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High Court Judgment: Benefit Cap

Volume 626: debated on Tuesday 4 July 2017

I beg to move,

That this House has considered the High Court judgement on the benefit cap.

It is a pleasure to see you in the Chair, Mr Hanson.

On 22 June 2017, a ruling was made in response to a judicial review of the imposition of the benefit cap brought by four lone-parent families who had three children under the age of two. This was supported by Gingerbread, Shelter and the Child Poverty Action Group, all of whom I thank for their briefings on the matter. The judgment was damning of this Tory Government. In my speech I intend to refer to Mr Justice Collins’s judgment and I absolutely commend it to anybody with any interest in this issue.

Mr Justice Collins was quite clear in his findings:

“Whether or not the defendant accepts my judgment, the evidence shows that the cap is capable of real damage to individuals such as the claimants. They are not workshy but find it, because of the care difficulties, impossible to comply with the work requirement. Most lone parents with children under two are not the sort of households the cap was intended to cover and, since they will depend on DHP, they will remain benefit households. Real misery is being caused to no good purpose.”

In response, the Department for Work and Pensions says that it intends to appeal the decision. I find that truly shocking and urge the Minister to reconsider, unless she supports misery being caused to no good purpose.

Back in the Government’s own assessment before the 2015 Welfare Reform and Work Bill, there was an acceptance that the policy of reducing the cap from £26,000 to £20,000, or £23,000 in London, would have a disproportionate impact on women. It even stated:

“Most of the single women affected are likely to be lone parents: this is because we expect the majority of households affected by the policy to have children.”

The Local Government Association says that this lower cap is being implemented without a full understanding of the impact of the original cap. I ask the Minister, what did they expect to happen? Mr Justice Collins found that the policy is unlawful and discriminates against female single parents.

The Supreme Court has said previously that the benefit cap breaches the UN convention on the rights of the child and that:

“It cannot possibly be in the best interests of the children affected by the cap to deprive them of the means to provide them with adequate food, clothing, warmth and housing, the basic necessities of life.”

Mr Justice Collins reiterates that point in his findings, stating in paragraph 40:

“the effect of the cap means that the children and their parents have restrictions on what can be provided by way of housing, food and other things that an average child should have available. Further, as the ministers have said, it may be necessary to try to move to cheaper accommodation to avoid the effect of the cap so that there will be an upheaval for the family. I have set out the evidence of the damage to both family and private life which the cap has produced and will continue to produce.”

I commend my hon. Friend for her sterling work on this campaign. In her conversations with the UK Government, have they indicated how this policy is compatible with their family test?

They have not. The family test would appear to be something the Government have said in some grand papers and then not implemented at all.

According to the most recent DWP statistical release from May this year, 66,000 households were capped as of February, up from 46,000 in November 2016, because of the lower cap being applied. Some 74% of them were capped only because of the introduction of the lower cap levels, and 72% of capped households, or some 48,000, are single-parent families. Some 79% of single-parent capped households, or 38,000, have at least one child aged under five years old, including 15%, which is 7,200, with a child aged under one at February 2017. At February 2017, 83% of capped households, or 55,000, had between one and four children, and 10%, or 6,800, had five or more children. That is a very small number in that whole pool of people, but those are significant figures and each of them is hiding its own tale of misery.

I am not even convinced that this policy will save money as there are significant consequential costs: the cost of bad debt to councils and housing providers when the rent costs can no longer be met by the tenant—that single parent in a household—who has been capped; the cost of court proceedings to go through the process to evict that individual and to reinstate the property after eviction and bring it back on to the market; and the cost of temporary housing for that family once they have been evicted and have presented themselves to social workers as being in need of housing. The LGA estimates that the cost of temporary housing is £2 million per day—£2 million per day that we do not need to be spending because of people being evicted as a result of this cap.

There are also the costs to children’s services and mental health services due to the stress on families—the stress of not being able to pay the bills, of going into housing arrears, of eviction and homelessness and of all the other things such as maybe having to leave their homes and the support networks around them. There is the cost to the education of the children involved as they are forced to move schools. This is not just about the younger children, as their older siblings in the family might have to move schools and go to a different area away from family and support networks. All of those are costs, and we must bear them in mind.

