Welfare Reform Bill
Baroness Hollis of Heigham Excerpts(14 years, 3 months ago)
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Lord Skelmersdale
No, my Lords. The reason I added my last sentence and prevented the noble Lord, Lord McKenzie, from rising to interrupt me was for the simple reason that the claimant may well need guidance and help in order to get the extra hours or money that he requires. Therefore, I am asking the Minister to what extent this is going to be driven by the claimant, or by the job provider, education or Jobcentre Plus. I said that I hoped it would be claimant-driven, and nothing else.
Baroness Hollis of Heigham
My Lords, I wonder whether I could add to the burden of questions that the Minister will be facing. This will appear somewhat on the tangent but, in my view, it is not, as it feeds into a lot of our other discussions and is related to work conditionality. At the moment, as I understand it, a lone parent is regarded as being in full-time work for the purposes of conditionality or eligibility for tax credits if she is working 16 hours a week, and is then topped up. With a child under, I think, 12—although coming down to 10, seven et cetera—that 16 hours kicks in at an earlier stage. As far as I am aware—and I stand to be corrected on this—there is no point at which the lone parent is expected to increase her hours beyond that as the child gets older. With a couple, the main claimant, as we know, may claim on behalf of both. I have no objections at all in principle with expecting either claimant in a couple relationship to be available for work; and, in certain circumstances, both.
What concerns me, and what I would like to ask the Minister about, is the impression that the support papers that I have read so far seem to give: that when a child is 12, whether you are a lone parent or in a relationship as a couple, all such people must work a full-time job, which is now defined as 35 hours a week. If I understand it correctly, it could mean that a lone parent with a 13 year-old could be expected to move from working for 16 hours to 35 instead, as part of work conditionality; and a couple—a husband and wife, or two partners—with children of 13 and 15 might each be expected to work 35 hours a week. If I have understood the proposals correctly, then I would like to come back on that because I find it antithetical to everything we know about the need for children to have support. I have no problem at all with couples and the second partner, or a lone parent, being asked to find work within school hours. However, if the Minister is saying that at the age of 12, both partners in a couple, as well as a lone parent, are expected to be in what we would traditionally regard as full-time work of 35 hours-plus, then this is certainly something that we would like to revisit. I would be grateful if the Minister could help us to be sure that we have the facts right, as this is part of a wider debate on conditionality.
Baroness Lister of Burtersett
My Lords, I would like briefly to follow up on that because this takes us into largely uncharted waters, so we have to be sure of what it is that we are doing. I was struck by the research report, Perceptions of Welfare Reform and Universal Credit, which states that:
“Many part-time workers were surprised that the Universal Credit proposition addresses them as they tended to perceive that they were already doing their bit and felt a strong sense of entitlement to tax credits”.
I think that they found the idea that conditionality was going to apply to them quite disturbing. There is a real danger here. The Government talk a lot about not wanting an overly oppressive state, but I fear that many workers will experience this as just that.
I have two questions for the Minister. First, my noble friend Lord McKenzie mentioned the equality impact assessment. I understand why the Government are using earnings rather than hours as the threshold—because they want to get away from the in-work/out-of-work distinction—but in doing that, as my noble friend said, someone who can earn more will find it much easier to meet the threshold. We know from all the evidence that men are more likely to be able to do this than women, non-disabled people are more likely to do it than disabled people, and white people are more likely to do it than minority-ethnic people.
Baroness Lister of Burtersett
Yes. Is there not an issue here in terms of the equality implications? How does the department see those implications?
Secondly, I know that the Minister likes evidence-based policy-making and of course will be very aware of the research report UK Employment Retention and Advancement Demonstration, which has found that gains are made by providing support for people to advance in work through this programme. It states that,
“the evaluation found that for specific populations, gains can be achieved, even for some of the most disadvantaged job seekers, and that those gains can be sustained over a five-year period. These results suggest that the core elements of ERA offer something to build on in future post-employment interventions”.
In what way is the department building on this? To me, it seems that it is going down the in-work conditionality route instead of developing the support provided in this programme.
Lord Freud
The first point I make to the noble Baroness, Lady Sherlock, is to assure her that full-time is not the default setting. The default setting is that we look at the circumstances of the claimant, particularly taking into account their caring responsibilities and available care, and reach a reasonable position. That is the position. On that basis, a lot of her concerns surrounding her point fall away. Of course we are not looking to have latch-key children.
On flexible working, I made the point earlier that we understand that when we look at the value of a job, the monetary implications are not the only measure; and that the gains of flexibility, in terms of how the employer behaves, and the relationship, are key and critical factors and have to be taken into account.
Baroness Hollis of Heigham
I do apologise, as I know the Minister has taken care to answer my noble friend. Does that mean that conditionality would not apply where a lone parent or a partner in a couple with primary caring responsibilities was able to work—or felt they could or should work—only during school hours, given the suggestion from my noble friend of the situations families find themselves in? Most of us have been through that. Therefore the default position for a lone parent of a teenager or, to gender-stereotype, the mother in a couple would be that one of those two need be available for work within school hours only?
Lord Freud
No, my Lords. I am sure that the noble Baroness, Lady Hollis, knows how the legislation works. That legislation now goes up to that 12/13 point and the formal protection around school hours. However, as I explained, the default setting remains that it depends more generally on the caring requirements of that parent, whether lone or in a couple, and their particular circumstances.
Baroness Hollis of Heigham
How then do you avoid the question posed by my noble friend of latch-key children if you cannot ensure that the homecoming of the parent with primary care for the children coincides pretty approximately with that of the teenaged children?
Lord Freud
As I say, that will depend on the particular circumstances of that family. That is the point I am endeavouring to make.
I would like to finish with the point about the cost to the claimant of being employed. That is an issue that we are going to pick up in later amendments so I will not go into it in great detail. However, we recognise the need to take account of those employment costs, and I will pick that up more generally later.
Lord Freud
At the risk of the noble Lord, Lord McKenzie, saying that we have not developed the whole system, I should say that it has not sprung, like Athena out of Zeus’s head, fully formed.
Lord Freud
Aphrodite was in the seashell. I think Athena was the daughter of Metis, who was swallowed by Zeus, but there we are.
We are working really intensively now to get the customer interface with our IT system for the universal credit right. We are spending a lot of time on the support that we will be providing for that and the categories of people who cannot be expected to do it themselves but need other ways of being helped. In practice, we will wrap this up with the much bigger exercise.
Lord Freud
Yes, soothe fears but also put this matter into context. We are essentially importing the existing arrangements, subject to the work experience issue that the noble Lord, Lord McKenzie, raised. We have drawn up an illustrative list. The noble Lord, Lord Wigley, referred to a draconian power. That is the structure that we have imported into this Bill. That structure has been debated thoroughly by many noble Lords in this Room over a number of Bills, so we are not trying to do anything dramatically new here, albeit with a nudge towards work experience. I said to the noble Lord, Lord McKenzie, that I would make absolutely clear what the protections are and how we intend to run the system. I think that the noble Lord, Lord Wigley, is looking at the whole thing as if it was a dramatically new and draconian way of doing things, but it is not. We are importing the existing methodology into the context of the universal credit.
Lord McKenzie of Luton
My Lords, I shall speak also to Amendments 51CEC and 51CEE in this group, which probe Clauses 17 and 18. These clauses cover claimants who are subject to all work-related requirements. Clause 17 deals with work search requirements, Clause 18 with work availability requirements. Clause 17 sets down actions which the Secretary of State can require of a claimant, and also limitations that can be placed on those actions. Such limitations can include restrictions to work in particular locations. Our amendment requires the limitations to specifically include,
“consideration of the length and expense of the claimant’s travel”.
A similar issue arises in respect of the work availability requirement.
As we discussed, the conditionality applies to those out of work and also to those in work. Our briefing note suggests that regulations will make the default position that claimants should look for work that is within one and a half hours’ travel time of their home. This makes a handy headline in the national press to show how tough the Government are on the growing numbers of unemployed. I understand also that it reflects arrangements under the existing JSA regime, after a period.
For a start, we contend that the limitations should have regard to cost as well as journey times and that this should be reflected in the regulations and spelled out in claimant commitments. One and a half hours each way is about the time of my journey to Westminster—oh, for the ministerial car—at a cost of more than £100 a week. Individuals on low pay with no long-term job security would not necessarily be in a position to get the cheapest tickets even if the best deals were readily discernible. Of course, the cost of travel from home to work has to be met out of taxed earnings. Journey times will not always be regular, especially in rural areas. They are not inevitably aligned with the hours of a job: five minutes extra at work can mean an hour’s wait for the next bus. It is understood that the Government recognise the need for flexibility in these matters but see the non-application of sanctions as the route to providing it. Is this correct and, thinking about it, is it an appropriate way to proceed?
We get an insight into how the Government are dealing with this by looking at the illustrative claimant commitment that has been provided to us. Jack Smith’s job goal is to be secure in work as a plumber, earning at least £8 an hour, full-time, within one and a half hours of his home. It also says that if he does not find this kind of work within eight weeks, his job goal will be reviewed and he may be required to widen it, and presumably widen his travel times as well. There is no recognition that cost could be an issue, but the prospects of widening the job goal are included in this illustrative claimant commitment.
Perhaps we may ask what the Government intend on this. It brings us to a wider point. The Government have argued the case for universal credit in terms of simplicity and demonstrably ensuring that people are better off in work. We recognise that it is difficult to have a system that inevitably has some national parameters, so our amendment is an individual underpin that ensures that no one can be made worse off under these provisions by taking up any particular paid work. Clearly, regulations would have to flesh out some definitions of “worse off”, but the calculation would have to encompass costs as well as income, particularly costs around childcare and caring. I beg to move.
Baroness Hollis of Heigham
My Lords, I support my noble friend in particular on Amendment 51CEC, which is about the cost of travel. Too often and too easily we assume a London model, with the Tube, regular bus services and so on; although even there, lone parents may find it difficult to access work in the way that they would like. However, in a county like Norfolk, where many villages have a bus service twice a day, you have a very different story. In Norfolk you have some of the lowest wage rates and some of the highest car ownership rates in the country; but those cars are battered, second-hand jalopies, which are taken by him to get to work, leaving her—usually—with the children and finding it very difficult to do anything except use a bicycle. The result is that it is very difficult for the second earner in a family, or—even more pertinently—a lone parent, to cope with travel to work if there is no job available for her in the local village.
We are expecting a lone parent to work 20 to 25 hours per week. She has two children, one of whom has to be delivered to a childminder and the other to the local school, but she has no transport apart from her feet. Finally, after that, she has somehow to get to a job of her own, and she has to do that again at 3 pm or 3.30 pm. It is almost impossible to find a job between those two hours in the locality, let alone further afield, given that she has to allow for her travel time. I remember one lone parent telling me that she calculated that the school bus picked up the children of the next-door village 40 minutes earlier than it picked up the children of her village; so she used to walk her child about two miles to the next-door village in order to put the child on the school bus, which would act as a form of childminder. That lone parent, with a great deal of ingenuity, managed to get to her job for its 9 am start. She was able to do so because the two villages were within walking distance of each other, but there is a real problem here. I think those of us who live in London or cities have no sense of just how isolated those villages can be.
However, the work requirement will apply to women, both lone parents and second earners, in a situation where there is no public transport, no private transport, a bicycle that you cannot actually take a small child on—let alone two children—except with some degree of difficulty and therefore there is only feet. I suggest to the Minister that it requires enormous juggling skill even to hold down a part-time job. Sometimes the jobcentre that the person has to travel to is not even in the whole of a rural district but may be 20, 30 or 40 miles away. I hope that jobcentre advisers will take all that into account when deciding what is reasonable for that lone parent or woman—and it is usually the woman who is the main child carer—in that situation. I ask the noble Lord to be sensitive to those issues, not because there is any lack of commitment but because of the sheer, simple, practical, logistical difficulties such women may face.
Lord Wigley
Perhaps I may add briefly that I identify totally with the rural dimension that the noble Baroness has just described. A bus twice a day would be a luxury in many villages in rural Powys and other parts of rural Wales. If a person has been lucky enough to have a job and a lift to work from a colleague, but the job comes to an end and they have no independent transport of their own and are required to go some distance to fulfil their obligations under the Act, that would be totally unreasonable. I would be glad to know what guidance the Minister will give to people who are trying to implement the Act on how to deal with circumstances such as those.
Baroness Hollis of Heigham
I have just a query for the Minister. What he is saying is wise. He understands that we fully support both the principle of UC and the continuum between not being in work and being in work. There is no dispute between us. However, I worry about the huge area of responsibility and effectively discretion that will fall on first level Jobcentre Plus staff. As my noble friend said, no one doubts their goodwill or that they will do the best they can. However, given the centralisation of Jobcentre Plus offices, the fact that staff are often young and that the office may be in a town or city with a substantial choice of jobs compared to rural areas, from my experience they will often have very little understanding of the difficulties experienced in a rural village where the only jobs may be part-time cleaning, childminding if you are lucky, picking mushrooms or cleaning caravans. Those are the options, and none of them would fulfil the work conditionality without serious travel that would impede people’s capacity to look after their children and meet school hours.
I say to the Minister, in capital letters, that so much of the effective delivery of what we all want will rest on the shoulders of junior staff: AOs, with luck supervised by an experienced EO, working in local offices and living some 40 or 60 miles away from the circumstances of an individual in a rural village of which they will have no knowledge. I do not know how far the Minister can go in giving assurances. Of course he will want the best possible training, but I am worried about this. Perhaps the answer will involve intensifying supervision and scrutiny by more experienced senior officers at the review level—the EO level—to make it more possible, so that this does not migrate upwards into the tribunal system that my noble friend identified. We have picked up this problem in the past, and it will become more acute as more people are brought into the conditionality realm. So much will hang on the experience of the staff handling their applications.
Baroness Sherlock
Perhaps I may clarify something. I may have misheard the noble Lord and I apologise for delaying the Committee. Did he say in his response that there might be circumstances in which somebody would not be better off, but that they should take a job anyway? I see that he did. I will quote from the right honourable Iain Duncan Smith, the Secretary of State for Work and Pensions. In his introduction to the Green Paper he referred to people of working age and stated:
“We will help them to find work and make sure work pays when they do. They in return will be expected to seek work and take work when it is available”.
Was that not the contract he laid before the British people? What the Minister said appears to contradict it.
Lord McKenzie of Luton
It is a good move, because it is important. However, I do not think I can let the noble Lord get away with the constant assertion that the current system that they are seeking to replace by universal credit does not reflect the fact that work can pay. Overwhelmingly, is it not the case that it does? It may be that a very complicated calculation has to be gone through in order to prove it. I accept entirely that simplification of how to deal with the in-work, out-work issue is to be welcomed and is something we support. However, I do not think it is right to say that, overwhelmingly, work under the current system does not pay.
I would hang on to the point that if there is to be discretion in the system, then why is there not protection at the individual level so that someone cannot be forced to undertake work that would make them worse off? Is there going to be some reassurance at the individual level? There can be regulations which have appropriate caveats around timing issues; it is not beyond the wit of the Government to do that. In all of this change and uncertainty which still has to be resolved in many areas, would it not be reassuring to individuals that if it was clear that they would be worse off, they could not be forced down a path? That seems entirely reasonable to me.
Baroness Hollis of Heigham
I wonder if I could come in on this. I absolutely see the dilemma and I can quite understand why you may want someone to start in on something in the hope and expectation that a year down the line, that entry into low-paid work will have paid off. I put it to the noble Lord—I think he might be horrified by the possible complexity of it, but I have been looking at the additional material and trying to get my head around how disregards work—that the disregard is relatively modest for a single young person. I wonder, following the point made by my noble friend—I can see already that there may be too much downside to this and the arguments against it—whether the Minister could look at the issue of whether in such circumstances you could adjust the disregard to ensure that, even where it does not appear to pay, you could construct it so that at least someone is not worse off through working until the point at which the hoped-for job progression that we all want to see has taken them into the pathway. I would ask the Minister to take this away. It may be that this is too complicated, but making someone worse off is going to be hard to defend, is it not?
Lord Freud
My Lords, the best answer I can give on the whole area is to encourage us to wait until we get to the piloting powers before we have this debate. Let me explain it. We want to test every aspect of this system on a continuing basis. Rather than having a debate about whether we should make this little change, make that little change, do this or do that—we all like to design a system—I think the way to develop this system, which will not and cannot be perfect on day one because it is just too tough, is to have a process of constant improvement. That is my real answer. We should have the constructive debate on these issues when we get to the clause—I forget which one it is, but it is not very far away. I do not think that we will arrive there today—
Baroness Hollis of Heigham
I add a couple of lines to my noble friend’s eloquent introduction to this issue. What we know from all our research about getting lone parents into work is that those lone parents stay in work if they have childcare they trust. Trust is key. As one lone parent told me when I visted, “I would never leave my child with strangers”. Childcare they trust tends to be associated with schools and extended hours. That is highly trusted. If they live in an urban area, it may be the availability of a nursery which is acceptable to them and which is trusted because of scrutiny. They may have neighbours or friends, and so on, who are childminders.
The biggest resource in my experience has always been grandmothers, particularly the maternal grandmother. The reason the maternal grandmother could do the childcare and often would do so once or twice a week, particularly over holiday periods, allowing a lone parent to hold down a job, was because she was herself not caught by conditionality. Can the Minister assure us that he has taken into account that, as we see the retirement age rising to 66 from 60 and that she as well as he in the 60s bracket are expected themselves to be available for work if otherwise they would be claimants on UC, that that unpaid resource will be taken out of the caring economy which has made it possible for that grandmother to permit her daughter to work? In other words, there is interaction going on here with other fields of government policy.
I am sure that the Minister has taken this into account, but one thing that I was most pleased that the right honourable James Purnell was able to introduce was the substitution: where a lone mother did not need her HRP because she was in the labour market and getting her own NI, a grandparent did not lose her entitlement to a state pension by virtue of not being in the labour market for wages, but was in the unwaged labour market, allowing her daughter to remain in full-time paid work.
That resource will come out of the system, if I understand the double interaction, of the raising of the retirement state pension age for women and the conditionality that the Minister will expose her to while she waits in that twilight decade to draw her pension, while she is perhaps not an attractive option for many employers. Can he reassure us that this has been taken into account and that there is lateral thinking here because 40 per cent of lone parents have relied on grandparents to provide informal care? We have never recognised this, except in so far as we have been assured that she does not lose out in terms of a pension. Can the Minister advise us on how this will be handled in future?
The Earl of Listowel
My Lords, before I speak to my amendment in this group, Amendment 51FZA, I thank the Minister for asking his officials to provide me with information in this area. I also apologise for being absent from the discussion of the first grouping today which was relevant to this debate now. I apologise if I repeat information raised then. I also remind your Lordships of Article 3 of the UN Convention on the Rights of the Child:
“In all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration”.
I should be grateful if the Minister could make his best endeavours to demonstrate how the Bill is considering the best interests of the child in relation to this debate.
My Amendment 51CED states:
“It is not a failure sanctionable under this section if a claimant falling within section 22 does not have guaranteed and predictable access to high quality, flexible and affordable child care acceptable to the parent and child or children”.
