My Lords, I shall speak also to Amendment 36 in my name. I express my gratitude to the noble Baronesses who have added their names to these amendments.
The amendments would add further exemptions to the two-child limit of the child element of tax credit and universal credit, and the exemptions that I propose are limited and specific.
I apologise for interrupting the right reverend Prelate but many noble Lords are leaving the Chamber and cutting across him. I remind my colleagues that it would be more courteous to the House if they were to exit without walking in front of him.
I am grateful to the noble Baroness. At Second Reading and in Committee I, along with others in this House, indicated our regret that these proposals as a whole might be seen as signalling that not every child is precious and deserving of love and support not only from parents and families but from communities, society and nation. Nevertheless, I recognise the intent of the Government.
I do not intend to rehearse the detailed arguments, numbers and costings used in Committee. The Minister and your Lordships are aware of them and of the perspective of my and other faith traditions. Whether personally supportive or not of the Bill’s provisions as a whole, noble Lords will see that my amendments do not challenge the main thrust of this part of the Bill: that decisions about family size should be made with responsibility and care and that any decision to have third or subsequent children should be made without expectation of benefit support. The exceptions I propose do not challenge the central plank of the policy, which seeks to influence parental behaviour.
I was grateful, as I know others were, for the opportunity to meet the Minister last week. I was grateful for his courtesy, candour and understanding, which I hope might be shown today in his response.
The Bill incorporates exemptions for multiple births and after rape, an exemption on which I hope the Minister can provide clarity about the procedure, judicial or otherwise, to be used in relation to that. The further exemptions I propose relate in the same way to specific circumstances or vulnerability. All relate to the common good of society, to an understanding of what is just, right and compassionate, and to characteristics and behaviour that we wish to encourage and enable, sometimes in legislation.
The first three exemptions relate directly to unforeseen circumstances that could not have been planned for when a decision was being made about family size. However carefully and responsibly consideration took place, these circumstances could not have been reasonably expected. The death of a parent drastically changes family circumstances. The death may remove the principal source of income, or increased childcare demands may compel the surviving parent to reduce their working hours or stop working. I hope that the Minister and the Government will, as they have previously, show understanding and accommodate these distressing circumstances at least for a transitional period. Will they indicate some provision here so that the deep sadness of bereavement is not exacerbated cruelly by financial penalty? Parental death is unforeseen when family size is decided.
A parent suffering domestic violence is often driven, as a last and desperate resort, to flee the family home. Everything is left behind as parent and children lose home and security and, sometimes, their main source of income. The Government have boosted refuge provision to support such vulnerable victims of violence. I hope the Minister agrees that it would be consistent to recognise the vulnerability of these children in relation to this Bill. The threat and danger of domestic violence is not chosen or sought. To penalise children taken out of a dangerous situation cannot be right and does not reflect well on the concern we all have for the security and protection of vulnerable young people.
No parent either plans for a disabled child, yet we know that the impact on previously anticipated patterns of work and childcare can be hugely significant. A realistic and rational decision to have a third child can lead to a massive change of circumstance if the child is disabled. I recognise, of course, that a disabled child will, in some circumstances, attract some additional payment, albeit hugely reduced under universal credit. The impact for that family on their employment patterns, on childcare priorities and costs would be exacerbated by the strict application of the two-child limit.
Two of the exemptions I propose relate to the behaviour and decisions which I and, I believe, the Government wish to encourage and which policy and legislation can enable through these amendments. Kinship carers and those fostering and adopting step in to care for children with love and commitment when many would otherwise be in the costly care system. Around and across your Lordships’ House there is a desire to welcome, enable and encourage such generosity, which benefits the children themselves and our society. Surely, when kinship carers or fostering or adopting families take third or subsequent children, often to keep siblings together, we should be supportive of that, not really because it saves money for the public purse and the Exchequer—though it does—but because it is the right and good thing, to be welcomed by this House, Parliament and the Government.
