Universal Credit: Effect of Child Element on Separated Parents

Toby Perkins Excerpts

Wednesday 4th November 2020 Westminster Hall

[Mr Toby Perkins (Chesterfield) (Lab)]

I beg to move,

That this House has considered the effect of child element of universal credit on separated parents.

It is a tremendous pleasure to serve under your chairpersonship, Mrs Murray.

There is a lot of evidence that children who have positive relationships with both parents are happier, healthier and more successful. When families choose to have children, in the vast majority of cases they hope and expect to stay together as a couple for the foreseeable future and the rest of their child’s childhood, but alas, it does not always work that way. A sad fact of life is that parental separation is commonplace: there are 2.5 million separated families with almost 4 million children across Great Britain.

Separation is in itself a traumatic experience for everyone involved, in particular for the children. It is also an incredibly financially stressful time for parents. It can lead to mental health issues, depression, homelessness and many other difficult consequences. It is therefore incumbent on all of us in this place to do all we can to protect children in such circumstances and to support them to have as stable and successful a relationship with both parents as possible.

The process of separation can often lead to considerable hostility between the parents, and that can spill over into financial disputes. Through the Child Maintenance Service, the Government already involve themselves in supporting the process of one parent providing money to the other, but that still leaves the thorny issue of who is eligible to receive child benefit. That issue also has consequences for the housing allocation and as a gateway to other benefits.

One of my constituents, Lee Waterhouse, has two such issues. He and his former wife were in dispute over some matters. I do not propose to go into the detail of their case, but while the Government will allow parents who share care for two children to agree to receive child benefit for one child each, when there is not agreement, as in this case, it means that one parent is considered to be the parent with care and the other parent neither receives child benefit nor is eligible to be housed as a parent with caring responsibilities—that parent therefore becomes eligible to be charged the bedroom tax.

That issue affects Lee, as he is classed as having a spare room, though he needs somewhere for his children to be when they stay with him for about half the week. The Social Security Advisory Committee, which examined this subject in October 2019, acknowledged that one of the most difficult issues for successive Governments has been to design and operate an effective financial regime for separated parents.

The committee’s report went on to recognise that it is difficult for the social security system to reflect complexities, especially of shared care arrangements. One recommendation was that there was a strong case for the Government to take a more strategic approach to separated parents and social security. The committee outlined that it felt the welfare system needed to be updated, given that a key principle is that it should centre on the welfare of the child, in line with the United Nations convention on the rights of the child, but that in doing so it should consider the impact on the child’s welfare of the living standards of both parents—not just the parent with the main responsibility—and their ability to share care.

The report went on to highlight that the current system does not meet those principles, pointing to the presumption that there is one main carer, despite the range of shared care arrangements in place within separated families. The report stated that, as a result, some parents without main caring responsibilities are being pushed into hardship, may face poor work incentives and are unable to share care of their child, which may not be in the best interests of the child’s welfare. I have to ask the Minister, what is the merit of the state deciding who is the main carer in situations where children are shared equally between two parents?

The committee pointed to Scotland as an example of best practice, given that the Scottish Parliament has established a cross-party working group looking at separated parents. It was recommended that the Department for Work and Pensions should join up with that group to ensure a joined-up approach and to learn lessons from the progress made so far. Chesterfield Borough Council has enabled Mr Waterhouse to have a discretionary housing benefit allowance payment that can be used in cases where the Government’s unfair bedroom tax applies. However, the Government are specific that it is a transitional payment to allow claimants to make arrangements to move into more appropriately sized housing. In this case, Mr Waterhouse’s property is exactly the right size when his children are with him. Although we have managed to get Chesterfield to extend the discretionary housing benefit, relying on that means that the Government have outsourced responsibility for the fairness of welfare policy on to Chesterfield Borough Council rather than the Department for Work and Pensions taking the responsibility, which is where it should reside.

In addition to having the bedroom tax imposed upon him, Mr Waterhouse is unable to receive the housing portion of child benefit, given that his children live with him on what is seen as a part-time basis, albeit 50% of the time. Given that my constituent is unable to work owing to a long-term mental health condition, he is now struggling to make ends meet. That is without the additional stresses placed on him by the current benefits system. He does not qualify for any child benefit entitlement. Again, as he has his children on a half-time basis, despite the lack of funds, my constituent is expected to care for his children when they stay with him. From what he has put on social media and from reading the evidence from many other parents in a similar situation, it is clear that his situation is not unique. He is often forced to go without to prevent his children going hungry.

