Welfare Reform Bill
Baroness Sherlock Excerpts(12 years, 6 months ago)
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Baroness Hollis of Heigham
My Lords, I deliberately did not follow my noble friend after such a full, strong and powerful speech; however, my name is also on the amendment. I appreciate the dilemma that the Minister is in: there is a cash constraint and he is making policy choices. The last thing I would wish to see is a diminution in the earnings disregard for the first earner in order to vire it across to a second earner because you are trying to see which poor people would be most hurt in that situation. It is a dilemma and I would not wish to go down that road.
The Minister is right to say that under universal credit the position of women improves for the most part. However, the position of partnered women does not. The distinction my noble friend was drawing was about the situation of partnered women, not women overall. All the moves between in-work and out-of-work benefits, the 16 hours and the extra disregards for lone parents are welcomed, but we are now talking about partnered women and much of the noble Lord’s response dealt with questions that we did not raise.
Let me refer the Minister to page 6 of his own document. This is what happens if Bhavna also starts work for 10 hours a week at the national minimum wage of £6 an hour: she brings in an income of just over £60 a week, and the household has a net gain of just over £20 a week. So she earns £60 and the two specific examples given by the Minister show that she has a gain of £20. As my noble friend emphasised repeatedly, this excludes any childcare costs. I have been doing some sums. If her children are not of school age and she is using a child minder at £2.40 an hour per child—which she may well do—and allowing an hour for travel at each end of the 10 hours that she is working part time over the course of two days, I reckon that, out of that £20 gain—her 30 per cent—her childcare costs would take up £19. So she is left with £1, out of which she has to pay her travel costs, let alone extras such as lunches, food at work, different clothes and so on. Some £19 of that £20 could go on the existing childcare costs, leaving £1 for travel—in other words, she would be out of pocket if she worked. That is based on the Minister’s own figures, and that is what concerns us.
My noble friend was surely spot on when she said that to have a second earner in the family is protective of all family forms. This is what matters; it protects the existing family. We know a larger family will still remain below the poverty line on minimum wage unless you have a second earner in play—and it is the second earner who takes a working family out of poverty. It protects the family and it also protects the woman, should anything happen to her in future.
While I accept the fact that the Minister is up against cost ceilings—I certainly do not wish him to stop viring earnings disregards between the two members of the family—it would help the Committee if he was able to give an undertaking that this will be a priority and that any additional resource would be aimed towards readdressing the issue of the earnings disregard for the second earner. Believe me, all the gains that he is offering, in terms of mini-jobs and so on, are going to be wiped out because of the tougher treatment of childcare costs and the fact that, as a result, it will not be worth your working, even though the Government claim it is.
Baroness Sherlock
My Lords, I want to save the Minister getting up twice, as I want to ask him a question on a similar point. I have been trying to wrestle with some of the briefing that has come in on this issue. Can he answer two simple questions? Is it possible for somebody to face MDRs of higher than 100 per cent if they are, for example, a second earner with childcare costs? Secondly, if somebody would actually be worse off in work, would they still be sanctioned for failing to do it?
Lord Beecham
My Lords, may I ask what I hope is a final question? The Minister rightly referred to the fact that there would be no income tax income to the Treasury to offset the cost. However, has the Minister considered the likelihood of much of the income of a second earner being spent in a way which would incur VAT? Is that not a material consideration in terms of what would be offset against the cost?
Lord Freud
My Lords, let me try to pick up some of those points. Picking up the point of the noble Baroness, Lady Hollis, I hope that she is hearing that I am sympathetic to this point. I hope that noble Lords have heard that this is about money. We do not have this money. We have a very sharp choice to make, about whether to reduce workless households or to look after second earners with a disregard. We have taken this decision, and we have also taken a decision, when we do find some more money, to do something about childcare, which is another issue that I know greatly concerns noble Lords.
There are two clear issues when we look to improve this system, as we see dynamic effects coming through which are provable. We had a debate the other day on why we need to test things. Two of the obvious things to test will be second earner disregards and taper. Those are the first two things that everyone in this Room, I think, would like to know about as we get the system under way. Therefore, to the extent to which I am being asked “Will we look at it?”, yes, we will be looking at this. I am not going to make any assurances, because we should find the answers, but that is exactly the kind of question we want to have answered.
I shall take up the points of the noble Baroness, Lady Sherlock, on MDRs. You can freight all kinds of things on to MDRs if you want to, with different costs, and I am sure that you can create a position where the overall costs come up to high MDRs. The simple point that I would like to make is that with the universal credit itself, the MDRs come down.
On whether we will force people to take a job which leaves the household poorer, we made the point when we discussed this that we take these things into account when we set up the obligations of claimants.
Baroness Sherlock
My Lords, I am grateful to the Minister. I hear very clearly his sympathy for this issue. If it is simply a question of money and therefore timing, one of the things he could do, to put everyone’s minds at ease, is to say, “Until we can afford it, we will not force a household to be worse off by forcing them into work or sanctioning them”. He could then review the situation when he found the money down the back of the sofa next time.
Lord Freud
I will not give that kind of assurance to noble Lords. This is clearly—
Welfare Reform Bill
Baroness Sherlock Excerpts(12 years, 6 months ago)
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Baroness Sherlock
I will focus on another point. Would the Minister mind answering the two points together? I am interested in trying to understand this. I have worked in the past with girls who got pregnant while they were in education, dropped out of school and were then eventually encouraged to get back to the stage where they could again get an education. The Minister has made clear his position on those who did not have basic literacy and those who might want to go to university or higher education. As I understood it from the amendment of my noble friend Lady Lister, we are talking about level 3: that is, A-levels or an international baccalaureate. I am not completely sure whether a young woman in that situation, who wanted to go back and get herself up to A-levels, would be allowed to do that or have to fit that around looking after children and a job as well.
Lord Boswell of Aynho
Further to that intervention, will the Minister also comment on the thought that occurs to me? It is that the test should be the value added from the education sought, at whatever level that happens to be.
Lord Freud
My Lords, the press reports were about the level of deductions to pay fines and whether the current limit was right for people who had committed a crime and been fined. Although this is breaking news, this is not an area I am confident we will consider in this particular Bill because it is about fines. It is not a matter today that we will need to consider.
Baroness Sherlock
My Lords, I want to ask the Minister two questions. The first is related to the questions asked by my noble friend Lady Lister and the noble Lord, Lord Boswell. I remind the Committee that I am a member of the Communities and Victims Panel looking at the impact of the riots, although my question is not specifically about the riots.
On the question of fines, what account can be taken of any fines the claimant may be committed to paying when making a decision to sanction the benefit. For example, it may be the intention to only sanction or remove the standard element but if the household is already committed to paying fines, inevitably that is going to be taken out of elements that are intended for children or housing, so the effect will be to eat into those. Could the Minister explain how that will be taken into account?
The second question returns to what I think I heard him saying in response to my noble friend Lord McKenzie in relation to the final amendment in this group. I believe that he said there would be no targets or benchmarks for sanctions. Could he reassure the Committee a little further? Are there any targets, performance indicators, measures or benchmarks that would have the effect of incentivising an increase in the number of sanctions? I would be happy to repeat that if it would be helpful.
Baroness Sherlock
I am not sure I can, frankly, but maybe Hansard can. I talk too quickly even for myself sometimes.
The Minister was kind enough to say in response to my noble friend that there were no targets that were designed to incentivise an increase in the number of sanctions. Are there any targets, performance indicators, measures or benchmarks—he will know the language better—that would have the effect of creating an incentive to increase the number of sanctions? The Minister probably knows what I am getting at; one does not have to be directly incentivised to sanction people. If, for example, there were pressure on the department to reduce either the number of people claiming certain benefits or the cost of the programme element of the budget and therefore the cost of those benefits, one way to achieve that might be sanctions. I am not suggesting that they would do so but inevitably, once there are measures, someone responds. There might be other ways of doing that. Could he answer that for us?
Lord Freud
Clearly, I am interested in behaviour change. However, I would hope that before we get into these regions we will have had the behaviour change. There will have to have been a very bad failure in circumstances where we impose a three-year sanction.
Baroness Sherlock
Perhaps I may try to understand this. I apologise if I have not grasped it until now. Let us assume that someone has refused to co-operate and perhaps has a drug problem that has not been identified until this point. Something happens, possibly even as a result of the shock of the sanction, and they get themselves into a position where they are enabled finally to begin the process of engaging and searching. At that point, will the adviser simply stop the sanction and put them back into compliance? Even at its simplest, if somebody has no income they cannot look for a job, unless it is next door.
Lord Freud
My Lords, we are moving now into the area of ill health. That is where decision-makers come in and look very hard at what is happening. This is aimed at the person who has not got a mental health problem or a chronic illness. We are looking at someone who simply refuses to become part of the regime.
Baroness Sherlock
This is the last time that I shall intervene; I shall stop. I want to come back to a point raised initially by the right reverend Prelate: one of the problems, as I know the Minister understands, is that in areas of mental health a lot of problems are not diagnosed and are not necessarily known to be such problems. They can present as behavioural problems but in fact these have underlying causes that may, complete rationally, be wholly unknown to decision-makers and the person themselves may not be willing to disclose them. I am not expecting decision-makers to be able to know that in advance; I am more interested in how the system can deal with that if at some point this information surfaces. It may be that I have simply misunderstood the explanation that the Minister has given. I would be grateful if he could clarify it for me.
Baroness Lister of Burtersett
Is my noble friend’s point not that it is at the point where someone has said they will engage with the regime that you are more likely to achieve that outcome if you then withdraw the sanction? You have achieved your end but there is still a sanction. I do not think that the Minister has addressed that point.
Welfare Reform Bill
Baroness Sherlock Excerpts(12 years, 6 months ago)
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Baroness Sherlock
My Lords, perhaps I could say a word. I am sorry to intervene. However, having been to the briefing yesterday and having heard the Minister respond to the question of the noble Baroness, Lady Hollis, I cannot in all conscience let this go without pushing it further. I am particularly concerned by the position of parents with teenage children. I understand what the Minister has done. After removing the barrier and artificial threshold between “in work” and “out of work”, he has been forced to compensate by reintroducing a form of conditionality for people who previously did not have it. I understand why he chose to do that. However, the big problem is the way in which it has been set. I read the notes, listened to him and went to the briefing. My understanding from what he said—I hope that he will correct me if I am wrong—is that the default setting for a parent whose child has reached their 13th birthday is that they will work full-time. That means 35 hours a week in addition to travel time. If that is standard travel time, it is up to 90 minutes each way—another three hours a day, 15 hours a week, on top. That will be 50 hours a week. If they are in the kind of job that has a one-hour lunch break, that will be an 11-hour day. Therefore, the parent will be expected to leave home at 8 am and not return until 7 pm.
