Welfare Reform Bill

Lord McKenzie of Luton Excerpts

Tuesday 13th September 2011 Lords Chamber

[Lord McKenzie of Luton]

My Lords, this has been a powerful, knowledgeable and passionate debate, as it should be, given the issues at hand. I congratulate the noble Lord, Lord Feldman of Elstree, on a very impressive maiden speech, and I look forward in the future to more of his contributions, and indeed to his stories. I had expected to hear about the iron triangle, but not from the noble Lord, Lord Boswell. I had not expected to hear a treatise on the family sizes of the Pakistani and Bangladeshi communities, and hope that I do not again.

I thank the noble Lord, Lord Freud, for the manner in which he introduced the Bill, for the extensive surrounding briefings and for the accessibility of the Bill team. I thank him again for his promise of further information, and it would be good to have a schedule of what is upcoming, particularly in relation to the Committee timetable. We acknowledge that the Minister is a pioneer and a true believer in the universal credit, and someone who is always evidence-led in his approach to policy. But his difficulty is that what is before us is a proposed credit that is not universal, and a universe in which there are too many black holes. I see the noble Lord not so much as a Che Guevara but perhaps as a Captain Kirk boldly going forth with a few warp factors involved. Of course, the universal credit provisions sit alongside measures that are known and which are deeply concerning. These arise in the context of the £18 billion of cuts to benefits before the universal credit sees the light of day, so assurances that there will be no losers, frankly, ring a little hollow.

We have had the timely and devastating report from the IFS which concludes that the Government’s economic strategy will give rise to greater inequality and rising child poverty, putting into reverse progress made in the years of the last Government. Indeed, if unchanged, the Bill will help to deliver this outcome for the Government. It is an outcome that, apart from those right at the very top of the income scale, will see the poorest 30 per cent hit the hardest. As my noble friend Lady Hayter reminded us in a fantastic speech from the Front Bench, the rhetoric of parts of Government—I exonerate the noble Lord from this—is increasingly in danger of stigmatising benefit recipients with a benchmarking always made against “hardworking families who pay their taxes”. I am bound to say we heard a little of that from the noble Baroness, Lady Stowell, implying that in order to receive benefits, you must be feckless, workshy and happy to live off the state, no matter that your circumstances may have changed because of a family bereavement, ill health, the worsening of a disability, the closure of a workplace or being forced to move because of housing benefit changes—or, as the right reverend Prelate the Bishop of Leicester said, because of simply making a mistake.

We are in support of a welfare system that recognises the benefits of work, supports people into work or closer to the labour market, and with an obligation on people to engage with the system and sanctions for those who refuse to look for work. These principles underpinned our approach to welfare reform when in government, with advice, of course, from the noble Lord, Lord Freud, in his former life. We know that the vast majority of claimants want to work, but they face job shortages and barriers to employment, so the Government have their part to play in promoting growth and job creation.

Of course, these barriers are not only lack of jobs but lack of skills, and sometimes employer attitudes to employing people with disabilities. A benefits system that provides in- and out-of-work support, and that has a single taper rate, a simple system of disregard and a single payment has the ingredients that could forge a political consensus, as my noble friend Lady Hollis said. However, having these components does not of itself justify the claim by the Secretary of State that there will be no losers and that work will always pay. It depends on the detail. There is a limit to simplicity, because the system must respond to the complexity of the lives of claimants, as we heard from my noble friends Lady Lister and Lady Sherlock; and of course, as my noble friend Lord Whitty said, simplification costs money.

We know that we have a taper rate of 65 per cent rather than 55 per cent, as the noble Lord, Lord German, would wish, because it was imposed by the Treasury; and that nearly 2 million workers will have a worse marginal effective tax rate as a consequence. We know that the savings cap will take thousands out of universal credit altogether, which is why we will seek to remove it during the passage of this Bill. Many noble Lords have commented on the lack of clarity about childcare—what we tragically do not see is a recognition of childcare as an investment to help parents access employment, reduce reliance on benefits and enable career development. We will continue to press for answers in Committee.

We also have no answers on how passporting to other benefits would work, although the passport in from PIP in respect of carers’ allowance is, as I understand it, work in progress. As my noble friend Lady Donaghy said, there is a lack of detail around self-employment, other than the unreal notion that someone starting a business will earn at the minimum wage from day one. We know that the Government have more work to do on payment issues, especially for joint claims, to take account of unequal distributions of finance in some households and to ensure that money allocated for children actually reaches them.

We have the outstanding issue of how direct payments to RSLs in respect of housing support can be made. It is only when these matters, and many others, are resolved that we can make our judgment on the universal credit. Although there are benefits in having a single payment source, it places even greater emphasis on the delivery systems being robust, because it is all or nothing. We have heard concerns expressed by the noble Lords, Lord Kirkwood and Lord Bilimoria; and my noble friend Lord Knight, in a very incisive contribution, effectively made the case for Parliament having reassurance before this finally proceeds.