My Lords, I rise to speak to Amendment 40, in my name and that of my noble friend Lady Drake, and to support the other amendments in this group in the name of the right reverend Prelate the Bishop of Portsmouth, to which I have added my name. I thank him for introducing this group of amendments with what we are coming to see as characteristic clarity and compassion.
I shall say a word first about the two-child policy, which I regard as a regressive piece of social policy. In Committee, we found it hard to get Ministers to put up any kind of cogent argument for the policy as a whole, so why is it being done? Whatever one may hear behind the scenes, this is not about the small number of unemployed parents with lots of children. They would already have been caught by the benefit cap, which we now know would hit a couple with two children living in a modest house in Leeds or Plymouth. This is about a family with three children who are working but struggling anyway. It is about all those who had children confident that they could provide for them until, as the right reverend Prelate pointed out, something went wrong. Perhaps their spouse died, they got sick and could not work, a parent lost their job and so on. Those are all the things that the welfare state is meant to protect against. The nearest we got to a case was in the impact assessment, which states that it is about,
“ensuring those on benefits face the same financial choices around the number of children they can afford as those supporting themselves through work”.
So it is about choice, and my suggestion is that we should use that as a yardstick by which we test these amendments.
Let us take first disabled children. Parents may have felt that they could manage a third child, but then they find that the child is born, or becomes, severely disabled. The disabled child element of tax credits will still be paid, but it does not begin to cover the extra costs. The charity Contact a Family states that it costs three times as much to raise a disabled child as one who is not. It is also much harder for the parents of a disabled child to raise their income through working, because it is difficult to find suitable childcare and more expensive if you can. Did the parents really make a choice to be in that situation?
What about the situation, described so powerfully by the right reverend Prelate, where a family is happily married or settled and the very worst happens, in that one of the parents dies? He described clearly what would happen to that family. As well as the trauma, the finances are going to get worse, especially if the deceased parent had been the main earner. This is almost a classic example of a family that probably did not need benefits or tax credits before, but suddenly finds that it is catapulted into a position where it needs to rely on the welfare state. This is exactly the kind of thing that the welfare state is meant to protect families against. Where was the choice there?
The right reverend Prelate mentioned stepfamilies. Perhaps it is not so dramatic, but what if the relationship breaks up? If the children deserved support when they were living apart, why do they stop deserving it because they are living in the same house?
Then there are the people who literally did not make a choice at all—cases of domestic abuse. Sadly, a child may have been conceived under duress rather than as a clear choice. Abuse can include the refusal to allow a woman to use contraception. It can include pregnancy as the result of rape, which may never have been reported to the authorities because of fear of the partner. Moreover, the fear must be there that the two-child limit will make it harder for a parent to leave an abusive relationship. Too often, they end up fleeing in the clothes they are standing up in. They are homeless and they have to hide from the former spouse, which means moving to a new area, away from jobs, schools and families. It is tough enough anyway to rebuild a life without added financial pressures.
On the subject of rape more generally, I hope that the Minister is now able to explain how the proposed exemption for women who have been raped will work. I hope that he can address the questions I asked in Committee. Will the exemption apply only when a woman has made a complaint to the police, or when someone has been charged or convicted? If not, will she have to give evidence to the DWP, to whom and what kind of evidence, and can the Minister assure us that this process will remain confidential?
We come now to the subject of my Amendment 40, which would exempt children who enter a household as the result of adoption, kinship care or private fostering. I hope very much that the Minister can accept this amendment, as the arguments are completely compelling. Children raised by kinship carers are typically unable to live with their parents because of parental abuse or neglect, perhaps due to alcohol or drug problems, or because the parents are in prison or indeed have died. A grandparent, and sometimes an aunt or a sibling, will then step in and take the children in, often in a case of emergency. There is clear evidence that children in kinship care settings do better than those in unrelated care, even though they have often had similarly adverse experiences in early life.
But kinship carers pay a huge price for their kindness. They face significant additional costs when their family size increases, and sometimes it can double in size overnight. A Family Rights Group survey found that almost half of kinship carers had to give up work permanently to take on the children, thus pushing them into reliance on benefits. The state should not be putting financial barriers in the way of families willing to take on often vulnerable children. It also makes no financial sense. The average child tax credit claimed by families with three or more children is £3,670 a year; it costs £40,000 a year to keep one child in foster care.
