Jobseekers (Back to Work Schemes) Bill
Baroness Sherlock Excerpts(11 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Howarth of Newport
My Lords, is it not the case that every Government of the United Kingdom since 1948 have been committed to the principles and values articulated in the Universal Declaration of Human Rights? Is it not also the case that Article 7 declares that all are equal before the law and are entitled without any discrimination to equal protection of the law? If the Government deny legal aid in these cases, will they not repudiate that historic and fundamental commitment?
Baroness Sherlock
My Lords, in responding to this amendment, I should like to pay tribute to my noble friend Lord Bach, who has fought tirelessly on this subject for many months.
As we have heard, it is currently possible for a claimant who meets the eligibility criteria to get free legal advice and assistance to cover preparatory work for a hearing. Legal aid may also be available for higher tribunals and courts appeals on a point of law. However, from 1 April, all welfare benefits will be out of scope for legal aid. The context for this Bill makes this all the more complicated because, as we heard from the Minister, the law on sanctions has changed, so claimants may struggle to work out what applies to their case. Further, since there may often be significant delays between alleged breach and appeal, claimants may also struggle to work out what good cause or recompliance mean so long after the event, subjects to which we will return on a later amendment. This brings me to my questions for the Minister. First, will he clarify the position? If a claimant would have been entitled to legal aid to help prepare his case had he appealed within a month of a decision to sanction him, will he still be entitled to legal aid on the same basis should he appeal after 1 April? If the answer is yes, how will this happen? Who will provide the advice and who will pay for it? If the answer is no, given that the Courts and Tribunal Service is likely to be inundated with cases once the deferred decisions pile is unleashed, what assessment have the Government done of the likely delays and the consequent additional cost to the Courts and Tribunal Service of having so many unadvised appellants arriving at once?
If the Government are unable to give satisfactory answers to all these questions, I suggest that the Minister should accept this very mild amendment. If he does not, and my noble friend Lord Bach chooses to press it to a vote, we on these Benches will give him full support. The very least that the Government should do is provide a considered view—impossible beforehand, given the timetable—of the effect on access to legal advice and support of a group which Parliament never intended to be affected by the provisions of the Legal Aid, Sentencing and Punishment of Offenders Act. We are pleased to support this amendment.
Lord Freud
My Lords, before I deal with this amendment, I ask the Committee to indulge me as I answer a couple of questions on the last round from the noble Lord, Lord McKenzie of Luton, which may be relevant.
On the question of what sanctions mean for national insurance, if the failure to participate was after 22 October 2012, national insurance is not credited but if it was before 22 October 2012 then it is. On going into work, no sanctions will be applied to people who no longer receive jobseeker’s allowance. That might save some writing.
Baroness Sherlock
“Guidance
Within a month of this Act coming into force, the Secretary of State will issue guidance on the way in which claimants may be entitled to mitigate any penalty imposed upon them under the 2011 Regulations or the Mandatory Work Activity Regulations following the coming into force of this Act.”
Baroness Sherlock
My Lords, the amendment would require the Secretary of State to prepare guidance on how claimants might mitigate any penalty. This is necessary because there are some serious questions for the Government to answer about how the sanction system will work in practice after a delay of many months, potentially longer, and how a claimant is able to limit the effects in the way in which Parliament envisaged when it passed the legislation.
I want to turn briefly to the question of recompliance raised by the noble Lord, Lord Kirkwood of Kirkhope. The Jobseeker’s Allowance (Employment, Skills and Enterprise) Regulations 2011—the regulations that were found to be at fault by the Court of Appeal—explain the consequences of failure to participate in the scheme covered by those provisions. Regulations 8(4) to 8(6) provide that a claimant who fails to participate in an activity may face a loss or reduction of benefit for a period of two, four or 26 weeks. Regulation 8(7) provides that if someone has been sanctioned for 26 weeks but has recomplied, the period for which benefit is stopped is reduced to four weeks—a point explained by the noble Lord, Lord Kirkwood. Recompliance is defined in Regulation 8(8), which refers to the claimant as “C”. It states:
“C will be taken to have re-complied where”,
on the same date, before or,
“after the date on which the Secretary of State determines that C has failed to participate in the Scheme, C complies with … (a) the requirement as to participation in the Scheme to which the determination relates, or (b) such other requirement as to participation as may be made by the Secretary of State and notified to C in accordance with regulation 4”.
Here come the questions, and I apologise that they are not very exciting. Can the Minister tell the Committee how this will work some months after the event? Let us say that a claimant with a fluctuating health problem has failed to turn up for a training course imposed as part of skills conditionality and has been sanctioned for 26 weeks. The course ended last September. Had he been sanctioned at once, he could perhaps have attended the remaining days of the course and had the sanction reduced from 26 weeks to four weeks. Can the Minister explain how that person could now show compliance? It is obviously too late for him to recomply under Regulation 8(8)(a), but perhaps he could recomply under sub-paragraph (b). If so, can the Minister explain how that will work? If the person has been given any subsequent direction and has complied with it in any way at all, will that count as recompliance; does the recompliance have to be specific to the particular scheme that he was put on; or does it have to be specific to the requirement made of him at the time—that is, that training course? Presumably, the Government would want to make sure that this person was not treated any less fairly than he would have been had the Government’s regulations and notices not been found to be unlawful, but how would the Minister do that? If he is not in a position to explain to the Committee in detail now, I would press him to accept the amendment, which simply asks that he issues guidance explaining to jobcentre staff how they should act in order to put the claimant in the position in which they would have been but for the delay caused by the failure of the regulations to be accepted by the Court of Appeal as lawful.
My second question relates to the question of good cause, which the Minister referred to at an earlier stage. If a claimant fails to participate in the scheme, they are notified by the DWP and will be sanctioned unless they show what is known as “good cause” for their failure to participate within five working days.
Let me give another example. I am interested in exploring how good cause works in this time-delayed world. Let us imagine a single mother who was due to attend a course but missed the registration on the first morning because her 13 year-old son was up all night vomiting and she could not take him to school. She could not leave a sick 13 year-old at home alone the next day, so she phoned up the course and explained what had happened and that she would not be in that day. She talked to the receptionist who took a message and said that it would be passed on. The message was not passed on and when she turned up the next day she was told that she could not join the course because she failed to be there for the start. I should say that I have heard of real cases where precisely these things have taken place, and I am sure that the Minister has as well. Can the Minister help us to understand what would happen in that circumstance?
I understood from what the Minister said early on that that lone parent would have been written to at the time that this alleged breach took place, asking if she had any good cause for failing to turn up for the course. So what happened then? Presumably the decision-maker did not make a decision at that stage, so perhaps this would be sat on from that point, say the previous September, until it got around to being processed from the pile of deferred decisions. Would she at this stage have to explain more about what happened? For example, if there were not enough information in the explanation, did the decision-maker go back at the point at which this happened last September to say, “Tell me more”, or will that happen, say, the following April or May? If so, will she be expected to recall precisely what happened with this child’s bout of sickness last September, when it is now potentially April or May? Will she be asked for evidence for a bout of sickness that may not have required a medical appointment if the child was recovered within 24 hours? If she did give all the information but she was then deemed not to have good cause, presumably she could now appeal. If so, can the Minister explain to the Committee how the normal standards of evidence will be relaxed, if at all, given the serious time delay, to deal with the evidential problems and the possible recall problems that come with that?
Finally, can the Minister explain which set of regulations will apply to someone who committed the alleged breach under the old sanctions regime? Will he or she be sanctioned using the provisions that applied at the time of the alleged failing, because of course the ability to reduce the sanction by recomplying has since disappeared? Can the Minister reassure us that in fact someone will be able to reduce a sanction period by recompliance even if such an option no longer exists under the current regulations?
I apologise for having to go into such detail at this stage, but I did not choose to be conducting a Committee stage at quarter past one in the morning. I do think, if we are going to be asked to fast-track a Bill of this complexity and importance, that it is very important that the Committee is given every opportunity to understand precisely what the Government are trying to do to these people. I beg to move.
The Deputy Chairman of Committees (Lord Haskel)
My Lords, I must inform your Lordships that the result of Division 3 on Amendment 5A should have been Contents 35, Not-Contents 139—not 137 as announced.
Lord Freud
My Lords, this amendment, which would require the Secretary of State to issue guidance on the way in which claimants can mitigate any penalty imposed under the ESE or MWA regulations after the Act comes into force, is unnecessary, as this information is provided to claimants as a matter of standard practice. When a claimant is issued with a benefit sanction, they are as a matter of course sent a letter explaining the decision made and what effect it will have. The letter clearly tells claimants that if they want to appeal the decision, they should fill in leaflet GL24, If you think our Decision is Wrong, and that claimants can,
“get this leaflet from your Jobcentre or Social Security Office”.
Attached to the sanctions letter are two leaflets: leaflet 1NF1, on appealing against a decision and leaflet JSA9, the hardship leaflet). I have both of these leaflets with me today.
The leaflet on appealing against a decision explains in plain English who the claimant should contact if they want to know more about the decision or, if they think the decision was wrong, how to appeal it and what support they may get in formulating that appeal. The hardship leaflet explains what financial support is available, the eligibility criteria and how to apply for hardship, and provides the form they must fill in to claim hardship. The whole process is done as a matter of course and, indeed, is on the record and available for anyone to see how those leaflets work.
I turn to the point raised by the noble Baroness, Lady Sherlock, on recompliance. If a claimant has been issued with a 26-week sanction but has complied in the intervening period, they will be served with a four-week sanction. Recompliance is not particular to any scheme and can include participation in any other scheme. Of course, the sanctions regime has changed, so if the failure to participate was before 22 October last year, the old regime, which includes the re-engagement, applies. However, if the failure to participate is after 22 October, the current sanctions regime, which has no engagement and which builds up, will apply. That goes on the time of the failure to participate.
The noble Baroness was concerned about the time between the failure and the sanction being imposed on the stockpiled cases. I am sorry that I have not yet found a better word than stockpiled but it is for cases not people. As I said on an earlier amendment, the process of finding that information takes place immediately on the failure. They receive a letter and need to provide good cause at that point. Clearly, where there is a problem and there needs to be amplification, and there is a problem of information or evidence, the decision-maker will have to take that into account in the normal way, given that there is a gap and it is a justifiable lacuna.
As a matter of course, the cases that we have stockpiled will get issued with a sanction and receive the standard letter, and those accompanying leaflets that I outlined. This amendment is therefore superfluous and I ask the noble Baroness to withdraw it.
Baroness Sherlock
I thank the Minister for that reply and, in particular, for clarifying that it will be the sanctions regime that was applicable at the time of the alleged breach that would prevail. I will just ask him to clarify one point more specifically. I was glad to hear him say that any subsequent direction can count as recompliance and that it did not have to be something specific to the particular scheme or course originally. It can count, but will it?
Lord Freud
If it fits the norms within which that re-compliance operates, then it will. I am not sure whether there is huge distinction, in this case, between the may and the will.
Baroness Sherlock
I am not trying to be pedantic, although I confess that it is a hobby. The reason it matters in this case is that normally, if I were sanctioned for not participating in a course, the obvious way to comply is to start going to the course. As the course has long since finished, there are all kinds of unrelated things that may have happened in between then and now, which would not be the obvious way for me to re-comply with a direction on something that has long since ceased. Therefore, the fact that these things could count does not necessarily mean that they will. The reason that I wanted guidance was precisely to make clear to jobcentre staff that in these circumstances they should interpret any form of compliance as being enough. I encourage the noble Lord to say that on the record.
