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Lords Chamber

Volume 743: debated on Tuesday 5 March 2013

House of Lords

Tuesday, 5 March 2013.

Prayers—read by the Lord Bishop of Leicester.

EU: Subsidiarity Scrutiny

Question

Asked by

To ask Her Majesty’s Government what assessment they have made of the working of the European Union subsidiarity test procedure under the Lisbon treaty in view of the two recent reasoned opinions submitted by this House to the European Union institutions.

My Lords, the power of national Parliaments to issue a reasoned opinion that an EU proposal does not uphold subsidiarity has been exercised many times since 2010, including five times by your Lordships’ House. Only once, on the Monti II proposals on the right to collective action across borders, have enough Parliaments done so to trigger what is called a yellow card. However, the views of national Parliaments have been influential on a wide range of issues and the continuing use of this procedure should give them an increasing role.

My Lords, I declare my interest as a member of your Lordships’ European Union Committee, Sub-Committee B. Under the current test procedure, this Parliament can only challenge the Commission on the basis of subsidiarity, as the Minister has said, if at least eight other Parliaments also raise concerns. What obligations does the Lisbon treaty place on national Parliaments to participate actively in the scrutiny of directives, because without such scrutiny and participation, the subsidiarity test cannot possibly work? Under what circumstances would the Government consider using the red card in the test procedure, to seek judicial review by the European Court of Justice, where this Parliament, through its scrutiny, has raised substantial concerns about subsidiarity and where other Parliaments may not have participated in the process?

My Lords, in the nature of events, red cards are to be used in an emergency situation, not as part of the normal procedure. Perhaps it would help the House if I point out that last year, the Swedish Parliament issued 20 reasoned opinions; the Luxembourg Chamber of Deputies issued seven in 2011 and a larger number in 2012; the French Senate issued seven last year; and the House of Lords issued five. It is not the case that we are the only Parliament to be active in this regard.

My Lords, under what circumstances would my noble friend consider that Her Majesty's Government should exercise themselves through the diplomatic network to engage the interest of other Parliaments in matters that concern us and appear not to have reached their attention?

My Lords, Her Majesty's Government do operate a diplomatic network in precisely that area. I hope that scrutiny committees through COSAC—the Conference of Parliamentary Committees for Union Affairs of Parliaments of the European Union—also now operate actively in this regard. I am told that it has become a much more effective body since I used to attend COSAC meetings many years ago when I was the chairman of a sub-committee. There is now a set of offices in Brussels of national Parliaments which provides a network where national scrutiny committees can get together. I hope that the Lisbon treaty arrangements will allow that network to become more and more active.

My Lords, remembering that for the past 33 years all British Governments have promised not to allow enactment of proposed EU legislation which is still being scrutinised by our Select Committees here and in the other place, will the Minister confirm Written Answers which reveal that this scrutiny reserve was broken no fewer than 403 times between January 2010 and June 2012? Does that not make 403 pieces of EU legislation that Parliament has not agreed but which have been steamrollered through by the juggernaut anyway?

My Lords, the noble Lord uses his characteristically robust and colourful language. There is always a tension between the time that national Parliaments wish to take for scrutiny and the pressures that national Governments, including our own, may wish to give to taking decisions. There are those in national Parliaments who regard the eight-week limit for taking a scrutiny decision as unfortunate, but I am informed by those who know the Brussels situation better than I do that the earlier national Parliaments submit reasoned opinions in the process of negotiation, the greater effect they have.

Reasoned opinions in the form of reports issued by the European Committee of this House are widely respected throughout the European Union in other national Parliaments and elsewhere. I recall with delight a Member of the European Parliament being appointed to head a committee in the European Parliament. He was asked by his clerk to start by reading three documents, two of which were reports from the House of Lords EU Committee.

My Lords, would the Minister not agree that in the short period of time that the yellow-card system has existed, the main lesson to draw is that we have to get better at enlisting other national Parliaments when we use the yellow card because that is the shortfall? Will he confirm that on the one occasion when it was used, the Commission withdrew its proposal—the Monti II proposal? Will he also confirm that the right to take action in the Court is one for this House, not the Government under the Lisbon treaty?

I can confirm all of those matters. On the Monti II proposals, some of the reasoned opinions submitted by national Parliaments were much more about the principle of the proposal rather than the subsidiarity issue. Her Majesty's Government did not suggest that we should submit a reasoned opinion on subsidiarity issues because they objected to the principle of the proposal.

My Lords, is not one of the ironies of subsidiarity that it requires greater centralisation to determine with whom the subsidiarity should remain?

I am not entirely sure that I follow the logic of that. We are in an increasingly globalised economy. That economy requires increasing international regulation of one sort or another. We are in a constant situation of tension between international regulators—not just the European Union but many other international bodies as well—wishing to extend the process of regulation and national Governments, national Parliaments, local groups and other lobbies wishing to resist it.

My Lords, does my noble friend agree with the European Union Scrutiny Committee when it took evidence from Professor Dashwood who, in respect of arguing before the European Court of Justice, said that,

“the subsidiarity principle was most useful in the state of law-making rather than at adjudication, at which point it was ‘largely inoperable’”?

In other words, as the noble Lord, Lord Hannay of Chiswick, has said, we need to build alliances in good time rather than wait to go to court.

My Lords, the principle of subsidiarity is in many ways a difficult concept to get hold of, and of course it is highly political. There are those here who think that a number of things should be dealt with in Wales and Scotland and not at the national level, while I wish that the principle of subsidiarity was better applied in England than it is at present. This is part of the way we play politics between different levels of government.

My Lords, can the Minister clarify how this procedure works in practice, bearing in mind the comments made by the noble Lord with regard to the power being with the Chambers and not with the Government themselves? As the UK has two votes on the basis of being a bicameral system, one of which is allocated to this Chamber, what would be the outcome if there was a difference of opinion between the House of Commons and this Chamber? Would we have to defer to the House of Commons as it is the elected Chamber?

My Lords, no, we would not. It would be interesting if, for example, the House of Lords decided on one side while the House of Commons decided on the other. I think it is unlikely, but I should say that there have been occasions on which some national Parliaments have issued reasoned opinions objecting to particular proposals while one or two others have issued opinions that are strongly supportive.

Probation Service: Community-sentenced Offenders

Question

Asked by

To ask Her Majesty’s Government whether the management of community-sentenced offenders will remain the responsibility of the Probation Service.

My Lords, the Transforming Rehabilitation consultation by my department closed on 22 February and we are now considering our response. We have proposed opening up the market for rehabilitation services to a more diverse range of providers, but the public sector will retain ultimate responsibility for public protection and will manage directly those offenders who pose the highest risk of serious harm to the public.

My Lords, I thank the Minister for that reply. Last week, the Justice Secretary appeared before the Justice Select Committee in another place and said that we have a duty to supervise offenders in a consistent way and that he wanted to make the probation world more independent of Government and the big bureaucratic documents that tell them how to do their job. For 100 years until recently dissolved by its subordination to prisons, the probation service, in partnership with the police and the courts, was responsible for the consistent supervision of community-sentenced offenders independent of such interference. Can the Minister tell the House how the Justice Secretary’s proposed division of responsibility for the supervision of different types of offender between probation and an unknown number of untried private and voluntary sector organisations will better honour his duty of consistency?

I hear the growl from the Benches opposite, but it is interesting that we are using the 2007 Act to carry through these reforms of probation, so they are not exactly being original in terms of how we should develop these matters. I do not take fully the point made by the noble Lord about going into the unknown. The fact is, as those noble Lords opposite who have had dealings with these matters will know, that the voluntary and the private sectors have been involved in offender management for a very long time. We are trying, within a very tight budget, to see whether we can reform the probation service and dealings with offenders in order to bring in the best of what works outside. It has been interesting to learn that good ideas on offender management are not constrained simply to the probation service. As I said in my original reply, the public sector has ultimate responsibility for public protection, but we think we can deliver a reorganisation that also makes use of the wide variety of experience and expertise that exists in this area.

My Lords, I have listened carefully to the answers given by the Minister. He will be aware that one of the most important things for the probation service is that there is public confidence in the work that it does. Part of that public confidence comes from the transparency of having information about the work that it does, and understanding what works and what is most effective. In his Answer, he said that the public sector has the ultimate responsibility. Does that mean that all services, even those outsourced to private companies by the Government, will still be subject to freedom of information?

That is one from left field. I will have to check on that and write to the noble Baroness. However, as she knows, my inclinations are that, as far as possible, freedom of information should extend to all work that is conducted by the private sector, or is covered by the contractual agreement between the public and private sectors, which would allow access to information. I understand the point she makes, and will write and make the letter available to the House.

My Lords, the probation service is widely admired for its professionalism and general excellence. What ideas do the Government have to make sure that we not only do not lose those but indeed capitalise on them?

My Lords, at no stage—either at this Dispatch Box, in private meetings or in any other meetings elsewhere—have I ever said anything other than that I am in awe of the work that our probation officers do. It will remain a matter of concern that we get the balance right between our public probation service and the new ideas, initiatives and ways of doing things that we hope this rehabilitation revolution will bring about. I personally hope that one of the outcomes of this rehabilitation revolution will be a probation service that is enhanced in public respect and public confidence. Indeed, I would look to the day when we have a chartered institute for probation, with the same kind of professional status as other professions.

My Lords, the Minister speaks of a new way of doing things. Is it not the case that when legislation was passing through Parliament, we were told that certain bonuses of a financial nature would be paid to those supervising the system, based on success? Will there be an aliquot penalty in the case of failure? In the case of success, what will be the indices of performance in respect of which success will be judged and at what level?

My Lords, part of the exercise is what is roughly called “payment by results” for those that take on these undertakings if they manage to achieve a rehabilitation, which means people not reoffending within a specific time. Part of the problem we face is that nearly half of offenders leaving prison reoffend within one year. We hope that the system will incentivise those providing services to think creatively about rehabilitation. The worst thing for victims and the taxpayer is this revolving door, which successive Administrations are faced with and which, I believe, the rehabilitation proposals we are bringing in give us a real chance of breaking into.

Referendums

Question

Asked by

To ask Her Majesty’s Government whether they are considering further legislation concerning the holding of referendums in the United Kingdom.

My Lords, the Government believe that the legislative framework set out in the Political Parties, Elections and Referendums Act 2000 has worked well. We have no immediate plans to amend this framework. Each referendum held under the Act, however, requires its own separate primary legislation to set the date and question, and to make any other necessary technical changes.

My Lords, as many with long memories will know, the first national referendum on Europe in 1975 had quite a lot to do with tackling internal divisions on Europe within the Labour Party. Now it seems that we are to have a referendum on Europe principally for party management reasons as the Prime Minister seeks to appease his party critics. Does the Minister think that this is a satisfactory way of deciding on referendums? If not, will he heed the report of the Constitution Committee of this House, which advised Governments against holding referendums for ad hoc tactical reasons and advised building up a wider political consensus about when and if they should be used?

My Lords, I had indeed reread that section of the Constitution Committee’s report, which said, as the noble Baroness has remarked,

“we regret the ad hoc manner in which referendums have been used, often as a tactical device, by the government of the day … Where possible, cross-party agreement should be sought as to the circumstances in which it is appropriate for referendums to be used”.

Let us hope that we can reach cross-party agreement on such matters in the future.

My Lords, given the precedent of the Scottish independence referendum next year, is it now the Government’s position that any future national referendum with long-term consequences should extend the franchise to 16 and 17 year-olds?

My Lords, we have debated this before and I do not want to go too far down this road. The Scots have decided that for this one referendum they would like to extend the vote to 16 and 17 year- olds. No doubt we will discuss time and again how much further that should be extended.

My Lords, has the Minister read the article by our friend, the noble Lord, Lord Hennessy, in the Tablet? In it he reveals that the Cabinet has taken two decisions: first, a wise decision not to have any pre-negotiations with the Scottish Government in advance of the referendum; and secondly, what is in my view an unwise decision not to have any contingency plans to deal with the situation in all our areas of concern if the referendum gives a yes vote. Will he ask his colleagues in the Cabinet to reconsider this? We will all be fighting to ensure that there is a no vote, but in the unlikely but unfortunate event of a yes vote, we have to be ready to deal with the consequences.

My Lords, I congratulate the noble Lord on the catholicity of his tastes in reading. I had indeed read that article because the noble Lord, Lord Hennessy, was kind enough to give it to me.

My Lords, as it was a Liberal Democrat commitment to have a referendum on Europe, surely there should not be too much difficulty for the coalition partners in agreeing that this is the way forward?

My Lords, we will wait to see what is in the manifestos of all the parties for the coming election. The proposal by the Prime Minister in his capacity as Conservative Party leader is to hold a referendum, after some considerable further renegotiation, in the mid-point of the next Parliament.

Does the noble Lord recall that we spent a long time a couple of years ago debating the extension of referenda to transfers of power to Brussels? Does he agree with my understanding that the fact that we have had no such referendum called indicates that Brussels is not always acquisitive of our powers?

My Lords, I vaguely remember some discussions on the subject. The question of whether we are heading towards treaty change is not primarily a matter for Brussels; it is much more a matter for different national Governments. The opinions of the French, German and Polish Governments and others weigh very heavily in this.

My Lords, will the Minister recommend to his colleagues in the Government the address of Edmund Burke to the electors of Bristol, its comments on the role of Members of Parliament and its relevance to the current addiction to referendums?

My Lords, I am surprised that the noble Lord has not also called in aid Mrs Thatcher’s comment in the mid-1970s on the dangers of sliding from parliamentary democracy to plebiscitary democracy. Our political system depends on the principle of parliamentary sovereignty and that is something that we have to cling to.

My Lords, further to the supplementary question of the noble Baroness, Lady Quin, does the Minister agree that opinion polls consistently show that more than 80% of the British people want a referendum on our membership of the European Union? Perhaps that should be of some significance even to our present political establishment.

I am glad that the noble Lord is such a man of the people in all these respects. I recall that, three months before the 1975 referendum, opinion polls were overwhelmingly in favour of leaving, but that, in the course of the campaign, opinion was informed and thus altered.

While we are reflecting on the wisdom of the British people, would the Minister like to reflect on some very successful referendums that have been held in the past two or three years: first, on the good sense of the public in rejecting any notion of a fancy new electoral system for Westminster parliamentary elections; and secondly, on nine out of 10 British cities rejecting fancy directly elected mayors? On the basis of this, might it be a good idea to hold just one more referendum, on deciding whether the elections to the European Parliament next year should be on the basis of first past the post?

My Lords, the noble Lord, as always, demonstrates what a splendid conservative he is on all matters of constitutional reform.

EU: Eurozone Financial Transaction Tax

Question

Asked by

To ask Her Majesty’s Government what assessment they have made of the effect on the United Kingdom financial services industry of the Eurozone financial transaction tax recently proposed by the European Commission.

My Lords, on 14 February, the European Commission published a proposal for the implementation of a financial transaction tax through enhanced co-operation. The UK has the largest financial sector in the EU. The Government oppose the European Commission’s initial proposal for an EU-wide financial transaction tax and the UK will not be participating in an FTT introduced through enhanced co-operation by a group of member states. We are currently studying the draft proposal carefully to understand its impacts and will continue to engage fully in discussions going forward.

My Lords, I am grateful to the Minister for that Answer as far as it goes, but, reading the newspapers and the Commission’s proposals, I believe that the United Kingdom will be affected. Can the Minister confirm that UK tax policy is made in Parliament and not by the European Commission and a gaggle of member states which are jealous of the City’s pre-eminence in financial services? What actions will the Government take to protect our special interests in this matter?

My Lords, as I said in my original Answer, we are fully engaged in discussions going forward. If the FTT is introduced, it will have a number of impacts on the UK. The Government are in the process of assessing what those impacts might be.

My Lords, can my noble friend tell us how much the European Commission expects the tax to raise? Will it not be pensioners and consumers who have to pay it?

My Lords, the estimate that the Commission has produced is that the tax would raise €35 billion. It would not be raised from all financial institutions across the EU; it would be raised only from those established in countries which levy the tax. A tax such as this, which covers things like shares, trickles down through multifarious channels but, obviously, at the end of the day, a very large number of people end up paying a small amount towards it.

If the treaty eventually proposes a tax that would affect this country, will the Minister make it clear that we would veto it?

My Lords, the noble Lord needs to understand the difference between a tax which we would levy, where there is a veto, and a tax which we would help collect, of which there are a number of existing examples in EU law and this would be another.

My Lords, does my noble friend agree that a tax which was to some extent a deterrent on frequent trading—for instance, algorithmic trading—might not be such a bad thing if it encouraged long-term investment in shares?

My Lords, I am sure that many noble Lords share that aim. The question is whether such a tax would have that impact, and the academic work on it is ambiguous at best.

Will the noble Lord explain why the Government are so allergic to the financial transaction tax, which is to be levied at less than 1% of the value of transactions and by many countries, whereas we are quite happy to have stamp duty levied on transactions at 5%, which is effective only here in the UK?

My Lords, we have some examples of where this kind of thing has been done in the past. In 1989, Sweden introduced its version of an FTT and in the first week the volume of bond trading fell by 85%, even though the tax rate was only 0.003%. The volume of futures trading fell by 98% and the options trading market disappeared. Not surprisingly, Sweden is not now supporting the idea of a Europe-wide FTT.

My Lords, the original concept of the financial transaction tax was that it would be global and that the funds would be used to assist the developing world. Have the British Government considered that, as many politicians on all sides support those concepts, they might take leadership in this global role, which might strengthen their hand in these much more parochial negotiations with the European Union?

My Lords, the noble Baroness will recall that in 2011 the French Government proposed such a tax at a global level in G20 and there was widespread opposition to it from, among others, the US, China, Australia and Canada. Sadly, there is nowhere near a global consensus on whether such a tax is a good idea, and, equally, there is no consensus, even within the EU, about where the money should go. The French were, and are, keen that at least part of the proceeds should go to development aid, but the Germans, for example, propose that any receipts from the FTT should simply go into the central tax pot.

Given the behavioural crisis in many of the financial institutions in recent years, would the Government not be well advised to discuss the merits of such taxation around Europe, rather than reacting like Pavlov’s dog to anything just because it comes from Brussels?

My Lords, we are engaged in discussions on this tax as it could have significant impacts not just on the City but across the EU. While the Government are not opposed in principle to a global FTT, with the lack of consensus on such a thing and faced with a proposal which we think could be damaging not just to the UK but to Europe as a whole, we are rather sceptical about it.

How do New York and other financial centres react to the international reach of this particular piece of EU lunacy?

My Lords, as far as I am aware, New York has not yet responded to the most recent Commission proposals.

Health and Social Care Act

Statement

My Lords, I shall now repeat as a Statement the answer to an Urgent Question given in another place by my honourable friend the Minister for care services earlier today on the National Health Service (Procurement, Patient Choice and Competition) Regulations 2013. The Statement is as follows:

“I know that the right honourable gentleman and others have raised concerns about the effect of the regulations, and I would like to address these. First, however, I would like to make it absolutely clear that the regulations must be fully in line with the assurances given to this House during the passage of the Health and Social Care Bill.

The former Secretary of State said to clinical commissioning groups in 2012 that,

‘commissioners, and not the secretary of state, and not the regulators, should decide when and how competition should be used to serve patient interests’.

This absolutely must be the case. I made it clear in health Questions last week that we would review the regulations to ensure that this is the case and that they are not open to any misinterpretation.

The right honourable gentleman himself gave guidance to primary care trusts, which made it clear, in 2010—and again I quote:

‘Where there is only one capable provider for a particular bundle of services or the objective of the procurement is to secure services to meet an immediate interim clinical need there will be a case for Single Tender Action (ie uncontested procurement). By definition, an immediate’—

or urgent—

‘scenario will be exceptional and likely to only … arise on clinical safety grounds or, for example, where existing services have been suspended following intervention by the Care Quality Commission’.

The next bit is very important:

‘A decision to procure through a single tender action should always take account of the potential to secure better value by investing in a competitive process, as long as this is justified by the scale and importance of the opportunity (ie it has to be worth it)’.

As we committed in the Government’s response to the Future Forum report, we want to ensure that the regulations simply continue this approach. However, I fully recognise that the wording of the regulations has inadvertently created confusion and generated significant concerns about their effect. I have therefore listened to people’s concerns and my department is acting quickly to improve the drafting so that there can be no doubt that the regulations go no further than the previous set of Principles and Rules, inherited from the previous Labour Government. As we also committed in response to the Future Forum’s report, the Co-operation and Competition Panel has been transferred to Monitor and this will ensure consistency in the application of the rules.

Concerns have been raised that commissioners would need to tender all services. This is not our intention and we will amend the regulations to remove any doubt that this is the case and to clarify that the position remains the same as at present—and as stated in the former Secretary of State’s letters in 2012. Concerns have been raised that Monitor would use the regulations to force commissioners to competitively tender. However, I recognise that the wording of the regulations has created uncertainty and we will therefore amend them to put this beyond doubt.

Concerns have also been raised that competition would be allowed to trump integration and co-operation. The Future Forum recognised that competition and integration are not mutually exclusive. Competition, as the Government made clear during the passage of the Bill, can only be a means to improving services for patients, not an end in itself. What is important is what is in patients’ best interests. Where this is co-operation and integration there would be nothing in the regulations to prevent this. Integration is a key tool that commissioners are under a duty to use to improve services for patients. We will amend the regulations to make this point absolutely clear”.

My Lords, that concludes the Statement.

My Lords, I thank the Minister for reading out the response to the Urgent Question in another place. While we welcome the climbdown on the regulations, can he appreciate the sheer disbelief and consternation across the House at the regulations, coming as they do after the recent SI on local Healthwatch that even the Government’s own supporters described as complex, draconian and muddled? These regulations flew directly in the face of lengthy and repeated government assurances about Healthwatch’s independence and right to campaign. Now we have a repeat of the story with the Section 75 regulations, which again made a mockery of the assurances by both Commons and Lords Ministers during the passage of the Health and Social Care Act. In the words of the Minister, GP commissioning would be,

“under no legal obligation to create new markets, particularly where competition would not be effective in driving high standards and value for patients”.—[Official Report, 6/3/12; col.1691.]