I invite noble Lords to imagine for a moment that they have a teenager who has just turned 13. I have asked people I know who have or have had 13 year-olds whether they would leave them alone in the house for that period. When they had picked themselves up laughing from the floor, they said: “No—have you met my teenager?”. The general conclusion was that they would not. I asked whether they would be able to get childcare. They said: “What kind of childcare would I get for a 13 year-old?”. They said, first, that it is very hard to find; secondly, that it is quite expensive; and thirdly, that it is very hard to persuade a 13 year-old to take it. My question is: do we think that that is a reasonable requirement as a default setting before we get into exceptional circumstances? I think that it is simply wrong and I would be very grateful if the Minister would either correct me or tell me that he thinks it is a good default setting.
My second question is: even assuming a lone parent or couple in this situation could find appropriate childcare, could they afford it? If they were working full-time on minimum hours, they would still have to pay a portion of that childcare, and that plus other costs could negate the gains from work. Will the Minister explain how that would be taken into account?
I have two final questions. When I worked with lone parents, I often found someone doing a 25-hour job who was underemployed for her qualifications but who had found an employer who would not sack her if she took a day off because her kids went sick. She was willing to stick it out when she could probably have earned a bit more but would have ended up being in and out of employment. Having found a job that was safe and reliable and which she had had for a few years, she was not willing to risk it by moving to slightly better paid but more insecure employment.
If she had a 25-hour job in that circumstance, and the assumption was that she had to find another 10 hours, she would then have the three choices the noble Lord set out. She could go and find another 10 hours on top of that, which would mean finding 10 hours to fit around the 25 she already has, and adding in another set of travel times to all those different bits of hours, assuming this would even work out. She would have to assume also that that job would remain stable.
When I asked the question in the briefing—and I am probably not meant to refer to this, so forgive me if I have the protocol wrong—my understanding from those who support the Minister was that in practice she would have a conversation with a friendly adviser, and they would say, “No, we totally understand, don’t worry”. But every time I asked, in a theoretical sense, the question, “What would happen in this circumstance?”, the answer was, “It depends”.
The assumption is that she will sit down with an adviser who will say, “Don’t worry, we understand all of that. We understand that you have a difficult teenager. We understand that they have GCSEs coming up and you’re worried they will drop out of school. We understand you’re worried that he is going to get into trouble. We understand that you’ve got a daughter who has an eating disorder and you want to make sure she eats”. That is a huge risk to take.
The final point is a more general one. Can the noble Lord tell me whether he has had discussions with other government departments about the public policy implications of encouraging the nation’s 13 year-olds to be latch-key children?
Lord Wigley
Perhaps I may add briefly that I identify totally with the rural dimension that the noble Baroness has just described. A bus twice a day would be a luxury in many villages in rural Powys and other parts of rural Wales. If a person has been lucky enough to have a job and a lift to work from a colleague, but the job comes to an end and they have no independent transport of their own and are required to go some distance to fulfil their obligations under the Act, that would be totally unreasonable. I would be glad to know what guidance the Minister will give to people who are trying to implement the Act on how to deal with circumstances such as those.
Baroness Sherlock
Perhaps I may ask one question. The noble Lord will be aware of this issue. We have heard about it from many claimants and I am sure that other noble Lords have had similar experiences to mine. At least one organisation that works with lone parents has complained to me about cases where lone parents have been sanctioned for failing to take jobs. They were confident of the veracity of the accounts they had been given, and it was clear that the claimant could not possibly have made it to the job and taken their children to childcare. There did not seem to be any malice involved, but the adviser did not understand what was involved in trying to get two or more children to different kinds of childcare in very tight timescales, in a context where being a few minutes late can mean either that you are fined by a nursery or that your child’s place is given to somebody else. How will the Minister protect claimants in that situation? Will he make sure that the guidance is sufficiently clear?
I am concerned because, as I understand it from our briefings, decisions like that can be challenged and referred to another adviser, but the only independent recourse a claimant has if the decision goes against them is to refuse to take the job, be sanctioned and then go to a tribunal to challenge it. This is not efficient. I quite see that it is not the Minister’s intention, but how can he reassure us and those claimants that they will not be in that position?
Lord Freud
My Lords, I start by expressing a degree of envy at the ability of the noble Lord, Lord McKenzie, to commandeer a ministerial car in the past. In these straitened times I am reduced to a bicycle. However, in case noble Lords are anxious, I can confirm that the Ortleib pannier manages to contain a ministerial Box—and I have two panniers.
Turning to the amendments, as noble Lords know, we recently announced that jobseekers will be expected to look for suitable work within a 90-minute commute from their home. This is the default position in jobseeker’s allowance at the moment. The intention is to ensure that claimants search in a sufficiently wide geographic area while keeping the requirements reasonable. The old position was that JSA claimants could restrict travel time to 60 minutes, but only for the first 13 weeks and only if they had a reasonable prospect of work. Otherwise, the 90 minutes of travel time did apply. Therefore, this is not a huge change, although I understand the challenge that the noble Baroness, Lady Sherlock, has given me when she said that the existing system could operate a little better. I accept that challenge. Our briefing note on the work search and availability requirements for universal credit explained that this would continue to be the normal position for claimants. However, we also explained that limitations will be applied to the work that a claimant has to look for to take into account any relevant circumstances, particularly childcare. For example, we are clear that a claimant who is the lead carer for a child under 13 need only look for work that will fit around school hours. This would include any necessary travel time.
A claimant with young children may be asked to take a job 90 minutes away, but only if the job had working hours that allowed the claimant to get the children to and from school and still get to work on time. Similarly, if a commute of any time up to 90 minutes is too far given caring responsibilities or health issues—for instance, the need to stay close to a child with ill health—we would be able to take that into account. Picking up the point made by the noble Lord, Lord McKenzie, about the widening of the job goal, that is not intended to refer to a geographic or time widening, but refers to the type of work and remuneration. The travel time remains at 90 minutes.
Baroness Hollis of Heigham
I have just a query for the Minister. What he is saying is wise. He understands that we fully support both the principle of UC and the continuum between not being in work and being in work. There is no dispute between us. However, I worry about the huge area of responsibility and effectively discretion that will fall on first level Jobcentre Plus staff. As my noble friend said, no one doubts their goodwill or that they will do the best they can. However, given the centralisation of Jobcentre Plus offices, the fact that staff are often young and that the office may be in a town or city with a substantial choice of jobs compared to rural areas, from my experience they will often have very little understanding of the difficulties experienced in a rural village where the only jobs may be part-time cleaning, childminding if you are lucky, picking mushrooms or cleaning caravans. Those are the options, and none of them would fulfil the work conditionality without serious travel that would impede people’s capacity to look after their children and meet school hours.
I say to the Minister, in capital letters, that so much of the effective delivery of what we all want will rest on the shoulders of junior staff: AOs, with luck supervised by an experienced EO, working in local offices and living some 40 or 60 miles away from the circumstances of an individual in a rural village of which they will have no knowledge. I do not know how far the Minister can go in giving assurances. Of course he will want the best possible training, but I am worried about this. Perhaps the answer will involve intensifying supervision and scrutiny by more experienced senior officers at the review level—the EO level—to make it more possible, so that this does not migrate upwards into the tribunal system that my noble friend identified. We have picked up this problem in the past, and it will become more acute as more people are brought into the conditionality realm. So much will hang on the experience of the staff handling their applications.
Baroness Sherlock
Perhaps I may clarify something. I may have misheard the noble Lord and I apologise for delaying the Committee. Did he say in his response that there might be circumstances in which somebody would not be better off, but that they should take a job anyway? I see that he did. I will quote from the right honourable Iain Duncan Smith, the Secretary of State for Work and Pensions. In his introduction to the Green Paper he referred to people of working age and stated:
“We will help them to find work and make sure work pays when they do. They in return will be expected to seek work and take work when it is available”.
Was that not the contract he laid before the British people? What the Minister said appears to contradict it.
Lord Freud
I will pick up on that last point from the noble Baroness, Lady Sherlock. There may be special circumstances. There are no blanket absolutes about taking a job.
Baroness Sherlock
I rise hesitantly, as the Minister got rather cross last time I got up, but I am brave. I was taking advice from more experienced colleagues to find out whether it was in order for me to speak to an amendment whose mover had not moved it. I hope that it is. I refer to Amendment 51F, which would require of the Secretary of State, in making decisions about prescribing certain actions, that:
“The matters prescribed under subsection (2) shall include the well-being of any child whose life or care may be affected by the requirements of this section”.
I wanted to address that and to pick up some of the comments made by the noble Earl, Lord Listowel. One thing that has always worried me on policy dealing with families and children is how difficult it is in government, when different departments have responsibility for different set of policies, to ensure that they take account of each other's policy objectives. There has always been a danger—I understand it completely—that when one is considering childcare primarily from the point of view of how one enables parents to work, one misses some of the unintended consequences of that policy on, for example, the well-being of children, their development and the next generation.
If the Minister does not like how any of the amendments are worded, he can advise me. He is far more experienced and knows a great deal more about how the DWP operates than I will ever know. Could he advise the Committee on how we might be reassured about a decision that will be taken perhaps by a young adviser or Jobcentre Plus employee who will rightly focus on how to get a person into work? How could that person be required to take account of the impact on the child?
My final point is that ultimately this will play to the Minister's benefit. Some years ago I visited the United States to look at welfare to work programmes there. As the Minister will know, the regime there is somewhat harsher even than the regime envisaged by him. It was interesting to meet the people organising the programmes. The single biggest barrier to getting people into those programmes was the lack of confidence of parents in the quality of substitute care. There is a huge amount of research into the effect of that on children. Will the Minister consider that reassuring parents on this might be in his interests, as well as to the advantage of the children?
Lord Newton of Braintree
My Lords, I will say a brief word to defend myself against this onslaught. I do not think that there is a lot between us. I do not disagree with a word spoken by either of the two noble Baronesses about what our objectives should be. I hope that I indicated that. I simply do not think—this is my attempt to curry favour with the Minister—that the amendment achieves the objective in a satisfactory way. Can we be friends again?