Lord Freud
What I will say on the record is that we will ensure that guidance to jobcentre staff will make this absolutely clear.
Lord Freud
My Lords, we will make sure that the particular options here are laid out for jobcentre staff so that we do this consistently. I can add that recompliance will count if it is a scheme under the ESE regulations.
Baroness Sherlock
That was worth waiting for. I thank the Minister for that. I still think that this amendment is worth while. Although the Minister regards it as superfluous, the information that goes out to claimants actually relates specifically and only to complaints and hardships. The other obvious way to mitigate the effect of a sanction is recompliance and in fact none of that information does relate to recompliance. However, in the light of what he has just said, and given the lateness of the hour, I beg leave to withdraw the amendment.
Jobseekers (Back to Work Schemes) Bill
Baroness Sherlock Excerpts(11 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Sherlock
My Lords, what a sorry state of affairs we find ourselves in. I almost feel sorry for the Minister, or I would if this shambles were not entirely of the Government’s own making. This debate has made clear the depressing, and I suppose rather shocking, extent of the Government’s failings. It seems as though crucial regulations underpinning the conditionality regime of the Government’s flagship, if utterly useless, Work Programme, as well as various other schemes, have been ruled unlawful by the Court of Appeal, and the Government now want to rectify the problem that they have created by forcing this Bill through Parliament at breakneck speed.
My noble friend Lord McKenzie made the point that the Constitution Committee has said clearly that it disagrees with the Government’s assessment, and we have now heard that, as it were, from the horse’s mouth in an extraordinarily powerful speech from the noble Lord, Lord Pannick. This is only the fourth time that I have spoken from the Dispatch Box in your Lordships’ House, but I suspect that if I were spared to do so another 400 times I would never begin to match the power of a speech like that, and I congratulate him. I am glad that it is the Minister, not me, who has to respond to it. The point that the noble Lord made, which I think is very interesting, is that the Government, having decided that the matter could take four weeks to consider from the time when they got the new regulations laid and enforced in this House, suddenly decided that there was a panic. I would like the Minister to return to this in his response.
In response to my noble friend Lord Foulkes, I think the Minister implied that the Government spent those four weeks considering all the various options before deciding on this deeply attractive one out of the collection. Will he explain why the Government did not consider the options before the decision? Presumably there were always two possible outcomes from the judgment, yes or no, so it would have been possible for them to spend time in advance of the ruling considering what they might do if they lost the case. Why did they have to wait for four weeks to consider the options and then come to Parliament to tell us that, having waited for four weeks, we had to rush through this in days? I will be interested to hear what the Minister has to say.
The shambles is even more annoying because the Government were warned. The Minister seemed to imply that the Social Security Advisory Committee did not tell them that the regulations were illegal, but perhaps he could help me. I understood that the committee drew attention to the overly wide scope of the regulation that was being used. Was that not one of the points on which the Court of Appeal found against the Government? If not, perhaps he could correct me, and I invite him to do so now if he wishes.
Lord Freud
The point that was being made by the SSAC about the width was that it meant that it was not necessary to come back to Parliament for specific approvals on particular schemes. It was not that this was likely to be against the law. The point was about parliamentary oversight.
Baroness Sherlock
I thank the Minister for explaining that, but of course it was on precisely the fact that parliamentary oversight and scrutiny of the nature of these regulations is important that I understand the Court of Appeal found against the Government. At the very least, this was a pretty heavy hint from the Social Security Advisory Committee, one that the Government managed to ignore completely.
Then there is the issue of retrospection, to which I barely need to turn after the speech from the noble Lord, Lord Pannick. As my noble friend Lord Bach noted, the worst aspect of this debacle is the combination of retrospection and fast-tracking. That is a particularly toxic mix, but it is what we are faced with. I look forward to hearing the Minister’s explanation of how the circumstances here make it necessary to bring forward this particular form of retrospection with this astonishingly foreshortened timetable, a point made by the noble Lord, Lord German. If the Minister’s response on that point is not compelling, I look forward to seeing the noble Lord join us in the Division Lobby should my noble friend Lord McKenzie decide to press his deplore Motion to a vote.
Like my noble friend Lord McKenzie, I am grateful to my noble friends Lady Royall of Blaisdon and Lord Bassam for trying to get us a few extra days to consider this matter. At least we now have the weekend to read the papers in more detail. I am also grateful that my right honourable friends Liam Byrne and Stephen Timms in the other place managed to get the Bill changed so that it would at least guarantee appeal rights for those affected by the sanctions process and ensure an independent review of that process.
It now falls to us in this House to do two things. The first is to register that this state of affairs is not right. The amendment in the name of my noble friend Lord McKenzie of Luton simply puts on record what we on these Benches think about the mess that the Government have got themselves into and the way they propose to get themselves out of it. I very much hope that the House will support it. We will then get down to the work that this House does best: doing our best, in the limited time that we have, to scrutinise the Government’s plans to ensure that there are no more disasters lurking in the undergrowth of this fast-tracked Bill.
There is a whole series of issues to which we will have to come back in Committee on Monday. For example, we know that appeal rights are to be safeguarded, but how can those appeals be robust when there is such a long time lag between the alleged breaches and the sanction being applied? As various noble Lords have said, how will the Government ensure fair treatment of a complainant who may have said that they had perfectly good cause not to comply with the requirement of a programme but who will struggle to evidence that months after the event? There is also the question of hardship. What kind of hardship regime will apply? The hardship regime is in the process of changing. How will the Government ensure that appropriate help is given to those who would suffer hardship as a result of sanctions?
Then there is the $64,000 question posed by my noble friend Lord Bach: will the Minister guarantee that anyone wishing to challenge decisions will have the same right to access to legal advice or aid as they would have done at the time the alleged breach took place, under regulations that have been found to be lawful?
There is so much more that I would like to ask, but we will have to wait until the dog end of Monday’s sitting, to which the remaining stages of the Bill have been confined. The message from today is clear: this is a shambles. I am beginning to wonder whether the Government’s entire approach to getting people into work is not itself a shambles. The evidence is clear. The Government are failing the unemployed of this country. They are failing to create jobs. They are failing to help them get back into jobs. Their flagship Work Programme—
Baroness Sherlock
I am so sorry, I could not catch what the noble Lord said from a sedentary position. Let me share a view with him about the Government flagship Work Programme, on which the noble Lord, Lord German, spoke so movingly.
The Public Accounts Committee described it as follows:
“Actual performance was even below the Department’s assessment of the non-intervention rate—the number of people that would have found sustained work had the Work Programme not been running”.
It was worse than doing nothing. I do not regard that as a success. There are other ways to do this. The Minister is aware that if Labour was in power, it would create real jobs for the long-term unemployed: six months of a proper job for 25 hours a week on the minimum wage. It would be compulsory, because we have never had a problem with sanctions, provided that they are fair and robust—oh yes, and legal.
I do not suppose the Minister will see the light today on that point, so instead I look forward to hearing answers to the various questions that have been asked, especially those from the noble Lords, Lord Pannick and Lord German. Our expectations are high. As there are no sitting days between today and all the remaining stages, the Minister will have to answer all our questions today. Unfortunately, on this occasion, we cannot wait for him to write to us, unless he does so very speedily. Perhaps he will also take the opportunity to do one other thing: will he apologise to the House, to the nation and especially to all those affected for the shambles that his Government have created?
Welfare Benefits Up-rating Bill
Baroness Sherlock Excerpts(11 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Sherlock
“Statutory maternity pay
Any mandatory 1% up-rating stipulated in section 1(1) shall not apply to statutory maternity pay.”
Baroness Sherlock
My Lords, I rise to move Amendment 6, which is in my name and that of my noble friend Lord McKenzie as well as the names of other noble Lords. We rehearsed this issue in Committee but I return to it on Report because, with apologies, I found the response from the Minister so disappointing. Because it is the last amendment of the day, I will be brief.
The Government estimate that some 232,000 families will claim statutory maternity pay, or SMP, in 2012-13, rising to 235,000 in 2013-14. Using the Government’s own inflation forecasts, the Children’s Society calculated that if a woman were on maternity leave now with her first child, and had her second child in 2015, she would find that she received about £184 less in real terms during her second period of maternity leave than her first. If her earnings were below the flat-rate level of SMP, that figure rises to £217. Just when a family needs money most, support is being cut.
This is by no means the first assault on the living standards of mothers of young children. In Committee, I recited the litany of cuts to support for parents of new children. I will spare the House the entire list but will just reprise one or two. We have seen the abolition of the health and pregnancy grant, the abolition of the Sure Start maternity grant for all but the first child, the abolition of the baby element of child tax credit and the cancellation of the planned toddler element, the abolition of the government contribution to child trust funds, cuts to the percentage of childcare help and much more. Since then, the Children’s Society has analysed in detail the impact of those changes. The results are shocking. They have calculated that a working couple about to have a second child in 2015 could find themselves over £7,000 worse off than they would have been over the following two years, simply as a result of changes since 2010. That is the context for this amendment and, indeed, for this Bill.
My second concern is that the Minister failed entirely in Committee to address the question that I raised as to the rationale for including SMP in this Bill. Noble Lords may recall that the Prime Minister’s official spokesperson responded to critics by telling the Telegraph that it was a “personal choice” for parents to decide whether to return to work or to stay at home after having a child. Of course it is, just like deciding where to go on holiday, where to shop, or where to buy your children’s clothes is a personal choice—if you have enough money, that is. If not, then it is George at Asda for you, rather than Giorgio Armani Junior. Money is what makes people have choices, not simply the fact of having a baby.
However, that was not the reason that the Chancellor gave when he announced this Bill back in the autumn. He claimed that the legislation was necessary to ensure that the welfare state was fair to working people, and not to those who lie in bed with their blinds down when their neighbours go to work. In Committee, I asked the Minister to explain how SMP fits with his argument. Let us recall that SMP is a contributory benefit, paid only to women who have given up work to give birth or to care for a new baby, after having been in continuous employment for the requisite period and earning enough to require their employers to pay national insurance contributions on their behalf. However, answer came there none. I therefore ask the Minister one last time: how does including SMP in this Bill fit with the Chancellor’s narrative, and why should pregnant women and new mothers pay the price for a tax cut for millionaires? I look forward to the answer. I beg to move.
Lord Bach
My Lords, I very much support what my noble friend has said in moving the amendment. The House seems very quiet this evening, following the shenanigans of this afternoon when it looked very much to some of us as though there was an organised group on the other side—many of whose members are no longer present, of course, it being after dinner time—who found a huge interest in this Bill in order to keep the Report stage going. Be that as it may, those times are obviously past.
If I read correctly, the Minister—to whom I attach no blame at all for what has been going on, of course—said in reply to my noble friend in Committee that the cost in the last of the three years of allowing this amendment would be around £50 million. Let me tell her one way, at least, that that £50 million could be found five times over. The communities department has £250 million to spend, and has done for some time, in order to make rubbish collections weekly rather than fortnightly. No doubt that is a priority for some, and no doubt it has a validity of its own. However, compared to the wrong which is being done by this Bill—and by others too—and in particular the wrong addressed by my noble friend in her amendment, could the Government not get some proper sense of priority as to what does and does not matter, even at this late stage? That is £50 million, compared with £250 million that is sorted away. This was not mentioned, of course, by the noble Lords who were this afternoon defending the Government’s position with such vigour, because it is an inconvenient truth that in government there is spend which could be much better spent on protecting those who are going to be hammered by this legislation. I ask the noble Baroness to answer my question: what is wrong with spending part of that £250 million, and agreeing to my noble friend’s amendment?