As the Francis report made clear, GPs must exploit their new role as commissioners to the full to ensure that their patients get safe and effective care. How will care be safe and effective if the coalition’s competition policy on the NHS is in chaos? Despite all the upheavals inflicted on the NHS, there is still no clarity in policy. The Government’s U-turn is clearly a response to Labour’s fatal Motion. The writing is on the wall for their plans to marketise the NHS. Why did it take this Motion to make the Government think again?

Finally, can the Minister outline to the House the sequence of events going forward? Can he confirm that the Government cannot in fact withdraw the current regulations but must lay additional regulations to annul or amend the mess we are now in? When will the new regulations be laid and when will the House have a chance to consider them?

My Lords, first, I understand perfectly the anxiety that has been voiced about the way the regulations are worded. This is a problem centring in almost every respect on legal drafting. Our intention and our instructions have been as they always have: to create a set of regulations—as expected under the terms of the Act, as the noble Baroness knows—which reflect in every way the assurances given by Ministers during the passage of the Health and Social Care Act, no more and no less.

However, to the lay reader, certain parts of the regulations which, in legal terms, do as they were intended appear not to do so. We took very seriously the fact that perception differed from reality—perceptions matter—and therefore, early last week, I put in train a programme of work to revise the regulations. However, we also determined that we could not come to Parliament with half a story and that we would have to present our fully formed response to the concerns by tabling a set of revised regulations. We were not in a position to do that until this week. It was therefore not the case that the Opposition’s Motion forced us into this position. I was well aware that we had to respond to the concerns voiced not only in this House but in the wider healthcare community.

The noble Baroness said that she thought our competition policy lacked clarity. Our competition policy is based on competition law as it now appears and as it was during the previous Administration. There is no question of our changing that. The idea that we are trying to marketise the NHS is, as the noble Baroness knows, not true. In the Health and Social Care Act, we included a specific provision which prevents the Secretary of State or anyone else preferring independent sector providers over the NHS. That was something which the previous Government did not see fit to do.

The noble Baroness asked me what the programme ahead looked like. We intend to revoke the current regulations and substitute regulations with amended wording within a few days.

My Lords, I thank my noble friend for meeting Members from these Benches on this issue nearly two weeks ago. Will he confirm for the House that, in line with assurances given during the course of the Bill last year, the regulations will promote integration of services in the best interest of patients?

I think that everybody was agreed during the passage of the Health and Social Care Bill that we wish to encourage integration in the way that services are commissioned. Integration in this context should be taken as a term that reflects the experience of the patient. The patient has to feel that he or she is on a seamless pathway of care. That care may be provided by a number of agencies, if necessary, whether in the NHS or social care, but the patient’s experience should not be disjointed. Therefore, as my noble friend will remember, numerous provisions were inserted into what is now the Act to ensure that commissioning should be on that basis. Nothing in these regulations interferes with that, but it is very much in our minds to make it crystal clear that integration of services is one of the main factors which commissioners should take into account.

My Lords, can the Minister reassure the House that the new draft regulations are consulted on before they are tabled—very swiftly, I am sure—to safeguard against misinterpretation again by lay audiences? Perhaps a very swift consultation programme could be developed with stakeholder organisations, royal colleges, patient groups, and so on, so that we can avoid the misunderstanding to which the noble Earl refers.

I intend to meet some of the royal colleges, and I have met one already. I do not feel that a full-scale consultation is appropriate because the Government’s policy has not changed. It is the wording of the regulations that has given rise to anxiety. I therefore think that, having taken on board, as I hope I have, all the concerns that have been raised, a clarification of the regulations is all that is necessary and there is no need to consult on the policy yet again.

My Lords, is it not the case that the Government have form on producing regulations that are virtually incomprehensible as far as the lay reader is concerned, particularly in respect of these health service changes? We had the incident with Healthwatch only a few weeks ago. Even though there is a short timescale, is it therefore not imperative that there is proper consultation to make sure that whatever emerges reflects the very fine and helpful words that the Minister has given us this afternoon? Will he also tell us whether Ministers ever read these draft regulations before they are laid before the House?

My Lords, it is my intention to issue an invitation to noble Lords to join me in a meeting so that we can discuss these matters. I am very happy to do that over the coming days. The answer to the second question is yes. We read these regulations in conjunction with the Explanatory Memorandum and the line-by-line interpretation that we have also published in this case which make it crystal clear that these regulations do no more and no less than reflect the law and the Government’s policy. However, others have chosen to misinterpret the regulations, and that was something that I could not predict.

The Minister may know that I do not always see totally eye to eye with all my colleagues on these Benches on the subject of competition. Will he say how much discussion there has been with the voluntary sector and social entrepreneurs on these regulations? In my experience they have always struggled to make their presence felt when contracts are available within the NHS.

My Lords, the department consulted on its proposals for these regulations between August and October last year on the basis of the commitments that had previously been given. All sectors had an opportunity to feed in their comments. Our proposals for the regulations did not give rise to any anxieties at that time.

My Lords, the Minister should have been made aware of the concern I expressed the other night in relation to the reference to Monitor in the Enterprise and Regulatory Reform Bill and to its supervision by the proposed Competition and Markets Authority which seems to some of us to introduce by the back door a situation where the CMA would override Monitor, making, in effect, competition trump integration and co-operation. Will he now advise the noble Viscount, Lord Younger, to delete the reference to Monitor in that Bill?

My Lords, I took the opportunity to read the noble Lord’s comments a few days ago, and I am grateful to him for them. He will be receiving a communication in a few days’ time to clarify this issue. I thank him for raising it. The short answer to his question is that it is not our intention for competition to trump integration.

Damages-Based Agreements Regulations 2013

Conditional Fee Agreements Order 2013

Criminal Legal Aid (Determinations by a Court and Choice of Representative) Regulations 2013

Legal Aid (Information about Financial Resources) Regulations 2013

Civil Legal Aid (Costs) Regulations 2013

Motions to Approve

Moved by

That the draft regulations and orders laid before the House on 14 and 21 January be approved.

Relevant documents: 16th and 17th Reports from the Joint Committee on Statutory Instruments, considered in Grand Committee on 26 February.

Motions agreed.

Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (England) Order 2013

Council Tax Reduction Schemes (Detection of Fraud and Enforcement) (England) Regulations 2013

Gateshead and Northumberland (Boundary Change) Order 2013

East Hertfordshire and Stevenage (Boundary Change) Order 2013

Motions to Approve

Moved by

That the draft orders and regulations laid before the House on 14 and 22 January be approved.

Relevant documents: 16th and 17th Reports from the Joint Committee on Statutory Instruments, considered in Grand Committee on 28 February.

Motions agreed.

Presumption of Death Bill

Third Reading

My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Presumption of Death Bill, has consented to place her interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Bill passed.

Mobile Homes Bill

Third Reading

Bill passed.

Armed Forces: Army Basing Plan

Statement

My Lords, with the leave of the House I will now repeat a Statement made in the other place.

“With permission, Mr Speaker, I would like to make a Statement on the future basing of the British Army. To assist honourable and right honourable Members in understanding the detail of the changes I shall announce and the effects on their constituencies, I have placed in the Libraries of both Houses and on the MoD website documents setting them out. Copies are, with your permission Mr Speaker, being distributed in the Chamber.

In 2010, we set out in the strategic defence and security review the configuration of forces that the UK would require to meet future threats and we committed to have completed the return of UK troops from Germany by 2020. Last summer, I announced to the House the structure of the Regular Army component of Future Force 2020. Today, I can announce the future pattern of basing of the Regular Army in the UK so that our service men and women, their families and the communities that host Army units have clarity about where they will be based in the future and when moves are likely to occur.

As the House will recall, in July 2011 the then Defence Secretary set out our initial plans for the future of the MoD estate on which we will accommodate, train and prepare our Armed Forces. Those plans have been significantly refined over the intervening 18 months and reflect the fully developed military advice on the optimum affordable basing lay down to accommodate the Army in its future structure.

This announcement honours our commitment to bring all our troops home from Germany by 2020, with all but 4,400 of 20 Brigade home by Christmas 2016. It supports the Army 2020 structure, the integrated reserves training model and the generation of the Army’s future military capability. It delivers a £1.8 billion investment in the UK economy in infrastructure and accommodation and annual savings of £240 million in reduced costs and improved efficiency of training and maintenance operations, on top of the £100 million-plus annual saving generated by the previously announced moves from Germany.

The return of the British Army from Germany marks the end of an era and I want to put on record the huge debt of gratitude we owe to the German Government and the German people for the support, both moral and material, they have shown our Armed Forces over more than six decades. In fact, that return has already begun. In 2010, there were 20,000 British service personnel based in Germany together with their dependants and civilian staff. Already, that figure has been reduced to less than 16,000, with significant force elements having already relocated, such as the Headquarters Allied Rapid Reaction Corps, which has moved to Innsworth, Gloucestershire.

Planning for completion of the return is well advanced. We are on track to reduce our presence in Germany by more than 70% by 2015, against our SDSR target of 50%. The long-term retention of a small training presence in Germany, utilising NATO training facilities, is under consideration, but we will be closing all major unit locations. But this is not just about rebasing the Army from Germany. It is about providing a basing plan for Army 2020 in the UK, which will allow the Army to generate its military capability in the optimal way.

As the plan has developed, two key principles have emerged to inform it. First, the armoured infantry brigades of the reaction force should coalesce around a single location. We have concluded that Salisbury Plain Training Area is the only place in the country where we have the capability to carry out the complex and demanding training exercises they need to conduct. Having all three brigades located in close proximity around the plain will enable them to train and fight more effectively, and will present significant opportunities for efficiency in equipment support and people management. Secondly, the Army should retain a UK-wide footprint, maintaining the vital link to civil society, fostering closer links between reserve units and their partnered regular units and supporting nationwide recruitment and engagement.

Guided by these two principles, the Army has identified the laydown that represents the best value for money, both in terms of utilisation of existing estate and in terms of minimisation of running costs. The focus will be on increasing consolidation around seven centres at: Salisbury Plain Training Area, where we will invest over £800 million; north-east England, centred on Catterick; Aldershot; Edinburgh and Leuchars; Colchester and Swanton Morley; Stafford and Donnington; and, in the east Midlands, focused on Cottesmore and North Luffenham, where £180 million will be invested—all while maintaining a regional presence in other parts of the country. Consolidating around these seven centres will significantly reduce the need for moves, giving Army personnel and their families greater certainty about where they will live and work, with real benefits in terms of increased stability, access to long-term spousal employment opportunities, continuity in schooling and the chance to set down roots and access the benefits of home ownership.

This announcement will maintain the broad pattern of Army activity in Scotland, Wales and Northern Ireland. With 45 Commando Royal Marines remaining in Arbroath for the foreseeable future, the measures announced today will see an increase of about 600-plus in total regular Armed Forces numbers north of the border as against the July 2011 baseline, even as the Armed Forces reduce in size by about 17% overall. In both Wales and Northern Ireland, overall numbers will reduce by approximately 400.

This announcement sets out our firm plans for the laydown of the British Army, subject of course to gaining the necessary planning, environmental and other regulatory approvals. They are underpinned by a capital investment from the defence budget of £1.8 billion, including £1 billion of investment in new living accommodation to provide 7,800 single living spaces and 1,900 new and refurbished units of family accommodation. This investment will provide a welcome stimulus to the UK construction industry and, taken together with significant purchasing power currently going into the German economy that will be diverted to the UK, will help create jobs across the regions and nations of the UK.

The MoD plays a major role in the Government’s public land release programme and will be looking to release additional land and surplus service family accommodation where it is no longer needed. Under this plan, the Armed Forces will leave a number of locations. The disposal plans will be subject to further detailed work and will be subject to the completion of the plans for the reserve estate in due course. However, I can confirm that we plan to dispose of Howe Barracks in Canterbury, Claro Barracks in Ripon and parts of Copthorne Barracks in Shrewsbury. In Scotland, we will be disposing of Craigiehall Barracks, as well as elements of Redford Barracks and Forthside Barracks, Stirling. Kirknewton will not now be developed as an Army base but Dreghorn will remain as one.

The MoD intends to close Cawdor Barracks at Brawdy in Wales, which is no longer fit for purpose, with 14 Signal Regiment relocating to St Athan, not before 2018, as part of a regional consolidation of the defence presence on that site that will also allow commercial development and job creation by the Welsh Assembly Government, with whom we are working collaboratively in support of the enterprise zone. The local communities in each of these areas have been hugely supportive of the military presence over many years. The loss of historic ties will be much regretted and, on behalf of the Army, I want to thank those communities for their generous hosting.

As part of our continued scrutiny of the central London estate, we will be pursuing options to vacate Hyde Park Barracks and reprovide for the Household Cavalry Mounted Regiment elsewhere within central London, allowing for disposal of this prime development site, provided that the regiment’s requirements can be met and that it proves value for money to do so. These disposals, and other planned disposals, will bring substantial receipts which have already been factored into the MoD’s future budgets and will significantly reduce the operating costs of the MoD estate.

I have focused today on the future basing of the Regular Army, but I am conscious that many honourable and right honourable Members will also be interested in the reserves and in our plans for reserve basing, as well as the future basing plans for the other services, the training estate and logistics operations. My right honourable friend the Minister for the Armed Forces will be making announcements shortly concerning other routine changes elsewhere in the MoD estate across the UK, and I will update the House before the Summer Recess on the future basing plans for the reserves.

This announcement represents a costed and funded plan to bring our Army back from Germany, deliver the basing laydown for Army 2020 and provide the accommodation our troops deserve, fulfilling our commitments to consolidate the Army estate and providing certainty to Army personnel and their families about where they will be based in the future. It is a plan that is driven by the Army’s requirement to generate military capability in the most effective and efficient way as it reconfigures for contingent operations based almost entirely in the UK. It represents a significant step towards the achievement of Future Force 2020, delivers substantial savings to defence in the future and a significant boost to the UK economy, and to the construction industry in particular, right now.

I commend this Statement to the House”.

My Lords, that concludes the Statement.

My Lords, I thank the Minister for repeating the Statement made earlier in the other place by the Secretary of State on the next, but hardly controversial, stage of one half of the coalition Government’s withdrawal of troops from Europe. We welcome a steady, costed withdrawal of UK troops from Germany. Today’s announcement will impact on Army deployability, our ability to meet planning assumptions, service families’ livelihoods, and the integration of service personnel with local communities.

Before asking some detailed questions on how to make these measures successful, I will refer to previous Statements on the basing plan. The 2010 Strategic Defence and Security Review referred to the redeployment back to the United Kingdom of British Forces personnel currently based in Germany. It also referred to reconfiguring the Army into five multirole brigades. Approximately half of the then 20,000 personnel serving in Germany were expected to be relocated back to the United Kingdom by 2015, and the remainder by 2020.

Following the SDSR, the Ministry of Defence undertook a basing review, the conclusions of which were announced by the Secretary of State in July 2011. Under the plans announced then, RAF Kinloss would be transferred to the Army, with some of the personnel returning from Germany being based at Kinloss from 2014-15. RAF Leuchars was also to be transferred to the Army, with two major units and a formation HQ being redeployed to that site from Germany. The HQ was expected to move to Leuchars before 2015, followed by the two units between 2015 and 2017. RAF Cottesmore was to be vacated by the RAF, with the Army expected to start moving in in 2013.

The five multirole brigades envisaged under the strategic defence and security review were to be located in and around Catterick and Salisbury, in eastern England largely at the former RAF base at Cottesmore, and in Scotland, largely in Kirknewton, south-west of Edinburgh. The multirole brigades in eastern England and Scotland were to be largely formed from units returning from Germany. According to the July 2011 Statement, it was expected that approximately 6,500 to 7,000 Army personnel currently in Germany would be based in Scotland. It was also expected that units returning from Germany would move into bases in Aldergrove in 2015, and that further units returning from Germany would relocate to Pirbright barracks during the course of this year.

In November 2011, the Ministry of Defence announced the first tranche of moves that would take place in 2012 and the first half of 2013 as part of the defence rebasing programme, with the first tranche including 1,800 personnel returning from Germany. I mention all that because I want the Minister to clarify the extent to which the proposed moves and timescales announced today are in line with previous announcements and Statements on the basing review and on the redeployment back to the United Kingdom of British forces personnel currently based in Germany. Where there have been any changes, will he explain what those changes are, including changes in timing, and the reasons for them, as that is not entirely clear from the Statement made in the other place by the Secretary of State for Defence?

The Secretary of State in the other place also said, and, indeed, repeated in the Statement, that the total cost of returning troops from Germany is £1.8 billion. Will the Minister spell out specifically where this money has been found and say whether any cuts to the Ministry of Defence non-equipment budget are being made as a result of having to find this money? All those in the military who have recently lost their jobs will want to know that today’s announcement has not been funded at their expense. Likewise, will the Minister say how much is allocated for each RAF base being converted to make them fit for the Army, and in each case when the conversion will be completed?

I would like to refer to the Armed Forces Covenant Annual Report 2012 because it contained the following observations by external members of the covenant reference group. It stated:

“Notwithstanding the fact that work on the New Employment Model (which will include accommodation) is on-going, we urge the Government to produce a transparent assessment of the impact of the freeze both on the condition of accommodation and on how the needs of Armed Forces personnel and their families are being met, particularly given the imminent relocation of our Forces from Germany”.

It is also worth reminding ourselves of the comments by the Armed Forces Pay Review Body in its 2012 report. It stated:

“Against the background of wider changes and uncertainty, accommodation remains high on the list of concerns for Service personnel and their families. We hear repeated concerns during our visits and from the Service Families’ Federations, ranging from practical issues about the lack of choice in allocations and variable maintenance performance in different locations to policy issues on the definition of the family. … On our visits Service personnel and their families often commented on the allocations process for Service Family Accommodation (SFA). Lack of information and choice ahead of moving to a new unit were often mentioned as issues of concern”.

The pay review body went on to express concern at receiving,

“poorly evidenced proposals from MOD to address its perception that the ‘subsidy’ to Service families has become too high”.

The pay review body went on to comment:

“The evidence we received from MOD was driven by the perceived need to reduce the difference between MOD’s spending on Service accommodation and its rental receipts. It did not give sufficient consideration to the human aspect of housing or the role of accommodation in the overall package for personnel”.

In the light of those comments from the pay review body and the Armed Forces Covenant Annual Report, including observations by the external members of the Covenant Reference Group, in relation to accommodation, rents and the apparent gap between income and expenditure, can the Minister say whether Armed Forces personnel and their families returning from Germany will be faced with attempts by the Ministry of Defence to secure significant increases in rents for accommodation provided for them in this country? What steps are being taken to address the other concerns on accommodation, to which I have referred and have been highlighted by the pay review body, in the light of the moves back from Germany? Clearly, accommodation is a significant issue for Armed Forces personnel. The quotes that I have mentioned are not mine but are contained in the Armed Forces Covenant Annual Report 2012 and the pay review body report for 2012. It would be helpful to have the Government’s response, bearing in mind that a significant part of the success of the moves back from Germany will be dependent on the quality, extent, variety and cost of accommodation provided for our Armed Forces personnel who are moving back.

What efforts will the Ministry of Defence be making to give personnel returning from Germany the opportunity to purchase their own homes, which I know is an objective of the MoD? It would be helpful if the Minister could say a little more on that score. Can we also be assured that the accommodation provided in the UK will be of comparable size to the accommodation in Germany? I know that this might sound like a detail but, to the families, that would not be the case if it went wrong. If the accommodation is not of comparable size, there could be logistical issues such as existing furniture not being able to fit into the new accommodation. I am sure that some warm words—I hope more than warm words—of clarification on that point would be extremely helpful.

Most of my comments are directed towards the moves back from Germany. Can the Minister give a guarantee that no one returning will be forced to take expensive private rented accommodation? What are the anticipated costs of education and healthcare provision for Armed Forces personnel and their families returning to this country, bearing in mind that they are likely to be concentrated, as I understand from the Statement, in a relatively small number of locations? Will the cost of education and healthcare fall on the defence budget or education and health departmental budgets, and those of the devolved Administrations? I ask that particularly in relation to the reductions in the amount of money that local authorities have. Bearing in mind that those returning are moving back to a relatively small number of locations, what will be the impact on existing schools? If new schools are required, will they be local authority schools, academies or free schools, and who will make such decisions?

Will the decisions on where to base personnel—the biggest group that we are talking about is coming back from Germany—lead to an even greater concentration of our Armed Forces in a limited number of locations, largely in the south of England? Given that that appears to be the case, subject to what the Minister says in reply, will that have any adverse impact on recruitment into our Armed Forces from other parts of the country, particularly when the economy picks up and those seeking employment have a wider choice of job opportunities?

Will it also be the case that, with the withdrawal of our Armed Forces from Germany, the expenditure on the costs of such a move will have to be financed well in advance of any savings or other financial benefits being realised? The noble Lord referred to costs and he also referred to savings, but he did not refer to timescales. If it is the case that the costs have to be borne well before the savings are achieved, what would be the cash-flow implications for the Ministry of Defence budget? May I also ask that, in withdrawing from Germany—

Are we faced with any penalty or other payments as a result or are we able to withdraw from the accommodation sites we currently occupy in Germany at any time we choose without incurring any penalty or other charges?

I am sure from the comments that have just been made that your Lordships will appreciate the fact that I am about to conclude. UK troops have been stationed in Germany for almost 70 years. We support their return home, but this will be matched, on our part, by detailed scrutiny. I hope the Minister will be able further to outline the implications of today’s announcement for personnel and their families as well as for local communities which, I am sure, will give our returning troops a warm and patriotic welcome.

My Lords, I am grateful for the noble Lord’s welcome for a steady, costed withdrawal from Germany. I wrote as fast as I could, but I am afraid that I could not keep up with all of the noble Lord’s questions. I will do my best to answer as many as I can, but I undertake to write to him as soon as possible.

The noble Lord referred to previous Statements, particularly the July 2011 Statement. As the Defence Secretary said, today’s announcement presents an updated plan for the British Army which is built on where necessary, just as the plan announced in 2011. The further work we have carried out in the interim has refined the Army’s requirements and further identified value-for-money in our planning. It has sought out incremental savings and operational synergies in the way the Army operates.

