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The Parliamentary Under-Secretary of State for Pensions (Richard Harrington)
As ever, it is a pleasure to serve under your chairmanship, Mr Stringer. I thank the right hon. Member for Birkenhead (Frank Field) for securing this debate; it is not the first debate he has instigated that I have answered on behalf of the Government this week, but as usual the comments in his speech, together with those in the Select Committee report, were very serious and well-reasoned. I also thank the other speakers: the hon. Member for Walthamstow (Stella Creasy); the hon. Member for Wirral West (Margaret Greenwood), who spoke for the Opposition; and the hon. Member for North Ayrshire and Arran (Patricia Gibson), who spoke on behalf of the Scottish National party. I would like to make it clear that I listened very carefully to everything that they said, and my remarks may be quite long as a result of that. If they feel that their questions have not been adequately answered, as the right hon. Member for Birkenhead said, I will be able to write to them.
I want to pass on the apologies of the Under-Secretary of State for Welfare Delivery. Ironically, she is not here today because she is attending a funeral. I have attended many meetings on this subject and agreed to step in for this debate. I thought I would make that clear just once; that is the reason why she is not here and I hope that hon. Members, together with the people in the Public Gallery, will accept that.
The Government are very aware—as any of us are as constituency MPs, or just as human beings with our own family and friends—that bereavement is a very difficult time. It is probably one of the toughest experiences we face. Many of these points have been responded to because the same issue was discussed here in Westminster Hall last September. It is perfectly correct that we return once more to this debate, which is about how Government can best support vulnerable people going through bereavement with the practical challenges it can create.
The hon. Member for Walthamstow specifically referred to two of her constituents. I will respond to the other points that she made, but I would certainly be very prepared to meet those two constituents, and I know that I can say on behalf of my hon. Friend the Under-Secretary of State for Welfare Delivery that she, too, would be prepared to meet them. We can arrange that as soon as possible after this meeting if the hon. Lady contacts us, or I will happily contact her office.
All of us have seen the vital support that funeral expenses payments provide; therefore I fully understand, personally as a constituency MP as well as on behalf of the Government, the importance of providing the right support at the right time. Since the debate last September, a lot of work has taken place on funeral payments and support for the bereaved. In responding to hon. Members’ points, I hope also to outline what we have been doing. I will mix responses to their points with a general response on the developments since then.
First, on funeral expenses payments, I wish to put on the record the support that my Department provides for vulnerable people at a difficult time. We make a significant contribution to the costs of a simple, respectful funeral for loved ones of applicants in receipt of qualifying income-related benefits. We meet the full, necessary costs of a burial or cremation, which we know can vary, including the purchase of a grave, necessary burial or cremation fees, the cost of any medical references or the removal of active implanted medical devices for cremations, reasonable costs if a body has to be moved for more than 50 miles and travel costs for the applicant to arrange and attend the funeral. In addition, as has been mentioned, we meet other costs up to a maximum of £700.
In 2015-16, nearly 29,000 funeral expenses payments awards were made—worth more than £40 million—in Great Britain. The average payment has increased by just under 40%—from £1,019 in 2003-04 to £1,410 in 2015-16—reflecting the rise in necessary costs, but not in discretionary costs. That is why in 2012 the Department made interest-free social fund budgeting loans available for funeral costs, in addition to the funeral expenses payments. Last year the average award for all budgeting loans was £418. It is important to emphasise that we made those payments available in 2012, and that they are interest-free. Those loans are crucial for supporting people at a difficult time by removing the need for bereaved families to turn to high-cost lenders and the worry of meeting a funeral director’s bill.
Furthermore, it is worth noting that we provide the most generous support for funeral expenses when we are compared with other European countries—we can still compare ourselves with them for the moment, but that is another debate. Providers of funeral services, including the church, funeral directors, local authorities and crematorium owners, all play a role in ensuring that funerals are accessible to everyone. The Government believe that when a family can take part or all the responsibility for the cost of funeral arrangements, they should. However, there are obviously times when state support is appropriate, and we know that we can do more. Having taken time to set out the facts of what we do, I will turn now to the issues that have been raised during the debate.
On costs and claims, when considering the level of support for other costs, a balance needs to be struck. We do not want the funeral expenses scheme to influence or inflate the prices charged by the funeral industry for a simple funeral, and it must not undermine personal and family responsibility for meeting funeral costs. We have to ensure that the system not only is fair to taxpayers but supports the most vulnerable people. We have been working closely with the funeral industry to discuss how it can improve the transparency of its information about costs and choices. That would help people to make more informed choices and encourage competition within the industry. We remain committed to listening to our stakeholders, as we have been, and to working together to find solutions that are in the interests of the most vulnerable.
