Jobseeker’s Allowance (Domestic Violence) (Amendment) Regulations 2012
Lord Freud Excerpts(12 years, 3 months ago)
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Credit Unions
Lord Freud Excerpts(12 years, 3 months ago)
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Lord Kennedy of Southwark
To ask Her Majesty’s Government what action they are taking to promote the accessibility of credit unions.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, the Government wish to see greater diversity in financial services, and credit unions have an important role to play. The recent credit union legislative reform order has opened up membership to different groups such as housing association tenants and employees of national companies working in credit union areas. A feasibility study has looked at how the Government could support credit unions. The study reported to Ministers in December and an announcement will be made in due course.
Lord Kennedy of Southwark
Although progress is moving in the right direction, I think it is extremely sluggish. If I asked a question about nurses, I would expect a Health Minister to reply; if I asked about teachers, I would expect an Education Minister to reply. I ask a question about credit unions and three departments could reply in this House. I contend that that is not joined-up government. My question for the Minister is: who is the driver?
Lord Freud
My Lords, I am the driver. I commissioned a report on credit unions last year. The DWP is the paymaster for the credit union movement. We have spent £113 million in the past six years. We are determined to go on funding this really important element of financial inclusion and to create an industry that will be viable in the long term and will support the poorest in our society.
Lord Martin of Springburn
My Lords, what limit is there on individual credit union loans? Will the Minister say what figure the credit unions are restricted to? I am very keen that self-employed tradesmen and women who want to start off with a small quantity of tools and equipment are able to go to a credit union in their locality rather than a bank, because banks at the moment are not very helpful to self-employed people.
Lord Freud
My Lords, there are various restrictions on credit unions at the moment. I am not aware of an absolute limit on loans. Clearly, the unions need a financially viable business structure. They do not have one at the moment. A typical loan from a credit union is about £500. It costs the union more than £75 to make the loan and it earns less than £63, so getting a new mix of business is vital.
Lord Newby
My Lords, does the Minister agree that the next big step required to increase the volume of credit union activity is to make credit union accounts accessible via post office counters? Will he assure the House that this option is under active consideration as part of the wider review that he described?
Lord Borrie
The Minister referred to the growing significance of credit unions, and of consumer credit provided by the unions. What proportion of outstanding consumer credit at the present time is owed to credit unions? What proportion of the totality of consumer credit do they cover?
Lord Freud
The proportion is disappointingly small; it is 2 per cent. That compares with a figure of 44 per cent in the United States and 75 per cent in Ireland. It is a very small industry here. Our ambition is to double its size in the next five to seven years. Nevertheless, we need to look at various other financial instruments, particularly as we introduce universal credit.
Lord Clarke of Hampstead
My Lords, I am sure that the House is delighted that the report that the Minister asked for is coming. Should not part of the report state that local authorities should be encouraged to help with the start-up costs of credit unions, in particular with the very high council taxes that are levied on premises? I speak with experience of a very successful credit union in St Albans of which I am a member. Start-up costs are very difficult and local authorities could play a good part in helping to create these unions.
Lord Freud
Yes, my Lords, credit unions are local organisations. It is very important that social units in the locality help them. Just as important as local authorities are social housing groups. There are already 20 such groups working with credit unions, which is very important.
Lord Elystan-Morgan
Does the Minister agree that the situation is acute because needy people must be kept out of the clutches of loan sharks? I appreciate that successive Governments have shown great good will in this matter. Will he study the situation in the Republic of Ireland, where, as he said, some 50 per cent of personal credit is represented by credit unions? In New Zealand and Canada the figure is between 20 and 22 per cent. Will he take those systems very much into account and do something that involves a substantial injection of public money into this investment?
Lord Freud
My Lords, we have made clear that we are prepared to support this industry, but we are determined to support it in such a way that it becomes viable in the long term. We are attacking illegal loans, which are coming down a bit. There are various supports for poorer people, such as payday loans, rent-to-buy and home credit. It is a very complicated picture, but we are determined to push this new factor as hard as we can.
Lord Cormack
My Lords, my noble friend said that the aim is to double from 2 per cent to 4 per cent in between five and seven years. Can we not do better than that? Can we not have a more ambitious aim?
Lord Freud
My Lords, it is very difficult to grow an industry from an organisational base that is not yet viable. We need to make sure that individual institutions are able to handle the growth that we want them to take on. That is not just about money; that is about trying to make the right changes to management and organisation. It is not an easy thing to do.
Pensions: Occupational Pensions
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, I join other noble Lords in paying tribute to the noble Lord, Lord McFall, and congratulating him on securing this important debate on reinvigorating occupational pensions. I am sure that noble Lords will join me in thanking him also for the skill and diligence that he showed as chairman of the Workplace Retirement Income Commission. The report was a fascinating read. It proposed recommendations on how industry, employers and the Government can strengthen workplace retirement saving. More importantly, I am relieved to see that in most of these areas the noble Lord and I are in much the same place.
The pensions landscape, which is always fluid, will see a huge change again in 2012 with the introduction of auto-enrolment, which presents a once-in-a-lifetime opportunity to transform our savings culture. However, if we are looking to reinvigorate occupational pensions, we need to go further than this. We need to build public confidence that such pensions are value for money; increase employee engagement in retirement saving; and motivate employers to provide good pension vehicles. None of these goals is easy, and they have become a lot more difficult recently.
In the past 25 years, life expectancy at 65 has increased by six years for men and five years for women. That is great news generally, but poses serious financial questions. Saving is in sad decline. In 2010, 13 million jobs had no pension provision—an increase of 2.5 million on 1997. The noble Lord, Lord Myners, uttered a lament for the occupational pension. We have seen falling annuity rates, increased longevity and a fall in the rate of return on equities. My personal belief is that some of us in this generation had a free ride because of the discovery of equity returns in the 1950s, 1960s and 1970s. I suspect that those returns were a one-off. We also saw the abolition of payable tax credits. As a result, UK pensions are no longer the gold standard that they were.
Only one in three private sector workers is contributing to a workplace pension. Other noble Lords cited different figures but basically, if one wants a £15,000 pension, it will require £300,000 of capital outlay to fund. That brings home very starkly the challenge of getting people to invest in a pension.
Lord Freud
Not at the moment, but their remuneration is going down quite a bit.
First, we must change attitudes towards pensions as a whole. Many people find pensions too complex, the incentives to save unclear and the expected retirement incomes unknown. For these reasons, the state pension needs to be reformed to provide a simpler, clearer foundation to support those saving for retirement. That is what the proposals in the Green Paper A State Pension for the 21st Century outlined: a simpler, single-tier pension set above the basic level of the means test as the primary option. I can update the noble Lord, Lord McKenzie of Luton, that, should we decide to proceed, we will set out further details as part of a White Paper in accordance with the usual process.
Nevertheless, around 7 million people are not saving enough to deliver the pension income they are likely to want, or expect, in retirement. With automatic enrolment, we will start to see a behavioural change requiring all employers to enrol all eligible workers into a workplace pension scheme. I welcome the introduction of the National Employment Savings Trust as a simple, low-cost pension scheme designed to fill a gap in the market for employees on low to moderate earnings. We are already seeing NEST acting as a beacon of best practice to other providers and encouraging high standards of governance, responsible investment, effective communications and low charges. A number of noble Lords raised the issue of the shackles on NEST. We will keep that balance between competition and choice very much under review. In response to my noble friend Lord Freeman, I am pleased to report that last week the department began its communication campaign to alert individuals and employers to the reforms and to ensure that tailored information is received by those affected.
On top of this, we must restore public faith in the concept of pension saving and, behind this, pension charges are key. Individuals who perceive their charges to be high are less inclined to save, so I welcome efforts by the National Association of Pension Funds to bring the pensions industry together to improve transparency of charges information for customers and employers. My department will offer its support to ensure that real improvements are made. It is also worth bearing in mind that since departmental research places the average annual management charge in default funds at between 0.4 per cent and 0.6 per cent, with none found higher than 0.9 per cent, the case for rushing into a charge cap without due consideration carries less weight. This is especially as new entrants into the market, such as Now pensions, are offering similarly low charges. Nevertheless, I can assure noble Lords that the Government will not hesitate to deploy a cap if individuals’ pensions savings are at risk from excessive charges.
As noble Lords have pointed out, there are a lot of small pension pots. There are more than 1 million small pension pots valued at less than £2,000, and automatic enrolment will clearly increase that number further. This is a serious hazard for individuals who want to build up their pension saving. Small pots are easy to lose track of and difficult to aggregate due to the cost and complexity of transferring pension schemes. In December 2011, the Government released the consultation paper Meeting Future Workplace Pension Challenges: Improving Transfers and Dealing with Small Pots, in which potential solutions are set out to address this issue. These include radical proposals such as an automatic transfer system in which pension pots could move with the individual from job to job or be consolidated in one or more aggregator schemes.
Individuals also need to get best-value outcomes. The Government believe that individuals are likely to get the best deal by shopping around on the open market and exploring options from a range of providers before purchasing an annuity. We have been working with consumer groups, industry representatives and other government bodies to bolster the current right to the open-market option by developing a default open-market option. The Association of British Insurers is currently consulting on a new draft code of conduct which supports this aim.
One area where standards must improve is on incentivised transfer, where members of perfectly sound defined benefit schemes are being offered cash incentives to transfer out of, or modify, their existing pension arrangements. It often results in members receiving less generous arrangements and thus lower retirement incomes. We are therefore working with the Pensions Regulator and the Financial Services Authority to develop an industry-wide code of practice which will cover all forms of incentivised transfers to ensure that these practices, when appropriate, are done fairly and transparently and are communicated to the member in a balanced and easily understandable manner.
We need to make it easier for employers to provide good-quality pension provision for their workers. To help deliver this, we aim to make it easier for employers to restructure their pension arrangements without requiring the employer to pay the difference between its assets and the cost of buying out the scheme’s pensions.
The department’s private pensions legislation will also be the focus of the red tape challenge. In response to the noble Lord, Lord McKenzie, I say that this is a cross-government initiative that seeks to revoke or simplify as much legislation as possible to ease the burdens on employers and business. We will use this opportunity to look objectively at pensions policy and consider whether the legislation as it stands reflects the department’s priorities and is fit for purpose.
The Pensions Regulator has set out its principles for what a good defined contribution scheme looks like, to establish standards for design and governance of defined contribution schemes and ensure that the pensions industry is best placed to support automatic enrolment.
Looking further ahead, we need to build on the good work that the consensus of previous years has achieved. We should consider the role for government in determining scale and ask ourselves whether the high fragmentation of the UK pensions market offers good value, or whether a smaller number of larger schemes could offer lower charges and higher governance, to the advantage of members.
As defined benefit continues to wane, we must take opportunities to study alternative risk-sharing arrangements, such as systems that I might term “defined ambition”. Here the schemes aspire to a set level of benefits, rather than making a firm promise as our defined benefit schemes currently do.
We must also consider how to encourage automatically enrolled individuals to save more where they can. The minimum 8 per cent contribution should be considered as it is described—a minimum. Options such as automatic escalation, in which pension contributions increase in line with member salaries, have merit and are worthy of close examination.
I feel confident that 2012 represents a step change in how pensions in particular, and saving in general, are perceived by the public. I thank again the noble Lord, Lord McFall, and I hope noble Lords will join me in acknowledging that we have taken great strides in reinvigorating our pension system for the future.
Welfare Reform Bill
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Lord McKenzie of Luton
My Lords, we support the amendment moved so comprehensively and eloquently by the noble Baroness, Lady Meacher. This has been a powerful debate with a strong ethical strand, as my noble friend Lord Peston said that it should be. My job is made easier by the contribution we have just heard from my noble friend Lady Hollis, who dealt comprehensively with those who argue that we should deal with this in regulations. The fact is that we have tried at earlier stages to reach the position that the amendment now provides and have been unsuccessful—as my noble friend said, possibly not because that is where the Minister wants to be but because that is the policy imposed on him. I think that my noble friend is absolutely right: if we pass this amendment today, we will put down a clear marker on proportionality, which will strengthen those who have to go and argue with the Treasury about resources.
As we have heard, the amendment seeks to prevent the interests of one group of disabled people being played off against those of another by limiting the ratio between the higher and lower levels of disability support. At present, as we have heard, the Government’s proposals would lead to a significant cut in the amount of support for disabled children on the lower rate of support, amounting to some £27 a week, or over £1,300 a year, with around 100,000 families seeing this drop in their support. We have heard some graphic descriptions from my noble friend Lady Wilkins about what support meant for her family. We also heard from the noble Lord, Lord Wigley, and the noble Baroness, Lady Browning, who made the very telling point that this is about the whole family—siblings as well—for whom the level of support can make a real difference.