The lack of widely available, affordable and acceptable childcare has been referred to. The purpose of this amendment is to ensure that claimants with a dependent child will not face sanctions if they are unable to work or participate in work-related activity due to a lack of suitable high-quality, flexible and affordable childcare appropriate to the parents’ and children’s needs. As we have heard, most lone parents want to have the opportunity to combine paid work with the vital job of being a parent. However, so far the Bill seems to fail to recognise that the required childcare infrastructure is lacking in many parts of the UK, including Scotland. There also continues to be a serious lack of childcare settings that are properly equipped and which have staff who are properly trained to deal effectively and positively with children with disabilities, learning, communication or behavioural challenges or who have a wide range of additional support needs.
To make a slight aside, I know how important it is to the Minister and to all your Lordships that we encourage a culture of independence and attack a culture of dependency. The kinswoman of the noble Lord, Anna Freud, whom I believe was a child psychotherapist and an early-years teacher, established in her work dating from the 1940s the absolute importance of the relationship between the child and parent in making the move from infant dependency—absolute dependence—on the parent to adult independent emotional maturity. The danger is that if we do not do all we can in this Bill to strengthen the relationship between parents and children we might inadvertently build in the problem of dependency in the next generation. For adults to be independent they need to have had strong relationships in their early childhood. That is what gives them the strength to be independent in their adulthood. The nature of the relationship between parents and children also colours the relationships that those children will have as adults with other adults. Therefore, the strength of parental bonds between partners is coloured very much by their early experiences in childhood.
I wish to cite a couple of case histories of lone parents in Scotland. I should say that this amendment is supported by 20 charities working in Scotland and Northern Ireland. Judy says:
“All very well and good expecting lone parents to work once their children are in fulltime education, personally I don’t have an issue with it. For me personally, voluntary work & eventually paid work turned my life around albeit not financially. However, where is the childcare to go along with this? Where is the flexible working? Where is the long term thinking? It’s all very well providing ‘some’ funding for childcare, what use is it if there is none? We now face a new generation of children who are ‘forced’ by the Government to be latchkey kids … These same children are often (not always) the ones who require the most emotional support and stability, in particular during difficult times (separation/divorce) … who is going to be around to support them at the times where parents have to be working?”.
I took part in the proceedings on the Childcare Act 2006. What was noteworthy about that was the recognition of how far behind our continental neighbours we were in developing an effective childcare strategy. We were 30 years behind Sweden in having our first childcare strategy. We start from a very low base in terms of thinking and providing for early-years and other childcare.
Lord Newton of Braintree
May I come in from my sedentary position? I ought to start by saying that, having been in another part of the United Kingdom for most of the day, I only strayed in here to demonstrate continuing interest and to check that the Minister was still being reasonable. I felt driven to contribute, as all too often both upstairs and downstairs, by the subject matter that was being discussed.
If I may say so, the noble Earl, Lord Listowel, need make no apology for the length of a speech from a noble Lord who has taken greater interest in these matters than almost anyone else in the House over all the time I have been here. His genuine knowledge and concern comes through, and we all benefit from it.
That said, I shall now incur the wrath of the noble Baroness, Lady Hayter, the noble Lord, Lord McKenzie, or both, or indeed of everyone. I had better admit immediately that if I were the Minister I would not touch this amendment, in its present terms, with a bargepole. It is all very well for noble Lords to talk about guarantees, but what does all that mean? Does it mean predictable? The number of hurdles here is unbelievable. The amendment speaks of “guaranteed”, “predictable”, “high quality”, “flexible” and “affordable” childcare. Who will be the judge of all those? It also talks about the care being,
“acceptable to the parents and the children”.
Frankly, that is not on, as a workable concept. I will just put that on the record in the interests of being helpful to the Minister.
Lord Newton of Braintree
There are too many hurdles in the amendment. In legal terms, although I am not a lawyer, it would be impossible to have guaranteed and predictable access to,
“high quality flexible and affordable childcare”,
because the parents could say that it was not acceptable. Indeed, the child could say that it was not acceptable. It is not a sensible construct, as I am sure any legal mind would advise. The noble Baroness may not agree, but that is certainly the view I would take if I was advising the Minister.
However, coming back to the noble Earl, the childcare issue is an important one, as we have recognised throughout the proceedings on this Bill. It could be crucial to whether it is sensible or reasonable to expect some people, be they single parents or others, to take up work. So we need a clear policy on this, even if in my view this amendment does not give it to us. I hope that the Minister will be able to give us some encouragement on that front.
Lord Freud
I am laughing at the memory of my own children’s disapproval of their minders. Jobcentre Plus does not dictate to parents the type of childcare or which provider they should use, or make any presumption that a childcare provider is suitable for the parent and child in question. The noble Baroness, Lady Hayter, asked whether childcare costs would be taken as good reason. This goes back to my previous response: there is no blanket rule. We will consider each case and look at all the benefits of work. Clearly, we will elaborate the detail on that in due course.
Advisers will continue to have an important role in both challenging and supporting parents who may have preconceived ideas about childcare, who may have had previous experiences or who have not used the services before. The circumstances of all parents and the needs of their children vary, and advisers will continue to take this into account.
Several noble Lords raised the question of the availability of childcare. We should bear in mind that local authorities have a duty under the Childcare Act 2006 to secure, as far as is reasonably practicable, sufficient childcare for working parents of children aged from birth to 14, and from birth to 18 in the case of disabled children. They must formally assess sufficiency in their area every three years. Local authority decisions on what they regard as “reasonably practicable” should be documented and published to allow scrutiny and challenge. Parents who feel that their needs have not been met can complain to the local authority. In the event that they are not satisfied with the way that their complaint has been dealt with, they may make a complaint to the Local Government Ombudsman. I will borrow the claim of the noble Baroness, Lady Hayter, about the perfection of all things under the previous Government. This is after all the system that they put in place, so I am sure that she is absolutely satisfied with the arrangements.
A parent who considers that childcare is not available will need to demonstrate to the adviser that they have taken reasonable steps to secure such care. If childcare is available but the parent considers that it is not appropriate, he or she will need to provide information indicating that they have discussed their concerns with the service provider and give reasons why they do not consider the provision to be appropriate. Parents will need to demonstrate that there are no alternative arrangements that it would be reasonable for them to make. Where the adviser considers that the parent has not taken reasonable steps to identify or access appropriate childcare they will refer the question to a decision-maker. The sanction will only be imposed if the claimant does not have a good reason. In considering whether there is good reason, we will consider all relevant matters raised by the claimant, which would include the individual circumstances of the parent and children, and the availability of suitable childcare. Of course, any sanction decision can be appealed to an independent appeals tribunal for review.
Ultimately, we believe that in the vast majority of cases it is best for children if their parents are in work. Research into child poverty and workless households highlighted that:
“Parental employment is the key route out of poverty and disadvantage. Growing up in a workless household and/or in poverty can have a significant negative effect on a child’s development.”
That is from the 2004 Treasury document, Choice for Parents, The Best Start for Children.
Baroness Hollis of Heigham
My Lords, can the Minister give us an assurance that one possibility he could explore again is that great source of unpaid childcare: grandparents. I tried to get payment, but the deadweight costs would have been too huge. I hope that he will take the issue of her—and it is usually a her—responsibility into account in assessing her conditionality. We have already moved down this path, as my noble friend mentioned, in terms of credits for her pension and so on. It would not be difficult to do and it would ease the pressure on two or even three generations if her contribution to childcare was set against the conditionality on her in her late 50s—certainly in her 60s—and thus make it possible to keep all three generations afloat.
Lord Freud
My Lords, there are two questions here. The noble Earl, Lord Listowel, asked whether our provision could be improved and integrated more closely. Clearly we do have links with the family service that I was describing. What we are doing in Jobcentre Plus is trying to co-locate services, so there may be something there to look at very closely.
The noble Baroness, Lady Hollis, made a point about unpaid childcare by grandparents and others, which I was able to think about in the break. It is deceptively easy to say, “Oh, yes”, but actually it is very complicated. There is a whole load of things happening: increasing longevity; much later childbirth; and in some cases much earlier childbirth, especially in some of the groups we are discussing here. There is a lot of social change going on, including the pension provision, so this is pretty difficult to do much about. I could say consolingly that we will look at it—and I will look at it, I am quite interested in this area—but solutions here are very difficult and would be hard to find. I will look at it but I am not expecting huge things to come out of that look.
Baroness Hollis of Heigham
It is very interesting that the noble Lord should say that, because it was exactly the advice I had from civil servants at the time. None the less, it did not stop us introducing NI credits for grandparents who did more than 20 hours’ care a week for their daughter, releasing her to work. If you can do it for national insurance and pensions, you can certainly do it for childcare, and it would be much easier to do it with conditionality.
Baroness Sherlock
My Lords, perhaps I could suggest to the Minister that Jobcentre Plus could encourage the grandparent to train as a childminder. The daughter could then claim help through universal credit to pay the grandparent for childcare. You could simply cycle the money round that way—it might be a better way to do it.
Lord Freud
My Lords, I am really grateful to the noble Baroness, Lady Sherlock, for her imaginative way of manipulating the system. I am sure that it is something we should look at very closely. No, come on; I will look at this. This is very difficult so I am not promising anything, but I will look at it.
Baroness Hollis of Heigham
It is already the case that grandparents can mind a grandchild if they are a registered childminder, with the childcare taking place in their own home, and look after at least one other child. That is already done.
Baroness Sherlock
My Lords, I am aware that irony plays rather poorly in Hansard. Just to clarify for the record, I am not actually recommending this scheme to the Government. I simply want to raise the fact that one has to be careful not to build perverse incentives into the system and overformalise relationships that might otherwise find a way of working out on their own.
Welfare Reform Bill
Baroness Hollis of Heigham Excerpts(14 years, 3 months ago)
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Baroness Drake
I support Amendment 50A. I am very concerned about the implications of the change of the rules on pension credit because the effect of the proposed change is a severe restriction on the availability of pension credit. The most recent impact assessment which updates that provided in February to take account of a more recently announced policy confirms that the number of households with lower entitlements under universal credit has increased relative to the previous version of the impact assessment. That is primarily due to the announced policy changes to disability payments and the treatment of couples with one partner under and one over the qualifying age for pension credit under universal credit.
I find this change in policy a peculiar form of couples penalty, when the Government are on record, I understand, as being against such a penalty. It is a couples penalty that disproportionately impacts on the poorest of couples because the recent impact assessment reveals that the number of households with lower entitlements under universal credit will increase as a result of this particular treatment of couples with one partner under and one over the qualifying age for pension credit. As a consequence of these changes, although not wholly attributable to this one, 70 per cent of the lower entitlement is concentrated in the bottom and lower quintile.
Although the figures in the impact assessment do not separately show the impact of the pension credit changes, the impact assessment states quite clearly that:
“Some of the heaviest notional losses … are in cases where one member is of working-age and one is currently eligible for Pension Credit”.
I see in response to a question from Stephen Timms in the other place, Steve Webb answered that as of February 2011, 93,200 pension credit recipients had a partner aged below 60. A not insignificant group of people, no doubt in low-income groups, will be impacted by this change.
When one looks at previous impact assessments that the department has released, in many of these couples when one is a pensioner and one is not, the partner below state pension age may well be caring for children or somebody with a disability or who is ill. Now those households would be subject to the new in-work conditionality requirements. We know that older women are less likely to be employed outside the home, so this is another example of a policy that will impact on women—exactly the kind of policy upsetting the Women's Institute according to this weekend's papers. I am sure that it will be onto the case with this one as well
I notice that the Minister, Mr Grayling, commented in Committee in the other place that it should be acceptable to say to someone:
“‘Your household is on a low income, you need more money, get a job’”,—[Official Report, Commons, Welfare Reform Bill Committee, 28/4/11; col. 553.]
as a defence of this change to the pension credit rules. Perhaps he should have reflected on the characteristics of the community affected by this change, such as the number of older women in such households who are undertaking valuable non-wage caring work or the fact that disabled people are more likely to be reliant on pension credit at minimum qualifying age. Those facts and figures are freely available in impact assessments from the department.
We now have a policy that is discriminating between pensioners on the basis of their spouse’s age and producing some quite arbitrary outcomes with poorer households having significantly different experiences because of what could be quite moderate differences in the age of their partners. Let us be clear: the effect of this policy is to disentitle someone under the current rules who would otherwise receive pension credit and place them, because of the age of their partner, into universal credit.
This policy will impact on a lot of low-income households. The noble Baroness, Lady Greengross, detailed that when she moved the amendment. I know that Age UK is particularly concerned. If, for example, a couple received an amount of universal credit equivalent to the basic level of income-related jobseeker’s allowance that would be just £105.95 compared with pension credit for a single person of over £137 and £209-plus for a couple.
The other point that causes me concern is that pension credit provides an automatic passport to benefits such as health benefits, Christmas bonus, home improvement grants and free school lunches—I was looking the list up—and any cared-for children’s access to school lunches. Will all these fall away now for these couples, even though one of them reaches the qualifying age?
The other impact is that this change in policy will also mean that these older couples, with one at the PC qualifying age, will find that any savings that they have are now subject to the more aggressive capital rules, rather than the gentler rules under pension credit. That strikes me as particularly harsh as a consequence of this change. I feel that this Bill is being used to change the rules on pensions, yet it is not a pension Bill, because the population most impacted on by the change in this policy will be subject to a series of government policy changes, the accumulative effect of which would be quite significant. They face an accelerated increase in the pension credit qualifying age, consequent on the state pension age changes, and the impact of that has been clearly detailed. The savings credit element of pension credit has been frozen until 2015, and now a new policy of disentitlement has been introduced, whereby a qualifying age of entitlement to pension credit will be dependent on the age of the partner. When one stands back and looks at the cumulative impact of this on these individuals, the impact of the rules on their savings and the characteristics of this demographic, one can see that this is a very harsh change of rules. Yet the Government’s own impact assessment for the Pensions Bill shows that women under 55 on low incomes, who are most likely to be the people under the qualifying age, whereas their male partners may be at it, are the hardest hit by any changes in pension credit policy because of caring responsibilities, ill health or availability of work. They are now going to be caught up in the conditionality requirements under universal credit.
Pension credit is a very effective policy for targeting pensioner poverty, which was confirmed by the recent PPI research commissioned by Age UK and launched at an event supported by the Minister, Steve Webb, who came to speak. Here we are, tampering with the rules of pension credit when it is probably the most effective mechanism that we have for immediately addressing pensioner poverty. The effect that it will have is simply to disentitle people who have previously been entitled to pension credit and put them through a discretionary work conditionality process when we know that the characteristic of this particular group should not be subjected to those kinds of policies. The amendment tabled by the noble Baroness, Lady Greengross, will allow the Government to address my concerns on this issue.
Baroness Hollis of Heigham
My Lords, may I just ask a question of the Minister in support of the amendment? As I understand it, if someone is on pension credit above the age, they pull a younger person up to their age. In future, if someone is of a younger age, they will pull someone over pension credit age back down again. How will that interact with the proposed new state single pension, which will of course embed pension credit into the pension, so that somebody over the age of 65 or 66 will get the whole lot? Could he confirm that the timing of this, which I thought was 2014-15, will be precisely when some of this is due to be implemented? Would it not therefore be wise to rethink that, in terms of those proposed changes?
Lord Freud
Yes, I can confirm to the noble Lord that that is absolutely what is happening here. Clearly, we have debated the changes in pension age. That is to do with the very welcome increase in longevity and the length of people’s healthy lives. Returning to the point, the noble Baroness’s amendment would deal with the difference between pension credit levels and universal credit levels by including an additional amount in universal credit where a claimant is over the state pension qualifying age. I understand the reasoning—and indeed there are currently pensioner premiums along these lines in income support and jobseeker’s allowance. In designing universal credit, however, we have not included any additions specifically for people over pension age. There are two main reasons for this.
First, we think that it could reduce the work incentives for the working-age partner if they are paid a higher rate of benefit simply because they have an older partner. We are already including additions for specific reasons such as caring, or limited capability for work, where people are likely to have longer durations on benefit. Clearly, we are raising some of those levels appreciably. If in a particular case these additions are not appropriate, there ought, in principle, to be as much scope for the working-age partner to work as in any other case, so it is not clear why a higher rate of benefit should be paid.
Secondly, as the noble Baronesses, Lady Drake and Lady Hollis, rightly pointed out, there is a significant programme of change under way for people over pension age. Following the Chancellor’s announcement in the Budget of 23 March, the Government published the Green Paper A State Pension for the 21st Century in April. That paper set out options for reforming the state pension system for future pensioners. In the light of the responses to the Green Paper, we are currently developing proposals for changing the state pension system and at the same time are considering how pension credit may need to change to best meet the needs of future pensioners under any reformed state pension. It would clearly be important to make sure that any arrangements for pensioners dovetail closely with universal credit to ensure a smooth interface and also to ensure that we deal fairly with couples where one person is over pension age and the other is under it. Until our thinking is further developed, we have only one side of the equation. We need both sides of the equation to consider this issue fully. I should just add that clearly once there is a migration on changing pensions the migration strategy into universal credit and the timing of how we take different groups into it will also be hugely relevant. That goes to the heart of the very perceptive question asked by the noble Baroness, Lady Hollis.
Baroness Hollis of Heigham
I am grateful for the Minister’s very full reply on that. He clearly anticipated the question coming up. When will he be in a position to tell the Committee about the two timetables? There is the universal credit timetable and people coming over to that and the new pension timetable. When will we be in a position to see? Frankly, if there is only a year or so’s difference between them, that raises a question mark about putting this extra weight on to the complexities of UC for a very short period before it is overtaken in turn by the changes to pensions, at least for the older partner in such a relationship. Can he give us some indication? I suspect that this is probably not worth doing.
Lord Freud
My Lords, I do not think I can give a precise time on this because there are quite a lot of moving parts at the moment. All I can do is assure the Committee that we really do have this issue front and centre if we have these two sets of changes. I hope I have explained how we are planning to proceed, and I ask the noble Baroness, Lady Greengross, to withdraw her amendment.
Lord McKenzie of Luton
Perhaps I may come back on a point with the Minister to make sure that I understood an answer to an earlier question. In relation to the proposed changes to capital limits for pension credit, did the noble Lord say that that would apply only—I am not sure how it would be worked out—to the housing component or that it will apply to the totality of the package?
Baroness Hollis of Heigham
While the Minister is consulting—because he spoke about the additions and so on—it would be very helpful if he could send a letter around giving worked examples of various pensioner couples, or a couple who bestride the pension credit line, indicating what the implications might be, including the cases that my noble friend mentioned. We could then see what it would be. I have no reason, obviously, to doubt the Minister’s word but it would be useful to know whether the discrepancy is £10 or £50.
Lord Freud
Yes. There are two or three issues wrapped up in that seemingly simple question around whether we got the differential pricing right when we set the contract terms up. The answer is that we do not know and we will not know. I doubt if they are completely perfect—that would be very surprising. But as we learn and get information, we will be able to adjust them. In practice, looking at the timescales of this, with the next set of contracts, which will be out in about five to seven years, you effectively have to start negotiating in four years’ time. By the time we have all the information on this, I suspect the reality is that it will not really be a question of changing existing contracts; it will go into the design of the next round. That is how it will happen in practice.