A similar argument applies to adoption, particularly of sibling groups. It is the Government’s policy, and I welcome it, to increase the number of children being placed for adoption and to remove any unnecessary barriers to the speed of the process, but this measure will directly undermine that policy objective. Adoptive parents often already have a child or children, so there is a clear disincentive to adopt if it would mean that they would not get payments for each child, and a particular disincentive to adopt sibling groups. There is already a shortage of parents who are willing to take on sibling groups, and this will only make that situation worse. If it delays adoptions, that becomes a vicious cycle. Children grow older and it is harder to place them, and therefore it is even less likely that they will be adopted at all. The only alternative is to break up sibling groups, which damages the children because that is often the only remaining bond they have. I hope that the Minister will consider this carefully.
If we judge the Government by their own yardstick, have they passed or have they failed? Have the families we have described today, who are covered in the amendments tabled by the right reverend Prelate and myself, been reckless in having children or taking on additional children without understanding the consequences? I do not think they have. Even if we accept the premise behind the two-child policy—and I confess that I do not—the Government’s own rationale simply does not work. These amendments make absolute sense both financially and in terms of the Government’s policies, and above all they are right for the people affected.
My Lords, we on these Benches have added our name to Amendments 36 to 38. We also support Amendment 40. The amendment is similar to the one that we put down in Committee when it was debated at great length. Noble Lords will be pleased to know that I do not intend to rehearse that contribution again today. Excellent reasons have already been given by the right reverend Prelate the Bishop of Portsmouth and the noble Baroness, Lady Sherlock, as to why exceptions should be made to the two-child limit on receipt of tax credits and the child element of universal credit.
I want to pose a few questions. For those who did not sit through Committee stage, I will read out the exemptions we seek. Under Amendment 38, we seek an exemption if,
“the claimant responsible for children in the household is a single claimant as a result of being bereaved of their partner”—
I ask the Government, where is the choice in that?—
“the claimant has fled their previous partner as a result of domestic abuse”—
where is the choice in that?—
“the child or qualifying young person has a disability”—
where is the choice in that?—
“the child or qualifying young person is in the household as a result of a kinship care arrangement, private fostering arrangement, or adoption”—
where is the choice in that?—
“or … the claimant was previously entitled to an award for the child or qualifying young person and has re-partnered creating a household with more than two children”.
Of course, there is a little bit of choice in that. It is love, which we can believe in or not, but sometimes we do not choose who we want to partner.
Effectively, these circumstances are beyond the control of the claimants. This amendment attempts to demonstrate that the first responsibility is to the child. It must be so, otherwise what kind of society are we really creating? I was, and I remain, particularly concerned that, despite the Government’s laudable commitment to exclude women who have had a child as a result of rape from the two-child limit policy, the Minister did not explain to my satisfaction how this exemption would operate. I will not go into that debate again. It is such a sensitive area. Perhaps he will explain today. Should this amendment be voted on, we on these Benches will wholeheartedly support it.
My Lords, I have not taken part in the debate on this Bill before but I was chairman of the Select Committee on adoption. I have been very concerned by the Government’s concerns, which I share, that not sufficient children have been adopted. This is a current problem. We need more adopters. It seems utterly astonishing to have a situation where those who are prepared to take children out of care or take, perhaps, members of the family whom they then adopt when they already have children, will be penalised for doing something that is entirely in line with what the Government have said in their adoption policies.
It seems to me quite extraordinary that the Government do not exclude adoption and kinship care. The noble Baroness, Lady Sherlock, has set it out very much better than I could and in greater detail, so I do not want to reflect on it. As she said, it is very expensive to keep children in care. There are practical financial reasons for the Government to look at kinship care and at adoption. They use the Bill as an opportunity to deprive these families of a comparatively small amount of money, put against the cost to the taxpayer of keeping in care children who could otherwise be living in a family of which they are truly members. That is why I support Amendment 40 in particular, and Amendment 38.