The Government have suggested that this money would be recycled into higher levels of support for disabled adults on the higher rate, but we do not believe that this is a trade-off that anyone wants to see. The interests of adults with severe disabilities should not be played off against those of children with lower-level disabilities, which, as we have heard, may well include conditions such as Down’s syndrome and profound deafness. Such children have no opportunities themselves to increase their income, and we know the problems that parents caring for these children can face when trying to find paid work or increase their hours.
The amendment does not seek to prescribe the levels of support, which will of course be a matter for the Government of the day and will depend on what resources allow, but it does seek to embed the principle that, although there is a need to recognise that some conditions require a higher level of support than others, this should not be used as a reason to downgrade the needs of the many disabled children—and their families—who currently rely on the lower level. Perhaps the Minister could outline in his response, first, what he believes the ratio between the two rates should be and, secondly, how he intends to ensure that those on the lower level do not see a dramatic fall in the support that they receive.
We will doubtless hear again that transitional relief will protect some claimants. However, we know that this is not a protection in real terms and in any event it does not help new claimants. Perhaps we can hear from the Minister what changes in household circumstances he considers would break even this partial protection. In making these judgments, what weight do the Government give to the fact that disabled children are more likely to live in poverty than other children? The Minister may justify the current ratio as aligning support for adults and children. However, is it not the case—a point made by the noble Baroness, Lady Meacher—that the routes into the benefit are quite different: for disabled children through the DLA and for adults through the WCA? Is there not a disability disregard for disabled adults who can access work?
Much of our debate on the Bill has focused on its impact on children. We would all, I hope, recognise the necessity of combating poverty among children because it carries with it the prospect of greater poverty in later life. However, it would seem that on this matter the Government are shifting resources in the other direction from children to adults.
It is perhaps appropriate that today we heard from the UK’s four Children’s Commissioners, who have put out a notice. I should like to finish by quoting them:
“Families who receive welfare benefits are particularly vulnerable because they live in poverty—small changes in their household income can have a big effect on their welfare. We are concerned that many more families and their children will be pushed into absolute poverty over the coming years if these proposed changes go ahead”.
We support the amendment.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, I think that I have to take up the challenge of the noble Baroness, Lady Hollis, and try not to read anything at all in order to convince her that I actually believe in what I am going to say.
I preface my remarks by reminding noble Lords that the amendment is in the same territory as the one we discussed on Report that was moved by the noble Baroness, Lady Grey-Thompson, and on which there was a Division. I confess to feeling slight surprise when I saw it come back in such a similar guise. If my arguments sound somewhat familiar to noble Lords, it will be because they have heard many of them before. I need to go through them in the context of this skilfully drawn-up amendment.
I start by making it absolutely clear to all noble Lords—in particular, to my noble friend Lady Browning—that this is not about deficit reduction. Every penny of the money will be recycled to increase support for severely disabled children and adults. None of the money that we are talking about will go to Her Majesty's Treasury, with which I have absolutely cordial relations at all times. The principle that was picked up by my noble friends Lord German, Lord Newton and Lady Thomas concerns the cliff edge that exists at 16 when youngsters transition from childhood to adulthood. As my noble friend Lady Browning pointed out, many of these youngsters are in practice dependent on their families for a long time. The cliff edge is something that we wanted to smooth out. This will be essential to protect work incentives in adulthood.
I said many times in the debate that we are overhauling the whole support system for people who rely on benefits. It simply does not make sense to concentrate on any one element. The universal credit will provide a package of support for families to meet a range of their needs. That is why we need to look at the overall impact of universal credit on families rather than look at individual components. If some families get a bit less on one component, it does not mean that they will get less overall. I will pick up on the point raised by the noble Baronesses, Lady Meacher and Lady Wilkins, about some of the social activities that are required to have a good quality of life. The intention is for DLA to pay for those facilities. The purpose of universal credit is income replacement. The two benefits do different things.
I also remind noble Lords that, contrary to some estimates that have gone around this afternoon on the impact of universal credit, clearly the impact will be that families will be much better off. I remind noble Lords that I and my friends in the Treasury are managing on a steady-state basis to put £4 billion a year into the pockets of the poorest people through universal credit. That is the context in which we are making these changes. Noble Lords should not underestimate what it took to get that out through a government process: a steady-state £4 billion a year in universal credit for the poorest.
Baroness Meacher
My Lords, I think that I am right in saying that about £18 billion has been taken out in cuts. We are not getting extra benefit payments, but I applaud the Minister for having retrieved £4 billion; that is wonderful, and great news.
Lord Freud
I am very grateful for the applause. I am not hearing a lot of it. The modelling that we have done in the department shows that, as a result of this measure on the reform of disability payments, the number of disabled children living in relative poverty will be negligible. The support for families in the universal credit package includes generous disregards for parents, plus the disability addition to the child element. Of course, we are also supporting formal childcare costs right the way down the hours spectrum in universal credit.
Lord McKenzie of Luton
I do not know whether the Minister is going to say anything further about poverty figures, but how does he deal with the report from the Family and Parenting Institute, prepared by the IFS, showing that relative child poverty will increase between 2010-11 and 2015-16 by around 400,000, and that absolute child poverty, as defined in the Child Poverty Act, will increase between those years by around 500,000? Does he dispute those figures?
Lord Freud
My Lords, we have spent a lot of time on child poverty, and the IFS projections do not take account of quite a few matters. They certainly do not take account of any change in government policy. Child poverty, to people’s surprise generally, actually went down last year, and it is projected to go down this year. What happens in future will depend on how we respond. I should point out to the noble Lord that the IFS had some very positive things to say about the impact of universal credit on child poverty, and it has pointed out the impact that universal credit will have as it goes in the direction that he and indeed I want to see.
Let me go through some of the figures on what happens under universal credit for a parent with a disabled child who works 20 hours a week on minimum wage. That parent, and that family unit, is likely to be £73 a week better off in work under universal credit, compared with £13 in the present system under tax credits. There are some 30,000 more families with a disabled child in work than out of work, so that extra money is being targeted pretty effectively.
Let me remind noble Lords again about the figures for the support that we are providing. Under universal credit, an out-of-work family with a disabled child can receive just over £8,000 a year in benefits for its child after introduction of universal credit, compared with just over £4,000 for an out-of-work family with a non-disabled child and around £1,000 for a family that receives only child benefit.
Baroness Wilkins
The Minister said that those children will receive £8,000. They are receiving £9,500 under the current rules.
Lord Freud
The figure that we have on the average amount is £8,800. There is a 5 per cent difference in the overall package for that family under universal credit. Those are the figures that we have worked out for the average. Taken overall, it is a small decline, and clearly there is a substantial incentive for the family to look at work. Work becomes much more attractive. Even a few hours of work under universal credit becomes attractive in a way that is completely impossible today.
The Countess of Mar
How can a single mother with a severely disabled child go out to work?
Lord Freud
My Lords, we are talking about severely disabled children receiving the full rate of £77. That is the point: we are trying to direct the money towards the people with the greatest need regardless of their age. That is what we are trying to do here.
Baroness Meacher
We have to be very clear about this. One of the main reasons for this amendment is the fact that it is so difficult to divide those who are eligible for the higher rate from those who are not. There is often a very narrow—and fairly arbitrary—margin. They just happen not to need to be disturbed at night, but during the day the costs may be even higher—the disruption to the family, the impossibility of working—all those issues are possibly just as great for those who will not qualify for the higher rates. It is really important to hang on to that.
Lord Freud
My Lords, this is a really important point. It may very well be that the concern of the House actually boils down to a discomfort with the dividing line between severely disabled and disabled. If that is the case, the way to do it—and I pick up what my noble friend Lord Newton was saying—is not to look at aspect or concrete ratios but at the precise issue that noble Lords are actually worrying about, which is the relationship. I will commit to having a very close look at this. It is clearly tied up with DLA definitions, which are under constant review and are being reviewed.
If we move the children from DLA to PIP, we need to look at this and there will be a real consultation process. I will review this dividing line and look at that very closely, and when we come to the regulations on this, I will report back to noble Lords on exactly what we find. My sense is that this is the real issue underneath all this. I know noble Lords had to find an amendment that had to weave through, to express this concern, so we all know what is happening on a technical basis. Let us go to the real issue. The real issue is: are we getting the dividing line right? People ask me if I am listening—I hear what noble Lords are saying; this is what I think noble Lords are saying, and I will go and do something about that.
Baroness Howarth of Breckland
I do not think that is the whole issue that is concerning noble Lords. There is another issue, about the context. If you expect a single mum to get work in order to benefit from universal credit, you should go out on to the highways and byways with these women, as I do, and try to get a job. You need to be part-time, you need to work within certain time constraints, and you need to be able to get specialist childcare if you are going to go out. It is about more than being proportionate, it is about understanding the nature of life when you have a disabled child, however severely along the spectrum that might be, because some behaviour disorders, which sometimes can be assessed as reasonably manageable, can be extraordinarily difficult to get someone else to manage outside your family home. As I said to the noble Lord recently on another point, if you compare the unemployment figures and the numbers of part-time jobs with the number of those women who would like to work getting into those jobs, there is also that contextual issue that I am sure is concerning their Lordships.
Lord Freud
Not just your Lordships—I share those concerns, clearly. One of the things I have been trying to do is to really hone in on the help for people to get them into the right kind of work. We have now substantially rebuilt the payment by results element of Welfare to Work. That is not about saving money; it is about making sure that the support is very individualised for people. We will have the formal national statistics on this later this year, but the anecdotal feedback that I am getting from providers is that that individualisation of support for people is really beginning to work. That is a real issue that needs to be addressed. We need to support people back into the workplace when they can work, but we also need to get severely disabled children, who will move into adulthood still needing to be supported, to this higher rate and not have this cliff edge.
The blunt truth is that if we got rid of this cliff edge and maintained higher levels for less disabled children—that is the set of choices that we are playing with here—the cost would be £200 million a year. When things are better, I can quite imagine any Government being very keen to put money in that direction. However, as noble Lords will know, you get an amendment here and an amendment there and pretty soon the amounts add up in a way that really damages our national finances. We can blame the Treasury if we like, but that is a real constraint. We have already looked at amendments the proposals of which we have totalled up to cost in excess of £5 billion over five years, and just taking that on the chin and continuing to get rid of the cliff edge would cost another £200 million, as I said. Those are the choices. We have done a lot of soul-searching on this, and our view is that it is right and fair to align the extra amounts payable for disabled children and disabled adults.
I will close with two points. First, we are trying with the universal credit to bring coherence and simplicity to our benefit support for people. I cannot tell noble Lords how difficult that is to do in practice. I spend every moment of the day when I am not here with your Lordships trying to do that and wrestling with issue after issue. It is very simple; if you are asking someone a set of questions, when do they turn off? How many questions can you ask? You have to simplify the whole system. One thing that I have appreciated more than anything else in the weeks in which we have gone through this Bill is that this House has supported absolutely consistently the introduction of a universal credit. It has understood what we are trying to do and the pressure and the need for coherence and consistency, and I am really grateful for that support. I ask the House please to maintain that support now, especially as we have already voted on this principle.
Finally, I will pick up the point made by my noble friends Lord Newton, Lord German and Lady Thomas that this is a matter for regulations and not for primary legislation. Noble Lords have sent a very strong message to me and to the Government. I will look at this issue and we will be able to discuss it in our debate on the regulations.
Lord Patel
My Lords, on a point of order, will the Minister confirm that we cannot amend regulations? He has asked us to give them consideration and committed to bringing them back, but whatever he brings back will have to be either accepted or rejected.
Lord Freud
My Lords, I hope that noble Lords by now have got a flavour of how I try to work with them. I listen and I take on board what people say. I will aim to shape the regulations in the light of that. I am more than happy to—
Baroness O'Cathain
I have listened avidly to this debate and been very moved by a lot of it. I also have some experience. I can see that the position is extremely difficult. On the point made by the noble Lord, Lord Patel, about not being able to amend regulations, I should like to ask my noble friend whether he can throw out regulations and put new regulations in their place. I know that we have mixed up concrete and aspic. It is not that regulations are fixed in concrete and cannot be changed—I understand that. However, if we voted saying that the regulations were not appropriate, could we have other regulations?
The Countess of Mar
If the House of Commons throws the regulations out, they can be thrown out; but if we throw them out, the House of Commons can ignore it completely.
Lord Freud
No, my Lords. Without wanting to get into a huge constitutional debate about this, my understanding is that if the House of Lords threw them out, there would at some stage have to be a satisfactory set of regulations that both Houses could agree. So it is a very powerful thing to do. Clearly, I would hope never to get into that position, which is why—
Lord McKenzie of Luton
What the Minister says about affirmative regulations is right, but is he aware that it is the stated position of the Conservative Party in this House that it does not vote against affirmative regulations? In recent times we have had several such debates, and the Conservative Party has declined to do this on principle.