Baroness Stowell of Beeston
In my short time in this House, we tend to sit until about 10 pm and have debates on amendments at all times that we are sitting. I did not realise that we were expected to have debates before a certain time at night.
Let us focus on statutory maternity pay. I remind the House that the UK has a strong and effective maternity and parental regime. The UK is significantly more generous than the requirements of the EU pregnant workers directive. The directive states that a woman should benefit from 14 weeks paid maternity leave; we provide 39 weeks. The directive states that a woman should receive at least the amount that would be paid for sickness; our standard rate of maternity pay and maternity allowance is £135.45 per week. That compares to the statutory sick pay rate of £85.85 per week. In addition, the latest available data from the OECD show that the proportion of our GDP spent on maternity and parental pay is higher than that in Germany or France.
It is also worth reflecting on the fact that in the past decade, the length of time for which statutory maternity pay was payable more than doubled. Under the previous Government, it was doubled. It is important to be aware of the baseline that we are starting from.
Yes, the decisions that we have to take on statutory maternity pay will mean a slightly smaller increase for people over the next few years, but that is in the context of a strong and effective maternity architecture in our country which will remain firmly in place. Indeed, the Government are committed to make this architecture even stronger. Noble Lords will soon be debating provisions in the Children and Families Bill which allow working parents to choose which parent takes parental leave and parental pay to care for their child in the early years.
It is also important to understand these changes in the context of other government reforms that support women, families and children and help make positive changes to their lives. I said this in Committee, but it is important, so I will repeat it. For example, a woman working full time at the national minimum wage for six months of the tax year who then receives statutory maternity pay for the next six months will still be better off overall as a result of changes to the income tax personal allowance.
We have debated universal credit many times before, and it is acknowledged that its purpose is to make it worth while for people to move back into work. Once universal credit is introduced, some 800,000 out-of-work lone parents would benefit significantly if they started to work just 10 hours per week. In nearly all such cases, these parents would see at least £40 more in their pocket per week than they would have done under the current system. Also as part of universal credit, £200 million extra is being spent to support families with childcare costs. For the first time, this support will be made available for families who work fewer than 16 hours per week. That means 100,000 more working families will be helped with their childcare costs.
Looking ahead, as my noble friend Lord Newby mentioned in one of the earlier debates today, we have set out changes that will increase eligibility of support to five times as many families as currently is the case through a new tax-free childcare scheme. As part of these changes, we have also announced today a further £200 million additional support in universal credit that will provide working families with the equivalent of 85% of their childcare costs where the lone parent or both parents pay income tax.
When referring to various different payments to families, the noble Baroness, Lady Sherlock, said that she could go on; so could I. There are other things that the Government are doing to support families and women. The support for families that the Government provide is about more than income transfers. I do not deny that families value them and they can make an important difference, but money is often better invested in interventions that really can change lives. In demonstrating this today, I have tried to explain what the Government are doing in addition to the comprehensive support that we provide to new mothers and to show how much there is in providing for families in the right way.
This amendment would reduce savings from the Bill by around £50 million in 2015-16. As I have said, we have taken none of the decisions in this Bill lightly, but we have to recognise that if the savings do not come from the measures set out in the Bill, that could clearly put additional pressures on to public services. The noble Lord, Lord McKenzie, mentioned alternatives that he would like to propose. They are not ones that I would point to because these amendments are part of a Bill that is about reducing by a smaller amount the increase that we pay in benefits.
To answer the noble Baroness’s question about why we are including statutory maternity pay, we have sought to address the very significant welfare bill, which I am afraid is unsustainable, but doing so in way to protect the most vulnerable. We discussed and debated that at length earlier today. Regrettable as it is to have to make any reductions or cap any of the increases in the way that we have, the infrastructure and architecture there for women and families are strong. They provide sound support that will make a real change to people’s lives. While I recognise that these are difficult decisions, I hope that I have provided enough assurance to the House to show that the Government take their obligations to parents seriously and that we will continue to provide a supportive environment for new mothers in the years to come. I hope therefore that the noble Baroness can withdraw her amendment.
Baroness Sherlock
My Lords, I am grateful to all noble Lords who have spoken in this debate, especially to my noble friend Lord Bach for his strong support, and to my noble friend Lady Hollis for her interventions. I am also grateful to the noble Baroness, Lady Howe, for a thoughtful and persuasive speech that highlighted the impact of these cuts on the next generation. I thank her for that.
In response to the noble Lord, Lord Bates, I would say three things. First, we have debated this a lot. We sat through the previous stages, and we have all contributed in long form to the Committee stage and reflected a great deal on this. I hope that we now know what each other thinks. Certain noble Lords contributed to every amendment but they did not make five speeches; they made the same speech five times. I am not sure that that took us much further. None the less, we are doing our best here today.
I say to the noble Lord that it is worth noting that the poorest mothers get the flat rate of SMP and are therefore unaffected by any impact on wage growth, so that point would not affect them. On the question of wage suppression, the consequence of that—in fact, of the whole Bill—is a double whammy for those who are finding that their wages are frozen or have been kept down, because these benefits and tax credits are the very things that will normally help to compensate the individuals as well as acting as stabilisers more broadly.
Welfare Benefits Up-rating Bill
Baroness Sherlock Excerpts(11 years, 2 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Kirkwood of Kirkhope
My Lords, I will make just a short intervention on this amendment so ably moved by the noble Baroness, Lady Lister. I entirely concur with her view and analysis. I want to add, however, the fact that I am now very frightened about what is happening in the short term. There is a complacent view held among policymakers generally that the Work Programme and universal credit are all that need be done. I support both, and will not cast any aspersions on any Governments or make any party political points, but both these important reforms will take at least 10 years to go into steady state and be of assistance to our most hard-pressed, low-income households in the United Kingdom.
If I am right about that, and about the prognosis for the United Kingdom’s level of economy over that period, we face a really difficult period of activity where we cannot rely safely on the Work Programme and universal credit to provide the social protection that this country needs and expects. We need to do something in the short term that seeks to understand what is going on. More than anything else, this is a plea for really rigorous and urgent monitoring of everything going on: every bit of evidence from every constituent part of the United Kingdom. We need to watch carefully what is happening. The noble Baroness is quite right: malnutrition of children will result over the next five to 10 years if we are not extremely careful.
Now, this is no one’s fault. I understand perfectly well the need to get austerity and deficit reduction properly balanced in the nation’s future policy at a financial and fiscal level. But nobody could have foreseen the difficulties or longevity of the recession, or the lack of growth that this country will have to deal with in the short term of five to 10 years. That does not seem like a long time and I do not take anything away from the long-term need to get universal credit and the Work Programme put together and rolled out, but nobody is paying enough attention to what is going on in the short term.
If you refer to the sensible policy professionals who look at this, the Joseph Rowntree Foundation is first among them and there is the work by Loughborough University, Professor Jonathan Bradshaw, and all these experts. We have better professionals in the United Kingdom than any other European country. I say that because I have worked with most of them for the best part of 25 years. The noble Baroness is one of them— she nodded at that point. This is a serious point: we have internationally recognised experts on this yet we are deaf to what they say to us. A growing body of opinion says that something different and more than what has been put in the policy framework to date needs to be done to be sure that we do not face levels of financial adversity with which the public will not be comfortable.
I know that there is a view that people are against welfare spend and we have had discussions over the Welfare Reform Act and this Bill about the language used nationally in the public discourse on this important area of public policy. It is important because £200,000 million a year is spent and it is still creating problems. We need to face up to that. We need to have a much more adult discussion about what is going on.
Certainly, concepts such as the minimum income standards need to be part of that discussion. We need to look at the cumulative effect of everything that has happened since 2010 that has made the circumstances dramatically worse. People know that I am a professional, paid-up pessimist—I accept that—but we have to be very careful about how we assess the evidence.
I want to make a couple of quick suggestions about how we might deal with that in conjunction with looking at the principles in the long and short term and how we perform the monitoring and evaluation. What is happening in the devolved legislatures of the United Kingdom is very important. There are positive responses in Wales, and in Scotland, which I know best, where the need is recognised. We must first promote the need to do things differently. That may mean financing food banks—that is not something that I want, but if the alternative is malnutrition in children, we cannot ignore that. It is easier in smaller countries which have shorter lines of communication and a smaller scale. They can move more flexibly and faster. Working with the legislatures in Cardiff and Edinburgh, I think that there are some quick wins that central Government could help to promote. I hope that we will do that and keep the channels of communication between London and the constituent legislatures throughout the rest of the United Kingdom open and dialogue promoted urgently.
As the second part of that, working with local authorities will be so important. The evidence coming back from housing authorities, particularly in local authorities, presents variable geometry—we are getting different messages from different parts of the country. There is a spatial dimension to some of these issues which we should not ignore. In the past, we have always safely relied on a centralised, unified United Kingdom social security process as the right thing to do. I have less confidence about that working in the next five to 10 years. We need to look much more carefully at how housing and labour markets are aligned in some regions of our United Kingdom and be sensitive to changes happening in those fields.
I think that we need a short-term anti-poverty strategy. The principles covered by the amendment of the noble Baroness are important and must be kept in mind for the longer term, but all my instincts tell me that the next three, five or seven years will be difficult in a way that nobody has previously been able to get a grip on. If we do not respond to that by looking at some of the ideas contained in the amendment, we will pay a heavy price in terms of child poverty, in particular. We have an important amendment coming up next on that subject, and I hope that we will think carefully about that as well.
In strongly supporting the concept behind the amendment, I would like the Committee to consider not just the longer and medium term but some of the emergency state provisions that we as a country will be forced to face over the next five to 10 years.
Baroness Sherlock
My Lords, this has been an interesting brief debate, introduced by my noble friend Lady Lister with her now characteristic blend of expertise and passion. I am sure that we are all grateful to her for opening up the question so well. The quotes that she shared with the Committee about children arriving hungry at school and mothers missing meals and going without themselves to protect their children from the effects of poverty were, on one level, not a surprise to any of us, but they are still shocking. They should be profoundly shocking.
I found the point made by the right reverend Prelate very interesting and I understand why he would like those assurances from both sides of the Committee. My noble friend Lord McKenzie of Luton made Labour’s position clear at the beginning of our first day in Committee. It is this: if we were in government right now, we would be uprating benefits in line with inflation. However, we cannot make a commitment at this stage for the next Parliament. My view is that that is not a good idea anyway. We are fundamentally opposed to the whole principle in the Bill of fixing the levels of uprating for a period. We have perfectly good mechanisms for uprating benefits annually in line with inflation in the light of prevailing economic circumstances. To be honest, I would not want to be tempted into anything other than maintaining that position, but I fully understand why the right reverend Prelate is pressing the concerns that he is pressing.
I also found the comments made by the noble Lord, Lord Kirkwood of Kirkhope, very interesting. He drew in the spatial dimensions of poverty and the wide-ranging regional issues. That is something that we may come back to. I particularly agreed with his point about the need to monitor what is going on. The next amendment that I shall move encourages the Government to look specifically at the impact on child poverty. I also support the noble Lord’s point about the need for a cumulative assessment of all the changes between 2010 and now—a point made very strongly by my noble friend Lady Hollis at earlier stages of debate.