My Lords, very briefly, I support these amendments as vice-chair of the parliamentary group for young people in care. Having followed this issue through the whole Bill process so far, I was grateful for the opportunity to meet with the Minister last week and for his careful consideration of our concerns on these matters.
Over the course of 10 years of listening to young people in care and hearing about what is important to them, they tell us that the most important thing is that someone sticks with them through the care process. That is why the Government have been so keen on supporting adoption: so that children who have been traumatised go on to have the continuity of care and relationship that helps them to recover. That is where the Government invested in and legislated for “staying put”, to allow children in foster care to remain with their carers to the age of 21.
I am sure that the Minister will give a sympathetic response to this as it is at the heart of government policy. I look forward to his response.
My Lords, I shall speak to Amendment 30 in the hope that the Minister has been persuaded by the arguments made in Committee that kinship carers and adopters should be exempt from the two-child limit. I also thank him for the very constructive meeting that he held with us.
We have enunciated many times the valuable contribution that kinship carers and adopters make, supporting as they do more than 200,000 children, many of whom have emotional difficulties because they have been living with parents who are drug abusers or who have abused or neglected them. They save the taxpayer the alternative cost of placing a child in care, which is £40,000 a year, and care proceedings of £25,000. The savings that 132,000 kinship carers deliver by voluntarily caring for these children runs into billions. Yet, significant costs fall directly on the carers themselves. Many have to give up work or reduce their hours—a requirement frequently set by the social worker—to settle what is often a traumatised child for a good reason. The need for such carers is not going away. The number of looked-after children has increased steadily over the last seven years, as has the number of care order applications.
The Government’s reasoning for limiting benefits to two children is set out in the impact assessment. It is to reduce welfare costs and introduce a behaviour-related measure that will encourage parents,
“to reflect carefully on their readiness to support an additional child”,
which could have,
“a positive effect on overall family stability”.
It continued that,
“people may respond to the incentives that this policy provides and may have fewer children”.
The policy is intended to deter people having more children where they cannot afford to support them.
The Minister reported in Committee:
“The average number of dependent children in families in the UK in 2012 was 1.7, so … it is fair and proportionate to limit additional support provided by the taxpayer through child tax credit and the child element of universal credit to two children”.—[Official Report, 7/12/15; col. 1328.]
Even if one were to accept that reasoning when applied to birth parents who are considering having more children—I accept that there are many in this House who do not—it is a non sequitur when applied to kinship carers and adopters. It lacks common sense. There, the need is not to get kinship carers and adopters to reflect carefully on their readiness to care for an additional vulnerable child. To the contrary: public policy needs to support carers in their readiness to do so. That is better for the children and their family stability, and secures savings for the state by not placing them in the care system.
Kinship carers and adopters are not the birth parents of the children but they voluntarily embrace them. They are not making a decision to become pregnant; they are making a decision to care for an existing vulnerable child who cannot be raised by their parents. For adopters and kinship carers, the behavioural disincentive in the two-child limit is directed at their taking on responsibility for that existing vulnerable child. Imposing the two-child limit will deter adopters or kinship carers from coming forward to take on a sibling group, or a child if they have dependent children of their own, undermine the child’s interest and potentially increase the number in care. This is inconsistent with the Government’s commitment to ensuring that families are stable and create the best possible environment for children to flourish.
The two-child limit applied to adopters and kinship carers does not even stack up in cost terms. Exempting carers from the two-child limit would cost an estimated £30 million but the limit needs to deter only 200 kinship carers from caring for three or more children in the future before the £30 million saving would be wiped out, as the taxpayer would then have to face the cost of placing a child in care—£40,000 a year—and the cost of care proceedings, which is £25,000. I asked the Minister what behavioural response the Government were seeking to achieve from potential kinship carers and adopters with the two-child limit on benefits but I never had a reply. I returned again to the impact assessment but I could find no answer there either. Indeed, I could find no assessment of the impact on potential kinship carers, adopters or the children.