Let me now explain how much differentiation there really is, when you are looking at a regime for everyone. When you look at those who come off the system as jobseekers, half leave the benefit system within three months, and three-quarters within six months—the majority, to put it bluntly, with very little help from the state. So it would not be appropriate to offer support to all claimants early in their claim and, clearly, it would clearly be much too costly to do so. I am very comfortable in believing that those who have sat in my chair before me will be very aware of the dead weight issues of running that kind of system.
Baroness Hollis of Heigham
Does that mean that with the sharing of this insight, the Minister will therefore look more favourably at amendments trying to protect those who are temporarily caught in the housing benefit underoccupancy trap by virtue of suddenly losing a job?
Lord Freud
My Lords, I very much remember the debates we had last week. I am thinking very deeply about some of the observations made by noble Lords in this Committee, and I think that is probably as far as I should go today.
We operate in a world of finite resources, and we need to target them appropriately. Clearly, at the moment, we do not refer all claimants to the work programme until 12 months into their claim. We pull some further forward. So we need to ensure we continue to have flexibility to allocate resources in the most effective way.
The noble Lord, Lord McKenzie, asked what is happening to work-focused health-related assessments—WFHRAs. The suspension of the WFHRA allows us time to re-evaluate the assessment, particularly in the light of the new work programme, and to consider whether its operation can be improved better to support claimants or whether this support should continue to be provided in other ways. I do not propose to second-guess the outcome of that review or to place constraints on our ability to take the best course of action on that.
On training, we already have a system in place for the professional development and upskilling of advisers. This includes access to a learning framework endorsed by Edexcel, the UK’s largest qualification-awarding body, which will be updated to reflect changes in policy ahead of universal credit. We strongly believe that our advisers are up to the task of personalising requirements and support. We have some very experienced professionals in Jobcentre Plus and their decisions are supported by relevant training, tools and guidance. In a Jobcentre Plus customer survey carried out this year, 88 per cent of claimants reported that they were satisfied or very satisfied with their experience of Jobcentre Plus. The changes we are making in Jobcentre Plus are precisely intended to allow district managers and their advisory teams more freedom and autonomy rather than having to follow a tick-box, process-driven approach. It is critical that we maintain flexibility in legislation to tailor training and tools according to business need and developing strategy. For all the reasons outlined here, I urge the noble Earl to withdraw the amendment.
Baroness Hollins
What I am going to talk about is very relevant to the discussion that has just taken place. I shall speak about Amendment 51CD first, whose purpose is to require Jobcentre Plus staff who are drawing up an individual claimant commitment to specifically address whether the claimant has a long-term health condition or impairment. There is growing evidence that the current system often fails to take adequate account of specific health needs of some individual claimants. This is relevant when considering compliance with the conditions that the claimant has agreed to as part of the assessment in the claimant commitment. It is a concern both when looking at a person’s performance during the work capability assessment and with respect to their ability to attend and fully explain their condition at the assessment.
The policy intention is for staff to make reasonable and appropriate adjustments as required by the Disability Discrimination Act. I was going to give noble Lords a different example, but last night I had a phone call from an acquaintance who is autistic—a middle-aged woman, who rang up to ask my advice about something. She does this quite regularly on a Sunday evening. I thought last night, “I really don’t want to have this conversation”—but in fact it was very useful, because halfway through the conversation she said, “I’ve just had this work capability assessment, and they have said that I have to join the work-related activity group”. She does not know what I do, apart from being a psychiatrist. So I said, “That’s really interesting. What conditions have been suggested and what is happening? Did they ask your doctor for advice?”. She is autistic, she has epilepsy and at the moment she has a neurological condition which is leading her to be quite unable to move very far or fast. She does not have very much insight and she has a recurrent depression, which is really not good at the moment. I find it quite difficult to imagine what conditions one would be able to put in place. I would love to see her back in work but, knowing her as I have done for 20 years, I really wonder. She said that as far as she knew, her doctor and her psychiatrist had not been asked for their opinion, so I thought, “I need to tell the Committee about her”.
The claimant commitment really should include specific reference to a health problem and to the agreed adjustments which should be made to enable a person to meet the conditions which are set. Another example was given: if somebody had agoraphobia and was perhaps unable to travel by bus or outside their own familiar neighbourhood, that would restrict where they could reasonably be expected to seek work. Yet there is some evidence that many quite ill people are being sanctioned because they have not been able to comply with conditionality, when such needs have not been taken into account.
Understanding that particular candidates have particular needs is the first step to ensuring that the claimant commitment is workable, which is of course what we are looking for. That awareness could be built on through training Jobcentre Plus staff. Good training is clearly vital but it is not enough to rely on, so that is the reason for this amendment. Many of these people will be covered by the Disability Discrimination Act and there is a requirement for the DWP to make reasonable adjustments, but I want to make sure that the question is specifically addressed in the claimant commitment so that it cannot be overlooked. I hope that the Minister will agree that staff training is not enough but that through this amendment, the requirement to make reasonable adjustments as part of the claimant commitment would make it more likely that appropriate action would be taken locally. I suggest that addressing the responsibility to make reasonable adjustments would in fact result in improvements in treatment for a lot of claimants and should be put into law.
The purpose of Amendment 51CE is to ensure that the work-focused health-related assessment process takes into account:
“Evidence from the claimant's own”,
doctors, who will of course have much fuller knowledge than the independent assessor. The purpose of these assessments is to highlight what they can do and what useful steps they can take to get back to work. It is important that they give as accurate a picture as possible of the impact of the claimant's condition on their daily life but the assessments carried out by an independent assessor, without access to the person's medical history, often fail to pick up vital information. If the healthcare professionals do not know somebody, a 40-minute assessment really is not long enough to fully appreciate the nature of a claimant's condition, particularly if it is complex. I propose that medical evidence from the claimant’s own doctors should become a key part of any work-focused health-related assessment.
Mind has written about a client who attended a work-capability assessment and failed to score any points, but what was not taken into consideration was that the client had a serious mental health problem and had been in hospital under Section 3 for six months prior to the assessment. She knew very little about her own condition and had a long history of hospitalisation.
Baroness Hollins
Yes—she did not score any points. I would like to mention a small, recent study done by Citizens Advice and presented to the Select Committee looking into the personal independence payment proposals last week. It reviewed 37 reports. The claimants went through the report with the CAB adviser, looking mainly at the section where the healthcare professional is meant to record the claimant’s account of the impact of their impairment or health condition on their life. Sixteen of the 37 were reported to have a very substantial level of inaccuracy. The suggestion is that if information from the claimant's own healthcare professionals had been involved, the accuracy of those assessment reports would surely have been better. In another recent report commissioned by DWP, healthcare professionals working for Atos were interviewed and agreed that the provision of medical information from a claimant's own doctor is rather helpful in completing their own assessment.
Welfare Reform Bill
Baroness Hollis of Heigham Excerpts(14 years, 4 months ago)
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Baroness Hollis of Heigham
My Lords, Amendment 34A, as noble Lords will understand, is a paving amendment for the subsequent, substantive amendment, Amendment 48, so that we can have a broader discussion on housing stock before we get into talking about individual client groups. That seemed to be a sensible way of proceeding. I declare an interest as a former chair of a local authority housing committee and a current chair of the Broadland Housing Association.
For me, underoccupancy is the most important issue in the housing section of the Bill. Essentially, the Government are saying that any tenant who is not a pensioner and is underoccupying will have their benefit cut to the size of the property that they should be occupying. The English house condition survey, and the DCLG in the past, regards someone as underoccupying if they have more than one spare bedroom. Indeed, the latest Written Answer from Grant Shapps states:
“It is estimated that 423,000 households were under-occupying”,
which obviously includes pensioners.
“This estimate is a three-year average … Under-occupying households are those with at least two bedrooms more than they need according to the Bedroom Standard”.—[Official Report, Commons, 11/10/2011; col. 337W.]
The DWP, for benefit purposes, will not allow two bedrooms more or one bedroom more but requires a precise fit. This is a much tighter and even claustrophobic ruling. A later amendment, Amendment 44, which I favour, would align the DWP to the DCLG standard. As almost 80 per cent of tenants who are affected by the DWP’s proposals have only one spare bedroom, that would address the issue for most people, although of course with implications for projected savings.
This amendment, like Amendment 43, tackles the issue in a different way. It requires the social landlord, not the tenant, to take responsibility. If the landlord does not have the stock to offer, the tenant should enjoy his current home with full HB. If the landlord can offer appropriately sized stock by DWP standards, the tenant takes the HB hit if they choose not to move.
Why do I think the DWP standards of underoccupancy are too tight? Under DWP plans, a couple with two teenage daughters in a three-bedroom house will be underoccupying, and will receive benefit only for a two-bedroom flat or home. Let us remember that we are dealing with social housing that is now built well below Parker Morris space standards. Two teenage girls might be expected to share a second bedroom that is 10 feet by 8 feet. Let us visualise two single beds put against the 8-foot wall, with 2 feet between them. Fifteen year-olds are not going to sleep in bunk beds as though they are five years-old. A 3-foot wardrobe and a 3-foot wide chest of drawers are in the 3-foot by 6-foot space at the bottom of the beds. There may be a gap of 1 foot, and that is it, if you are to open the bedroom door. There is no space for a desk, a table, or a chair. Where exactly do they do their homework? Not in the galley kitchen, because they will not have one, and not in the only living room, where the parents want to eat, talk, watch TV. They cannot do their homework anywhere, so maybe they will not. City children can stay on at school of an evening or use the public library for their homework in that situation. Rural children, dependent on the school bus, can do neither. And then we are surprised at the GCSE results. As a result they cannot find a job, and I fear that there could be two generations of worklessness.
This example assumes that those four family members have moved to the two-bedroom flat as required under the new proposed changes in housing benefit. Actually, probably they will not. Most two-bedroom homes are actually three-person, not four, with a small second bedroom, and although some 12 per cent of my housing association’s three-bedroom houses are four-person houses with a double bedroom and two singles, most are five, so we have three-person accommodation, and five-person accommodation. Imposing HB caps by bedroom numbers rather than by total space size of bedrooms—that is, trying to shoehorn a four-person family into a two-bedroom, but three-person, property—will certainly take us into the realm of forced overcrowding and judicial review. Such a family will be deemed by the DWP to be underoccupying a three-bedroom five-person property, and deemed by housing law to be overcrowded in the only property they can move to, which is a two-bedroom three-person home. What would the Minister have us do?
Will the Minister say whether, if that family were in a three-bedroom but four-person house, they will receive full HB as three bedrooms or persons, or whether they would be expected to move to a two-bedroom flat even if they were three persons? If we put a family of three into a two-bedroom four-person house, would that be classified as underoccupied? I am not playing word games because, depending upon the outcome of this question, families will or will not lose more than £10 a week of their housing benefit. These are the allocation decisions that my housing association and local authority are making day in and day out.
A fortnight ago I was visiting an attractive small development of some 20 homes that we have just built. Thirteen of them were two-bedroom houses, four of them were three-bedroom and there were three bungalows. However, of those 13 two-bedroom houses, 12 were three-person. Only one was four-person. We do not have and we are not building the four-person stock that the Minister has now told us that tenants in a family of four should occupy to get their full HB. They are mostly either three-person or five-person, with the assumption that the couple get the first type and the couple with children get the other. Nationally, our situation is replicated. There is a huge shortfall of one-bedroom and two-bedroom accommodation. Relatively, there is a surplus of three-bedroom accommodation. The national federation calculated that last year 180,000 families were waiting for two-bedroom homes, and just 60,000 became available. Who do those families go to?
I can tell noble Lords about our allocation structure. First, the homes go to families in urgent housing need. Next we have pensioners—to whom the changes do not apply—in three-bedroom homes queuing up to move to more convenient and easier-to-heat two-bedroom homes. Yet we cannot always help them because we do not have the stock, and they are the people who are most likely to underoccupy. Then we have families who need to transfer from one two-bedroom property to another in order to help look after frail elderly people in a nearby village. So we have queues of people wanting two-bedroom accommodation who are willing and able to move, and we cannot meet that demand.
However, under the Bill, if there is no two-bedroom accommodation for my four-person family to move to—as there is not—they are fined with cuts of £15 a week or more. It is madness as well as a misery. We allow—indeed, we make—the pensioners who would like to downsize stay put, while requiring the family who wants to stay put to move. This possibly causes a dislocation of schools for their children and of family support. Yet the HB bill would be identical if we swapped those categories around.
To its credit, the impact analysis recognises this and agrees that there are insufficient two-bedroom properties to meet these forced moves. On page 2, it is stated:
“If all existing social sector tenants wished to move to accommodation of an appropriate size, there would be a mismatch between available accommodation and the needs of tenants”.
Quite so. Some 670,000 tenants would be affected—2,000 of them disabled—or 32 per cent of all HB claimants. Some 108,000 tenants live in an adapted property, with the average cost of adaption being £6,500; yet 78 per cent of them are underoccupying by only one bedroom, which the DCLG does not consider as underoccupying but which the DWP is proposing to consider for benefit purposes. That could be an extra small bedroom for each teenage daughter to do their homework in, for a husband or wife who is in poor health and has disturbed sleep, for the occasional overnight carer of a disabled person, or for a grandchild.
Let us return to my family of four who are obliged to move or face HB cuts. As there is a shortage of smaller accommodation, what then? How can the tenant move if there is nowhere to move to? “Oh”, states the impact analysis blithely on page 8, at paragraph 24:
“In these circumstances individuals may have to look further afield for appropriately sized accommodation or move to the private sector, otherwise they shall need to meet the shortfall through other means such as employment, using savings or by taking in a lodger”.
Employment? Do noble Lords really think that they have not so far looked for work and that a £15 fine on their HB bill will find them a job? Using savings? The average individual savings of £300 would cover the shortfall for barely five months. Taking in a lodger? If you have small children? We need to get real. Instead, if they cannot afford the HB cut, they may move, apparently, to the private rented sector, where their HB bill will of course increase because it is higher. That, of course, is if they can find a landlord to take them, given their past history of possible rent arrears, and if they can find the deposit—a month’s rent in advance—together with moving costs, curtains and carpets, which may come to £1,500 out of savings of £300. In rural Norfolk, all this takes place close to the school that the children go to. It is simply not possible. If the family moves after falling into arrears, which private landlord will accept them anyway?
The impact analysis is revealing—it sort of knows all this. It expects savings of £700 million, but this is based on the presumption that families do not move but stay put, are fined and have their HB cut. I quote page 2:
“If a significant number of tenants wished to move, this would reduce direct savings and place extra demands on social landlords”.
A couple with a child in Crawley, quoted by Shelter and Crisis, moving from three-bed social housing to a two-bed private rented flat would see their HB bill rise by £66 a week. The savings—and this is key—are based not on people moving to smaller accommodation but on their being fined for not moving because the stock is not there and for staying put. In other words, the Government are basing their savings not on people doing what the Government say they should do but on their not doing it. The Government need their public policy, for people to move home, to fail if they are to ensure that their private policy—to cut HB and make the savings off the fines for people not moving as normally required—succeeds.
I was pretty horrified when I read that. You might think that issues around underoccupation were at the very least being propelled by a huge increase in overcrowding, so that, however reluctantly, underoccupying families should move to make way for those in greater need. It is not so. On average, 5 to 6 per cent of all households in all rented sectors are overcrowded; 40 to 50 per cent are fit; 40 to 50 per cent are underoccupied, many of them containing pensioners. So the needs of the overcrowded could be met if we were able to meet the requests of pensioners and others to downsize. No force majeure is required, except that we do not have the stock to do it.
This is not about the need of other families for the house that you are underoccupying; it is about artificially capping the HB bill knowing that there is insufficient stock for tenants to move into and then pocketing the fines because they have no alternative course of action. That is not a proper way to behave. They stay put because they cannot move and arrears mount because they have run out of savings. What do the Government suggest local authorities and housing associations then do? Should they evict them? As I said, how many private landlords will take on a tenant with rent arrears? No judicial review, and there will be plenty of those, would regard them as intentionally homeless—in which circumstances the local authority would give them priority housing and back they would come again into social housing, where everybody can find a home, or go into B&B at five times the cost. But if they are not evicted, arrears mount rapidly and a housing association’s balance sheet goes into the red. It may already have tripled the amount set aside for rent arrears due to direct payments to tenants. It could now expect it to double again if it does not evict.
We have four solutions. First, we can follow Amendment 44, aligning the DWP’s definition of overcrowding with that of the DCLG and largely define the problem away. This is the solution that I prefer, but I accept that it has cost implications. Secondly, we can build and better balance the stock, but that will take years, as our building programme is being halved by DCLG. We can, thirdly, ask local authorities to use their discretionary housing payments to top up, except that my local authority ran out of money halfway through the financial year—last November, in fact—and even then had helped only a few families. The £60 million, although welcome, will go nowhere near to meeting or softening cuts of £2 billion-plus. The final option is the path of these amendments. We place the responsibility on the landlord and not the tenant. They do not say no change; they are genuinely a compromise. If the social landlord can make an offer of appropriate accommodation, the tenant will be expected to take it or take on the HB shortfall and government make their savings. But if the landlord cannot do so because the homes are simply not there, as in my housing association, then HB continues exactly as was.
We sanction people in JSA if they do not seek work, because they can and should. We use the threat of sanction to change their behaviour. What we do not do is sanction them if, after a proper job search, they cannot find a job, because no change in their behaviour can change the economy and job vacancy rates. We sanction them according to what we can reasonably expect them to do and how they change their behaviour. This is about job searching, not a lack of job success.
Similarly, it may be reasonable to sanction by HB cuts someone who is grossly underoccupying a house that a much larger family desperately needs and who could change their behaviour by downsizing. We could debate that, but to sanction families for not moving when they cannot change their behaviour and cannot move because of the housing stock is not a sanction but a punishment of people who not only have committed no offence but who can do nothing to avoid the sanction by changing their behaviour. That is wrong. We should not fine some of the poorest people in the country who have been set up to fail. It is not their fault, and it is not decent, and I really hope that the Minister, who I am sure will share these worries, can indicate that he accepts the principle of the compromise of this or some subsequent amendment. We would all be happy to discuss further with him how this might be done. I beg to move.
Lord McAvoy
My Lords, I want to put a couple of points to the Minister on a particular aspect of the availability of suitable accommodation. I will describe the city of Glasgow because it is the biggest city I know. I stay adjacent to it and I know quite a bit about the different types of housing there. Some is council accommodation. My noble friend Lady Hollis of Heigham has indicated that size is important and that people can be in a small room that is classed as a room. Glasgow has what are called three-stairs-up tenements, which are usually in red or grey sandstone tenement blocks. The rooms are smaller in the likes of Dennistoun, Townhead and some older parts of the city centre, but massive in the likes of Shawlands, King’s Park and Langside. If someone was “forced” to move from a small two-bedroom flat in Dennistoun to King’s Park or Shawlands, they would be dancing up the stairs, because it would be a vast improvement on the living space that they had had. They would soon get a sofa bed in the living room.
I am leading up to the fact that this is a very difficult situation and I really do not know how this can be done. Has any assessment been made to address the main thrust of my noble friend’s amendment, which deals with the fact that the size of rooms is just as important as the number of rooms? As I say, it would baffle me, but there are highly paid people working for the Government who should at least be able to test this. My question is therefore: has some consideration been given to assessing the size of rooms compared with the number of rooms in individual cases?