Baroness Hollis of Heigham
It is very interesting that the noble Lord should say that, because it was exactly the advice I had from civil servants at the time. None the less, it did not stop us introducing NI credits for grandparents who did more than 20 hours’ care a week for their daughter, releasing her to work. If you can do it for national insurance and pensions, you can certainly do it for childcare, and it would be much easier to do it with conditionality.
Baroness Sherlock
My Lords, perhaps I could suggest to the Minister that Jobcentre Plus could encourage the grandparent to train as a childminder. The daughter could then claim help through universal credit to pay the grandparent for childcare. You could simply cycle the money round that way—it might be a better way to do it.
Lord Freud
My Lords, I am really grateful to the noble Baroness, Lady Sherlock, for her imaginative way of manipulating the system. I am sure that it is something we should look at very closely. No, come on; I will look at this. This is very difficult so I am not promising anything, but I will look at it.
Baroness Hollis of Heigham
It is already the case that grandparents can mind a grandchild if they are a registered childminder, with the childcare taking place in their own home, and look after at least one other child. That is already done.
Baroness Sherlock
My Lords, I am aware that irony plays rather poorly in Hansard. Just to clarify for the record, I am not actually recommending this scheme to the Government. I simply want to raise the fact that one has to be careful not to build perverse incentives into the system and overformalise relationships that might otherwise find a way of working out on their own.
Baroness Hayter of Kentish Town
My Lords, I thank the Minister for his response, and the speakers who contributed to the debate. I especially thank the noble Lord, Lord Newton of Braintree, who is not in his place at the moment. Perhaps other noble Lords could pass on to him that he would never incur my wrath—the Minister’s, yes, but never mine.
The one thing that we have to take account of when we use words like “trust” and “availability” is that the debate is taking place within a much broader overall government policy. We have already mentioned in Committee that unemployment is at a 17-year high. There are already cuts to childcare. It is estimated that 32,000 people have already given up work because of the reduction in childcare allowance—at a cost of £50 million to the Exchequer, I gather, so the Treasury will not be very happy about that. Of course, it demonstrates yet again that if affordable childcare is not available, people do not go to work—fairly obvious, but there you are.
Unfortunately the noble Baroness, Lady Grey-Thompson, is not in her place. I was a little worried after what the noble Earl said about being an untrained play-scheme worker that maybe we were all untrained carers today for her daughter. At least with her mother here, I assume the child was in safe hands. As a grandparent, I very much appreciate the comments made about the contribution of grandparents. I am in the other position: with very new grandchildren, all the grandparents line up and vie to look after them. I am assured that this soon gets a bit too much and problems set in. Short-term care is much more easily set up than long-term grandparenting, unless the sort of help that my noble friend Lady Hollis mentioned is available.
I will make a couple of comments. First, I thank the Minister very much not only for saying that he will look very carefully at the suggestions made by my noble friend Lady Hollis but for the commitments he gave about including current protections. However, he did not answer one of my comments about whether they will apply to couples. He mentioned lone parents but not couples.
Baroness Lister of Burtersett
I very much welcome the positive response of the Minister and the fact that he has clearly been talking with kinship carers and thinking about how to address the issues raised by the amendment tabled by my noble friend Lady Drake.
I just press him on his final point about doing this on a case-by-case basis. One of the recurrent themes of our discussions is the extension of discretion. I understand the value of discretion, but as the noble Lord himself has acknowledged, it does not provide the clarity of treatment that something in legislation would do. I get the sense that there may be something in future in regulations. I cannot speak on behalf of my noble friend but it would be valuable if there could be a firm commitment before the Bill leaves this House, even if it is not in the Bill, that it will be in regulation. I will not say all that I was going to say because the noble Lord clearly does not need convincing of the importance of this issue. It is one that I have become aware of only fairly recently, partly at the all-Peers meeting where a member of a kinship carers’ association spoke to us. I was very struck by their case in the way that the Minister has clearly been.
I also want to mention, if only to get it on the record, that I was at a conference at the Law Society at the weekend on economic and social human rights. A presentation was made there by the Poverty Truth Commission from Scotland. Some of its members are people with experience of poverty, some of whom are kinship carers. I was struck that it said one of the key issues was kinship care. I will not quote as much as I was going to, but the commission states:
“Kinship carers have been supporting each other and struggling for recognition and justice for many years”.
Recognition is very important for people living in poverty. This is something I have become aware of through my work on the Commission on Poverty, Participation and Power, which also involved people with experience of poverty. The kind of amendment that my noble friend proposes would have both symbolic and practical significance. It would provide that recognition that simply saying, “We will look at it on a case-by-case basis”, would not do. Having said that, for once I can hear the ministerial nuances and I know when to say thank you very much.
Baroness Sherlock
My Lords, I have two brief points to make. I was delighted to hear the warmth of the Minister’s response. If he is thinking about this area, perhaps I could punt two thoughts at him. First, I can see that he will be concerned that there may be a range of other circumstances that may appear similar on the face of it, where there is a disruption to the circumstance of an older child, perhaps moving house, and therefore there might be some wish to have that taken into account; for example, a family break-up where the children are suddenly moving to a different house and although the children are of school age, the disruption to the household might make the parent feel that they should stay at home; or the formation of a step-family where there is some significant upheaval in the household which might put a parent who might normally want to go out to work in that situation. If the Minister is thinking, perhaps he can think about those issues as well.
The reason he might want to think that this is a different case is that the grandparents or the other kinship carers have a choice: they do not have to take these children on.
The danger must be that they have to do so unless they have absolute assurances. That is the distinction, which is why I think there is a particularly compelling case for a legislative requirement.
Welfare Reform Bill
Baroness Sherlock Excerpts(12 years, 6 months ago)
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Lord Boswell of Aynho
My Lords, I shall respond briefly to the helpful introduction from the noble Baroness, Lady Hayter of Kentish Town. Two points occur to me. The background to passported benefits is a wonderful mish-mash—an attempt, in effect, to meet certain social needs and then, possibly, to avoid the interaction of malign or unfortunate consequences by trying to dovetail them in some way, which produces an acceptable outcome. It would be a brave person who said to this Committee that they fully understood them—and I certainly do not rate myself among them—or who thought that there was a sublime, overarching concept that reconciled them all. Even the Social Security Advisory Committee will have some difficulty with it.
I simply want to distil my concerns, and I hope that the Minister will respond to them. The first is the simple point, which the noble Baroness has already mentioned, that if one believes that the whole principle of universal credit is making work pay and that benefit is withdrawn on a smooth taper, it is clearly very important to consider the consequences for other kinds of benefit when people come in or out of the system. In other words, the anomalies, inconsistencies and differences in coverage become, if anything, more critical under the new regime.
I feel very strongly about the second point, which the noble Baroness did not bring out perhaps quite so clearly. The two benefits that she produced, school meals and health costs, are very salient and important, but there will be others—including some attachment to disability, which may relate to transport costs or otherwise—which may be less obvious. However, what is clear, and was clear when I did a little work on this, is that a very large number of government departments become engaged on this. It is very difficult for anybody, even with the erudition of my noble friend the Minister, to stitch these together and get an overall view of what is going on. One can be quite sure that the Minister’s transport colleagues, admirable though they may be, are not taking that overview, although the particular benefit in question, whether health costs or school meals or otherwise, may be very important to the individual or family concerned. So that must be looked at.
I hope that the Minister will approach this in the spirit of giving assurances in principle, and in the determination of the assistance of the expert advice that he will receive, to achieve sensible solutions. It would be absurd to set out the admirable and agreed principle of universal credit, with a smooth taper and making work pay, and then find that we had left this, because it was in the “too difficult” category. Some of the consequences of the withdrawal of any of these benefits might be very damaging to individuals.
Baroness Sherlock
My Lords, I, too, support the aims of this amendment, which are primarily about protecting certain key benefits but also making sure that they are not subject to the benefit cap, which we will come to later. My noble friend Lady Hayter of Kentish Town carefully set out the challenge that the Minister will have in squaring a circle, in making sure that work pays but also dealing with the consequences of a quite important specific provision. I ask the Minister to reflect briefly in his reply on the fact that free school meals, for example, have more than one public policy aim. How does he go about squaring that? They clearly are a means of effectively transferring a benefit that has a cash value to some of the poorest families in the country, but they also have the effect of making a hot or at least good, nutritious, meal available to children within all those poorest families. That feels like a separate and quite specific policy aim. How will he ensure that that policy aim will be achieved within whatever solution he comes up with?
As the Minister will know—and I certainly support the view of his erudition, which is obviously legendary—the evidence of the efficacy of free school meals goes back to the 1960s. If anything, the evidence suggests the extension of breakfast clubs rather than going in the opposite direction. Some noble Lords, perhaps more on this side of the House, may have read the Observer yesterday, in which there was a piece specifically on breakfast clubs. It looked at both, mentioning in passing that one in four school children in the UK are in a position where the only hot meal that they have in the day is their school lunch. It was talking in particular about breakfast clubs. An interesting head teacher in a very poor area described the benefits of breakfast clubs as being way beyond any cash benefit and being in the energy of children, improving their behaviour and improving their learning. She said:
“It helps with their socialisation skills too. School is about life chances and unless the children have something in their bellies then they are not going to get those life chances they deserve. There is very little money out there in our community and for many it's cheaper to feed the family on takeaway fried chicken than anything else. You see the leftovers in lunchboxes, or rice; we get a lot coming in with just rice.
We tried to run a breakfast club ourselves, it was £1 a day, but the numbers just dwindled away and you realise that it doesn't seem expensive but it adds up, five days a week, three children or more. It's a lot. And you can't turn a child away if they arrive without their £1”.
The article also pointed out that breakfast clubs are starting to shut around the country as a result of a combination of budget cuts and the ending of ring fencing for wrap-around care. If we are not careful and end up with a solution that does not retain the provision of free school meals, we could end up with a double whammy, with the two potential sources of nutritious food available to children disappearing at the same time.
I am just as concerned, as I know everybody in this room is, that the universal credit system continues to make work pay and that we do not find ourselves in a position where someone who is now entitled to free school meals will not be entitled to them in the future. That would be a travesty of the anti-poverty element as well as of the work incentive element of universal credit. It means that we have to consider carefully the other policy implications.