It is difficult to quantify the scale of the situation as there is currently poor quality data available in relation to parents without main caring responsibility. The family resources survey in 2017-18 estimated that as many as 30,000 young non-resident parents were likely to be affected by the housing benefit shared accommodation rate policy. I understand that the situation is a difficult one, particularly in circumstances where parents are in a dispute over custody or child maintenance payments.

In the Social Security Advisory Committee report that I referred to earlier, the committee believed that a cross-departmental working group should be set up to instigate urgent action on these issues. It suggested that such a working group should consider the impact of policy on the living standards of both parents and the net impact of that policy on children’s welfare. It should consider how the social security system could better reflect modern shared care relationships that are not detrimental to the parent without main caring responsibility. What actions have the Government taken as a result of the Social Security Advisory Committee report and has the cross-departmental working group been set up to instigate urgent action on the issues that the committee raised?

The committee went on to say that the group should also consider how to ensure that the benefits system and interactions with the child maintenance formula do not unduly result in poor work incentives or push one parent into hardship, with all the impact that that would have on the children, and it should consider how to ensure separated parents can easily access the right information and support from the social security system. The Government’s sorting out separation website was a welcome step, but much more needs to be done to help both parents effectively navigate the complexity of the system. The committee also suggested that the social security system and interactions with the child maintenance system affects the hardship of both parents, including those not classified as having main caring responsibility, while also affecting and creating hardship for children.

When examining the housing element of universal credit, the committee recommended that the system should be reformed to enable young parents under 35, who share custody of their children, to have them to stay overnight without imposing a financial penalty. Another key recommendation of the committee was that the Department for Work and Pensions should consider options for the system to support all non-residential parents with more than one child to stay with them overnight.

I do not underestimate the challenge, given that it is difficult to design a system that takes into account every personal circumstance, but I do say that there should be safeguards in place to ensure that any social security system is not open to abuse and does not work against the interests of separated parents when one parent has decided not to support a collective approach. We also need to make sure that children are protected in the eventuality that one parent is negligent in carrying out their responsibilities, and I recognise that striking a balance is a difficult matter, but it is incredibly important. It is clear that the social security system is currently not fit for purpose to reflect the complexities of modern family life and that reform is necessary.

In summary, it cannot be right that the benefits system forces parents already in dispute to fight it out between themselves as to who receives the money needed to support their children. Nor can it be right that parents who do the right thing and want to care for their children are hit with the bedroom tax for having their child’s bedroom empty for half the week. In addition to the Minister telling us what the Government have done in response to the Social Security Advisory Committee report, will he tell us what steps they are planning or can take to ensure the equity of payments in these situations? Is the gender of the parent a factor that the state considers when deciding who should be regarded as the main carer? Does the Minister think that the Government do enough to support separated fathers to continue to be there for their children? Will he explain why it is not appropriate for benefit payments to be shared as a matter of course when parents are sharing responsibilities rather than relying on parents coming to some mutual arrangement? I do not underestimate the difficulty in finding arrangements that work fairly and equitably for all sides but will the Minister tell us whether there are any specific concerns about an assumption towards shared payment?

Protecting children who have suffered the trauma of a divorce is something that we should all feel passionately about. Supporting their parents when they are suffering ill health is one of the most tangible ways that we can deliver on that. The report has exposed the failures in the system so I hope that this debate and the Minister’s response can be a step towards getting greater fairness and security for many of the 3.9 million children who will look to us to act.

[The Parliamentary Under-Secretary of State for Work and Pensions (Will Quince)]

It is a pleasure to serve under your chairmanship, Mrs Murray, on your first occasion in the Chair. I thank the hon. Member for Chesterfield (Mr Perkins) for securing a debate on this hugely important issue.

The hon. Gentleman rightly raises some of the challenges faced by separated families. I have listened very carefully to the points that he has made. Following this debate, I and the DWP Lords Minister, Baroness Stedman-Scott, will be happy to meet him to discuss the issues further. Baroness Stedman-Scott has responsibility for the Child Maintenance Service and the reducing parental conflict programme, so there is clear crossover there.

I will start with the principles of universal credit. One of the core principles is to enable families to manage their own affairs. We believe that the current arrangements whereby one designated party receives the whole child element payment are fair and allow families to make their own decisions on how it is used.