Lord Freud
When we were in opposition we certainly did not vote on a fatal basis, which was our policy. If the House feels strongly about a set of regulations and the Opposition do not have such a self-denying ordinance—which I think they do not—they can express their view in a vote on the regulations.
Baroness Hollis of Heigham
My Lords, the Minister is encouraging us to defy all the conventions of the House. Perhaps I may say gently that he really should not go down this path. First, the noble Lord, Lord Patel, is absolutely right: you cannot amend regulations. If you could, you would be in the game of primary legislation, because you would be toing and froing. Equally, if the House of Commons were to pass those regulations and we decided to overturn them, then the non-elected House would be overturning the will of the elected House. Both major parties have respected—I repeat, respected—that convention for the full 20 or so years that I have been in your Lordships’ House.
Lord Trimble
Before the Minister replies to that intervention, perhaps I may suggest that we are getting bogged down on the question of amending or rejecting regulations. I thought that the Minister indicated that, before we get to the point of regulations, he will look at this closely, consult people and speak to people. That is where the conversation should be and where the attention should focus at the moment.
Lord Freud
I thank my noble friend Lord Trimble for that. That is the position. I have heard strong arguments here and very great concern. I will talk to noble Lords before we get the regulations out to make sure that they find the regulations acceptable. I give that undertaking now. I beg the noble Baroness to withdraw her amendment.
Baroness Meacher
My Lords, I feel a huge weight of responsibility here. The Minister does not want me to test the opinion of the House, and I understand that, but hundreds of thousands of families all over the country with disabled and severely disabled children are desperate about this issue; I repeat, they are desperate. The pressure of that is difficult to bear. But I do want to say that I respect very strongly the Minister, the noble Lord, Lord Freud, for the huge amount of work that I know he does all the time on working towards a simpler welfare system. He has done a fantastic job on this. But, as he knows, the job of this House is to try to ameliorate the worst effects of legislation, and that is what we have done consistently throughout this process. The Minister has generously agreed to take back and think about these issues following the moving speeches that have been made by many noble Lords, but the fact is that we in this House do not have an assurance that anything will happen.
The Minister is under huge pressure from a Secretary of State who is an awfully long way from this. I think that he has little real understanding of what it is to be a poor family with a very disabled child and not able to afford to give to that child what they know it needs. I have concerns about that because we need the Government to understand the enormity of the pressure on these families. I have often said to my own children that I do not think I could have managed it at all because these things are so tough. That is the situation here.
The Minister referred to a cliff edge at the age of 16. The noble Lord in his place beside me referred to a cliff edge at the age of three. The worry is that what the Government are doing is introducing a cliff edge at birth and then at one, two and three, when severe disability hits. Do we want these families to fall off a cliff—and that must be how it feels—when they realise that they have made a lifelong commitment to care for a child but the state withdraws some of its support? That is a big issue for us.
The Minister referred to DLA funding swimming lessons, school holiday clubs and so on. The reality is that DLA does not cover adequately those expenditures, and that is the issue. Families do not have enough money, and it is why 40 per cent of them are in poverty. They need more money if they are to help their children fulfil their potential, whatever that potential may be. The Minister also referred to families being better off in work. I accept that, but the difficulty is that that is being achieved by impoverishing an awful lot of people, some of whom can work—speaking for myself, I support the Government’s quest to get more and more people back into work. But when we consider families with disabled children, particularly single parents with disabled children, as others have said, they cannot do this and it is terrible to impoverish them.
That is the dilemma we are facing. I know that the Minister is going to be deeply unhappy with me and I do not like making him deeply unhappy, but I owe it to the families out there to test the opinion of this House. We have to do it.
Welfare Reform Bill
Lord Freud Excerpts(12 years, 3 months ago)
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Lord Freud
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, on 22 December last year, the Scottish Parliament voted on a legislative consent Motion to the Bill. Legislative consent was given in relation to several provisions. However, the Scottish Parliament did not give consent in respect of the provisions of the Bill that give Scottish Ministers the power to make consequential, supplementary, incidental or transitional provisions by regulation in relation to universal credit and the personal independence payment. I indicated on Report that I intended to bring forward these amendments, removing the relevant provisions from the Bill, to ensure that the UK Government adhere to the principles of the Sewel convention. As social security is a reserved matter, it will not have an impact on the introduction of universal credit or the personal independence payment. Scottish Ministers will still need to make changes to legislation within the competence of the Scottish Parliament—for example, to add references to these benefits to legislation for housing, health and education, and to remove references to existing benefits that will be abolished in due course. Where necessary, they will do this through a Bill in the Scottish Parliament instead of through regulations. I beg to move.
Lord McKenzie of Luton
My Lords, I do not believe that we have a problem with the amendments in this group, but perhaps the noble Lord will clarify something. If we are removing the power of Scottish Ministers to deal with consequential amendments, where does the power lie—or is the Minister saying that there is no need for the power?
Lord Freud
No, my Lords, I am saying the opposite. The Scottish Parliament has decided that it wants to make the consequential amendments and not rely on us making them. If Scottish Ministers want to do it that way round, that is a matter for them. We were trying to make life more convenient for them.
Lord McKenzie of Luton
I am grateful to the noble Lord. Obviously we support the amendment.
Lord McKenzie of Luton
My Lords, one issue that lacks clarity at present concerns “work”, “better paid work” and “more work”. We are using the opportunity of Third Reading to elicit further information on this important matter. The amendment seeks to ensure that not only “work” must be defined for the purposes of universal credit, but that there should be clarity on “more paid work” and “better paid work”, and on how the requirements would be applied. The definition of work is relevant to the current benefit system as well as to universal credit. It is relevant for the application of the benefit cap—or cliff edge—on one side of which one is free and, on the other, one is within its grasp. For the benefit cap, we know that initially receipt of working tax credit will be sufficient to take somebody out of its grasp. Perhaps the Minister will say whether there is any further news on what the threshold for work will be in these circumstances in the world of universal credit.
The amendment is principally focused on getting an update on how in-work conditionality will work. It is some three months since we debated this in Committee, when the development of how things would work in practice was pretty sketchy. What appeared to be settled was that in-work conditionality would cease when somebody was earning the equivalent of 35 hours at the national minimum wage: approximately £11,000. The threshold for a couple may be double that of an individual, and the threshold for a lone parent may be lower. It is accepted that having a universal benefit that removes the distinction between in-work and out-of-work benefits raises the issue of in-work conditionality. Universal credit claimants will have an entitlement regardless of the hours they work, up to a limit. Before we leave the Bill, or it leaves us, we seek an update on the latest thinking. Presumably, for universal credit to be effective, this is not an optional extra.
On 26 October in Grand Committee, the noble Lord told us that there were a range of complicated issues to work through. He said:
“Critically, we will need to build our understanding of what can help claimants progress—when we should require claimants to look for more work and what role other interventions, such as skills assessments or careers advice sessions, can play … We are not rushing in here ... We recognise that we need to tread carefully in this new area”.—[Official Report, 26/10/11. cols. GC295-96.]
That was fine, but is there any progress to report? My noble friend Lady Drake put the issue very succinctly in the Committee debate. She referred to the significant discretion that the Government would have under the new arrangements: a discretion that would potentially impact on a sizeable section of the workforce and on existing in-work relationships, and would require Jobcentre Plus or outside providers to engage with a large number of companies.
In Committee there was vagueness also in respect of the roles of Jobcentre Plus staff and external providers, and on issues of capacity. In particular, there was no clarity on how this would fit in with the work programme. We know that remuneration for providers under the work programme will come in three ways: an attachment payment, a job outcome payment and a sustainment payment. The latter will be the biggest element of the fees in each of the eight claimant groups. How will in-work conditionality interrelate with the work programme? Will sustainable payments be due only when providers have not only helped somebody into work and sustained them in work, but sustained them in work at a level that meets the requirements of in-work conditionality? Presumably this was not effectively factored into contract negotiations ab initio because of the vagueness around these concepts. Do the work outcomes for which providers are paid align with the in-work conditionality that is proposed, and include the claimant commitment on a case-by-case basis?
In Committee, there was a hint that in-work conditionality might be applied only when somebody has left the work programme. The Minister said:
“Once claimants have left the work programme, we could then look to continue working with them to help them progress”.—[Official Report, 26/10/11; cols. GC 295-96.]
There was also a hint that there might be a future work programme to which individuals would migrate. What is happening on that? If one is to be developed, can we be assured that the lessons of the first work programme and the comments of the National Audit Office are taken fully into account, especially on compiling a business case before a decision is taken to proceed and on going live before the IT is in place?
The definition of “work” and, especially, new issues around “more paid work” and “better paid work” are important to how universal credit is to operate. This is an opportunity to provide up-to-date information to noble Lords at this last stage of our deliberations. I invite the Minister to do so. I beg to move.
Lord Freud
My Lords, before I start on the specific matter, I shall take a short period to thank the noble Countess, Lady Mar, for her remarks a few minutes ago which I appreciate.
This amendment relates to the definitions of “better paid work” and “more paid work” and would require the regulations to be subject to the affirmative procedure. The first point I want to make is that it is not necessary to define these terms. They have their natural meaning: working for more hours, increasing your pay and so on. To that extent, we cannot accept the amendment, but I understand that it is a way of looking for information and I am very happy to have the opportunity to provide it.
These phrases are important. Their inclusion in Clauses 15 to 18 allows us to impose work-related requirements on claimants who are already in work. We are currently able to impose requirements on existing JSA claimants who are in some work and we need to retain this capability. Obviously, we are interested in doing more and extending conditionality to claimants who are in relatively substantive levels of work but who are nevertheless capable of working more. A conditionality regime can play an important role in encouraging such claimants to progress towards more self-sufficiency and to raise their standard of living and general status. Clearly, I understand noble Lords’ concerns about the extension of conditionality in this way. It is new and it is a difficult area. I also understand the way that noble Lords want to stay in touch with developments as they progress, so let me reiterate and perhaps expand on the remarks I made on Report.
At the launch of universal credit, we will not be imposing conditionality on claimants in substantive employment. In other words, there will be no conditionality for claimants with income or earnings which would, broadly speaking, have taken them over the cut-off point for current out-of-work benefits. We will retain our emphasis on those claimants who would be eligible for JSA, ESA or income support now. The existing system, in that sense, will continue.
As a general point about how we are going to introduce universal credit, we are trying to be incremental and to lock in gradually the opportunities that it represents. Before we extend conditionality to claimants with earnings above this level, we will run pilots. We want to gather views on the approaches that could be taken in these pilots and we will therefore be consulting widely. Depending on the design, we expect such pilots to require regulations. They will be subject to the affirmative resolution procedure and therefore to debate in Parliament. I think we have had enough discussion about what that means. I thank the noble Baroness, Lady Hollis, on that point. I have committed to publishing details of any pilots, to monitoring the results of the pilots, in particular, the outcomes for claimants, and to making those results available for scrutiny. We will reflect on this before adopting any national approach. I remind noble Lords that we considered and passed an amendment that I tabled earlier to allow us to test every aspect of universal credit to see how it would change. This is clearly one area where we could do a lot of testing about how different things work.
Lord Freud
No, my Lords, I am not aware that we have locked that down at this time. It is an issue that we are going to have to address when we lock down universal credit. I cannot update the noble Lord on that matter.
Lord McKenzie of Luton
My Lords, I am grateful for the update that we have had. I guess that we just look forward to further developments on those issues. I beg leave to withdraw the amendment.
Lord Freud
Lord Freud
My Lords, let me cut straight to the chase. We have the powers in regulation to do whatever we or any future Government want to do to raise sanctions, so I can provide reassurance to that extent. I will go into a little detail about our plans and what we intend to do, but first I pay tribute to noble Lords because some really interesting and useful ideas were expressed in Committee that we took on board, although I do not think that we took them on board quite as much as some noble Lords would want. We moved a long way and thought about this again more specifically, so I thank noble Lords a lot for that.
We are trying to create a sanctions regime to provide at one level—probably the most important—a deterrent against behaviour that damages a claimant’s and indeed others’ employment prospects. Ending sanctions when a claimant complies with requirements can clearly play a role in incentivising sanctioned claimants to do the right thing. That is why we are moving in the direction of open-ended sanctions for lower-level failures, such as the failure to participate in training or to attend work-focused interviews. In essence, these sanctions apply only until the claimant re-complies, with a short fixed period of a week or a few weeks.
