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Welfare Benefits Up-rating Bill

Volume 744: debated on Tuesday 19 March 2013

Report (Continued)

Amendment 6

Moved by

6:After Clause 1, insert the following new Clause—

“Statutory maternity pay

Any mandatory 1% up-rating stipulated in section 1(1) shall not apply to statutory maternity pay.”

My Lords, I rise to move Amendment 6, which is in my name and that of my noble friend Lord McKenzie as well as the names of other noble Lords. We rehearsed this issue in Committee but I return to it on Report because, with apologies, I found the response from the Minister so disappointing. Because it is the last amendment of the day, I will be brief.

The Government estimate that some 232,000 families will claim statutory maternity pay, or SMP, in 2012-13, rising to 235,000 in 2013-14. Using the Government’s own inflation forecasts, the Children’s Society calculated that if a woman were on maternity leave now with her first child, and had her second child in 2015, she would find that she received about £184 less in real terms during her second period of maternity leave than her first. If her earnings were below the flat-rate level of SMP, that figure rises to £217. Just when a family needs money most, support is being cut.

This is by no means the first assault on the living standards of mothers of young children. In Committee, I recited the litany of cuts to support for parents of new children. I will spare the House the entire list but will just reprise one or two. We have seen the abolition of the health and pregnancy grant, the abolition of the Sure Start maternity grant for all but the first child, the abolition of the baby element of child tax credit and the cancellation of the planned toddler element, the abolition of the government contribution to child trust funds, cuts to the percentage of childcare help and much more. Since then, the Children’s Society has analysed in detail the impact of those changes. The results are shocking. They have calculated that a working couple about to have a second child in 2015 could find themselves over £7,000 worse off than they would have been over the following two years, simply as a result of changes since 2010. That is the context for this amendment and, indeed, for this Bill.

My second concern is that the Minister failed entirely in Committee to address the question that I raised as to the rationale for including SMP in this Bill. Noble Lords may recall that the Prime Minister’s official spokesperson responded to critics by telling the Telegraph that it was a “personal choice” for parents to decide whether to return to work or to stay at home after having a child. Of course it is, just like deciding where to go on holiday, where to shop, or where to buy your children’s clothes is a personal choice—if you have enough money, that is. If not, then it is George at Asda for you, rather than Giorgio Armani Junior. Money is what makes people have choices, not simply the fact of having a baby.

However, that was not the reason that the Chancellor gave when he announced this Bill back in the autumn. He claimed that the legislation was necessary to ensure that the welfare state was fair to working people, and not to those who lie in bed with their blinds down when their neighbours go to work. In Committee, I asked the Minister to explain how SMP fits with his argument. Let us recall that SMP is a contributory benefit, paid only to women who have given up work to give birth or to care for a new baby, after having been in continuous employment for the requisite period and earning enough to require their employers to pay national insurance contributions on their behalf. However, answer came there none. I therefore ask the Minister one last time: how does including SMP in this Bill fit with the Chancellor’s narrative, and why should pregnant women and new mothers pay the price for a tax cut for millionaires? I look forward to the answer. I beg to move.

My Lords, I very much support what my noble friend has said in moving the amendment. The House seems very quiet this evening, following the shenanigans of this afternoon when it looked very much to some of us as though there was an organised group on the other side—many of whose members are no longer present, of course, it being after dinner time—who found a huge interest in this Bill in order to keep the Report stage going. Be that as it may, those times are obviously past.

If I read correctly, the Minister—to whom I attach no blame at all for what has been going on, of course—said in reply to my noble friend in Committee that the cost in the last of the three years of allowing this amendment would be around £50 million. Let me tell her one way, at least, that that £50 million could be found five times over. The communities department has £250 million to spend, and has done for some time, in order to make rubbish collections weekly rather than fortnightly. No doubt that is a priority for some, and no doubt it has a validity of its own. However, compared to the wrong which is being done by this Bill—and by others too—and in particular the wrong addressed by my noble friend in her amendment, could the Government not get some proper sense of priority as to what does and does not matter, even at this late stage? That is £50 million, compared with £250 million that is sorted away. This was not mentioned, of course, by the noble Lords who were this afternoon defending the Government’s position with such vigour, because it is an inconvenient truth that in government there is spend which could be much better spent on protecting those who are going to be hammered by this legislation. I ask the noble Baroness to answer my question: what is wrong with spending part of that £250 million, and agreeing to my noble friend’s amendment?