In the years I worked with single parents, I became very aware that the vast majority of parents prioritise spending on their children. In fact, I often met lone parents who went without food themselves in order to buy things for their children. Indeed, there is research that bears that out. I suspect that my noble friend Lady Lister may have done it; she seems to do most of it. The evidence is very clear, but none the less there is a minority who, for a variety of reasons, are not in a position to put the kind of food in front of their children that we would wish them to do. In some cases there simply is not enough money to go round. Since it is cash, it is subject to an awful lot of other pressures: a huge bill coming in, debt collectors, being sanctioned or fined, or other pressures on the budget. At least this is money that is for the child, not simply for the family. I do not want to say any more than that. I am not pretending it is easy. When he replies, will the Minister reflect how he will do those three things: protect those families that currently get the benefit of free school meals; ensure that work continues to pay; and fulfil the other policy objective?
Lord Knight of Weymouth
I want to comment briefly on this. I say “briefly” because I have the next amendment, there is more I want to say and I do not want to take up too much of the Committee’s time today. I got a bit of billing from my noble friend Lady Hayter as someone who might know something about this, which daunts me somewhat as I had intended to make a contribution more in keeping with my noble friend Lord Foulkes than my noble friend Lady Hollis in terms of knowing something about it or being something of an expert. My noble friend Lord Foulkes is, of course, the master of the probing question, rather than the probing answer.
My noble friend Lady Hayter and others have set out the quandary that the Minister and the Social Security Advisory Committee are clearly in as regards issues around whether it will be included within the cap, for example. If it is going to be part of a tapering rather than a cliff edge, I hope that extra money is added so that you are not taking money away from those who currently get free school meals. I particularly want to focus on free school meals because if I know anything about any of these things, it is about free school meals, given the time I served as a Schools Minister.
Very much in keeping with what my noble friend Lady Sherlock said, I think there is great importance in ensuring that free school meals continue to reach the child. It is a finely grained argument, but I encourage the Minister to look at whether it is possible to get the money straight to schools rather than including this in universal credit. It is important to note that free school meals are used as a proxy within the education system for all sorts of things, and I am sure in other areas as well. In particular, the level of the pupil premium in England is set by the numbers on free school meals. That presents an opportunity to the Government, if they choose to follow the side of the argument that I would advocate in terms of giving the money to schools, and, through them, to children, rather than having it within the universal credit. If the pupil premium is set on the basis of knowing how many children are eligible for free school meals within a school, it ought to be possible to passport the money for those meals to the school directly, given that most schools now operate a cashless payment system. It will then be possible to passport that money through to children's fingertips, if they use fingerprint technology, in respect of paying for their school meals, or on to their cards, if they use a card system. Either way, if they do not operate that, it is possible to get the money into schools so that we can be confident that children are getting a nutritious meal every day, which is hugely important.
I represented a parliamentary seat in Dorset for some time where I found that the health inequalities were such that a child born in my constituency had a life expectancy 10 years longer than one born in Manchester. A lot of that was to do with issues like whether or not they were getting a decent start to the day as regards food and nutrition and the quality of the nutrition that they were receiving during the day. I know that school meals are a crucial part of that. That is why, in the end, my contribution on this is to encourage the Minister to think about that aspect in terms of the needs of children to get a decent meal every day, rather than how things work within the universal credit.
Lord Boswell of Aynho
My Lords, I hope that the noble Lord, Lord Knight of Weymouth, will not take it as an insult—I assure him that it is not intended to be one—if I say that he is genuinely an expert as well as an enthusiast on the use of the IT system in government. I warm to that, and I have a great deal of sensitivity to what he and my noble friend Lord German have said about the need to get the system right. I am perhaps a little less pessimistic than the noble Lord, Lord Knight, in introducing his remarks, which seemed a little apocalyptic at one or two points. Perhaps I may also say that they were not quite as differentiated as they might be between general concerns about the level of unemployment or economic activity, about which we could have a debate in another context, and specific issues about the impact on the universal credit system.
In that context, one of the three points that I would like to ask the Minister to comment on is his assessment of the extent to which the system is sensitive to variations in volume, with all the difficulties that he is putting together, which have been rightly touched on. Depending on the number of claimants, there could be consequences if it has been under-specified; it could be resourced for a lower number but the numbers turn out to be higher. There could be quite a small movement of the margin which could tip over the sensitivity of the system. That is the first point.
The second point is an extension or a reflection on the point raised by my noble friend Lord German about the transfer of data. I am not a great expert in this, although I have taken an interest in some of these security issues. Indeed, there has been a conversation about the dangers of discrediting the system or the political class more generally if all this went wrong. It would be helpful if the Minister gave reassurances, not only on the specification of the data transfer but on the security and understanding of the transfer of that data. I think there is a strong wish across the Committee that data that is publicly relevant and obviously impacts on people's housing benefit, as it now will, on their housing claim, on other aspects of their financial package, or on arrangements with the public sector, should be transferrable. As one makes that longer daisy chain, there is also concern that it might get out of control or get into inappropriate hands.
Perhaps I may take the analogy produced by the noble Lord, Lord Knight, about the Department of Transport system for vehicle licensing, a system which I used at the weekend entirely successfully and, to be honest, because it has rather good graphics, quite enjoyably. The first time I used it, I thought to myself, “Do these people really know that I am insured and did I give consent that they should know?”. Now, because it is extremely convenient, I am very happy to accept that. There are issues about public reassurance, not least about employment data getting out to the public sector, to which the Minister may wish to respond.
The third point—one could say it is my motive for making this speech—is having intervened in the noble Lord’s introductory remarks, I realised when I sat down that I had given the wrong date for my entitlement to the pension. I did not want anyone here or in the wider world to assume that just because I said 2005, as I did, that in some way Members of this House or Members of the other place had an inside track to get their pension two years early. So I am now putting it on the record that when I said 2005, I should have said 2007. I want to cap it with a specific point. That is the kind of error which, however well conceived the system is, whether it is a public input or, in this case, a private input, it can be wrong; it can be a verbal slip or a misreading. We get older and we do not read the digits as clearly as we might.
One of the biggest points—I come back partly to the experience of tax credits, as a former Member of Parliament, and no less to child maintenance claims under the CSA, as it was—is that there is a huge capacity either on the official side of the system or on the private side to make entirely innocent errors, which then need correction. They may appear and then need to be sorted out. One element that the Minister needs to bottom—perhaps my noble friend will speak about this—is a system that enables people to get such errors attended to when they are noticed, without huge bureaucratic difficulty or excess delay, otherwise people will often run away from putting them right. That is where the rubber hits the road and where, despite the macro concerns that have been set out in this amendment, we should equally recall that there are micro-concerns: “Is it sensitive to me? Do I feel comfortable using it?”. I would be very grateful if my noble friend could give us some assurances along those lines.
Baroness Sherlock
I want to intervene briefly to ask the Minister a couple of specific questions. There is very little to add to the speech made by my noble friend Lord Knight of Weymouth. The Minister should hope that this does not go badly because he may find that speech being quoted back at him. He has been warned, and very eloquently too.
I have huge sympathy for the Minister. As I have said before in this Committee, I was involved as a special adviser during the development of tax credits, and I watched Ministers seek and receive all assurances that it would be reasonable for a Minister in those circumstances to have. I would not for one moment suggest that the officials with whom they worked, all of whom I was hugely respectful of, did anything other than give the best assurances they could. However, until a system is up and running one never really knows how it will respond to the realities of the information within it, so we all know this is a risk.
I want to ask the Minister about what kind of assurances he has been seeking and receiving and, in particular, whether he has been getting any independent assurance on the development and management of this project. As I understand it, the DWP’s development of its system is going to be dependent on the revenue’s system. Has the Minister received any assurance from the Treasury that has enabled him to progress, given the interdependence of those two things? Has he received assurances from the Treasury or from HMRC, in particular, about the nature of their systems so that he can make plans on the back of them? Secondly, what assurance has he about whether his plans are robust enough? If he will not tell us what it is, what is the nature of the assurance that was sought and from whom was it sought? I am aware that by and large large-scale government projects of this nature often seek some kind of independent assurance, perhaps from an independent auditor, whether internally or externally procured. Can the Minister assure us that the department has been through that process and can he reassure us on the basis of the reassurance that he has been given?
Thirdly, I am interested in how plan B will work. I am very sorry to say that I cannot make the briefing on 3 November. That is a genuine disappointment on my part. I am in the anorak category as well. I am afraid I am engaged with a communities and victims panel looking at the impact of the riots, and that takes me elsewhere on that day. Can the Minister explain very briefly how plan B will work? For example, is it the intention that businesses will report real-time information manually monthly or that individuals will report? Is the assumption that the DWP part of the game, where it matches up the different packets of real-time information from different employers in relation to individuals or households, will be done automatically as it is now? How will that work? Is it the intention that the new child maintenance system will be dependent on the same HMRC real-time information system? If so, is there any priority about which of these projects gets first dibs on the HMRC data, should it come under pressure?
If the Minister can answer only one question, I am really interested in the assurance question, so he will save me getting up again. Finally, if there is reporting under plan B, has he been able to get advice on what additional pressure that will put on the system? I am conscious that automated systems often put on much less pressure than processing individually and manually entered data, whether from businesses or elsewhere. Is that something that has been factored in?
Lord Freud
My Lords, before I respond to the amendment, I want to deal with the issues about what universal credit does and some of its impacts because the noble Lord, Lord Knight, implied that it has a perverse impact on poverty when exactly the opposite is the case. The IFS noted that it is progressive and pointed out that the bottom two quintiles gain £11 and £10 per week respectively and that 80 per cent of the gainers are from those bottom two quintiles. In fact, its estimate is that child poverty will reduce by rather more than our estimate. Our estimate is 350,000 when the system is in; its estimate was 450,000.
I do not want to go over the economic stuff, otherwise we will stay here all day. I want to deal with this issue. I can assure noble Lords that as part of the work to build the universal credit system we are undertaking a level of testing fully commensurate with a programme of this scale. Prior to the main go-live date in October 2013, there will be significant levels of testing specifically focused on ensuring that the various components work effectively together, including realistic business testing. For this project, we are adopting the Agile method of development, which creates and tests working IT components at an early stage. We are actually testing them now, and I shall show them to Members who can attend on 3 November. Instead of building very big sections of the IT system slowly, we are building small pieces more quickly. We are confident that this approach will provide a stable and fully proven system that will allow us to successfully deliver universal credit. I assure my noble friend Lord Boswell that the system will be sized to cater for the worst case volumes and will be robustly tested for performance at peak times. But I do not believe that it is necessary to introduce the additional step of a formal report, with the additional cost to the taxpayer and inherent time delays this would entail.
