Social Fund Maternity Grant Amendment Regulations 2011

Lord German Excerpts

Monday 7th March 2011 Lords Chamber

[Baroness Gale]

My Lords, I support the Motion of Regret of my noble friend Lord Touhig.

That word “regret” is important. The Merits of Statutory Instruments Committee, in its devastating report of 3 February, made a number of points relating to the withdrawal of the Sure Start maternity grant for most pregnant mothers. One of the points it made is that the Office for National Statistics survey found that,

“less than 10 per cent of second and subsequent children were born more than five years after the first or subsequent child”.

The effect of this means realistically that the grant is now paid only for the first child because, if there are children in the family under 16, in no circumstances will the maternity grant be paid.

The Merits Committee also suggests that,

“The House may wish to seek clarification of why age 16 was chosen as the threshold as opposed to say age 5 or 10”.

I therefore ask the Minister why the age of 16 was chosen. It is highly unlikely, for example, that if there is a 15 year-old child in the household—or even a 10 year-old—any equipment from that child could be used for the new baby. The expenditure would be very like having a first child, but with no help whatever from this Government.

The charity Gingerbread, commenting on the emergency Budget of June 2010, said:

“A family having a second child could be over £1,200 worse off this year than last year. These cuts will be deepest for the most vulnerable families”.

The charity Family Action said,

“low income families will find it tough to meet the needs of their newborn children and families returning to work will be stung by cuts to tax credits and childcare costs. We know from talking to the new parents who access our services how vital these funds are in giving families and their children the best possible start in life. Now they’ll be on the back foot from birth, thanks to the Government’s policies”.

In his statement on the Social Fund Maternity Grant Amendment Regulations 2011—published in the Act paper—the Secretary of State for Work and Pensions says:

“Around 150,000 families in receipt of a qualifying benefit at the point they have a second or subsequent child will be affected by this measure. In order to help mitigate the effects for some of these families, the forthcoming Welfare Reform Bill will include a measure to open up the Social Fund budgeting loan scheme to enable loans for maternity items to be made available. However, due to the discrepancy in timing between the introduction of the changes to eligibility to Sure Start Maternity Grants in April 2011 and the date the provision in the Bill comes into force (expected to be early 2012), families will not be able to take advantage of the extended access to Budgeting Loans during this period”.

The Government saying that “families will not be able to take advantage” must be the understatement of the year.

This is the coalition Government’s timetable; they are in charge of it. They could do something about it but they have chosen not to. This means that there will be no government help available for women who are expecting babies between 11 April 2011 and some unknown date in 2012. What are these mothers expected to do? Do they go without? Do they go to a charity or to their church to see whether they can get some help? Perhaps they may be able to get a loan from a bank. If not, perhaps, as my noble friend Lord Touhig said, they may be able to take out a loan with some organisation where a very high interest rate will be charged. What a worry for a pregnant mother.

Of course, depending on the age of the first child, there may be some items that can be used, but there are always additional costs for every child and this can be a strain on a family budget. However, as things stand now, there is no chance of help from this Government. I ask the Minister to listen to the charities which have expertise in these matters and to reconsider what help can be given from April to the date when the Welfare Reform Bill will be enacted.

We know this legislation has been rushed through, allowing only nine days for consultation by the Social Security Advisory Committee, and without proper consultation and scrutiny it is lacking in evidence. I am not aware of any impact assessment and I wonder why there has not been one. I ask the Minister to take careful note of what has been said and the effect that this proposal will have on the families that once qualified for such support under a Labour Government but will no longer receive such support.

[Lord German]

My Lords, I should like to take a rounded view of these regulations and put them in the context of the activity of the Government in terms of poverty. There are some issues which noble Lords on the Benches opposite have raised which require some answers from the Minister and I shall raise one or two myself.

First, it is important to recognise that these regulations have the effect of providing a level of savings within the DWP budget—that is undeniable—and that these types of decisions are never easy. At face value, of course, this could be simply seen as yet another cost-saving exercise, which is the thrust of the previous three speeches. However, it should also be looked at in the broader context. I shall examine both sides of the issue in my contribution to the debate.

I preface my remarks by posing a question to the noble Lord, Lord Touhig, the mover of this Motion of regret. I shall not correct him on his Welsh mutations; I shall explain to him afterwards—

[Lord Touhig]

The “d” should be a “t”.

[Lord German]

Yes, the “d” should be a “t”.

The question is about the level of savings that he and his party are looking for in the public finances and whether they are put back into good order within five years or, as I understand it from his party, within seven years. Perhaps he can tell me because I have been struggling to find the answer to the question. What is the level of interest on the loan that the country now has and the debt that we have to repay if it is to be spread over seven years rather than five, which I think was his party’s policy? At the moment we have to repay £120 million a day in interest for the next five years. If we went for the seven-year position, what savings would we need to look at from within the budgets of all the departments in the country? I still fail to understand that. As we all know, it is easy to stand up and say, “Do not cut this or that”, if in the end the summation does not add up to the figure—which I understand is the position of the Labour party at the moment.

However, I recognise that this is part of a package designed to save money and that, if the circumstances for the country were appropriate, we would not have wanted to do this. If the finances were strong, I doubt whether this would have appeared on the horizon. Fundamentally, the judgment here comes down to the question of whether this particular set of regulations fits within the whole scheme of reforms and changes to our work and benefits regime, in the context of the economy as we find it. You cannot see one particular benefit set in isolation without considering the rest. Right from the beginning when the universal benefit regime was talked about in your Lordships’ House, and through the discussion and questions about it here, I have always been attracted by one of its fundamental aims—a fundamental aim of the whole revision of the benefits structure from its current complex base to something much more straightforward and simple—which is to lift people out of poverty. The impact assessment produced by the Government showed figures which, frankly, would have made everybody around this Chamber smile.

The principal aim of the universal benefit Bill and the new work programme is to lift people out of poverty. That programme itself requires investment: it has a £4.5 billion price tag. Part of that has to be funded from within the savings that can be made from the department, and part is coming from new money that the Treasury has made available. In making this change in these regulations, are we ensuring overall that the poorest and most vulnerable are being supported while helping to lift large numbers of our people out of poverty? That is the fundamental question against which you set these regulations. If the answer to that is yes, then, clearly in the context of that whole regime, you have to move forward upon that basis.

There are some problems and concerns, and some of them have been raised already. I echo some of them and pose a new one in questions that I hope the Minister will answer at the end. First, we have this interim period between the universal benefit Bill passing through your Lordships’ House and its becoming an Act in our country. In that interim period, the current interest-free loans will no longer be available. There is a danger that the people who find themselves put in most difficulty by these regulations will turn to high-cost lenders. What comfort at all can the Minister offer for where these people might turn in that interim period so there will be no difficulties for them? It is a short, one-off period before the new loan arrangements for purchasing, say, a cart, buggy and all those matters are in place.

Secondly, as has already been alluded to, what happens when a second child is born in a family and there has been no claim for the first child? You can imagine the circumstances where that might happen. Someone who is in work, has appropriate leave and reasonable funding behind them, might decide that it is not worth the effort, hassle or for other reasons—it might be that parents provide some of this equipment—and do not apply for the grant. Then perhaps there is a period of no work and when it comes to the second child it is difficult to find that sort of money. What happens when this is the first application within the family but the application is for the second child? Again, I would value an answer from the Minister.