For kinship carers and adopters, the choice is whether or not to embrace an existing vulnerable child—a different choice to a parent choosing to become pregnant. The Minister advised in Committee that,
“there is a difference between the voluntary and involuntary taking on of children, whether they are your own or anyone else’s. That is what our exemptions are for. We are seeking to try to draw the line between where it is involuntary, as in the case of rape, and where it is not”.—[Official Report, 7/12/15; col. 1332.]
However, taking a behavioural measure into the benefits system for one purpose, then applying it to carers of children who might otherwise enter the care system without an explanation of the behavioural response being sought and with no assessment of the negative impact on the carers or the children is not good public policy.
I hope that the Government have deliberated further on where to draw that line and that they will exempt kinship carers and adopters from the two-child limit. In doing so, they would avoid building a perverse disincentive rather than positive support into public policy on people caring for vulnerable children, avoid undermining the interests of the child and avoid failing to recognise the real savings that these kinship carers and adopters provide.
My Lords, I rise briefly to speak in support of Amendment 38 and the other amendments in this group, having spoken on the matter in Committee. In the interests of time, I will focus on two of the proposed exemptions set out in Amendment 38, but I make the point that I consider all five exemptions equally deserving.
On the issue of disabled children, which has already been set out powerfully by the right reverend Prelate the Bishop of Portsmouth, the Government have framed the two-child limit as being about choice, but no parent makes a conscious choice to bring a disabled child into the world—a point already made powerfully in the debate today. It is not something you plan for. If that unforeseen event happens, however, surely that child deserves our help to ensure that they can be a fully functioning member of society. Research has shown that raising a disabled child can cost three times as much as raising a non-disabled child. Surely that is part of the rationale for this exemption.
Turning to the proposed exemption when new families are being formed, in a speech last year to the Relationships Alliance the Prime Minister thanked relationship support organisations which help to keep families together and, critically, to bring new families together. I declare an interest as vice-president of the charity Relate. The Prime Minister said that,
“government should do everything possible to help support and strengthen family life in Britain today”.
In fact, he even criticised the welfare state, saying that it was,
“incentivising couples to live apart”.
How, then, can it be that the Government have brought forward a Bill which says that if two lone parents come together to raise a family—one of them having possibly suffered bereavement—their child tax credit will be cut? Surely, creating that incentive in the benefits system would accomplish exactly the opposite of what the Prime Minister wanted to achieve, as I understand it—that is, giving children the right to live in a two-parent household and providing the stability that that often achieves. In saying that, I do not mean any detriment to single-parent families, who do a very good job of raising their children. However, we know that half of all single-parent families find a new partner within five years of their previous relationship breaking up, indicating that cuts in this area could affect as many as 500,000 people. This is not an insignificant matter.
To conclude, we have heard much debate on how these proposed changes will impact vulnerable groups. I think we can all agree that it is better to be pound wise than penny foolish. As such, we need to look at changes holistically and ask whether they help individuals who can work to seek work and whether they help to ensure that the next generation is healthy and ready to contribute to society. How do we ensure that the vulnerable in our country do not start behind and get left further behind? Amendments 38 and others in this group are necessary to ensure that the vulnerable, especially children, do not start behind because of their failure to choose the right parents.
My Lords, I want to intervene briefly. I spoke in Committee about kinship carers. Therefore, I support Amendment 40, which relates to kinship carers and adopters. One reason I take such a strong interest in kinship carers is that the north-east, where I come from, has one of the highest proportions of kinship carers in the country, along with London. I meet, and have met, numerous kinship carers in the region who will be affected by this measure.
Some very powerful arguments have been made today and in our previous debates on this topic. If I were the Minister, I would want to take account of two issues. First, the best outcomes for children are undoubtedly achieved when they are with kinship carers or adopters. Secondly, the Government would show that they are on the side of taxpayers if they exempted kinship carers and adopters from these provisions. I could say a lot about the other proposed exemptions but I have concentrated on kinship carers and adopters in the past and therefore, for consistency, I shall do so again today. When we last discussed this issue, it seemed that the Minister listened to the very strong arguments that were made. My noble friend Lady Drake has reiterated many of those powerful arguments. I felt that after our previous debate the Minister was thinking about those arguments. Therefore, I hope he will have better news for us today.