Baroness Sherlock
I thank the Minister for that. At the outset, obviously that kind of assurance will give confidence in the nature of the planning. Is he receiving independent assurance, as the programme goes on? The fact that he is, very unusually, a member of the programme board as a Minister, is certainly a sign of his own commitment to the project. It makes independent assurance even more important, because part of the point of independent assurance is to give an outside view in case those who are too close to the project may not see pitfalls as they develop.
Lord Freud
Yes, I am absolutely aware of that. The Major Projects Authority is looking at the process, and coming up in November or December is the next major independent look through the whole project. It is genuinely independent and quite a tough set of governance.
Lord Freud
The responsibility for those reviews is with the Cabinet Office. It is slightly hazy—I think that is the best word. They seem to get out, but I am not sure of the exact process. I take the point of that question and I will explore and report back to the Committee exactly how that information will be published. It may well be that we would look at extracts. Leave it with me. I take the point and will come back and say exactly how that information will be treated.
I want to clarify for the noble Lord, Lord Knight, his questions on costs because there are a lot of different figures flying around. One of the confusing things is that the figure of £2 billion has genuinely attached itself to two or three different parts of the project so it is easy to get confused. If you see £2 billion you think it is that £2 billion. The first £2 billion is all the costs associated with the implementation and operation of universal credit across the SR10 years, which is not just purely an IT investment. Some £1.5 billion of that is investment in systems, people, estates and other resources to allow the creation of the model. On top of that, there is another £0.5 billion for transitional and future running costs following the launch in October 2013. That £2 billion is a separate £2 billion to the net extra AME costs when it is all in operation compared with the current system. I apologise for the various £2 billions. There are some more running around but let us not get into those.
Baroness Sherlock
I am sorry, but I would like the Minister’s help in understanding which £2 billion the Public Accounts Committee was talking about in its report. It said,
“Approximately £628 million of the £2 billion set aside for Universal Credit is capital expenditure and a further £400 million is to cover the increased benefits … So less than half of the funds … will be available for staff costs”.
Is that the £2 billion that he was just talking about?
Lord Freud
Yes, that is the £2 billion of the implementation. The £628 million was within the £1.5 billion figure that I was talking about. I apologise for the confusion. There are a lot of figures. There are too many £2 billions. This is the oddest topic to joke about that I have ever come across, but there we are.
The noble Lord raised an issue about the complexity of universal credit in comparison with the ESA. This is a large project. There is no doubt about that. It breaks down to three different projects from the one that the noble Lord, Lord Knight, was talking about. The first is the universal credit administration platform. That is a DWP responsibility. That incorporates large elements that have already been developed, such as the payment accounting system. The next thing is the universal credit real-time earnings calculation and the payment and accounting system. That is basically the front end of the system and the rules engine behind it. Then there is the feed, which is the HMRC RTI system. You are looking almost at two components there: the supply of the information, which is being piloted—those pilots are getting going—and the data cleansing because, as the noble Lord rightly pointed out, getting the data through in a way that is readable and matchable is the key. Currently, the HMRC is working really hard on getting that right. It has got up to a data cleanse of 98.3 per cent and its aim is to push that higher and higher.
On data security, we will use our secure file transfer system, which is already in place between DWP and HMRC and is currently used for national insurance systems as well. We have recently had an independent assessment, which is an extra piece of independent scrutiny, undertaken by IBM on that technology plan. I should add on data sharing, as there was a question from my noble friend Lord German on data standards, that we are using the relevant information—the ISO standard. In fact, it is not a question of having it to be used for universal credit; we are already doing so and it is in place today.
We have a robust governance process with the Major Projects Authority. There is a commitment from me to keep noble Lords well informed on this matter, and I can make that commitment from a stronger position than most Lords Ministers because I am responsible for it. I make that commitment informally and I make it formally. The development can also be monitored by Select Committees in another place—the Work and Pensions Select Committee or the Public Accounts Committee—and they indeed look at it. All the structures are in place to ensure that the introduction of universal credit is properly scrutinised and on that basis I ask the noble Lord not to press this amendment.
Welfare Reform Bill
Baroness Sherlock Excerpts(12 years, 7 months ago)
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Lord Kirkwood of Kirkhope
My Lords, I am provoked into joining this discussion, which I was going to leave until the next group of amendments.
First, underoccupation is one of the most serious concerns in this Bill, and I think that those concerns are shared across the Committee. I do not think that it helps to start picking away at the positions of individual members of the Committee at this time. What I think we are trying to do is to make it clear to the Government that the current proposals are unacceptable. They are unacceptable to me for two reasons. One is process—and we touched on the discussion about transition. On 1 April 2013, between 5 per cent and 10 per cent of the case load, which is arguably 67,000 working-age families, will be tipped into debt. It is a brick wall that they cannot avoid. It is very unusual for a social policy change of this magnitude not to have built in a transitional provision.
With a little bit of application and consideration, we might be able to address the issue of overoccupation, which it would be sensible to do in the long term. Speaking for myself, I think that Amendment 44 is close to doing that, although Amendment 40 is not far away. I got a very interesting note from Moat housing the other day, which suggested that:
“Two bedroom properties or below should never be regarded as ‘under-occupied’”.
It is as simple as that. That is another way of expressing it. I do not know what it would cost, but the Committee is right to explore some of these circumstances, which have ramifications for social landlords as well as everyone else. What worries me more than anything else is that on 1 April—that may be an appropriate date—in 2013, that change will be made, and people have very little protection or room for manoeuvre.
The other very interesting suggestion that Moat housing made to me, which I had never heard before, was that a “soft start” could be adopted when people were demonstrating that they were taking steps to address the underoccupation that they were allegedly facing at the time. They could continue to get the full support until they had made the appropriate arrangements. It would probably take 18 months or two years to work out in the wash; that may be too tight a period—it might take longer than that to do safely. As a Committee, we are looking for a safe transition process and a way of limiting the brick wall of debt that 670,000 of our social tenants in the United Kingdom will face on 1 April 2013. That is a matter of concern across the Committee, which I think we should represent to the Government in a way that will occasion constructive change on Report.
Baroness Sherlock
My Lords, there is very little left to say, particularly after the astonishingly impressive opening speech of my noble friend Lady Hollis. If I were a Minister facing that speech across the Table I would have run the white flag up and gone to the pub, but the Minister is clearly made of sterner stuff than me, which is probably just as well.
I have two questions, the first specific and the second general. First, what discussions has the Minister had with colleagues in other departments about the position of children in relation to the implementation of these provisions? Like many other noble Lords, I have had a number of cases raised with me on the position of disabled children, to which we may return, and children with health problems, as discussed by my noble friend Lady Lister. Also, Barnardo’s, for example, raised with me the position of families in which a child or children are in temporary care. For example, they may live temporarily under a residence order with their grandparent, and while the family is trying to get the children back it may look as though they are underoccupying when they are not. There is a whole series of exceptions. I am interested in the specifics, but more generally has the Minister talked to colleagues in other departments about the impact on child welfare, safeguarding and well-being or child poverty when this policy is implemented?
The second question is one the answer to which I would be very interested to hear. We have talked a lot about modelling and transition, but the noble Baroness, Lady Hollis, talked about what seemed to me to be an astonishingly simple amendment. She said that somebody should not be required to do something that they are incapable of doing. What is the Minister’s philosophical reply to that?
Baroness Hayter of Kentish Town
My Lords, I start by saying that it was good to hear a defence of the noble Lord, Lord German, who arrived in the House at the same time as I did. However, I thought that being asked questions and dealing with them was a wonderful preparation for being Minister, and I hope that the government Whip has taken note of that.
It is difficult to add to the words of the noble Baroness, Lady Hollis, who, as the Guardian said last week—and only the Guardian could use these words—gave a “frankly beautiful speech”, and an astonishing one today, as it was described by my noble friend Lady Sherlock. I hope only to add a few remarks in support of what she said. First, I remind us, as did my noble friend Lady Turner, of the special nature of a home. We know the importance of feeling secure in one’s home and that one of the biggest causes of stress is a house move. It affects all of us, whether we are owner-occupiers or renters, old or young, rich or poor. As the noble Lord, Lord German, said, it is one of the worst things that we have to do.
Baroness Sherlock
May I press the Minister on one more point? I understood that his argument in response to the amendments up to Amendment 83 was that he could not accept such a broad exclusion because it would encompass people who would otherwise have paid the shortfall. That is probably the dead weight argument. I was in the Treasury. Dead weight is much loved as an argument by the Treasury and despised by pretty much everyone outside it. You can see that it makes perfect sense, if you are in the Treasury, to think, “You are already paying this, why on earth would I want to do it?”. If you are on the other end of the telescope, it looks rather different.
Does the Minister accept that the fact that a claimant may stay put and pay the difference does not necessarily mean that they can afford to pay it? That point was made by the noble Lord, Lord Kirkwood, and the noble Earl, Lord Listowel. Someone who can see no alternative suitable accommodation may stay put, pay the difference—or at least accept that they must pay the difference and get into debt, with all the consequences that has for the family. Does the Minister accept that point and, if so, how will he address it?
Lord Freud
My Lords, it was interesting that there was a range of responses to our survey. Different people will do different things depending on the circumstances. That is the point. That is the problem with all the broadly defined exemptions that we have discussed today, which we have explored in great detail in the department: none of them works to define eloquently and adequately the people whom we want to protect. We need other ways to do that. I know that people like to attack the Treasury on every conceivable opportunity—
Lord Freud
It did not sound like that.
Some people will choose to pay £11 and £12 extra for an extra bedroom perfectly rationally and other people will make other responses; a wide range of response is likely. A lot of people would regard it as a bargain to spend that amount on an extra bedroom. As noble Lords will be aware, spending to get that extra accommodation in the outside world—whether through a mortgage or through renting—would cost a lot more.