Separating council tax benefit and housing benefit creates the worst of all worlds: a credit that is not universal, and the need to unpick local authority systems currently coping well with both—many of which, as my noble friend has just said, have been jointly outsourced. Local authorities are having to cope with this at the same time as the challenges of huge cuts in resources, increased homelessness and while picking up the pieces of the discretionary Social Fund—the latter without ring-fenced resources. Can the Minister tell me what assessment has been made of the capacity of local government to respond to these challenges, including that of devising new rebate systems with 10 per cent less money? How will this fragmentation help individuals access specific advice? The calculation of housing costs within the universal credit is delegated to regulations, but we know that this facilitates the uprating of housing allowance by CPI, separating actual rent levels from the housing support available.

The Bill covers just some of the changes to housing benefit that this Government have introduced. Our debate today has illustrated the extent to which noble Lords are appalled by the so-called under-occupancy provisions relating to social housing, ignoring the needs of foster carers, irrespective of where there is available smaller accommodation with equivalent security of tenure, regardless of whether people can afford to move and ignoring the expense to follow from replicating adaptations when disabled people are forced to move. These are illogical, wretched provisions that must be exposed and opposed. Even Mr Pickles has recognised that this will increase homelessness and cost money.

Many noble Lords have also commented on the benefit cap, an arbitrary measure which lacks an evidence base or indeed a clearly stated aim. We must use Committee to clearly challenge the basis for the figures and the perversity of including housing support in the calculation. There can be no more damning critique of this proposal than that of the Children’s Society, which says that 200,000 children would be affected by the proposal, and more than 80,000 children made homeless. I simply cannot believe that the Minister himself will find this acceptable, or the Treasury that it is cost effective.

We have heard from many noble Lords in this debate the fears that the policy in this Bill will have a massive impact on the lives of disabled children and adults, people with long-term conditions and their carers. These concerns have been highlighted by reforms to DLA set in the context of a reduction target of 20 per cent in expenditure mentioned by the noble Lord, Lord Rix. We are not unsupportive of reform to DLA, provided it is undertaken fairly, but what is important—and we have heard this from many noble Lords—is that there is a full opportunity in Committee and otherwise to scrutinise the proposed assessment criteria, the process and the structure of the benefits. As the noble Baroness, Lady Campbell, said, the lack of coproduction in this is to be regretted.

Many noble Lords again expressed particular concerns about the assessment process. The noble Baronesses, Lady Meacher, Lady Campbell and Lady Grey-Thompson, the noble Lord, Lord Wigley, and my noble friends Lord Touhig and Lady Healy raised questions about how the assessment would work in issues relating to people with mental health, fluctuating conditions, autism and Parkinson’s disease. I am bound to say I had a sense of déjà vu in all this. When we were discussing the work capability assessment we had a team of excellent officials from the department and extensive work with stakeholder groups testing the process, but we know what history tells us about what happened to the WCA and the extent to which it has taken time to put it together. We do not want a replication of that. We will also want to know how it works before it has been applied to existing DLA recipients.

The noble Baroness, Lady Hollins, my noble friends Lady Hollis and Lady Morgan and others gave us graphic descriptions of the effect of proposing a one-year time limit on contributory ESA—a limit which is to be imposed retrospectively. As we did in the other place, we will seek to get this extended to two years. We will further seek support for the qualifying period for PIP to be three months, as is currently the case for DLA. It is time for an end to the lingering confusion of DLA mobility for those in residential homes, and to ensure that it is protected.

Under the universal credit, the gateway to extra support for adults with a disability will be through the ESA. What this means is that there is no extra help within universal credit for those found fit for work regardless of their level of disability. The demise of the severe disability premium means less help for disabled people if they live on their own without a carer, and parents of all but the most severely disabled children will have their means-tested extra support cut in half. Moreover, the higher proportion of childcare costs of disabled children in less well-off families will be lost. Whatever the final proposals on childcare, does the Minister accept that these families are currently likely to miss out? We will seek to amend the Bill to ensure that any new disability addition to the universal credit for disabled children is no lower than that they currently receive in the child tax credit system.

Several noble Lords raised the issue of child maintenance: the noble Baroness, Lady Finlay, the noble Lord, Lord Boswell, the noble and learned Lord, Lord Mackay of Clashfern, and my noble friend Lady Sherlock. The legislative basis on which charging could proceed in fact is set down in the Child Maintenance and Other Payments Act 2008, but we will not allow our legislation to be prayed in aid for charging PWCs for routine access to the statutory system on a basis which will inevitably deter parents with care from using a lifeline to maintenance. We will also challenge the veto which non-resident parents have been given over a right to prevent PWCs accessing the statutory system. Of course, we support the encouraging of parents to reach their own arrangements but not for the gateway to act as a barrier to that system. Perhaps the Minister can tell us about the research which underpins the approach that the Government have adopted and the extent of the support services which can be brought to bear.

This is a great upheaval of the benefit system and it is being accompanied by a legal aid Bill which puts welfare benefits and employment out of scope, while limiting housing advice—quite unbelievable. The Bill presents us with many challenges. If it proceeds through your Lordships' House unamended, some of the most vulnerable people in our society will face serious hardship. Their day-to-day existence and their aspirations for the future will be diminished. Our task is to confront the Government with the consequences of what they propose, pursue the detail of the glaring gaps in the universal credit, scrutinise what detail is available on the PIP and the draft regulations and amend the Bill where we can—and to continue to argue the case for a fair, progressive, compassionate and sustainable welfare benefits system.