This amendment is about the higher-level sanctions: sanctions imposed for failing to comply with the most important requirements. These are employment-related failures, such as the failure to apply for a job when specifically asked to do so, the failure to accept a job offer, or the failure to leave employment voluntarily. By failing to do these things for no good reason, a claimant is fundamentally breaking the agreement that sits at the heart of jobseeker’s allowance: that they do everything possible to find work in order to be able to support themselves. That is why we believe it is vital that there are clear consequences for such failures. Fixed, substantive sanctions reinforce the message that these requirements absolutely must be met.
As I said on Report, we propose to wipe the slate clean by terminating any outstanding sanctions once a claimant has moved into employment for six months, but we believe that going further and ending these critical sanctions after a few weeks or months of compliance would undermine the clarity of our message and the effectiveness of the sanctions regime. It is worth noting that in the current system sanctions can be imposed for up to six months and are typically not lifted at all on re-compliance.
As I said at the beginning of this debate, we have the powers to end sanctions following re-compliance—we have defined the levels of re-compliance—so if, after a period of live running, we or future Governments wish to change the position, we have the powers to do so. Indeed, this is one area in which it might be very interesting to do some piloting work on how incentives and deterrents actually work.
Just to be techie about this, the powers that I mentioned are in this Bill and in the Jobseekers Act 1995. Clause 19(4)(b) provides a broad regulation-making power to set the duration of a sanction. Existing Section 36 of the Jobseekers Act allows for any regulations made under that Act to be subject to particular exceptions. I am not absolutely surprised that no one could piece that together.
Baroness Lister of Burtersett
I thank the Minister for the techie stuff, but what happens to someone who has been subject to a sanction, goes into paid work, through no fault of their own loses that job before the six months is up, then assiduously looks for work daily, just as they are supposed to do?
Lord Freud
My Lords, under this construct, they will have to do the six months to wipe off the sanctions. Let us not forget that the sanctions that we are talking about do not involve the full amount of support but the equivalent of the JSA—£63-odd. There will be a very strong incentive on that person to take absolutely anything to fill in the rest of the time.
As I said, this is a very interesting area of deterrence and compliance and how we influence behaviour, which is exactly why I wanted to have the powers to pilot all these things. This is our starting point. Noble Lords have influenced us into making the lift at the six-month level, and it is clearly our best view today on what the reasonable balance is. No one can know yet as we have not done the live testing, but we will do it and we will be able to look at this and get the balance absolutely right. It might need to be milder, it might need to be tougher, but noble Lords will appreciate that if we pilot and test and look at these things in the way that I am describing, we will start to get answers on what works and move away from some of the rather more excited commentary and pressures from some of the media in this area. It could be of great interest to noble Lords if we start to move this into a social science area where we know the answer as opposed to an area where everyone has an opinion.
With those thoughts, I urge the noble Baroness to withdraw her amendment.
Baroness Hayter of Kentish Town
My Lords, I thank the Minister for passing the test on the regulations—obviously I knew; I was just testing him—and finding that out, which I had obviously failed to do.
As I said earlier, we welcome the fact that the Government have undoubtedly accepted that the three-year sanctions need to be lifted in certain circumstances. However, questions remain, some of which could be dealt with in regulations. For example, people need to know what the carrot is and what they have to do to get sanctions lifted. There is still the problem of defining work, particularly for someone who has childcare responsibilities and the job offer simply does not fit in with their responsibilities.
I am sure the Minister did not mean this, but I also worry about the idea of an incentive to take anything that is offered. Would that not allow certain rogue employers to exploit people on benefits because they know that if there are sanctions they can offer pretty thankless and underpaid jobs? Similarly, I also worry about people leaving a job. There is the problem of the strength of an employer, but those worries are by the by. The biggest thing to say about this is that the idea that you have to get a job to come off sanctions, even if you live in an area where there are simply no jobs available, remains a problem. However, I welcome the Minister’s commitment to pilot and test this. If it proved to be a big stumbling block, I assume that he could come back with regulations to allow for that. On that basis, I beg leave to withdraw the amendment.
Lord Best
My Lords, Amendment 8 gives effect to an amendment which was in my name on Report and to an amendment to my amendment in the name of the noble Lord, Lord McKenzie of Luton, at that stage. These amendments, which addressed the cuts to housing benefit and universal credit for those deemed to have a spare room, were declared to be consequential amendments to two earlier amendments approved by your Lordships on 14 December and now incorporated in Clause 11.
However, the consequential amendments were not moved formally. They should have been. I fear that the complexities of consequential amendments and of amendments to amendments meant that this amendment is now required. With apologies, I beg to move the amendment formally.
Lord Freud
My Lords, I accept that Amendment 8 from the noble Lord, Lord Best, is a duplicate of previous Amendments 49 and 49A, which related to Clause 68 and should have been formally moved during Report stage. We find the veil and draw it as to why they were not. The Government acknowledge that it was the view of the House, following the vote on the amendments in the name of the noble Lord, Lord Best, on 14 December, to have those amendments made. Essentially Amendment 8, which is a duplicate of Amendments 49 and 49A, would mean that a reduction is not possible where the tenant has no more than one spare bedroom unless suitable alternative accommodation, which is to be defined in regulations, provided by a local housing authority or registered provider of social housing is available. I am clear that to complete that picture Amendments 49 and 49A should also have been made.
The Government regret that the House reached such a conclusion on the social sector size criteria. While I do not intend to oppose these amendments now, I should make it clear to this House that this is not an indication that the Government agree with the overall principle of the amendment proposed by the noble Lord, Lord Best. It is now for another place to consider this when the Bill returns there.
Lord Freud
Lord Freud
Baroness Lister of Burtersett
My Lords, I support the amendment. It is important that there has not been a change in meaning. I know that the Government have their doubts about targets and so forth but they are very important in terms of accountability. I talked a lot last week about accountability in relation to the Social Fund. This is accountability in terms of organisations which are very concerned about what is happening as regards child poverty and enabling them to know what progress the Government are making and are intending to make. I know that certain voluntary organisations are very concerned about child poverty and that there has been a slight shifting here in meaning that could make their job that much harder.
Lord Freud
My Lords, Amendment 14 is designed to place a caveat on the amendment to Section 9 of the Child Poverty Act which is already included in the Welfare Reform Bill. As I discussed on Report last week, the amendment to Section 9 is a clarification which confirms the Government’s existing understanding that the requirement in Section 9(7) of the Child Poverty Act for a UK strategy to describe progress can be met with a description of progress in narrative or policy terms, rather than in numerical or statistical terms.
This amendment appears to seek clarification that the changes already agreed by the House will not undermine three requirements on the Secretary of State which are included in Section 9 of the Child Poverty Act; namely, first, that he must publish and lay before Parliament a child poverty strategy; secondly, that he must describe in that strategy the progress that he considers necessary to meet the four child poverty targets by the target year of 2020-21; and, thirdly, that he must describe in that strategy the progress he intends to make over the period of the strategy to reduce socioeconomic disadvantage as far as possible.
I can state clearly on the record that our amendment to Section 9 is not designed to remove the requirement on the Secretary of State to do any of those things. The Secretary of State will continue to have a duty to produce a strategy every three years which sets out the measures that will be taken, and the progress that needs to be achieved, in that period in order to meet the targets by the target year and reduce socioeconomic disadvantage as far as possible. The purpose of our amendment to Section 9 is not to change the substance or effect of the law. The amendments simply clarify how progress can be described—in particular, that it can be described in policy or narrative terms rather than statistical or numerical terms if the Secretary of State so wishes.
I discussed on Report the reasons why we think that this clarification is important. We believe that a requirement to set out the progress required in statistical terms is equivalent to a requirement for interim targets on child poverty towards the 2020 target. Interim targets incentivise the short-term, income-transfer approach that we have seen in the past. That approach has not worked and completely fails to address the underlying problems. This can lead therefore to small amounts of money being given to families just to lift them over the poverty line.
The Government remain committed to eradicating child poverty and improving social mobility. We do not believe, however, that the right way to achieve these aims is by using income transfers to move people above an arbitrary line, so we must focus on tackling the root causes of poverty and changing behaviour. In the long term, those with the lowest level of income can only improve their life chances by keeping pace with those at the top. This is why we must take long-term sustainable measures to improve skills, abilities and aspirations. An income-transfer approach does not work because it is unsustainable and does not deal with or address the underlying causes of long-term deprivation. We will continue to monitor progress through the annual publication of the Household Below Average Income Statistics, the beloved HBAI. However, we think it is very important to clarify that the law does not require the child poverty strategies to set out interim income targets. It is because of this that we cannot accept the amendment. By reintroducing the wording of the original Child Poverty Act, in effect it would remove the clarification that we introduced using the amendment to Section 9.
I emphasise that we remain fully committed to eradicating child poverty, and that amendment does not alter current government policy. We will continue to be required to produce a strategy every three years which sets out the measures that will be taken and the progress that needs to be achieved over the period. This amendment is unnecessary and unhelpful. The requirements it seeks to place on the Secretary of State already exist. All it will do is reintroduce lack of clarity regarding how progress is to be described, and I therefore urge the noble Lord to withdraw it.
Lord McKenzie of Luton
From what the noble Lord has just said, it seems that what the Government did on Report sought to change the import of what is set out in the Child Poverty Act. If it removes what the noble Lord thought might be the need to have interim targets along the way, surely that is a change, otherwise what is the clarification about? Part of the strategy is to hit some very clear targets by the end of 2020, and I presume the noble Lord is not seeking to change that requirement, but what is it about the current wording that has been changed? I am sorry that I am not being very clear on this, but the Minister has said that there is no change and it is all the same as before and this is just a clarification. However, I thought he said when explaining it that it obviated the prospect of having to put in interim targets when the strategy is developed along the way towards 2020. If that is the case and the requirement for those interim targets is removed, that is a change. It may be that that is what the Minister and the Government want, but it is a change. If it is not a change, can the Minister have another go at explaining why not?
Lord Freud
My Lords, what I hoped that I had explained, although I failed to do so adequately, was this. As currently written, the Act is somewhat ambiguous. We and, I imagine, the previous Government have always interpreted this as needing to describe the progress we are making in policy terms in a way that does not require interim targets because such targets, when set every year, become absolutely tyrannical. They are particularly tyrannical when you are trying to change people’s lives and behaviours in a fundamental way. If you are worrying about interim targets every year, your efforts are undermined. This is a clarification to make it crystal clear that our understanding of the Act, and to be honest what I think was the previous Government’s understanding of the Act—the noble Lord and I spent many happy hours going over every word of it, although I am still not sure that I understand the word “socioeconomic” in it, but let us put that to one side—is that we can progress in the way we think is best, which is pursuing fundamental change for people, without the tyranny of interim targets. The previous Government did not want them and we do not want them. We want to be able to describe our progress towards the main target. I hope that the noble Lord will agree that that is the desirable way to go with this.
It is not an easy thing to do. Dealing with child poverty is really tough. The noble Lord knows it and I know it, as do we all. Let us not mess about with it, but try to do the fundamentals, and this is what we need for that. We need to be absolutely clear that this approach will work.
Lord McKenzie of Luton
My Lords, it is a pity that this came up at the end of the Report stage and that we do not have another chance to review the record. I am minded not to press the matter this evening, but frankly I am not sure whether colleagues in another place or we in another situation might not wish to re-engage on the issue. The key issue along the way is what the Government will be prepared to commit to and how progress towards the 2020 objective is going to be measured. That, to my mind, is what is missing from what we have just heard from the Minister. However, I do not think it would be productive to test the opinion of the House on what is quite a narrow debate, so we must try to find another way of clarifying this. I accept the assurance given by the Minister. He has put it clearly on the record that this is not meant to change the law or the duty on the Government, and it is not meant to change the obligation that the Government have. On that basis, I will withdraw the amendment.
Lord Freud
“Work-related requirements6A Regulations may provide that a claimant who—
(a) has a right to reside in the United Kingdom under the EU Treaties, and(b) would otherwise fall within section 19, 20 or 21,is to be treated as not falling within that section.”
Lord Freud
My Lords, we have brought forward this amendment to ensure that where we have an obligation under EU treaties to allow the free movement of workers, those who have a right to reside here under EU treaties, particularly as jobseekers, may be subject to the full work-related conditionality requirements of universal credit. This amendment enables us to make regulations so that EU migrants cannot fall into groups which are not subject to the work search and work availability requirements. We must meet the UK’s obligations under EU law while ensuring that, when people come here, they do not take inappropriate advantage of our benefit system. We must maintain protections against non-active migrants who travel for the purpose of accessing state support.
We have always maintained that non-active migrants who want to come to the UK should be self-sufficient, and EU law supports this. The amendment will allow us to make sure that jobseekers who exercise their EU treaty right to come to the UK are in fact searching and available for work, as is the case now. I beg to move.