Lord German
I think if the noble Lord would wait a few moments, he will see what I am proposing. It is on this piece of card, which I can pass to him, but if he just bears with me, I will give him three things which I think are essential in order to make this section of the Bill work. That is why I am posing the questions, because it seems to me that the solutions are not given in any of the documents.
The document from the DWP about what these choices will be and the three questions that people will have to answer says:
“it is unclear how this”—
the policy—
“will affect the choices of claimants that are likely to be affected by the measure”.
In other words, the Government do not know; or do they? If they do know, we need to ensure that we have those figures in front of us. If we are to avoid unintended consequences, we are going to have to look at the levers that ensure that the housing stock is accurate, and if the housing stock can, over time, match the needs of this particular policy.
As we know, there are 670,000 claimants, presumably of working age, which means that a third of a million non-working age claimants are underoccupying—the noble Lords, Lord Stoneham and Lord Wigley, have talked about elderly people underoccupying. Maybe there is an answer to that which the Minister and the Government have already thought about. There are no figures that I have seen in any of the documentation that indicate how we are going to manage to create a housing stock to match the changes. First, we need to know how many of the 670,000 are going to move and the modelling figure behind it. Until we have the answer to that, we cannot answer the question about how many houses we are going to need.
Baroness Hollis of Heigham
The Government’s own impact assessment says:
“Estimates of Housing Benefit savings are based upon the current profile of tenants in the social rented sector, with little tenant mobility assumed”.
Lord German
I am grateful for that quotation, which of course goes against the other one that I gave from further on in the document, which says that we do not know what claimants’ choices are likely to be. The noble Baroness’s quotation has the word “little” in it. We have often reached the point where we have quoted from different sections of the same document, and that is why we need answers. We need to know which of the three choices people are going to make so that we can determine whether the homes are available for them. There are three solutions, which I put to the Minister and which we need answers about, at the very least after his answer to the fundamental question of whether we have the housing stock.
I ask the Minister, when replying, to talk not about the DCLG but about the three government departments that are responsible for these matters in this country, because three levers have to be pulled for the DWP to be able to answer that single question. What is the solution? I would like to know what the three government departments feel about how they can match housing demand. I must say that I am not particularly encouraged because, for many of us, moving house is probably the worst thing in the world that you could probably do. In fact, my noble friend Lord Kirkwood told me this morning that we ought to exchange our rubbish with our neighbour’s because our neighbour’s rubbish is much more interesting than our own. I have found moving house to be a very uncomfortable exercise, and I am sure we have to be careful of this. The Government say that they are working in England to develop a team of advisers who will work to help people to make better use of our housing stock, which is a laudable aim, but they also say that they will work with the devolved Administrations to see what can be done in Scotland and Wales. What can be done about the housing stock across the whole of the country where this policy impacts?
It seems to me that there are three potential solutions when we have the answers to the figures, one of which is that we must have housing money—discretionary housing money, or whatever—to ensure that the money reaches the particular groups that will need it in order to be able to make the adjustment. The second is about exceptions. We will come to that in the next set of amendments, but where the cost to the public purse can be demonstrated to be larger—and many of the amendments coming up now will demonstrate that—we must ensure that we have exceptions. The final point that has been made by many noble Lords here today is that we must have transition time for the social housing sector in all three parts of the country where this Bill applies to make the changes in order that this policy works. We cannot achieve the original purposes of these measures, all of which I think are right, without achieving those three things and without ensuring that we have a sector that can—
Baroness Hollis of Heigham
Does that mean, therefore, that the noble Lord supports the DWP definition of underoccupancy in which there can be, except for special groups, no spare bedroom, as opposed to the DCLG one, which I outlined, which allowed at least one bedroom more—and in the latest Parliamentary Answer from Grant Shapps is two bedrooms more? Is that what the noble Lord was saying? We need to be clear where he is coming from on this.
Lord German
I cannot answer that question until such time as we have the answer to what our housing stock is, how many are going to move, and for those who are going to move whether there is available housing for them. That was the answer to the question, and the one I will give if the noble Baroness asks me again.
Baroness Hollis of Heigham
This is an “in principle” question: what definition of overcrowding or underoccupying is the noble Lord assuming such that the transitional arrangements must seek to meet and adapt to?
Lord German
I will repeat the answer that I gave the noble Baroness just now.
Lord Freud
My Lords, the size criteria measure marks a significant change in our approach to housing benefit for claimants living in the social rented sector. The current housing benefit system is not fair; it is not right that families on benefit in the private rented sector have been able to live in homes that most working families could not afford, and we have already begun to tackle that unfairness through changes to the local housing allowance. It is also not fair that, in the social rented sector, housing benefit pays out the full rent on properties that are larger than required by those who live in them, while at the same time over 250,000 households in England are overcrowded.
To pick up one of the many points made by the noble Baroness, Lady Hollis, on the bedroom standard, that standard actually expects children aged over 16 to share a room with children of the same gender until they are 21. That is a rather tougher requirement than that of the DWP and the LHA, which allows separate bedrooms for a child of the same gender, aged 16 and over.
Baroness Hollis of Heigham
My Lords, that was why I specified a 15 year-old in my illustration of bedroom size.
Lord Freud
I shall continue. By 2014-15, the annual savings achieved as a result of housing benefit reform as a whole will exceed £2 billion. It is right that the social rented sector plays its part in achieving those savings. The size criteria measure itself will achieve around £0.5 billion of savings each year from 2013-14.
On the point made by the noble Lord, Lord McAvoy, about room size—the example that he used was his nearby city of Glasgow and its tenements—the size of rooms is something that we are looking at with stakeholders as part of the implementation planning. That concern is shared by the noble Baroness, Lady Hollis. It is an issue that we are looking at.
Baroness Hollis of Heigham
My Lords, first, I thank warmly all those who have taken part; it has been a helpful as well as a highly focused debate on the issue of underoccupancy and leads us usefully into some of the other debates that we are to face.
I do not think that the Minister addressed the issues raised in full. My noble friend Lady Turner talked not just about the difference between stock and a home but about the need for local support, and so on, as you get older, and the fact that we may cut all the connections which the big society and localism are urging us to strengthen. We did not have a full reply to that. The noble Baronesses, Lady Thomas and Lady Wilkins, talked about the cost of adaptions to spare bedrooms. We will come to greater detail on that when we discuss disability issues. About two-thirds of those who are regarded as underoccupying by DWP criteria have a degree of disability. It will be difficult to decide where we draw the line.
Then there was the issue of the difference in localities. The noble Lord, Lord Wigley, and my noble friend Lord Foulkes, as well as my noble friend Lady Hayter, in a powerful speech about Lambeth, showed that in each of these cases the stock was not there to deliver what the Minister seeks. I attempted to throw in some evidence from rural Norfolk. The division was between those of us who regard the definition of underoccupying that DWP proposes to adopt as targeting intrinsically—an opinion that I share—and those of us who say that if it is too tight, none the less the transitional arrangements are not sufficiently generous to make it possible even to move in that direction.
Members of the coalition Government have raised the issue that we need discretionary money. There is not enough of it, as I am sure that the noble Lord, Lord German, will be aware. My local authority ran out half way through the year, and it was helping only a couple of dozen families. The noble Lord asked about exceptions, but we will have definitional problems there. He asked for transition time for stock balancing and made the point about bungalows, which is absolutely right. That will take a decade or more to achieve. On the point about unacceptable process made by the noble Lord, Lord Kirkwood, and the need for a safe transition process, frankly we will have had a further two social security Bills—as I would like to call them—in the intervening stage before we can address that.
I found the Minister’s answer deeply disappointing. The two words that he was using were “fair” and “choice”. I think he said that it was not fair that social tenants should have a spare bedroom when other people might not be able to afford such; that there should be better use of accommodation for families who are overcrowded; and that it was right that the social sector should continue to contribute £0.5 billion or so to the proposed expenditure cuts of £2 billion to housing benefit. As for better use, only about 5 per cent of housing benefit tenants are overcrowded. If we had the stock available to meet the requests of those who wish to move, we could probably meet that overcrowding today. As for the Minister’s point about home swap, frankly, under different labels, we have been doing that for decades. There is nothing new there, but I welcome the fact that the Minister is looking at room size.
The key question is why the DWP is not accepting what I understand to be the DCLG definition. That means that on 2 April 2013, there will be a family in Norwich in bed-and-breakfast accommodation who have been lingering there for a couple of weeks, to the distress of the children, but technically they require two-bed accommodation if they are not immediately to find that their HB does not meet their rent. The local authority and the housing association, because we jointly have a choice-based letting system, only has three-bedroom houses available. Will the Minister tell me what we do? Do I say to that family that they must stay in an B&B for yet another fortnight or another three weeks until possibly the perfect fit of a two-bedroom property comes up in a place near where their children have started going to school, or do I say they can move into a three-bedroom house but that they have to take the hit? The local authority may help them with the first month or so, but after that they are on the own and will have arrears, and they may go back into the recycling of bed and breakfast accommodation.
As someone who is intimately involved in this, I am afraid I know that that is what we will be facing on day two or day three after 1 April 2013, and the Minister must tell us what we say to that family: move into accommodation that is notionally too large, not by DCLG standards but by housing benefits standards, and pay the price, or stay put in bed and breakfast accommodation, with everything that we know happens to children in that situation and how damaging and stressful it is for the family concerned. The noble Lord emphasised that there are choices in what people can afford—there is no choice. His concept of fairness seems to run like this—I think this is how the syllogism worked. We start with a definition that is tight, in my view too tight, which requires 670,000 families to move, two-thirds of them with a degree of disability. Yet knowing that, we do not have the property, and we do not expect the tenants to move because they cannot. They have no choice. We then, thirdly, go on to fine them for something they can do nothing about.
I do not believe in my wildest moments that the Minister would regard that as fair. It is not fair. We all know it is not fair. A transition arrangement would be fine if it is going to be long enough, but that takes time to adjust the stock, but it is not fair to punish people for something over which they have no power to change and in which they have no choice. I am hoping the Minister will rethink this because many of us feel very strongly indeed. There are various aspects of it that I perfectly well understand, such as the need to try to cap HB expenditure. We will come back to why that is happening, but it is certainly not because of this. It is happening, as the latest reports from the chartered institute and the property federation show, because of the increase from 49 per cent to 52 per cent of the case load in the local housing allowance in the south of England, which is more expensive with a higher number of claimants. It is nothing to do with this at all. I hope the Minister will run that when we come to that debate.
Does he suggest that it is fair to punish tenants for something over which they have no choice, in a way that is antithetical in every other aspect of social security legislation of which I am aware? We sanction when people could and should change their behaviour. If they cannot, we do not; full stop. Yet with this the Minister breaches that profound principle to benefit policy in this country, and I deeply hope, because I know he is a decent man and I believe he genuinely holds to concepts of fairness here, that he will think again and hopefully be able to change his mind before we come back to this on Report. I beg leave to withdraw the amendment.
Lord Best
I am glad to start with that affirmation in advance. I am speaking to Amendments 38, 39, 40, 42, 43, 44, 79, 80, 81, 82, 83 and 84. This group of amendments relates back to the underoccupation penalty, about which we have heard so much.
I was deeply impressed by the array of speeches from the noble Baronesses, Lady Hollis, Lady Turner, Lady Lister, Lady Sherlock and Lady Hayter—the opposition Baronesses. I wondered what the plural was and I thought of it by the end: it is “a battery of Baronesses”. I thought that I might feel annoyed that they had stolen all my speech in various instalments, but I did not. Instead, I felt admiration and was in entire agreement with what they said.
My amendments in this group include two, Amendments 44 and 84, which relate to the fundamental point here: the definition of an underoccupied home, one in which people will either pay a penalty, have to move or make some other arrangements. The amendments suggest that we should stay with the standard that we have used in the past; that is, the standard used by the Department for Communities and Local Government and the Tenant Services Authority. This allows you the basic bedroom standard plus one bedroom. The amendments call for that status quo to be resumed. I have been involved in housing matters for some 42 years. During that time, we have grappled a lot with issues around underoccupancy in managing property that I have been responsible for and trying to incentivise people to move when that has been sensible. I do not think that it is possible to insist on the basic bedroom standard and expect people to live in the homes that they would then be required to live in. That is not how we occupy our properties in this country; 83.9 per cent of owner-occupiers fail this test straightaway. Most other people, in these terms, underoccupy the homes that they live in. Indeed, we build accommodation on the basis that you are going to underoccupy it. The housebuilding industry knows that people like to be able to tell their parents that they have bought a three-bedroom house. It is actually a two-bedroom house with a box room added. We do not expect people to occupy all those rooms in the real world of owner-occupation, and people move when they fill them up. I cannot believe that social housing tenants’ lives are so different that they will be able to cope with the basic bedroom standard.
The noble Baroness, Lady Hollis, gave some illustrations. The example that I might well have quoted was read out by the noble Baroness, Lady Lister—I received the same, very impressive e-mail about a family with two daughters. I give my own example. Let us try not to pull the heart strings. It is just an ordinary case of a family where there are two girls, of 14 and nine, who are not at the moment sharing—thank goodness, because the teenage girl of 14 does not want to share with her nine year-old sister. People have lives to lead as well as homework to do; they want to invite their friend in and listen to music or whatever they want to do. The 14 year-old does not want to share with a nine year-old who goes to bed at a completely different time. Theoretically, they have to move out. They will move down from a three-bedroom to a two-bedroom home. However, it will not take long before the 15 year-old is 16 and can get a room of her own. They can then move back again—of course, the former home will not be available. It will not be long, though, before that older girl leaves home, and then the family will have to move out again. This is ridiculous—people moving around to try to fit in with the rules.
Let us face it: the impact assessment makes it quite clear that it is about saving money. Reducing the cost of housing benefit is of course a very important objective, but the great majority of ordinary people, even those who do not have small children or children of the wrong sex who will not be able to be fitted together in the right boxes, need an extra room. Their children come back—does no one realise that they have not gone for ever? Sometimes, their coming back saves other people a lot of money because the parents will put them up and look after them during some period of crisis in their lives—marriages break down; all kinds of things happen. Indeed, you in your older age or even in your middle age may get sick and need a member of the family to come back and occupy the spare room and a keep an eye on you for a bit. To have that one spare room available, even when you do not have children to put in it, is the way that the rest of us live, and it has to work for social housing—I have never found a way of persuading people otherwise. This measure is a way, I fear, of raising money. It is a fundraiser, because almost nobody in these circumstances will move. They will just have to pay—or forgo, as it is—£13 a week, which is a serious amount of money for people on very low incomes. It begins to tot up.
The consequences of that will be shared. They will be felt by the individuals, who try to cut their living standards at a time when fuel bills and everything else are rising. It will be felt also by the landlords, because it will be extremely difficult to collect the money which has not been received by way of housing benefit. That means that arrears will begin to accumulate.
At first, landlords will be tolerant and helpful and try to see this through, but eventually—and I have been responsible for social housing—you get to the point where, pour encourager les autres, you have to proceed with eviction. After a while, arrears become too much. If they cannot be paid, people are going to have to be moved out, and then you get all the cost of that.
I cannot believe that people are going to move. It costs a great deal to move. Your carpets will not fit the place to which you are moving; your curtains will not fit. You have to pay disconnection charges for your electricity suppliers, and so on. People are not going to keep moving; they are just going to be stuck there and have to pay up, or forgo the money. I do not think that it is fair. The rest of us do not feel, for a moment, that that is how we would expect to live. I do not think that people, just because they are in social housing, should be expected to.
The amendment says that if you have two rooms which, using the basic bedroom standard, would be regarded as unoccupied—they would probably be a study or whatever—you would pay the penalty, but you would not do so for one bedroom, using this very tight definition. That is the effect of Amendments 44 and 84.
Is there a solution to the problems of underoccupancy? I am not going to burden you with a long speech on this, but underoccupancy is mostly about people over pension age. They are specifically excluded from this measure. However, they are the ones who are actually underoccupying, often in a three-bedroom home, and who—if only we could find the incentives and the ways of moving people—could be moved on, and families could take those homes.
I declare my interests: I chair a housing association called Hanover. Hanover has 19,000 properties, but they are all retirement properties. We concentrate exclusively on older people.
Our target is the underoccupying elderly person, whose home, even though they feel quite reluctant to move, is not suitable any more. If it has three bedrooms, stairs, a garden that needs to be kept up and heating bills that are higher than they should be, it is a great idea if we can move people out of those three-bedroom houses. They are desperately needed by families. Housebuilders have tended to build just flats, and not houses with gardens, so these are really valuable to the rest of society. The incentives to move are what we need.
We have shown in my housing association—others have done just as well—that if you provide something that is really good, then people will move. They are not going to go to scruffy old bedsits in sheltered housing that has seen much better days. But they will go if it is to somewhere manageable, clean, bright, open and companionable.
Lord Best
Well, preferably a bungalow, but mostly we just do flats, but they can be smart apartments. Yes, you could move.
There are some 240,000 families who are overcrowded. We have far more elderly people who are underoccupying than that. We could give incentives to older people, the incentive being the really nice apartment elsewhere. It gives you two-for-one, because you release your family home. This is not the approach being taken in this legislation.
If we are going to have to reconcile ourselves to there being this penalty, then the other amendments in this group come into play, which are about exemptions, exceptions and letting some people off. I hope it does not come to this, but if it does, a series of exemptions is outlined in the amendments that follow.
Amendments 38 and 79 would remove the underoccupation penalty for the 100,000 properties that have been specially adapted to meet the needs of a disabled tenant—we have heard a little about that already. It would be daft to move a household with a disabled family member to smaller premises if the costs of fitting out the new home—for example, with a level-access shower or removal of steps—far exceeded the savings from cutting the housing benefit and left wasted adaptations behind because no other household needed the particular adaptations made to the previous home.
Similarly, Amendments 39 and 80 would exempt the 200,000 households in receipt of disability living allowance, or the new personal independence payment, in the same way that DLA recipients have been excluded from the proposed total housing benefit cap. Some extra space for those with disabilities can even save money when that allows a carer to move in during a difficult period for the disabled person, saving the cost of hospital or residential care. Amendments 40 and 81, which are supported by the Fostering Network and Barnardo’s, as well as the housing charities, which are behind all the amendments, would exempt properties where families are providing foster care placements.
I am sure that it is simply a fault of the drafting, but, at present, the Bill would not count foster children as part of the household. Therefore, any rooms they occupy would be classified as unoccupied. That is clearly nonsense, and I am sure that the Minister will explain how that will be put right in future.
Baroness Hollis of Heigham
Am I right in believing that, to become a foster carer, you must have a spare bedroom? If you have a spare bedroom, you are hurt and hit by the HB rules.
Lord Best
I fear that that is exactly the position. Others may wish to come in on the amendment about foster parents.
Amendments 43 and 83 would not require an underoccupying tenant to move out where there was simply nowhere for them to downsize to—the fundamental point behind the amendment of the noble Baroness, Lady Hollis. For example, the National Housing Federation has demonstrated that about 180,000 social housing tenants would be classified as underoccupying their two-bedroom homes and would need to move on, but that only about 68,000 one-bedroom social housing flats come available for letting in a year. Even if every one of the one-bedroom flats was allocated to those who are downsizing—which of course would be impossible as there are serious demands from tens of thousands of other such households—it would take years before they could be accommodated.