Baroness Sherlock
Forgive me, in the interests of levity, I was not being clear enough. The people I am concerned about are not those who could afford it but declined to stay, or those who are staying put and are happy to pay the money. The Minister mentioned statistics earlier about the number of people who would move, downsize or stay put and pay the difference. I am concerned about the rump who remain, which I think is sizeable—perhaps he will remind us of the percentage. I tease him about dead weight only because that argument works only if the Government are willing to accept that the price is borne by those who are not capable of making the difference. I am trying to tease out exactly how big is that price, who is paying it and what price the Minister would regard as acceptable for people who are forced into debt in order to make it work for everyone else.
Lord Freud
My Lords, I said earlier that we are working on the detailed implementation of this. It would be premature to make judgments on that. We need to develop strategies to ensure that those problems do not arise.
Welfare Reform Bill
Baroness Sherlock Excerpts(12 years, 7 months ago)
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Baroness Howe of Idlicote
My Lords, having listened to the detailed arguments, which were extremely well put, if I may say so, the message to me is definitely that all this looks as though it is going to discourage people from saving. If the Minister cannot reply to what we have heard, that is a very worrying message to be sending out.
Baroness Sherlock
My Lords, I would like to add one final word. Could the Minister reflect for us briefly on one of the wider consequences of this move? When tax credits were set up, they were, as he will know, designed to replicate work in many ways and to replicate the tax system, so it is not the case that having savings is not taken into account at all. Under tax credits, genuine income from savings is taken into account, and that is the way it should be, but under this new system it is not just the very richest who are affected. Once people reach £6,000 worth of savings, they will face, as my noble friend Lady Drake described, a heavily punitive rate of effective taxation on that. I wonder what the effect of that is on the marginal deduction rates as they move into work.
I ask the noble Lord to do two things. One is to comment on how he has factored that into the effective incentives to move into work in a whole variety of situations. Secondly, could he say whether he is not worried at all that it might push people back into an approach of dependency on the state as opposed to their trying to share that responsibility between themselves and the state, which the tax credits system encourages them to do?
Lord Freud
My Lords, Amendments 22B and 22F would exclude from the calculation of capital any savings placed into an individual savings account or other prescribed accounts of a claimant who is in work, or who has been in work in the past 12 months, up to a maximum limit to be set no lower than £50,000. It begs a really very simple question: should the taxpayer support someone who has savings of £50,000? That is the question that is being asked here, and I think it is a question about amounts. The figures we are using were taken over from the existing benefits system, and they were raised a little over five years ago in April 2006. Those figures were doubled from £8,000 at the top to £16,000, and the starting rate from £3,000 to £6,000, so those figures do move around. I accept that determining what the right figure is here is not an exact science. Indeed, one of the things I am keen to have is a responsive system that starts to get research and understand judgments such as what the right figure is here.
I understand exactly the motivation of the two amendments, which is to encourage low-income workers to save. The argument comes down to how much we and the taxpayer can afford. I gave some figures when we debated the previous group of amendments. I will remind noble Lords that if we had an upper capital limit of £50,000, it would cost £90 million a year, which we simply do not have. Under our proposals, only when a claimant, or joint claimants, has £16,000 or more will the entitlement to universal credit cease; and only 13 per cent of households have this much in savings. That is why the figure is not as arbitrary as some noble Lords indicated.
I was asked a series of questions. I will have to add to my letter to the noble Earl, Lord Listowel, to get right the position of children leaving care. Clearly, a child's income and capital are wholly disregarded in the system. The noble Lord, Lord McKenzie, asked about the treatment of ISA interest. Universal credit will replicate the capital rules for means-tested benefits by using a tariff income. It is not possible to read across from the tax credit system. As noble Lords know, tariff income is not—and is not meant to be—the equivalent of the actual income that you might earn on that amount of capital. The figure includes an estimate of how much you should be prepared to run down your capital while you look for support from the state.
Lord Wigley
My Lords, I support this amendment very warmly indeed, and put to the Minister circumstances that arose frequently in the area that I used to represent in the other place and that still arise in rural areas, not only in Wales but also in areas such as the Lake District and Cornwall, where it is very difficult for young people to buy a first home. Indeed, it is so difficult that unless a parent is in a position to make some contribution towards a deposit, it is next to impossible to buy a first home. The question that goes through my mind is: if a parent has money allocated for this purpose, is he or she going to pass it to their offspring to buy a house, knowing that if it stands in their offspring’s name in a bank it may prevent that person from getting benefits?
In areas such as those to which I have referred, the major industry is often tourism, which is highly seasonal. This means that people are moving in and out of work frequently. If one takes the combination of ultra-high property values, which have often arisen because of the pressure of second homes, the relatively low income levels that obtain within the economy, and the seasonal nature of the employment available, particularly for young people looking for their first job—and one wants to encourage them to take every job opportunity there is—one surely has to make sure that the rules and regulations do not militate against them getting their foot on the first rung of the ladder in order to be the owner of their home. I put it to the Minister that somehow or other that has to be safeguarded within the system.
Baroness Sherlock
I would like to make one brief point about the sums of money that are increasingly needed to save for a house. It was reported in the Guardian on 17 September this year that the average deposit has gone up tenfold in the last 20 years, from £6,793 in 1990 to over £65,000 now. The same article went on to quote a banker from First Direct, which I presume must know these things, who said:
“The average deposit … has actually risen more than twice as fast as house prices and almost four times as fast as income”.
Could the Minister therefore think for a moment about whether the inflation in the savings limit properly takes account of the specific house-related inflation, and within that the specific deposit-related inflation, that we are seeing?
Lord Freud
My Lords, Amendments 22C and 22D would exclude from the calculation of capital prescribed amounts saved for a deposit on the purchase of accommodation for personal use where the claimant is in work or has been in work in the previous 12 months. I can of course see the benefits of encouraging low-earning families to become homeowners, but at present these amendments would be difficult if not impossible to implement efficiently in practice. As the noble Baroness, Lady Drake, pre-empted my argumentation, I will not go into this in depth, but I must say that one would need both the provision of a savings vehicle, which would in effect be exclusively for the purchase of a house, as well as adequate numbers of people wanting to save in this particular way, for that market to work. I do not think there is any necessary block on creating a vehicle like that at some stage in the future, and it would be up to a Government to look at that in the future. Right now, given our constraints, I do not think we are in a position to do it. As noble Lords have heard and as the noble Baroness suggested, these are not necessarily issues of principle; they are issues of affordability and the envelope that we have to introduce universal credit. I remind noble Lords that we have obtained an envelope of £4 billion per annum to give to people in receipt of universal credit. I am not netting it off against other changes, but that is what the universal credit does. Finding extra money for this, that and the other cannot be done just by a wave of the hand. It will be tough to get extra money for desirable things.
It is essential that we get the architecture of a structure that we can use to help and motivate people. If we cannot afford particular things or it would be desirable to develop particular processes, that is fine and we can do it, but right now we do not have those resources. For that core reason, I hope noble Lords will appreciate why we do not support these amendments, and I ask the noble Baroness to withdraw her amendment.
Lord Northbourne
My Lords, I do not want to delay the Committee. I am sure there are many people in this room who have more experience of these issues than I do. However, during 16 years chairing the youth department of Toynbee Hall down in Tower Hamlets we came across quite a lot of problems with moneylenders in particular. I strongly support fortnightly payment. Monthly payment will give much more opportunity for unscrupulous traders to profit from budgeters who are perhaps not very experienced.
Baroness Sherlock
My Lords, I have little to add to the rather remarkable contribution made by my noble friend Lady Lister, but I want to address a couple of points.
First, I was delighted to see the DWP research report, Perceptions of Welfare Reform and Universal Credit, and I commend the Minister and the department for taking this kind of research so seriously. The foreword to that report says:
“The Department for Work and Pensions … is committed to involving users throughout the development of Universal Credit, from setting out the criteria for a good experience to detailed design decisions. This user involvement helps ensure issues are known, understood and mitigated as the Universal Credit system is being built”.
I want to commend that. I thought it was a very good decision. However, it means that if you ask people and they give you answers, it really is wise to listen to them. Having sought the opinion of those who are going to be using the system, and having been told so clearly that only a small minority appreciated monthly payments as a route and the majority clearly felt it was a problem, is the Minister at all persuaded by that?
I have two other points to add. I am particularly concerned about the impact on those who are in that territory between work and out of work. The most compelling argument made today was the fact that if only half those people are paid monthly at the moment, the whole idea that moving to monthly payments mimics work simply falls flat. If people are currently paid weekly or fortnightly, they could be in the bizarre position of having their wages paid weekly or monthly and their universal credit paid monthly, which seems ridiculous. At the moment with tax credits people can opt to be paid weekly.
I declare an interest as having been involved in advising Ministers on the design of tax credits, as noble Lords will know. I can understand the desire of the centre to want to simplify this. I really understand why having everybody on monthly payments would be an awful lot easier for the process, as well as the design problems in terms of processing capacity of having people opt into a variety of options. However, this feels so important that if the noble Lord is so committed—and I know he is—to the aims of universal credit in supporting people in work and to getting the architecture right, it would seem that this is a fairly fundamental piece of the architecture, and we get it wrong at our peril.
I have one final point. I spent some years working with single parents. Most of them had come out of relationships or marriages. One of the things that they always said they liked about being single—there were many things they did not like that were very hard—was that they could control the money. I heard many of them describe the struggles that they had had to protect the money coming into the household and to have it spent on the children. They described a whole range of situations that I am not in any way suggesting are typical, but they are none the less not invisible or irrelevant either. Some said that they quite often had a situation where their partners would periodically go out on a binge and spend the money. There were people who had quite a bit of money who would say: “I fed the children on child benefit till they got back”.
One thing about credits being paid directly to them and coming in weekly was that at least they knew there was another payment coming along soon. If in this situation one partner spends the money unwisely, it is an awful long wait until the next payment comes in. Would the Minister consider that alongside some of the later issues we are going to discuss about the Social Fund and single payments being made only to one partner or to a joint account? This is an area of which the Minister would be well advised to take careful consideration.
Baroness Campbell of Surbiton
My Lords, I would also like to support the amendment of the noble Baroness, Lady Lister, and congratulate her on her first amendment. What a good first amendment. Disability charities, including the full membership of the Disability Benefits Consortium, have expressed grave concerns to me that many disabled claimants, particularly those with mental health problems or learning disabilities, will struggle to manage their budgeting over monthly intervals. With the proposed replacement of the discretionary Social Fund and by confusing an unpredictable plethora of local schemes, accessing crisis payment when budgeting problems arise will be very hard for this group of people also.