The noble Lord particularly mentioned Scotland and the previous Secretary of State’s announcement in July 2011. The plans set out two years ago were on the basis of the Army operating a multirole brigade structure, but under Army 2020, published last year, the Army announced a significant change in its structure based on two key elements: reaction force brigades, centred on Salisbury Plain, and adaptable force brigades, based on regional headquarters. We will have an adaptable force brigade in Scotland, but it would not make sense to split the reactive force brigades between Salisbury Plain and Scotland, especially as we would need to purchase an additional training area in Scotland. Nevertheless, today’s announcement strengthens the Army’s presence in Scotland and implies an increase in the number of Armed Forces personnel based there of roughly 600 above the levels at the time of Dr Fox’s July 2011 announcement. This is a visible sign of our commitment to Scotland and to Scotland’s continual vital contribution and role in the United Kingdom’s defence.

The noble Lord asked me about the £1.8 billion expenditure and where it comes from. I can confirm that it comes from the capital budget and will not be at the expense of any redundancies. The point to remember is that it will deliver substantial savings from 2015 onwards.

The noble Lord asked me about RAF bases. We will be spending a lot of money both at former RAF Cottesmore and at RAF Leuchars. I do not have all the information at hand, and anyway, we are subject to contractual agreements, so I would not be able to give the noble Lord the figures. I will write to him in the best possible way that I can.

The noble Lord referred to the Armed Forces covenant and the pay body report. The Army has always looked to minimise effects on families of unit moves by ensuring that, where possible, any necessary moves are timed to allow personnel the ability to manage issues such as schooling and healthcare as easily as possible. While moving a great many Army families initially, this basing plan will give our personnel and their families greater long-term stability where they are based. This will allow them to integrate into the local community, their spouses to find long-term jobs and their children to have continuity in their education. Following the complete delivery of the plan, it is envisaged that the majority of units will not need to move again in the near future. The noble Lord asked me whether we are encouraging members of the Army and the Armed Forces to buy their properties. We are certainly doing that.

I can give the noble Lord confirmation that to the best of my knowledge no members of the Army will have to go into private rented accommodation. We are taking a great deal of trouble in working this out. Those members of the Army coming back from Germany will have suitable, adequate accommodation to move into with their families. We will consult the relevant government departments, local authorities and devolved Administrations about education and health. While the department recognises that the increase in personnel in some areas will increase demand on local services, many of the changes—for instance, Salisbury Plain—will not take place until the second half of the decade, which will allow time for resources to be appropriately redirected. Obviously, the education and health costs will fall on these local authorities but it is my understanding that they very much welcome these units moving into their areas.

The noble Lord mentioned Germany. We are very sad to be leaving Germany. I add to what the Secretary of State said in thanking the authorities there very much for all that they have done over the past six decades. I can confirm that the Secretary of State spoke yesterday to his German counterpart who, while being very sad, quite understands the reasons for us moving.

I think that that addresses most of the noble Lord’s questions. I know that there are a lot of unanswered ones and I undertake to write to him.

The Minister made mention of training areas. To train an army properly with its ground-air support, great dedication must be given to the hours of darkness and night training. This always causes consternation among local government, various bodies and nearby inhabitants. What are the Government doing to ensure that night training is not sanctioned in any way in its most modern form today so that our military can consider and take part in proper night training within the United Kingdom? If we do not allow constant night training of our Regular Forces and Reserve Forces of all three services, we will not have much of an Army.

My Lords, it is my understanding that a good deal of night training takes place in different training areas, such as Salisbury Plain, Otterburn in Northumberland and in Wales. We hope to keep the NATO training area in Germany after we move the rest of the Army out. Troops go to Alberta, Canada, for night training and to other countries, of which the noble Viscount is aware, including jungle training in Brunei.

My Lords, last year in your Lordships’ House, as regards housing for the Army, I said:

“The bad news is that there will be a three-year pause in the improvements programme from April 2013”.—[Official Report, 23/4/12; col. GC 278.]

That related to the report of the Armed Forces pay review body. We owe it to our soldiers to provide good and decent accommodation. Will the Minister confirm that we are doing that and how it fits into the earlier statement about having a pause in improvements in April 2013? Can he also say whether the £1 billion funding for housing in the Statement will not lead to calls for further cuts in welfare benefits?

My Lords, I quite agree with my noble friend that we owe members of our Armed Forces decent accommodation, and we are going to considerable lengths to ensure that that happens. As I said in the Statement, we are spending £1 billion to provide some 1,900 new service family accommodation units and some 7,800 single living accommodation bed spaces. The intention is that the living conditions of those returning will be comparable to those of UK troops based in Britain and that the return of units from Germany to the UK will provide greater stability for the soldiers and the families involved.

I am afraid that I have forgotten the second part of my noble friend’s question, but this money is pretty much ring-fenced for accommodation. It will not be at the expense of other areas.

My Lords, the Minister will be well aware that any development such as this is a compromise between the need to save money and the need to maintain the footprint of the Armed Forces throughout the United Kingdom. What account has been taken of the difficulties that we appear to be experiencing in recruiting, particularly to the Reserve Forces, when Scotland, for example, is one of the major areas that we would hope to be recruiting from? This could be seen as a disappointment in that the footprint in Scotland will not be expanded as greatly as was originally thought.

I hope the Minister will forgive me a parochial point. Have the Government taken into account the availability of the Barry Buddon training area just across the estuary from Leuchars in deciding which units would be based there?

My Lords, I cannot answer the noble Lord’s last question. I am sure that it was looked into but I will check. We are aware of the recruiting issue, particularly for the reserves. As the noble Lord knows, we have done a lot of work on the reserves and trying to build up recruiting. There will be a White Paper on recruiting for the reserves and I hope to make a Statement on that issue before the Summer Recess.

My Lords, the Minister will recognise that those of us who come from Yorkshire will have mixed feelings about the Statement and since both Catterick and Ripon are in my patch, I share those feelings. On the one hand, so far as my experience at Catterick is concerned, I very much welcome the emphasis in the Statement on spousal opportunities for work, home ownership and continuity of schooling. Will the Minister reaffirm that individual soldiers and their families will be spending longer periods of time at a single base? That is what is necessary. It is not simply that they will return from Germany, but that they will spend a significant amount of time at one base in this country, which has often not been the case in the past.

On the other hand, the damage to Ripon of the closure of Claro barracks will be substantial in terms of the economic effect, friendships and the pride of the city. I have no doubt that that will be the same for other places where barracks are being closed. What support will be available to local communities, especially in comparatively small places such as Ripon, in order that those effects may be mitigated for the whole community in which those barracks are set?

My Lords, I can confirm to the right reverend Prelate that our objective is to have units based in similar locations for a much longer period of time so that wives can be encouraged to get jobs and children will have continuity of education. We have set out in this basic plan, which I hope noble Lords have with copies of the Statement, all the different places where the units coming back from Germany are going to. I accept that there is a lot to digest in this and I am organising a briefing in the Ministry of Defence on 19 March. All the members of the Armed Forces and the civil servants who have been working on the plan will be there to explain everything to noble Lords. Indeed, noble Lords who do not normally come into the MoD are welcome to come along, and I would very much welcome the right reverend Prelate. We will be able to discuss the support that we are planning to give to all the local communities, in particular the smaller ones.

My Lords, I welcome the Statement that the Minister has just repeated about the future basing of the Army and the answer he gave earlier that the money involved, the capital investment, will be ring-fenced. I assume that the Minister meant that the £1.8 billion should be ring-fenced, which I very much welcome. Army basing is one of the areas of doubt that now may well have been clarified. Of course, doubt is what reduces morale in the Armed Forces, but redundancy is another issue hanging over many members of the Army at present. While I accept that the basing policy now brings more clarity to where the Army is going to live, can the Minister tell us when the new employment model will be made known to members of the Army so that they know how they are going to live?

My Lords, I was referring to the £1 billion which my noble friend asked me about; that is being spent on accommodation. The noble Lord mentioned morale and I quite agree about how important accommodation is to the morale of the members of our Armed Forces. I spend quite a lot of time looking at the accommodation for the three services and I do all I can to ensure that it is being upgraded. Likewise, the noble Lord mentioned basing. We are doing everything possible to pass messages on to members of the Armed Forces and their families so that they know exactly where they stand. The feedback I have been given suggests that it has been very well received by the Army.

Can my noble friend give an estimate of how long the transitional arrangements will take in respect of RAF Leuchars? Also, can he give an assurance that the runway will be kept operational in the mean time?

My Lords, I can confirm for my noble friend that the runway at Leuchars will be kept in operation. I think that a university air squadron is based there and will continue to use it. Once the Typhoons have moved up to RAF Lossiemouth, we would want it as a failsafe runway for Lossiemouth.

My Lords, it is the wrong decision to bring back the Army from Germany at present, and to do so at very considerable cost. The Minister mentioned the figure of £1.8 billion. That would have been enough to have kept Nimrod going, to have maintained a Harrier strike force and to have bought all 22 Chinooks. The Government have demonstrated a very perverse order of priorities in this decision. It also deprives the Army of the training opportunities available in Germany which are much more extensive than Salisbury Plain, as the Minister knows very well, and of course of the opportunity for close collaboration in Germany with the Bundeswehr and the American army units stationed there, so it was the wrong decision. However, perhaps I may ask the Minister for a figure that he has not given. What is the estimate of the incremental costs in the future of flying our troops for training in Germany, Canada or in other places where they need more extensive training grounds—a need that would not have arisen had we maintained our position in Germany?

My Lords, I am sorry that the noble Lord always finds something wrong with the announcements I make, but he forgets the very difficult financial situation that we inherited. I would point out that although we are spending a certain amount of money on bringing our troops back from Germany, huge savings of at least £240 million a year will be made from there on. I would much rather see the money spent in this country than in Germany.

My Lords, the Statement confirms that 45 Commando Royal Marines will remain at RM Condor in Arbroath. The marines of 45 Commando are this country’s specialists in mountain and arctic warfare. Arbroath has swift access to training areas in the Cairngorm mountains and is close to NATO’s northern flank. Since the war, 45 Commando has deployed with great distinction these important specialist skills on operations in the Troodos mountains in Cyprus, the Radfan mountains in Aden, and more recently in Afghanistan. Does my noble friend agree that this decision will be good for the Royal Marines and their families, for our defence capabilities—including recruitment —and also for Scotland?

My Lords, I agree with everything that my noble friend says about the Royal Marines. The Secretary of State was telling me last night how impressed he was when he visited them on winter training in Norway earlier this week. I agree with my noble friend that remaining in Arbroath will be good for the Royal Marines and for their families. As I said earlier, 45 Commando Royal Marines will remain in Arbroath for the foreseeable future. We investigated the feasibility of the move to the south-west but that option did not, at this stage, represent value for money and Arbroath is not needed for Army basing in Scotland. It is my understanding, as my noble friend said, that 45 Commando is very happy with this decision.

My Lords, I noticed that the Statement includes a proposal to sell off Hyde Park barracks, presumably because it is so incredibly valuable. Does my noble friend have any idea where the Household Cavalry would go if that was done?

My Lords, that is a difficult question for me to answer. Of course, if the Household Cavalry Mounted Regiment was ordered to leave, it would have to go. However, as the Statement made clear, a lot of research needs to be done before it can move out. Suitable barracks would need to be found within the centre of London for it to move to, with all the costing worked out. It would be very complicated, but we would be irresponsible not to look into it.

I thank the Minister for the Statement, particularly for covering the continual running sore—as the Armed Forces Pay Review Body report this year confirms yet again—of accommodation. Is he confident that the new and refurbished housing will be ready for our troops and their families when they come home, knowing that this will have to go through the public procurement process—I presume—and knowing about the delay after delay that such processes in the MoD seem to attract? What processes have been set up to consult with the services families organisations? Accommodation is a problem but there is also the linked problem of an influx of young families requiring more school places, to go on lists for local doctors and dentists, and hospital accommodation, which was not mentioned in the Statement. What processes are in place to deal with that and to ensure that when these families come back, those facilities are there for them? Finally, how does this impact on the covenant, which we have all welcomed and which is important in the life of servicepeople?

My Lords, we are of course well aware of the covenant and do everything we possibly can to stick by it. When I was in opposition, I went with the noble Baroness to visit quite a lot of accommodation. In the last two years we have done a lot of work on accommodation, as did the previous Government at the end, and it is hugely different now to three years ago. The level of Army accommodation is catching up with the Navy’s and the Air Force’s and, on the whole, is really good. I am very much looking forward to going down to Salisbury Plain, I hope next month, to see what has been done there recently and what the plans are. We are in discussion with Wiltshire Council about the very issues that the noble Baroness raises—hospitals, schools and all the others. These are issues that we have to deal with, but all the local authorities and the devolved Governments that we have been in touch with very much welcome the Army moving into their area.

Perhaps I might ask the Minister, in a slightly light-hearted way: if Scotland becomes independent will those troops stationed north of the border become part of the “Scottish Army”? If it does not, what does that do to his pronouncements about long-term stability and how they will not all get moved around?

My Lords, the noble Earl asks a very good question. The creation of independent Scottish armed forces would not be as simple as transferring existing Scottish-recruited or Scotland-based units. The UK Armed Forces are a totally integrated, pan-UK organisation and parts cannot simply be broken off like bits of a chocolate bar. Individual members of the UK Armed Forces could not simply be co-opted. They would have to be given a choice and it is far from clear that Scots in the UK Armed Forces, or members of units recruited or based in Scotland, would automatically choose to join the armed forces of an independent Scotland. The prospect of being part of smaller, less globally active armed forces might be seen as less rewarding for some.

With the indulgence of the House and an eye on the clock, perhaps I may ask the Minister a second question, given that my earlier question about the new employment model still hangs. I raised the issue of morale a moment or two ago. The capability of the Army is obviously very critical and its future capability is based on the integration of the Reserve Forces with the Regular Forces, about which this basing report is concerned today. When will we know the Reserve Forces basing plan? Clearly, successful delivery of our Reserve Forces is absolutely critical to the future capability of the Army, given that the Regular Army is being cut by 20%, which is unprecedented in recent times.

My Lords, I can confirm to the noble Lord that there is a lot of work going on at the moment on the Reserve Forces basing plan and how that ties in with the Regular Army. As I said earlier, there will be a White Paper quite soon and I hope very much to give a Statement on this very important subject before the Summer Recess.

Welfare Benefits Up-rating Bill

Committee (2nd Day)

Relevant document: 14th Report from the Delegated Powers Committee.

Amendment 11

Moved by

11: After Clause 2, insert the following new Clause—

“Duty on the Secretary of State

Before enactment, the Secretary of State shall lay before both Houses of Parliament a report which states—(a) his assessment of the adequacy of the social security benefits listed in Schedule 1;(b) the principles upon which the future up-rating of all benefits and tax credits covered by this Act will be based.”

My Lords, Amendment 11 is in part inspired by the speech made by the right reverend Prelate the Bishop of Leicester at Second Reading. He suggested that this was an occasion for considering,

“the moral responsibility of this House”,

and warned that this Bill,

“looks like part of an ideologically motivated attempt to alter the very nature of the welfare state”.—[Official Report, 11/2/13; col. 469.]

He voiced his fear that we are heading towards a US-style system, where pensions are protected,

“but working-age provision is less generous and more stigmatised, barely providing enough for people to live on without relying on charitable handouts”,

and asked:

“Is this really the kind of society that we want to live in?”.—[Official Report, 11/2/13; col. 471.]

It certainly is not the kind of society in which I want to live.

The purpose of this amendment is to facilitate a debate on that fundamental question of the generosity of benefits for working-age people and their children. The first part addresses the question of whether the social security benefits affected by this nasty Bill are adequate in the first place, and the second the principles that should govern the uprating of benefits in the future once the Bill’s provisions have ceased to have effect. Of course, the two questions are related because the current level of benefit reflects uprating policies over the years.

As the House of Commons Library briefing notes:

“It is a misconception that benefit rates in the UK are based on some regular, systematic estimate of minimum needs”.

In fact, they are not even based on an irregular systemic estimate, for as the briefing points out,

“no government has … attempted any official empirical study of adequacy”,

since a covert study undertaken by the National Assistance Board back in the 1960s, despite countless fundamental reviews of social security, which some of us have lived through to tell the tale.

There are various indicators that we can use to assess benefits’ adequacy. The most basic is whether they are sufficient to keep people out of poverty and, patently, they are not, as so many people living on benefits are in poverty if one uses the relative income and material deprivation measures. The income support received by, for example, a couple with two children or a lone parent with one child is around 30% below the poverty line. Briefings from children’s charities underline the hardship that families already experience as a result. For instance, research undertaken by Barnardo’s among its service users found that two-thirds were cutting back on fuel and half were borrowing money. Three-quarters reported that food poverty was impacting on their children’s health and well-being. Similarly, a Children’s Society survey of teachers found that nearly half of those surveyed are seeing children coming into school hungry. Recent peer research undertaken by five Gingerbread community researchers in partnership with the Poverty Alliance found many lone parents skipping meals to feed their children. As one said, “Occasionally, I’ll miss meals and things like that just to make sure that they get wee bits and pieces. It makes me feel better about them having than me having”. This is an example of a common phenomenon, where mothers deprive themselves of basics to try to protect their children against the worst impact of poverty, as they act as the shock-absorbers of poverty. It is an example, too, of a point made by the noble Baroness, Lady Howe of Idlicote, on our first day in Committee about how women are disproportionately affected by the Bill.

The most sophisticated benchmark of adequacy is the minimum income standard developed by the Joseph Rowntree Foundation. It represents what members of the public through group discussion have arrived at as the minimum acceptable standard of living: what you need in order to have the opportunities and choices necessary to participate in society. I emphasise that it is about needs, as socially determined, rather than about wants.

The latest calculations indicate that a couple with two children, or a lone parent with one child living on the basic safety net benefit of income support, receive only three-fifths of the income needed to meet the minimum income standard. A single working-age person receives only two-fifths. The researchers, who are colleagues of mine at the Centre for Research in Social Policy at Loughborough University, observe that, because increases in costs have not been adequately captured by the consumer prices index, out-of-work benefits fall even further short, providing a lower minimum income living standard for non-pensioners than they did in 2008 when the MIS was first calculated. They concluded, even before this Bill was proposed, that the gap between the incomes and needs of the worst-off households is widening, especially for families with children. While the JRF is not suggesting that benefits should be raised to the level of the MIS, the sheer scale of the shortfall is indicative of how far they fall below the decency benchmark established by members of the public.

Policy has been more successful in ensuring that pensioners can achieve minimum income standards, which is of course a good thing, but according to Professor Jonathan Bradshaw, the decision to uprate pensions by 2.5% and working-age benefits by 1% for three years is going to exacerbate further the absurd differentials in benefit rates that have developed over time. In 1948, a single pensioner received only 10p more than a single person on national assistance. Now, a single female receives £71 per week in jobseeker’s allowance. When they are eligible, they get £142.70 on pension credit. A lone mother with one child gets only £133.21 a week. These differentials, Professor Bradshaw says, clearly have nothing to do with need.

That brings us to the second half of the amendment, on the principles underlying uprating policies. The significance of these policies was underlined in an earlier JRF study. It pointed out that uprating policies have big effects over time. They are among the most significant decisions taken by Chancellors. Their gradual effects seem imperceptible on a year-to-year basis yet they carry immense implications for the future. This year’s decisions will certainly be perceptible, and the implications for the future are even more immense, because, whatever decision is taken by future uprating policies, they will be uprating benefits that have been significantly depressed in real terms over a three-year period.

The report called for a more open debate about this often hidden area of public policy, so that decisions that prevent the poorest members of society keeping up with rising living standards would not be taken in the dark. Unknown to most people, uprating policies have resulted in a significant erosion of relative living standards among benefit recipients over most of the past three decades. Recently, this has been exacerbated by the use of CPI rather than RPI as the measure of inflation, particularly during the period when prices of necessities that represent a disproportionate share of spending among benefit recipients have risen faster than prices generally—a point that we made on the first day in Committee. As Donald Hirsch of the Centre for Research in Social Policy comments, in this context, the index used to uprate benefits has become a highly imperfect mechanism for preserving their real value and a rather arbitrary means of raising benefits by an amount that politicians feel that the country can afford rather than of protecting living standards.

Of course, assessments of affordability cannot be ignored. They can also be contested, as we are doing in relation to this Bill, but looking to the future I agree with Donald Hirsch that there is a need to establish principles linking benefit uprating to some stable concept of what is fair, rather than just ad hoc decisions about what can be afforded. He suggested that, as a start, this might involve reasserting the principle of human decency whereby the real value of benefits is genuinely protected and that, in the longer term, if prosperity starts to grow again, we need to consider how those in greatest need can share in such growth.

I suggest that a report to Parliament that addresses these fundamental questions is the least that we can ask of a Secretary of State willing to preside over a deliberate reduction in the living standards of the most deprived members of our community. I beg to move.

My Lords, I have put down my name in support of the amendment and am very grateful to the noble Baroness, Lady Lister, for her tabling of it and for her powerful advocacy of it. I have done so because I am repeatedly told by citizens advice bureaux and the like of the uncertainty which is being introduced by this Bill. It is ironic that we have talked so much of certainty in setting the rates for the years up to 2015-16, when those on benefit and providing advice feel uncertain as to its short and long-term effects.

So long as benefits have been uprated by inflation, it has been possible to budget taking them into account. But this cap on uprating is a major and apparently long-term change to the whole principle of our benefit system. Recipients and those who work with them are owed an explanation. I am not looking for commitments from either Front Bench beyond 2015, but I would be very grateful for comment from both of them on whether this is to be seen as a temporary reduction with the aim of restoring benefit values after 2016 so that we ensure a decent living standard for those on benefit—the requirement that has been so ably put by the noble Baroness, Lady Lister. Or is this actually a permanent reduction to a lower level, which will then be stabilised in real terms after 2016, or a continuation of a gradual reduction expected to continue after 2016? None of those options is desirable, but they are very different in the effect that they will have, and a sense of purpose and direction from the Government and Opposition is important in all this. It is important to know just where benefits are anticipated to be going in future, both from the opposition and the government Front Bench. I hope that they can supply that in the debate on this amendment.