For that reason, my hon. Friend the Under-Secretary of State for Welfare Delivery convened a ministerial round table earlier this year, with stakeholders such as the National Association of Funeral Directors, the National Society of Allied and Independent Funeral Directors, representatives from different faith groups and organisations representing bereaved people—in fact, my hon. Friend the Member for Rugby (Mark Pawsey) was also present. A lot of topics that are relevant to issues raised today were covered, including transparency and the costs of funerals in the industry. The Under-Secretary of State asked stakeholders to share news and good practice about how they plan to be more open with their online pricing to support vulnerable claimants, and how they can support the rest of the industry to do the same.
We are carrying out a thorough review of the social fund expenses payments and have created a small working group of stakeholders to work with us to identify where regulation can be amended to help to address and tackle funeral poverty issues. We have also improved information about the scheme so that it is easier for people to understand whether they are eligible. That is available online with the application form, as well as through our dedicated bereavement service telephony line, which hon. Members have mentioned.
We know from research that people prefer to speak to someone on the phone when they have suffered a bereavement, instead of using online tools. We have therefore provided a specialist telephony service with staff who are fully trained to support people sensitively. The service has received positive feedback. It includes an eligibility checker, which has been mentioned—I will come on to that in a moment—and we are taking steps to ensure that claims are processed and that decisions can be made more quickly. Our recent improvements include reviewing all claims on the day that they are received to identify those requiring further evidence; and gathering further evidence by telephoning and texting applicants to speed up the process—[Interruption.]
Richard Harrington
Yes. Thank you, Mr Stringer. I was able to take a deep breath while the right hon. Member for Birkenhead attended to his electronic device.
Let me get back to the rising cost of funerals. We do not believe that the Government should be mandating or promoting a specific form of funeral provision for benefits claimants. Although my Department does not have responsibility for regulating the funeral industry, we are encouraging it to be more open and transparent in the way that I have explained, because people have to make informed decisions.
A number of low-cost alternative options are emerging in the funeral industry, such as direct cremations and municipal funeral arrangements offered by several local authorities. We recognise that those are not geographically widely available yet, and are not relevant to all religious and cultural practices. However, when it is appropriate, the industry should signpost people to direct cremations schemes and other low-cost alternatives so that bereaved people know they have the choice. We believe that improved pre-planning for funerals is just one way of helping individuals to focus on planning for a life event that is not always considered in advance.
Hon. Members, including the hon. Member for Wirral West, discussed the £700 limit. We know that some people need help with short-term needs, such as funeral expenses. Our priority has been to ensure that the scheme meets the full necessary costs of a cremation or burial for such people. The average payments have increased year on year to meet the necessary costs in full. Although we have had to make difficult choices about welfare spending, we have protected the £700 limit for other funeral costs, and we have continued to give people a choice on how they can spend that money on funeral expenses. However, the majority of funeral cost claims exceed the £700 limit, which is why, as I explained, we make interest-free social fund budgeting loans for funeral costs in addition to the funeral expenses payment.
The online eligibility checker was mentioned by the right hon. Member for Birkenhead—I think in his second question—and by other hon. Members. As I have explained, the dedicated bereavement service telephone line already offers an eligibility check and research shows that that has been well received by callers. We believe—I accept that hon. Members may feel differently—that an online checker could cause confusion. User research has identified that individuals would rather speak to an individual during these times—that is based on user research, not on cost. At these very difficult times—at one of the most traumatic times in their lives—they would rather speak to a well-trained human being than deal with a website.
We have been working closely with the bereavement service to ensure that the scripts and messaging are incorporated and updated for funeral expenses payments and to ensure that the staff can adequately offer support to a bereaved person or funeral provider when they access our services.
Margaret Greenwood
As well as talking about funeral costs, will the Minister get on to the continuing support that bereaved people need?
Richard Harrington
I hope it will satisfy the hon. Lady to know that I will. I apologise if I have been going into too much detail about other things, but it is important for hon. Members, and others throughout the country and here today, to understand generally what the Government are doing about these issues, in response to the Select Committee’s report. Please be patient with me; I will do my best to answer her questions. If not, I know that she will question me afterwards, but I hope that that will not be necessary.
The right hon. Member for Birkenhead raised the issue of increasing awareness of the scheme. Information on the eligibility criteria is clearly presented and detailed on the gov.uk website and in the information accompanying a funeral payment application form. The current eligibility criteria ensure that the scheme is administered quickly without additional complex means testing and used solely for funeral expenses payment purposes.