My Lords, I am going to be extremely brief because the arguments have been powerfully made. Because I have supported some of these issues and do support the amendments, I want to make two points.
I hope the Minister is able to come back with better news than we have had hitherto. I am sure that he will have gone back and looked at the issue. He very often says that this is a manifesto commitment and it links to many other Conservative commitments. The present focus of the Conservative Party on the family test and family life fits very much with the arguments that have been made around the House. If he is not able to come back with better news, I would like to ask him two questions. First, how does he see the family test moving forward, considering my colleagues’ arguments about how more secure families are achieved? Secondly, what discussions has he had with his colleagues in other departments, particularly those who are promoting children’s policy issues and pressing forward further adoption, fostering and kinship care? Do they understand this issue? In my discussions with some people in the other place, concern has been expressed that this will undermine some of those strong, clear and positive Conservative Party policy commitments.
My Lords, I would like to tell two stories that illustrate why I believe two of these exemptions are important.
A good friend of mine and his wife were unable to have children, and they put themselves forward as adoptive parents. They went through the rigorous process—this was a few years ago—and with great pride entered a room with several of us who had our own children and presented a piece of paper that said, “I have been authorised to become a parent in a way that none of you ever have”. This was a great joy. They were then asked if they would take three children, because those children had been born to the same mother and had experienced serious abuse living in a home with addiction. The absolute conviction of all concerned was that it was vital that these three children remained together. We, as a society, asked them to care for those children. They took up that responsibility and have exercised it for many years. They have, on our behalf, saved an enormous amount of money through those children not going into care. Also, a much longer-term point is that those children are healthy, well-educated and will be fantastic contributors to society. That is one of the reasons why adoption needs to be exempted.
The second story is of another two friends. When their first child was born, they had to come to terms with a severe disability. They had a second child who was fine and healthy. They chose to have a third child. That child also turned out to be disabled. Under the current proposals, without the exemptions they would not be given any support for that child other than the extra disability support. These are the children and the families we are dealing with in considering these exemptions. I sincerely hope, like others, that the Minister has had time really to consider such situations and has better news for us.
My Lords, I do not want to add to the extremely powerful speeches we have had but I would like to ask the Minister a straightforward question. On Monday, when we discussed the benefit cap, we raised the issue of the guardian’s allowance. As noble Lords who were present at the time will know, the guardian’s allowance goes to those at the very sharp end of kinship care, looking after children who are not just neglected but orphaned and traumatised as a result. That benefit cap obviously interlocks very much with the issues of kinship care. In the light of that, has the Minister been able to think further on the arguments that were put during that debate and reconsider the guardian’s allowance issue? It is a subgroup within kinship care but a few may be affected by a benefit cap, which would have disastrous effects on their capacity to care for some of the most distressed and grieving children society is likely to see.
I thank the noble Baronesses, noble Lords and right reverend Prelates for their amendments, and all those who contributed to the debate. The amendments all relate to exemptions in certain circumstances from the policy which limits the child element in child tax credit and universal credit to a maximum of two children or qualifying young persons from 6 April 2017. I think we have gone through those exemptions so I will not go through them in the normal way but take them as read.
We have been clear since the summer Budget, when this policy was announced, that we will exempt a third or subsequent child or qualifying young person who is one of a multiple birth where there were previously fewer than two children in the household, and we will exempt a third or subsequent child born as a result of rape. These exemptions will be developed and brought forward in secondary legislation, as subsections of Clauses 11 and 12 permit. We believe that secondary legislation is the right approach for specifying exemptions, to allow for flexibility and engagement with stakeholders. It will be important to get the detail right and we have time to do that before bringing forward regulations for April 2017.