Lord McKenzie of Luton
My Lords, we support the thrust of this amendment. Perhaps I may ask one question. We had a helpful briefing note from the Box which reads as follows: “This amendment therefore is designed through this regulation-making power to enable the Secretary of State, so far as possible within the unified structure of universal credit, to maintain the current position in relation to the obligation placed on EU jobseekers”. The phrase “so far as possible” seems to be a qualification on what the Government are seeking to achieve here, and I wonder if the Minister might just expand on what that qualification amounts to.
Lord McKenzie of Luton
Before the Minister answers the question that I posed earlier, perhaps I may take the opportunity to add our thanks. The Minister’s enthusiasm for universal credit and his commitment to evidence-based policy have been evident to all of us. He has borne a very heavy load in bringing the Bill through your Lordships' House and has done so, as has just been said, with good humour throughout our proceedings. The fact that noble Lords have sought to beg to differ on a number of provisions does not lessen our respect for him or for the determination that he brings to his role. He has of course been ably supported by the noble Lord, Lord De Mauley, and other colleagues. Our thanks go also to the Bill team for their extensive briefings and provision of information, and the helpful way in which they have engaged. I have seen the operation of a Bill team as a Minister and am aware that we see just part of a huge operation which underpins the calm presence that we see in the Box. The scope, the size and the innovative context of the Bill will have added to this challenge. Of course, I thank my team on these Benches for their expertise, passion and support. As I have said previously, I would not have wished to face such a battery when I was a Minister.
The important changes that we have made to the Bill do not belong to us; they are the result of the voices, votes, knowledge, experience and compassion on all Benches in your Lordships' House. I have no doubt that what we send back to the other place is a much better Bill but also one which does not fundamentally undermine universal credit. It remains to be seen what returns in due course. Thus far, I have no doubt that your Lordships' House has done its job in holding the Government to account. What we are dealing with in this Bill touches the lives of millions, including many of the most disadvantaged and vulnerable in our country. Our duty to them is not yet concluded.
Lord Freud
My Lords, before I say a few words of my own, I have to admit that the very last question from the noble Lord, Lord McKenzie, was a tribute to him. It is quite difficult to answer; it is in a tricky area. We are pretty confident that we can maintain the position whereby it is only EU jobseekers whom we have to support and not others. As the noble Lord will know, we are moving from providing particular support in JSA to providing general support. That is where the protection is. We are hopeful that, by and large, we can maintain it, but there may be some shadowing of that position.
It is a shame that the crowds trying to get out of our deliberations earlier on slowed down the noble Baroness, Lady Morgan. I can clarify that we had a useful conversation on monitoring cancer patients and I said that the statistics which come out quarterly would become national statistics. I committed to look at what they would show in order to assess how the face-to-face process and other issues were dealt with. She very kindly said that she would help me with that after the consultation. Although we did not debate it, the position is now sufficiently clear on the record.
I do not think that we have seen the last of this Bill, but we have passed a significant point at Third Reading. Perhaps I may use this opportunity to place on record my thanks to noble Lords right around the House for the way in which they have been so constructive, have thought through the issues and been absolutely on the point. I have seen in other Bills a lot of grabbing of the wrong end of the stick and waving it about vigorously, but we have not had that here. Our deliberations have been outstanding. I shall not name all the contributors because it would take all evening—and I would forget someone, which would be invidious.
I was going to say how pleased I was that we had got universal credit through unchanged, but I cannot say that any more. Had it not been for today, we would have had it through. I know that what we are trying to do with universal credit has been understood. The complexity of universal credit is such that, if noble Lords had not appreciated it, it could have been cut to shreds and rendered completely unworkable and basically a disaster. I really appreciate the fact that it has not happened, except on one occasion.
Lord Freud
This is my speech.
I need to thank my noble friend Lady Garden for her support on the Front Bench, and my noble friend Lord De Mauley for his proficiency in covering a number of clauses. He drew one of the short straws, but he did it manfully.
I need to thank also the Bill team—a few of them are in the Box—who have been absolutely stunning in supporting me all the way through. As some of your Lordships have said, they have supported a lot of noble Lords in this process. The access and one-to-one contact that they offered were probably why the wrong end of the stick was not waggled quite so vigorously as it could have been. I hope that the whole House will join me in thanking them for their phenomenal support.
Employment: Sickness Absence
Lord Freud Excerpts(12 years, 3 months ago)
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, the Independent Review of Sickness Absence by Dame Carol Black and David Frost has provided a valuable contribution to the evidence base about the issues facing individuals, employers, healthcare professionals and the state. The Government will carefully examine the findings and respond later this year. Given the complexity of the issues raised and the work needed to consider the recommendations, it is too early to speculate on whether and how individual recommendations may be implemented.
Lord Luce
My Lords, I welcome the Minister’s response. Does he agree that the report is full of recommendations that are designed to help those who suffer from long-term diseases such as chronic pain to get back to work or indeed to stay in their jobs? Since sickness absence costs the economy something like £15 billion in output and £13 billion in health-related benefits, does he agree that the early implementation of these recommendations would do a great deal to boost both the quality of life of a large number of people and the economy?
Lord Freud
Yes, my Lords. This initiative, which I am proud to have commissioned and sponsored, is really very important for improving the quality of life for a lot of people. With this review we are talking about a way of intervening much earlier so that we stop people start falling out of the labour market. The present system allows them to drift on for months, if not years.
Lord Harrison
My Lords, does the Minister agree that there is a connection between a healthy economy and a good health service? Given that back problems are the most important reason for sickness absence, early intervention by physiotherapy services is important for those who fall foul of that problem. Will he ensure that we have a service for physiotherapists that is able to match the need in order to return people to healthy work as soon as possible?
Lord Freud
My Lords, one of the reasons why this is quite a challenging report that implies quite a lot of work is that we need to reshape the provision for people. I shall give your Lordships a statistic that I find truly shocking. We have one occupational health professional in this country for every 34,000 people. In the Netherlands, there is one for every 4,000 people. That just shows how far we have to go to get provision for people in that position.
Lord Kirkwood of Kirkhope
Does my noble friend agree that general practitioners have a critical role to play in the health-at-work policy area? Is it too early to say whether there has been any flow-through from the recent introduction of the fit note certification process on absence rates? Will he give sympathetic consideration to the idea in this very welcome report that we should have an independent assessment service? That would be of signal assistance to general practitioners, who are trying to persuade their own patients that it is often in their own interests to go back to the world of work earlier rather than later.
Lord Freud
Yes, my Lords. The recommendations in the report were very supportive of maintaining the GP’s role. The independent assessment service could be a supplement to that, which a lot of GPs would find very welcome in helping to get people back into the workplace.
Lord McKenzie of Luton
My Lords, if we are going to prevent people becoming ill at work and accidents at work, should we not do more to promote and applaud the health and safety system that we have in the UK? Would the Minister have a word with his right honourable friend the Prime Minister to ask him to stop making ill informed comments that undermine the system?
Lord Freud
My Lords, in practice there has been a lot of emphasis on the safety aspects of work and too little on health in work. One of the things that we are trying to encourage is the ramping up of health support, both in work and as people fall out of work. That is why this set of recommendations is so interesting.
Lord Brooke of Alverthorpe
I welcome the report and the update that the Minister has given us on the process for its implementation. He mentioned early interventions in this context, and in the debates on Monday he spoke frequently about the need for early interventions with certain families to try to get them on the right track. That is a lot of additional work coming the way of the Civil Service. Is he confident that his department has the resources to address these issues adequately? Can he say whether his department will increase or diminish in size between now and 5 April?
Lord Freud
My Lords, the department has an enormous workload; I am absolutely conscious of that. It is driving through one of the biggest social changes that this country has seen for many decades. At the same time, we are decreasing the numbers in the department at the centre. That does not mean that it is happening at Jobcentre Plus, which is the client-facing area. We are confident that the department, which I have now been in for some time and genuinely find admirable, is able to fulfil these objectives.
Baroness Masham of Ilton
My Lords, does the Minister agree that it is sometimes easier for GPs just to write a sick note, rather than find the real cause; and that this is very difficult for employers?
Lord Freud
One of the things that the sickness absence review did was to look at the mismatch in what people were trying to do. The worst of the mismatches was that GPs were signing people off on their sick notes because they could not do a particular job, while the work capability assessment later looked at whether they could do any job. It is those mismatches that we need to stop and sort out.
Lord Campbell-Savours
I suffer from ankylosing spondylitis, which the noble Lord will know is a long-term disease. Does he have any provisional views on the recommendations in the report on physiotherapy services?
Lord Freud
My Lords, I think I tried to deal with this a little earlier. There is inadequate support across a whole range of occupational health therapies, including physiotherapy. We are taking our time to do this properly, but one of the important implications is the question of what provision is needed for people who are of working age and in danger of going out of the workforce. We seem to have far too little provision generally, and we will probably need to bulk it up.
Welfare Reform Bill
Lord Freud Excerpts(12 years, 3 months ago)
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Baroness Hayter of Kentish Town
My Lords, it seems that the HMRC’s position on tax credits is to say, “If we fail to meet our responsibilities but you meet all yours, we won’t ask you to pay back all of an overpayment caused by our failure”. That is quite a strong statement of their side of the bargain and recognition of an error made by HMRC. Its own code of practice and guidance sets out the limitations of payments where a claimant is experiencing hardship and the circumstances in which an overpayment will be written off.
Given that we will now have a new and unfamiliar system of universal credit, once it is clear both that there has been an official error and that the recipient could not possibly have known about it, if all those overpayments were to be clawed back in those circumstances the officials would have precious little incentive to get the system right, despite the hardship that that could later cost claimants who, through no fault of their own, were overpaid.
In Committee, the noble Lord, Lord Freud, said:
“Although the starting point for overpayment recoverability will be that almost all overpayments of working-age benefits … will be recoverable … DWP will consider a claimant’s means, income or expenditure if the debtor”—
I do not like that word because it suggests that the claimant in some way invited this—
“considers that they are in hardship”.
However, that means that repayment is essentially means-tested in that the DWP will have the discretion to write off an overpayment based, in the Minister’s words, “on their individual merits”.
The Minister promised the Committee that the DWP,
“will ensure that deductions from benefit or earnings to repay an overpayment should not lead a debtor”—
a claimant—
“to suffer undue hardship”.—[Official Report, 23/11/11; col. GC 468.]
However, it seems to me that this has two problems. First, it is discretionary and possibly means-tested but without anyone knowing the rules. HMRC’s draft code, which was sent to us in December, as the noble Baroness, Lady Hollins, has said, says only that it might decide in exceptional circumstances not to seek recovery of an overpayment or part of it and that there are no prescribed circumstances for a discretionary write-off, although it hints that it would do so only in cases of immediate significant family hardship or a threat to their health, and emphasises that hardship is taken to be “other than financial hardship”.
Secondly, the code relies on claimants knowing that they can appeal against a required repayment without having been informed about that. The draft leaflet really does not make it very clear, nor does it explain how to appeal. If I have understood it correctly, it says only that you can consider the amount that is being asked for, but not the fact that you have to pay it because of your own circumstances. The Minister said in Committee,
“that if the debtor considers they are in hardship, they can say that and then there is a process built on that”,—[Official Report, 23/11/11; col. GC 469.]
but it is not clear how that would work. If this amendment falls and the system proceeds, will the Minister assure us, first, that anyone asked to repay to cover for official error will be told of their right to appeal; secondly, that they will be given rather more guidance than that given in the draft leaflet as to the circumstances in which any write-off will be allowed; and, thirdly, where the repayment is sought from landlords, which in certain cases it would be, that they will also have the right of appeal against a loss of income over which they will have no control?
The Minister knows that the IT problems caused significant headaches and hardship for many claimants in the early days of tax credits. Getting the position right on overpayments and ensuring that claimants do not feel that they have been unjustly made to pay for the errors of government officials will be essential to building confidence in universal credit. We look forward to the Minister’s response to these and the other queries raised, and emphasise that this amendment is about the consequences of official error, not of claimant mistakes.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, as we have previously discussed, Clause 103 is based on the premise that for those benefits within its scope, most if not all overpayments will be recoverable. I think we are all in agreement that a benefit recipient should not receive any more money than they are due; nor should they receive any less. In keeping with this general principle, we believe that a benefit recipient should not be allowed to keep money that they should not have received and that this should hold true even if they were not aware of the mistake. I do not think that we can accurately compare the issue of tax credit overpayments, raised by the noble Baroness, Lady Hayter, with that of benefit overpayments. That is because awards of tax credit are based on an estimate of what someone will earn, whereas benefit entitlement is based on actual information—and of course it will not have escaped anyone’s notice that the level of tax credit debt has grown significantly.
