opposition Benches, but no real constructive alternative is offered.

I have made it my priority to visit the jobcentre and speak to local people on the ground in Redditch. These are just a few of the experiences that I have heard. My local jobcentre manager has worked there for 30 years. She described the system as “working very well” for her clients. She said that it is “the best system” she has seen in her 30 years as a jobcentre manager and that it helps people “who really need help”.

The first example is a customer who was seen by a work coach when universal credit first went live. The customer had a very difficult personal background. She was totally disengaged when she saw the work coach and she was quite difficult to work with. The work coach encouraged the customer to gain upskilling in maths and English. With the work coach’s help, she found work. The customer is now working in a role where she wants to help others to find work. She even shares knowledge of vacancies with her former work coach to encourage other people to find work.

Another example is a customer who had been on and off benefits since 2012 and was working with a work coach. This customer struggles to make eye contact and lacks confidence. Over time, the work coach established a rapport and helped him to gain confidence. They referred him to work experience with a local retail outlet. When he attended, the work coach asked if there had been any changes. The customer looked them in the eye and said, with a smile on his face, “Would that include the fact that I’ve got a job?” The coach said that they are “delighted” and “so glad” that they referred him to the retailer in the first place, and:

“Seeing the customer smiling about his success really made my day.”

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[David Linden]

As well as being a constituency MP who does surgeries, I spend two hours every week door-knocking in my constituency. I do not regularly find people opening their door and saying to me, “This welfare system is absolutely fandabbydozy.”

This week marks two years since the Welfare Reform and Work Act 2016 implemented some of the most punitive cuts from this Government. Some of those were a fresh round of cuts, and some built on the cuts made in the Welfare Reform Act 2012. This debate allows us the opportunity to shine a bright light on the damage caused by those punitive welfare reforms, which have had a direct impact on some of the most vulnerable people in my constituency. I will address two policy areas in my remarks: first, the punitive benefit freeze, which leaves people out in the cold, quite literally, while the cost of living soars, and secondly, the medieval two-child policy and abhorrent rape clause.

Figures commissioned by the SNP and put together by the Library show that, based on the spring statement 2018, between 2018-19 and 2020-21, the benefit freeze will save an additional £3 billion compared with what was forecast for those years in the summer Budget 2015. In November 2017, the Joseph Rowntree Foundation said that the benefit freeze means that between 2010 and 2020, a couple with two kids will be £832 a year worse off. It has also said:

“The freeze is the single biggest policy driver behind rising poverty by the end of the Parliament.”

The impact of the poverty premium means that people on low incomes face higher costs as a proportion of their income than those on higher incomes, due to the nature of products and services. People on low incomes often cannot pay for goods or services by fixed direct debit, but for many things, such as mobile phone bills, energy bills and bank cards, companies only offer discounts based on people signing up for a direct debit.

Economic shocks such as the breakdown of a car or a washing machine are far more significant for people on a low income. I know that from direct experience, having spent two years working at Glasgow Credit Union. One of the most heart-breaking things about being in that job was people coming to me for loans to pay for a washing machine that had broken down or for school uniforms.

Sadly, that is the reality we are now in. I am disappointed that that lived experience did not come into the previous speech. We see it week in, week out when we do our constituency surgeries. With all those factors, the benefit freeze is an additional financial burden on disadvantaged people. The Government must urgently restore the real value of benefits by scrapping the freeze.

The second issue I will raise is the Government’s medieval two-child policy that would frankly make China blush. The idea that in 2018, we are saying to families, “Two children in your family—that’s it. The state won’t pay for any more than that,” sends a strong signal from this place. [Interruption.] If the Minister is unhappy with that, I am more than happy to take an intervention—absolutely not.

[Dr Whitford]

Will my hon. Friend give way?

[David Linden]

I am happy to give way to my hon. Friend, though.

[Dr Whitford]

Does my hon. Friend accept the basic premise that we have an ageing population and we need people to have children so we can balance that? Instead, we are relentlessly punishing people who have children.

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[Alex Burghart]

I think the word “punish” is entirely wrong in this context. I think we have to say that if people are aware of the consequences of their actions—that there are benefits available for certain decisions they make but not for others—they can make their own decisions. It is up to the state to decide where the balance of benefit lies.

[Dr Whitford]

Will the hon. Gentleman give way?

[Alex Burghart]

I will happily give way to the hon. Lady.

[Mike Gapes (in the Chair)]

Order. I am conscious of time. At least two other Members wish to speak. They will not be able to speak if there are any more interventions and if the hon. Gentleman does not conclude his remarks soon. I intend to start calling the Front-Bench spokespeople at 10.30 am.

[Dr Whitford]

Thank you, Mr Gapes. I intervened merely to point out that people’s circumstances change, so if they end up redundant, ill, or whatever, and then apply for benefits and have three or more children from better times, they will not receive that support.

[Alex Burghart]

No, but they will have additional support to get back into work and they will have the benefit of universal credit to progress in work when they do.

I will go back very quickly to the Scottish perspective, because something that is obviously completely unacceptable in the position of the Scottish National party is that they want to fix the problem but they do not want to do it themselves. I find that very peculiar from a party that seeks independence, because of course if Scotland was independent the only way that it could get rid of the freeze would be by paying for it out of Scottish coffers, which would require an increase in tax, and that is something they have declined to do.

I was very surprised when I questioned Jeane Freeman, the Scottish Minister for Social Security, about this issue in a Select Committee. She failed to answer the challenge, just as SNP Members have done today. The SNP can raise taxes now to pay for this, but it chooses not to. It has therefore decided not to prioritise this policy.

Obviously there are always steps we can take to improve the welfare system. Universal credit, which is coming online, will help people to overcome major barriers to employment. It will help people overcome addiction or mental health problems and move back into work. On disability, we have an admirable aim to halve the disability employment gap, and I believe that assistive technology will help us do that. I would like to see us increase work incentives by adjusting the taper as and when the budget allows.

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[Dr Whitford]

We did not defend the old system. If work is to pay, the Government should look at children in working households in poverty.

Motion lapsed (Standing Order No. 10(6)).