I support a man with mild learning and behavioural difficulties. He can just about manage his two-weekly payments and often, at the end of the two weeks, it is up to his friends—normally me—to sub him until the end of that two-week period. I have no idea how he will manage on a monthly basis. He falls under the radar of most help and I know that he would not seek it anywhere but me. So it also puts a burden on families, friends and other poor relatives who are often in the same situation to make up the shortfall. I support the noble Baroness and would like to know what the Minister has in mind for this particular group of people to cope with a monthly payment.
Lord Freud
My Lords, Amendment 29 specifies that deductions from the claimant’s maximum amount of universal credit should include an amount in respect of prescribed types of unearned income calculated in the same way as the deductions made in respect of earnings. As drafted, Clause 8 allows for a reduction in respect of unearned income to be calculated “in the prescribed manner”. The Bill therefore already allows for the manner of such reductions to be specified in regulations. This could include, where appropriate, the same calculation as for earnings.
As we set out in the White Paper, claimants will have their universal credit withdrawn according to a single taper rate after appropriate disregards. The latest assumptions on the earnings disregard have been set out in a new policy briefing note which was published today. Further analysis is provided in an updated version of the impact assessment for universal credit, which was published not very soon, but this afternoon.
With regard to income other than earnings, we have today released a new policy briefing note which confirms that statutory sick pay and statutory maternity, paternity and adoption pay will be treated as earnings. We do not intend to treat either ESA—or ESA equivalent—or maternity allowance as earnings. They are not treated as earnings in the current system; they are benefits and are treated as such. Nor do we propose to alter the current treatment of maternity allowance in the benefits system, where it is taken into account in full. This is because maternity allowance is one of a number of benefits which exist to replace income for people who are out of work. It therefore addresses the same need as universal credit for mothers who cannot work because they are giving birth to their children. We do not believe it is right for the Government to pay twice to meet the same need.
The income briefing note also explains our wider approach. In general, where a claimant has income at their disposal to meet their living costs, such as spousal maintenance or payouts from an occupational pension, these payments will be taken fully into account. However, we need to make exceptions to this general rule while ensuring that the system is kept as simple as possible. We will therefore disregard certain income types in full where they are paid due to additional costs or expenses that a claimant has. This would apply to additional payments due to being disabled, such as DLA or various local authority payments, or for looking after children, including child benefit and fostering allowances. We will also disregard in full certain payments which would be disproportionately costly to take into account. These will include the value of payments in kind or charitable payments.
I turn now to the proposed subsections in Amendment 30 which would require the Secretary of State to carry out and publish a review of the impact of a taper rate on universal credit claimants and their work incentives one year after the Act comes into force. As the revised impact assessment sets out, we expect the single taper together with the earnings disregards to improve work incentives significantly. With regard to the participation tax rate, the number of households who lose between 70 per cent and all their earnings through taxation and benefit withdrawal on moving into 10 hours of work will fall by 1.2 million under universal credit. Under the current system, around half a million individuals in low-paid work would lose more than 80 per cent of an increase in their earnings because of higher tax or withdrawn benefits. Virtually no households would lose 80 per cent under universal credit. On reasonable assumptions, the combined impact of take-up and entitlements will lift around 900,000 individuals out of poverty, including more than 350,000 children and 550,000 working-age adults.
These are significant outcomes and we will be monitoring and evaluating universal credit to confirm that they are achieved. However, this is an ongoing process and we expect that it will take longer than a year to develop a sufficient body of evidence on which to draw firm conclusions. As a result, we do not think it appropriate—
Baroness Sherlock
I thank the Minister. I am trying to look through the revised impact assessment, as I am sure will other noble Lords. I hope he has had the opportunity to read it before I have; I would be very disappointed if he had not. I wonder, therefore, if he would give us the benefit of that experience. Regarding the figure he has just cited of 200,000 children being lifted out of poverty by entitlement alone—and I see he has had to resort to modelling take-up which he has always previously refused to do on the grounds that it was not necessary—could he remind us what the previous estimate was of the number of children being lifted out of poverty?
Lord Freud
Yes, I can help noble Lords. There is a small decline for adults in this impact assessment compared with the last one. It is down from 600,000 to 550,000. However, the figure for children is unchanged at 350,000.
Lord Freud
Yes, for children lifted out of poverty, the figure 350,000 is unchanged. I am sorry; I can only tell noble Lords what is in the document, which I confirm that I did read over the weekend. Let me nail down the reason why I do not want a formal annual review process. I do not think that that is the right way to go when we have something as sophisticated as the universal credit, given the impact of the different delivery mechanisms, taper rates, disregards and conditionality. I will be talking to the Committee quite soon about how we could assess the system most effectively. I accept assessment and regular assessment, and I am looking for support from this Committee in that process.
Baroness Sherlock
I thank the Minister. I wanted to phrase my question more precisely because I think I may have confused him. The improvised impact assessment says on page 18 that changes in modelled entitlements will lift approximately 200,000 children out of poverty. The figure of 350,000 children that he quoted included take-up modelling. My understanding is that previously he has given us figures that did not include take-up modelling. I am trying to contrast the current steady state figure without any assumed change in take-up compared to the previous steady state figure.
Lord Freud
I can absolutely confirm that the figures included take-up and are the same figures, so there is no change there.
Baroness Sherlock
I am so sorry. What was the previous figure, not including take-up modelling?
Lord Freud
They are exactly the same—200,000 and 400,000 adults. Those figures have not changed. Let me come back to the issue raised by the noble Baroness, Lady Hayter, on the target rate of the taper. I do not think it is right to have a target rate of what the optimum figure is, and I will not talk about the iron triangle today. I will spare the Committee. A lot of factors are involved in what the optimum rate will be. We do not know, so it would be foolish to set a target, whether it is 55 or 65 per cent. If noble Lords want my opinion, I think 65 per cent is too high and a future Government—when they have some money—would be smart to lower it. But by then I would hope that we would know exactly what the optimum figures were. When we know that, a smart Government would move to it. It would be wrong to set a target when we do not know what the optimum figure is. I agree that we need to be very sophisticated in our understanding of how people behave and the impacts of universal credit. I take on board the spirit of this amendment in the sense that we do need to assess it. I do not think this is the right way and I hope to be able to discuss with this Committee better ways of assessing it. I am hoping for some real enthusiasm behind those ways as well.
I hope that these answers have helped to clarify our intentions in these areas. They are really important areas, and I urge noble Lords not to press their amendments.
Welfare Reform Bill
Baroness Sherlock Excerpts(12 years, 8 months ago)
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Baroness Sherlock
My Lords, I want to examine the extent to which the Bill meets its objectives, particularly for families with children. My interests are in the register but I was a non-executive director of the Child Maintenance and Enforcement Commission and I was an adviser in the Treasury during the development of tax credits.
The Bill describes a revolution in the benefits system. The Minister might look an unlikely revolutionary, but he said today that this is the most radical reform of the welfare system since its invention. So a revolutionary he certainly is. I wonder whether there is a poster of Che Guevara tucked away in his office somewhere in Richmond House.
This is going to be the biggest change we have ever seen in the welfare system. The White Paper said:
“The Universal Credit will have a simple structure designed to provide a basic income for people out of work … make work pay ... and help lift people out of poverty”.
I will back a system that does those things, as will many noble Lords, but we must test whether it will. First, will universal credit be simple? No. It will be unified but not simple. By bringing together so many benefits, the process of applying for universal credit may be more complicated for some people who want access only to limited parts. I understand that. It may be inevitable as simplicity in the benefits system is often bought at the expense of fairness. Child benefit is simple but not fair, certainly if that is all there is. Tax credits are fair but even I would concede that they are not simple. Finding a single system that brings together fairness and simplicity is a great challenge. In particular, it puts a premium on smooth implementation to balance the inevitable structural complexity. Having been involved with the development of tax credits, I freely offer the Minister some advice that was hard-won by me during my time in the Treasury. Each front on which you pursue reform in a major structural change increases the chances of one of them failing and the whole thing falling over. I would urge the Minister to take that to heart and counsel him to stagger the reforms. Start, if you must, with universal credit, but get that sorted first before even contemplating moving on to the CSA or abolishing the Social Fund or introducing in-work conditionality, otherwise we risk jeopardising the entire system.
Secondly, will universal credit make work pay and support people in work? Tax credits were designed to do just that. Working tax credit was designed around people in work. It was meant to look like work. It was run by the Revenue, paid through the wage packet, based on prior year earnings, with no conditionality other than a minimum hours rule. The treatment of savings was fair, like in the tax system. Nobody was debarred for having savings but income from savings was taken into account. In merging these two systems, as my noble friend Lady Hollis pointed out so eloquently, too often the lowest common denominator has won out.
Will a father saving for a deposit on a house who is eligible for tax credits be denied any universal credit once his savings reach £16,000? What about a mother who is getting a divorce and gets some of the proceeds from the sale of the marital home but not enough to buy again any time soon? She will be expected to run down those savings, feeding her family from them, and so never getting back on the housing ladder unless she marries someone else. She had better make sure he does not have any kids or the benefit cap will kick in. What of a couple who both work part-time to share childcare. Will they face in-work conditionality when they might not have set foot in a benefits office for years? I worry about the characteristics of this system and how worker friendly they are going to be.
Will work pay? I was pleased that the Secretary of State for Work and Pensions gave a clear pledge that,
“people will be consistently and transparently better off for each hour they work and every pound they earn”.
Let me highlight two worries. Many noble Lords have mentioned childcare costs. The options that the Government have canvassed are fairly unattractive because all reduce the maximum amount of childcare help that can be claimed. The Minister may correct me, but if either option is implemented, some parents could be worse off if they increase their hours. They could be trapped in part-time work, making it hard to lift the family out of poverty and some could even find that work does not pay at all. We need specific assurances from the Minister that work will continue to pay at least as well as now, even if you have high childcare costs, and that no one will be put into the position of being forced to work more hours without being given the money to pay for the childcare they will need in order to do that.
The second area I worry about is the proposal to leave help with council tax to the discretion of local authorities. If the DWP cannot control how much council tax help is offered, how quickly it is withdrawn or how it is means tested, how will it be possible for the Secretary of State’s guarantee to be met? I should be grateful if the Minister could explain that to the House.