In the past, we built social housing between the world wars and afterwards. Mostly, we built three-bedroom housing. Now we have a lot of households that require something smaller, but we do not have enough houses to put them in. Here, again, the impossibility of people moving means that the exemption would kick in. If they were expected to downsize into less secure private rented properties, rents are likely to be much higher and therefore the benefit costs, the universal credit costs, would be much higher—about £66 per week more in south-east England. That is not a great saving. The housing benefit bill would be likely to rise dramatically although people were occupying less space.
Moving creates the familiar barrier to employment. Moving to somewhere with a higher rent itself intensifies demand on the private rented sector, which will push up rents more generally.
Of the amendments, my preferred option is to define underoccupying as exceeding the bedroom standard plus one—that is, having two “spare” bedrooms. That would cut the gains to the Government from the underoccupation penalty to 150,000 households from the 670,000 that the Government are expecting to be caught by the new penalty.
If the Government cannot accept that, I hope that, alongside the exclusion for older people—the category most likely to be underoccupying at the moment— exemptions could be put in place for disabled people in adapted property, recipients of disability allowance, families classified as underoccupying because foster children are not counted, those unable to move because no suitable alternative exists, and those in supported or sheltered housing where a spouse or partner dies or leaves them and who are below pensionable age and would be compelled to move out. Added together, those exemptions would certainly reduce the hardship and extra costs implicit in the underoccupation penalty. I look forward to hearing comments from other noble Lords and the reaction of the Minister.
Baroness Hollis of Heigham
My Lords, perhaps I may press the Minister on that key point. He has quoted a figure of £500 million for HB savings. The impact analysis that I think most of us were working off gave a figure of £700 million. If that figure is correct—it may have been overtaken by further refinement from the DWP—it would mean that, for less than half the cost of the savings, he would take some 80 per cent of those worst affected out of the equation. That seems to be very good value.
Lord Freud
My Lords, without us rambling through the papers, I think that the figure is £500 million, of which £300 million is a very substantial proportion.
Lord Freud
My Lords, perhaps I may conclude on the point raised by the noble Baroness, Lady Hollis. The confusion is between the £0.5 billion that we start to save annually in 2013-14 and the £770 million figure that she quoted from the impact assessment. It represents two years of savings on a GB basis, which is appropriately discounted and deflated.
Baroness Hollis of Heigham
My Lords, it is nice of the Minister to give us those figures, but is his £300 million the amount set off against the £500 million, or is it set off against the £770 million?
Lord Freud
No, it is £300 million set against £500 million—so 60 per cent.
I have already talked about the behavioural responses. I move to the point raised by the noble Lord, Lord Rix, about the number of bedrooms, the size of the rooms and box rooms. Again, we discussed that issue briefly in the previous set of amendments when the noble Lord, Lord Foulkes, raised the window tax. It is the social landlord’s responsibility to specify the number of bedrooms in a property but, as I said, we are looking at this, including the size of the bedrooms, to explore whether it is an issue.
Amendment 35 of the noble Lord, Lord Rix, relates to support for mortgage interest payments and is connected with Schedule 4, concerning the payment of housing costs for pensioners. I understand only too well why noble Lords are seeking reassurance that assistance with eligible mortgage interest costs will continue to be provided for homeowners, including those with long-term disabilities. In fact, I met only yesterday representatives from Mencap to discuss these matters.
Approximately 430 claimants have purchased their properties through the shared ownership scheme known as HOLD—rather less than the 1,000 figure that has more generally been quoted. The Government want disabled people to continue to access suitably adapted homes, whether through a mortgage or housing benefit. The Homes and Communities Agency continues to support the provision of shared-ownership homes where this is a local priority, including shared-ownership homes under HOLD. The agency is holding ongoing discussions with lenders on the provision of mortgages for HOLD. Support for mortgage interest is intended to provide a reasonable level of help for homeowners but has never been intended to cover all of a person’s housing liabilities. As noble Lords can see from the draft regulations, help will continue for homeowners. So I see no need to set out in the Bill specific reference to mortgage interest payments. We propose to continue using the same standard mortgage interest rate for all claimants. As to Schedule 4, a housing credit element with broadly the same rules as housing benefit will be introduced into pension credit to ensure that low-income pensioners continue to receive help with their rent.
Regarding the point raised by the noble Lord, Lord Best, on providing incentives for pensioners to move, our approach to this issue will, over the long term, help to ensure that people are in suitably sized accommodation before they become pensioners. Our expectation is that the proportion of pensioners needing to downsize will in future be lower than it is now. As several noble Lords mentioned, the Localism Bill includes measures specifically aimed at helping pensioners to downsize and will help to increase mobility in the social rented sector for this group.
Baroness Hollis of Heigham
Could the Minister at some point, not necessarily today but in due course, set out the stats on the number of pensioners underoccupying and what his projection is of the time it will take for numbers to diminish?
Lord Freud
I would be happy to circulate the information to noble Lords.
On the social sector size criteria measure that we are introducing through Clause 68, we will use the time before its introduction in April 2013, as we are already doing, to explore fully the implications for claimants and landlords. We acknowledge that the impact will not be the same across all regions; we will work with stakeholders to look at those variations as we move towards implementation.
Let me repeat: I value these debates and hope that they continue on a constructive level as we move forward.
Lord Freud
My Lords, I said earlier that we are working on the detailed implementation of this. It would be premature to make judgments on that. We need to develop strategies to ensure that those problems do not arise.
Baroness Hollis of Heigham
In that case, can I ask the Minister to amplify his stats for us when he writes to us next? He has talked several times, over the few Committee days we have had, about a £60 million discretionary housing fund, and how it is going up threefold, and so on. I am not keeping a tight list, but I think we have now overspent that by approximately five times. Could he tell us—given that there are some 400 local authorities—even on a per capita basis, how it works out? On average an authority can only help 700 families, out of—for instance, in the Norwich situation—some 20,000-odd families that are in rented accommodation.
I believe that those people affected, who will not readily afford it, are probably more like 7,000 rather than 700. Could the Minister give us the assumptions, or the stats, behind that £60 million figure as to what this would mean in a typical local authority, per 1,000 rented homes, for a period of, say, six months, or what percentage of those families you could typically expect to support? So that, per 1,000, that £60 million would extend to 20 families for six months, or 50 families for six months. Then we can get some idea of how that money connects to all the various issues for which this will, apparently, be the solution.
Lord Freud
Yes. I always prefer to answer rather than write, but I think I will on this occasion go to paper. It may be that the noble Baroness prefers paper.
Housing Benefit (Amendment) Regulations 2011
Baroness Hollis of Heigham Excerpts(14 years, 4 months ago)
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Lord Freud
I muttered it. The letter was very moving and was about a particular individual.
Clearly, people on the autistic spectrum who are receiving severe disability premium are exempt from this measure. But not everyone, as my noble friend pointed out, is categorised as severely disabled. The question is: how does one best get support? Our basic view is that the local authorities are best placed to identify this group. Indeed, they have a duty to identify this group, unlike other groups. It is our view that discretionary housing payments to that group are the way to go. Clearly, it would be hugely in the interests of local authorities to make sure that happened because, as my noble friend pointed out, the ongoing costs of getting this wrong in particular cases are much larger than the DHP support. So there is a real incentive for local authorities to get this right.
Baroness Hollis of Heigham
I apologise for not speaking in the debate. I did not do so deliberately, because I thought that we would go through a lot of these issues tomorrow, and it would be more sensible to wait until I had heard some of the arguments addressed. One quick point for the Minister is that, by the time that we have counted up the number of referrals to the local housing allowance of £60 million, I suspect that it will have been overspent by fivefold, but we will see.
The Minister made the point in response to the noble Lord, Lord Kirkwood, that a lot of people between the ages of 25 and 35 choose to share accommodation, which I entirely accept, and it is not right that people who are not in work should have separate accommodation when people in work cannot afford that. To my mind, the key question that has not been identified is how large that shared accommodation is. Clearly, it is reasonable for two people who are not connected to each other in an emotional or sexual partnership to share a two-bedroom flat, but the Minister seemed to be suggesting earlier that single people in a one-bedroom flat, rather than going down to shared accommodation, could take someone in and thereby go into shared accommodation. Can he help us with the statistics on how many instances there are of two people who are not sexually connected who share a one-bedroom flat, which is the obvious analogy, rather than a two-bedroom flat where they have separate accommodation within that flat?
Lord Freud
My Lords, I do not have that precise information to hand, but if I can find it I will make it available and write to the noble Baroness. I can say that, in 60 per cent of cases, two people claiming the shared accommodation rate would be more than the two-bedroom accommodation rate. There are many areas where sharing gets the group of people more money than if they formally join up as a couple and go for the same accommodation.
Baroness Hollis of Heigham
Sorry, is the noble Lord saying that someone who is in single-bedroom accommodation and now finds that they are subject to SAR because they are 33, should, instead of going down to a shared room, actually seek a larger two-person two-bedroom flat with another person, thus possibly increasing the HB bill?
Lord Freud
There will be quite a lot of flexing around, and people do accommodate to systems. According to the figures that I have, regarding shared rates, in 60 per cent of localities the two-bedroom LHA rate is less than twice the shared rate. In 90 per cent of localities the shared rate would cover the relevant share of the three or four-bedroom rate. The point is that, when you are looking at pressure on the market, which noble Lords and the SSAC have been concerned about, fundamentally we are taking pressure off the market by looking for more sharing. Clearly, there are local adjustments but, as I have said, this has proven to be a very flexible market in the past, and we have no reason to expect it not to continue to be.
The question raised by my noble friend Lord Stoneham about the shortfalls in London—the difference between the one-bedroom rate and the shared accommodation rate—reflects the generally higher rents in London. The ability of those not on benefits to live in self-contained accommodation in these areas is also very limited, and many, therefore, already choose to share. Indeed, as my noble friend Lady Thomas pointed out, it is for exactly that reason that such decisions have been taken for very many years in London. I think I can join her in that experience.
It has been suggested that the Government are doing little to encourage the development of houses in multiple occupation. Landlords make commercial decisions about whether to provide such accommodation, and government’s influence on those decisions is limited. We do, however, have a role in setting the planning framework and licensing requirements. Communities and Local Government Ministers have considered whether the licensing regime, which places added burdens on landlords to comply with various health and safety measures, should be relaxed. However, with more people likely to require this kind of accommodation, they do not think it appropriate to remove or reduce this protection.
We also have the rent-a-room scheme, which is an income tax relief introduced in 1992 intended to boost the private rented sector. It encourages individuals to offer spare accommodation in their own homes at affordable rents to low-income groups. Homeowners and tenants who let furnished accommodation in their own homes are exempt from income tax on rental income of up to £4,250 a year.
As I said earlier, it is too soon to know how claimants might react to these changes. Those who will be affected by this change will have to consider their alternatives and make decisions about where and how they live. Some may decide to share with others, move back or stay with their family, or they may manage to find employment that allows them to stay in self-contained accommodation. These are the decisions that people in lower-paid work but not on benefits have to make, and those on benefit should not be sheltered by the state from this sort of responsibility. Picking up the point made by the noble Lord, Lord McAvoy, on work incentives, there is clearly no incentive to work if someone is in a property that is unaffordable for those who are in work. We have at the same time the issue of fairness if someone who is not on benefits is unable to afford a house that someone on benefits can afford.
Welfare Reform Bill
Baroness Hollis of Heigham Excerpts(14 years, 4 months ago)
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Baroness Hollis of Heigham
My Lords, I wonder whether the noble Lord can help me with some stats. It was interesting that in his reply he told us that the current percentage of people who have savings above £16,000 is 13 per cent. However, when you start netting the figure and taking into account the notional income derived from that tariff, and given that something like 85 per cent of people on JSA expect to get back to work within nine months to a year, what does he think the real savings, or loss of savings, would be were he in a broader sense to accept that, with the integration of the two benefits, one should go for the tax credit system rather than the JSA system? Can he help us on that? In the light of that, we can perhaps press him further, but what real savings is he expecting to generate, given that most people who come on to JSA will be back in work within the year? In their first six months their benefit is contributory, so they are not affected and they will go back to work very quickly within the next six months. Therefore, if they have those savings and you say that because they are over £16,000 they will get not a penny of JSA, in real terms what net savings do you expect to garner? I would like to press the Minister on a further point, if I may.
Lord Freud
My Lords, I have to confess to the noble Baroness that I do not have my hands on that particular figure. I am not sure that I can find it out. We have other figures around the costs, but I am not convinced that I have that particular figure readily to hand. Can I leave it that I will try to find it out and supply it in the fullness of time?
Baroness Hollis of Heigham
My Lords, I do not want “the fullness of time”; I want very soon, just as with childcare—the day after, if the Minister would be so kind. This is the key figure. The key stat is the real net cost of going for the more generous alignment with tax credits rather than bringing people down to the harsher alignment with JSA. That is the pivotal figure. I am surprised that this has not been brought into play in the Minister’s response. People coming out of work on to JSA are desperate to get back into work. Anything we do to make it difficult for them to get back into work is counterproductive. Anything that runs down their savings and that they are worried about, or anything that risks them when they go from work to benefit as opposed to from benefit to work is surely to be deplored. I suggest to the Minister that this is very unwise social policy.
Lord Freud
My Lords, I withdraw my previous reluctance to provide a figure. In much less time than I thought, I am now in a position to let noble Lords know that if we removed the cap limit entirely, the cost would be £500 million per annum.
Baroness Hollis of Heigham
Forgive me, but that is the net cost. If you removed the cap entirely and instead took into account notional income from those savings, given the stat of 13 per cent being over £16,000, as the noble Lord said, as well as people being in a range of between £6,000 and £16,000, and taking into account that they will have their benefit cut by virtue of their notional income, I take it that the £500 million includes that figure. It seems unlikely on the face of it, but it may well be the case. I suspect that it is a gross figure, not a net figure. I could be wrong, but we need to know the cost in effect of substituting one system over the other, not simply the cost of not having any savings rules at all.
Lord Freud
My Lords, I can clarify. That is a gross figure. Behavioural changes, clearly—
The Deputy Chairman of Committees
My Lords, I hesitate to interrupt but noble Lords will see that there is a Division in the Chamber, so the Committee will adjourn now and resume in 10 minutes.
Lord Freud
My Lords, I will complete my response to the questions. If we were to take a £50,000 limit with the tariff rules—in other words, starting at £6,000 and moving up on the tariff rules from £1 for every £250—the cost would be £90 million; so if we were to take the cap off completely, it would be a little, but probably not a lot, more. The £16,000 cap that we propose will affect 200,000 people in total. However, currently only 100,000 are on tax credits. That is the universe that we are talking about. I point out the political choices that we are making. We are designing universal credit to be for the poorest people and putting constraints higher up the income scale. That is entirely deliberate.
Baroness Hollis of Heigham
I am grateful to the Minister for giving us the figures. Perhaps he could make it clear that embedded in them is the scatter of JSA claimants who will return to work at different intervals. The first six months will be contributory. Thereafter, most of those coming on to JSA for the first time in that year will be back to work within three months or so on average after their contributory benefit has ended. Has the distributional factor of how long people stay on JSA been taken into account? I am talking not about existing JSA claimants but new claimants. What will the implications be?
Lord Freud
Yes, my Lords, a careful assessment has been done of how it will work in practice, which incorporates those kinds of effects.
Baroness Campbell of Surbiton
My Lords, I would like briefly to support this amendment by reminding Members of what happened when there was an assault on savings of disabled people who are reliant on social care. Over the past 10 years, one who is in receipt of social care support has significantly not been able to retain savings above and beyond £14,000. The consequence is that these people have not been able to develop their careers, buy a house, buy a car, save for a family and feel an equal member of society to a non-disabled member. I think we sometimes forget how the inability to save beyond £14,000 can erode one’s sense of self and of equality. I therefore support this amendment; I think it is admirable, and I will continue to raise the issue in the area of social care. Andrew Dilnot raised this in his recent commission report as being one of the greatest barriers to the life chances of people who rely on benefits, especially social care benefits and support, so I am very pleased that this has been raised by the noble Baroness, Lady Drake, and I support it.
Baroness Hollis of Heigham
My Lords, I, too, support my noble friend’s amendment, which was so impressively and eloquently moved. I thought she had an unarguable case, but we will see in a moment whether the Minister thinks differently. The Minister has been very responsive, rightly in my view, not only to the issue of rewarding the move into work but to the issue of reducing the risk of moving into work. One thing I must welcome about universal credit is precisely that it takes into account the risk for people on very low and narrow incomes. I do not doubt we shall come back to the very high risks that people on very low incomes face when trying to manage on a frankly very tiny budget when we discuss an amendment on payment methods tabled by my noble friend Lady Lister.
There is another risk. You are in work, you may be receiving tax credits or may be self-employed, and you try to build up savings, through ISAs or whatever, because you need to replace a white van for your business to move things or because you are a self-employed carpenter with tools because you can no longer get a job as an employee, or because you are associated with a garden centre and are taking stuff around; or you might need a car, particularly one that is big enough to take your elderly parents out from their residential care, and that will cost you substantial savings; or, as my noble friend mentioned, you might be an older person in your 40s or 50s, with children approaching university age, who has been saving hard to make it possible for them to go to university without facing a massive fear of subsequent debt.
All these are expenditures which I am sure the Minister would regard as reasonable, and all require saving—in some cases, if possible, beyond the £16,000 figure. You may have several demands. A rollercoaster of demands might hit you, and you have over the years providently built up your savings to £20,000, £25,000, or whatever, so that you can lay off that risk. I know the Minister understands the point about risk if one is going from benefit to work.
Lord Freud
I will have to write to the noble Lord on ISA income in tax credits. I do not know the exact position. I hope that that explains why we cannot support Amendments 22B and 22F. I ask the noble Lord to withdraw his amendment.
Baroness Hollis of Heigham
My Lords, the noble Lord started off with a question that I suspect was meant to be rhetorical, but I think he is entitled to an answer. Is it right for the taxpayer to support someone who has £50,000 in savings? That was the noble Lord’s opening sentence. I agree with him that that is the key question. However, given the responses that he has heard today, the answer should be, “Yes, in certain circumstances”. The key question is, “What are the circumstances?”. There is no absolute yes or no answer.
The circumstances mentioned so far include whether this will help sustain savings and the savings habit. The answer is yes. Would it help people get back to work earlier than they otherwise would, and therefore depend less on benefits? Possibly, yes. Would it help families avoid falling into debt and thus lose even the tariff income that they would otherwise expect to enjoy between £6,000 and £16,000? Possibly. Should it be for a limited time so that it is not an unending commitment? Certainly. That is surely the way in which we should approach the question. It should not be, “£50K or not?”, but, “What are the circumstances in which it is reasonable to support people?”. Otherwise, we will make short-term savings at the expense of longer-term losses, which will come from keeping people on benefits longer than they need to be because they have gone into debt by having run down their savings. Surely that is the right question to ask rather than the bald one that does not take into account the very different situation of people who are marginal, who are in and out of the labour market but who hope to stay there with the help of savings to smooth out these movements.
Baroness Drake
The Minister opened by asking whether the taxpayer should support someone with £50,000 in savings. My initial reaction to that is that the taxpayer supports people on £500,000 because there is 40 per cent to 50 per cent tax relief up to the value of £1.8 million and £50,000 per annum for pension savings. Actually, the taxpayer supports people on much higher levels of income, and we can think of lots of other incentivised examples. There is no limit on the ability to use the advantageous tax opportunities of ISAs year on year depending on what capital is held in other places. I am not sure that that would withstand the test of rigorous intellectual analysis.