Single-parent families of young children are forced by this Government into a no-win situation. They cannot earn enough via work because they cannot take on a job that will pay them enough to get out of the cap—they cannot take on more than the 16 hours that they need because they have childcare obligations to children under two. Some of the mothers involved in this case are breastfeeding. It is more difficult to go out and start work when someone has obligations to go back and feed their child, and we should not be forcing them to do so because, as we know, those early years with a child are extremely valuable. The families are also trapped because they cannot get enough support from the state. Sadly this leaves them with destitution, food banks and both physical and mental ill health. These are women who are doing their best and struggling to provide a better life for their children. We should be helping them, not cawing the legs from under them.

The Scottish Government’s independent adviser on poverty and inequality, Naomi Eisenstadt, said yesterday that

“life outcomes are largely determined by the wealth and social class of one’s parents at birth… it represents not just fundamental unfairness, but also significant waste of talent and opportunity for the economy and social cohesion of Scotland.”

I would argue that that applies more widely to the UK as well. By taking parents’ circumstances and punishing them—not allowing them the means that they need to feed their families—we are stunting the life chances of the children throughout their lives. We are punishing people for the circumstances they are in.

The UK Government will say, as they always do in these types of debates, that the best way out of poverty is work, and that those receiving benefits should face the same choices as those supporting themselves solely through work. If those phrases are on the Minister’s sheet today, I advise her to cross them out now. Mr Justice Collins stated:

“those observations are entirely irrelevant in relation to lone parents such as the claimants who find themselves in real difficulty in being able to enter work because of the need to care for a child under 2.”

The circumstances of the parents in this case are worth reading out in full, just in case those looking at Hansard or watching at home have not had the chance to read through some of the circumstances. The first claimant, “DA”, was

“homeless, living with her four-year-old son in a refuge in north London as a result of serious domestic violence from her husband, which led to her having to leave her council flat. She is due to give birth in mid-June. When living in the refuge, she was not subjected to the cap since it does not apply to those victims of violence who have to live in a refuge. It was submitted that she was not able to be a claimant since she was not a lone parent with a child under two and was living in a refuge. That objection has not been seriously maintained since she will become subject to the cap when she gives birth on leaving the refuge. Furthermore, I was informed that she has now been given emergency accommodation for those who are homeless which costs £247 per week. She has investigated the possibility of private accommodation but has found, as is confirmed by her solicitor who has made a statement based on her experience of dealing with many clients who are homeless or suffering the effects of the benefit cap or the bedroom tax, that very few private landlords are prepared to accept tenants who depend on housing benefit particularly if they are capped. As must be obvious, when she gives birth she will not be able to work particularly as she wishes to breastfeed. Furthermore, the council has refused to allow her to join its housing list since she came from outside its area as she was fleeing violence and does not have the necessary four year residence in the borough. She has been informed that when capped she will have £217 per week available for rent. She has mental and physical problems as does her son. She is anxious to work when she can.”

The other claimants are equally worthy cases and worthy of the attention of everyone in this House, but I would like to mention the last one, a parent who has four children:

“WBA has four children, aged 17, 14, 13, 7 and 14 months, the youngest also being a claimant. The youngest child was conceived following a rape by her husband: she has indeed been the victim of an abusive relationship over the years. She has since February 2017 been living in suitable accommodation, but the cap has resulted in a shortfall of £151.76 per week. She was able to obtain DHPs but only for short terms and with no promise that they would continue. On having been granted a DHP on 20 April 2017, the council wrote a letter dated the same day saying it had been cancelled. The way she has been treated has distressed her. She wishes to work when she can.”

I should mention another campaign that I am involved in, which is on the rape clause. This family will potentially lose the rights to child tax credit and universal credit unless the mother fills in the form to say that she has been raped. This is a family who are already under significant pressure. They deserve support, not further demonisation and stigmatisation.

The Government will talk about childcare. They will say that they are offering childcare to people, and that that is an important point. Actually, it is not an important or relevant point in this case. The money they are offering for nursery places is not for this specific group, the under-twos. The cost of nursery places, particularly for under-twos, can be prohibitive in a lot of cases. The childcare ratios for under-twos bear a higher cost, and some nursery providers will charge more for an under-two’s childcare place than for a three or four-year-old’s. Some nurseries do not deal with under-twos at all—they do not take babies.