Since the Bill cannot help but drive down standards of living for families, what assessment have the Government made of the likely impact on the well-being of the poorest adults and children of what is effectively a real-terms cut in benefits and tax credits, not just over the year ahead, but over the three years covered by the first uprating and the two years of this Bill? It would be very helpful to the Committee to understand what assessment the Government have made. At a time when three new food banks are opening every week and even families in work are finding it a struggle to make ends meet, the state needs to take particular care to demonstrate that resources are gathered and distributed in a way that is fair to everyone. In the light of that, I shall be very interested to hear what the Minister has to say.
Baroness Stowell of Beeston
My Lords, I am grateful to the noble Baroness, Lady Lister, for moving this amendment and explaining her thinking. Of course, I recognise the serious issues that she and other noble Lords have raised during the course of this debate. I would not claim first-hand experience of living on benefits, so I do not bring to this debate any presumption about those on benefits finding what we are doing anything other than difficult, but is an inescapable fact that when setting benefit levels successive Governments have sought to strike a balance between the needs of claimants, maintaining work incentives and affordability.
Indeed, the current uprating legislation recognises this explicitly. The Social Security Administration Act 1992 requires the Secretary of State to make his annual review of benefit levels based on the increase in prices. He is then given discretion as to how to uprate certain benefits, having regard to the national economic situation and any other matters that he considers relevant. Parliament therefore requires the Secretary of State to take certain issues into account when considering the level at which the benefits in question are set. In bringing forward this Bill, we have considered these issues carefully and struck a balance between providing a cash increase, protecting certain key benefits and making necessary savings.
Benefit levels also have a significant bearing on work incentives. The complexity of the current system largely arises from successive Governments’ attempts to balance benefit income against work incentives. That is why universal credit is such an important measure as it applies a single set of rules focused on maintaining the incentive to take up work or more work. In response to some of the points made in this debate, I shall say something that I know is shared around the Committee. This Government believe that work is the best route out of poverty, and that is why we are focused on making sure that work pays.
Baroness Hollis of Heigham
Would the Minister agree that the last increase she mentioned has come about by increasing the additional cuts that people will have to face as a result of the bedroom tax?
Baroness Sherlock
I am sure the Minister is aware that the IFS analysed the distributional impact of tax and benefit changes between January 2010 and April 2015 as if universal credit were fully in place. It modelled the real-terms changes in household income at today’s prices with all the measures announced and UC fully implemented. It suggests that a one-earner couple with children will be £64 a week worse off. How does that equate to what she is saying?
Baroness Sherlock
“Assessment of impact on child poverty
The Secretary of State shall, in making the orders referred to in sections 1(1) and 2(1), publish and lay before Parliament a report assessing the impact of the order on the number of children living in—(a) relative low income;(b) combined low income and material deprivation;(c) absolute low income;(d) persistent poverty;as defined in the Child Poverty Act 2010.”
Baroness Sherlock
My Lords, Amendment 12 is in my name and that of my noble friend Lord McKenzie of Luton. This amendment would require the Secretary of State to publish and lay before Parliament a report assessing the impact of the order on the number of children living in the four measures of child poverty set out in the Child Poverty Act; namely, relative low income, combined low income and material deprivation, absolute low income, and persistent poverty. The aim is very simple. It is to force the Government to face up to the consequences of their actions and to come clean about the impact of these measures on child poverty.
I am sure that the Minister is closely familiar with the coalition agreement. I know that I read it regularly, so I expect no less of him. My favourite bit is paragraph 14, the first bullet point of which reads:
“We will maintain the goal of ending child poverty in the UK by 2020”.
That is rather lovely and has a beauty in its simplicity. I will repeat it:
“We will maintain the goal of ending child poverty in the UK by 2020”.
In keeping with that commitment, the Government have previously published the effect on child poverty of Budgets, spending reviews and Autumn Statements. But in the last Autumn Statement we did not get the kind of detail that we were expecting. Why could that be? We got a hint in a Written Answer in another place from the honourable Esther McVey when she said:
“We estimate that the uprating measures in 2013-14, 2014-15 and 2015-16 will result in around an extra 200,000 children being deemed by this measure to be in relative income poverty compared to uprating benefits by CPI”.—[Official Report, 15/1/13; col. 716W.]
It probably is important to look at the backdrop to this. Since the goal of ending child poverty by 2020 was first announced in 1999, the UK has made real progress. Some 1.1 million children were taken out of relative child poverty between 1998-99 and 2010-11, and 2.1 million children were taken out of absolute child poverty between 1998-99 and 2010-11. But now we are going into reverse. The rise in child poverty likely to be caused by these measures is on top of a net rise in child poverty of 400,000 by 2015 and 800,000 by 2020, resulting from the Government’s current fiscal policies, as seen in the IFS analysis of 2011.
If that is right—the Institute for Fiscal Studies has a pretty good record on these things—that means a rise in child poverty of at least 1 million children under the relative low-income measure is now likely by 2020. However, the relative low-income measure is just one of the four poverty measures in the Child Poverty Act. I should like to ask the Government why Ministers have not given any figures on the number of children who will be pushed into absolute poverty by the Bill, despite the fact that the Government have the same capacity to produce an estimate on that measure as on the relative low-income measure. I look forward to hearing the answer because, as the Minister will realise, the Government have a statutory duty to reduce absolute child poverty under the Child Poverty Act. Therefore, they presumably must be able to measure it to know if they have fulfilled that statutory duty.
Similarly, the Government have given no assessment of the likely impact of the Bill on material deprivation, despite again having a statutory duty to reduce material deprivation under the Child Poverty Act. Even if Ministers did not feel able to produce a numerical estimate, I cannot see any reason why they could not produce a narrative assessment, a point made repeatedly by the Child Poverty Action Group. Finally, and at the risk of being repetitive, we have seen no assessment, not even a narrative one, of the impact of the Bill on persistent poverty, despite the fact that yet again the Government have a statutory duty to reduce persistent child poverty under the Child Poverty Act.
This really is a disgrace after all the careful progress that has been made. The reason the previous Government took child poverty so seriously was that it had risen so dramatically under the previous Conservative Government. The researcher, Jonathan Bradshaw, who has already been mentioned today, found that child poverty increased nearly threefold in the 1980s alone and that the well-being of British children compared unfavourably with that of children in most developed nations. That was the reason the Labour Government acted. It was also the reason why, by the time of the last election, there was apparently cross-party support for that goal of tackling child poverty in Britain. We are now in the position of having to ask what it means for the Government to say that they will maintain the goal of ending child poverty in the UK by 2020.
This is perhaps a philosophical point, but what does it mean to have a goal if one takes no steps towards it? I may say that I have a goal of being a concert pianist, but if I do not take lessons to learn to play the piano and I never practise, no matter how many times I say it, the odds of my becoming a concert pianist must be seen to be slim. In that case, on what basis can Ministers say they are committed to eradicating child poverty in the UK if they keep bringing forward Bills that drive it ever higher? It may be time for them to come forward and say that they do not in fact have any intention of eradicating child poverty and perhaps never did.
The amendment really is for the Government’s own good. If they are committed to the goal of ending child poverty by 2020, they need to understand the impact of their policies on child poverty. Otherwise, they cannot possibly achieve that. If they are not committed to that goal, the nation has a right to know that and still to understand what the impact of these measures would be. That is all the amendment does. It requires the Secretary of State to tell Parliament and the nation what the effect would be of these measures before he implements them. What could be more reasonable than that? I beg to move.
Lord Kirkwood of Kirkhope
My Lords, I hope to make an even shorter contribution to this important debate. I agree that the amendment relating to child poverty is apposite and important. I want to confine myself to seeking further clarification from the Minister, if she has the information to hand. It would be to the Committee’s advantage if we knew more about what we can expect from the Social Mobility and Child Poverty Commission, because it relates directly to the substance of this amendment.
I was pleased that there was a recent change to the membership of the commission and that our very own noble Baroness, Lady Shephard of Northwold, has joined it. I am pleased about that because she is an experienced hand and I trust her judgment. I look forward to seeing the fruits of her work within that commission. It is important to us all. However, I was disappointed to learn recently that the first annual report of the Social Mobility and Child Poverty Commission is not now to be with us before 26 September this year. We were expecting it in May. I make that observation because it is a sign of drift, potentially. If I am wrong about that, I hope that I will be put right.
I was very uneasy about adding social mobility to child poverty. The original terms of reference of the 2010 Bill as put forward by the noble Lord, Lord McKenzie, were the correct ones. The Deputy Prime Minister, of whom I am a great fan, as I am sure people understand, was wrong. Social mobility is a different subject altogether. It is much longer term and in the short term, we are dealing with a situation that is more of an emergency than the aspiration of social mobility, which of course we all accept. We really need to understand what contribution to child poverty this commission will make. If the Front Bench can tell us anything about that in the course of this amendment, that would be very useful.
My second point is that of course we know that there is a consultation on child poverty measurement. I am taxing my memory here, but I think we were expecting the end of the consultation to be earlier this year—some time in February. If that is the case and my memory is correct, I hope we can be told that the Government’s contribution to the further development of child poverty measurement will be vouchsafed to us sometime soon. It will certainly be important to get hold of this around the time of the Budget, if we can. Some of the Office for Budget Responsibility’s assessments of future policy in terms of the Budget should be seen against the background of the Government’s view about how they will treat child poverty measurement in the future.
I am slightly nervous about some of the things that I have been hearing are being factored into the measurement of child poverty in the future. It may be that I am misreading signals but I hope that we do not lose focus on the fact that, at the end of the day, child poverty can be addressed only with money. Regarding any attempt to dress that up and expand the measurements too widely, while I am in favour of having all the data and metrics that we can access, for the reasons I explained on the last amendment we are facing an emergency situation the extent of which I did not anticipate.
The difficulties are mounting up, as we heard earlier. The decisions to be taken by the Government in the near future on measuring the data on child poverty are very important. If the Minister can help us to understand when we might expect information of that kind, it would help the Committee’s consideration of this Bill not just today but over the rest of its proceedings.
Baroness Sherlock
My Lords, I thank all noble Lords who have spoken in this debate, which may be an interesting precursor to the kind of debate we may have when the commission finally reports. I am particularly and genuinely pleased to hear the Minister say two things—first, that the Government remain committed to eradicating child poverty and, secondly, that income matters. They are both important statements, and I welcome them and am very pleased to have them on the record. I thank the Minister for making them so clearly.
The noble Lord, Lord Bates, with whom it is always a pleasure to do battle, took me to task for saying that I did not somehow accept that the Government made clear their commitment to eradicating child poverty. What I was challenging was not that commitment but whether or not the actions were being taken that would make it a reality. That was the point that I was trying to make, and I apologise if that was not clear. My question was really about what one does to make a difference.
A lot has been said about the nature of the measure. I have never thought that the well-being of children was about only money. However, the reason why this amendment is about money is because the Bill is about money; the amendment is about the impact of the Bill, and the Bill is solely about what happens to the tax credits and benefits that go out to people—in this case, children. So it makes no sense for it to be any broader than that.
The second thing that is worth saying is that I made it clear that the relative income measure was, deliberately, only one of four income measures in the Child Poverty Act, and that was for a reason. The Government of the day recognised that we had to take a 3D approach to understanding what poverty was, and no single measure alone would be able to give us all we needed. However, those four points of perspective between them give a pretty good idea of what is happening to incomes across the UK. That is something that we need to understand.
The noble Lord, Lord Bates, commented on the regional variation of median income. That is true, but the cost of living also varies. As he and I both know, the cost of living in Durham is significantly different from the cost of living in London. So although wages may be different, so too is income—and the measure relates to median incomes.