As we have discussed before, although the provision allows for all overpayments to be recoverable, this does not necessarily mean that overpayments will be recovered in all circumstances. We will endeavour to recover all overpayments where we are able to do so and where it is reasonable to do so without causing undue hardship. This remains a cornerstone of our overpayment recovery policy. The code of practice, a draft version of which has been distributed to noble Lords, will provide guidance about the circumstances in which recovery action will or will not be taken. It is intended that the code of practice will be available to the public in leaflet form and online. This will ensure that the decision-making process is transparent and that the right decisions are made about the recovery of overpayments. Where a claimant wishes to challenge a decision, they may exercise their right of appeal against it.
To pick up on the point made by the noble Baroness, Lady Hollins, on what compels decision-makers to apply the code of practice, the application will form part of the decision-making process, and failure to adhere to it would leave the DWP open to challenge and appeal on the decision itself or, indeed, judicial review for failure to apply good practice. While there may be no legal duty to comply, failure to do so renders the department more open to successful appeal by the claimants. So we have every incentive to adhere to the code of practice.
Baroness Hollis of Heigham
My Lords, the Minister reminded the House that the current maximum weekly repayment for overpayments is some £10 a week. Will he assure the House that when a local decision-maker decides on the pattern of repayments that may be appropriate, one of the key factors to be taken into account is any other debts and debt repayments that that person may have? Under the old social security system the rule was that no more than 10 per cent of a benefit income should be top-sliced to repay debts for utilities, the Social Fund and the like. Can we have that assurance? Otherwise someone could find themselves trying to repay housing, fuel and pay check debts, and now overpayment debts. Each claim may seem reasonable, but the total may plunge the benefit recipient into total desperation.
Lord Freud
My Lords, I think I can give that assurance on the basis that we are looking at financial hardship as the key criterion. Clearly the benefit recipient’s other debts form part of that consideration, so they will clearly be considered.
Baroness Hollis of Heigham
Does the Minister think it reasonable that no more than 10 per cent of total benefit income should go towards the repayment of any or all other debts.
Lord Freud
My Lords, I am not sure that I am in a position to give assurance on precise figures and percentages. I am giving a general assurance that that factor will be looked at as part of the financial hardship consideration.
Baroness Hollins
My Lords, I thank the Minister for his detailed and careful reply, which contained a number of reassurances. Many of the reforms proposed in the Bill are primarily about changing behaviour rather than reducing expenditure. On the issue of overpayments, it is difficult to argue that the changes to the procedures for repayment fall into the former category. The primary motivations, I understand, are ones of principle and finance.
Until we can be sure that when things go wrong the individual judgment of officials does not subject claimants who have been overpaid to undue punishments, we need clear safeguards. The Minister has tried to reassure the House that those safeguards will be in place. I am reassured by his comments that recovery will not cause hardship and by his reminding us that the DWP would be open to challenge or to judicial review. With great power comes great responsibility, and many Members may believe, like me, that when the DWP alone is at fault the DWP alone should take the hit, and that this ought to be clear in legislation.
However, I am reassured by the Minister’s comments and I beg leave to withdraw the amendment.
Baroness Hayter of Kentish Town
My Lords, on behalf of my noble friend Lord McKenzie, I also thank the Minister and the noble Lord, Lord Ramsbotham, for that meeting. I know that he found it of considerable interest and use. The noble Lord, Lord Ramsbotham, of course knows rather a lot about penalties, sanctions and their fairness. His amendment seeks to ensure that the appropriate guidelines and procedures are in place when a jobcentre or local authority imposes sanctions, fines or penalties on claimants, and particularly that, when officials impose such penalties, they give clear reasons for doing so.
Clarity about circumstances in which a penalty, sanction or overpayment can be recovered is vital if administrative justice is to be realised but also to enable claimants to have confidence in the system. It obviously also makes the job of officials considerably easier when there is a clear set of steps to follow and a clear description of the circumstances in which they should consider possible hardship to a claimant. It is also essential that the reasons for any sanction or repayment are set out, preferably in writing, so that the claimant, any adviser or a reviewer can understand the grounds on which the decision was taken. We look forward to the Minister giving us assurances that a set of guidelines, safeguards and relevant procedures will be in place so as to meet the aspirations set out in the amendment.
Lord Freud
My Lords, I need to start by thanking the noble Lord, Lord Ramsbotham, for arranging a really useful seminar the other week on a range of issues related to sanctions and penalties. I was equally impressed by the content of that seminar, the iron discipline with which it was conducted and how much ground we managed to cover. We are very keen to draw on the expertise of others as we develop our implementation plans. I look forward to continuing to work with interested groups in this collaborative manner. I gave a commitment in that meeting that we would work collaboratively with the groups involved. I am pleased to repeat formally here that that collaboration will happen.
Turning to the substance of the amendment, I hope I have made clear that we are really on the same page on many of these issues. We absolutely agree that clear guidance should be issued to officials making decisions on behalf of the Secretary of State where discretion is exercised. We do this now and will continue to do it under universal credit. Decision-makers will be required to follow this guidance when applying the law to the facts of the case where they consider a decision about a claim, sanctions for non-compliance with work-related requirements, a civil penalty or the recovery of overpayment. As is currently the case, we will make this guidance publicly available.
Lord Freud
Lord Freud
My Lords, Clause 129 enables relevant information to be shared between DWP, local authorities and others for prescribed purposes relating to the operation and administration of welfare services and social security benefits. As thinking has developed in relation to new data-sharing arrangements, it has become apparent that we may want to supply social security benefit information to local authorities in connection with the administration of localised council tax schemes. These amendments will enable that, and will allow local authorities to share such information between and within themselves for the purposes prescribed. Making social security information available in this way will help local authorities design and deliver schemes that provide appropriate financial support to residents who are unable to meet the full cost of their council tax. I beg to move.
Lord Newton of Braintree
My Lords, I just want one penn’orth. I completely support these amendments, but they give me the opportunity which I missed earlier in these proceedings to record on the Floor of the House that the single silliest thing in this whole affair is the determination of the Department for Communities and Local Government to have separate council tax benefit systems in every corner of the country. That is a battle to be fought again on another day. I had devised an amendment that could have brought it up today, but I decided that discretion was the better part of valour at this stage. However, there is a local government finance Bill coming down the path. My noble friend—and, above all, his noble friends in the DCLG—should know that some of us are going to go on worrying away at this total absurdity, which I know is not supported in the DWP itself. These amendments may help to mitigate the effects but they will not completely eliminate them, and I shall go on trying to eliminate them.
Lord Freud
Yes, my Lords, I can confirm that we have agreements with the devolved Administrations on this matter. They will be receiving the information in slightly different ways, but we have sorted that out. On that basis, I will avoid the temptation to indulge in a long discussion about DCLG and council tax. Although I know that noble Lords would enjoy that, we have other things to do.
Lord Freud
Lord Freud
Welfare Reform Bill
Lord Freud Excerpts(12 years, 3 months ago)
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Baroness Lister of Burtersett
My Lords, I rise briefly to support the amendment of my noble friend Lady Hayter. However, her case was made on the assumption that the commission will have expertise. The original requirement that commissioners must have expertise relevant to the work of the commission has been taken out by this legislation. Apparently, the Government have argued that, because the commission will be a reviewing rather than an advisory body, the expertise requirement is no longer needed in the schedule. However, as End Child Poverty points out, this makes no sense. Reviewing requires just as much expertise as advising.
I should therefore be grateful if the Minister could give a rather better explanation as to why that provision has been taken out, because it is in danger of weakening the commission. I understand that the commissioners will be appointed through the non-departmental public body appointing process. Can the Minister explain how the process will work in this instance? What type of expertise do the Government believe is necessary for the commission, taken as a whole, to have? How will the NDPB appointment process ensure that the commission has such expertise? We are of course talking about expertise on both child poverty and social mobility. It is perhaps also worth considering not just traditional academic forms of expertise but the expertise born of experience.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, at the start of these two groups of amendments on the child poverty commission, I want to make it clear that this Government are absolutely committed to tackling child poverty. Our child poverty strategy, published in April last year, set out the package of reforms that we are implementing to ensure that no child faces a life trapped in poverty. As part of this, we want to create a new and more powerful commission that can assess the progress made as reforms are implemented.
Amendment 62F seeks to ensure that the commission continues to provide advice to the Minister as to how to eradicate child poverty. As noble Lords are aware, the new Social Mobility and Child Poverty Commission differs from the original child poverty commission in a number of important aspects. First, it will have a broader remit that will encompass social mobility as well as child poverty. Secondly, it will for the first time have the power to publicly assess government progress. The previous child poverty commission’s role was simply to provide advice to government. The new commission is required to produce an annual report that assesses whether the Government are taking the steps that they said they would in their strategy, and it will therefore have the opportunity to hold the Government to account for the steps that they are taking and point out where they are falling behind. This will ensure that Ministers are still responsible for developing the strategy, as is right, but that there is external examination to ensure that it is being implemented.
Finally, the commission will no longer play a direct role in the development of the Government’s child poverty policy. This third change is crucial if we are to maintain our commitment to ensure that unelected public bodies are not established unless there is a clear need for their work to be carried out independently of government. This is one of the three key principles of the review of public bodies carried out by the Government last year. It is the role of the Civil Service, directed by Ministers, to develop policy. This is not a job for external bodies.
We cannot justify establishing a public body to provide advice when there is already a wide variety of ways in which government can access such guidance. Indeed, many of the organisations that we might expect to see represented on such a body provided recommendations on the current child poverty strategy via our extensive consultation exercise. Giving a single public body a statutory power to provide advice to government on child poverty policy also risks undermining ministerial accountability. It offers a degree of scope for Ministers to shift responsibility for their policy to an external body. When publishing its report each year, the commission will have the opportunity to advise the Government on steps that they should be taking to implement the strategy. As an independent body, the commission would be able to respond to government consultations and put points to Ministers, alongside other organisations with an interest. It is a fundamental principle of this Government that Ministers are accountable for the policies and strategies they put forward. Therefore, while we will continue to consult widely on this policy area, we do not believe that the commission should be given a special, statutory role in providing advice.
I can tell the noble Baroness, Lady Hayter, that we are committed to establishing the new commission as soon possible, once the necessary legislative changes are made. That means, given that I need to define “as soon as possible”, that as soon as the amending legislation has been passed we will begin to put the new commission into place.
If the commission thinks research is required but the Minister does not, whether or not a particular request is granted will be a matter for private discussion between the Government and the commission. The commission will be able to request research directly; there is provision for it to do that.
On the issue of the expertise on the commission, raised by the noble Baroness, Lady Lister, we intend that it have the appropriate balance of expertise in child poverty and social mobility and we agree that a commission without specific expertise in these areas would not be effective in carrying out the functions set out in the Bill. How will we conduct the appointment process? All members of the commission, including the chair and the deputy chair, will be appointed using a fair and open recruitment process which meets the standards required by the office of the Commissioner for Public Appointments.
Baroness Lister of Burtersett
I am sorry to interrupt, but I also made a point about expertise born of experience. I sat on the Commission on Poverty, Participation and Power, half of whose members had experience of poverty. It was one of the most rewarding experiences of my career, because the insights of those with experience of poverty were such that I could not bring to the subject. Will the Government be open to such expertise?
Lord Freud
Yes, my Lords. I hope that I was making clear that our intention is to get people who are experts in the area. It is hard to overspecify what that means, but people in that category could provide a powerful insight. I am not going to write the job spec in detail tonight, but clearly those would be attractive sets of experience for the commission.
Amendment 62CZA would require that any steps taken in relation to collecting child support maintenance should be consistent with advice given by the Social Mobility and Child Poverty Commission. I will stick precisely to the point in relation to the commission rather than straying back into some of the discussions we had earlier this evening. Our view is that the commission should not be involved in developing policy. From that it follows that we do not think that it should develop policy on child maintenance. That is something for which Ministers alone should be responsible—or perhaps responsible for alongside the House of Lords.
Moreover, where payments are reliable and regular, child maintenance provides parents with care with a separate income stream that may improve the lives and life chances of some children in or near poverty. We have concluded that child maintenance payments are estimated to have a small, non-reportable impact on the number of families living in relative income poverty as currently measured and with current data sources.
Amendment 62JA, the government amendment, and Amendment 62K, would both create an explicit provision in the Bill for the Government to carry out research at the commission's request if it so wishes. We addressed that issue briefly in Committee. I gave assurances that having that provision in the Bill is unnecessary. The Bill already enables Ministers to provide the commission with any resources, including research, which Ministers think are required for the commission to carry out its functions. However, given that the issue has arisen again, we decided to table an amendment to allay any remaining concerns. The government amendment provides that Ministers have the power to carry out or commission research at the request of the commission if they so wish.
Before I ask the noble Baroness to withdraw the amendment, I make it clear that the Government do not consider any of the amendments consequential. I commend Amendment 62JA.