Lord Freud
My Lords, I need not write to the noble Lord on this matter because I am trustful that the impact assessment that holds these figures will be on its way—
Lord Freud
I was going to say today. In fact, I can say more. I have copies in the Room. I can do better; I can ceremoniously deliver the impact assessment to the noble Lord with that figure explained.
Baroness Howe of Idlicote
My Lords, I congratulate the noble Baroness, Lady Lister, on her excellent exposition of the case and the passion with which she presented it to us. Like my noble friend Lord Northbourne, for many years I have been and still am involved with the Peckham Settlement charity. I know that there was considerable concern when the money that the women had charge of ran out for one reason or another.
I am very impressed by the range of options here, but I would really like to support the one identified by the noble Lord, Lord Kirkwood of Kirkhope, because I think that really said it all. It is a question of choice, and that should be what we give individuals in this situation. We know the number of times families have gone hungry when women have not had control of the money, for all the reasons that have been explained previously. This particular option is the one that we should all consolidate behind. More than anything else, I say this because the more people who speak in favour not just of this amendment but of what is being said in all these amendments, the more likely we are to persuade the Minister to have another look at this, and above all to take it back to his colleagues, who may have rather different views, and to try and persuade them.
Baroness Hollis of Heigham
My Lords, I support the amendment of my noble friend Lady Lister, which she moved so powerfully, and I certainly hope it will cause the Minister to reflect on the issues she has raised. I want to speak to a related issue that could be raised under Clause 29, but I raise it now because I think it will make worse the situation that my noble friend has described, and I am fearful. This issue is the payment methods for housing benefits—not to whom they are paid, which we will come on to later, but how they are paid. I hope the Minister can give us reassurances on that, and if not, that we can follow this up in the discussion afterwards.
Your Lordships will know that HB is very complicated to assess and to administer. Local authorities will often not allow a member of staff to fly solo on handling HB claims until they have had some six months—I repeat six months—training and chaperoning. This is almost as much as a police officer. The reason, of course, is that it involves checking entitlement, rents, family size, the non-dependence in the home, property size, the landlord’s veracity, any disability, backdating, separating out service charges—including fuel, water rates and energy bills—and careful checking against fraud, because it is a big-ticket item. It takes a good local authority with intimate knowledge of its locality an average of between seven and 10 days to process a housing benefit claim. Crawley Borough Council, for example, which is a very high performer, processes about 40 per cent of new claims in one day and the rest in under 10. None the less, do we think that universal credit staff can deliver a benefit as complicated as HB?
In future, this will be done online by a family in Exeter, with queries, I understand, to a call centre in Warrington. That call centre will be handling over 30,000 new HB claims a week: nearly 7,000 a day. Families competent in financial management may be able to cope; we calculate that perhaps 40 per cent of families are ready to use the online process. Those who are most dependent on HB are the same group who are most dependent upon and in need of weekly and fortnightly payments: people with, say, mental health problems or learning difficulties, or other people who for whatever reason lead chaotic lives. These are the people who find that their paperwork is lost, that landlords are unhelpful, that call backs go missing, that deadlines pass. I understand that there is a 63-page form to fill in: one mistake, and no money gets paid. I hope the call centre line is free. Is it? The lines will be jammed, callers will have to call back repeatedly, and they will have to hang on for long periods of time while their call is transferred to someone who knows something about HB—that is, if the call has not been cut off in the mean time through the handing-on process and they have to start all over again.
All that is handled now with skill, patience, good will and huge experience by local authority and housing authority offices. Local government officers find that 66 per cent of all those on housing benefit need the face-to-face service they offer. The Government are assuming that only 10 per cent will do so, and that that 10 per cent will be serviced by Jobcentre Plus offices, whose staff are not only not experienced in housing matters but in physical terms are often inconveniently located. For example, one district in Kent with 100,000 people has no Jobcentre Plus in its area. Claimants needing a face-to-face service in the north of the district have a £9 bus ride to get to and from the Jobcentre Plus offices, while those in the south have a £7 bus ride—a day’s allowance for the claimant gone on a day’s travelling costs.
At the moment, the only experience that DWP staff have of housing issues is from 200,000 home owners nationwide, less than 5 per cent of the jobseeker’s allowance caseload. Housing cost assessments will go up from 200,000 to 4.83 million. So I have some questions for the Minister, and I apologise for not giving him advance warning of them, but they are absolutely integral to the whole issue of how payments are made.
Will claimants get an itemised statement of the elements making up their universal credit so that they can see what they should get in housing benefit and thus, what is often the trickiest and most difficult to compute, be able to compare it with previous awards? Will claims get slowed down to the slowest part of the process? If there is delay over housing benefit, will the claimant know that that is where the difficulty lies, and will they none the less receive the rest of their universal credit, which may be more open to real-time assessment? At the moment, if a claimant gets their jobseeker’s allowance paid, the landlord can be pretty confident that they will get their housing benefit. Will that happen in the future?
If a claim has to be investigated further, perhaps because the family needs an extra bedroom because of disability, and it takes a fortnight or more to get the required information back from GPs, will the entire universal credit payment be held up until it is resolved? What, as my noble friend so eloquently argued, will the family live on in the meanwhile? What plan B does the Minister have in mind for the individual living on the breadline, especially since that same individual may want the housing benefit to be paid directly to the landlord? However, the Minister wants it paid directly to the tenant, who will now be far more exposed to the vagaries of administration as well as to the temptation of fraud.
Perhaps I can suggest a plan B to him: get local authority staff who are highly experienced, skilled and swift to do the housing benefit calculation for the DWP and—given that central and local government computers already communicate with each other on these issues and the whole system is online—get them to feed their data into the central universal credit processing centre. After all, the ATLAS project means that local authorities have a direct link into JSA, ESA and IS. On top of that, they can access electoral records, they can verify residency, they have knowledge of local HMOs, and they have street knowledge. No call centre 200 miles away can identify a contrived tenancy, or whether too many individuals all appear to be claiming housing benefit for a shared property, or whether rent arrears are beginning to mount up and intervention is necessary. Local housing benefit staff can and do, and they act on it. Having a local contact point would also stop the phones being jammed by worried landlords wanting to know whether their tenant is going to get housing benefit, which is essential if we assume that most tenants will in future get their housing benefit paid direct to them. Landlords want the security of a paid rent, and hence their demand that rents be paid directly to them, but they also rely on cash flow. Cumbersome administration that makes the timing of their payment from the tenant unpredictable is at least as significant.
Claimants who have steady circumstances and basic competence will cope with an online system supported by a call centre and may very well be able to cope with monthly payments. However, the claimants about whom so many of us around this Table, as well as local authorities and housing associations, are most worried, are vulnerable, chaotic and prone to error. They may have literacy difficulties, they are in constant flux and they will not cope. Many of the most vulnerable are also clients of other statutory services. No call centre can deal with them or will interface with them. The local HB office does this each and every day.
Tax credits are relatively easy because they are based on the previous year's income, with fixed periods of claim. Yet even here, as I know to my pain, the computer nearly toppled over and the backlogs were huge because no one had appreciated the rollercoaster nature of the lives of so many lone parents. Half of them had more than a dozen changes of circumstance per year, many connected to childcare. The computer was often three changes behind. HB is far more complicated than tax credit. It exposes the tenant to the much greater risk of homelessness, and no unemployed tenant facing homelessness will concern himself with looking for a job rather than trying to secure his home, which is the outcome that we want him to seek.
We will strengthen UC and protect some of the clients of UC most at risk by developing a partnership with local authorities, particularly as they will be holding and distributing the discretionary housing allowance to soften the difficulties that will follow from the tough new HB changes that we will no doubt debate in a later session. For the Government, local authorities represent a back-up resource that it would be foolish to squander. I realise that I have sprung some questions on the Minister. I hope that, if necessary, we can follow this up with a meeting. They were triggered by the concerns raised by my noble friend’s amendment, and by the additional difficulties inherent in the complexity of the nature of HB, which the system as presently constructed cannot begin to address.
Lord Freud
My Lords, in the spirit of developing a system together, which we seem to have moved into, we can look at a greater amount of flexibility. Some things are not that expensive to do, but others are. Payment systems are not necessarily hugely difficult. I do not have my computer gurus sitting around me whispering how much things cost, but my feeling is that there are areas of flexibility here which we are going to explore in great detail in the next year or so in order to get this right. We can be flexible and make changes if we feel that things are not right.
I turn now to the series of questions raised by the noble Baroness, Lady Hollis, on the relationship with housing benefit. I will try to deal with them one by one. The universal credit will be an itemised statement. It is being developed and at the moment comprises three layers. You will see the summary on the top sheet, so to speak, and a somewhat more elaborated thing when you hit the button for the next level, and then you see pages of the stuff at the third level, which we do not think a lot of people will go to. However, we give them the option to do that. The statement is simple; it itemises the intention. The structure that we have arrived at has been the subject of a lot of toing and froing with the customer insight people. A couple of weeks ago I sat on one side of a piece of glass watching how people were using the system. That is where we have ended up in that particular bit.
I was asked whether this process would be slowed down to the rate of the slowest element. Where you have some decided elements, the JSA rate and so on, we should be able to get that going straight away without tying it up. We will be able to separate out elements with new claims involving big new changes rather than the whole claim waiting for the last little bit of evidence on, say, housing to come through. We are looking at tackling this matter much more flexibly.
Baroness Hollis of Heigham
I am very grateful for the care and attention that the Minister has given to the questions. However, oddly enough, if you can fragment that way, you can certainly fragment in terms of payment rhythms.
Lord Freud
My Lords, I thought I had delicately hinted that there could be some flexibility around that. In future, I will be less delicate in making my points.
We have discussed the other elements. The noble Baroness, Lady Hollis, directed a bit of abuse at the Warrington call centre. We are developing the system in Warrington, but that does not mean that the call centre in Warrington will do it all. We will have a much more sophisticated system. Indeed, the noble Baroness’s thoughts on using ATLAS, and the experience of housing benefit staff around the country in that regard, are very good. We are talking to local authorities to get the detail of this right. It would not make sense to lose the expertise of housing benefit staff, so we are involving them as we develop the process. It is too early to describe the system because it is not yet developed. However, the noble Baroness’s advice chimes with the way we are going about this, and we are grateful for it.
Amendment 28 would require the Secretary of State to conduct an annual review into the impact on claimants of monthly payments. I have already set out our firm commitment to safeguards, such as providing budgeting support and the facility to make more frequent payments where necessary or appropriate. I can assure noble Lords that in addition to this we will continue to monitor the impact of these policies after they are introduced. I urge noble Lords not to press these amendments.
Baroness Hollis of Heigham
I think that “um” would be a very good response from the Minister.
Baroness Hayter of Kentish Town
Some of my comments will not be appreciated but I thank the Minister for his response. Clearly, I have not received the same response as did my noble friend Lady Lister. I will take it back and think about it. She does not know when she is ahead. However, I am afraid that I have to express some regret. A lot of us have done a lot of work in preparing for the Bill although I am sure that we have done much less than the Minister. I blame my noble friend Lady Sherlock in that when I asked her what I should do she advised me to read everything that was said in the Commons. I thank her for that. What I found again and again were promises from Ministers in the other House that by the time the Bill reached Committee stage there the relevant information would be available. Again and again I am afraid I read that our friends in the other place found that that was not the case. They nevertheless were given absolute assurances that the relevant information would be available before the Bill reached Committee stage in this place. To have something published today concerning a debate that is taking place today is simply not good enough. We cannot work that way; “before” ought to mean before. Anything that is relevant to what we are talking about should be with us in time to enable us to read it and think about it.
I welcome the remarks about our being involved in the debates about how this process is going to work. I think that those remarks were probably genuine. However, that means that we have to have the relevant information available, especially as we are trying to discuss the Bill without a wonderful array of staff to help us.
I also regret the remarks about ESA, maternity allowance and earnings. The women who will be getting this who have been in work may simply not qualify for a statutory payment because they have changed employers. However, they could well have been working full time before that. In that sense it is not a benefit but something that they earned and are entitled to. Therefore, to treat it as unearned income—as if a sugar daddy had given it to them—would not be the right approach. It has been earned, albeit in a different way.
Similarly, the Minister did not respond to the question of whether ESA affected the self-employed. They are another group of people who have paid contributions into a system. If they then discover that what they get when they are possibly very seriously ill with cancer is seen not as something that they have earned but something from a very kindly Government, that will not be the right way to ensure that people see the system as enabling them to get something for what they have put in, which is what many of us want. I am sorry about that and I hope that, even if the Minister does not respond orally now, he will think about those groups of people, and in particular about women whose circumstances may have changed and who may have moved to a better job. On the whole it is young women who get pregnant. They may be moving up in a career and may have moved to a different employer and therefore may not qualify.
I have two further brief points. We are obviously delighted about any monitoring and assessment. If there is to be no formal review, I will have to accept that that is the best way of doing it. Nevertheless, it would be very nice if the Minister or his successor will bring those reports to the House, where they can be debated in the same way as we are able to now.
Finally, I accept that the Minister may not want to set a target rate for a taper. He said that perhaps 65 per cent was too high but that a future Government could perhaps do something about it. I look forward to sitting next to my noble friend Lord McKenzie when he is the Minister in a future Government—
Welfare Reform Bill
Baroness Hollis of Heigham Excerpts(14 years, 4 months ago)
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Baroness Campbell of Surbiton
My Lords, I would also like to support Lord MacKenzie’s amendment and add something to this particular area. Can I ask the Minister to reflect on what happens when a disability assessment process, or an assessment process regarding a disabled person, is not properly developed and constructed in co-production with those who understand in detail what it is to live as a disabled person; that is, disabled people themselves? I know I am getting a bit of a reputation for banging on about involving disabled people in the issues that concern us. However, I understand from the disability charities and NGOs that I have consulted, as well as from the countless disabled individuals who have written to me over the past few months, that the universal credit assessment process, with particular reference to the work capability assessment process, is still deeply flawed due partly to disabled people’s lack of involvement.
This morning, I telephoned the chief executive of the Royal Association for Disability Rights, Liz Sayce. Many of you will know her because recently she conducted the Government’s disability employment support services review. She is very assiduous and capable. With a worrying example, she demonstrated where we are in danger of going wrong with one of the universal credit assessment processes, the work capability assessment. She told me about a woman who lives in the north-west and has end-stage multiple sclerosis. She can now move only one eyelid and murmur inaudible words. She was telephoned at home by Atos. They told her husband that she needed to attend a work capability assessment. When he explained that this was not possible, they said that they must speak to her on the telephone and read out a statement. When her husband explained that she could not speak, they asked him to hold the telephone so that they could read it out to her, so he put the speaker phone on. They said:
“This assessment is necessary and mandatory. If it does not go ahead, there will be consequences”.
The woman, of course, found this very distressing and scary. They continued, refusing to take into consideration that the woman was not able to be interviewed. They were working from a script in which there is no flexibility and no requirement on assessors to apply themselves to real-life situations or to take a different approach to different disabilities or health conditions.
This example, and I know that there are others, shows that the Government must develop a different approach to the universal credit assessment process. I know Professor Harrington has attempted to make this happen in his work; I have met him myself. He listens and he is a good man. He tries to understand and this is reflected in some of his recommendations, but the whole process has not been intelligently and systematically co-produced in any substantive way with disabled people and disabled experts. We have done it. It was and is being done through the Government’s Right to Control programme. Can we not do the same with this? The assessment process must not be driven by a script. It must allow for sensitivity and assessor judgment—personal judgment—as to when it is appropriate to change their behaviour and respond to a disabled person’s condition and situation. Can the Minister assure us that a more co-productive and intelligent approach to all the assessment processes for universal credit will happen, and happen more effectively?
Baroness Hollis of Heigham
My Lords, I shall speak very briefly in support of my noble friend’s amendment for two reasons. First, I was rather appalled by statements from the Prime Minister that the Government were for the first time tackling the issue of people who should be, but currently were not, in work. Really, that comes into the category of Boris-type statements, which are an imaginative reconstruction of events that did not occur. All parties—I am sure that I also speak for the Cross Benches on this—agree that we want to seek to help people into work, and we have been doing it.
When we came into Government in 1997, we had found that, particularly during the 1980s, thousands of people with some mild disability had been moved off unemployment benefit into what was then invalidity benefit, the precursor for incapacity benefit, in order to massage the unemployment figures. On behalf of the previous Government I took Bills to your Lordships’ House that brought in proposals for the New Deal for all sorts of claimant groups. It was never a problem, as it had never been a problem of trying to help the unemployed into work. They are always anxious and keen to do so. The problem has always been those who, for too long, have been economically inactive and marginalised from the labour market.
It is for that reason that I and my noble friend Lord McKenzie continued to follow these policies when he came into the department: to ensure that new deals into work for disabled people, lone parents and for the over-50s were brought in to help people who for some time had been at some distance from the labour market. I am delighted that, insofar as the decent supportive activity of the previous Government may be pursued by the current Administration, we should welcome it. Some horror stories are now coming through about Atos, and we should be joining our disabled colleagues in protesting about that deforming of what should be a decent policy.
Secondly, my noble friend’s amendment says that it is about supporting work for those who can provide security for those who cannot. I would like to spend a second to almost verbally amend it. Help into work those who can, provide security for those who cannot and support those who care; because those who care are left out of the equation. I do not doubt that the Minister’s intentions are as decent as those of any Member around the table in the Committee. However, one of our concerns is that of the 6 million carers, about 400,000 to 500,000 receive carers allowance, which is a passported benefit from what is currently the disability living allowance based on hours worked and the level of care needed.
We are still awaiting what will happen to PIP and the number of disabled people currently on DLA who will receive the higher or lower element of PIP and whether the carers benefit will be passported from the higher rate or from both rates. Until that happens, not just disabled people, but thousands of carers are worried, anxious and distraught that they may lose the carer’s benefit that they currently enjoy. I know that the Minister is engaged with this issue and I am not pretending it is a simple one, but I would be very grateful if he would, acknowledge first, the work done by the previous Administration in bringing those who are economically inactive back into the labour market, and secondly, that we all share a concern for the position of carers and if he could give us some idea as to when we will know what their situation is.
Baroness Hollis of Heigham
Just as a correction, there is no division on the opposition Front Bench. That is absurd. This is an addendum to a very well thought out amendment.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, Amendment 2 would define the purposes of universal credit as,
“to support work for those who can and provide security for those who cannot”.
In Tuesday’s debate on Amendment 1, several noble Lords stressed the importance of language and risk. I am not sure that a definition that divides the caseload between people who can and cannot work is particularly helpful in that respect. However, it clearly is the purpose of universal credit to support people in or out of work, provide security and remove risk.
With regard to supporting people into work, I hope that it is already clear that work is at the centre of the new benefit. In designing universal credit our clear aim is to make work pay. In Tuesday’s debate I referred to the significant improvements that we expect, overall, in terms of participation tax rates, marginal deduction rates and levels of worklessness. Key to this is the single taper, which will ensure that claimants see the benefit of every extra hour worked. We will debate the level of the taper in a later session. For now, I hope your Lordships will agree that the principle of replacing the current tangle of overlapping tapers is the right one and a major step forward.