To touch on the most recent support, we have taken immediate action to protect jobs and incomes in the face of the pandemic and the Treasury analysis of these measures is that they have been targeted at those most in need. We have injected more than £9.3 billion into the welfare system, including an increase to the universal credit standard allowance of up to £1,040 this year and we have increased the local housing allowance rate to the 30th percentile of local rents from April, so for UC and housing benefit claimants, we are giving additional financial support for private renters to support them through this difficult period. For an average family, that is worth about £600.

Yesterday, we announced that the current easement of the suspension of the minimum income floor in universal credit that was due to expire on 12 November will be extended to the end of April 2021. This sits alongside a generous package of additional support already announced by the Chancellor, including further grants through the self-employment income support scheme and an extension to the furlough scheme until December.

The hon. Member for Chesterfield spoke about who receives the child element of universal credit when separated parents share custody, including arrangements where it is shared 50:50. Where a separated couple have joint custody for their children, the parent who receives the child element is the one the child normally lives with, but if the child normally lives with both, it is the parent who has the main responsibility for the child who receives it. That is decided by the parents, or by a Department for Work and Pensions decision maker if the parents cannot agree or the decision maker does not think that the nomination accurately reflects the arrangement. It is important to stress that similar rules apply to child tax credit and to child benefit, both of which are administered by Her Majesty's Revenue and Customs.

I appreciate the points the hon. Gentleman made and I have huge sympathy with some of them. This is a hugely complex situation and there are no simple or easy options, as he said. There are many different kinds of childcare arrangements that families can come to; that is why our policy is to pay the child element to one parent, and then leave it to families to decide how it is shared between different parties who care for the child or children. Our view is that separated families are able to make their own private arrangements regarding the sharing of resources for children without state intervention.

It might assist and add some important context if I set out some details of how universal credit awards are calculated. Universal credit is a unitary benefit made up of different elements. There is a standard allowance, plus additions to help with additional expenses; for example, the cost of raising children comes via the child element. These elements are all subject to prescribed maximum amounts and paid as a single monthly award, which is calculated at the end of a claimant’s assessment period. Consequently, certain elements, such as the child element, cannot be ring-fenced or separated from the monthly award. Attempting to ring-fence individual components or extract them from the calculation would ignore the all-important interaction between the different stages of the calculation and would not correctly reflect how universal credit is designed in legislation and how it operates in practice.

I understand the case the hon. Gentleman made for his constituent, and we have corresponded on it. There is a 50:50 shared care arrangement, but the ex-partner receives the child element for both children. I understand that that means the constituent does not receive housing support for the additional bedroom that he has. As I have pointed out in correspondence with the hon. Gentleman, we have provided resources to local authorities so that additional financial support for those facing a shortfall in meeting their rental housing costs can be given through discretionary housing payments. We have provided about £1 billion in discretionary housing payments to local authorities since 2011, and they are designed to help the most vulnerable and disadvantaged to meet their housing costs.

[Mr Perkins]

I seek clarity on that point. It is the understanding of Chesterfield Borough Council that discretionary housing payments are a transitional payment for local authorities to work with vulnerable people so that they can get themselves out of the position of having a spare bedroom. In this particular case, and many others like it, however, it is not a transitional arrangement. The man will have a long-term need to accommodate the children. The council is under the impression that the Government do not want it to use discretionary housing payments as a long-term support. Has the council has misunderstood the guidance? If it has not, what does the Minister suggest for this case?

[Will Quince]

We have provided £180 million in discretionary housing payments this year; that is an additional £40 million in this financial year. We deliberately do not give prescriptive guidance on how discretionary housing payments should be spent by local authorities, because they are precisely that: discretionary. They are there for the local authority to use its discretion to support people who sometimes face very complex situations at the point of need. That discretion is deliberately with the local authority. We also do not prescribe how long discretionary housing payment can be paid. In cases such as this, people may have to apply multiple times for a discretionary housing payment, but we do not say that payments can only be, for example, handed out once, twice or three or four times. It is wholly at the local authority’s discretion.

Just one more point: I gently suggest to the hon. Gentleman that, even if the Government were to agree with his suggestion and I were minded to agree with him—I stress that we do not agree—any proposed change of this nature would require significant structural system change or a manual intervention, which would take considerable departmental resource, along with any legislative change. The Department simply does not have any capacity to make that kind of change at the moment.