My Lords, I was not intending to speak on this amendment, but I rise at the prodding of the noble Lord, Lord Bach, who seemed to suggest that some kind of operation was going on in the conduct of our discussion. If there was any operation, the strangest thing about it was that there was not a single speech from the Back Benches of Her Majesty’s Opposition. It is amazing. We are talking here about what we recognise as being critical issues. On each amendment, there were probably three speeches from the Back Benches here, but not one single speech from the Back Bench of the Official Opposition. If the noble Lord wants to come back on that, I shall be more than happy to give way.

I overheard one of the government Whips encouraging those who sit on the Privy Council Bench to speak and speak and to string out it out to delay the votes. I heard that myself. Those Members made their own decisions and I do not in any sense criticise the quality of their speeches. I also saw briefing being passed from the Minister and so on. Perhaps the noble Lord could not see from where he was sitting in the same way as we who have a front-stalls view of what is going on might have done, but, certainly, there was active encouragement of three privy counsellors, none of whom has been known to display any interest in social security hitherto—unlike the noble Lord. All credit to the noble Lord: he has stayed with us; he works on these matters; and he tries to take a balanced approach. I make no criticism of him, but, as to today’s proceedings, there was not a shadow of doubt. Perhaps the noble Lord was sitting in the wrong place, in more ways than one.

That is a wonderful way of expressing it. The noble Baroness has been complimentary to me; let me reciprocate by stating a fact. She knows more about this subject than anybody else in this Chamber and everybody would immediately acknowledge that. Our previous discussions in Committee and at Second Reading were enhanced immeasurably by her thought-provoking contributions. Now, what is more unusual: that a few Members on Her Majesty’s Government’s side should rise to speak in support of the amendments or that the noble Baroness did not make one speech during their consideration?

I am grateful to the noble Lord for letting me come back on this. Today, we started with a key debate on whether it was right to tie future Secretaries of State’s decisions on the rate of uprating of benefits. My noble friend Lord McKenzie moved the relevant amendment and we had an extensive discussion. We then had a hugely important debate on children, a hugely important debate on disabled people and then an important debate led by the noble Lord, Lord Kirkwood. The noble Lord, Lord Bates, will know as well as I do that, as we had only effectively half a day—because people are not here after dinner—to discuss four key issues, either we had to postpone key debates to a period of time when no one would be here, including his Privy Council colleagues, to listen and take part, or we acted in a way that was self-disciplined in order that the arguments at least in their basic form could be heard, so that those who wished to—and there were not very many on his side—could come in and listen to those points being made to see whether they affected their vote. We were trying to act responsibly. Had we had two days on Report, we could have paced it differently and I for one would have been delighted to have spoken at least three times on each amendment and made a dozen speeches.

I take the noble Baroness’s point and shall not pursue it further. I had not intended to make that point, but it is important. Perhaps I may say one other thing. Since I have trodden on a few toes, let me tread on truly sacred ground.

I am going to deal with it. I want to come back to the point that I was going to make previously, because I think it is relevant. For the first six weeks of the 39 weeks of statutory maternity pay, 90% of the benefit that is payable is linked to earnings. The point that I was going to make is that, while benefits have increased in line with inflation by 20% in the past five years, as we have heard many times, average earnings have increased by only 10%. In fact, according to the Centre for Social Justice, that increase for some of the lowest earners, particularly females, has been 7.8%. I wanted to make the point that in terms of helping with maternity pay at that particular point, the best we can do is see a growth in salaries. If salaries grow, it is axiomatic that the statutory maternity benefit in that first six weeks will be enhanced. The problem is that salaries have been suppressed.

The OBR report relating to the Bill that we are debating shows some quite encouraging signs. For the first quarter of 2014, we have a forecast of increases in the order of 4.5% per year, growing to 4.6% during the period of this Bill. Surely increases of that nature, when linked to the statutory maternity pay of which we are talking, must have some effect. In the same way, I inquired of the noble Baroness, Lady Sherlock, who introduced this amendment, whether the stark numbers that she presented to us contained any element that reflected the suppression of wages that we have seen over the past five years. This has been seen particularly in the private sector, although it has been in the public sector as well, where wage increases are subject to a 1% cap. That is the point that I ask the noble Baroness to clarify when she responds.