There are issues of availability and flexibility as well as cost. If the parent goes out to work, they are essentially working to pay for the nursery place, not to bring extra money into the house. They cannot always rely on family, because they may have had to leave home and move to a cheaper part of the country so that they can afford housing—the Government have put them in that situation as well. They cannot rely on older family members, who might be WASPI women who have been forced back to work and cannot carry out childcare tasks as they might have before. This is not really a choice for a lot of these women.

The Government expect women to make the same choices regardless of their circumstances, but some of the women in the cases I mentioned do not have the choices that we would all like. They may not have a choice over their reproductive rights. They may have been raped. They may not want to have a termination. They may not have all the choices they would want. It is interesting that the benefits charity Turn2us, which runs a helpline, has reported an increase in inquiries about whether or not to proceed with a pregnancy, as a result of the benefit cap. That is absolutely appalling. The Government are forcing women into such choices.

The women in these cases did not become single parents by choice, but by circumstance. These things happen in life. We cannot always choose to end up how we set out in life. The benefits system should be a supportive safety net, not something that punishes women for their circumstances, particularly if they are facing domestic violence.

The chief executive of the Women’s Aid Federation, who gave evidence in the case, mentioned that because of the perverse nature of the system, there has been bed-blocking in refuges. Women are not subject to the cap while they remain in the refuge, but the second they leave it, they are. That creates unfairness in the system: there are women who cannot come into the refuge because other women literally cannot afford to leave, since they will lose so much money if they do. It is appalling that women are forced to make that choice. It also forces women into making the choice of leaving in the first place, because if they know that with the benefit cap and with the children they already have they cannot possibly afford to support themselves going into housing—possibly expensive private lets—they will stay, risking their own and their children’s safety. The Government should take heed of that, if nothing else.

It cannot be possible that any Minister listening to these cases could intend people to live in such circumstances. To be generous to the Government, is it not more likely that the ideology of austerity and of arbitrary caps is forcing people into them, through policy?

Absolutely. The entire policy and the way that people end up as a result of it need to be reviewed. It is causing genuine hardship to no good purpose, as the judge pointed out. We need to look at the whole policy in the round.

The Government will say that there is the discretionary housing payment. Yes, there is, but the savings from the benefit cap amount to £155 million, while the amount put towards the DHP by the Government is £37.1 million, so there is no way that the money can be made up in that way.

The Local Government Association has found that the

“cumulative impacts of welfare reform are contributing to a…housing affordability crisis.”

The Government have a huge part in that. There is a lack of rehousing options for women. Where can they move that is cheaper than where they are now? If they live in a city such as London, they would probably have to leave it altogether, which would mean leaving the family, school and other support networks they might have. There is a lack of social rented housing, particularly in some parts of England. A lot of it used to be local authority housing that has either been bought under right to buy or has gone to housing associations or other areas where there is less control over it. Not enough new housing has been built in its place, so there are fewer options for people. Private lets are extremely expensive. When private landlords see someone who they think will not be able to pay the bills in a few months’ time, they will not take them on. As the judgment states,

“the reality is that DHPs do involve short term payments and give those affected no peace of mind.”

May I say how grateful I am that the hon. Lady secured this debate? I would like to cite one extra figure: 3,270 children in Scotland have been affected by this cap. We have heard harrowing tales about individuals who have suffered because of it, and about the difficulty that the Government are placing them in: an ultimate Hobson’s choice that single parents, predominantly mums, have to make over their children. In Scotland, 3,270 individual children are being made subject to this cap. They are under 18, they do not vote, and their parents have to make the choice.

I agree.

The judgment further notes that inquiries were made

“of local authorities about their practices in dealing with DHPs. Of the 235 who responded, none had ever made a permanent award nor had any agreed to make a payment before a tenancy commenced.”

So somebody who goes into a new tenancy cannot expect to get that payment, and neither can the landlord expect to receive it. It is not enough of an option. By their very nature, discretionary housing payments are discretionary—they are at the discretion of whoever the person applies to. They are also oversubscribed in many areas, because people know that they are their only option to try to top up an income that is dwindling as a result of Government policy.