My Lords, I will make just a short intervention on this amendment so ably moved by the noble Baroness, Lady Lister. I entirely concur with her view and analysis. I want to add, however, the fact that I am now very frightened about what is happening in the short term. There is a complacent view held among policymakers generally that the Work Programme and universal credit are all that need be done. I support both, and will not cast any aspersions on any Governments or make any party political points, but both these important reforms will take at least 10 years to go into steady state and be of assistance to our most hard-pressed, low-income households in the United Kingdom.

If I am right about that, and about the prognosis for the United Kingdom’s level of economy over that period, we face a really difficult period of activity where we cannot rely safely on the Work Programme and universal credit to provide the social protection that this country needs and expects. We need to do something in the short term that seeks to understand what is going on. More than anything else, this is a plea for really rigorous and urgent monitoring of everything going on: every bit of evidence from every constituent part of the United Kingdom. We need to watch carefully what is happening. The noble Baroness is quite right: malnutrition of children will result over the next five to 10 years if we are not extremely careful.

Now, this is no one’s fault. I understand perfectly well the need to get austerity and deficit reduction properly balanced in the nation’s future policy at a financial and fiscal level. But nobody could have foreseen the difficulties or longevity of the recession, or the lack of growth that this country will have to deal with in the short term of five to 10 years. That does not seem like a long time and I do not take anything away from the long-term need to get universal credit and the Work Programme put together and rolled out, but nobody is paying enough attention to what is going on in the short term.

If you refer to the sensible policy professionals who look at this, the Joseph Rowntree Foundation is first among them and there is the work by Loughborough University, Professor Jonathan Bradshaw, and all these experts. We have better professionals in the United Kingdom than any other European country. I say that because I have worked with most of them for the best part of 25 years. The noble Baroness is one of them— she nodded at that point. This is a serious point: we have internationally recognised experts on this yet we are deaf to what they say to us. A growing body of opinion says that something different and more than what has been put in the policy framework to date needs to be done to be sure that we do not face levels of financial adversity with which the public will not be comfortable.

I know that there is a view that people are against welfare spend and we have had discussions over the Welfare Reform Act and this Bill about the language used nationally in the public discourse on this important area of public policy. It is important because £200,000 million a year is spent and it is still creating problems. We need to face up to that. We need to have a much more adult discussion about what is going on.

Certainly, concepts such as the minimum income standards need to be part of that discussion. We need to look at the cumulative effect of everything that has happened since 2010 that has made the circumstances dramatically worse. People know that I am a professional, paid-up pessimist—I accept that—but we have to be very careful about how we assess the evidence.

I want to make a couple of quick suggestions about how we might deal with that in conjunction with looking at the principles in the long and short term and how we perform the monitoring and evaluation. What is happening in the devolved legislatures of the United Kingdom is very important. There are positive responses in Wales, and in Scotland, which I know best, where the need is recognised. We must first promote the need to do things differently. That may mean financing food banks—that is not something that I want, but if the alternative is malnutrition in children, we cannot ignore that. It is easier in smaller countries which have shorter lines of communication and a smaller scale. They can move more flexibly and faster. Working with the legislatures in Cardiff and Edinburgh, I think that there are some quick wins that central Government could help to promote. I hope that we will do that and keep the channels of communication between London and the constituent legislatures throughout the rest of the United Kingdom open and dialogue promoted urgently.

As the second part of that, working with local authorities will be so important. The evidence coming back from housing authorities, particularly in local authorities, presents variable geometry—we are getting different messages from different parts of the country. There is a spatial dimension to some of these issues which we should not ignore. In the past, we have always safely relied on a centralised, unified United Kingdom social security process as the right thing to do. I have less confidence about that working in the next five to 10 years. We need to look much more carefully at how housing and labour markets are aligned in some regions of our United Kingdom and be sensitive to changes happening in those fields.

I think that we need a short-term anti-poverty strategy. The principles covered by the amendment of the noble Baroness are important and must be kept in mind for the longer term, but all my instincts tell me that the next three, five or seven years will be difficult in a way that nobody has previously been able to get a grip on. If we do not respond to that by looking at some of the ideas contained in the amendment, we will pay a heavy price in terms of child poverty, in particular. We have an important amendment coming up next on that subject, and I hope that we will think carefully about that as well.

In strongly supporting the concept behind the amendment, I would like the Committee to consider not just the longer and medium term but some of the emergency state provisions that we as a country will be forced to face over the next five to 10 years.

My Lords, this has been an interesting brief debate, introduced by my noble friend Lady Lister with her now characteristic blend of expertise and passion. I am sure that we are all grateful to her for opening up the question so well. The quotes that she shared with the Committee about children arriving hungry at school and mothers missing meals and going without themselves to protect their children from the effects of poverty were, on one level, not a surprise to any of us, but they are still shocking. They should be profoundly shocking.

I found the point made by the right reverend Prelate very interesting and I understand why he would like those assurances from both sides of the Committee. My noble friend Lord McKenzie of Luton made Labour’s position clear at the beginning of our first day in Committee. It is this: if we were in government right now, we would be uprating benefits in line with inflation. However, we cannot make a commitment at this stage for the next Parliament. My view is that that is not a good idea anyway. We are fundamentally opposed to the whole principle in the Bill of fixing the levels of uprating for a period. We have perfectly good mechanisms for uprating benefits annually in line with inflation in the light of prevailing economic circumstances. To be honest, I would not want to be tempted into anything other than maintaining that position, but I fully understand why the right reverend Prelate is pressing the concerns that he is pressing.

I also found the comments made by the noble Lord, Lord Kirkwood of Kirkhope, very interesting. He drew in the spatial dimensions of poverty and the wide-ranging regional issues. That is something that we may come back to. I particularly agreed with his point about the need to monitor what is going on. The next amendment that I shall move encourages the Government to look specifically at the impact on child poverty. I also support the noble Lord’s point about the need for a cumulative assessment of all the changes between 2010 and now—a point made very strongly by my noble friend Lady Hollis at earlier stages of debate.

Since the Bill cannot help but drive down standards of living for families, what assessment have the Government made of the likely impact on the well-being of the poorest adults and children of what is effectively a real-terms cut in benefits and tax credits, not just over the year ahead, but over the three years covered by the first uprating and the two years of this Bill? It would be very helpful to the Committee to understand what assessment the Government have made. At a time when three new food banks are opening every week and even families in work are finding it a struggle to make ends meet, the state needs to take particular care to demonstrate that resources are gathered and distributed in a way that is fair to everyone. In the light of that, I shall be very interested to hear what the Minister has to say.

My Lords, I am grateful to the noble Baroness, Lady Lister, for moving this amendment and explaining her thinking. Of course, I recognise the serious issues that she and other noble Lords have raised during the course of this debate. I would not claim first-hand experience of living on benefits, so I do not bring to this debate any presumption about those on benefits finding what we are doing anything other than difficult, but is an inescapable fact that when setting benefit levels successive Governments have sought to strike a balance between the needs of claimants, maintaining work incentives and affordability.

Indeed, the current uprating legislation recognises this explicitly. The Social Security Administration Act 1992 requires the Secretary of State to make his annual review of benefit levels based on the increase in prices. He is then given discretion as to how to uprate certain benefits, having regard to the national economic situation and any other matters that he considers relevant. Parliament therefore requires the Secretary of State to take certain issues into account when considering the level at which the benefits in question are set. In bringing forward this Bill, we have considered these issues carefully and struck a balance between providing a cash increase, protecting certain key benefits and making necessary savings.

Benefit levels also have a significant bearing on work incentives. The complexity of the current system largely arises from successive Governments’ attempts to balance benefit income against work incentives. That is why universal credit is such an important measure as it applies a single set of rules focused on maintaining the incentive to take up work or more work. In response to some of the points made in this debate, I shall say something that I know is shared around the Committee. This Government believe that work is the best route out of poverty, and that is why we are focused on making sure that work pays.

I think it was the noble Baroness, Lady Lister, who talked about how benefits could impact on people living in poverty. We believe it is misguided to try to lift people over the 60% median income line through benefit increases alone. This does not change their lives or those of their children because it does not tackle the reason they find themselves in poverty in the first place. We accept that most benefit rates are below the 60% median income line that measures relative poverty but it has never been the intention to alleviate poverty through benefit payment.

Universal credit will channel more money to those at the bottom end of the income scale and will allow people to keep more of their own income as they move into work. We expect some 3.1 million households to gain from the move to universal credit, on average by about £168 a month. Around 75% of those gainers will be in the bottom 40% of the income distribution, and it is estimated that the change in financial incentives brought about by the introduction of universal credit will result in a net reduction in the number of workless people by up to 300,000.

My noble friend Lord Kirkwood, in his usual eloquent way, talked about the need to monitor the impact of the changes that we are making in this uprating Bill on those who are directly affected. I remind noble Lords of something that I said last week in Committee, which is that the Government recognise that very soon—from April this year—a lot of the changes that we talked about in theory during the passage of the Welfare Reform Act will be implemented. I want to reassure the Committee that the Government take very seriously their responsibility for monitoring the effects of the changes that will be implemented through the Welfare Reform Act. We have put in place a number of measures to make sure that there are no unintended consequences. The noble Lord, Lord Kirkwood, spent a lot of time on this and, because it is so important, I want to go through some of the issues.

First, it is worth reminding the Committee that we have a transitional protection that means that no one moving to universal credit will lose out in cash terms when they are migrated by the DWP. There is a discretionary housing payments fund, which has been in existence under previous Governments. Since 2001, the contribution to discretionary housing payments has been £20 million a year, whereas this Government have significantly increased that budget. We are investing £155 million for discretionary housing payments in the next financial year and up to £125 million the following year.

Would the Minister agree that the last increase she mentioned has come about by increasing the additional cuts that people will have to face as a result of the bedroom tax?

I am sure the Minister is aware that the IFS analysed the distributional impact of tax and benefit changes between January 2010 and April 2015 as if universal credit were fully in place. It modelled the real-terms changes in household income at today’s prices with all the measures announced and UC fully implemented. It suggests that a one-earner couple with children will be £64 a week worse off. How does that equate to what she is saying?

I have laid out for the Committee the measures that are there and have been put forward by the Treasury. The noble Baroness wants to put forward some alternative statistics. Let me get back to the point I was making about the arrangements that are being put in place to ensure that, when we move into the implementation phase, support is available for those who need it, if there are any people who are not properly covered by the changes that we are making.

The noble Lord, Lord Kirkwood, referred to local authorities when he was talking about this. The local authorities and the Scottish and Welsh Governments would get £178 million to deliver new local welfare provision. They will develop local schemes to help those facing a crisis or short-term unavailable need. On the arrangements for people moving from weekly receipt of payments to monthly receipt, a whole range of different programmes is being put in place to support people in budgeting and making sure that they have the support that they need to manage the changes that are being brought about—changes that we believe will have the right effect in ensuring that this is a much simpler and more effective welfare system.

The noble Lord, Lord Kirkwood, and the noble Baroness, Lady Sherlock, also referred in this context to food banks. I point out to noble Lords that one reason why there has been an increase in the use of food banks is because the Government were clear that we wanted Jobcentre Plus advisers to be able to signpost their availability to claimants. For reasons that noble Lords on the other side of the House will presumably be able to explain, this was not possible before. The Trussell Trust director has said that he thinks that there has been a need there for a while, but the growth in the number of volunteers and the awareness that you can get this help if you need it explains the growth in this area.

Is it not a sad day when a government Minister has to stand up and say that food banks will be made available? Our children should not have to depend on food banks in this day and age.

It is a sad fact that people should have to rely on food banks; I absolutely acknowledge that point and do not dispute it at all. The point I am making to the Committee is that Jobcentre Plus staff are now permitted to signpost the fact that they are available, whereas previously they were not permitted to do so. I am not suggesting that the fact that they exist is to be applauded at all, but it would be wrong for Jobcentre Plus staff not to be able to say that they are there to people who might be able to take some advantage of them just because we do not want to make that facility known.

The Minister is speaking as though the only people using food banks are those who go to the jobcentres. Surely, from my experience and that of other noble Lords, many of the people who are now using food banks are actually in employment. As things like the bedroom tax bite, more people in employment will lose out on what benefits were available to them.

My Lords, to add to my noble friend’s point, my obviously localised and limited experience of food banks has been that before about 2010, in so far as they were in play, food banks were mostly drawn upon by young people. These were very often young men aged under 25 who were getting the shared rate for housing benefit in the private rented sector and found, as Shelter and others have told us over the years, that it did not match the rent they were required to pay; it was a very discrete group. They, in my localised experience, often had to turn to food banks to cope. Now the Government have extended that limitation on housing benefit from 25 to 35, while producing additional pressures right across the benefits spectrum, as my noble friend Lady Farrington has said. It is a disgraceful aspect of the fifth-richest nation in the world that so many of our people have to make recourse to food banks because our benefit system does not sustain them in the way it should.

My Lords, I do not for one moment suggest that food banks are something on which anybody would want to have to rely. I completely agree with the noble Baroness in that regard. My point is simply that the fact they exist—

I suggest to the Minister that we should be ashamed that this is happening. I was brought up in the 1950s in a family of the poorest of the poor, and my parents would not have dreamt of going to a food bank. All these years later, we are talking of parents and children having to go to a food bank. If this so-called facility exists, the Government should do something to eradicate the need for food banks.

My Lords, food banks have existed for a long time. They have not been introduced in recent times—that was the point I tried to make by quoting the director of the Trussell Trust. I am not trying to make any point about this whatever. I do not for one moment suggest that anybody in this House should feel anything other than great disappointment that anybody should have to use a food bank. I am making a simple point. All noble Lords have been clear about their views, and certainly I am not here to disagree with the arguments they made. Let me move on.

The noble Baroness, Lady Lister, while accepting the need to strike a balance, argued none the less that a report into the adequacy of benefit levels would be useful, as it would help people better understand where benefit incomes sit in relation to the rest of society, and so would help inform the debate. This approach relies on the idea that we could produce figures that would concretely situate benefit incomes in relation to an objective adequate level. The desire to draw conclusions on the adequacy of benefit levels has always been fraught with technical difficulties. In 1985, the then Government looked at this issue and concluded that,

“it is doubtful whether an attempt to establish an objective standard of adequacy would be fruitful … all such assessments would themselves include judgements on the standards to be achieved”.

This view was echoed in the previous Labour Government’s consultation exercise on measuring child poverty, which concluded that,

“despite a wide range of research into budget standards, there is no simple answer to the question of what level of income is adequate … Different research methods tend to make different assumptions that are essentially subjective”.

Similarly, during her time as Minister at the Department for Work and Pensions, the right honourable Margaret Hodge said, when asked what assessment the Government had made of the minimum income a household needed to live on:

“Our concerns about research on minimum income standards have been well documented. What people need to live on varies greatly depending on their needs and a range of factors. Different research methods tend to make different assumptions and generate a range of estimates”.—[Official Report, Commons, 7/2/06; col. 1163W.]

The noble Baroness, Lady Lister, also raised the issue of minimum income standards, and suggested that this metric could be used as a measure of benefit adequacy. We will continue to take note and look carefully at the evidence from research on minimum income standards. However, I do not believe that minimum income standards provide an appropriate comparator when considering the adequacy of benefit rates.

The Joseph Rowntree Foundation’s minimum income standard is a relatively new metric—the first report was in 2008—and there is no international consensus on how this should relate to setting benefit standards. Minimum income standards are informed by public perception so can change even if prices do not. For example, the rate for a couple with two children increased by a third between 2008 and last year—more than twice the rate of inflation. Moreover, it is important to remember that most working-age benefits are intended to provide temporary support during periods of interruption to employment, whereas the minimum income standard is focused on more long-term living standards. The Bill does not, of course, affect long-term benefits, such as those paid to pensioners or those relating to additional needs arising from disability.

I do not believe that there is a straightforward and meaningful way of determining the adequacy of benefits. Moreover, when considering the level at which benefits are set, we cannot forget the other factors to which I have already alluded: namely, the need to give due regard to questions of affordability and work incentives. I am also not convinced that statute is the right place to provide for the kind of analytical work which the noble Baroness proposes. What I can say is that the Government remain mindful of benefit rates at all times. We make extra support available to those claimants with extra needs. Most crucially, we will continue to focus on ensuring that work is the best route out of poverty.

My Lords, the Minister seems to imply throughout her speeches that there is a distinction between those receiving benefits and those who are in work, and that you have to maintain that gap to produce work incentives. That seems to be her argument. However, she knows that two-thirds of the current expenditure on housing benefit and tax credits goes to people in work on the minimum wage to make that wage adequate to enable them and their families to survive. Therefore, will she please refrain from talking about the need to maintain work incentives when the only way that there is an incentive to work is when it is underpinned by benefits?

With the introduction of universal credit, we will make sure that that is always the case. Therefore, I do not disagree with the noble Baroness at all.

The noble Baroness, Lady Lister, referred to the Government’s decision to move from RPI to CPI as the appropriate index of inflation. The Government believe that CPI is a more appropriate measure than RPI when considering the impact of inflation on benefits and pensions. It is worth saying that the judicial review of the switch from RPI to CPI found in the Government’s favour and we continue to believe that CPI is a more appropriate index. As an example of the costs involved, uprating the benefits and payments in this Bill by earnings would reduce the savings by £1.8 billion of the total of £1.9 billion in 2015-16 and, if we did so by RPI, would wipe out all the savings and cost an additional £700 million in 2015-16.

As regards paragraph (b) of the amendment, while I cannot predict the decisions that will be made by future Governments, once the provisions in the current Bill cease to have effect, the default position will be for uprating decisions to be made in line with pre-existing legislation.

In referring noble Lords to the comments made by the noble Lord, Lord McKenzie, during last week’s debate, I was going to mention his reluctance to say what his party would do if it was in government. Indeed, he was even more than reluctant; he refused to say what it would do. However, the noble Baroness, Lady Sherlock, has commented on that point today.

For social security benefits and statutory payments, the default position will be for uprating decisions to be made under Section 150 of the Social Security Administration Act 1992, meaning that the Secretary of State will make an annual review of benefit levels to see whether they have kept pace with the increase in the general level of prices. If prices have increased, he will then make a decision about how he should uprate the benefits covered by the Bill, based on the national economic situation and other factors he considers relevant. For tax credits, the default position is that the Treasury is required under Section 41 of the Tax Credits Act 2002 to review the amounts of certain elements of tax credits each year to determine whether they have retained their value in relation to the general level of prices.

Before I conclude, I refer to the question put by the noble Baroness, Lady Sherlock, about an assessment of the changes that we are making via this Bill on the well-being of adults and children. In response—and it was a point that I made in Committee last week—this Government publish cumulative impacts of government policy at every major fiscal event. We did so at the time of the Autumn Statement last year. Those assessments include the effects of any changes in welfare and ensure that the other positive measures being introduced in relation to tax rates and so on are taken into account. That represents an increase in transparency when compared with what was in place hitherto. The assessments are publicly available on the Treasury’s website.

This has clearly been a serious debate and I am grateful for the opportunity to respond. I hope that in future debates I am able to expand a little further on some of my comments because I am concerned that in some of my points I was not as clear as I intended to be. I will ensure that when I speak in later debates I am much clearer about the importance we place on ensuring that proper consideration and monitoring are taking place in the implementation of all these changes. If any additional measures are required to support people who are affected in a way that goes beyond that which we are expecting, we will make sure that they have the support they need.

My Lords, following the Minister’s final comments, can I check that the default position after 2015-16 will be that there would be CPI increases based on the lower level that benefits will have reached by then?

I start by thanking the right reverend Prelate the Bishop of Ripon and Leeds for supporting the amendment so powerfully. He asked for a sense of direction. I fear that we have a sense of direction but it is not one that either the right reverend Prelate or I feel happy about. I thank the noble Lord, Lord Kirkwood, who, as ever, has brought important issues to light. I also thank my noble friend Lady Sherlock who again made a powerful speech. I also thank the Minister, whose attempt to deal with the issues raised by the amendment I acknowledge and appreciate. She was given rather a hard time but I am sure that she will understand because people feel strongly about the implications of the Bill and the effect it will have on benefits. I should like to address a number of her points.

First, my noble friend Lady Hollis picked the Minister up on this mantra that work is the best route out of poverty. Of course we all agree with that, except that work is not always the best route out of poverty because some people are going to work and are in poverty. As well as the point made by my noble friend, there seems to be an assumption that if we depress benefit levels we are somehow making it more likely that we will push people into paid work. I always remember work on lone-parent families carried out by another poverty guru, Alan Marsh of the Policy Studies Institute. He pointed to evidence that,

“a malign spiral of hardship, poor health and low morale … builds up its own barriers to work”.

He found that those in severe hardship were three to four times more likely to suffer low morale, compared with those who were not in hardship. He very wisely commented:

“It is quite hard to contemplate work if you are that demoralised and hard up”.

That is why we must not assume that keeping benefits low is necessarily going to improve work incentives.

The Minister made a point that I found quite chilling. She said: “It has never been the intention to alleviate poverty through benefit payment”. That is not my understanding: I thought that the whole point of benefits was to try to alleviate poverty. I am dismayed by that statement.

What I said was that we believed it was misguided to try to lift people over the 60%-of-median-income line through benefit increases alone, because this would not change their lives or their children’s since it would not tackle the reason they found themselves in poverty in the first place.

I accept that, but I wrote down what the noble Baroness said. She said: “It has never been the intention to alleviate poverty through benefit payment”. I wrote it down. If she wants to retract that statement, I would be delighted.

I think it was at the point when the Minister said that unemployment benefits were only intended to be temporary while people were in between work, and that therefore they were never expected to address poverty as such. That is the problem that we are worried about.

This is a debate about the adequacy of benefit rates, not about benefits in a package of what people receive. The difference here is that if somebody is in receipt of a combination of different benefits—housing benefit, jobseeker’s allowance and so on—I can absolutely see the point that the noble Baroness is making. What I am saying in the context of a debate about how to set the rate of a benefit is that benefits alone do not alleviate poverty.