Will these reforms lift people out of poverty? Many noble Lords know that this week an IFS report has predicted that the people who will suffer most from tax and benefit changes are families, especially poor families with children, with the poorest decile suffering income losses of more than 8 per cent over the next three years. I want to look particularly at the effect of the benefit cap, so eloquently explained to us by the right reverend Prelate the Bishop of Leicester and by the noble Baroness, Lady Tyler. The charity Family Action has said that the cap is likely to push more families into poverty. The Children’s Society has said that it will affect nine times as many children as adults, so it is clearly a measure aimed directly at families with children. I have heard this explained as being necessary to stop, for example, a benefits scrounger living in the kind of house that no decent working family could ever afford to live in. But if we think about that for a moment, it makes no sense. There are already limits in the housing legislation on how much housing help can be given, just as there are limits on every other individual benefit. So an overall benefit cap will have a particularly unfortunate effect on those who happen to catch more than one of those tripwires. If you happen to have more than two children and live in an expensive urban area, you are the kind of person who will be hit. A Parliamentary Answer in another place revealed ministerial estimates that around 70 per cent of those who will be affected by this are already living in social housing; they are already in the cheapest accommodation. Where are those families meant to go?
Finally, I want to comment on the proposal to change dramatically the child support arrangements. The Bill and the response by the Government to their earlier consultation document make it clear that the intention is to put significant barriers in the way of any single parent who wants to make a claim through the statutory system. Those who do make it through the gateway will have to pay a fee just to be allowed to apply for the money to which they are entitled in law. If they get through and the money is then paid through the statutory system, both parents have to pay a fairly hefty proportion of that money—private money—to the DWP for the privilege of getting what is meant to be paid by one parent to the other. The noble and learned Lord, Lord Mackay of Clashfern, made a clear argument on this. There is nothing the parent with care can do to influence the other party to pay directly or to co-operate other than going through the state. Why is she then to be penalised? This is money that currently she receives directly to feed, clothe and buy shoes for her children. Why should some of that money be handed over to the state, potentially up to 32 per cent of the total amount, simply because the other party will not co-operate? That seems to be dramatically unfair.
There are many other questions that are yet unanswered, and the hour is getting late. However, I want to flag some issues that will come up during the Committee stage. What will happen to passported benefits such as free school meals? What will be the effect of stopping the automatic payment of money for children to the main carer, usually the mother? What about disabled children—potentially as many as 187,000 of them, so the charities tell us—who could lose up to £1,400 a year? What of the impact on 17 and 18 year-olds?
I understand that we cannot get all the detail right and I heard the persuasive appeal made by the noble Lord, Lord Brooke of Sutton Mandeville, that we should ensure that we do not allow the best to be the enemy of the good. I have heard the Minister say in previous briefings that we must focus on the structure, not on the detail, and that there may be more jam tomorrow. But children growing up now will be affected in the future by the incomes of their parents today. The very least we must ask of the Minister is that he should demonstrate to the House how the Government will achieve their own goals of simplicity, making work pay and tackling poverty. If he cannot do that, we are entitled to ask whether the revolution is justified. Perhaps the poster of Che Guevara should come down.
Social Mobility and Child Poverty Commission
Baroness Sherlock Excerpts(12 years, 10 months ago)
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Lord Freud
My Lords, the job of the commission will be to hold the Government to account for their strategy. It is the job of the Government to set the strategy and we will look at all the areas in which we need to improve performance.
Baroness Sherlock
My Lords, I am sure that noble Lords who saw the recent BBC documentary “Poor Kids” will have been moved by the brutal reality of child poverty in Britain that was portrayed. Will the Minister assure the House that the Government will commit themselves to tackling poverty at the very bottom and not just social mobility? Is he aware of the concerns expressed by charities that the Government’s approach to the commission may undermine its independence and will he meet the End Child Poverty group to discuss this?
Lord Freud
My Lords, one of the things that we are doing to expand the measures of accountability is to look precisely at severe poverty, which is a combination of very low incomes and material deprivation. That is an area on which we want to focus. One of the problems with targets is that they encourage Governments to tuck people just above an arbitrary line, which we do not want to do. I am sorry, but I have forgotten the second part of the noble Baroness’s question.
Baroness Sherlock
Will the Minister meet the End Child Poverty group to discuss its concerns that the Government may be weakening the commission’s independence?
Lord Freud
We are not weakening the commission’s independence in any way; we are strengthening it by requiring the commission to hold the Government to account. The fact that we are not insisting that the commission sets the strategy for the Government means that the Government now have that responsibility and the commission can then hold them to account. I shall of course meet the group at any stage; I am sure that it is in my diary anyway.
Child Poverty
Baroness Sherlock Excerpts(13 years ago)
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Baroness Sherlock
My Lords, returning to the matter of targets, even if the Government are correct, as the Minister said, and 350,000 children are lifted out of poverty by the welfare reforms, the IFS has said that that will be wiped out by the numbers falling into poverty before reforms even take place. I am sure that everyone in the House wants to build on the achievements in raising children out of poverty. Would targets not be the best way to do that?
Lord Freud
My Lords, it is important to look at what the figures have shown us. Last year we put an enormous amount of money into tax credits and the benefits system. The amount increased by 6.7 per cent and is the sole reason that we had income growth in this country in that year. It is not sustainable to do this by income transfers. Our aim is to try to transform the lives of people, and that must mean a renewed emphasis on getting people back into work, making them independent and leading their own lives. That is our strategy and that is how we have reformulated our poverty policy.
Housing Benefit (Amendment) Regulations 2010
Baroness Sherlock Excerpts(13 years, 3 months ago)
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Baroness Sherlock
I shall pick up precisely where the right reverend Prelate the Bishop of Hereford left off in looking at the impact on children and communities. In preparing for this debate, in common with other noble Lords I read briefings from a wide range of charities and was very grateful for them. I also read the excellent report from the Social Security Advisory Committee, but probably the single most informative document that I have read so far has been the impact assessment from the DWP. I even thought of simply reading out sections of it in place of a speech, until it occurred to me that noble Lords might have read it already, but it is probably the most damning impact assessment that I have ever read.
Rather than repeating the comments that other noble Lords have made far more eloquently—my noble friend Lord Knight did a beautiful job of setting out the detail on this—I want only to look at what that might mean for a family, because it is very easy for us to consider the policies without understanding the impact on individual families.
I spent some time running a charity that worked with single parents. A lot of the single parents who came through the door would phone up when their world had suddenly fallen apart. Perhaps the husband had left, or something had happened and the marriage or family had broken up. Often, a pattern would follow from that. Usually, the mother would end up with the children. She would often have been working, as would the father. When she had to do the childcare alone she would find that she could not manage it and do the same job, because that simply did not work, so she would often then give up the job. The pattern would be that she would often move to be closer to her own family—perhaps her own mother or father—who would help to share the childcare. Over time, she would rebuild her life and often end up getting a part-time job with childcare and being helped by the family and friends in the neighbourhood. She was usually able to do that only because of tax credits and housing benefit. Suddenly, the family would begin to be back together again.
Imagine what happens to that lone parent in that situation if she suddenly finds that the rent on the family home which she has managed to establish can no longer be met by the local housing allowance. What does she do? The landlord might be kind enough to drop her rent, but what if he does not? She then has two choices. Should she try to stay put and make up the difference, when we already know from Crisis that 48 per cent of people on the local housing allowance already face a shortfall? She might already be trying to top up the rent as it is. Even if the difference is only the £12 a week which the noble Lord, Lord German, mentioned, that is a lot of money to someone on that kind of income. If you shop around, £12 a week can buy a pair of children's shoes or put a lot of food on the children’s table. At that level, £12 a week might simply be beyond her reach; it might as well be £1,200.
What does that lone parent do? Does she decide to move to a different area? In doing so, if she moves from inner to outer London, for example, the children will certainly have to change schools, if they can find a place. In doing that, their schooling is disrupted and they lose contact with their friends. In many cases, the woman loses contact with her family. She might then not be able to travel back to the job. The travel costs might be too great or her own mother cannot mind the children, which means that she cannot risk being late back as she has to be there in time to pick the children up from school. We can end up in a situation where the children's lives have been disrupted, the mother might be forced back on to income support, the family has been fractured and the children will suffer. The consequences are potentially significant.
I do not want to wave a shroud; that is not my intention. I want to try to dismantle a policy from its larger scale to see what the impacts might be on an individual set of families. In fact, the impact assessment makes it very clear what the consequences are of some of that dislocation. It talks about the evidence of what happens to the educational attainment of children who are moved—about the impact on the GCSE points of those who are moved at key stages. It talks about the dangers of overcrowding, because the alternative for our lone parent is to stay put or perhaps to go to a smaller house, squeezing a family into a tiny flat. But then where do the children do their homework, as the impact assessment points out? What are the consequences for that family?
The other issue is the other wider impacts of a choice such as this. What happens to the families who have traditionally lived in a very mixed area, in the way that the right reverend Prelate described? I visit people who live in Islington—I went to a church there—and have always been hugely impressed that in so much of London there are such areas, where rich and poor live side by side. But where do they mix in practice? I remember the vicar of Islington walking me down a street to show me a beautiful Georgian terrace on one side and an interesting and challenging 1960s council block on the other. He said, “You know, the joy is that the people in the Georgian terrace look out on the council block and the people in the council block look out on the Georgian terrace”. The real joy was in fact that their bins were emptied by the same council service, that they went to the same GPs and that they shopped in the same local neighbourhood stores when they needed to. In other words, they shared local services. One thing that has long been observed is that services for poor people become poor services, while one thing about having people in mixed areas is that you have what I think a government Minister memorably described as the sharp-elbowed middle classes, who are there to make sure that those shared services are available to all and are protected and developed.
The case that I have described might be just one family, but the impact assessment says that 450,000 of the households affected contain children. If 450,000 households with children are affected by these changes, I very much hope that the Minister will be able to consider the sensible suggestion from the noble Lord, Lord Best, and take his time to consider the impact of two things. First, what will the impact be on families with children? He should track what has happened to some of those families and look at how their lives have changed. Secondly, I strongly urge him to consider how this interacts with the many other measures that the Government have taken through.
That single parent will already be facing cuts from the Government in her childcare help and in the amount of money that she is allowed to earn on her tax credits. She could already be facing a range of other cuts and benefits. She is already in a context in which inflation is rising and the local housing allowance will be uprated only in line with the CPI, while VAT and fuel bills have just gone up. These families are much squeezed already. The very least we owe them is to make sure that we do not take a step such as this without properly understanding the implications.