We have received positive feedback from industry representatives on how helpful the bereavement service telephone line is in guiding callers through the application process and their eligibility, and on changes that we are introducing to the application form. We are discussing with third parties such as registrars and funeral directors how we can improve the way in which the Government engage with the bereaved to ensure that information is in the right place and in the right form.
The right hon. Gentleman asked what we were doing to negotiate a reasonable cost for a simple funeral with the funeral industry, as his Committee recommended in its report. We have been engaging with the industry and different lobbies, as I have explained, on how they can make costs more transparent, but we do not believe that the Government should mandate or promote a specific form of funeral provision for benefit claimants. We have encouraged the industry to be more open and transparent about its pricing structure so that individuals can make informed decisions and shop around.
We have engaged with stakeholders to build strong links so that we have the relevant expertise at hand for the first phase of the review, which will visit what parts of the social fund regulations can be amended to help address and tackle funeral poverty issues. We also continue to improve, review and monitor the application process. All that work is being done with the funeral industry and groups that advise bereaved people. In November last year, as I explained, we launched the shorter application form, and we are open to ideas about how we can review the system, in particular the application form for the social fund funeral expenses payment. It has been simplified as much as possible.
On support for child funerals and bereaved parents, I pay tribute to the efforts of the hon. Member for Swansea East (Carolyn Harris), who is not here; I suspect, knowing her, that she is at the debate in the main Chamber. I speak to her regularly, and she put on record her views on the subject in an Adjournment debate, as I recall, on children’s funerals.
Frank Field
Just to put it on the record, she very much wanted to speak, but is in the other debate.
Richard Harrington
I was absolutely certain of it, as the right hon. Gentleman knows.
I confirm that we assign priority to applications received for children’s funerals and aim to process them without delay. We have listened to stakeholders’ concerns about the need to support bereaved parents of children, and we are currently considering how we can introduce a separate application form and system to help simplify the process in those tragic circumstances. We are keen to know how else to support individuals who require support for children’s funerals. The view of most funeral industry representatives at the round table that I mentioned was that the vast majority of funeral directors already waive fees or offer significant discounts for child funerals, although there are no industry-wide arrangements and there is no guidance in place. The National Association of Funeral Directors offered to do a survey of its members on current practice.
Moving on to bereavement support payments, I will respond to the points made by the right hon. Gentleman and others. As has been stated, both Houses of Parliament have approved, under the affirmative procedure, the Bereavement Support Payment Regulations 2017. The new bereavement support payment, which is due to be launched in April 2017, will replace three current bereavement benefits: the bereavement payment, bereavement allowance and widowed parent’s allowance.
Losing a spouse or civil partner is obviously tragic, and bereavement benefits provide vital support during this distressing time. Previous reforms have tended to be limited and made in response to specific pressures. No one had really considered how bereavement support fitted in with wider changes to the benefits system, and indeed to the social landscape as a whole. The aim is to provide targeted financial support at the time when it is needed most, without affecting access to additional forms of support that are available through other parts of the welfare system.
Stella Creasy
The Minister just said that the reforms are designed to provide targeted help when it is needed most. On what evidence has the concept of “most” been based, in his calculations? What does he define as a time when less help might be needed, as opposed to the most help? It would be helpful to understand the Government’s thinking.
Richard Harrington
The hon. Lady makes a good point. I used the word “most” to refer to the most critical short-term time, which is what I was discussing, but I am prepared to accept her point, without getting into a competition about when “most” is most. It is all the time, and I am happy to say that, but that is not the context that I was referring to.
I hope the hon. Lady will agree that the old system could be unfair and complex, and could act as a trap preventing people from readjusting. Reform is essential to simplify and modernise the system. The history of bereavement benefits is rooted in the Widows’, Orphans’ and Old Age Contributory Pensions Act 1925. The way that people thought in those days was that most women were wholly dependent on their husband’s income. If a woman was widowed, her sole source of income would disappear completely, so it was considered necessary to provide a replacement income for her to survive.
Today, women as well as men actively participate in the workforce, and many households now benefit from dual careers and dual incomes. That is why we are modernising bereavement support into a simple, uniform and easy-to-understand benefit that better reflects society. We listened to the recommendation of the Work and Pensions Committee that there was merit in considering the length of the new bereavement support payment. For that reason, the bereavement support payment is now payable over 18 months.
Patricia Gibson
The Government have said that this is not about saving money but about, as the Minister has said, rationalising the system, bringing it into the modern era and so on. However, the Work and Pensions Committee told us that the changes to bereavement support payments will save £100 million. If this is not about saving money, will that £100 million be reinvested in helping the 75% of people who will lose out under the new measures?
