Welfare Reform and Work Bill (Second sitting)

Victoria Atkins Excerpts

Thursday 10th September 2015 Public Bill Committees

[The Chair]

Emily, I am going to interrupt you, if I may. I have got a list. We will come back to you towards the end—there is plenty of time. Victoria Atkins, followed by Corri Wilson.

[Victoria Atkins (Louth and Horncastle) (Con)]

Q 35 This question is picking up on the evidence Octavia has just given. Is it right that the £26,000 benefit cap in place at the moment is equivalent to approximately £34,000 of gross income if you are working?

Octavia Holland: That is my understanding.

[Victoria Atkins]

Q 36 What help is given to people with gross incomes of £34,000?

Octavia Holland: Obviously, the help given to people varies greatly depending on their circumstances. If you were a single parent or a couple-parent family living in a high-rent area with several children, you could well be receiving support with that amount. [Interruption.]

[Victoria Atkins]

Forgive me, the ladies opposite are not giving evidence. [Interruption.]

[The Chair]

Order.

[Victoria Atkins]

Q 37 The point is that £34,000 gross income is, for most people, getting on for a decent salary

Octavia Holland: I think it very much depends on their circumstances. If you were a single parent or a couple-parent family living in central London in a high-rent area on a £34,000 income, you would receive some kind of support and you would be struggling to make ends meet.

[Victoria Atkins]

Q 38 If I may say so, you have hit the nub of why this legislation is being introduced in this format. In my constituency, which is not in London—a lot of people live outside London—the median salary is £490 a week. The fact that the different rates of living are now going to be reflected in the different rates of benefit caps in the new legislation is fairer across the country, both in terms of the cost of living in London and outside London, and also to those people who are getting up in the morning and going to work and earning £490 a week in my constituency.

Octavia Holland: What is important is that benefits reflect the needs of a family. The benefit cap is making a break in that, so the needs of a family and the support it receives are broken. There are all sorts of reasons why a single parent or a couple-parent family could find themselves out of work. It might be for a short-term period. If the benefit cap pushes a family in central London, with several children in a school part-way through their education, to move away from that area, that is going to have all sorts of long-term costs for the state further down the line, because there will not be the support network that they have there. There is evidence that suggests that if children have to keep changing schools, their results suffer, so I think we need to think about the needs of these families.

[Victoria Atkins]

Q 39 I want to follow up with one last question. Approximately four in 10 households earn less than £23,000 in London, and less than £20,000 outside London. Do you accept that?

Octavia Holland: I would be interested in seeing a breakdown of how many children those families have got and where they live. It is difficult to reach those ballpark conclusions without looking at the details.

[Victoria Atkins]

I am sorry, I was just asking about the rate of the salary.

Tony Wilson: There is an important point here. What drives the experience of the benefit cap is having children and living in the private rented sector. Families with children often have quite high entitlements to tax credits. For example, a family with earnings of £26,000 and three children would receive £5,500 in tax credits. They would also receive £2,500 in child benefit, and they would likely be receiving housing benefit if they were in the private rented sector. So benefits do exist for people on low pay as well as for people out of work. Essentially, a lower benefit cap brings more people into the benefit cap, but these are often people with large families in the private rented sector who would be receiving support in work.

[Corri Wilson]

Q 40 This is a question for Kirsty and Tony. How can you incentivise people who have been assessed as ill to get back to work? When we are capping people who receive severe disablement allowance, how is this treating people fairly?

Tony Wilson: Can I make two quick points to add to Kirsty’s really good, comprehensive list of what works in supporting disabled people and those with health conditions? One further thing is early intervention. One thing we could do much better to incentivise and support is to intervene much earlier. We intervene very late. By the time somebody has got through the work capability assessment and the ESA, they have probably been out of work for a year or more, although they might have been previously in work. Early intervention is really important. The earlier we can engage people, the easier it is and the more effectively we can incentivise a quick return to work.

In terms of financial incentives, for example, one thing that was abolished in 2011 was the in-work credit, which was a payment made to people who were claiming incapacity benefit or ESA when they returned to work. The in-work credit was paid at about £50 a week for 26 weeks. We did a qualitative evaluation of that; there was never a formal impact assessment of it. There is very good literature around financial incentives to individuals when they move into work, internationally. It is not something tested very well here. We should look at how we create financial incentives. It is a behavioural tool to support people to make the transition into work and help to meet the transitional costs of work.

As others have said, I have significant concerns around the incentive and disincentive effects of the changes to the ESA WRAG. As much as anything, the most likely effect is to further increase the cliff edge between the support group and the rest of the benefits system. It will probably make the WCA even more of a mess. It will clog up the system even more with appeals and problems. We need the fundamental reform that Charlotte talked about.

Kirsty McHugh: One of the positive things over the past few years has been the introduction of the Health and Work Service. We need to stop people becoming long-term sick to begin with. The early intervention with the employer is important so that when somebody becomes ill, they are prepared to keep them in work. We need to keep an eye out to ensure that that is doing what we want it to.

A lot of people get assessed to death. They go through the personal independence payment assessment and the WCA. They are assessed by the employment providers. We could probably streamline some of that process—that is the outsourced sector and the DWP element. At the moment we are not sharing those assessments in a sensible way. We could probably take some costs out of the system and make life much easier for the people who are subject to it if some of those system issues were more effective than they are currently.