I thank the Minister for her clarification. I think I can take it that it is not the Government’s position that benefits are not there to alleviate poverty; I hope that is right. The noble Baroness must remember that not everybody can take the route into paid work: there are some people of working age who will be on benefits for a considerable length of time and we cannot just say, “Oh well, they don’t matter”.

There was quite a lot of discussion about food banks. It just so happened that I chaired a meeting the other week for a group called Just Fair, where the director of the Trussell Trust was speaking. He pointed out the exponential increase in the number of food banks over recent years. The increase is huge. That meeting was addressed by the UN rapporteur on the right to food. He made it very clear that he did not see food banks as any kind of solution to the problem of food poverty. I accept that the Minister was not saying that she was happy about the spread of food banks, but I think she was, perhaps, underplaying the extent to which they have spread recently. I do not think it is simply because Jobcentre Plus is now acting as a signpost.

I was disappointed that the noble Baroness was referring back to quotes from 1985 about the difficulties of establishing the adequacy of benefits. Research has become a lot more sophisticated since then and there is a growing consensus—although clearly not on those Benches—around the work done on minimum income standards. When my noble friend Lady Sherlock asked about impact, I do not think she was asking for the same kind of impact statement that we have been talking about—the numbers and so forth. She was asking for an impact on well-being. Local authorities are now supposed to address the well-being of everyone in their areas. What impact is this Bill—together with all the other things that are happening—going to have on the well-being of children and their parents? This goes back to what the noble Lord, Lord Kirkwood, was saying about monitoring. Monitoring is not simply about numbers: it is about what it is going to mean to the lives of some of the most deprived members of our community.

I am disappointed that the Minister is not prepared to accept an amendment which is not about spending money; it is about trying to let us better understand the principles that should govern our social security system when times are easier. However, I beg leave to withdraw the amendment.

Amendment 11 withdrawn.

Amendment 12

Moved by

12: After Clause 2, insert the following new Clause—

“Assessment of impact on child poverty

The Secretary of State shall, in making the orders referred to in sections 1(1) and 2(1), publish and lay before Parliament a report assessing the impact of the order on the number of children living in—(a) relative low income;(b) combined low income and material deprivation;(c) absolute low income;(d) persistent poverty;as defined in the Child Poverty Act 2010.”

My Lords, Amendment 12 is in my name and that of my noble friend Lord McKenzie of Luton. This amendment would require the Secretary of State to publish and lay before Parliament a report assessing the impact of the order on the number of children living in the four measures of child poverty set out in the Child Poverty Act; namely, relative low income, combined low income and material deprivation, absolute low income, and persistent poverty. The aim is very simple. It is to force the Government to face up to the consequences of their actions and to come clean about the impact of these measures on child poverty.

I am sure that the Minister is closely familiar with the coalition agreement. I know that I read it regularly, so I expect no less of him. My favourite bit is paragraph 14, the first bullet point of which reads:

“We will maintain the goal of ending child poverty in the UK by 2020”.

That is rather lovely and has a beauty in its simplicity. I will repeat it:

“We will maintain the goal of ending child poverty in the UK by 2020”.

In keeping with that commitment, the Government have previously published the effect on child poverty of Budgets, spending reviews and Autumn Statements. But in the last Autumn Statement we did not get the kind of detail that we were expecting. Why could that be? We got a hint in a Written Answer in another place from the honourable Esther McVey when she said:

“We estimate that the uprating measures in 2013-14, 2014-15 and 2015-16 will result in around an extra 200,000 children being deemed by this measure to be in relative income poverty compared to uprating benefits by CPI”.—[Official Report, 15/1/13; col. 716W.]

It probably is important to look at the backdrop to this. Since the goal of ending child poverty by 2020 was first announced in 1999, the UK has made real progress. Some 1.1 million children were taken out of relative child poverty between 1998-99 and 2010-11, and 2.1 million children were taken out of absolute child poverty between 1998-99 and 2010-11. But now we are going into reverse. The rise in child poverty likely to be caused by these measures is on top of a net rise in child poverty of 400,000 by 2015 and 800,000 by 2020, resulting from the Government’s current fiscal policies, as seen in the IFS analysis of 2011.

If that is right—the Institute for Fiscal Studies has a pretty good record on these things—that means a rise in child poverty of at least 1 million children under the relative low-income measure is now likely by 2020. However, the relative low-income measure is just one of the four poverty measures in the Child Poverty Act. I should like to ask the Government why Ministers have not given any figures on the number of children who will be pushed into absolute poverty by the Bill, despite the fact that the Government have the same capacity to produce an estimate on that measure as on the relative low-income measure. I look forward to hearing the answer because, as the Minister will realise, the Government have a statutory duty to reduce absolute child poverty under the Child Poverty Act. Therefore, they presumably must be able to measure it to know if they have fulfilled that statutory duty.

Similarly, the Government have given no assessment of the likely impact of the Bill on material deprivation, despite again having a statutory duty to reduce material deprivation under the Child Poverty Act. Even if Ministers did not feel able to produce a numerical estimate, I cannot see any reason why they could not produce a narrative assessment, a point made repeatedly by the Child Poverty Action Group. Finally, and at the risk of being repetitive, we have seen no assessment, not even a narrative one, of the impact of the Bill on persistent poverty, despite the fact that yet again the Government have a statutory duty to reduce persistent child poverty under the Child Poverty Act.

This really is a disgrace after all the careful progress that has been made. The reason the previous Government took child poverty so seriously was that it had risen so dramatically under the previous Conservative Government. The researcher, Jonathan Bradshaw, who has already been mentioned today, found that child poverty increased nearly threefold in the 1980s alone and that the well-being of British children compared unfavourably with that of children in most developed nations. That was the reason the Labour Government acted. It was also the reason why, by the time of the last election, there was apparently cross-party support for that goal of tackling child poverty in Britain. We are now in the position of having to ask what it means for the Government to say that they will maintain the goal of ending child poverty in the UK by 2020.

This is perhaps a philosophical point, but what does it mean to have a goal if one takes no steps towards it? I may say that I have a goal of being a concert pianist, but if I do not take lessons to learn to play the piano and I never practise, no matter how many times I say it, the odds of my becoming a concert pianist must be seen to be slim. In that case, on what basis can Ministers say they are committed to eradicating child poverty in the UK if they keep bringing forward Bills that drive it ever higher? It may be time for them to come forward and say that they do not in fact have any intention of eradicating child poverty and perhaps never did.

The amendment really is for the Government’s own good. If they are committed to the goal of ending child poverty by 2020, they need to understand the impact of their policies on child poverty. Otherwise, they cannot possibly achieve that. If they are not committed to that goal, the nation has a right to know that and still to understand what the impact of these measures would be. That is all the amendment does. It requires the Secretary of State to tell Parliament and the nation what the effect would be of these measures before he implements them. What could be more reasonable than that? I beg to move.

My Lords, I hope to make an even shorter contribution to this important debate. I agree that the amendment relating to child poverty is apposite and important. I want to confine myself to seeking further clarification from the Minister, if she has the information to hand. It would be to the Committee’s advantage if we knew more about what we can expect from the Social Mobility and Child Poverty Commission, because it relates directly to the substance of this amendment.

I was pleased that there was a recent change to the membership of the commission and that our very own noble Baroness, Lady Shephard of Northwold, has joined it. I am pleased about that because she is an experienced hand and I trust her judgment. I look forward to seeing the fruits of her work within that commission. It is important to us all. However, I was disappointed to learn recently that the first annual report of the Social Mobility and Child Poverty Commission is not now to be with us before 26 September this year. We were expecting it in May. I make that observation because it is a sign of drift, potentially. If I am wrong about that, I hope that I will be put right.

I was very uneasy about adding social mobility to child poverty. The original terms of reference of the 2010 Bill as put forward by the noble Lord, Lord McKenzie, were the correct ones. The Deputy Prime Minister, of whom I am a great fan, as I am sure people understand, was wrong. Social mobility is a different subject altogether. It is much longer term and in the short term, we are dealing with a situation that is more of an emergency than the aspiration of social mobility, which of course we all accept. We really need to understand what contribution to child poverty this commission will make. If the Front Bench can tell us anything about that in the course of this amendment, that would be very useful.

My second point is that of course we know that there is a consultation on child poverty measurement. I am taxing my memory here, but I think we were expecting the end of the consultation to be earlier this year—some time in February. If that is the case and my memory is correct, I hope we can be told that the Government’s contribution to the further development of child poverty measurement will be vouchsafed to us sometime soon. It will certainly be important to get hold of this around the time of the Budget, if we can. Some of the Office for Budget Responsibility’s assessments of future policy in terms of the Budget should be seen against the background of the Government’s view about how they will treat child poverty measurement in the future.

I am slightly nervous about some of the things that I have been hearing are being factored into the measurement of child poverty in the future. It may be that I am misreading signals but I hope that we do not lose focus on the fact that, at the end of the day, child poverty can be addressed only with money. Regarding any attempt to dress that up and expand the measurements too widely, while I am in favour of having all the data and metrics that we can access, for the reasons I explained on the last amendment we are facing an emergency situation the extent of which I did not anticipate.

The difficulties are mounting up, as we heard earlier. The decisions to be taken by the Government in the near future on measuring the data on child poverty are very important. If the Minister can help us to understand when we might expect information of that kind, it would help the Committee’s consideration of this Bill not just today but over the rest of its proceedings.

My Lords, I am pleased to support my noble friends on this important amendment, which has been moved so ably. The Government have still not explained why they did not include the impact on child poverty in the impact assessment for the Bill, as they promised. A Written Answer in the Commons as late as 30 January wrongly stated that the impact assessment sets out the estimated child and adult poverty effects, but it does not. As it is, the shameful figures had to be dragged out of the Government by a Written Question, as my noble friend said. Nor have the Government explained to the Committee how the anticipated increase in the number of children living in poverty thereby revealed is compatible with their obligations under the Child Poverty Act 2010, to which my noble friend referred. I asked this question during Second Reading, but answer came there none.

Instead, the Minister deflected the question with the Government’s usual line that the child poverty measurement indicators are somehow not fit for purpose —picking up on the point made by the noble Lord, Lord Kirkwood. That was followed by a brief discussion about the importance of education, debt and paid work in tackling poverty, but nothing was said about how by enacting this legislation and knowingly adding 200,000 children to the poverty rolls, the Government are fulfilling their obligations under the Act. Those obligations are in addition to the increase in child poverty estimated by the Institute for Fiscal Studies, to which my noble friend referred. I would be grateful if today the Minister could answer the question I asked at Second Reading. What does this mean for the Government’s statutory obligations under the Act? Whatever the Government think about the measures of poverty enshrined in the Act, unless they plan to amend it—perhaps the Minister could tell us if they do—they must face up to their legal obligations as set out in it. What countervailing measures will they take against the increase of 200,000 children living in poverty?

I agree with the Minister that education, debt and work are important factors in any anti-poverty strategy, but it is unclear how reducing real incomes will help with any of them. How, for instance, will making life harder for low-income families enhance the educational chances of their children? Hungry children do not make good learners. Anxious and stressed parents are less able to support their children’s education. Adequate incomes are important to educational chances. Paul Gregg has estimated that around 50% of educational inequalities or attainment gaps between the rich and the poor in the UK stem from differences in income. Similarly, as the Minister said, debt is a major problem for poor families, but I fail to see how reducing their weekly income will reduce that problem. All the children’s charities are predicting an increase in debt as a consequence of this Bill, and a Bill that depresses the incomes of low-income workers is hardly conducive to promoting work as the best route out of poverty. I made the point earlier about what Alan Marsh said: people who are demoralised do not make very effective jobseekers.

As the Government consistently attempt to deflect questions about the impact of the Bill on child poverty by dismissing the measures in the Child Poverty Act 2010 as inadequate I should like to say a few words, if the Committee will indulge me, about their recent consultation on those measures. Noble Lords might have read a letter recently in the Guardian from eight fellows of the British Academy, myself included. The letter argued that the Government’s proposals to measure child poverty in a new way,

“are confused and would meet neither the government’s objectives nor international standards”.

While accepting that,

“it is helpful to track what is happening to the factors that lead to poverty and the barriers to children’s life chances”,

the letter advises that,

“it does not make sense to combine all of these into a single measure. To do so would open up the government to the accusation that it aims to dilute the importance of income in monitoring the extent of ‘poverty’ at precisely the time that its policies will be reducing the real incomes of poor families”.

I should make clear that I did not draft that letter; nor, I must admit, did I respond to the consultation as, having read the document, I could not face the work involved in engaging with what Jonathan Bradshaw, one of the signatories, called the worst paper setting down government policy direction that he had ever read—and he has been around for quite some time. However, I am grateful to my fellow academics who did engage with it. I had to smile when I read that the DWP had dismissed our letter as coming from “a handful of academics”, not least because of course “handful” has two meanings and I am quite glad to be a handful in terms of how the department sees us. I was grateful to fellow academics who then wrote to the Guardian to make clear that the views expressed in the letter are representative. In one of those letters, Professor Adrian Sinfield argued that responses to the consultation should,

“be made publicly available so the government’s own summary of the views can be subject to scrutiny”.

Will the Minister give that assurance?

I have read some of those responses and want to pick out a few key points from a couple of them, to reassure noble Lords that it is valid to continue to use the indicators from the Child Poverty Act 2010, as set out in this amendment, as measures to assess the impact of this Bill on child poverty.

First, the widely respected Centre for Analysis of Social Exclusion at the LSE expresses its belief that,

“the current suite of indicators in the Child Poverty Act does a good job of measuring child poverty as it is widely understood—as income poverty and material deprivation. These indicators play a vital role in holding government to account in progress on reducing income poverty, within a UK and international context”.

It endorses the relative income measure as,

“the most appropriate headline income poverty indicator, capturing the nature of poverty in contemporary society and allowing for meaningful comparison over time and across countries”.

Although it acknowledges—I am sure the Minister will make this point—that this measure,

“can give counter-intuitive results in certain circumstances”,

for instance, as recently, if median income falls, it points out that that is,

“why monitoring the full suite of indicators in the Child Poverty Act is important”,

a point made very strongly by my noble friend Lady Sherlock. It argues that, in contrast,

“the proposed multidimensional indicator put forward in the consultation document is conceptually muddled and would add confusion rather than clarity to current measurement approaches”.

Secondly, the Royal Statistical Society—not one of the handful that writes letters to the Guardian—argues that combining the indicators as proposed in the consultation could conflate,

“causes, symptoms, things associated with poverty, and things which do not seem to be related to poverty in any major way”.

It warns that public trust in statistics could thereby be threatened.

Given that leading poverty researchers and statisticians are endorsing the indicators enshrined in the Child Poverty Act and reproduced in this amendment, the Government should think very hard before changing the measure of child poverty. That is not to say that there is not scope for complementing it with indicators of risk factors and consequences, which is what many of the indicators suggested in the consultation are and which the previous Government published. I hope that in responding the Minister will not take refuge in a measurement consultation, which would appear to have received a pretty resounding thumbs-down, but will address the substantive question of the impact of this nasty Bill on the numbers of children living in poverty and the implications of that for their obligations under the Child Poverty Act 2010.

My Lords, I rise with trepidation following the noble Baroness, who has immense expertise in this area. Even if I had not intended to speak on the technical aspects of this amendment, the claim by the noble Baroness, Lady Sherlock, whose approach is always sharp and pointed in proposing such matters, that this Government is not serious about tackling child poverty would demand a response. Not only is it there for us to read repeatedly in government statements that this Government, as with their predecessor, are committed to the eradication of child poverty, but when we are tempted to get a little too high and mighty about that, one might look at the targets which the previous Government set in respect of halving child poverty by 2010 and how they performed against that measure—they did not tackle it. The commitment is real and is what is driving the whole argument towards universal credit, the raising of tax thresholds, the freeing up of the economy to create 1 million new jobs—which is a pathway out of poverty—the troubled families programme and the pupil premium. This is an immense drive across all departments within government to tackle what we accept is a shame on a country which is still the seventh-richest nation on earth—that 2.3 million children should be in poverty. I just make that point initially.

Given the Minister’s very welcome and obviously understandable sympathies and sensitivities towards the issue of child poverty, does that mean that we can expect the noble Lord to table an amendment at Report stage to protect child benefits, including the child benefits within tax credits, from this Bill altogether?

I will come to that point in a minute because it is an interesting one about the effectiveness of the cash measure alone in eradicating child poverty. The previous Government failed to meet their target of reducing child poverty by the level they set themselves, despite spending £171 billion between 2003 and 2010. Here, in a sense, is something that almost makes the case for the Opposition, were they to take it. Those of us on the government Benches could stand here and point to the fact that, in 2010-11, 300,000 children were taken out of relative poverty. We could say that, but of course we realise that that is not actually happening on the ground. We recognise that those immense pressures are there. I do not dispute the quotes that the noble Baroness has used in introducing this but the Institute for Fiscal Studies, in its helpful analysis, points to the fact that all that happened with that 300,000 was that you had private sector incomes—predominantly—being repressed or flat-lining. I am trying to follow the gestures of the noble Baroness but being a man I can do only one thing at a time. Private sector incomes increased by 10% over the years 2007 to 2012 while benefit levels increased by 20%. That is one of the arguments that is put. Because it is pitched at median income, you then find that, as the Institute for Fiscal Studies shows in its graph, the measure comes down, the benefits go up and effectively you say, almost like a card trick, “We have reduced child poverty by 300,000”. In fact, you have done nothing of the sort. All that has happened is that, during a recession, private sector incomes have fallen and therefore, as the IFS says:

“If earnings fall relative to benefit levels, then being in work becomes less financially attractive”.

Those are the IFS’s words, not mine.

My Lords, I apologise to the Committee. I was unable to be present for the beginning and I have obviously missed the explanation of a phrase that I cannot understand. The noble Lord has just repeated that the answer to child poverty is not money. I do not know the explanation for the Government’s view that you do not eradicate child poverty by providing money. I wonder whether the noble Lord could refresh my memory.

Secondly, the noble Lord comes from a different northern region from mine. The biggest problem that people face is poverty when they are struggling to go to work. They are struggling to get extra hours, which the Government are insisting that people have to try to do, when their employers will not give them extra hours; when the only extra hours they can get may be two hours further away from their home and the cost of travel there is impossible. I think that noble Lords opposite are not living in the same world as I am. My only reassurance is that the right reverend Prelate appears to be living in my world.

My Lords, perhaps I may add to my noble friend’s comments. The noble Lord perfectly accurately described what was happening to the 300,000 children who were lifted out of poverty because the median income line fell by virtue of the recession and the downward pressure on incomes. Of course, he is completely right, but the other way of stating that was that as a result of what the previous Government did, the incomes of those children—the poorest of the poor—were protected against the effects of the recession, for which most of us are grateful and appreciative, including the noble Lord, I am sure.

I accept that point. On the first point made by the noble Baroness, Lady Farrington, of course I am not saying that child poverty has got nothing to do with money. It is vastly to do with money, but is that the only thing that impacts on child poverty? If we want to impact on child poverty, do not the quality of housing, the quality of education and the opportunity to work have some bearing on the fact? Does the fact that the parents are in debt or are drug-dependent or alcohol-dependent have any bearing on it? Does living in a one-parent family or with two parents make any difference to the life chances of the child in poverty? One would probably have to say: yes, to a degree. I am simply saying that there is more to this.

That fact is borne out by international comparisons. I found a report card of child well-being, which was produced while the previous Government were in power. It was undertaken by UNICEF and it is an international comparison. Yes, it looks at cash, although interestingly it looks at 50% of the median, not 60%; it also looks at health and safety, educational opportunities, work opportunities, family and peer relationships, behaviours and risks, and subjective well-being—a broad range of indicators in a basket of trying to assess international child well-being. By the way, if the party opposite is interested, it actually came last: 18.2 was that Government’s average ranking position out of the most advanced countries in the world, but that is not my point.

My point is that we must come back to the median income. The median income is worth looking at in itself because that is the test that we are using to measure all benefits. It relates to a level of income—not an average income but a median income, the most frequent across the distribution. The latest figures I could find on the ONS website showed that median incomes vary quite substantially across the United Kingdom—nothing unusual there; you would expect that to happen. For example, in London the median gross wage is £651.80 per week, but in the north-east the figure is £451.80 per week. These are the latest figures; I accept that there might be a shift slightly in one direction—well, upwards only.

There is a difference of 44% across the range. Therefore, when we are applying a national target of 60% of the median, we need to examine whether that is giving us an accurate reflection of child poverty levels in all parts of the country. It might be that we are understating it in parts of the north, Wales and the south-west; it may be that we are overstating it in London—I do not know. None the less, using that as the sole measure to test median income across a national rating by which we actually assess those in child poverty is worth taking a more careful look at.

Does the noble Lord accept that the Child Poverty Act was not looking at just the metrics of the targets? Section 9(2)(b) talks about ensuring that,

“as far as possible that children in the United Kingdom do not experience socio-economic disadvantage”.

We had big debates about that. The Act requires strategies for,

“the promotion and facilitation of the employment of parents or of the development of the skills of parents … the provision of financial support for children and parents … the provision of information, advice and assistance to parents and the promotion of parenting skills … physical and mental health, education, childcare and social services, and … housing, the built or natural environment”.

It was not looking at just those targets; there is a whole range of strategies that this Government should be adopting if they are signing up to this Act.

That is a more reflective point; it is just not exactly what the amendment before us today actually refers to. It refers to the financial measures of “absolute low income”. Is that the one that is based on 1998-99 and uprated for inflation in a direct line?

My point is that there is an absolute crying need, of which we are all absolutely aware. There is child poverty out there and we need to strain every sinew to ensure that we tackle it. Also, we have no doubt that on the current measure there is no question that it is going to increase. The Office for Budget Responsibility’s figures forecast that as the recovery gets under way, private sector earnings will increase by 4.6% per annum. It does not take a great mathematical mind—which is fortunate for me—to figure out that with what we are dealing with today, as well as the likely increase in private sector incomes, we are going to see the gap rising and almost an inversion of what has happened over the past few years happening in the future. But there are more indicators that need to be examined to give us a holistic picture and to ensure that we target scarce resources where they are needed most.

