Welfare Reform Bill

Lord Kennedy of Southwark Excerpts

Tuesday 13th September 2011 Lords Chamber

[Lord Kennedy of Southwark]

My Lords, as noble Lords on these Benches have said, the Opposition support many of the broad principles in the Welfare Reform Bill. On the face of it, these Benches could agree with many of the opening remarks of the noble Lord, Lord Freud. Universal credit is a welcome simplification of the benefits system. We all want measures to support people getting back into work, we support sanctions for people who persist in refusing to look for work, and we can support careful, considered reform of disability living allowance. All these reforms can build on the actions the Labour Government took to make work pay.

However, the Bill is a lost opportunity for real progress. I sincerely hope that the noble Lord, Lord Freud, is in listening mode. These Benches have major concerns about how the reforms have been proposed and the negative effect they will have on the living standards of millions of families and children. The Bill is not clearly thought through and in reality is an attack on family budgets which will have billions of pounds taken away under a smokescreen of reform. I hope the noble Lord, Lord Freud can explain why the Government have chosen to bring forward legislation which is so light on detail. Would it not have been better to wait and detail the proposals more clearly? We all want to get people quickly back into work, but to achieve that you need some jobs for them to get into. Failure to provide realistic opportunities for employment throughout the UK will mean that unemployment levels will rise and the welfare bill will be difficult to rein in.

Noble Lords will recall that we have been here before. It is very simple. If we can get people back into work, that will reduce welfare costs, but the Bill does not help in that regard either. The number of people chasing each vacancy can vary greatly, but even in areas that have more jobs on offer, you can be looking at one person chasing every five or six vacancies. So I worry that the Bill just does not take into account the reality of the situation people can find themselves in but instead takes a blinkered view.

There are a number of other issues. As the noble Lord, Lord Best, said, direct payment to claimants is not always in the interest of the benefit recipient. There is much to be said for payment to providers on behalf of the claimants. We have to recognise that people sometimes struggle to keep a grip of their household budget. Rising prices and the change in benefit rates from RPI to CPI all add to pressures on families. With direct payments of benefits into bank accounts, have the Government considered the problem of banks levying charges when account holders are overdrawn and recovering them as soon as funds from the DWP appear in the account? Charges taken direct from the claimant’s account will mean people will have even less money with which to meet their obligations. How will that help a family which is struggling to make ends meet?

As my noble friend Lord Knight of Weymouth said, proposals to remove local authorities from administering the housing benefit elements of universal credit need detailed scrutiny by your Lordships’ House. At present, the proposals run the risk of not saving money but actually costing more and increasing hardship and worry. At present, local authorities have achieved a high level of performance, which has reduced errors and speeded up claims. Should the Government not be allowing more localisation and less centralisation? The Institute of Revenues, Rating and Valuation, in evidence to the Department for Work and Pensions, urged the Government to listen, take a realistic approach and use local authorities in this regard. They have a track record of delivering and have the necessary skills and expertise. Can the noble Lord, Lord Freud, tell the House how a reformed administration of the system, overseen directly by the Department for Work and Pensions, will improve on the situation at present? How does the noble Lord envisage that measures to mitigate risks in the change will be implemented? What will be the process for the DWP to start a new claim? Will all new claimants be expected to send all their documents to the DWP? What if documents go missing? How will the new system mitigate against fraud? Does the Minister not understand the problem that over or underpayment will cause to claimants, as people seek to budget effectively?

Often housing benefit services are combined with council tax benefit and other benefits as part of a general benefit service. Can the noble Lord, Lord Freud, confirm that these local authority contracts will be allowed to run their course and local authorities will not be placed in the invidious position of having to seek to end these contracts early with all the resultant expense that that will entail. At this stage, I fail to see how not allowing local authorities to retain responsibility for administering the housing benefit element of universal credit is not a good thing. The system is administered well. If we move away from that expertise, the Government must put in place protections for people so that they are not disadvantaged and the situation made worse by this change.

In conclusion, I ask the noble Lord, Lord Freud, where the Government took soundings from before they brought these proposals to Parliament. Did they look at how systems are operated abroad? If they did, which systems did they look at? Much could be done with this Bill if the Government are prepared to listen and to work with noble Lords. There could be much merit in these proposals, but the devil is in the detail and the consequences for individuals and families on the lowest incomes appear to be grave indeed.