Other key elements of the work focus of universal credit are the work-related requirements set out in the Bill, the work programme and support for childcare. I said on Tuesday that I hope soon—very soon, in fact—to be able to give more details about the childcare element of universal credit. This is clearly an essential part of supporting parents in work.
Baroness Hollis of Heigham
My Lords, if “soon” is around a week, is “very soon” around a day? An hour?
Lord Freud
“Soon”, you can measure in weeks; “very soon”, you can measure in days. Well, let us say that noble Lords in this Committee can.
To pick up the point made by the noble Lord, Lord McKenzie, on the application of conditionality; in the Bill conditionality is linked only to employment outcomes, but any responsible Government will always want to look at options for achieving other outcomes for individuals, taxpayers and society as a whole. Indeed, I remind the noble Lord that the previous Government tried sanctions as a way to improve compliance with community sentences.
On the related point of the noble Baroness, Lady Hollis, on IB and ESA numbers, I need to point out that the numbers were pretty much the same in 2008 and 1997. I welcome her focus on reducing inactivity. That is exactly the right thing. One can get pretty historical going over who is to blame or who is not to blame. This is the situation we are in and I do not think that any Peer in this Room would disagree with the proposition that we now have a benefits system that traps people in inactivity through its structure, and certainly one that does not apply substantial help to people to get out of that trap. She asked me to acknowledge the continuity between the two Governments, and I am pleased to do that. I can absolutely confirm that the design of the work programme, for instance, is very much based on the fact that the employment zones pilot initiated by the previous Government was clearly the most successful pilot. We picked that up, effectively, in the work programme and made it a national programme.
While the aim is clearly to help as many people into work as we can, universal credit will also provide for those who cannot work. We have ensured that it is specified in the Bill that a number of groups will receive unconditional support without having to meet any labour market requirements. This will include those assessed as having limited capability for work and work-related activity; claimants with regular and substantial caring responsibilities; and lone parents or nominated carers with a child under the age of one.
In terms of benefit payments, the structure of the benefit is similar to existing provision for people who are out of work. We have announced changes where we believe change is needed, and the Committee will be looking closely at specific points, such as disability support, housing benefit and the household benefit cap, when we reach the appropriate clauses.
It is important to be clear from the outset that universal credit is overwhelmingly not about taking money away from people who are out of work. That much is very clear from the impact assessment, which shows that the majority of losers are people in work, many of whom have higher earnings. As I said on Tuesday, I hope that an updated impact assessment will be available soon, but the fact is that most workless people are not losers and the overall impact of the reform is progressive.
I shall here refer to the important matter raised in particular by the noble Baronesses, Lady Campbell and Lady Wilkins, of the work capability assessment. We continue to work with Professor Harrington to ensure that that assessment works effectively. Clearly, he is involving disability groups in that development in a very proactive way. I obviously know the concerns of disability organisations in this area and I will aim to explain that in much more detail when we get to Clause 12, if that would be acceptable to noble Lords. It is also slightly misleading to talk about losers when we have a package of transitional protection to ensure that there are no cash losers as a direct result of the migration to universal credit, where circumstances remain the same. I understand that noble Lords are concerned that any claimants should be worse off under universal credit, but the fact is that we cannot simplify the system while retaining each and every element of all the existing benefits. That would be simply unaffordable.
If I can touch on the introduction of the PIP on carers, which was raised by the noble Baroness, Lady Hollis, and my noble friend Lord Newton—
“( ) an amount for council tax,”
Baroness Hollis of Heigham
My Lords, I am grateful to the noble Lord, Lord Kirkwood, for his efforts to bring this on and for the support for a similar amendment which seeks to deal with the same issue from the noble Baroness, Lady Meacher.
Council tax benefit is a social security benefit and in my view should be within universal credit. DCLG, in another turf war, disagrees and stays out. The effect of this will be very damaging. I remind your Lordships that council tax benefit is paid to 5.8 million people at a cost of £4.8 billion, the average benefit being about £16 a week. At the moment local authorities are reimbursed by the DWP for their actual expenditure. In other words, it is demand led: or, to be technical, it comes within annually managed expenditure headings.
In future, by going over to DCLG, local authorities will be awarded a fixed-rate grant to fund a local scheme which is also expected to carry a 10 per cent cut to their usual expenditure. Given that that will now come within the departmental expenditure limit, the level each and every year will have to be negotiated with the Financial Secretary to the Treasury. It will not be demand led. Before the Minister says—I do not know whether he will—that local authorities are in a position to top this up, I am sure that he will be aware of the situation that local authorities find themselves in, which we can perhaps go into later.
In August the DCLG sent out a consultation paper, Localising Support for Council Tax in England. This consultation closes on 14 October. DCLG proposes to localise council tax benefit. Every local authority and every shire district within every county will have its own scheme. If that is not administratively complex enough, they will be required to make 10 per cent cuts in it.
On whom will the cuts fall? Pensioners—we are not sure yet whether it will be the over-60s or the over-65s—are 42 per cent of the recipients and will be protected. So the 10 per cent cuts rise to 20 per cent for everybody else. Thereafter, protecting other vulnerable groups is discretionary. If the local authority protects disabled people and families with children as well—a further 25 per cent of the client group—cuts of 40 per cent will fall on the rest. Finally, if a local authority went further and sought to protect those on 100 per cent council benefit, on IS or on JSA, cuts of 10 per cent would fall on the residual 9 per cent: the working poor, the working population. My Lords, do the maths. They will get no CTB whatever. If that does not impede the move into work, I do not know what does. So low-income families, encouraged into low-paid work by universal credit, which I strongly support, will find that the cuts from HB, which we will come to, and these huge cuts, given the protected groups in CTB, may wipe out any gain from work. What is the point of universal credit if it does not do what it says on the tin and make it worth working? Is this cut in CTB necessary? Why is it fine for DCLG to find £800 million to freeze council tax for all of us around this table today, while cutting £490 million from the poorest, who depend on council tax benefit? I think that it is disgraceful.
Lord Freud
As I was about to say, we will soon publish an impact assessment on the universal credit that incorporates this approach. As noble Lords will be aware, the existing impact assessment assumes council tax in the system. This one will assume council tax out of the system.
Lord Freud
I ask my noble friend to resist pressing me, which I know he enjoys doing, at this moment. Let us wait for the new impact assessment.
Lord Freud
The impact assessment that I am talking about is the one on universal credit and how it will respond to the exclusion of council tax. We will not have an impact assessment from DCLG available for some time. I do not know when we will have that impact assessment, but I will write to the DCLG and find out.
Lord Freud
My Lords, without being over-coy on that question, this matter is out for consultation and we expect the responses from Scotland and Wales to be incorporated as part of it. So the answer, I guess, is that it will be looked at in that context. With that, I ask the noble Baroness to withdraw the amendment. I am sure that we will return to the some of the substance later.
Baroness Hollis of Heigham
Yes. Before coming back to some of the main themes that your Lordships have adduced, could I thank everybody who has taken part, because all sorts of issues have come up that I had not fully clicked on? I now have an even clearer sense of indignation at what these proposals might mean for—as the noble Lord, Lord Newton, rightly said—the poorest people in the land. I appreciate your Lordships’ contributions.
I am sure that the noble Lord, Lord Freud, will take this Committee’s views back to his close working colleague Mr Pickles. Bar a couple of open questions, I think they were unanimous in being deeply concerned both about the effect on the individual and on universal credit.
Lord Foulkes of Cumnock
I agree with every word my noble friend says about the revelations that have come out in this Committee, which have been fascinating on both sides. The Government do not seem to have had any support from anyone on any side. Is it not now clear why the Government Chief Whip wanted this Committee hidden away up here, rather than on the Floor of the House?
Baroness Hollis of Heigham
Actually, my Lords, it is oddly enough not about trying to win a vote in the House; that is irrelevant. We are seeking to persuade the department that this proposal is profoundly unworkable as well as profoundly indecent. It has to be taken away to the Leg Committee—to use the shorthand—and rethought. That is what I am trying to do. This is not meant to be a grandstanding effort on the Floor of the House, though it might get even more contributions there. It is trying to strengthen the DWP’s concerns between the lines, if I judge it right, and empower it with some of the powerful arguments advanced today by experienced people—a former Minister in your Lordships’ House, a former Secretary of State, and in particular people who speak directly from the nations of this country outside England—that this should not and will not run. It should be taken back to the drawing board to think again. Given that consultation on the document finishes on 12 October, this discussion today is designed specifically to take that debate forward. I thank the Committee, because I am confident that they have moved the debate forward.
I will pick up the point made by my noble friend Lady Turner and reiterated by the noble Lord, Lord Skelmersdale, about discounts, rebates and benefits. My noble friend is absolutely right. Discounts and rebates are, for example, a quarter off for a single person. This is a standardised figure, irrespective of the individual’s circumstances. That is why it is a discount or rebate.
One of the reasons why the British Legion was campaigning on this—and I stand to be corrected—was that it had succeeded in getting through the proposal that local authorities on a voluntary basis, but in practice fairly universally, awarded a 50 per cent rebate on the old council rates system for those veterans who enjoyed war pensions. I remember the debates vividly. If any council thought it might do otherwise, there was a march to City Hall and they occupied the first three rows in their uniforms and decorations as councillors tried—or did not try—to meet their concerns.
They were seeking a rebate. The difference about a benefit is that it is tailored to individuals’ circumstances and council tax benefit does precisely that. That is why one cannot put it into the same category as rebates, which are a category which does not depend on means testing.
Three issues have come up today, and I am very much indebted to your Lordships for these. First, there are worries about localisation as such. This was put powerfully by the noble Lord, Lord Newton, and I am very grateful. Added to that were the concerns—which I am sure are right—of the noble Baroness, Lady Meacher: the worry and stress that will affect individuals.
Lord Freud
We expect the universal credit to be treated as social assistance, which is within the rules, so we can keep a reasonable amount of control over it. This is something that is causing great concern to countries throughout Europe. The European Commission is taking infraction proceedings against us. Twenty members have expressed strong concern. Fourteen member states have joined the UK in calling for a debate on the matter with a view to amending EU social security rules as soon as possible. This is a live and changing issue but currently, as we understand it—nothing is locked down in this area—we have designed the universal credit in a way that it is protected from some of the exportability concerns. That is our intention.
Baroness Hollis of Heigham
Could the Minister help us a bit further? It might be more helpful to have a letter on this later on. The benefits that he is bringing together have different rules—or they had different rules—according to whether they were regarded as coming within the free movement of labour and the support for this through some of the tax credit rules and some of the other benefits that were localised and related only to being present and so on. By bringing them all together, does this mean that, for the first time, universal credit, with a much bigger price tag—so to speak—on the individual entitlement, could now be freely exported to people who are coming to work in this country and whose family members are living in other European countries?
Baroness Hollis of Heigham
If the Committee will excuse me, I have one further point. One of the things that I thought was deeply unfair, but about which we could do nothing, was that a British citizen who took her child to Bangladesh, Pakistan or India for 12 weeks or so thereby lost her child benefit. However, if a worker from one of the eastern European countries came here, and their family had never even visited the UK and their wife and children and so on remained in their home country, they were able to continue to enjoy such benefits.
Lord Freud
I am slightly at a loss to respond, mainly because the noble Baroness has opened the door to such an enormous area. It is so complicated that I have spent quite a long time going through it. Yes, there are lots of anomalies because it is not a stable area of law, but the bottom-line point is we do not think that with universal credit we are putting ourselves in any worse a position than that we are currently in.
Welfare Reform Bill
Baroness Hollis of Heigham Excerpts(14 years, 4 months ago)
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Baroness Campbell of Surbiton
My Lords, I do not wish to comment on the overarching universal credit and associated issues, but I commend the noble Lord, Lord Kirkwood, on raising the issue of language. Language is absolutely essential not only to the dignity and self-worth of people who receive benefits, but also to what our message is to the world about those who survive because of the support they receive from what will be these welfare reforms. I remember writing about three years ago a very important article entitled Sticks and Stones, But Words are Hurting! It was about the issue of language as it pertains to disabled people. I remind noble Lords that disabled people have spent the last 25 years trying to get away from welfare and talk about rights. I would like us to think about this as we go forward.
I, too, will be raising the issue of language when we come to personal independence payments. Noble Lords will recall from the Second Reading debate that I have questioned the term, because it does not fit with what we perceive to be the original and, what we thought would be the enduring, intention of disability living allowance. So language is important and I thank the noble Lord, Lord Kirkwood, for raising the issue at this point. Welfare versus rights is something that we disabled people talk about all the time.
Baroness Hollis of Heigham
My Lords, like others, I thank the Minister and his Bill team for being so accessible and helpful; I genuinely congratulate them. When we can get the material in hardcover rather than on e-mail, I shall be even more enthusiastic and enduring in singing the Minister’s praises, which I am sure we all want to do.
I want to make two points, both of them triggered by the remarks of the noble Lord, Lord Kirkwood, and my noble friend Lord McKenzie, which I thought were spot on. First, the main thing is to talk about language. The noble Baroness, Lady Campbell, is exactly right. Until recently, when we introduced a Bill like this, it would not have been a welfare reform Bill; it would have been a social security Bill. The gap between social security and welfare is precisely the gap between entitlement and stigma. We forget, when using words like “welfare reform”, what is the structure of who pays and who gains in our welfare state. We all know that a very substantial part of “benefit expenditure” is actually a redistribution of resources through people’s lifetimes, particularly from the working years to retirement. Our pension work falls into that.
A second key group of redistribution is what we would call the category benefits. They go to children and to disabled people. There are more methods of redistribution than merely from rich to poor. Instead, they go from those without children to those with children; they go from those who are in good health to those in poor health. That is something that all civilised societies would sign up to. Only the third category of benefits, those which are means tested, reflect a straightforward redistribution from rich to poor. They have been allowed to dominate and cloud the language and to stereotype claimants in ways that portray them as dependent on handouts and the goodwill of others. We should return instead to the more appropriate, all-inclusive language of social security. Apart from the very lucky few, who are probably white millionaires, male and in very good health indeed, all the rest of us will need recourse to the welfare state, to the social security state. We should all hold that firmly in mind and refuse to engage, wherever it is spoken, in language that seeks to make distinctions between the deserving and the undeserving poor—or, as the Victorians would have said, God’s poor, poor devils and the devil’s poor.
The second point I want to make, which follows that, is the point made rightly by the noble Lord, Lord Kirkwood. I strongly support the principles and much of the structure of the Bill, although, like others, I have real concerns about what I regard as the pressure points. In dealing with the Bill, we must not only be concerned with the question of language, but we must encourage the Minister to respond to those adjustments we need to make, particularly where the language of the amendments run by the Minister, or his replies, may suggest what I call the econometric model of the Treasury, which is that people have to be pained or punished into work, because the only stimulus that they will respond to is an economic one.
What many of us said in our Second Reading speeches, and what I hope we will all remember, is that when we ask people to move from being on benefit to coming into work, whether they have a disability, whether they have been a lone parent, whether they have struggled for a long time with being chronically unemployed because of the demography and the economic structure of their region, the issue for them is not just about whether they are better off; it is primarily about risk. Unless people understand—and I fear that too often the Treasury does not—the issue of risk and the abatement of risk that needs to go on, we are not going to make a success of the Bill. I think that the Minister understands this perfectly well. I think and I hope that he will accept arguments and that where, in future amendments, we seek to abate risk as well as reward work, he will understand that this is in order to make a philosophy that so many of us sign up to to work today.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, before I deal with the amendment, the stand part debate and the clause, I have to take on board what the noble Baroness, Lady Campbell, said, and her expression of concern. I do not have an answer for her now, but I will go back and get one and make sure that her concerns are addressed in the most thorough way possible. If things have not gone appropriately, I apologise unreservedly.
Before I turn to the amendment in the name of my noble friend Lord Kirkwood, let me talk a bit about the universal credit. Clause 1 establishes universal credit as a new benefit under the provisions of Part 1 of the Bill. This is a modern, simplified benefit, available both to people who are in work and those who are out of work, instead of claiming a number of benefits and tax credits from different sources, as happens currently.
As the Committee will know, the Government are determined to reform the welfare system to make it fairer and more affordable while addressing the problems of poverty and dependency on welfare. Universal credit is at the heart of this strategy. I welcome the support from the noble Lord, Lord McKenzie, for the principle of universal credit. While I am on that point, a number of noble Lords have thanked my Bill team for their accessibility and requested that that continue and I can again give an assurance that we will lean over backwards to continue that accessible approach. The reason is entirely one of self-interest, and when I say self-interest, I mean the interest of the governance of this country. It is vital that we have a proper debate on this very important Bill. A number of noble Lords have pointed out that this is a really important, transformative Bill and it is important that we address the issues properly and with full knowledge. That is why we have this very accessible approach.
We are currently updating the impact assessment—we have been working with a rather out-of-date one—and I am hopeful that we will be publishing that soon.
Baroness Hollis of Heigham
Could the noble Lord help us a little more? Some of us, in our amendments, are relying quite heavily on the impact assessment figures and we would not want to mislead the Committee by using figures that will be replaced quite quickly.
Lord Freud
Yes, I think that they will be replaced quite quickly. I cannot give the actual date or time now, but I think I am safe to say, “Soon”.
Lord Freud
We will get a code. But even the current impact assessment shows the transformative effect of universal credit when it is fully implemented. The combined impact of take-up and entitlements may lift hundreds of thousands of individuals out of poverty, including as many as 350,000 children. The vast majority of gains from universal credit will go straight to the poorest households.
I shall pick up the point made by the noble Lord, Lord Wigley, and the noble Baroness, Lady Meacher, on risk. By combining, effectively, out-of-work benefits and in-work tax credits, we effectively de-risk moving from one category to the other and that is a very powerful incentive for the poorest people to take a risk. One other aspect of it which I have been very conscious of as we develop the whole approach is that it is the best way of dealing with fluctuating conditions. You can move, take a risk and work for some months without being terrified that, if it does not work out, you have lost your benefit support structure, because you are just moving up and down the taper. So, from the aspect of risk, universal credit has huge advantages and it is one of the main drivers of our expectation to see many fewer workless households.
Lord McKenzie of Luton
On the impact of the taper rates, does the Minister agree that, if you have council tax benefit or its replacement outside the system, you simply cannot be sure what the effect of the withdrawal and taper rates will be? Can you include that benefit?
Baroness Hollis of Heigham
I reinforce my noble friend’s point. As every council tax taper will differ from district to district, and there are some 300 to 400 of them, it will be impossible for anyone to predict who gets what.
Lord Freud
We will have a debate on this matter rather soon, but maybe not today. The only way I can respond is to point out that, depending on how we adjust the system to have what is effectively a tax rebate system outside the universal credit, we could see different effects. Rather than prejudging this, I will reserve that information for another day. We will have plenty of time to deal with it.
I have been asked about IT by a number of noble Lords, including my noble friend Lord Newton, the noble Lord, Lord McKenzie, and the noble Baroness, Lady Meacher, among a few others who have some concerns. We have gone through a huge process of external assessment by the Major Projects Authority, which is a continuous process in stages. The most recent independent review stated a high level of confidence that the expert teams that we have assembled will see us deliver the programme. The review team said that we had made an impressively strong start.