My Lords, this proposed new clause would require the Secretary of State to lay a report in each of the years in question, assessing the impact of that year’s uprating order on child poverty based on the different measures contained in the Child Poverty Act. I absolutely understand noble Lords’ concern to ensure that we are tracking progress and impacts on child poverty. However, I do not believe that this new clause is necessary to do that.

The Government already publish child poverty figures every year using the households below average income series, which is usually published in May or June and includes details on the areas listed in the amendment: namely, the number of children,

“living in relative low income … combined low income and material deprivation … absolute low income … persistent poverty”.

Moreover, later this year, we will see the first of what will become an annual report from the Social Mobility and Child Poverty Commission, chaired by Alan Milburn. It will report on the Government’s progress towards reducing child poverty, in particular meeting the targets in the Act and implementing the most recent UK strategy.

The noble Lord, Lord Kirkwood, asked a number of questions about that commission. He asked where it had got to and what it was going to say. The answer is that the Government do not know what it is going to say because it is an independent commission. We await its report eagerly, but we are not attempting to pull it up by the roots to find out what it is going say as it is in the process of undertaking its work. I can reassure my noble friend that there is no drift in the work of the commission. It is a very substantive piece of work and it is therefore not surprising that it cannot do it very quickly. We expect that its report will be available in the late summer. It will report to Parliament and I am sure that we will give considerable scrutiny to it in your Lordships’ House when the time comes—we are already looking forward to it on these Benches, I can tell you.

I strongly believe that it is only through such comprehensive reporting, looking at poverty issues in the round, that we can have a meaningful debate about child poverty. As noble Lords have mentioned, we published in response to a Parliamentary Question in another place the expected impacts on child poverty of the uprating measures that we have announced. An additional 200,000 children will be in that category by the end of the period covered by the Bill as a result of the measures in it.

The noble Baroness, Lady Sherlock, asked whether we would publish other impacts of the measure. We do not think that it is possible to derive estimates of all the measures in the Bill. For example, impacts cannot be modelled for the persistent low income poverty measure because impact assessments are based on cross-sectional data rather than longitudinal data. In addition, measures based on an estimate of material deprivation are technically complex to model because material deprivation relies on more factors than just income, so impacts have not been modelled for these measures. The noble Baroness asked also about the absolute poverty figure. If she will forgive me, I shall write to her on that separately.

As we have said previously, we believe that we need to be cautious about setting too much store by such individual assessments of impact. These are not predictions of how the child poverty figures will change in the future, as they do not take into account all the other variables which exist. For example, our estimates will change as forecasts of economic growth and average earnings change, and they do not take account of policies which cause child poverty figures to move in the other direction such as universal credit. Universal credit, which has not played much of a part in our debate today, is of course expected to lift up to 250,000 children out of poverty depending on the effect of the minimum income floor. I believe that we can have a meaningful debate about poverty, as we have started to do in the latter part of this debate, only when we accept that poverty goes wider than the measures contained within the Child Poverty Act.

The noble Baroness, Lady Lister, asked a number of questions about the work that we are doing on defining poverty and on the consultation. The consultation is finished. She is quite right that a number of people have been very critical of what the Government are proposing and we are now considering how we respond to those criticisms. It is not the case that the Government have made up their mind about the outcome and are going to ignore everything that has been said—that would be ridiculous. I can give the noble Baroness an assurance that we are analysing all the submissions, of which there have been a number, and we will produce our response to the consultation in the summer.

I am sure that the Minister is about to say this, but the assurance that I was seeking was that all the responses would be published on the web. I do not question the fact that the Government are analysing them all—I am sure that they would not ignore any of them—but the public need to know what people were saying about it.

I am happy, I think, to give that assurance. I say “I think” only because I have not talked to officials. That is the standard practice and, unless somebody for a reason that I cannot immediately think of has said that they do not want their comments to be published, I would expect the department to publish all the comments and representations that we have received.

I want to clarify a few matters that have been put to us on several occasions by noble Lords. First, the Government are committed to the Child Poverty Act; secondly, we are committed to eradicating child poverty; and, thirdly, we strongly believe that income matters and will remain a central part of any new measures of child poverty. Our discussion is about what else one needs to do both to measure and deal with child poverty so that all children have a better opportunity when they are living on very modest means.

A number of noble Lords have cited figures from the IFS and the Child Poverty Action Group which suggested that child poverty levels would rise by between 800,000 and 1 million by 2020. I really would caution against setting too much store by those figures. First, child poverty forecasts are an inexact science. For example, the numbers that the IFS produces do not account for future changes to government policy. It is measuring change at a time of immense fiscal challenge for the Government but cannot know what government policy will look like in four or five years. The IFS core numbers also do not take fully into account the dynamic and behavioural changes that will result from the Government’s reforms. Moreover, even in the short term, child poverty forecasting has proven difficult to get right. The IFS, which I accept is a leader in this area, made predictions in October 2011 of a fall of 100,000 in the figure for relative child poverty for the year 2010-11. In reality, the figure fell by 300,000. It is therefore an inexact science and it is very easy for numbers produced by it to be spectacularly wrong. This does not of course detract from the importance of taking action to reduce the level of child poverty, but it serves as a reminder that we should proceed with caution in making forecasts of child poverty, whether based on measures in isolation or changes over the longer term.

It is important to remember that many figures on poverty are based entirely on tax and benefit changes feeding entirely into the relative income measure of poverty. This measure does not capture the full range of issues that poverty involves. It captures a lot, but it does not capture them all. It will not tell us how many children’s lives will have been changed by 2020 but only how many children have circulated around the poverty line. One way of tackling child poverty is to focus on this line, pushing up benefit incomes to lift people from just below it to just above it. We already know that focusing on the relative income line alone yields perverse results, and people have referred in this debate and earlier debates to the fact that, in 2010, 300,000 fewer children were set to be in poverty because the recession had caused median incomes to drop. Children were set to be pulled out of poverty not because anything had changed in their lives but because the rest of society got poorer.

The alternative path that we are trying to follow in government focuses on the interventions that transform lives. That is why we have protected spending on the education budget; that is why we have invested £2.5 billion in the pupil premium for disadvantaged pupils; that is why we are spending £1.2 billion on capital investment in schools; and that is why we are investing in making work pay through the universal credit, sending out a clear signal that we believe that work is the best route out of poverty for parents and their children. As part of the universal credit, we are spending an extra £200 million to support families with childcare costs and, for the first time, this support will be made available to families who work fewer than 16 hours a week. This will mean that 100,000 working families will be helped with their childcare costs.

As I have said, the Government are currently analysing responses to their consultation on new measures of child poverty, measures which will attempt to capture the wider reality of poverty in the UK today. The Government already produce a number of detailed reports on poverty. I hope that this will reassure the Committee that we will continue to publish vital information around child poverty and to take our obligations around child poverty seriously. This proposed new clause would therefore be an unnecessary addition to the Bill.

My Lords, I thank all noble Lords who have spoken in this debate, which may be an interesting precursor to the kind of debate we may have when the commission finally reports. I am particularly and genuinely pleased to hear the Minister say two things—first, that the Government remain committed to eradicating child poverty and, secondly, that income matters. They are both important statements, and I welcome them and am very pleased to have them on the record. I thank the Minister for making them so clearly.

The noble Lord, Lord Bates, with whom it is always a pleasure to do battle, took me to task for saying that I did not somehow accept that the Government made clear their commitment to eradicating child poverty. What I was challenging was not that commitment but whether or not the actions were being taken that would make it a reality. That was the point that I was trying to make, and I apologise if that was not clear. My question was really about what one does to make a difference.

A lot has been said about the nature of the measure. I have never thought that the well-being of children was about only money. However, the reason why this amendment is about money is because the Bill is about money; the amendment is about the impact of the Bill, and the Bill is solely about what happens to the tax credits and benefits that go out to people—in this case, children. So it makes no sense for it to be any broader than that.

The second thing that is worth saying is that I made it clear that the relative income measure was, deliberately, only one of four income measures in the Child Poverty Act, and that was for a reason. The Government of the day recognised that we had to take a 3D approach to understanding what poverty was, and no single measure alone would be able to give us all we needed. However, those four points of perspective between them give a pretty good idea of what is happening to incomes across the UK. That is something that we need to understand.

The noble Lord, Lord Bates, commented on the regional variation of median income. That is true, but the cost of living also varies. As he and I both know, the cost of living in Durham is significantly different from the cost of living in London. So although wages may be different, so too is income—and the measure relates to median incomes.

It is also worth reminding ourselves that the Child Poverty Act does not—

That is quite an interesting point, if the noble Baroness is prepared to expand on it on the record. I think that she accepts that it is true in Durham, a city that we both love greatly, that median incomes—or, rather, average incomes—are significantly lower, by 44% according to my figures, and that the cost of living is different and lower. So in those circumstances —putting the two together by using a national measure and putting 60% of median income—you would perhaps overstate the level of child poverty in Durham. Does she accept that?

It might be worth the noble Lord and me sitting down together with the Child Poverty Act. He might find that many answers to his questions are in there. As well as giving the Secretary of State a specific duty to address income measures, because tax and benefits are in the gift of central not local government, with the exception—reprehensible in my view—of the recent move to localising council tax support, the strategy places a duty on local authorities and other players to engage in issues around child poverty, specifically because they have competence in those areas. So if the noble Lord goes back to read it, he will find that there is an awful lot more in it than he perhaps remembers. We may have to come back to that.

It is also worth coming back to the idea that it is not just about money—but it is also not not about money, a point made very clearly by my noble friend Lady Farrington. The noble Lord, Lord Bates, said that the fact that the Labour Government did not meet their target for child poverty reduction means that the measure does not work. I do not think that it means that at all. I pick up again a point that the Minister made. I fully accept that no forecast is a precise measure and no measure is precise, but one reason for keeping a long-term target of 2020 is that what really matters is direction of travel. Over time, how does the income of the poorest relate to the income of the country as a whole? On that, I am proud that our Government lifted 1.1 million children out of poverty. If I had to stand up and say that we had pushed 1 million children into poverty, I would be ashamed of that, and I am very glad that I am not in that position.

If the Government come forward with other measures, we will happily debate them. I am always open to any conversation that focuses the attention of this House and the nation on the well-being of the poorest families, and I am very happy to have the conversation when the commission reports about what that means and what the best means is to assess the impact of policies on that. However, at the moment, the Child Poverty Act is law, and it puts an obligation on the Government—a statutory duty—to address child poverty in all these areas. Unless they measure that, I simply do not see how it is possible to satisfy themselves that they have done it.

The Government’s defence has also partly been that the measure is meaningless. It may be worth reminding ourselves even of the relative income measure. The Child Poverty Action Group reminds us that a relative low-income poverty line is, typically, around £12 per family member per day for all spending needs after housing costs. It notes that many families in poverty will be far below that—because that is where the line is, and many families are way below the line. The point of having four measures is to try to understand the impact of policies such as this on all those measures. I accept that other measures are going on. I accept the point that the noble Lord, Lord Bates, made—and he has engaged with the arguments from this side of the Committee most comprehensibly—that other measures are happening and that there are time lags. However, it is impossible to ignore the fact that a Bill that sets out deliberately to cut in real terms the incomes of poor and middle-income families will do anything other than increase child poverty in real terms. That is a real increase—it is not a statistical anomaly.

I do not want to delay the Committee much more, but I remind noble Lords that the amendment simply invites the Government to report before they enact this Bill on what the impact will be on child poverty, using measures already in statute to reflect a duty that the Government already have in statute. That is all that it does; it could hardly be less radical. However, as I am interested in returning to this at a later stage, I beg leave to withdraw the amendment.

Amendment 12 withdrawn.

Amendment 12A not moved.

Clause 3 agreed.

Schedule : Meaning of the “relevant sums” and the “relevant amounts”

Amendment 13 not moved.

Amendment 14

Moved by

14: The Schedule, page 4, line 9, leave out “150(1)(i) and (j)” and insert “150(1)(j)”

My Lords, the three amendments in this group have two specific aims, and both concern the treatment of children under the Bill, which we have discussed under Amendment 12.

Amendment 14 seeks to remove child benefit from the Bill and Amendment 19 does the same for child tax credit, while Amendment 17 concerns the child additions within universal credit. I shall return to Amendment 17 later with regard to children with disabilities.

Amendment 14 concerns child benefit. Time and again in these debates on welfare reform, we face the challenge that our reforms have a disproportionate effect on children. Overall, some 30% of households are affected by this Bill. Of those with dependent children, 87% are affected; of lone-parent households, 95% are affected. For example, a single nurse on average earnings for her profession of £530 a week would lose nothing at all as a result of the Bill. If she had two children, she would lose £424 a year in 2015-16. Families with lower incomes are those who end up being the worst affected, whether by reductions in housing benefit or the freeze on child benefit, and so on.

I do not for one moment believe that it is the Government’s intention to target children, but it is the result of much that we do in welfare reform, and that is a matter of choice. The most powerful speech at Second Reading was that of the noble Baroness, Lady Hollis, when she spoke of the way in which she and I and the vast majority of Members of this House were not affected by the responses that we make to our fiscal challenges. We could be: my personal allowance, winter fuel allowance or bus pass benefits could be withdrawn or taxed if we took a different line. In this Parliament, £9 billion has been spent on the increases to personal allowances and £4.7 billion on fuel duty—an effective cut by not increasing fuel duty.

When we discuss matters here, I am always deeply impressed by the expertise brought on health matters by doctors and NHS trust chairs, on higher education by university professors and academics, and on defence by senior military officials. When we wrestle with issues of poverty, there is no one experiencing deprivation to tell us what it feels like. Many of us know, because of other people whom we talk to, of the pressures, especially on those in work with low incomes, but we do not experience that deprivation for ourselves.

The extension of the threshold for the personal tax allowance in 2013-14 leaves basic rate taxpayers £47 better off. If you do not pay tax, that clearly has no effect. If you are a working family eligible for both housing and council tax benefit, you will lose benefit so that your net gain is not £47 but £7 in 2013-14. There are alternatives to the pressure on the most deprived families.

I am particularly concerned about the continued chipping away at the value of child benefit. This has been frozen for three years and is now to be capped at 1% for two further years. That is a total increase of 2% compared with an estimated 16% in CPI. Again, the issue is the cumulative effect of the reductions. This is in addition to the cuts in other benefits experienced by those on low incomes. The impact assessment shows that some 60% of the savings from this Bill come from the poorest third of households, with 3% from the wealthiest third. These three amendments would mean a substantial decrease in the 200,000 children pushed into poverty by the below-inflation increases in children’s benefits and tax credits in this Bill.

I wonder whether we realise, and get hold of well enough, the considerable extent to which child benefit in particular is regarded in most families as being specifically for the children concerned. My experience in West Yorkshire is of families on low pay struggling to make ends meet but quite clear that child benefit is to be used not for the general household expenses but by the mother to help her children. The points made persistently in debates on this Bill and on the Welfare Reform Act by the noble Baroness, Lady Howe of Idlicote, speak of the way in which it is women—often mothers—who are most disadvantaged by the measures we are taking because they are concerned particularly with the specific help of their children. Child benefit reduction fails to take account of the cultural and social support for children that this benefit provides, in addition to its financial obligations.

Reduction in child benefit specifically is also a disincentive to seeking work, so it is a direct challenge to the Government’s own desire, put forward powerfully by the Minister, to encourage people to return to work. Child benefit, rightly, is disregarded both from household income and in calculating the applicable amount before housing and council tax benefit are reduced. The result is that a low-income working family living in rented accommodation loses both the £4.80 a week in child benefit and a further estimated £4.10 a week because of the disregard rules. A loss of some £9 a week is a serious blow to working families, and that child benefit reduction in particular works against the Government’s aim to get people back into work.

More specifically, on Amendment 17 and its effect in removing the lower disabled child addition within universal credit from the scope of the Bill, the Government have promised to provide protection for the most vulnerable families, specifically including those affected by disability. Many of the things that the Government have done have had the effect of protecting some of those with disabilities, yet this particular piece of support for disabled children is being subjected to the 1% cap.

There is already the cut in support for these children under welfare reform legislation from £57 a week under child tax credit to £28 a week under the disability addition of universal credit. We discussed that on the first day in Committee. This is in addition to the other reductions faced by all families under welfare reform. The Holes in the Safety Net review carried out by the noble Baroness, Lady Grey-Thompson, demonstrated how hard the changes to welfare benefits will hit disabled children who need specialist aid or clothing, for example. Enabling those children to play as full a part as possible in society benefits them and society as a whole. We must do all we can to achieve that.

In comparison with the Welfare Reform Act, the provisions we discuss today may seem in one sense minor but, again, they are cumulative. They add to the pressure on disabled children and their families. The Children’s Society estimates that if the lower child disability addition were uprated by CPI, the monthly rate in 2015-16 would be £130, whereas if it is capped at 1% it will be £126. The cost of the amendment would be some £4.2 million in that year. It would benefit 100,000 children by some £42 a year. That figure of £4.2 million is tiny in the context of the welfare reforms that we face. It would be a genuine mark of support for disabled children if the Government were prepared to move on this particular item of the Bill.

Those in Leeds who work with disabled children, with whom I have discussed this, were as much puzzled as anything else by the inclusion of this particular benefit in the Bill, in view of the Government’s welcome attempts to support disabled people. On Amendment 17, will the Minister avoid this additional pressure on disabled children by looking to uprate the revised entitlement in line with the cost of living?

On Amendments 14 and 19, will the Minister look again at the effects the restriction on child benefit and child tax credit will have on the Government’s aim to move children out of poverty? Will he consider the disincentive to seek work involved in the reduction of child benefit? Will he look at other ways to raise the £0.9 billion that the removal of these caps would cost by placing responsibility on those of us who can afford to pay it rather than on those who cannot? I beg to move.

My Lords, the amendments would remove the benefits paid on behalf of children from the scope of the Bill because that disproportionately hits children and families. That is why I have added my name to them. Where 30% of all households are affected by the Bill, nearly nine out of 10 families with children are affected, including 19 out of 20 lone-parent families.

In total, the Children’s Society has estimated that about 11.5 million children are affected by the Bill. As the right reverend Prelate explained, Amendments 14 and 19 would together remove child benefit and child tax credit from the scope of the Bill. That is made particularly necessary by the fact that child benefit has already been frozen for three years before the measures contained in the Bill take effect. That means that child benefit will increase by only 2% over the course of half a decade. Over the same period, prices as measured by CPI will have risen by more than 16%. I say that that justifies the removal of child benefit from the scope of the Bill but, in truth, it would be unjustifiable not to remove it.

These benefits are paid to working families from all walks of life, as well as non-working families. The Children’s Society’s benefits uprating cap impact calculator shows that a couple with two children with one earner working as a primary school teacher and earning £600 a week would lose £424 a year by 2015. A couple with three children and one earner, a corporal in the Army, say, earning £619 a week, would lose £552 a year by 2015, so we can see the impact of having extra children.

As we have heard, Amendment 17 would remove the 1% uprating cap from the lower child disability addition under universal credit. That is particularly justified by the fact that rates of support for children in that group are already intended to be halved under universal credit. At present, families with a disabled child for whom they are in receipt of some level of disability living allowance, may be entitled to receive support through the disability element of child tax credit, currently worth £57 a week. Under universal credit, that support is to be provided through disability additions within household benefit entitlements, but it is proposed to cut that support in half to just £28 a week. That change will affect all families with a disabled child unless the child is receiving the higher rate of care component of disability living allowance or is registered blind.

The review of the noble Baroness, Lady Grey-Thompson, Holes in the Safety Net, of the impact of universal credit on disabled people and their families surveyed 1,400 families with disabled children about changes to support under universal credit. The evidence received suggested that, for those likely to be affected by the cut, the impact could be disastrous. Two-thirds of those likely to be affected said that if they received £30 a week less in benefits for their disabled child, they would have to cut back on food. At this point, I cannot resist asking: if the Minister shares other noble Lords’ disappointment at the greater resort to food banks, what does that say about her view of the government policy that she is supposed to be defending, as it is government policy that is leading to people’s greater resort to food banks?

Returning to the review of the noble Baroness, Lady Grey-Thompson, more than half of those surveyed said that the changes would lead to them getting into debt, more than one in 10 that they might even need to move home. One parent told the inquiry:

“My child would have little quality of life and would lose much of the social interaction he needs. It would be like a prison sentence”.

Another simply expressed their desperation, saying:

“This would have such a huge impact on us I really don’t know what we would do”.

The Bill will further compound that cut. For a family with one disabled child, the impact of the change in uprating would be about £42 a year. It should be noted that that impact is on top of changes to the uprating of other benefits received by the family.

The Children’s Society estimates that the cost of uprating the lower child disability addition would be only £2.4 million in 2014-15 and £4.2 million in 2015-16. All this hardship for such a paltry saving. The disproportionate impact of the Bill on children cannot be overstated or justified. It is not the first time that austerity measures have had a disproportionate impact on children and families. In fact, as the noble Baroness, Lady Sherlock, told us, the Institute for Fiscal Studies found last year that, even with universal credit fully in place, taking together all the tax and benefit measures introduced or to be introduced between the beginning of 2011 and April 2014, families with children will lose a higher proportion of their income than either pensioner households or working-age households without children across the whole income distribution.

We have heard a lot this afternoon about the measurement of child poverty, but the IFS estimate of a growth in the number of children living in poverty of 400,000 between 2011 and 2015 and 800,000 by 2020, has been referred to more than once. The noble Lord, Lord Newby, said that we cannot set too much store by such predictions because we do not know what direction government policy may take. All I know is that the last time I heard, the Government intended to take a further £10 billion out of welfare. The Bill can only serve to increase the level of child poverty. Indeed, as the noble Lord, Lord Newby, acknowledged, it will add 200,000 to the number of children in poverty; 100,000 of them will be in working households.

Children do not have a vote. If they did, it is impossible to believe that they would be voting for the Bill as it stands.

My Lords, my name is also attached to all three amendments in this group. I thank the right reverend Prelate the Bishop of Ripon and Leeds for explaining the amendments.