It is also worth reminding ourselves that the Child Poverty Act does not—
Lord Bates
That is quite an interesting point, if the noble Baroness is prepared to expand on it on the record. I think that she accepts that it is true in Durham, a city that we both love greatly, that median incomes—or, rather, average incomes—are significantly lower, by 44% according to my figures, and that the cost of living is different and lower. So in those circumstances —putting the two together by using a national measure and putting 60% of median income—you would perhaps overstate the level of child poverty in Durham. Does she accept that?
Baroness Sherlock
It might be worth the noble Lord and me sitting down together with the Child Poverty Act. He might find that many answers to his questions are in there. As well as giving the Secretary of State a specific duty to address income measures, because tax and benefits are in the gift of central not local government, with the exception—reprehensible in my view—of the recent move to localising council tax support, the strategy places a duty on local authorities and other players to engage in issues around child poverty, specifically because they have competence in those areas. So if the noble Lord goes back to read it, he will find that there is an awful lot more in it than he perhaps remembers. We may have to come back to that.
It is also worth coming back to the idea that it is not just about money—but it is also not not about money, a point made very clearly by my noble friend Lady Farrington. The noble Lord, Lord Bates, said that the fact that the Labour Government did not meet their target for child poverty reduction means that the measure does not work. I do not think that it means that at all. I pick up again a point that the Minister made. I fully accept that no forecast is a precise measure and no measure is precise, but one reason for keeping a long-term target of 2020 is that what really matters is direction of travel. Over time, how does the income of the poorest relate to the income of the country as a whole? On that, I am proud that our Government lifted 1.1 million children out of poverty. If I had to stand up and say that we had pushed 1 million children into poverty, I would be ashamed of that, and I am very glad that I am not in that position.
If the Government come forward with other measures, we will happily debate them. I am always open to any conversation that focuses the attention of this House and the nation on the well-being of the poorest families, and I am very happy to have the conversation when the commission reports about what that means and what the best means is to assess the impact of policies on that. However, at the moment, the Child Poverty Act is law, and it puts an obligation on the Government—a statutory duty—to address child poverty in all these areas. Unless they measure that, I simply do not see how it is possible to satisfy themselves that they have done it.
The Government’s defence has also partly been that the measure is meaningless. It may be worth reminding ourselves even of the relative income measure. The Child Poverty Action Group reminds us that a relative low-income poverty line is, typically, around £12 per family member per day for all spending needs after housing costs. It notes that many families in poverty will be far below that—because that is where the line is, and many families are way below the line. The point of having four measures is to try to understand the impact of policies such as this on all those measures. I accept that other measures are going on. I accept the point that the noble Lord, Lord Bates, made—and he has engaged with the arguments from this side of the Committee most comprehensibly—that other measures are happening and that there are time lags. However, it is impossible to ignore the fact that a Bill that sets out deliberately to cut in real terms the incomes of poor and middle-income families will do anything other than increase child poverty in real terms. That is a real increase—it is not a statistical anomaly.
I do not want to delay the Committee much more, but I remind noble Lords that the amendment simply invites the Government to report before they enact this Bill on what the impact will be on child poverty, using measures already in statute to reflect a duty that the Government already have in statute. That is all that it does; it could hardly be less radical. However, as I am interested in returning to this at a later stage, I beg leave to withdraw the amendment.
Baroness Sherlock
My Lords, we have heard yet again some very powerful and persuasive speeches and it is a very interesting argument. I commend the right reverend Prelate the Bishop of Ripon and Leeds for provoking such a good debate on so important an issue. As we have heard, this amendment would remove child benefit, child tax credit, and the child addition to universal credit from the scope of the Bill. Since we on these Benches would like to remove all benefits and tax credits from the scope of this Bill, we are pleased to support it
As we have heard from the right reverend Prelate, the noble Baroness, Lady Grey-Thompson, and others, the Bill has a disproportionate impact on children and families. The Government’s own impact assessment shows that two-thirds of affected households are families with children. As the noble Lord, Lord Low, noted in a very powerful speech, the Children’s Society says that while 30% of all households are affected, 87% of families with children are hit.
On one level this is because families with children receive more in state support—of course they do. As the noble Baroness, Lady Grey-Thompson, pointed out, a household without children is rather cheaper to run than one with children; not to mention a great deal quieter. However, while most parents rightly bear the lion’s share of the cost of raising their children, the state has always contributed—not just in extreme cases to try to protect children from the misfortunes that befall their parents but also because, in general, it is always recognised that children are a public as well as a private good. We all have a stake in seeing the next generation thrive.
Many noble Lords have rehearsed—and I will not repeat them—the concerns expressed to all of us about the impact of these measures on families with children. We have all had briefings from Save the Children, the Child Poverty Action Group, the Children’s Society and others making those points. These are very difficult times to be raising children, as my noble friend Lord Touhig noted in a very powerful speech. As the costs of food and energy have soared, more and more parents are struggling to make ends meet as they spend more of their money on these basic costs.
The right reverend Prelate made a telling point, I thought, when he reminded us that, unlike other areas, we do not have people in here with direct expertise of the matters under consideration. To that end, I liked the quote from Rosemary Keenan, the chief executive of Catholic Children’s Society (Westminster), when she said:
“It is hard for many of us to imagine what it is like for a mother to only have £1 left and know she still has to feed her children before the next payday. Families facing in-work poverty rely upon Working Tax Credits and other benefits to help make ends meet, and will face serious hardship as a result of these restrictions”.
Indeed they will. As we have heard from a number of noble Lords, the Bill comes on top of a series of cuts in the value of other tax credits and benefits. As well as the headline cuts, there have been a series of hidden cuts affecting, for example, tax credits for families with children by changes to taper rates, the treatment of income and the freezing of allowances, all of which sound technical but have in fact saved billions. However, it is not of course money that has been saved, but money that has been taken way from low-income families with children.
I seem to recall that the Government suggested at earlier stages that one of the reasons that so many families are affected is that tax credits go too high up the income scale. The implication, I suppose, is that people would not miss the money. However, the noble Baroness, Lady Grey-Thompson, described some figures from Citizens Advice. It has given us case studies showing that a couple with two children, where one parent is working full-time on just over minimum wage—getting £13,000 a year—will gain just 76 pence from the personal allowance. As a result, however, they will lose £3.46 a week net. By April 2015, that family on £13,000 a year with two kids will be £12.79 a week worse off. Even if we go nearer to average earnings, Citizens Advice suggests that a family earning £26,000 in similar circumstances will be over £12 a week worse off by April 2015. The sums may not sound like a lot, but they are significant to families on those kinds of incomes.
The Bill, as we have heard, will affect primarily working families with children. I was pleased to hear my noble friend Lady Massey of Darwen reiterate the impact of the Bill on child poverty, although I hope to hear something specific about this. I feel that I have probably done it to death, so I shall stop saying it now.
To come back to our core concerns, the Bill is a completely inappropriate way to address the up-rating of state support for families. We have perfectly good mechanisms in place to do that on an annual basis in the light of prevailing economic conditions. To come to the specifics, in trying to circumvent those annual mechanisms, the Government have left me slightly confused. I therefore have two questions for the Minister. First, can he tell the Committee what plans are in place for the up-rating of those benefits, tax credits and allowances which are not included within the scope of the Bill? This was raised at an earlier stage, but I do not think that we got a full answer; if we did, I apologise and will look it up. If the Minister does not know, would he mind writing to me before Report stage?
Secondly, other than those mentioned in the schedule and the universal credit work allowance mentioned in the Autumn Statement, are there any other benefits or allowances which the Government intend to up-rate by 1%? Those two questions together sound quite boring but, in fact, their answers will enable us to understand the parameters of the Bill’s impact. Unless we can get that detail, the Committee cannot properly understand its consequences.
Coming back to our core objections, these are poor choices for the Government to be making. The families who will be hit are not responsible for the economic situation, for the banking crisis or for the failure of the Government to get the economy growing again. They are just doing their best to manage in difficult times. Yet the Government are planning to cut the value of the help they get from the state in order to fund a tax cut for nearly 13,000 people earning £1 million a year. We should not be doing this and are pleased to support the amendment.
Lord Newby
My Lords, I absolutely understand and appreciate the desire of the right reverend Prelate and other noble Lords who have spoken on these amendments to protect and support children; of course, we all want to do that. However, our view is that supporting children is not just about increasing benefit levels. One of the most important things that we as a country can do to support children is to tackle the deficit and restore economic growth. In doing so, we create a future of prosperity, opportunity and jobs for the parents of those children in the short-term and for those children as they grow up. Taking benefits out of the Bill, as proposed by the right reverend Prelate, would take away some of what we consider to be the vital savings required to do this.
The amendments which we are debating now would remove from the Bill the child element of tax credit, child benefit and the lower rate of disabled child addition in universal credit. I assume that the right reverend Prelate’s intention in removing those elements is that they would be up-rated with prices, as was the case previously. If that were the case, I need to remind the House that the savings delivered by the Bill would be reduced by nearly £1 billion. In our view, those savings simply have to be found. If we did not do it through the Bill, they would have to be found from somewhere.
I was extremely grateful to the right reverend Prelate for the fact that, unlike the Opposition, he at least set out how he would raise the money. It was a long and credible list. However, it is not a list with which the Government agree. The Government’s view is that tax credits and child benefit account for over 40% of working-age welfare expenditure. It is not realistic to think that they can be excluded from the need to make savings.
We are attempting to prioritise resources into reforms which can help children in a variety of ways. To repeat some of the points which I made in my earlier speech, I hope not too tediously, we have since September 2010 entitled all three and four year-olds to 15 hours per week of free early education. This is being delivered flexibly to meet parents’ needs. It will be extended to 260,000 disadvantaged two year-olds from September 2013. We are also helping 100,000 more working families with their childcare costs by spending an extra £200 million in universal credit.
To deal with a point made by the noble Lord, Lord Touhig, we are taking action to deal with exorbitant practices by payday loan companies and loan sharks. One thing that we are grappling with, with which any Government would grapple, is that many families on low incomes have got very high levels of personal debt. This is not new. When I was Treasury spokesman for the Liberal Democrats about seven or eight years ago I appeared, somewhat implausibly, on the steps of the Treasury with my right honourable friend Vince Cable, bearing an outsized cheque at the point when personal debt in the country reached £1 trillion. Most of this, I accept, was mortgage debt; it is not the debt that we are talking about today. However, some of the biggest increases in personal debt over the past decade have been among people on low incomes. This growth in personal debt was not effectively recognised or tackled in the past. Indeed, our appearance bearing this cheque just guaranteed a huge amount of ridicule for Vince Cable and myself, rather than anybody, including the previous Government, taking the slightest notice of it, which was deeply distressing—or, more importantly, taking the slightest action to deal with the culture with which we are now grappling.
However, both in terms of loan sharks and payday lenders, I hope that we are taking more effective measures, not least through the amendments during the passage of the Financial Services Act, to ensure that people requiring access to short-term loans can, at the very least, do so with companies which will treat them half-decently. The other area which we protected, which is vital to families and benefits those at the poorer end at least as much as those at the upper end, is the support they get through the schools system and the NHS, where the budgets are protected.
The right reverend Prelate spoke about child benefit, which he is anxious to protect. I remind the House that, even after the changes that have been made to child benefit, nine out of 10 households are still covered by it. We are taking the entitlement away only right at the top end. Child benefit continues to be paid to many households which are by no means on low income.
Baroness Sherlock
Baroness Sherlock
My Lords, this amendment is in my name and that of my noble friend Lord McKenzie of Luton.