Richard Harrington
If the hon. Lady will be patient with me a little longer, I will mention the financial point that she has made. I am sure that she will intervene to castigate me if I do not.
The new bereavement support payment restores fairness to the system and focuses support during the 18-month period after a loved one dies, when people need it the most. I accept the view of the hon. Member for Walthamstow that “most” can mean a lot of things. If I said “when people need it” without “the most”, it would still mean the same thing. People need it in those 18 months. The support is not taxed and is subject to a disregard for income-related benefits. The idea is, hopefully, to help those on the lowest incomes. Those who are least well off will gain the most, as for the first time they will be able to receive payments of bereavement benefit in full alongside any other benefit entitlements.
In her case studies, the hon. Member for Walthamstow mentioned the duration of payment and interactions with universal credit. We do not believe that the period of payment could or should be equivalent to the period of grief following spousal bereavement. As I know from the experience of many people known to me, grief can go on for one’s whole life. The payment is not designed for that; it is designed to support people with the additional costs associated with bereavement, rather than providing an income replacement. That is probably the contradiction with the points that she made.
Stella Creasy
I thank the Minister for trying to clarify the Government’s thinking, but as he goes along, he is making rather a different case. He says that the changes needed to happen because women are now entering the workforce. The old system was taxed, so if he is concerned that women might have additional income, continuing the old system might deal with that challenge better.
The Minister talks as well about people needing it most, but surely he recognises that although the loss of a partner is emotionally difficult, the practical financial concerns are paramount here. Does he recognise that the picture that he is painting of the issues is slightly askew from the reality of what the issues are for these women?
Richard Harrington
Obviously I do not agree with the hon. Lady’s subjective point that I do not recognise the reality of the situation. We are not trying to replicate the period of grief with this benefit. As I have said, it is designed to support people with the additional cost associated with bereavement, rather than providing an income replacement. Her view, from what she has said, is that the support should be an alternative to the other income support systems.
Stella Creasy
Let me be absolutely clear: the support is predicated on the contributions that the partner will have paid into the national insurance system, just as they might get a pension from their partner. We are talking about fairness to the children so that they benefit from the contributions that their father made and about the impact on the family’s income. Actually, it is not about replacing income support; it is about the fact that the father has paid in a contribution that should be recognised to the children’s benefit.
Richard Harrington
What the hon. Lady talks about is not really what I am talking about, but I accept what she has said. I was actually talking about the bereavement support payment, which is a lump sum payment.
We believe that income-based benefits are more suited to providing longer-term assistance with everyday living costs. Unlike bereavement allowance and widowed parent’s allowance, bereavement support payment will be paid in addition to any other benefits the recipient is entitled to, thus ensuring that the least well off receive the extra cash in their pocket to help with those extra financial strains brought about by the unexpected loss of a spouse or civil partner of working age. Long-term ongoing income-related support will be provided through universal credit, which better targets support to those with the greatest need.
The regulations make no changes to conditionality, which has been mentioned. Like the bereavement benefits it replaces, the bereavement support payment sets no work-related conditions. Any obligation to participate in any work-related activity will come from claiming other benefits. That said, it is well known that long periods out of work can have a negative effect on an individual’s prospects of future employment. That is why the Government think it is important that people are encouraged to maintain, as much as they can, a link with the labour market.
Recipients of bereavement support payment who also receive universal credit will therefore be able to access Jobcentre Plus support on a voluntary basis from three months after bereavement. They will then not be subject to conditionality for a further three months. Those exemptions from conditionality will also apply after the death of a child or partner, even where there is no entitlement to the bereavement support payment. At the end of the six months, advisers will use their discretion to ensure individuals’ capability and requirements are taken into account. That is the best way of ensuring that the support we give is tailored to the individual.
The right hon. Member for Birkenhead and others mentioned the extension of the bereavement support payment to cohabitees. That was discussed in detail during the passage of the Pensions Act 2014. Marriage and civil partnerships are legal arrangements that are associated with certain rights, including inheritance and recognition in the tax system. Extending eligibility to cohabitees would not only increase spend, but be complex to administer. Having to prove cohabitation could be a lengthy, complex process, which could cause distress at a time of bereavement.
Many critics have suggested that it is unfair that those who choose not to formalise their relationship are treated as a couple for income-related benefits, but not for contributory benefits. Income-related benefits serve a different purpose, however: they are for the ongoing day-to-day needs of a household, irrespective of whether the relationship is formal. When assessing entitlement to income-related benefit payments, the state rightly assumes that couples, whatever the legal status of their relationship, have joint outgoings and share resources such as earnings or other income.