My Lords, it is good to get back to the subject of the Bill. I support the amendment of the noble Baroness, Lady Sherlock. Although everyone is inevitably suffering under this economic disaster, it is surely completely counterproductive for the Government not to make specific arrangements for those who produce and support children. This is a particularly important generation of children. We will all need to depend upon them and will need to help them develop to their full potential if we are to have a brighter and more economically successful future. Not to do so will also specifically disadvantage—I would argue even discriminate against—women.

Whatever hopes there are for both parents to share childcare in future, to include statutory maternity pay at present would clearly disadvantage women, on whom the main responsibility remains for their children’s upbringing. It will also particularly disadvantage single parents, the vast majority of whom are women. While 30% of all households with children are affected, 95% of lone parents—that is 2 million—are affected by the Bill. The Government have already estimated that the Bill will push a further 200,000 children into poverty, so what effect will this economic deprivation have on this vitally important next generation of children and their well-being?

First, there is their health: the 2010 Marmot review highlighted how poor health is strongly linked to low socioeconomic status. Children in the lowest-income households, for example, are three times as likely to suffer mental health problems as their more affluent peers. At the age of 33 they are at increased risk of severe long-term and life-limiting illness.

Next is their education. The link between economic disadvantage and educational underachievement is widely recognised by academics, as well as by parliamentarians. Children’s cognitive development, related to parental social status, is evident as early as 22 months. The earliest high-achievers from deprived backgrounds are overtaken at five years, with this gap widening by the time children reach 10. DfE figures also show that only 26.6% of secondary school pupils eligible for free school meals achieved five or more A* to C GCSEs, compared with 54.2% for all the rest.

In employment, inevitably, the educational and health inequalities drive a similar divide. Young people who are NEET are more likely to have grown up in socially disadvantaged households, for example, from single-parent households and those where parents also have low educational qualifications.

Finally, there are family relationships and children’s subjective well-being. Living on a low income is stressful and difficult and can, and often does, adversely affect family life and intra-familial relationships, as well as children’s assessment of and satisfaction with their lives. Poverty can make strong parent-child relationships more difficult, and research shows that children growing up in poverty are more likely to suffer from low self-esteem and to be socially isolated.

Having listened to the excellent speech of the noble Baroness, Lady Sherlock, and a range of other subjects also brought into the conversation, I hope that the Government will find a way to accept this very reasonable amendment.

My Lords, I must say to noble Lords on the Benches opposite that we have had a number of debates about the economic context in which we are making these changes, and I have been disappointed that more noble Lords have not found themselves moved to contribute to them so far. I am glad that there have been more contributions to this debate.

My Lords, I thought that we had discussed this already. Can the noble Baroness help me by describing how we could have made our contributions? As she knows, four or five of us have regularly taken part in social security debates—including my noble friends Lady Lister and Lady Donaghy, and me, among others. If we had made our contributions, does she think that we would have got to the important debates on disability and the 3% trigger amendment before dinner? If not, does she think that it would have been fair to disabled people to exclude them from the possibility of Parliament reconsidering a foolish decision?

In my short time in this House, we tend to sit until about 10 pm and have debates on amendments at all times that we are sitting. I did not realise that we were expected to have debates before a certain time at night.

Let us focus on statutory maternity pay. I remind the House that the UK 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 states that a woman should benefit from 14 weeks paid maternity leave; we provide 39 weeks. The directive states 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 per week. That compares to the statutory sick pay rate of £85.85 per week. In addition, the latest available data from the OECD show that the proportion of our GDP spent on maternity and parental pay is higher than that in Germany or France.

It is also worth reflecting on the fact that in the past decade, the length of time for which statutory maternity pay was payable more than doubled. Under the previous Government, it was doubled. It is important to be aware of the baseline that we are starting from.

Yes, the decisions that we have to take on statutory maternity pay will mean a slightly smaller increase for people over the next few years, but that is in the context of a strong and effective maternity architecture in our country which will remain firmly in place. Indeed, the Government are committed to make this architecture even stronger. Noble Lords will soon be debating provisions in the Children and Families Bill which allow working parents to choose which parent takes parental leave and parental pay to care for their child in the early years.

It is also important to understand these changes in the context of other government reforms that support women, families and children and help make positive changes to their lives. I said this in Committee, but it is important, so I will repeat it. For example, a woman working full time at the 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.