First, I will cover Amendments 14 and 19 together. Households with children are much more likely to be affected by the Bill than households without children. Many families with children will be affected even when someone is working full time. A single person or couple with children obviously have much greater costs than those without dependent children. For this period of their life, the income they need to meet the basic living costs of their household is clearly greater. That means that the amount someone can be earning and still need extra financial support from benefits and tax credits stretches much higher up the income scale than for those without children.

The level of childcare costs and of rents—especially in the private rented sector— combined with the lack of a living wage means that people who can only find work at or near the minimum wage cannot escape from needing that extra financial support, for however much time they work. If they work more hours, they need more help with childcare. Many are already struggling to manage.

For example in a local paper in the north-east of England, where I live, Pauline Chambers, chief executive of Sedgefield and District citizens advice bureau in County Durham, said that the team had encountered levels of hardship not seen for 21 years. Telephone inquiries have increased by 100 per cent in the last two months, with many people struggling to pay for basic food and utilities. That view is repeated up and down the country. Julia Cornelius, manager of Luton CAB was quoted in a different paper. She said:

“Every day we see people who are struggling to keep a roof over their heads or put food on the table as wage squeezes, price rises and benefit cuts wreak havoc on household budgets”.

Those in work and on benefits gain little from their earnings increasing. A single person earning £250 a week who receives a £2.50 rise in their earnings will keep about £1.70 of the increase after deductions for tax and national insurance. If they have children, and so need to rely on benefits and tax credits, they will reduce as their income rises, so they will be left with a net gain of 10p from a rise in earnings of £2.50.

The increase in the tax threshold gives much less help to families with children. In April, a single person with earnings of £250 will see a rise in their net earnings of £5.12 per week because of the raising of the tax threshold. It is clearly important that single people in this position are helped; they are likely to be near or below the poverty line if they are paying housing costs. However there is no equivalent help for families with children when someone in the household earns £250 because they are likely also to be entitled to housing and council tax benefit. They will gain just 76p next April because of the way their benefits will reduce as their net earnings rise.

The cumulative loss due to changes in the uprating of child benefit also decreases work incentives. The real-terms loss between 2010 and 2015 due to child benefit uprating alone is about £6 a week compared with if it had been uprated as it used to be by RPI. However, child benefit also plays a role in determining the level of housing and council tax benefit paid for those on low incomes in work, which means a further loss of £5. So the total real-terms loss between 2010 and 2015, just due to the changes in uprating child benefit, for a family with someone in work but on a low income is almost £11 a week.

Many working families with children are already in poverty. Calculations by Citizens Advice show that a couple, both of whom are working, one full time earning £250 a week, the other part time earning £50 a week, who have two children aged 14 and eight and are living in rented accommodation have an income of £337 a week after paying housing costs. This is already £30 below the after-housing costs poverty line for a family in their situation. This Bill is going to pull them deeper into poverty. A couple with the same household but who are unable to find work will have an income of £259 a week after paying housing costs. This is already £109 a week below the after-housing costs poverty line for a family in their situation.

To summarise Amendments 14 and 19, households with children are much more likely to need to be reliant on benefits because of their extra costs. These families, even if working full time, gain very little from the raising of the tax threshold. Many of these households, whether working full time or unable to work, are already in poverty. This Bill is going to pull many households with children even deeper into poverty. Universal credit will help the family in work, but that will be too late for many of these children. Taking child benefit and child tax credit out of the scope of this Bill would go some way to mitigate the increasing financial pressures on these families in the next couple of years. It is surely time to do something for these families.

I shall briefly turn to Amendment 17. Many parents of disabled children face losses under universal credit. Support for the most disabled children is being halved. In my inquiry into the impact of universal credit on disabled people, the large body of evidence we received from parents of disabled children was that they face substantial additional costs as a result of having a disabled child. They include paying for specialist aids, adaptations to their homes, additional clothing costs and travel costs. Roughly two-thirds of lone parents who had a disabled child receiving the middle rate of the care component of DLA reported that they were unable to work because of their caring responsibilities. Their entitlement under universal credit will be about £28 less than current levels of benefit, as has already been mentioned by the right reverend Prelate. Roughly two-thirds of these parents said they were unlikely to be able to return to work for at least five years. The evidence we received was that these levels of benefit would create great hardship.

Freezing the disability element will mean an even greater loss. Current parents will receive transitional protection, but their award will be frozen until their entitlement under universal credit reaches that level. These families are facing a very difficult next few years because of the freezing of child benefit and child tax credit. If the disability element does not increase with inflation, these families will face an even bigger drop in real-terms value when they transfer to universal credit. They will face several years with lower-than-inflation rises. Their benefit will then be frozen on universal credit for an even longer period while food, housing costs and fuel prices continue to rise.

My Lords, these amendments, to which I have added my name, are essential to protect the basic well-being of the very poorest children. Those seeking to justify restrictions to our social security system have continually argued two things: first, that we must fairly distribute the burden of national economic hardship, and secondly, that we must take tough decisions in order to ensure a sustainable future. Yet driving down the value of child-related benefits achieves neither of those objectives. Instead, it unjustly shifts the burden onto the most vulnerable section of our society and damages the future prospects of hundreds of thousands of young people.

The Government’s own impact assessment highlights that the Bill as it stands will disproportionately affect families, with lone parents experiencing the most significant real-term cut to their income of £5 per week. Noble Lords might think that £5 is not much, so let us put that figure into context: it is the equivalent of half an average weekly heating bill or two lunches for a child. The loss of it is a significant challenge to the increasing number of parents currently struggling to cover utility costs or turning to local food banks for their children’s meals. In practice, the actual shortfall is likely to be larger still owing to above-inflation rises in the cost of necessities such as groceries, fuel and gas and electricity. The net result will inevitably be more child poverty and greater family suffering, making a mockery of any notion that this is a fair or just mechanism for securing cost savings.

As Helen O’Brien, the chief executive of Caritas Social Action Network, said recently,

“it is absurd to suggest that a child going to school hungry or coming home to a cold house is shouldering their fair share of austerity measures; rather they are being deprived of a basic standard of living to which all children are entitled”.

Removing child-related benefits from the scope of the Bill will not completely prevent or reverse this hardship, as low-paid and unemployed families will still face a rapidly widening gap between their outgoings and their core benefit income. However, specific parts of the safety net designed to cover essential costs of caring for their sons and daughters will be crucially safeguarded if these amendments are agreed.

This is particularly important given that the relentless squeeze on the support available for poor families has already left considerable numbers of children not only without the facets of a good childhood but growing up in simply unacceptable living conditions. Reflecting on cuts to local housing allowance and the pending introduction of the household benefit cap, Alison Gelder, chief executive of Housing Justice, recently noted that,

“across the country we are seeing increasing numbers of children suffering from a life in sub-standard housing and being forced into overcrowded accommodation”.

Taken in conjunction with this April’s intended ending of council tax benefit and the imposition of social housing underoccupancy penalties on approximately 220,000 families with children, these measures are putting the income levels of the poorest parents under unprecedented strain. On top of this, child benefit is already subject to a three-year freeze, which stands to create a further annual real-term loss of £130 by 2014.

More than ever the most vulnerable families require protected child-related benefits in order to mitigate the most damaging effects of this rapid and extensive cut to their income. At the very least, the Government should allow sufficient time for the impact of recent and pending benefit changes to be properly examined in relation to child poverty. The result of committing to another three years of real-term cuts before many key restrictions have even come into force will be disastrous for children whose parents are struggling to keep a roof over their heads and food on their table.

Ultimately, increased levels of child poverty are not only devastating for individuals and families but stand to have a profoundly negative effect our society. One of the most significant risks is to children’s education, an issue previously recognised in the DWP’s impact assessment on restrictions to housing benefits. It stated that overcrowding resulting from the cuts could hamper children’s ability to do homework and affect educational attainment. Last year, more than half of teachers surveyed reported that financial hardship among families had resulted in children arriving at their classes hungry, with significant consequences for concentration and behaviour. A report from the Children’s Food Trust last week reinforces the picture of children going to school hungry. Of 250 staff surveyed, 84% said they had seen children without enough to eat and 68% said they had seen an increase in this over the past two years. If child-related income is driven down further this is only likely to worsen, jeopardising the potential of even more young people and undermining the prospects of the next generation.

When parents struggle to afford basic necessities for children, there is also the very real risk of running into long-term personal debt. The shocking findings by the magazine Which? last year showed that payday loan companies now spend over half a million pounds targeting cash-strapped mothers and fathers by putting their adverts on television during children’s programmes. This is indicative of the increasingly desperate situation that so many families now face. A growing number of parents are turning to these lenders, while some 25% now use credit cards to meet everyday living costs. The abolition of community care grants and crisis loans in April only stands to deepen this problem by closing the door to interest-free emergency funds.

It is difficult to see how pushing even more parents into debt by slashing the value of child-related benefits will contribute in any way to our future economic recovery; yet increased levels of debt are precisely what will result from this Bill. Children still need healthy meals, warm houses, winter clothes and new shoes. When parents are faced with a real-term cut in child benefit and tax credits, alongside above-inflation rises in the prices of these goods, they will have to turn somewhere to make up the shortfall. It is as simple as that.

These amendments are not only right, but imperative. Capping up-rating of child-related benefits at 1% for the next three years will exacerbate the already unsustainable pressure that parents are under. It will cause serious damage to our communities in the long run and, most critically, it will drive down the living standards of millions of children. Protecting the basic level of income required to meet young people’s most intrinsic needs is a fundamental test of our society and one that we cannot afford to fail.

At the general election, the leader of the Opposition, Mr Cameron, now the Prime Minister, said that we lived in broken Britain. I paid little attention to him at the time because I believed he was wrong. However, after two and a half years, we live in a Britain where multi-millionaires are about to receive thousands of pounds a week in tax cuts; we live in a Britain where corrupt bankers who fiddled the LIBOR rate are rewarded with pay-offs when they should have gone to prison; we live in a Britain where those who operate our transport system cannot run the trains on time but get big bonuses; we live in a Britain where energy companies have more than trebled their profits yet require pensioners to pay an extra 6% for gas and electricity; and we live in a Britain where hard-working low-income couples with children will now see their weekly income slashed, the unemployed and poor will have their benefits cut and disabled people will see what help they get now cut or taken away altogether. Now, in 2013, I have started to understand what Mr Cameron meant by broken Britain.

My Lords, I want to make some very brief comments on the amendments, mainly to follow up some things I said at Second Reading. As my noble friend Lord Touhig just said, these amendments are imperative, crucial and brilliant, and I congratulate the movers on putting them so powerfully. Any amendments that will mitigate against benefits having a negative impact on children are very forceful and follow very well from earlier, powerful speeches about child poverty.

I suggested at Second Reading that anything that might increase child poverty should be removed from the Bill. I say that again and support these amendments. The Government should really think about listening very carefully to the organisations and experts who work closely with children and families and who understand child poverty. These organisations and experts have pointed out the negative implications of this Bill. Surely their analyses should be taken very seriously.

The Government have already announced that the Bill will directly increase relative-income child poverty by 200,000 children, of which 100,000 will be in families in work. Nearly all the highly vulnerable children that Barnardo’s works with are receiving in-work or out-of-work benefits. This Bill will impose a real-term cut to their income. One in 10 families will be affected by this Bill, the poorest families most.

The Government are obliged to drive forward progress on child poverty and it is good to hear that they are committed to reducing it. The action areas that the Government must consider when they provide their national child poverty strategy, as my noble friend Lord McKenzie mentioned, include the employment of parents or the development of the skills of parents; financial support for children and parents; information, advice and assistance to parents and the promotion of parenting skills; physical and mental health, education, childcare and social services; and the promotion of social inclusion. This Bill cuts across all these duties and negates them. I echo the question that my noble friend Lady Sherlock posed about the assessments that have been done on the impact of this Bill.

This Bill cuts not just a hole, but a chasm in the fight against child poverty. I ask again: are the Government listening to those who work with children and, importantly, have the Government considered the long-term effects of child poverty, such as underachievement at school, with all the consequences, potential drop out from education and lack of social mobility? Measures in the Bill are potentially hugely costly, much more than the potential savings proposed, and I hope the Government will think again.

My Lords, we have heard yet again some very powerful and persuasive speeches and it is a very interesting argument. I commend the right reverend Prelate the Bishop of Ripon and Leeds for provoking such a good debate on so important an issue. As we have heard, this amendment would remove child benefit, child tax credit, and the child addition to universal credit from the scope of the Bill. Since we on these Benches would like to remove all benefits and tax credits from the scope of this Bill, we are pleased to support it

As we have heard from the right reverend Prelate, the noble Baroness, Lady Grey-Thompson, and others, the Bill has a disproportionate impact on children and families. The Government’s own impact assessment shows that two-thirds of affected households are families with children. As the noble Lord, Lord Low, noted in a very powerful speech, the Children’s Society says that while 30% of all households are affected, 87% of families with children are hit.

On one level this is because families with children receive more in state support—of course they do. As the noble Baroness, Lady Grey-Thompson, pointed out, a household without children is rather cheaper to run than one with children; not to mention a great deal quieter. However, while most parents rightly bear the lion’s share of the cost of raising their children, the state has always contributed—not just in extreme cases to try to protect children from the misfortunes that befall their parents but also because, in general, it is always recognised that children are a public as well as a private good. We all have a stake in seeing the next generation thrive.

Many noble Lords have rehearsed—and I will not repeat them—the concerns expressed to all of us about the impact of these measures on families with children. We have all had briefings from Save the Children, the Child Poverty Action Group, the Children’s Society and others making those points. These are very difficult times to be raising children, as my noble friend Lord Touhig noted in a very powerful speech. As the costs of food and energy have soared, more and more parents are struggling to make ends meet as they spend more of their money on these basic costs.

The right reverend Prelate made a telling point, I thought, when he reminded us that, unlike other areas, we do not have people in here with direct expertise of the matters under consideration. To that end, I liked the quote from Rosemary Keenan, the chief executive of Catholic Children’s Society (Westminster), when she said:

“It is hard for many of us to imagine what it is like for a mother to only have £1 left and know she still has to feed her children before the next payday. Families facing in-work poverty rely upon Working Tax Credits and other benefits to help make ends meet, and will face serious hardship as a result of these restrictions”.

Indeed they will. As we have heard from a number of noble Lords, the Bill comes on top of a series of cuts in the value of other tax credits and benefits. As well as the headline cuts, there have been a series of hidden cuts affecting, for example, tax credits for families with children by changes to taper rates, the treatment of income and the freezing of allowances, all of which sound technical but have in fact saved billions. However, it is not of course money that has been saved, but money that has been taken way from low-income families with children.

I seem to recall that the Government suggested at earlier stages that one of the reasons that so many families are affected is that tax credits go too high up the income scale. The implication, I suppose, is that people would not miss the money. However, the noble Baroness, Lady Grey-Thompson, described some figures from Citizens Advice. It has given us case studies showing that a couple with two children, where one parent is working full-time on just over minimum wage—getting £13,000 a year—will gain just 76 pence from the personal allowance. As a result, however, they will lose £3.46 a week net. By April 2015, that family on £13,000 a year with two kids will be £12.79 a week worse off. Even if we go nearer to average earnings, Citizens Advice suggests that a family earning £26,000 in similar circumstances will be over £12 a week worse off by April 2015. The sums may not sound like a lot, but they are significant to families on those kinds of incomes.

The Bill, as we have heard, will affect primarily working families with children. I was pleased to hear my noble friend Lady Massey of Darwen reiterate the impact of the Bill on child poverty, although I hope to hear something specific about this. I feel that I have probably done it to death, so I shall stop saying it now.

To come back to our core concerns, the Bill is a completely inappropriate way to address the up-rating of state support for families. We have perfectly good mechanisms in place to do that on an annual basis in the light of prevailing economic conditions. To come to the specifics, in trying to circumvent those annual mechanisms, the Government have left me slightly confused. I therefore have two questions for the Minister. First, can he tell the Committee what plans are in place for the up-rating of those benefits, tax credits and allowances which are not included within the scope of the Bill? This was raised at an earlier stage, but I do not think that we got a full answer; if we did, I apologise and will look it up. If the Minister does not know, would he mind writing to me before Report stage?

Secondly, other than those mentioned in the schedule and the universal credit work allowance mentioned in the Autumn Statement, are there any other benefits or allowances which the Government intend to up-rate by 1%? Those two questions together sound quite boring but, in fact, their answers will enable us to understand the parameters of the Bill’s impact. Unless we can get that detail, the Committee cannot properly understand its consequences.

Coming back to our core objections, these are poor choices for the Government to be making. The families who will be hit are not responsible for the economic situation, for the banking crisis or for the failure of the Government to get the economy growing again. They are just doing their best to manage in difficult times. Yet the Government are planning to cut the value of the help they get from the state in order to fund a tax cut for nearly 13,000 people earning £1 million a year. We should not be doing this and are pleased to support the amendment.

My Lords, I absolutely understand and appreciate the desire of the right reverend Prelate and other noble Lords who have spoken on these amendments to protect and support children; of course, we all want to do that. However, our view is that supporting children is not just about increasing benefit levels. One of the most important things that we as a country can do to support children is to tackle the deficit and restore economic growth. In doing so, we create a future of prosperity, opportunity and jobs for the parents of those children in the short-term and for those children as they grow up. Taking benefits out of the Bill, as proposed by the right reverend Prelate, would take away some of what we consider to be the vital savings required to do this.

The amendments which we are debating now would remove from the Bill the child element of tax credit, child benefit and the lower rate of disabled child addition in universal credit. I assume that the right reverend Prelate’s intention in removing those elements is that they would be up-rated with prices, as was the case previously. If that were the case, I need to remind the House that the savings delivered by the Bill would be reduced by nearly £1 billion. In our view, those savings simply have to be found. If we did not do it through the Bill, they would have to be found from somewhere.

I was extremely grateful to the right reverend Prelate for the fact that, unlike the Opposition, he at least set out how he would raise the money. It was a long and credible list. However, it is not a list with which the Government agree. The Government’s view is that tax credits and child benefit account for over 40% of working-age welfare expenditure. It is not realistic to think that they can be excluded from the need to make savings.

We are attempting to prioritise resources into reforms which can help children in a variety of ways. To repeat some of the points which I made in my earlier speech, I hope not too tediously, we have since September 2010 entitled all three and four year-olds to 15 hours per week of free early education. This is being delivered flexibly to meet parents’ needs. It will be extended to 260,000 disadvantaged two year-olds from September 2013. We are also helping 100,000 more working families with their childcare costs by spending an extra £200 million in universal credit.

To deal with a point made by the noble Lord, Lord Touhig, we are taking action to deal with exorbitant practices by payday loan companies and loan sharks. One thing that we are grappling with, with which any Government would grapple, is that many families on low incomes have got very high levels of personal debt. This is not new. When I was Treasury spokesman for the Liberal Democrats about seven or eight years ago I appeared, somewhat implausibly, on the steps of the Treasury with my right honourable friend Vince Cable, bearing an outsized cheque at the point when personal debt in the country reached £1 trillion. Most of this, I accept, was mortgage debt; it is not the debt that we are talking about today. However, some of the biggest increases in personal debt over the past decade have been among people on low incomes. This growth in personal debt was not effectively recognised or tackled in the past. Indeed, our appearance bearing this cheque just guaranteed a huge amount of ridicule for Vince Cable and myself, rather than anybody, including the previous Government, taking the slightest notice of it, which was deeply distressing—or, more importantly, taking the slightest action to deal with the culture with which we are now grappling.

However, both in terms of loan sharks and payday lenders, I hope that we are taking more effective measures, not least through the amendments during the passage of the Financial Services Act, to ensure that people requiring access to short-term loans can, at the very least, do so with companies which will treat them half-decently. The other area which we protected, which is vital to families and benefits those at the poorer end at least as much as those at the upper end, is the support they get through the schools system and the NHS, where the budgets are protected.

The right reverend Prelate spoke about child benefit, which he is anxious to protect. I remind the House that, even after the changes that have been made to child benefit, nine out of 10 households are still covered by it. We are taking the entitlement away only right at the top end. Child benefit continues to be paid to many households which are by no means on low income.

The other point, which is hugely important in the context of this debate, is that while we have restrained child benefit, in April 2011 we also increased the child element of child tax credit by £180 above inflation to take account of that freezing of child benefit. I hope that all noble Lords will support us in tilting the expenditure on families and children, taking child benefit and child tax credit together so that a higher proportion of what is paid goes to children at the lower end of the income scale.

I appreciate that the intention behind Amendment 17 is to increase the amounts paid for less severely disabled children, which is an understandable ambition. Many noble Lords will have taken part in far more debates than I on this subject, not least during the passage of the Welfare Reform Act and the subsequent regulations. I will not repeat those arguments, as I do not believe that anybody would disagree that the current benefits system is too complex, and that welfare reform is much needed.

In universal credit, the disability support package has been restructured to remove much of the current complexity, creating a system that is simpler both to understand and to administer. We have removed many of the disability premiums and complicated entitlement rules, and have created a system that delivers what it is designed to do: to support the most vulnerable and ensure that work pays.

The disability package in universal credit focuses support on disabled people with the greatest needs, who would be less able to provide additional support for themselves through taking up work. This Bill excludes universal credit elements paid to the most severely disabled adults and children. This higher rate, paid to the most severely disabled adults and children, reflects the fact that some people will face longer durations on benefits, and in the case of children there is also an important relationship with the level of care which a parent will need to provide, which itself affects their ability to take up or increase the level of paid employment.

Over the past decade, child payments have increased at a faster rate than adult payments. We firmly believe that aligning the extra amounts payable for disabled children and adults is the right and fair thing to do. This amendment would remove this alignment and set us back on a path towards complexity and multiple rates. That is something we wish to avoid.

I hope that I have gone some way to reassure noble Lords that, while we have restructured the disability support package in universal credit, we have not reduced the funds available, and that maintaining a balance between child and adult payments continues to be the right thing to do.

The noble Lord, Lord Low, gave an example of how much a family with a less severely disabled child would receive under universal credit. However, as we said, transitional protection will mean that existing claimants whose circumstances remain unchanged will not receive less in money terms as a result of moving to universal credit. The amount will be squeezed, but they will not face the kind of cliff edge that he was talking about.