The programme is on time and on budget. It is being developed in a radically new way to government programmes. The difference is that in a traditional government programme the whole system is built, trialled for a few months and then introduced. This system is being built in layers so that we can trial each layer as it develops and test it with customer insight. That process is happening. One of the things that we can do today is take some particular claimant types through the system. I am planning a demonstration for noble Lords later this month to take them through this process, because when they start to see the different elements coming together there will be a much better basis for understanding.
In my confidence, I can quote only these external sources; my own views are perhaps less relevant. The external sources are holding the programme up as an exemplar of how the Government should develop IT. We will be getting these external reviews regularly at each of the difference gateways, so it will be monitored externally very carefully. I have no knowledge of where this is on anyone’s risk register, so I cannot answer that particular question put by the noble Lord, Lord McKenzie. Obviously, though, any big programme is going to be looked at to ensure that it is being done to time and to budget. That is just governance.
I think there is a lot of confusion in the external world between what is an appropriate level of governance and external monitoring of an important, big programme, and the fact that there are always risks involved in developing it. I responded to the article in the Telegraph, saying that this was a programme on time and on budget. Basically, the article was misleading and I stand by that letter.
Welfare Reform Bill
Baroness Hollis of Heigham Excerpts(14 years, 5 months ago)
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Baroness Hollis of Heigham
My Lords, I very much support the principle of universal credit. It was put in the “too difficult” box when I was a Minister and I think we can all see why. The benefit system was built in the Beveridge world where, as long as the man held on to his full-time job and his wife held on to him, the family was insured. To his contributory benefits were added, over time, category benefits for disabled people or children; means-tested benefits for emerging groups such as lone parents or emerging needs such as housing benefit; and, more recently, the different structure of tax credits.
The result is that most benefits and credits have different income thresholds, different taper rates, different back-dating rules, different eligibility criteria, different linking rules, different passporting arrangements, different savings caps and different payment patterns. Not surprisingly, therefore, we have error, fraud, underclaiming and overlapping built into the system, to say nothing of complexity, confusion and high administrative cost. The result is that it is a full-time job being poor. We need a robust, easily understood structure that reduces the risk while increasing the reward of working as the most effective route out of poverty. I am hoping that the universal credit will deliver this.
The issue is not the unemployed, three-quarters of whom are back in work within a year, but the economically inactive—the lone parents, people with some disability—who linger far too long on benefit. Will universal credit make it easy for them to work? You need self-confidence, resilience and a modest cushion of security to afford risk. Most lone parents and many disabled people quite sensibly prefer the security of a guaranteed low benefit income to the risk and uncertainty of somewhat higher wages should either their job or their health fold, which would then require an exhausting struggle to get back on to benefit while only two tins of baked beans remain in the cupboard. We must reduce risk. We do not need to whip people back into work. That is a complete fabrication. We need to strengthen their confidence to risk work and to seek it by removing the penalty for failure. I believe that universal credit can do this.
Obviously, we must make work worth while. Any work must pay, not as now when so many lone parents find that working between three hours and 16 hours on minimum wage loses every pound—even though a 10-hour job cleaning caravans, picking mushrooms or working in the launderette may be just what she and a would-be employer want. Beveridge’s world of either “work and wages” or “not in work and contributory insurance benefits” has now become one where many people much of the time, and most women most of the time, will need both work and benefits—dials, not dichotomies. Again, universal credit’s structure can do this for us.
I very much support the concept of UC. Like the noble Lord, Lord Brooke, I thank the Minister particularly for the care that he has taken in his seminars and his briefing papers. In best “Yes Minister” style, I congratulate him on his bravery, as well as his tenacity, in bringing it this far. It needs doing—it really does. We must reduce the risk as well as increase the reward for work by simplifying and recasting the structure. But, and alas it is a big “but”—this reinforces the point made by my noble friend Lady Hayter, in her admirable speech—the architecture is being undermined by the cuts agenda and we risk UC failing.
I shall give some examples. First, as regards second earners, we know that in one-third of poor families he is in work and she is not. Her second wage could lift them all out of poverty and, in a world of increasing flexibility and part-time jobs, it is misguided to use UC to get him to work even longer hours, which are probably not available, or to discourage her from work because UC has higher deduction rates for second earners. It is not sensible. It keeps them in poverty. It does not fit the labour market and discourages a better work-life balance between them. UC needs to follow the choices, not constrict them. Incidentally, any lone parent in part-time work who repartners is relegated to second-earner status and loses money. Either she will not declare it, which is fraud territory, or she will not repartner and her lone-parent status continues. It is not sensible.
A point on childcare has been made by several noble Lords. Helping more people is good but, within a cut or a capped budget, those working longer hours will find that their work is unaffordable. I accept that the cost of childcare presents a huge problem to the department but the Government’s proposals undermine the incentive for full-time work. That is undeniable.
As regards the changes to housing benefit, HB must be regularly reconnected to the 30th percentile of market rents because rents are rising far faster than CPI. I care particularly about the shared room rent housing benefit. A woman of 33 living in a one-bed flat who loses her job will potentially lose her home. It will double her stress as she spends time looking for a room which is safe, rather than searching for a job, which she needs. That, too, cannot be sensible.
Let us take savings, which several people have mentioned. Today, you lose JSA if you have savings over £16,000. With tax credits there is a notional income instead from your savings and no cap. With UC, the Government are going for the lowest common denominator, as in so many fields. If you are new to part-time work, you will get no help from UC until your savings have been run down to £16,000, and probably lower than that. So why save? Instead of savings giving you resilience and protection against risk, we have made saving itself risky—the exact opposite of what we are rightly doing with pensions. That is not sensible either.
ESA is to be means-tested after a year—not just on a man’s income and savings, but on that of his wife, who perhaps is a part-time carer and part-time worker. What would noble Lords do, if they were her? You would either cut your hours or drop out of work altogether, rather than see his benefit withdrawn. Then, you would both enter retirement the poorer. We have increased the risk of her not working, which is the reverse of what UC intends. That is the trouble with a household means test for UC. It makes entirely good sense for the young, unemployed couple on HB but, if a member of the household becomes disabled, after a year financial support for him is almost literally paid for by other working members of his family. That can destroy families, which no one wants.
Finally, there is the helpful input of the DCLG, requiring social landlords to fund the new building programme by increasing rents substantially, thus probably adding £2 billion to the DWP’s housing benefit bill. At the same time, the DCLG is undermining the work incentive by pushing out better-off tenants. We have increased rents, increased insecurity, reduced work incentives and a higher HB bill—really helpful of the DCLG—and then it is a complete idiocy for it to localise and cut council tax benefit, undermining universal credit rules. It sends an Exocet through UC. With friends like the DCLG, who needs an Opposition? I suggest that the Minister explores a useful trade-off—that he drops the benefit cap, which the DCLG and most of us do not want; and the DCLG in return drops the localising of council tax, which the DWP and no one wants. The Minister would have the better bargain.
I want UC to work, but unless we can rectify these issues in Committee, we will have badly damaged the two drivers behind UC: removing the risk and increasing the reward of working. Then we will be back exactly where we are now.
Retirement Age
Baroness Hollis of Heigham Excerpts(14 years, 5 months ago)
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Lord Freud
My Lords, clearly that is the issue: life expectancy is growing rapidly. It is hard to set the figures many decades in advance. The responses to the consultation show that most people think that a period of around 10 years seems appropriate, although other countries have used shorter periods. It is right that we should look at a number of factors when we move the retirement age. These include not just longevity but healthy life expectancy and regional and other variations.
Baroness Hollis of Heigham
My Lords, it is clearly reasonable that the pension age for men and women should rise alongside longevity. However, it is clearly unreasonable that up to half a million women have recently learnt that they will have to wait up to two years longer than they expected for their state retirement pension. The noble Lord will know that many sectors of the House were deeply unhappy about this. The Pensions Bill is now in the other place. Will he tell the House whether the Government are shifting their position on this so that it is fair to all women and not so deeply unfair to so many women?
Lord Freud
My Lords, as the noble Baroness pointed out, we debated this in some depth when we looked at the Bill. Those concerns, expressed around the House, were taken very seriously. The Secretary of State responded at Second Reading in another place by saying that we needed,
“to implement the change fairly and manage the transition smoothly”.—[Official Report, Commons, 20/6/11; col. 50.]
We are looking at how best to do that. Should there be legislative changes, they will of course come to this House to be considered in due course.
Pensions Bill [HL]
Baroness Hollis of Heigham Excerpts(14 years, 9 months ago)
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“Single tier or universal state pensions
(1) Before the end of June 2016, the Secretary of State must lay before Parliament a report containing an assessment of the consequences of its provisions on any proposals for the introduction of a single tier or universal state pension.
(2) For the avoidance of doubt, this section shall come into force on the day on which this Act is passed.”
Baroness Hollis of Heigham
My Lords, the amendment in my name would require the Secretary of State to introduce a report on the single state pension by June 2016, before Part 1 of the Bill, which refers to the delay in the state pension age for women, is commenced. I would also ask the House to ignore the word “universal” on this amendment—
Baroness Anelay of St Johns
I ask that colleagues carry out the normal courteous procedure. Those who are remaining in the Chamber wish to hear from the noble Baroness, Lady Hollis. Could those who are leaving do so rather quietly?
Baroness Hollis of Heigham
I thank the Chief Whip. The delay in women’s retirement age so that, for the most unfortunate, retirement is delayed by two years, was discussed and determined, narrowly, on Report. No one, I think, was happy about the bunching effect, including the Minister. It is the consequence of insisting, despite the coalition agreeing to the contrary, that the state pension age for women would rise to 66 by 2020. I remind the House that the coalition agreement that women’s state pension age would not begin to rise to 66 until after 2020 was not an election pledge that was broken in the name of coalition dealings and agreement but was part of the post-election coalition agreement from both government parties in the full knowledge of the costs and circumstances. To break that joint, agreed, published, post-election pledge within the year is, in my view, pretty disreputable. However, that is where we now are, regrettably. I hope very much that the other place will try to smooth out the bunching effect, which narrowly this House allowed to continue.
Since Report—I think on the day after—we have had the long-awaited Green Paper on the new single state pension. I am sure that noble Lords greatly welcome it, as I certainly do. It proposes bringing the basic state pension, the state second pension and pension credit into one pool, allowing the payment of a single pension based on national insurance contributions a few pounds above pension credit level. This would both tackle pensioner poverty, especially among women, and encourage saving. Existing accrued rights would be honoured, but possible future accrued rights would be capped in much the same way as when this House decided—rightly, in my view—to replace SERPS with S2P. That mostly capped men’s higher earnings-related pension entitlement with a scheme of more generous redistribution to lower wage earners, mainly women. To me, the Green Paper is very good news, and I congratulate the Minister and his right honourable friend in the other place, Mr Steve Webb, on achieving it in the face of, I suspect, the agnosticism of HMT at best, the scepticism of HMT at least, and the hostility of HMT at worst.
The new single pension is important in a couple of ways. I am raising it now because we did not have the opportunity to raise it on Report, given that the Green Paper just happened to be published the day after Report. There is agreement around the House about the desirability of NEST. It will effectively reintroduce an earnings-related pension, so to speak, to top up the new single pension, performing the same function but in a very different way from the old SERPS. However, as we all know, NEST is risky, particularly for low-earning women. If they do not have a partner at retirement whose pension income lifts them both off pension credit, they find that their savings in NEST are severely depleted by the operation of the pension credit taper. There is no way that someone at 30 can predict whether it is worth saving in NEST if it depends on what partnership and household arrangements they have 30 or 40 years down the line.
Pension credit has done a superb job of tackling the poverty of existing pensioners. It means that pensioners are no more or no less likely to be poor than any other group in society. However, it has added to the risk of future pensioners who seek to avoid poverty by building savings. The single state pension cuts through all of that. It means that your pension income from NEST will depend not on your household but on your own income, which is a far safer, clearer and cleaner path for savers. With a new pension, every penny you normally save in NEST will return to you as your pension. It has built out the risk from saving; it pays to save. That is why, on all sides of the House, we welcome NEST, and I am sure will welcome the new single pension. Hence this amendment.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, I am grateful to the noble Baroness for the opportunity to spend a little time today on our proposals for reforming the state pension. She has been instrumental, as other noble Lords have pointed out, in the move for better pension provision for those left out of the benefits of the heyday of the occupational pension and the earnings-related state counterpart. The Pensions Act 2007, with its enormous boost for women through the reduction in qualifying years for basic state pension and the increasing coverage of the state second pension, could have been the final push for equal treatment in state provision.
Even that was not good enough, though. In March last year, a week before the 2007 Act started to deliver for women, the noble Baroness launched the pamphlet The New State Pension: A Call to All Parties, which pushed for further radical change. Very skilfully, she got my honourable friend, the Minister responsible, to contribute a chapter to that. It proposed a new type of state pension with a near-universal amount, set above the level of the means test and made affordable by paying the pension to new pensioners only. Her main motivation, as ever, was to deliver an adequate state pension for women who, because of low pay and career breaks, have historically lost out in pension provision.
Just over a year later, the Government published their proposals for improving state provision, A State Pension for the 21st Century. That Green Paper confronts the big issue of how to respond to a decline in private saving at a time of increasing life expectancy. It describes how means-testing, with all the damage that it can do to private saving, pervades the state system. It describes the great complexity of the state system. Bluntly, for most people the system is simply impenetrable. Crucially, it fails to answer the most obvious of all questions from potential private savers: is it worth it? How much will I get from the state when I retire anyway? As importantly, it describes the extent of inequality in the state system—how women, on average, get £40 a week less state pension than men and how they are more likely to live in poverty as pensioners.
The Green Paper describes two options for reform to respond to the challenges that the pension system faces. The first option would simplify the state second pension. It would strip out the earnings-related part of the second pension, leaving just a flat-rate amount—the same pension for all workers and people who are credited into the system for caring and other good reasons. The second, more radical, option would effectively fold the basic and second pensions into one to create a simple single-tier pension, set above the level of the guarantee credit. This option, which is clearly similar to the one that the noble Baroness proposed a little more than a year ago, would mean that by 2020 no less than 90 per cent of pensioners—men and women—would retire on a pension above the guarantee credit.
The Green Paper, as I said, was published earlier this month and the consultation is currently under way. As the noble Baroness appreciates, changes of the magnitude proposed in the Green Paper can be progressed only by listening to the views of all those with an interest. It is far too early in the process for the Government to come to a view on the way ahead, so I cannot give a conclusion to the consultation. I assure the noble Baroness that, should the Government decide to bring forward proposals to reform the state pension system, we would as a matter of course publish a full assessment of impacts, including those on women, alongside any reform proposals.
I remind the House that we published an impact assessment, including a gender, race and disability impact assessment, of our proposals to increase the state pension age first as part of the White Paper setting out our response to the call for evidence and again alongside the publication of the Bill when it first entered Parliament. Those assessments will be further amended and revised as necessary for republication when the Bill enters the Commons and yet again once the Bill has completed its passage through Parliament. I can therefore assure the House that, were the Government to publish a White Paper on reform, we would be no less diligent in providing detailed information on the impacts of any policy changes by gender, ethnicity and a range of other factors. In short, there will be plenty of opportunity for noble Lords, as well as Members of another place, to scrutinise any proposals for reform and their likely impacts, should the Government decide to proceed with reform.
I emphasise that the proposals that we have set out in the Green Paper do not depend on increasing the state pension age. As I said in our debates on Clause 1, the rise in the state pension age must be brought forward because the sharp upward revision in life expectancy projections has overtaken the legislated timetable. The revised timetable would be necessary with or without the reforms on which we are consulting. We have already discussed at some length the impact of our proposed changes to the pension age timetable, in particular on those cohorts of women who face an increase in their pension age of up to two years. A number of noble Lords have emphasised that point and I do not propose to rerun that debate. However, I draw attention to the fact that a key objective of the reforms, alongside simplifying the system and rewarding those who save, is to look at how the state pension could be made fairer for groups, including women.
The noble Baroness’s amendment seeks to ensure that we consider the impact of the state pension age changes in conjunction with our proposals for reforming the state pension scheme. As I said, we are only at the consultation stage on our reform proposals but I can assure the House that although, as I hope I have made clear, these are not interdependent changes, we would undertake such an assessment if these reforms are taken forward. I trust that I have been able to assure noble Lords that the statutory duty that the noble Baroness’s amendment would impose is not necessary and, furthermore, is somewhat premature. We will have many opportunities to debate what to do with any reform proposals as they go through the whole process. I therefore urge the noble Baroness to withdraw her amendment.
Baroness Hollis of Heigham
My Lords, I thank all those who have taken part around the House, including the noble Lord, Lord Boswell, the noble Baroness, Lady Howe, and my noble friend for their warm support for the principle of the amendment. If the comments in this House are anything to go by, the Minister can be assured of the reception that his Green Paper will receive outside the House. I am confident that it will be greeted with warm support.
I very much take the point made by the noble Lord, Lord Boswell, that we have to see pensions as part of a structure. However, such a new single state pension is the keystone for any reform not just of state pensions but of occupational pensions that do not generate a savings trap for those on lower earnings. That is why noble Lords all round the House are so delighted to see the possibility of that keystone finally coming into place. The noble Lord said that we should minimise retrospective unfairness and avoid future moral hazard. Those words are well taken; they are wise words for us to absorb.
My noble friend Lord McKenzie is absolutely right that, with the advent of a new single state pension, the issue of the threshold of enrolment into NEST disappears. It does not matter whether you end up with £3,000, £30,000 or £300,000 of savings; you keep the lot if the new single state pension is in place. Therefore, you do not have to legislate to avoid the moral hazard of low-paid women earning less than £7,500 a year going into NEST because their savings may not be worth having, given the effect of pension credit. As NEST will be reviewed in 2017, which many of us are already looking forward to, I very much hope that we shall be able to revisit this issue then as, with the new single pension in place, a threshold of enrolment will simply not be necessary. However modest the savings, they will be worth having and worth encouraging, so that even the poorest of people can go into retirement with a cushion against the adversities of old age.
I am grateful to the noble Lord, Lord Freud, for his generous comments on the background to the single pension and to his officials for their work in bringing the Green Paper forward. My only regret is that the Green Paper came too late for Report and that Third Reading has come too early for the results of the consultation. None the less, we are trying to wedge this in between the two. I believe that the new single pension will transform the pension landscape and should receive huge support. I was delighted to hear from the Minister that there was no interdependence between the deferring of the state pension age—in other words, the raising of the state pension age to 66—and the funding or costing of the Green Paper. That is key. It gives me hope that he and his honourable friend Steve Webb will be seeking to smooth the bunching effect whereby some women have a much rougher deal than others. Some wait nearly an extra year for their pensions and some wait for nearly two years. We all recognise that that is—in the words of the noble Lord, Lord Boswell—rough justice. I would go further than that: it is unacceptable. I and, I am sure, the Minister hope that a decent solution can be found to that in the other place.
However, I am, in a way, using the amendment to do what we would have done had the Green Paper been introduced by a Statement, which was not the case. We are delighted to have the Green Paper in place. We wish the consultation good speed. We hope that the results will come through in such a way that the Government are encouraged to go down the path that they should. I can assure the noble Lord, Lord Freud, that if he comes forward with such legislation in this House or the other place he will have wide and enthusiastic support. I beg leave to withdraw the amendment.