The Telegraph online ran a story on 6 December 2012 headed “Autumn Statement: Osborne Attacked over ‘Mummy Tax’”. The article stated:
“Hundreds of thousands of new mothers will be almost £240 worse off after George Osborne announced cuts to maternity pay”.
A similar story was run in the Mail in January under the headline “True Cost of ‘Mummy tax’”. It is fair to say that the inclusion of statutory maternity pay in the scope of this Bill has not been universally well received. The Telegraph story quoted the founder of Mumsnet and I think it is fair to say that she was pretty unhappy with it. Why are the Government including statutory maternity pay in the Bill? The Telegraph had an explanation. It said:
“The Prime Minister’s official spokesman said it was ‘a personal choice’ for parents to decide whether to return to work after having a child or to stay at home”.
So there you have it—it is a personal choice; at least, presumably it is if you can afford it. But surely it is slightly more than that. Do we not all have an interest in making sure that people have a real choice when they have a baby? Is not one of the reasons the state pays statutory maternity pay that it is seen to be good for babies to have their mothers at home, breastfeeding them where possible and bonding with the child? Therefore, is there not a genuine public policy interest in making sure that we do not unnecessarily make it any harder for women who want to stay at home when they have a new baby?
The growing concern about this and other cuts affecting new mothers prompted this amendment, which seeks simply to remove statutory maternity pay from the scope of the Bill. It is worth rehearsing very briefly how SMP works. SMP is payable only to women who have just had or adopted a baby, or who will do so shortly. They must be in paid work. Indeed, they must have been continuously employed by an employer liable to pay national insurance contributions for them for six months before the 15th week before their expected date of confinement. They must have had average gross weekly earnings at least at the level of the lower earnings limit for national insurance and they must have stopped work in order to have or care for the baby. In other words, this is a contributory benefit paid to working women who have stopped work only to give birth or to care for a new baby. SMP gives them 90% of their average weekly earnings for the first six weeks and then, at the current rate, £135.45 a week for the next 33 weeks.
According to a Written Answer from the right honourable Maria Miller in another place on 30 April 2012, at col. WA 1322, the Government estimate that some 232,000 families will claim SMP in 2012-13. Those families could find themselves being seriously short-changed. Using the Government’s own inflation forecasts, the Children’s Society calculates that in 2015-16, SMP will be £145.15, if inflated by CPI. However, the impact assessment indicates that the likely rate is just £139.58—a difference of £5.57 per week. To put that in context, if a woman were on maternity leave now with her first child and had her second child in 2015, she would find that she got about £184 less in real terms during her next maternity leave than she would during this maternity leave. If her earnings were below the flat rate level for SMP, that figure rises to £217.
The period after a birth is a particularly tough time for parents. The Money Advice Service estimates the average cost of essentials for a new baby as some £3,700 over their first year. Of course, just as costs rise, income falls because of maternity leave, and parents are time-poor as well. The £200 may not be much to some people but it is enough to buy a cot and bedding and 17 value packs of newborn nappies.
This amendment focuses on SMP for two reasons. First, I simply do not think we can allow this Bill to go through the House without noting all the impacts on mums of new babies that have happened since 2010. Just since 2010, the Government have done the following: abolished the health in pregnancy grant; abolished the Sure Start maternity grant for all but the first child; abolished the baby element of child tax credit; cancelled the planned toddler element of child tax credit; abolished the Government’s contribution to the Child Trust Fund; frozen child benefit for three years and removed it from higher rate taxpayers; cut the percentage of childcare costs parents can get back through working tax credit; and legislated to introduce hefty charges for using the CSA. Some of those cuts are very severe. House of Commons Library research shows that low-paid new mums are losing £1,300 during pregnancy and the baby’s first year just from cuts to maternity pay, pregnancy support and tax credits, and are losing more from child benefit.
The second reason for tabling this amendment is that during the Second Reading debate, I raised the issue of SMP. I did it specifically to try to find out how that fitted with the Chancellor’s claim that the reason this Bill is needed is to ensure the welfare state is fair to working people, not, you may recall, to those who lie in bed with their blinds down, sleeping off a life on benefit, while others go out to work. However, on the face of it, it is hard to see how targeting a payment made to someone who has just had a baby after being in continuous employment for the requisite period at a level which triggers national insurance contributions fits with that narrative. Indeed, I am sure that the Government have a good reason, and I hope it is better than simply saying, “It’s a choice”. However, given that we are in Committee and this amendment is about SMP only, I look forward to hearing the Minister share that reason with us. I beg to move.
Baroness Sherlock
My Lords, I thank the Minister for her reply and my noble friend Lady Hollis for her telling interventions. I cannot help noticing that the Minister did not answer one of my two main charges. She began to answer the first charge, where I had listed a whole series of benefits and payments—specifically for mothers of children—that had been cut. I was grateful to her for at least recognising that offering up in her defence a benefit that the Government have decided to withdraw for second or subsequent children was at least slightly less effective than it might otherwise have been.
I am more concerned that she simply has not addressed my second charge at all. One reason why I put this amendment down was because of the words from the Chancellor of the Exchequer when he introduced the Autumn Statement, explaining specifically why this Bill was needed. I read them out at Second Reading but to remind noble Lords, he said that the Bill mattered because,
“we have to have a welfare system that is fair to the working people who pay for it”.—[Official Report, Commons, 5/12/2012; col. 877.]
According to the Guardian, he told the “Today” programme:
“It is unfair that people listening to this programme going out to work see the neighbour next door with their blinds down because they are on benefits”.
It is clear that the Bill was intended to penalise those out of work to be fair to working people. Why, then, is there included in the scope of the Bill a benefit that is payable only to women who have given up work to have a child or look after a child? The Government do not have an answer to that. I suspect that the noble Baroness would not have expressed it in those terms and therefore is not in a position to defend it.
Finally, in relation to the charge being thrown back at us, I was trying to avoid rehearsing the whole Second Reading, but we have made it very clear that we simply would not have made the choices that the Government have made. We would not have set out to give a tax cut to people earning £150,000 a year or more, which will be worth £100,000 to those who earn more than £1 million a year in order to be able to ensure that they benefited, and to cut benefits to the poorest families to do that. I fully accept and understand that she takes a different view. However, it is not reasonable to say that we have not explained where the money would come from. We have clearly made our case; these are not the choices that we would have made. I very much hope the Government will think again, specifically in relation to statutory maternity pay. In the light of those comments, I beg leave to withdraw the amendment.
Universal Credit Regulations 2013
Baroness Sherlock Excerpts(11 years, 3 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Sherlock
At end to insert “but that this House regrets that the regulations will not achieve their aim of making work pay for all and in fact will provide lower work incentives for 2.1 million households; will have the effect of penalising savers; will result in a cut in childcare support for working families; will result in cuts to the income of some of the poorest and most vulnerable in the country and will have a disproportionate impact on women and lone parent families; do not meet the needs of disabled people; do not provide adequate treatment of small businesses and the self-employed; and risk pushing many families into arrears and homelessness”.
Baroness Sherlock
My Lords, in rising to move an amendment to the Motion, I thank the Minister for his co-operation and for the work that he and his officials have done to help us to understand the very complex regulations we have had to work through in preparation for today.
I believe that this is probably one of the most important set of regulations your Lordships will debate this Session. The main Universal Credit Regulations operationalise the workings of the new system of means- tested benefits for most working-age people. This is huge. They constitute the framework which supports the huge tent that is universal credit, into which millions of people will be moved over time. The Universal Credit (Transitional Provisions) Regulations provide the detail of how people will move into the tent. In working through this considerable amount of material, I have been impressed by and grateful for the detailed work done by many stakeholder organisations, including the Children’s Society, Citizens Advice and many others. We on these Benches also broadly support the principle of a single structure for working-age support, but we have always said that the design and implementation are all. These regulations are too important to the many citizens who depend on the money that the state provides to them for us not to go over them in detail.
Now that we have most of the regulations and some, but not all, of the guidance, what was a pile of canvas on the floor is starting to take shape as a tent. It raises some very significant concerns, the first of which is money. In the Second Reading of the Welfare Benefits Up-rating Bill on Monday, we heard of the huge losses already being faced by many low and middle-income families, with more to come. We are about to find that significant numbers of people are going to be worse off as a result of universal credit. The impact assessment states that,
“3.1 million households will have higher household entitlement under Universal Credit”,
than now; but that 2.8 million will have a lower entitlement and that 300,000 households will lose more than £300 a month. These are significant sums. There is of course transitional protection at the point of moving across if someone is actively moved on to the new system. However, if someone claims universal credit because they have lost their job or had a baby, they will not get any protection. As the Welfare Reform Bill went through both Houses of Parliament, we were repeatedly assured that the new system would make sure that work always paid and that more work would pay more. I have been struggling to reconcile those assurances with the views of many experts outside the House who have made representations to most of your Lordships.
Regulation 22 sets out the way in which income from work will be treated for the purposes of withdrawing universal credit. To understand what that will mean in practice, we have to go through the impact assessment, which contains details of what are called “participation tax rates”—which reflect how much a claimant would gain from moving into work—and “marginal deduction rates”, which reflect how much better off they would be from increasing their earnings once they were in work. When I read this, I was astonished to find that more people will see their marginal deduction rates rise than fall; so some people will get to keep more of every pound that they earn than now, but more people will get to keep less of every pound that they earn than now. Some 1.8 million first earners will have higher marginal deduction rates under universal credit and 1.3 million will have lower ones. Similarly, most second earners will face higher marginal deduction rates than now, and couples with children are generally likely to see an increase rather than a decrease in those marginal deduction rates. How can this be in a system that is designed, surely, to make work pay? I think the culprits are found in different places.
First, there is childcare. Currently, the childcare element of working tax credit covers up to 70% of childcare costs for children in working families. However, many low-income working families can currently get up to 96% of their childcare costs covered through the tax and benefits system. The extra 26% comes through an allowance within housing benefit and council tax benefit. Around 100,000 families—about 20%—who get help with childcare through the system get this extra money. But under universal credit, that will not be around. The Children’s Society estimates that this will leave some of the lowest-income working families paying more than seven times as much out of their own pockets.
Barnardo’s did some detailed figures and discovered a whole series of circumstances in which parents could be worse off by doing more work—precisely what the system is not meant to do. For example, a lone parent with two young children ends up in effect paying to work once she starts having to use paid childcare rather than free childcare. Does the Minister accept that there is a problem in making work pay for parents who pay for childcare?
Baroness Sherlock
My Lords, I thank the Minister for trying to answer our questions. Of course he could not answer them all in the time because there were so many. I have never been through a two-and-a-quarter-hour debate over one set of regulations with so many powerful speeches from every set of Benches in this House. I understand it is complicated, but we are running out of time. This is not simply a rough sketch of the architecture; these regulations describe what will happen to real claimants when the system starts operating in April. I understand that the Government are doing something that will revolutionise payments to all working-age claimants. We support that principle, but we cannot experiment on the lives of ordinary men and women in this country and on their children. The Minister has been unable to answer, despite his best efforts, concerns from all around the House about the impact on disabled people, childcare, free school meals, vulnerable people, of forcing people to claim online and so much more. We have to let these regulations go through because that is the nature of our House, but we do not have to allow them to go through without making a very clear signal to the Government that they need to get these things right. To that end, I wish to test the opinion of the House. I urge all noble Lords to come with me.