My Lords, two sentences ago the Minister said that one of the reasons for bringing the rate of £57 down to £28 was in order not only to align it with the adult rate but to increase simplicity. Will he explain why halving the amount increases simplicity, as opposed to hardship?

My Lords, that was not the point I made. I was talking about aligning the uprating of the adult and child rates, not the halving of the amount. I was making a different point.

The noble Baroness, Lady Sherlock, asked about plans to uprate benefits. Benefits not covered by this Bill are subject to existing legislation, so the Secretary of State will review social security benefits annually, after publication of the relevant price figures. He will therefore decide what uprating will take place when he has that information in the normal way. I will write to the noble Baroness with the details of other benefits that are to be uprated by 1%.

As I have said before, the welfare system provides vital support for many families with children. However, government support for children must be about more than benefits. Securing the economic recovery matters to every household in the country, and only by doing that can we create a stable and thriving future for our children. I hope that I have also been able to provide some reassurance to the Committee that this Government are continuing to take action to support families—action that will change the lives of families with children.

My Lords, I am very grateful to all noble Lords who have taken part in this debate, and not least to the Minister for his response. I am disappointed that he was not able to respond more to Amendment 17, because it is not an expensive proposal. It will help a significant number of children—real children with real disabilities. I know that money is being provided for disabled people in the greatest need, but the disabilities that are felt and known by those who would benefit from Amendment 17 are real. To accept the amendment would provide real support for a large number of children who could thereby have been enabled to play a greater part in our society, both for their benefit and for the benefit of the rest of us.

I accept that together, the amendments in this group would cost a significant amount of money at £0.9 billion. However, it is not fair to argue that welfare benefits cannot be excluded from the work that we have been doing in order to respond to our fiscal crisis. Welfare benefits have been tackled extensively through the whole welfare reform process. This comes over to me as twisting a knife in a wound. I regret that the Government have felt that this is the area where they have to find that £0.9 billion. I will not repeat the argument that there are other areas where we could have found it.

I am very grateful to all noble Lords who contributed examples of a wide range of people: the corporal in the Army with three children, who will lose £520 a year, the primary school teacher, the nurse, and so on. They showed that a wide range of people will be affected and damaged by the Bill. I am grateful to the noble Baroness, Lady Massey, for stressing the organisations that support children. It is good to have all the statistics produced, but however many of them there are, the reality comes home to me, not when I read the Children’s Society’s statistics, but when I go to see its work in Leeds and its projects with children who are hungry, who have to cut back on food, as the noble Lord, Lord Low, said, and whose future prospects are being damaged, as the noble Lord, Lord Touhig, said. We need to do something to look at the ways in which we disadvantage children in practice by so much of the work we are doing.

I hope that we will come back to this issue on Report to see whether there is not something we can do to set down a marker and make a real contribution to the lives and vitality of children in our society. However, for the moment, I beg leave to withdraw the amendment.

Amendment 14 withdrawn.

Amendment 15

Moved by

15: The Schedule, page 4, line 10, at end insert “with the exception of statutory maternity pay”

My Lords, this amendment is in my name and that of my noble friend Lord McKenzie of Luton.

The Telegraph online ran a story on 6 December 2012 headed “Autumn Statement: Osborne Attacked over ‘Mummy Tax’”. The article stated:

“Hundreds of thousands of new mothers will be almost £240 worse off after George Osborne announced cuts to maternity pay”.

A similar story was run in the Mail in January under the headline “True Cost of ‘Mummy tax’”. It is fair to say that the inclusion of statutory maternity pay in the scope of this Bill has not been universally well received. The Telegraph story quoted the founder of Mumsnet and I think it is fair to say that she was pretty unhappy with it. Why are the Government including statutory maternity pay in the Bill? The Telegraph had an explanation. It said:

“The Prime Minister’s official spokesman said it was ‘a personal choice’ for parents to decide whether to return to work after having a child or to stay at home”.

So there you have it—it is a personal choice; at least, presumably it is if you can afford it. But surely it is slightly more than that. Do we not all have an interest in making sure that people have a real choice when they have a baby? Is not one of the reasons the state pays statutory maternity pay that it is seen to be good for babies to have their mothers at home, breastfeeding them where possible and bonding with the child? Therefore, is there not a genuine public policy interest in making sure that we do not unnecessarily make it any harder for women who want to stay at home when they have a new baby?

The growing concern about this and other cuts affecting new mothers prompted this amendment, which seeks simply to remove statutory maternity pay from the scope of the Bill. It is worth rehearsing very briefly how SMP works. SMP is payable only to women who have just had or adopted a baby, or who will do so shortly. They must be in paid work. Indeed, they must have been continuously employed by an employer liable to pay national insurance contributions for them for six months before the 15th week before their expected date of confinement. They must have had average gross weekly earnings at least at the level of the lower earnings limit for national insurance and they must have stopped work in order to have or care for the baby. In other words, this is a contributory benefit paid to working women who have stopped work only to give birth or to care for a new baby. SMP gives them 90% of their average weekly earnings for the first six weeks and then, at the current rate, £135.45 a week for the next 33 weeks.

According to a Written Answer from the right honourable Maria Miller in another place on 30 April 2012, at col. WA 1322, the Government estimate that some 232,000 families will claim SMP in 2012-13. Those families could find themselves being seriously short-changed. Using the Government’s own inflation forecasts, the Children’s Society calculates that in 2015-16, SMP will be £145.15, if inflated by CPI. However, the impact assessment indicates that the likely rate is just £139.58—a difference of £5.57 per week. To put that in context, if a woman were on maternity leave now with her first child and had her second child in 2015, she would find that she got about £184 less in real terms during her next maternity leave than she would during this maternity leave. If her earnings were below the flat rate level for SMP, that figure rises to £217.

The period after a birth is a particularly tough time for parents. The Money Advice Service estimates the average cost of essentials for a new baby as some £3,700 over their first year. Of course, just as costs rise, income falls because of maternity leave, and parents are time-poor as well. The £200 may not be much to some people but it is enough to buy a cot and bedding and 17 value packs of newborn nappies.

This amendment focuses on SMP for two reasons. First, I simply do not think we can allow this Bill to go through the House without noting all the impacts on mums of new babies that have happened since 2010. Just since 2010, the Government have done the following: abolished the health in pregnancy grant; abolished the Sure Start maternity grant for all but the first child; abolished the baby element of child tax credit; cancelled the planned toddler element of child tax credit; abolished the Government’s contribution to the Child Trust Fund; frozen child benefit for three years and removed it from higher rate taxpayers; cut the percentage of childcare costs parents can get back through working tax credit; and legislated to introduce hefty charges for using the CSA. Some of those cuts are very severe. House of Commons Library research shows that low-paid new mums are losing £1,300 during pregnancy and the baby’s first year just from cuts to maternity pay, pregnancy support and tax credits, and are losing more from child benefit.

The second reason for tabling this amendment is that during the Second Reading debate, I raised the issue of SMP. I did it specifically to try to find out how that fitted with the Chancellor’s claim that the reason this Bill is needed is to ensure the welfare state is fair to working people, not, you may recall, to those who lie in bed with their blinds down, sleeping off a life on benefit, while others go out to work. However, on the face of it, it is hard to see how targeting a payment made to someone who has just had a baby after being in continuous employment for the requisite period at a level which triggers national insurance contributions fits with that narrative. Indeed, I am sure that the Government have a good reason, and I hope it is better than simply saying, “It’s a choice”. However, given that we are in Committee and this amendment is about SMP only, I look forward to hearing the Minister share that reason with us. I beg to move.

My Lords, I start by making it absolutely clear that, contrary to what the noble Baroness, Lady Sherlock, has just said, the United Kingdom has a strong and effective maternity and parental regime. The UK is significantly more generous than the requirements of the EU pregnant workers directive. The directive says that a woman should benefit from 14 weeks’ paid maternity leave; we provide 39 weeks. It also says that a woman should receive at least the amount that would be paid for sickness; our standard rate of maternity pay and maternity allowance is £135.45. This compares very favourably with the current statutory sick pay rate of £85.85 per week.

In addition, the latest available data from the OECD from the previous financial year show that the proportion of our GDP spent on maternity and parental pay is higher than in Germany or France. Moreover, in the past decade, the standard rates of statutory maternity pay and maternity allowance, which is the allowance that is paid to women who are not in work who have children, or who were not in work prior to the birth of their child, have increased by more than 35%, from £100 a week in 2003 to £135.45 currently. So while I accept that the decisions we have taken on statutory maternity pay will mean a slightly smaller increase for people over the next few years, the UK’s strong and effective maternity architecture will remain firmly in place.

The noble Baroness, Lady Sherlock, referred to what she described as a mummy tax and to media reports on it. I am slightly surprised that she referred to Mumsnet because when her honourable colleague Rachel Reeves published an article on Mumsnet on what she described as a mummy tax back in December last year, the blog attracted a lot of comment. It is worth highlighting some of the points that were made. Most of the contributors were at pains to say that they were not supporters of, or spokesmen for, the Government, or supporters of either of the two parties in government. One contributor said:

“I despise this latest Labour ‘Mummy Tax’ campaign. For one, the name ‘Mummy tax’ is hugely patronising and sexist for people in a relationship as my husband benefits from maternity pay just as much as me as all our household income is pooled. And let’s be clear although there is a real terms cut due to the rate of inflation, this change is not a tax”.

The comments continued and attracted quite a lot of support. Another contributor responding to the post on Rachel Reeves said:

“I’ve had no pay rise for the last 3 years and we are getting nothing this year and told to expect the same for the next 2-3 years—is that a tax? No, it’s just the real world and I have to get on with it. I’ve had a child during that time and we had to work around what we could afford with regard to length of maternity leave and to be honest £180 would have made no difference whatsoever. I despise the term ‘mummy tax’—it’s a patronising media friendly sound bite, which creates a hugely distracting perception of the middle class having to cut back on cappuccinos whilst on maternity leave which removes debate from the real issue. I would like to see the labour party setting out what it would do in power and challenging the government instead of wheeling yet more spin and inaccurate bluster”.

I am sorry to interrupt the noble Baroness. I accept that that must have been said on Mumsnet and I have to admit that I do not particularly like the term “mummy tax” either, but does she accept that while it is the case that the mother who posted on Mumsnet pooled her income, research that I and others have carried out shows that for many women having a benefit in their own right is important to them psychologically? They receive money over which they have control, whether or not they then pool it in the household. Not all households pool their incomes. Some do and some do not.

That is a fair point. The people who were posting on the internet at that time were responding to the comments of Rachel Reeves about the proposals having a disproportionate impact on women, and only women.

Away from the debate on Mumsnet, the Government are committed to make this architecture for women stronger. The provisions in the Children and Families Bill, which had its Second Reading in another place last week, will allow working parents to choose which parent takes parental leave and pay to care for their child in the early years. This will give mothers real choice over when and whether they return to work. This is helpful in two big ways—where the woman is the higher earner and in starting to chip away at the inequality that some women face at work just because it is assumed that they and only they will take a break in their careers to have children. Our proposals will start to make a big difference.

It is also important to remember that the Government have introduced other reforms that will help to offset the impacts of these changes. For example, a woman working full time at national minimum wage for six months of the tax year, who then receives statutory maternity pay for the next six months, will still be better off overall as a result of changes to the income tax personal allowance. The introduction of universal credit will also provide a big boost for many mothers and lone parents, with 2.6 million women and 700,000 lone parents expected to gain through increased take-up and improved financial incentives to work. In addition, as part of the introduction of universal credit, £200 million extra is being spent to support families with childcare costs. For the first time, this support will be made available for families who work less than 16 hours a week. This will mean that 100,000 more working families will be helped with their childcare costs. That is important, because it means that even if someone is able to take on only a small amount of work, they will get that support for childcare costs to which they previously would not have had access. In another move that will be helpful to mothers and parents, as my noble friend Lord Newby mentioned, we have committed to introduce 15 hours a week of early education for 40% of two year-olds, starting with the most disadvantaged.

The Government will also continue to make extra support available for mothers on low incomes to buy the basic goods that they need. We have a programme called Healthy Start, and the Sure Start maternity grant—a lump sum payment of £500—is available to help parents with the costs of having a new child. I know that the noble Baroness, Lady Sherlock, said that this is now available only to parents who have a child and no other child under the age of 16. However, this support is additional to the money that parents receive through their statutory maternity pay. Bear in mind that if there is another child in the home, some of the initial substantial expenses of having a family often are not repeated if they have a second child.

The amendment would reduce savings from the Bill by around £50 million in 2015-16. None of the decisions contained in the Bill are easy. I recognise that the noble Baroness, Lady Sherlock, would prefer that we did not include statutory maternity pay in the Bill. I would like that, too. I would love it if we could say, “Let’s exclude this or that”. However, as my noble friend said in our previous debates, every time we say that we will not include something in the Bill, we have to look somewhere else for the money. That £50 million is not a small sum and is equivalent to more than 20,000 part-time nursery places for three to four year-olds. This is money that will cover substantial support that rightly we provide to mothers and families in other ways.

I hope that I have been able to demonstrate that there is a strong architecture to support women when they have children. I therefore hope that the noble Baroness feels able to withdraw her amendment.

My Lords, the Minister regularly makes the point that if we do not have these savings the money must come from somewhere else, such as nurses’ salaries, teachers, the NHS, schools or whatever. I hope that she appreciates that most of us on this side believe that the Government are making a political policy choice. It does not have to fall on children, disabled children or statutory maternity pay. As some of us argued at Second Reading—there were different shopping lists—we are spending £32 billion on tax relief for private pensions, of which £8 billion goes to subsidise the tax relief that higher-rate taxpayers currently enjoy. To continue that is a political policy choice. The money would pay for most of these cuts twice over.

As I have said on several occasions, these cuts are necessary because of the financial situation that we found ourselves in. They are not something that we want to have to do, but we believe that these are the right cuts to make because we have made sure that we have, wherever possible, protected those who are least able to increase their income by different means. While these are not cuts that we want to introduce at all, we think that we have done so sensibly and by addressing people in the right way, as anybody would expect us to do. That is the situation that we have found ourselves in and the decision that we have made.

My Lords, I do not think that anyone doubts the Minister’s good will, integrity or concern about these issues. That is not the issue. All that I am saying—and she has not answered this—is that those cuts could fall elsewhere, and she, on behalf of the Government, is choosing for them not to fall elsewhere on people who could afford to pay for them.

I would say to the noble Baroness that while she and the right reverend Prelate are willing to put forward their alternatives on where they would target cuts if they were in a position to make those decisions—and I respect them for doing that—her colleagues on her own Front Bench have so far refused to do so. We have made these decisions in this area. We have done so in a way whereby we have protected those who are most vulnerable. We would much rather not have to do this but we believe that it is necessary because of the economic situation that we find ourselves in and because we think that this is, in the end, the right thing to do to secure a strong economy for the future.

My Lords, I thank the Minister for her reply and my noble friend Lady Hollis for her telling interventions. I cannot help noticing that the Minister did not answer one of my two main charges. She began to answer the first charge, where I had listed a whole series of benefits and payments—specifically for mothers of children—that had been cut. I was grateful to her for at least recognising that offering up in her defence a benefit that the Government have decided to withdraw for second or subsequent children was at least slightly less effective than it might otherwise have been.

I am more concerned that she simply has not addressed my second charge at all. One reason why I put this amendment down was because of the words from the Chancellor of the Exchequer when he introduced the Autumn Statement, explaining specifically why this Bill was needed. I read them out at Second Reading but to remind noble Lords, he said that the Bill mattered because,

“we have to have a welfare system that is fair to the working people who pay for it”.—[Official Report, Commons, 5/12/2012; col. 877.]

According to the Guardian, he told the “Today” programme:

“It is unfair that people listening to this programme going out to work see the neighbour next door with their blinds down because they are on benefits”.

It is clear that the Bill was intended to penalise those out of work to be fair to working people. Why, then, is there included in the scope of the Bill a benefit that is payable only to women who have given up work to have a child or look after a child? The Government do not have an answer to that. I suspect that the noble Baroness would not have expressed it in those terms and therefore is not in a position to defend it.

Finally, in relation to the charge being thrown back at us, I was trying to avoid rehearsing the whole Second Reading, but we have made it very clear that we simply would not have made the choices that the Government have made. We would not have set out to give a tax cut to people earning £150,000 a year or more, which will be worth £100,000 to those who earn more than £1 million a year in order to be able to ensure that they benefited, and to cut benefits to the poorest families to do that. I fully accept and understand that she takes a different view. However, it is not reasonable to say that we have not explained where the money would come from. We have clearly made our case; these are not the choices that we would have made. I very much hope the Government will think again, specifically in relation to statutory maternity pay. In the light of those comments, I beg leave to withdraw the amendment.

Amendment 15 withdrawn.

Amendments 16 to 21 not moved.

Schedule: Meaning of the “relevant sums” and the “relevant amounts”

Debate on whether the Schedule should be agreed.

My Lords, in opposing the question that the Schedule be agreed, I do not wish to reopen the debates we have already had about the damaging impact it will have on some of the most deprived members of our community. I hope I can take it as read that I oppose this schedule in the same way that I have opposed the clauses. Instead, on the helpful advice of the Public Bill Office, I wish to use this debate as an opportunity to draw attention to the needs of an even more deprived and vulnerable group who cannot even count on a miserable 1% increase in benefits, and that is asylum-seeking families reliant on asylum support.

The right reverend Prelate the Bishop of Ripon and Leeds and I raised this issue briefly during Second Reading. The Minister responded, correctly, that asylum seeker benefit rates are a matter for the Home Office and are not within the scope of the Bill. He kindly said he would draw our remarks to the attention of colleagues in the Home Office. We are, of course, aware that asylum seeker benefit rates are not within the scope of the Bill; that is the very reason why we raise the question. They should be part of its scope and treated in the same way as other social security benefits when it comes to uprating policy. As I have given the Minister’s office notice that I planned to raise this issue in this context, I hope that the Minister will be able to address the substance of our remarks when she comes to respond.

The right reverend Prelate and I, together with the noble Lord, Lord Avebury, remember the all-party parliamentary inquiry into asylum support for children and young people, set up by the Children’s Society. I would like to put on record my thanks to the Children’s Society for all the work it has done on this important issue and for its briefing for today’s debate. That briefing draws on the findings of our inquiry. We found that the current asylum support system is forcing thousands of children and young people seeking safety in the UK into severe poverty. We were shocked to hear of instances where children were left destitute and homeless, entirely without institutional support, and forced to rely on food parcels or charitable donations. This cannot be right.

It is estimated that there are 10,000 children living on asylum support. The panel heard powerful evidence of the reality for those living on as little as £5 a day, whose parents are forced to skip meals to feed their children and are unable to buy warm clothing in the winter. Some families find current levels of support particularly difficult, including pregnant women and lone mothers with young children—and families of a disabled child, because asylum support does not offer families any standard additional support when a family member has a disability. With regard to pregnant women, one particularly shocking example brought to our attention was a mother having to walk home from hospital in the snow with her newborn baby in her arms because she had no money.

Just last week, Maternity Action and the Refugee Council published a report which gave more examples of the problems faced by pregnant and nursing women who had insufficient money to meet their most basic needs. Most asylum-seeking parents are not allowed to work, leaving families totally reliant on state support; paid work is not a route out of poverty for them. Asylum support levels differ significantly from income support and other mainstream benefit levels. Until 1999, asylum support was set at 90% of income support, after which levels of support were reduced to 70%, with the justification that asylum seekers in accommodation no longer had to pay utility bills. There is currently no statutory provision to make an annual uprating of levels of asylum support in line with increasing costs of living. I acknowledge that the previous Government did not set a good precedent on the uprating of asylum support. I therefore hope that my own party will at least be open to rethinking our policy on this.

Asylum support rates have not been raised in 2012-13, so they have effectively been frozen without any announcement to justify this. When I asked a Written Question about this, the Answer was that there was not only no statutory obligation to carry out an annual review but no obligation even to make an announcement. There should be, in both cases. As it is, I was told:

“There are no current plans to change asylum support rates”,

although the Government,

“will continue to keep them under review”.—[Official Report, 15/1/13; col. WA 121.]

If the rates are frozen for a second year in succession, that will mean a cut of 6.2% in relation to income support payments over the last two years, making it even more difficult for families to survive. Can the Minister please explain which factors are taken into account when keeping asylum support rates under review? What is the actual process for deciding how and when they will be uprated?

The inquiry recommended that asylum support for families also provided with accommodation should be aligned with mainstream benefit rates paid for living expenses. Where accommodation includes utilities, which would normally be expected to be paid from living expenses, it is appropriate to make a deduction. However, such a deduction must be reasonable. The inquiry argued that the rates of support should never fall below 70% of income support. As it is, asylum support now bears no relation to income support.

The inquiry was particularly concerned about the situation of families on Section 4 support, which may be provided if a child is born after an asylum claim had been refused but where the family are, for some reason, unable to leave the UK. Almost 800 children are being supported under Section 4, some for many years. Under Section 4, the amount provided is even lower and the use of a cashless system—the azure card, as it is called—can be degrading and wasteful because it can be used only in certain designated shops. The inquiry recommended that this particularly inhumane form of asylum support be abolished entirely and replaced with a single cash-based support system for all children and their families who need asylum support while they are in the UK.

Given that asylum support rates were not increased in 2012-13, they should be raised as a matter of urgency for the 2013-14 financial year and thereafter increased annually, at the very least in line with income support, along with other benefits in the schedule. I would be grateful if the Minister could explain the rationale for treating asylum support differently from mainstream social security benefits when it comes to annual upratings. Ministers frequently refer to the Government’s ongoing review of asylum support when questioned on these issues, including recently in response to a Written Question from the noble Lord, Lord Hylton, which referred to our all-party inquiry. In his Written Answer, the noble Lord, Lord Taylor of Holbeach, said that the Government would consider our findings as part of this ongoing review. Will the Minister please tell us whether the Government will respond to the all-party inquiry’s report? How long will this ongoing review go on, and when can we expect an outcome?

I would argue that a review of the treatment of one of the most deprived groups in our community should be treated with a little more urgency. It is shameful that we are willing to allow children and their parents who are seeking asylum in a rich country such as ours to continue to suffer in this way.