The position with bereavement benefits is different, because they are contributory. The founding principle of the contributory benefit system is that all rights to inheritable benefits derive from another person’s contributions. That is based on the concept of legal marriage, which has extended to civil partnership in recent times. Unmarried or non-civil partnership couples will, of course, have access to a full range of income-related benefits and will benefit from the removal of conditionality requirements in exactly the same way as those in a legal marriage or civil partnership.
Richard Harrington
I am not trying to suppress the hon. Lady’s comments, but I was about to explain about widowed parents under the new system, which, if I may boldly suggest it, was probably what she was going to ask me about.
Stella Creasy
I was simply going to ask whether the Minister will clarify whether he considers children to be a joint outgoing. If he does, the contributions that a partner would make to a household would also be eligible. The idea that if people are not married, their relationship to those joint outgoings somehow stops at their death seems rather misplaced, does it not? I have certainly heard that children are expensive.
Richard Harrington
I can personally verify the latter part of the hon. Lady’s comments on the expense.
The new bereavement support payment restores fairness to the system and focuses support just on that 18-month period after a loved one dies, when it is most needed. It is not taxed and will be subject to a disregard for income-related benefits, helping those on the lowest incomes the most. Widowed parents will no longer lose their benefits if they decide to remarry or repartner. We do not believe that the period of payment could or should be equivalent to the recovery period following spousal bereavement. I am sure most people would agree that that is a totally different amount of time.
Unlike with the widowed parent’s allowance, claimants of the bereavement support payment will be entitled to receive all the other benefits at the same time. Disregarding bereavement support payment in the calculation of other benefits will ensure that the immediate additional costs of bereavement are met. Those requiring support will be able to obtain it from other areas of the welfare system, and I cannot stress that enough. Its purpose is better placed to provide longer-term, means-tested financial assistance.
The right hon. Member for Birkenhead, the hon. Member for Walthamstow and other Members made a reasonably cynical, but well-made point about the changes to the bereavement benefit. They basically said that it was just an austerity measure, delivering savings of £100 million to the Treasury after two years. Over the first two years of the reform, we will actually spend an additional £45 million, but any savings, like in anything else in the public finances, will be for future Governments to reinvest as they choose. I therefore cannot undertake, as I have been asked, to ensure that savings are reinvested in this field.
It is important to emphasise for the record that nobody in receipt of the current bereavement benefit stands to lose out as a result of the reforms. Recipients of the current benefit will continue to receive it for the natural lifetime of their award. Furthermore, households with dependent children will receive higher payments in recognition of that fact. Analysis shows that more people stand to gain than to lose from the changes. That is particularly so for the least well off, because—I have made this point several times—bereavement support will be paid on top of any income-related benefits that the household receives.
The Government have been asked here and elsewhere to extend the duration to three years and make the BSP cost-neutral. If we did that, we would have to fund it by reducing other elements of the payments. There seems to be little rationale for reducing the monthly payments for parents to make extending the duration cost-neutral. It would reduce payments to a token amount, which would not meet the intention of dealing with the immediate costs relating to bereavement.
With the introduction of the bereavement support payment, short-term financial support will be provided based on six months of national insurance contributions. The amount and duration of the award will be clear from the outset, allowing people time to plan ahead. Those requiring further support will be able to obtain it from other areas of the welfare system that are better placed to provide longer-term, means-tested financial assistance.
The hon. Member for North Ayrshire and Arran made a point on uprating. Any decisions on future changes will be taken as part of the annual process in the context of the wider public finances. I cannot say much more on that, other than that section 150 of the Social Security Administration Act 1992 provides for the rate of BSP to be reviewed annually. The Government committed to review the bereavement support payment reform in the impact assessment of 2013, but we cannot do that until sufficient evidence is available to assess all aspects of the policy, including its effectiveness and the impact on different groups of claimants.
The hon. Lady also made a point about the consequences for children of bereavement support payments. She said that, as a result of the shorter duration of payments, 75% of new claimants with children will be worse off. No one in receipt of the current bereavement benefits stands to lose out as a result of these reforms. As I said, recipients of the current benefits will continue to receive them for the natural lifetime of their award. Furthermore, for those households where there are dependent children, a higher level of payments will be made in recognition of that fact.
In conclusion, let me reassure hon. Members that the Government are absolutely committed to supporting the bereaved and ensuring that individuals have the opportunity to access the funeral expenses payment scheme. Our priorities remain to improve the funeral expenses scheme, to raise awareness of the scheme and to ensure that we are doing what we can to offer a provision of support for vulnerable claimants.