Lord Freud
“Review of fees regulations
In section 6 of the Child Maintenance and Other Payments Act 2008 (fees), after subsection (3) there is inserted—“(3A) The Secretary of State must review the effect of the first regulations made under subsection (1).
(3B) The review must take place before the end of the period of 30 months beginning with the day on which those regulations come into force.
(3C) After the review, the Secretary of State must make and publish a report containing—
(a) the conclusions of the review, and(b) a statement as to what the Secretary of State proposes to do in view of those conclusions.(3D) The report must be laid before Parliament by the Secretary of State.””
Baroness Hayter of Kentish Town
My Lords, does not Davos sound interesting? I gather that the Prime Minister is there as well as the noble Lord, Lord Layard, but that Mick Jagger decided not to turn up. The advantage in one sense of the absence of the noble Lord, Lord Layard, is that we have had the privilege of hearing the amendment moved by the noble Lord, Lord Adebowale, who is second to none in his experience of working with substance abusers and those with mental health problems. It is good to have him here.
The subject of mental health is an important one and has featured a lot in our debates throughout the Bill—in discussions on where and whether conditionality is appropriately applied, in looking at the length of time for which contributory employment and support allowance should be available, and in assessing ways of dealing with the caseload for DLA and how best to introduce and assess the new PIP criteria. In all these we have been dealing with the consequences of the increasing mental problems that have been touched on. We know that the diagnosis of mental health problems has been rising. An NHS study in 2007 found that the prevalence of common psychiatric disorders severe enough to need treatment was between 6 and 9 per cent among people of working age. That means that we are talking about between one in 10 and one in 20 of our fellow citizens.
The consequences of that for the Bill and for the DWP are most obvious in the growth of the number of people eligible for DLA. Since 2002 the rise in the number of claims—which the Minister has frequently cited when making the case for reform of the benefit—has been almost entirely accounted for by those with either learning disabilities or mental health conditions. So, ensuring that employment and mental health treatment services are working closely together would have clear benefits not only—although most importantly—for claimants, but also for the department’s own efforts to reduce the number of people forced out of work through ill health. Equally vital will be an attempt to work with employers to help them better understand and equip themselves to be able to use the talents of those who, whether on an ongoing basis or for short periods, experience poor mental health.
I hope the Minister will outline in his response not only how employment-focused services, in particular for those on ESA, are working with mental health experts and ensuring that claimants receive the right treatment, but also what his department is doing to encourage employers to put the right support in place and to take a positive attitude towards workers with poor mental health. If he follows up on the excellent suggestion of a meeting, it would be particularly appropriate, along the lines set out by my noble friend Lord Winston, to include the Department of Health in it. Perhaps we will be able to encourage a bit of cross-Whitehall working on this issue.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, I start by thanking the noble Lord, Lord Layard, who is in a better place, and the noble Lord, Lord Adebowale, who moved the amendment, for all their work on mental health conditions. Last month I had a very good meeting with the noble Lord, Lord Layard, on these matters, so there is an active dialogue. I want to put this into some context. This is an area that I have taken an enormous interest in, and I think that we need to go much further. What we need to realise is that we are right at the beginning of the process of even thinking that for people with these kinds of illnesses, work is a solution and not a problem for them. It is early days in our understanding of what to do and how to do it, but in the years to come we will have a really good opportunity to try to lock some of this stuff down. It can be done from several directions, which I want to describe.
The problem is that, as we know, around a third of those going on to ESA have a primary diagnosis of a mental health condition, although dual diagnosis and co-morbidity is seen in many cases. Indeed, a lot of people have mental health problems because they are long-term unemployed or long-term inactive. They need the right interventions to help them back into work, and mental health services are absolutely vital in that area, along with employment training and support. It must be the role of GPs and health services to diagnose conditions and work out what, if any, specialist health support should be provided to each individual, and to make those referrals to specialist health services. They have the knowledge to make those complex judgments. It is not the role of non-medically qualified individuals in Jobcentre Plus to do that; it is simply not appropriate. They can do some things—they can signpost people to health support such as the IAPT programme; they can provide work support—but they do not have the training or the knowledge formally to refer individuals to specialist health support. Nor do I want to go down the road of mandation into treatment or of out-of-work obligations. That is not the right way to go. I think that noble Lords will immediately understand all the human rights issues around that.
I assure noble Lords that we have a significant number of safeguards in place to ensure that individuals who present with mental health conditions and who may need specialist health support are signposted to such support. If at work capability assessment stage an individual presents with unexpected findings or undiagnosed physical or mental health conditions that cause the healthcare professional concern, and they feel that their GP should be aware of it, that information goes to the GP within 24 hours of the assessment. Again, it reinforces the role of the GP.
I am not talking about passing the buck to the NHS, because we have an important role to play. We need to ensure that the incentives in the system are right so that we stop people falling out of work—mental health conditions come second behind musculoskeletal conditions in the list of reasons. These concerns led me to commission the sickness absence review led by Dame Carol Black and David Frost. That important review has done a lot of the analysis that I wanted, and one of its recommendations was an independent assessment service which offers a kind of second opinion and a much more coherent view on what a person can do in terms of the workplace and their illness. That is about catching people at the right time, and I want to be able to catch people right at the start. The review has made a very serious set of recommendations which, as we work through their implications, could become a valuable motor to our rethinking how we supply help and make the connections between health and work. That is one opportunity that we now have. We are taking our time to get our reaction out because we want to get it right and to sort this issue out in its context.
We are also working with work programme providers to help them support those of their participants who have a mental health condition in gaining employment. We have had a bit of a slow start, as I had to admit in this Chamber yesterday, with the flow of ESA, although there are good signs that it is beginning to pick up. We have established a relationship between the prime providers and the mental health specialists, and I thank the noble Lord, Lord Adebowale, who is one of the key people in working out the mental health interventions that help people on the road to work. He has started working that out precisely and I am looking to him to give me some of the answers. I should probably vote against him rather than him against me because he has the responsibility in that area.
Within Jobcentre Plus we have launched a new support for all advisers to ensure that they are better skilled in helping claimants to improve their health and well-being. Jobcentre Plus employs disability employment advisers who are able to help claimants with the most severe health problems and to refer them to specialist divisions, such as Work Choice. We employ mental health and well-being partnership managers to build practical links between the local mental health services and employment services. Outside of the employment support we provide, the department has been actively engaged with the Department of Health to ensure that employment support is an integral part of the IAPT programme. Similar work is ongoing with the devolved Administrations.
This is a serious amendment on a serious matter. It is a difficult matter and we are not going to sort it out with a little bit of legislation. I commit to continue giving the issue serious consideration and effort. We can make a big improvement to the lives of hundreds of thousands of people and I commit to go on working in this area. I will have any meeting on this matter. My door is always open anyway but on this matter it is wide open. I therefore urge the noble Lord to withdraw his amendment.
Baroness Thomas of Winchester
Is Access to Work still available to people with mental health problems?
Lord Adebowale
I thank the Minister for his thoughtful response and the Members of the House who have taken part in this useful debate.
It is frustrating for me that there is evidence about the interventions that are likely to work with people who have the most common types of mental illnesses which restrict their ability to work—mainly anxiety and depression. The use of programmes such as Beating the Blues—the cognitive behavioural therapy approach which is most widely used in mental health, and the most widely researched intervention in the world—has a measurable and predictable impact on mental health. It is possible to apply some of these approaches and improve a depression and anxiety score such as to enable someone to work.
It is important that we pick up on the point, which noble Lords may not fully have understood, that we are dealing with people in a client group who are sometimes ill, but most of whom want to work. This is not me saying that—it is the expression of these individuals. They recognise that work is a powerful mental health improver. One in six people with serious mental health conditions currently work, and yet eight in 10 wish to do so. This means that there are 356,000 people with mental health conditions in the UK who wish to work but are not doing so. These people are inviting an intervention.
Although I recognise the seriousness of the Minister’s remarks on this issue, there is a systems failure that we could resolve. This is not about people like me and my organisations coming up with credible solutions; we have to match those credible solutions with the policy and the practice of the DWP. That is why the amendment is so important.
While I am on the subject of the work programme, my discussions with Ministers often ended with the sentence, “It is early days”—and it is early days—but the days are running out.
Lord Freud
“UK child poverty strategies
(1) Section 9 of the Child Poverty Act 2010 (UK strategies) is amended as follows.
(2) In subsection (7)(a)(i)—
(a) for “progress” there is substituted “measures”; (b) for “needs to be made” there is substituted “need to be taken”.(3) In subsection (7)(a)(ii)—
(a) for “progress” there is substituted “measures”;(b) for “intends to make” there is substituted “proposes to take”;(c) for “in achieving” there is substituted “to achieve”.(4) In subsection (7)(b)—
(a) for “progress” there is substituted “measures (other than those described under paragraph (a))”;(b) for “intends to make” there is substituted “proposes to take”;(c) for “in achieving” there is substituted “to achieve”;(d) the words from “otherwise than” to the end are repealed.(5) In subsection (8), for paragraphs (b) and (c) there is substituted “and
(b) give an account (in such manner as the Secretary of State considers appropriate) of the effect of those measures, so far as relating to the purposes mentioned in subsection (2).””
Lord Freud
My Lords, I will speak to Amendments 62G, 62H, 62J and 62L, which have been brought forward to ensure that the commission’s duty to report on child poverty in the UK does not duplicate the responsibilities of the devolved Administrations. They clarify that accountability for progress on devolved matters affecting child poverty will remain with the devolved Administrations. They have been developed in close consultation with those Administrations.
The Government have always been of the view that the new commission will be most effective if it continues to have a UK-wide remit. That is why it will continue to have a member appointed by a Minister from each of the devolved Administrations, in addition to the members appointed by UK Ministers. However, it is important that the commission does not unduly duplicate the scrutiny measures already provided by each of the devolved Administrations. We have therefore agreed that the annual reports will not present the commission’s views on the progress of the devolved strategies. The reports will only describe the child poverty measures taken by the relevant devolved Ministers. This approach will ensure that responsibility for scrutiny of the content of the devolved strategies remains with the devolved Administrations.
Secondly, these amendments also enable Northern Ireland to join the commission at a later date, if the Northern Ireland Assembly passes a Motion to that effect and a Minister of the Crown makes a corresponding order. Until then, the commission’s report is not required to comment on the Northern Ireland child poverty strategy, and the commission will not have a member appointed by the relevant Northern Ireland department. By giving the Assembly this option, this approach allows us to proceed with the commission for the rest of the UK, respects the rights of the Northern Ireland Assembly and ensures that we adhere to the principles of the devolution settlements while ensuring that the Sewel convention is not breached. These amendments ensure that we can create a commission which can sit effectively alongside existing devolved provisions and report on progress across the UK.
Amendments 62EA and 71 clarify the provisions in the Child Poverty Act 2010 that set out the requirements for UK child poverty strategies. The Act requires each UK strategy to,
“describe the progress that the Secretary of State considers need to be made”,
over the period of the strategy. The current UK child poverty strategy does this in detail. It sets out the radical package of reforms that the Government are introducing and provides a clear timeline for progress in terms of policy implementation. However, the strategy does not set interim targets for reductions in child poverty by the end of the three-year strategy period. We do not wish to incentivise the short-term income-transfer approach in which small amounts of moneys are given to families to lift them just over the poverty line. This is the easiest way to improve child poverty figures but it does not strike at the heart of the problem. This is what our reforms will do, tackling the root causes of poverty and providing a sustainable solution which will enable us to meet the 2020 targets.
This approach is absolutely in line with both the letter and the spirit of the Child Poverty Act. It is important to confirm in statute our existing understanding that the Act does not require progress in this context to be expressed in numerical terms or interim targets. These amendments will ensure that it is a matter for the Secretary of State to decide how the strategy should describe progress and make it crystal clear that a long-term approach such as that outlined above is in line with the requirements of the Act. These amendments will ensure that the commission does not duplicate the responsibilities of devolved Administrations and clarifies the requirements for child poverty strategies.
The Government see Amendments 62H, 62J and 62L as directly consequential upon Amendment 62G. However, further Divisions would be required should noble Lords wish to push the other amendments in this group to a vote. I beg to move.
Lord Wigley
My Lords, I rise to speak to the amendments that deal with the devolved Administrations. I wondered until almost the last sentence that the Minister spoke exactly what the game was going to be. From what I understand, it will be mainly in terms of the avoidance of duplication. I do not know whether I have got that right—and perhaps the Minister can indicate whether it is mainly the avoidance of duplication, as opposed to giving anything additional with regard to the powers.