We have debated universal credit many times before, and it is acknowledged that its purpose is to make it worth while for people to move back into work. Once universal credit is introduced, some 800,000 out-of-work lone parents would benefit significantly if they started to work just 10 hours per week. In nearly all such cases, these parents would see at least £40 more in their pocket per week than they would have done under the current system. Also as part 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 fewer than 16 hours per week. That means 100,000 more working families will be helped with their childcare costs.

Looking ahead, as my noble friend Lord Newby mentioned in one of the earlier debates today, we have set out changes that will increase eligibility of support to five times as many families as currently is the case through a new tax-free childcare scheme. As part of these changes, we have also announced today a further £200 million additional support in universal credit that will provide working families with the equivalent of 85% of their childcare costs where the lone parent or both parents pay income tax.

When referring to various different payments to families, the noble Baroness, Lady Sherlock, said that she could go on; so could I. There are other things that the Government are doing to support families and women. The support for families that the Government provide is about more than income transfers. I do not deny that families value them and they can make an important difference, but money is often better invested in interventions that really can change lives. In demonstrating this today, I have tried to explain what the Government are doing in addition to the comprehensive support that we provide to new mothers and to show how much there is in providing for families in the right way.

This amendment would reduce savings from the Bill by around £50 million in 2015-16. As I have said, we have taken none of the decisions in this Bill lightly, but we have to recognise that if the savings do not come from the measures set out in the Bill, that could clearly put additional pressures on to public services. The noble Lord, Lord McKenzie, mentioned alternatives that he would like to propose. They are not ones that I would point to because these amendments are part of a Bill that is about reducing by a smaller amount the increase that we pay in benefits.

To answer the noble Baroness’s question about why we are including statutory maternity pay, we have sought to address the very significant welfare bill, which I am afraid is unsustainable, but doing so in way to protect the most vulnerable. We discussed and debated that at length earlier today. Regrettable as it is to have to make any reductions or cap any of the increases in the way that we have, the infrastructure and architecture there for women and families are strong. They provide sound support that will make a real change to people’s lives. While I recognise that these are difficult decisions, I hope that I have provided enough assurance to the House to show that the Government take their obligations to parents seriously and that we will continue to provide a supportive environment for new mothers in the years to come. I hope therefore that the noble Baroness can withdraw her amendment.

My Lords, I am grateful to all noble Lords who have spoken in this debate, especially to my noble friend Lord Bach for his strong support, and to my noble friend Lady Hollis for her interventions. I am also grateful to the noble Baroness, Lady Howe, for a thoughtful and persuasive speech that highlighted the impact of these cuts on the next generation. I thank her for that.

In response to the noble Lord, Lord Bates, I would say three things. First, we have debated this a lot. We sat through the previous stages, and we have all contributed in long form to the Committee stage and reflected a great deal on this. I hope that we now know what each other thinks. Certain noble Lords contributed to every amendment but they did not make five speeches; they made the same speech five times. I am not sure that that took us much further. None the less, we are doing our best here today.

I say to the noble Lord that it is worth noting that the poorest mothers get the flat rate of SMP and are therefore unaffected by any impact on wage growth, so that point would not affect them. On the question of wage suppression, the consequence of that—in fact, of the whole Bill—is a double whammy for those who are finding that their wages are frozen or have been kept down, because these benefits and tax credits are the very things that will normally help to compensate the individuals as well as acting as stabilisers more broadly.

With regard to the Minister’s comments, I appreciate that she had been dealt a difficult hand and I do not envy her having to play it. She has given us a description of the baseline from which we are starting. The real baseline for this Bill is £15 billion of cuts to support for families by 2015—that is the point that we are starting from.

The Minister mentioned that there were all these benefits for parents. I was particularly confused by her citing the fact that lone parents could be better off if they work for 10 hours a week. We are talking about women on maternity leave. These are women who are already working but have given up work to have a baby. Although it may be interesting for other lone parents to work for 10 hours a week, that is hardly an answer to the impact of the Bill on people who are having babies.

The Bill is basically an assault on the living standards of people who are struggling to make ends meet at the moment, and I have heard nothing from the Minister today to make me feel any less concerned about the impact that it will have on mothers-to-be and women who have just had babies. However, given that it has been a long day and given the lateness of the hour, disappointed though I am once again in the Minister’s answer, I beg leave to withdraw the amendment.

Amendment 6 withdrawn.

Amendments 7 to 15 not moved.