The other problem with moving people to so-called cheaper areas around the UK is that those areas also tend to have higher rates of unemployment. People are not moving to areas where they are more likely to get work; they would get work in areas where rents are higher, because there is more demand for it there.

The issue of private landlords is particularly worrying. The judgment mentions evidence from the Residential Landlords Association and the National Landlords Association that

“private landlords are very reluctant to take on tenants who were capped and many would seek to evict such tenants.”

It is not even that people will not get a tenancy, but that they will be evicted from the tenancy they already have. That seems particularly cruel.

All these problems are avoidable. They are a result of Government policy, and there is a choice here for the Government. We are in a very different situation now from the one before the election. There is no longer a majority for austerity in this House. The Government have a choice. They do not have to waste further money on appealing the judgment. I understand that they have already wasted at least half a million pounds on other appeals relating to the bedroom tax and the carer’s allowance, but they should not waste more public funds appealing a case that has already been proven to be an injustice. They should put their hands up and say, “There is an injustice here, and we will put it right in the interests of the children who are affected.”

The Government have a choice. The Chancellor has stated that the British people are “weary” of austerity. I urge the Government to do something about it for these women, for their children and for families across the UK. If money can be found on the magical money tree for £1 billion to prop up the Government, it can be found for women and children across these islands.

It is a great pleasure to serve under your chairmanship, Mr Hanson. I congratulate the hon. Member for Glasgow Central (Alison Thewliss) on securing this important debate on the benefit cap High Court judgment.

The hon. Lady is absolutely right to bring the issue to the House. As she knows, the Government are committed to building a country that works for everyone, and that means taking action to help and encourage people into work and away from a life of welfare dependency and to restore fairness between those who pay into the system and those who access it. We believe that those out of work should not receive more in benefits than many working families are able to earn. Before the cap, the Department for Work and Pensions disproportionately spent £10 million a year on just 300 families.

As the hon. Lady said, we introduced the benefit cap in 2013 at a national rate of £26,000 a year. Its aim was to encourage people to find work, and that is exactly what has happened. We did that on the principle that work not only pays, but brings self-esteem, better health, better happiness and improved self-confidence, as well as much more opportunity for social mobility for children in such households. The evaluation of the original cap shows that that is what has happened.

Capped households are 41% more likely to go into work than uncapped households, and 38% of those capped who were interviewed said that they were doing more to find work. The original cap met its aims, but the change was mainly felt in London and the south-east. To spread the work incentives across the country, we introduced a lower tiered cap in November last year. It aims to build on the original successes. The new tiered cap is set at £23,000 for couples and lone parents in Greater London and at £21,000 for other parts of the country. That is an equivalent salary of £29,000 in London or £25,000 in the rest of the UK. We know that four out of 10 households in London and in the rest of the UK earn less than those respective amounts. That system is fair to those who use it and to those who pay for it.

The cap levels continue to provide a clear incentive to work. Households are only required to work part-time hours to be exempt from the cap. Households that claim working tax credits are exempt from the cap if they work just 16 hours a week for lone parents or earn £520 a month on universal credit. However, we acknowledge that the move into work just is not appropriate for some people. That is why there is a range of exemptions for vulnerable groups, including households in receipt of most disability benefits, carer’s allowance, the equivalent universal credit carers element and the guardian’s allowance.

We were disappointed by the High Court judicial review decision, which challenged the application of the cap to lone parents with children under the age of two. The Court gave the Government the ability to appeal, and we will be appealing the decision, as we strongly believe that work is the best way for people to raise their living standards. We know that children whose parents work benefit from increased life chances. They are less likely to grow up in poverty. Evidence shows that one of the biggest drivers of child poverty is long-term worklessness and low earnings.

I want to respond to some of the issues that the hon. Lady raised. The latest labour market statistics show that we continue to have a record number of people in work. In April, nearly 32 million people were in work. Evidence shows that work is the best route out of poverty. There are also record numbers of lone parents in employment. It is not easy. In life, very few people choose to be a lone parent, as I know. I never made the choice to be one, yet I was a working lone parent, making the same difficult decisions that lone parents, particularly mothers, have to make every single day.