Social Security (Payments on Account of Benefit) Regulations 2013
Baroness Sherlock Excerpts(11 years, 3 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Lister of Burtersett
My Lords, I have a few points to make. The Minister will be glad that I am not going to go over all the previous arguments about the demise of the Social Fund and I will not cover everything that I had planned to cover. However, I want to ask about budget advances. I think that the Minister may have referred to my first point. In the answers to questions raised at the seminar, which I was unable to attend, it was stated that,
“the test of ‘serious risk’ for budgeting advances has been carried forward from the existing system and is deliberately set at a high bar, but it is one staff are familiar with”.
However, I am advised by CPAG that in the existing system the “serious risk” test is applied to crisis loans and not budgeting loans, which budgeting advances replace. So, yes, staff are familiar with it but in another part of the system. By introducing the test for budgeting advances, the bar is being set higher for this part of the system, and yet another part of social security is being made available only in situations of dire need. Surely, the point of budgeting loans is in part to help prevent ever getting to a situation where there may be a serious risk of damage to health or safety. Will the Minister explain why this particular change has been made? To be honest, I think that he slightly conflated crisis and budgeting loans in his introductory explanation. Will he also confirm that, as with regard to crisis loans, health will include mental as well as physical health, and that safety relates to potential as well as actual danger? Does he agree that the lack of adequate cooking, heating or sleeping facilities could constitute a risk to health? I would feel happier about this shift if the Minister could give that assurance.
Regulation 15 prescribes the maximum amounts of budgeting advances as £348 for single people, £464 for couples and £812 for households with children, single or couples and irrespective of the number of children. These amounts are much lower than the current maximum amount under the Social Fund budgeting loans scheme, which is £1,500. I should be grateful if the Minister could explain the justification for this reduction. In particular, is there any evidential basis to suggest that the maximum amounts can be so substantially reduced, compared to that used for the Social Fund scheme of budgeting loans, without it causing problems for some claimants?
Having elicited some management information through Parliamentary Questions, I accept that these amounts are higher than the average budgeting loan award made to each of these family groups in 2011-12 and that fewer than 100 people are recorded as receiving awards higher than those specified. However, that suggests that such a big reduction in the maximum amount is unnecessary from a public spending point of view while a small number of claimants could suffer as a consequence. Is the Minister able to give any information as to the kinds of circumstances in which claimants have received higher awards than those specified and what kinds of sums are involved? Given that these maximum amounts are set out in the regulations, can he explain the procedures for keeping them under review and for uprating them? This question becomes more important now with the significant reduction in the maximum amounts.
I thank the Minister for explaining why a person has to pay back all a previous advance before getting the next one, but I am still worried that, at a time when benefit levels are being cut in real terms and people will have problems with monthly budgeting, these new rules will be unduly restrictive and cause real hardship. Lone parents and disabled people currently receive two-thirds of the gross expenditure on budgeting loans and they will therefore be the groups hardest hit.
Baroness Sherlock
My Lords, I thank the Minister for introducing these regulations and explaining how they would work; and my noble friend Lady Lister for her characteristically incisive questions. For this one moment only, I am glad that I am standing here and not sitting in the Minister’s seat. As has been explained, these regulations come in two parts. I will first look briefly at the payments on account. The Minister has explained the circumstances in which these will operate and my noble friend Lady Lister has already tried to tease out the reason why the Government have gone for this strict test of being available only to those in financial need. It is even slightly stricter than that. They will be available only for those in financial need as a result of having applied for a benefit, but not yet received a payment, when it seems likely that they will do; or when an award of benefit has been made, but the date on which it would be paid has not yet been reached.
That last one is likely to be of particular interest to millions of people who will find themselves being moved from weekly or fortnightly to monthly payments. Recent research commissioned by DWP, Work and the Welfare System: a survey of benefits and tax credits recipients, by Tu and Ginnis in 2012, found that 42% of potential universal credit claimants said they would find it harder to budget with monthly payments; 80% of these said that they were likely to run out of money before the end of the month. As I understand it, they will not all be entitled to budgeting advances, only those who find themselves in this stiff test of financial need, as a result of the circumstances I have described.
I would be grateful if the Minister would explain what he understands as being a “serious risk”. Would running out of food or cooking facilities constitute that, as my noble friend Lady Lister mentioned? Food banks already see significant numbers of people turning up because their benefit payments have been delayed. I suggest that this is likely to become much more significant in future with the move to monthly payments. Even if the test is the same as now, will the Minister concede that there may be a different set of needs resulting from a change in the circumstances because all these people are moving into monthly payments? Has he considered that aspect of it?
Regulations 11 to 15 cover budgeting advances. My noble friend Lady Lister has gone through the reduction in the maximum amount available, so I do not need to revisit that but I will be interested to hear the Minister’s answer. I would be interested, though, in the following information, if the Minister can provide it. His department has inquired about what has been happening with regard to the replacement for the Social Fund in different parts of the country. How many of those schemes will offer cash to claimants? What has his department found out about that? That will be important since they will replace a system whereby claimants can access cash at the moment. What research has the department done to establish the alternatives to which claimants are likely to turn? Since many claimants will not be able to access mainstream credit, it must be feared that they will turn at best to expensive legal credit, home credit or retailer financing, or at worst to illegal loan sharks.
I would be grateful if the Minister could explain again why he thinks it is important that claimants should be able to have only one loan at a time, even when it is a very small loan. A family may have borrowed £150 to buy a bed for a child but then a disaster strikes: for example, their washing machine breaks down, there is a flood or the bicycle which the mum is going to use to get to a job interview is stolen. They then need a significantly larger loan. What is the rationale for their not being allowed to take out more than one loan even if the total of the loans is well below the ceiling?
Will the Minister address the interaction between the new low ceiling, the fact that the adviser will be required to establish that the claimant can afford to repay the loan and the fact that the maximum period over which it can be borrowed has been reduced from two years to one year? Therefore, somebody taking out the maximum loan will have to contend with a tighter borrowing period and will have to prove that he or she can afford to repay it. Is there not a danger that that will make it even harder to get the loan in the first place?
These regulations may seem minor and technical but we will see millions of people face changes in their payment patterns because the decisions the Government have taken—in the face of widespread dismay and advice to the contrary—to move to a single payment, including amounts for rent, children as well as work, and to pay it monthly in arrears, are likely to be the cause of significant difficulty for a great many claimants. The least they deserve is a generous, open, accessible system of payments on account to ease the regulations’ passage.
Lord Freud
My Lords, again, lots of punchy points have been made. I think that the noble Baroness, Lady Lister, is under a misunderstanding—this rarely happens—as regards the serious risk test. This is applied only to short-term advances. It does not apply to the budgeting advances. I reassure her that not having access to heating would clearly be considered a risk to health. The budgeting advances are exactly the same as for the current budgeting loans in terms of the maximum. The current budgeting loan is lower than the available maximums because that counts for the whole of the Social Fund debt—the £1,500 figure—which includes budgeting loans and crisis loans. Because the Social Fund will no longer exist and we are sending elements of it to the regions and the devolved areas, we are not comparing like with like. The actual maximums as regards the like-for-like components have not changed.
As regards mental health issues, the test is whether the claimant or a member of their family would face a serious risk to health or safety. Clearly, savings are a factor, as are other sources of income, but health, including mental health issues, will be considered.
The context here is to widen the source of funding for families, which is why we are looking to deliver a further £38 million investment into the credit union movement, thereby aiming to make sure that it becomes a viable industry that is able to support families. I am looking forward to making more announcements about that in the not-to-distant future.
Taxation: Families
Baroness Sherlock Excerpts(11 years, 4 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Sherlock
My Lords, what a wonderful place to start. I would certainly not want to go back to when my noble friend Lord Graham or the children of today would have no boots, but maybe a place where Wayne Rooney got £7 a week would be a country I would think about living in.
Like other noble Lords, I am most grateful to my noble friend Lady Hollis for introducing this debate so powerfully. If I were the Minister I would be getting anxious already about how I would respond to that rather forensic opening statement. I congratulate her, too, on choosing the topic and expressing it in a way that has drawn so many powerful speeches from around the House. In a debate such as this, I am proud to be a Member of this House. I have learnt something from every speaker and having the opportunity to come into the debate at the end is really a privilege.
It is clear that there is widespread concern about the impact of tax and benefit changes on families. Given the rather forensic opening assault by my noble friend Lady Hollis, the Minister has some rather big questions to address. I was impressed that my noble friend had done so much spade work in trying to dig out the cumulative impact on families of successive tax and benefit changes since 2010. She mentioned a whole number of cuts that have been made but there are more. As well as those changes she mentioned, the Government have abolished the health in pregnancy grant and the baby element of child tax credit; they have cancelled the planned toddler element of child tax credit; the government contribution to the child trust fund has gone; the Sure Start maternity grant is not there for second and subsequent children; and the Government are introducing hefty charges for using the Child Support Agency.
All of that makes me worry about the extent of the burden being borne by women and children. This was highlighted very well by my noble friend Lady Massey of Darwen. If I were a mum of young kids, out there on a modest income, I would be starting to wonder what David Cameron thought about me and why so much of this burden seems to be borne by people like me. This is before we discuss the move to uprate benefits by just 1% for the next three years. Would the Minister like to comment on Tuesday’s admission by the Government in another place that that 1% change would increase child poverty by 200,000 more than would have been the case if benefits were uprated by CPI?
What is the Government’s strategy on tax and benefits for families? The Chancellor of the Exchequer, Mr Osborne, explained this very well. Introducing the Autumn Statement in another place on 5 December, he said:
“Those with the most should contribute the most, and they will, but fairness is also about being fair to the person who leaves home every morning to go out to work and sees that their neighbour is still asleep, living a life on benefits. As well as a tax system where the richest pay their fair share, we have to have a welfare system that is fair to the working people who pay for it”.—[Official Report, Commons, 5/12/12; col. 877.]
Let us test the Government’s record against that statement. First, will those who have the most contribute the most? The Government decided to reduce the top rate of income tax from 50% to 45%, a move that will give a major tax break to high earners including, as the noble Lord, Lord Alton, explained very clearly, giving 8,000 people an average tax cut of £2,000 a week. This is at the same time as introducing a Bill that would give someone on jobseeker’s allowance an increase of just 71p a week for three years.
What, then, of the personal tax allowance increase that was advocated so ably by the noble Lord, Lord German? Does that help the poor? Sadly, it does not. The nature of tax allowances is that everybody who pays tax benefits from them and the poorest do not, a point clearly made by the right reverend Prelate the Bishop of Exeter and the noble Baroness, Lady Jenkin. The Child Poverty Action Group calculated that a working family eligible for both housing and council tax benefits will gain just 13p a week from the extended personal allowances. The much quoted Institute for Fiscal Studies noted that households towards the bottom of the income distribution,
“benefit relatively little from the increase in the income tax personal allowance, as many individuals in these households would have had a personal income below the allowance (i.e. they would have paid no income tax)”.
The IFS continued,
“Households in the middle and upper-middle of the income distribution benefit the most as a percentage of income from the increase in the personal allowance”.
So, that is not so good on those with the most paying the most.
What, then, of the opportunity to consider how the Government make sure that the system is,
“fair to the working people who pay for it”?
Tax credits, and all those payments I listed at the beginning of my speech, are or were available to working parents. The Minister may argue that surely the Welfare Benefits Up-rating Bill will rebalance things by giving people on benefits only a 1% increase. Again, no. As the noble Lord, Lord Alton, noticed, although it is true that some 2.5 million workless households will find their entitlements reduced by an average of £215 a year, 7 million households, about half of those with somebody in work, will lose an average of £165 a year. As a number of noble Lords have commented, I am sure we have all seen the report from the Children’s Society which describes the kind of losses that occur. A second lieutenant loses £552 a year; a nurse or a primary school teacher lone parent loses £424. These people are not sleeping off a life on benefits but they will really pay the price.
