Universal Credit: Effect of Child Element on Separated Parents

Will Quince Excerpts

Wednesday 4th November 2020 Westminster Hall

[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.

[Mrs Sheryll Murray (in the Chair)]

Would the hon. Gentleman like to have two minutes to respond?