An evaluation of the previous benefit cap showed that it changed attitudes and behaviours. One in five of all capped households went to work after a year, compared with just 11% of similar uncapped households previously. Importantly, capped lone parents were 51% more likely to be in work after a year as compared with similar uncapped lone-parent households. Those surveyed said that the new employment had brought financial rewards —some felt better off and able to afford extra treats for their children—and other rewards in health, happiness and self-esteem.

The hon. Member for Glasgow East (David Linden) talked about the family test, but he is mistaken about what it is. He has a far too pessimistic view. It is not a tick-box exercise, but a way of assessing the impact of a policy on a whole range of family measures. It is not in children’s best interests to live in workless households. Children’s life chances and opportunities can be significantly damaged by living in households where no one has worked for years and where parents do not consider work as an option.

Let us face it: we are only requiring people to work for 16 hours a week. Children in households where no parent or carer is in work are much more likely to show challenging behaviour by age five. Parental worklessness has been shown to be significantly associated with poorer academic attainment and greater behavioural problems in children aged seven. Growing up in a workless household is associated with a higher risk of being not in education, employment or training in late adolescence.

The Minister is talking about the importance of ensuring that we do not have households with worklessness, but part of the problem is that the Government have done very little to tackle pay inequality. They are bringing forward a living wage that does not support under-25s. Nothing the Minister is saying reassures me that the Government are making any attempt to tackle pay inequality, particularly for under-25s. This Government will be actively discriminating against them with their false living wage.

I am afraid the hon. Gentleman is just wrong. Some 1.3 million people on the lowest incomes have been taken out of income tax altogether since 2015. In April 2017, we increased the national living wage to £7.50. That will directly benefit 12 million workers this year. A full-time worker on the national living wage will see their annual pay increase by more than £500.

One issue raised was that the benefit cap is forcing people to move. Our evaluation of the original cap found that very few households moved house. Where they have moved, the vast majority have moved locally.

I am particularly concerned about the arguments that the hon. Member for Glasgow Central made in respect of vulnerable women. Before doing this job, I was the Minister for Women and Equalities, and the violence against women and girls agenda is close to my heart. That is why I am delighted that the Government have committed more than £100 million to tackling violence against women and girls. Such violence is absolutely unforgivable in any circumstances.

We recognise that some groups, such as pregnant women, new mothers and victims of domestic violence, find it harder to adapt to benefit caps. That is why we have explicitly stated in the guidance that direct housing payments should provide targeted help to women within 11 weeks of an expected birth and to households with children under nine months. Women who need safe accommodation, such as sanctuary houses, are prioritised. Housing benefit can be paid for both the home a victim has fled and the refuge or other temporary accommodation for up to 52 weeks. That 52-week limit is to avoid the blocking issue that the hon. Lady specified. It is also disregarded from the benefit cap.

In regard to Scotland, 7,300 households have been capped since the benefit cap was introduced. Of those, more than half are no longer capped, with 21% moving into work. The cap is having a positive impact. We can always find negative and distressing stories; when those happen, the hon. Lady is more than welcome to bring them to my desk and to my attention, but we have to look at the vast majority of people who have been assisted by the cap.

Both the cap and the policy limiting entitlement to the child element of tax credits were subject to detailed impact analysis throughout their development. We know that children whose parents work have improved life chances and are less likely to grow up in poverty. Parents receiving universal credit can get help with up to 85% of their eligible childcare costs. That is not just for children over the age of two or three; there is no minimum child age requirement for claiming costs through working tax credits or universal credit.

Our new childcare offer is backed by unprecedented levels of investment. Spending on childcare will increase to £6 billion by 2020. I was the Minister for early years education, and we are spending more than any previous Government on early years education and support for childcare. Finally, the flexible support fund can be used to help those working fewer than 16 hours a week with childcare costs for a child of any age, when those costs would otherwise present a barrier to work.

Lowering the cap emphasises the message that it is not fair for someone on benefits to receive more than many people in work. The hon. Lady may say that I should cross through those lines in my speech, but they are the most important. Even when claimants remain capped, they are better off from any work they are able to do. In some cases, a relatively small amount of work can be sufficient to mitigate the effects of the cap. For those impacted by the cap, we have made discretionary housing payments available to people who may need extra help.

Motion lapsed (Standing Order No. 10(6)).

Sitting suspended.