The 2020 target has had considerable enthusiastic support in Wales, but the progress has not always been as positive as one would have hoped. Of course, definitions of child poverty can sometimes be a problem, as I am sure that the Minister will immediately acknowledge. It is not just with regard to absolute levels of poverty; it is to do with relative levels as well. Perhaps the Minister will respond to this. One challenge is to get joined-up thinking between the devolved Administrations which have responsibility for social services, education, community services and local government. Many of the other responsibilities are in Westminster, particularly the economy and taxation and the transfer of resources. That is clearly important in cracking this problem. I welcome any steps being taken here that bring greater coherence and better working together between the various parts of these islands for that purpose. But I hope that something additional will come into the equation that enables greater progress to be made to eradicate child poverty, not just in Wales but throughout the UK.
Lord McKenzie of Luton
My Lords, we are supportive of Amendments 62G, 62H and 62K. As we have heard, Amendments 62G and 62H clarify the position with regard to the devolved Administrations and Amendments 62J and 62L do so with regard to Northern Ireland. The briefing note explains that Amendments 62G and 62J ensure that there is no overlap between the role of the commission and the devolved Administrations by ensuring that the commission describes rather than assesses progress on each of the devolved Administration’s strategies. Could the Minister confirm, however, that the commission will still take a UK-wide view and ensure that it assesses progress across the whole country, including assessing where central government may need to take specific actions on those policies within its remit in a particular nation?
I listened carefully to what the Minister said about Amendment 62EA, clarifying the requirement in the Child Poverty Act for UK child poverty strategies to describe the process that the Secretary of State considers needs to be made by the end of the period. The department says that the amendment will confirm the Government’s existing understanding that a description of the progress in narrative or policy terms meets the requirements of the Act. Perhaps the Minister can say a little bit more about this amendment. As I understand it, the intention of the Child Poverty Act was to ensure that the Government set out a strategy to ensure that this progress was made rather than simply describe, perhaps in numerical terms, what that progress would look like. We would be concerned if the effect of the amendment was to weaken the duty on the Government to set out such a strategy.
Lord Freud
My Lords, the amendment is intended to clarify the Child Poverty Act, not to change the substance or affect the law. It will make it absolutely clear that describing progress in terms of policy is entirely in line with the requirements of the Act. It does not alter current government policy on child poverty. The Government will continue to be required to produce a child poverty strategy every three years, setting out the measures that will be taken and the progress that needs to be achieved in that period. The purpose of the latter two amendments is simply to clarify how progress can be described.
To pick up on the point made by the noble Lord, Lord Wigley, the amendment will ensure that scrutiny of devolved matters relating to child poverty remains with the devolved Administrations, thus respecting devolution conventions. We will continue to work closely with the devolved Administrations to ensure that both the commission and the devolved strategies contribute to continued progress against the goal of ending child poverty.
Lord Freud
Lord Freud
“( ) After subsection (2) there is inserted—
“(3) In this Part “appointed day for Northern Ireland” means such day as a Minister of the Crown may by order with the consent of the Northern Ireland Assembly appoint (and different days may be appointed for the purposes of different provisions of this Part).””
Lord Freud
My Lords, I have to admit that this amendment is not as expensive as the £1.4 billion PIP one, because the noble Baroness is looking to do the research afterwards rather than stopping it all and doing the research first, which would have delayed it. The reason why the PIP amendment was so expensive was the one-year delay, meaning that all those savings would not have accrued.
The intention behind this amendment is to allow discussion of the impact of the universal credit on both the accessibility of childcare and work incentives for potential second earners. Working families will be able to receive support in respect of 70 per cent of monthly childcare costs up to £760 for one child or £1,300 for two or more children. These amounts are equivalent to the current arrangements in tax credits.
We understand that childcare plays a crucial part in parents’ work decisions and are determined to help those moving into the workplace, which is why we found the extra £300 million to help people below the 16-hour limit of tax credits. The childcare market is very varied and does not always effectively meet the needs of working parents. We are introducing flexibility into the system, such as through introducing monthly limits based on actual paid costs, so that it supports the childcare market better. Local authorities in England and Wales have the duty to secure as far as reasonably practicable sufficient childcare for working parents. The Department for Education is currently consulting on whether a local annual report would be a more effective and meaningful way of enabling parents to hold their local authority to account.
Let me move now to the concerns over the work incentives for potential second earners. My views on this are on the record. The costs are high. If couples who were both in work were entitled to an additional disregard of, say, £700 a year, the cost would be £240 million. If the disregard were £1,000, the cost would be £350 million. Those are the sums and we simply do not have them at this stage. Universal credit should mean that most families in which one parent works full-time for 35 hours a week for the minimum wage will not live in poverty.
The amendment asks us to confirm in legislation that we will undertake a formal review of both these areas. However, my real response is that these are just two particular areas. We will monitor the effect of universal credit right across aspect after aspect of its impacts. I have also included powers in the Bill to pilot different policy approaches. We will do that by having affirmative regulations to approve particular pilots. Any substantive changes following a pilot will also require regulations and be subject to the usual SSAC, so there are a lot of protections here.
It will not be a question of doing a review of something such as the second-earner incentive. I want to see a pilot in which we can pinpoint the value of moving it around. That is a far more useful way of finding out such things. What is the effect of the taper? What is the effect of the second-earner disregard? What is the effect of moving them around? We need to know all these things in a much more coherent way than we would from carrying out a review. We will have econometric analysis of a kind that leaves anything that we have seen in the past in the dust. Therefore, this requirement for a review and a report on specific impacts just creates unnecessary bureaucracy. That is not the way I want to do it.
To summarise, I hope it is clear that we are aware of these two issues, which are very important and interesting. I will continue to give them the attention that they deserve, and I therefore urge the noble Baroness to withdraw this amendment.
Baroness Hayter of Kentish Town
Having had the promise of the intention to give these issues the importance that they deserve, I beg leave to withdraw the amendment.
Lord Freud
Lord Freud
My Lords, as noble Lords are aware, our focus is on supporting and helping to lift children out of poverty and improve their life chances by encouraging lone parents to enter paid work. Evidence shows that paid work is good for lone parents and their children in nearly all circumstances. Indeed, just under 80 per cent of lone parents with a youngest child aged five or six are either in employment, looking for a job, or would like to work.
Many lone parents consider making the transition to work when their youngest child starts school, and it is for these reasons that we announced our intention to align the age at which lone parents could reasonably be expected to look for work to when their youngest child reaches the age of five. This means that once a lone parent’s youngest child reaches the age of five we would want the parent to claim jobseeker’s allowance if they are capable of work. If they have limited capability for work, they would claim employment and support allowance, unless they are entitled to income support on some other ground, for example as a foster carer. If we delay carrying out this change and wait for the introduction of universal credit, we delay bringing these lone parents closer to the labour market, delay making any benefit savings but, more importantly, delay lifting more children in lone-parent households out of poverty.
Picking up the point on the current economic situation, it is important that we do not repeat the mistakes of past slowdowns and allow people to slip into inactivity. In fact, one of the best things about this economic slowdown—and there are not many good things about it—is that we have not let more people fall into inactivity. In fact, there is less economic inactivity now than a couple of years ago. Maintaining our active labour market policies will ensure that people, including lone parents, do not become detached from the labour market and are well placed to benefit when the economy picks up again.
As noble Lords are aware, this is especially significant because, compared to a child of a lone parent who is not working, a child of a lone parent who works part-time is almost three times less likely to be living in poverty, and a child of a lone parent who works full time is five times less likely to be living in poverty. While we want lone parents to enter work, we do not want them to do so at the expense of their caring responsibilities. This is why we maintained the right for lone parents to restrict their availability for work to school hours, and we will retain all other flexibilities within jobseeker’s allowance to ensure that lone parents can balance caring for their child while working. I described all those measures in Committee, and I shall not do so again given the lateness of the hour.
I stress that this initiative is an important lever in lifting lone parent families out of poverty. If it were delayed until October 2013, it would result in about 17,000 fewer lone parents being in work, which in turn would prevent increases in household income for up to 25,000 children. However, in response to the noble Baroness, Lady Lister, I am conscious of the importance of putting together training and employment strategies. When I wrote my report in 2007, the two strategies were so far apart that they never met. They are moving together, and my view is that we should move them as close as we possibly can, so the door is particularly wide open to discuss with the noble Baroness and, perhaps, with Gingerbread how we can achieve that in the months and years to come.
With that explanation, I ask the noble Baroness to withdraw her amendment.
Lord Freud
“( ) any provision of Part 4 (personal independence payment) or of Part 9 of Schedule 14;”
Lord Freud
Child Poverty
Lord Freud Excerpts(12 years, 3 months ago)
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Baroness Massey of Darwen
To ask Her Majesty’s Government what are their current targets for reducing child poverty.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, the Government are committed to eradicating child poverty but recognise that income measures and targets do not tell the full story about the causes and consequences of childhood disadvantage. We will measure the success of our approach to tackling child poverty through a new set of indicators including, but not limited to, the income targets set out in the Child Poverty Act. They include measures of family circumstances and drivers of children’s life chances.
Baroness Massey of Darwen
I thank the Minister for that response. Does he accept that children are in poverty through no fault of their own and that, in neglecting early years, social costs may be very significant later? Will he also say whether proposed legislation such as the Welfare Reform Bill and the legal aid Bill will have a negative or positive impact on child poverty?
Lord Freud
My Lords, we certainly agree on the importance of early intervention. We have put in a number of measures to reinforce that, including: the fairness premium, on which £7.2 billion is being spent; the expansion of free early education for three and four year-olds and for 40 per cent of two year-olds; and the introduction of the pupil premium. As for the Bills mentioned, in the long run the universal credit is predicted to take 350,000 children out of poverty, but rather more important than that is reducing the number of workless households by 300,000. That is a behavioural response. On legal aid, we have retained legal aid for child parties in virtually all family cases.
Baroness Howarth of Breckland
The Minister has said that the best way to get children out of poverty is to ensure that their families are in employment. How do the Government intend to bring the number of jobs available into line with the unemployment figures in the short term rather than the long term, because it is short-term measures that will have an effect on children? In addition to the issues he has outlined, what other financial help will he give to families in the short term while jobs are becoming available?
Lord Freud
My Lords, we have a large number of measures to deal with unemployment in the short, medium and long terms, but the really important area here is to look at the long-term unemployed who have been excluded from economic activity. That is one of the most important areas of effort that we are undertaking to try and get those families back into the economic activity of the country.
Lord German
My Lords, the work programme is one of the cornerstones of the Government’s action to alleviate child poverty. Today’s NAO report on the work programme reports that harder-to-help people are not being referred to the programme in the numbers expected. Surely, as the Minister has said, this is the most important group to help to get back into work. What response does my noble friend have to the NAO report in that respect?
Lord Freud
My Lords, we are concerned about the slow way that people on ESA are moving into the work programme and we are looking closely at how to accelerate that process. Clearly, one of the ambitions of the programme is to get the hardest-to-help people back into the workforce, and there has been a rather slow start in that area.
Baroness Lister of Burtersett
My Lords, can the Minister explain why the Government dismissed the projected 100,000 increase in child poverty due to tax credit cuts as a “statistical quirk” arising from the relative nature of that poverty when, in opposition, the Prime Minister promised,
“loud and clear … the Conservative Party recognises, will measure and will act on relative poverty”?
Lord Freud
My Lords, one of the recent decisions we have taken was to up-rate benefits by the CPI at 5.2 per cent, when average earnings in the period have increased by 2.8 per cent. Interestingly, that is the core reason why the IFS projections for this year and next show a decline on last year. Looking further ahead, we clearly have a lot of work to do in maintaining any reduction in child poverty and the IFS warns us that we need to have government policies to do that. However, I should point out that what we are driving towards is behavioural change, whereas the IFS measures concrete changes of income transfer.
The Lord Bishop of Wakefield
My Lords, further to the previous question, the Institute for Fiscal Studies report suggests that within three years, by 2015, the number of children in poverty will have increased by 400,000. What will the Government’s response be?
Lord Freud
My Lords, I was trying to answer that question just now. The IFS projections are valuable and important, but they do not absorb changes in future policy and they do not make any assumptions as to behavioural change; many of the policies that we are driving are trying to get people back into work and reduce worklessness in that way. In particular, as regards universal credit, the report does not take into account the reduction in workless families that we are expecting.
Lord Roberts of Llandudno
My Lords, if the reforms going through the House at the moment are carried, many families lose their homes and children are put into care, the cost will be £2,900 a week for each child who is in care. Have the Government taken that into consideration?
Lord Freud
As noble Lords will know, we are not expecting that kind of change as a result of our policies. We have in that sense taken that into account.
Jobseeker’s Allowance (Jobseeking and Work for Your Benefit) (Amendment and Revocation) Regulations 2012
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Lord Freud
That the draft Regulations laid before the House on 21 November 2011 be approved.
Relevant documents: 34th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 16 January.
Motion agreed.