As we heard from my noble friend Lady Hollis, in the case she cited of a Daily Telegraph reader, tax credits have made a real difference, in particular to enable people with children to move into low-paid work. Not only do they help those who cannot work full-time, they have also helped households where only one member of a couple is in work—the groups of concern to the right reverend Prelate the Bishop of Exeter and to the noble Baroness, Lady Jenkin. The Government have taken the decision to move across to universal credit, to replace all these benefits. I see the noble Lord, Lord German, has confidence that all will be well in those days and I very much hope so, although I confess that I am getting worried about the repeated reports of delays and the constant snipping away at the support within universal credit—not as worried as the Minister, perhaps, but he can tell us more of that later.
If the Government are confident and want to invest in universal credit because it will help people to move between welfare and work, why are they doing so much to undermine work incentives and cut the payments to low-income families in work? How can that make sense? When Ministers say, as they often do, that social security spending is unsustainably high but fail to be honest about the drivers for that spending, not only is that bad politics but it will cause them to make the wrong policy choices, which is even worse. One reason spending on out-of-work benefits is higher than the Government want it to be is that unemployment is higher than the Government predicted, and pursuing economic policies that make the recession worse or longer and do not promote growth are likely to make that situation worse.
The Government have made some decisions about their work programmes. They abolished Labour’s successful Future Jobs Fund and their own Work Programme has been shown to be worse than doing nothing. I regret to say that I read in the Guardian this week that the Government’s much vaunted unemployment figures include some 20% of people who are in fact on job training schemes, most of them still claiming jobseeker’s allowance. The Government need a strategy other than simply blaming people for the fact they have lost their jobs. As a country, we need a strategy to go out there to pursue growth and create jobs, as was so well described by my noble friend Lady Prosser. We also need measures to support those who are long-term unemployed. There are currently more than 130,000 adults over the age of 25 who have been out of work for two years or more. I share the view of the noble Lord, Lord Bates, that people who can work should work. Labour had said that if it was in government now, it would introduce a two-year compulsory programme; when someone had been on jobseeker’s allowance for two years, they would be in a compulsory job. That would have tackled the question of long-term youth unemployment.
I have focused on working families not because I want to demonise or marginalise those who are not in work, but to try to point out that the tendency to imply that the entire social security bill is spent on a bunch of idle layabouts and is paid for by hard-working people is at best disingenuous and at worst playing politics with the lives of struggling families who are already finding it very hard to make ends meet. My noble friends Lady Prosser and Lady Donaghy have explained how tough life can be for struggling, low-income workers, either in employment or self-employment. The last thing these people need at the moment is for the state to take away from them some of the bit of help they have which is just about helping them to make that transition.
Statements such as that from the Chancellor fail to acknowledge that when unemployment is high there are people claiming benefits who, before they were made redundant, were paying tax to fund them and will do so again. It also fails to acknowledge the disabled people who will clearly struggle, a point made very well by my noble friends Lord Touhig and Lady Pitkeathley and by the noble Lord, Lord Alton. I would be grateful if the Minister could confirm what will happen to disabled people who, even if they receive protected benefits, often get 70% of their income from benefits which will be hit by the 1% limit.
I finish where this debate started. The analysis of my noble friend Lady Hollis was very powerful. I urge the Minister to tell the House today whether he accepts her figures for the impact of the Government’s changes to tax and benefits. If he does not, will he tell us when the Government will publish their own analysis of all they have done to families in Britain? In Britain today it seems that we can afford tax breaks for millionaires but a food bank is opening every three days and a million people have resorted to a payday loan just to pay their rent or mortgage. I invite the Minister to explain those priorities to the House.
Personal Independence Payment
Baroness Sherlock Excerpts(11 years, 5 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Freud
My Lords, I made a very full Statement, which I hope was comprehensive. We have focused a lot on people with mental health and learning difficulties. Indeed, we divided communication activity in the new assessment criteria, so there is a new activity focused on reading and understanding signs, symbols and words. That reflects the importance we place on the non-physical side which is one of the areas on which PIP is far more satisfactory than DLA
Baroness Sherlock
I shall pick up where my noble friend Lady Hollis stopped. Will the Minister help us to understand the implication of the fact that some people will be better off and some worse off? We cannot understand whether those who will be worse off are those, for example, who are getting the severe disability premium at the moment on one benefit. It is hard to understand. We may simply be redistributing the large amounts of money currently given to people with very high needs by giving smaller amounts of money to those who have lower needs. A number of noble Lords were at a briefing this morning where a range of charities were raising questions with us. Has the Minister been able to reflect, for example, on what happens to those who currently receive severe disability premium—those on mid or high rate DLA who live alone and do not have a carer in receipt of carer’s allowance?
Lord Freud
We may have to pick that up and take it later as we are out of time. Within PIP there is a greater concentration towards the people with highest needs. I gave out percentages: I think it was 23% of people on both top rates, which is more than under DLA.
Universal Credit
Baroness Sherlock Excerpts(11 years, 6 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Freud
My Lords, we did a survey on our complete claimant base and found, somewhat to our surprise, that 78% of them were already online, and, indeed, that 41% of them used online banking. Our target when we start next year is to have 50% of people going online, with others going to our other channels which support the online process. We plan to have a support and exceptions process to help the people who need support in getting their universal credit.
Baroness Sherlock
My Lords, is the Minister aware of the recent report of the Joseph Rowntree Foundation which showed that it will be very difficult for people to claim online because only 20% of people now do so and only 40% are ready and able? What will the Government do if people do not feel able to claim online? How far and for how long are the Government willing to extend paper applications to those who struggle?
Lord Freud
My Lords, I should make clear that we are not entertaining paper applications. We are looking at either face-to-face or telephone support groups. We have looked at pushing JSA online and the figures have gone up from 16% in September last year to 39% this September. We are moving people very rapidly to the online route.
Benefit Cap (Housing Benefit) Regulations 2012
Baroness Sherlock Excerpts(11 years, 6 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Sherlock
My Lords, so much wisdom has already been shared with the Committee that I am not going to try to tread over the ground so impressively covered. I would like, however, to ask the Minister to focus on two particular categories of people. I am particularly concerned about families with children, especially vulnerable families with children. The Minister may recall that, among the many amendments that he faced during Committee stage, I moved an amendment that specifically asked that families be exempted from the cap if their household contained a child who was the subject of a child protection plan, a children-in-need assessment or a common assessment framework team. The Minister sadly did not smile on that amendment, but I hope that he has had the opportunity in the mean time to think some more about what happens to particularly vulnerable children. Since the Government now have data about the families who will be affected by the cap, will he tell the Committee today how many of the households that will be affected contain a child who was the subject of any of those protection plans or assessments or a common assessment framework team? If he cannot do so today, would he commit to write before his regulations are considered or, if time does not permit it, to place that in the Library as soon as possible?
I briefly remind the Committee why this matters. I raised this on Report and I am not going to revisit the principle, but I was concerned at that stage because of discussions that we had had in Grand Committee, where I had heard a noble Lord—I shall not name him, because he is not here, but he was someone with great experience—describe having sat in a serious case review of a very serious incident with a child. He described what I have heard over and over again from social workers, which is that when you get to a serious case review, people gather around the table from all the different agencies and, about an hour in, somebody always says: “If only we had talked to each other sooner; if only we had all shared information previously, maybe it would not have come to this”. Reports from one London safeguarding board showed that, in a significantly high proportion of families affected by serious case reviews, rent arrears or impending eviction had been an issue; of them, a significant number were known to more than one authority.
A number of noble Lords from all sides raised throughout our consideration of the Bill the question of what happens to families who are forced to move repeatedly—in particular, what happens if households containing vulnerable children of the kinds that I have described are forced to move some considerable distance. There must be a real danger that these children disappear from the system. Could the noble Lord tell me whether he has considered my proposal to exempt those families from the cap? If he has not, what assurance can he give the Committee as to precisely how those families will be protected and how those children in particular will be protected?
Picking up the point made by various noble Lords about families in temporary accommodation, I am very concerned about the considerable distances that they and other families with children may end up moving. Like other noble Lords, I have been reading the newspapers this week—but I do not read those left-wing communist rags. I shall quote a headline to the noble Lord:
“Homeless families to be kicked out of London and sent as far away as WALES as councils buy up cheap properties to house them”.
The article goes on to state:
“Local authorities say sky-high rental costs in the capital, combined with the incoming benefits cap has forced them to send people miles away from home. Areas as far away as Manchester, Merthyr Tydfil and Hull … ‘It is going to be practically impossible to provide affordable accommodation to meet our homelessness duties in London,’ Dagenham Council say”.
I am sure that the noble Lord recognises that that is from the Daily Mail.
Will the noble Lord tell the Committee whether that is true? Is he expecting significant numbers of homeless or potentially homeless families to be rehoused hundreds of miles away? If not, why are so many of our grand newspapers labouring under such a misapprehension? Perhaps the Minister could put their minds at rest. He might want to write to the editors with a copy of his speech when he has reassured us today.
I would be interested to know whether there is any danger that families could be forced to move, as has just been described by the noble Lord, Lord Best, more than once, either because accommodation for the homeless has become too expensive or simply because, as was raised in Committee, the median rents have gone up over the area. Rents may rise in an area as a result of an influx of families and then they could hit a cap again. Is there any danger that that could happen? I am sure that the noble Lord is aware of the evidence showing the impact of repeated house moves on a child’s achievement in school. If that is the case, will he say how the Government will protect vulnerable children in particular from the damage that could happen to them not only in childhood but in later life as a result of their schooling being impaired?
Finally, turning to the report from the Child Poverty Action Group, to which my noble friend Lady Lister of Burtersett, referred earlier, I should like to draw the noble Lord’s attention to a paragraph on page 40. It states:
“Authorities are also concerned about the impact of the cuts on their ability to meet other government priorities, in particular around the ‘troubled families’ agenda”.
Will the Minister tell the Committee what discussions he has had with the DCLG and other departments about the extent to which this policy may impact on their ability to deal with troubled families? If so, what steps are being taken to address that?
Lord McAvoy
My Lords, I rise to speak briefly because my noble friend Lady Sherlock has spoken with wisdom and analysis, as have my noble friend Lord McKenzie, the noble Lord, Lord Best, and others. I do not think that I could hope to match that. I prefer to speak about the effects of what this Government are doing on families and people. First, I should make it plain that I am not a social liberal or a bleeding-heart liberal with a small “l” or even with a large “L”. As a genuine member still of the honest working class, I am totally opposed to people fiddling the public purse and the benefits system.
I do not think that the Government care so much about that. I am not trying to paint a picture of an uncaring Government, although the effects of what they are doing here are exactly that. Some of the stuff that has come from the Government for dealing with the people who will be affected by this is in the Explanatory Memorandum to the regulations. Paragraph 7.7 states:
“The Government expects different households to have different behavioural responses to the cap but those affected will have a number of options to consider”.
What are the options to consider? The options include,
“reducing their non-rent expenditure”.
I should like to ask the Minister some questions. Under what budget heading should that come? Does he have any suggestions about which item of household expenditure in these poor households should be cut to make up the shortfall in rent? Paragraph 7.7 suggests that they should make up the shortfall,
“using a proportion of their other income or moving to cheaper accommodation or area”.
We will come to that later, because to me that has the biggest impact on families who are being treated in this way.