To add some context, we have had to divert huge amounts of resource across the Department to the processing of claims throughout this unprecedented period, with claims for universal credit going up from 2.2 million to some 5.7 million. It is important to point out, despite that unprecedented shift, that more than 94% of people were paid in full and on time. We simply do not have the capacity to make big structural system changes, even if we were minded to agree with the hon. Gentleman, but we are committed to providing a strong safety net for those who need it.

[Mr Perkins]

The Minister talked about the Government wanting parents to work together and leaving it to parents to decide, but clearly, this is not a unique situation. After a separation, there is often contention and disagreement between former partners. When both are looking after the children 50:50, how is it fair for the Government to decide that one of those parents is the main carer and therefore gets the support with housing, child benefit and the gateway that that opens, and the other parent gets nothing? It seems patently unfair. To dismiss that by saying that is how the system is and it would be difficult for the Department to work on it in a different way is not really good enough, not just for Mr Waterhouse but for many others in that situation.

[Will Quince]

The hon. Gentleman hits the nail on the head when he says that these situations are extremely complex. Every family is different. In the vast majority of cases, families come to individual arrangements that work well. The answer cannot always be state intervention. He says that it is not fair. That may well be the case; in many of these situations, there is an element of unfairness. There are often situations of family breakdown and separation that are hugely regrettable and there are situations that are deeply unfair, but we, as the state, try to encourage families to come to arrangements themselves. We have programmes such as the reducing parental conflict programme and the Child Maintenance Service precisely for situations where parents are not able to come to individual arrangements themselves, or need the support of the state to do so.

The question comes down to this: how much state intervention and involvement do we want? That is why I said I am happy to sit down with the hon. Gentleman and hear more about his constituent’s case and about his ideas for how we might reform the system. I just gently say to him that fundamental or large-scale system reform would not be an easy or quick thing to do. That does not mean we should not explore it or look at it for the future, but it is certainly not something that we could do in the short-to-medium term. As a Government, we are always looking to see what more we can do to support families and to support separated families, be that one family unit or a unit migrating into two or multiple units.

[Mr Perkins]

I remind the Minister of the question I asked and invite him to respond. Is the gender of each party a deciding factor in who ends up getting the original payment? Certainly, the view of Mr Waterhouse and many others is that there is a sort of natural bias in the system, so that where both parties share the care, the woman is treated as the main carer. Is that how the system works, and what more can he tell us about that aspect of it?

[Will Quince]

My understanding is that that is not the case, but I think that if the hon. Gentleman and I sat down with officials from the Department, it would give him a level of comfort about the procedure when individuals from separated families cannot reach an agreement, and how the DWP decision maker will consider all the facts of the case and then come to a conclusion and make a judgment. I would be very happy to have that meeting with him and with officials to go through that process.

As I said, we are deeply committed to providing a strong safety net for those who need it, which is why we continue to spend over £95 billion a year on welfare benefits for people of working age. We believe that families should be free to make their own decisions about how their benefits are used, without Government intervention. As I also said, there are no current plans to change arrangements for the payment of child benefit to separated families. I appreciate that that is not the response that the hon. Gentleman hoped for, but I repeat that I and the DWP Minister in the Lords, Baroness Stedman-Scott, will be happy to meet him.

This Government will continue to reform our welfare system so that it promotes work as the most effective route out of poverty, and is fairer to those who receive welfare and to the taxpayers who pay for it.

--- Later in debate ---

[Mr Perkins]

I am never knowingly quiet, Mrs Murray. [Laughter.]

I appreciate the Minister’s response and his offer to continue our dialogue after this debate. I recognise that creating a system that works in individual cases is difficult, but there is inherent unfairness at the heart of this system, and a real danger that it will make it more difficult for fathers who are on benefits and who may suffer with mental health or physical health problems, or who are for whatever reason reliant on the benefit system, to be the parent that they would like to be. We recognise that we have a safety net to support parents and families and their children, so investigating whether there is more that can be done to allow for the reality of the situation, which is often that responsibility for children is shared and that therefore benefits need to be shared, is something to work towards. I will take the Minister up on his offer to meet further.

Question put and agreed to.

[Mrs Sheryll Murray (in the Chair)]

Order. In order to allow the safe exit of honourable Members who have participated in this debate, and the safe arrival of those Members who will participate in the next debate, I am suspending the sitting for two minutes.