I recognise the deeply felt concern in this House, the other place and more widely about how this exemption will work—something the noble Baroness, Lady Manzoor, pinpointed just now. We all recognise that this is a difficult and sensitive issue and I would like to provide the House with further information. Clearly, we need to establish a way of making this assessment that is sympathetic and responsive to the claimant and timely in determining entitlement to benefit. Our intention is not to focus on or pre-empt criminal justice outcomes but to ensure that mothers receive the help they need at the time they need it, using clear criteria that are straightforward to apply and not overly intrusive, but which secure the system against fraud and error.
While we continue to look at the detail, our thinking is that a third party evidence model offers the most promising approach to striking the balance we need to achieve. This approach would not be new for the benefit system. For example, we use a third party evidence model in universal credit for the temporary relaxation of the requirement to be available for work in cases of domestic violence. The evidence required is the reporting of the abuse to a third party acting in an official capacity, such as a GP or social worker. This model was developed with input from stakeholders.
Of course, a significant amount of work is needed to take forward and develop the detail of the model. I also want development of the model to include working with stakeholders to help ensure that the process is as compassionate and supportive as possible for claimants in these circumstances, while providing the right assurance to government that the additional support is going to those for whom it is intended. We will be getting in touch with organisations with an interest in this policy shortly to seek their input, and I encourage any other stakeholders who would like to be a part of this to let me know. While there is a significant amount of work to do and detailed questions to be answered, I hope this helps reassure the House and stakeholders that we are thinking very carefully about how we respond to this difficult and sensitive issue.
We have been clear since the summer Budget that we will bring forward further exemptions for exceptional circumstances, and we will be doing that today. I am grateful to those who have suggested amendments and contributed to the debate. As a number of noble Lords pointed out, I have been talking to Peers on this matter. We have carefully considered those affected by this policy and the options available, while taking into account the fact that one of our objectives for universal credit is that it will be part of a simpler and workable welfare system that benefits everyone. I know that noble Lords will remember my muttering about adding carbuncles every now and then.
Regardless, I am pleased to announce today that in recognition of the important role which family and close friends can play in caring long term for children who are unable to live with their parents and could otherwise be at risk of entering the care system, we are in favour of an exemption for children in such circumstances. The noble and learned Baroness, Lady Butler-Sloss, and the noble Baronesses, Lady Sherlock, Lady Drake and Lady Armstrong, have made persuasive speeches on this issue not just today but in Committee—so it is worth putting the effort into those speeches. We recognise that in these cases such carers, often referred to as kinship carers, are not in the same position to make choices about the number of children in their family as other parents are. I am grateful that the noble Baroness, Lady Drake, is now taking my distinction there in a positive rather than a non-positive way.
As I have already mentioned, the Bill provides the necessary powers to make regulations to provide exemptions to this policy, and we intend to use regulations to provide for this exemption. In developing the regulations, we will need to ensure that we get the definition right to make sure that the exemption applies to the children to whom it is intended to apply. We will work with stakeholders in developing the regulations to deliver a solution which meets the needs of vulnerable children, while protecting the Government from the potential risk of fraud and error.
If the Minister will forgive me for interrupting, I am having slight difficulty in understanding. I am delighted to hear about kinship carers but adopters are generally not family. One of the great points about adoption is that they come from outside, so the Minister’s suggestions to the House about kinship carers would not cover the majority of adopters.
That is a timely intervention because I am now going to move on to the very eloquent arguments for exempting adopted children. We think that where a single child is being adopted, it would not be fair to treat the parents adopting more advantageously than other parents. However, where children need to be placed for adoption and have siblings in the same position—this was the example that the right reverend Prelate the Bishop of Durham used about one of his, I suspect, many friends—we recognise that it is often in the best interests of the children for them to be placed in their sibling group. Therefore, I am also able to announce that we are in favour of an exemption where there were previously fewer than two children in the household and the adoption of a sibling group causes the number of children to exceed two. Again, we intend to use regulations to provide for this exemption.
This is a good point at which to respond to the question of the noble Baroness, Lady Hollis, who on Monday night discussed guardian’s allowance—very eloquently, as usual. I am in a position to say that I will continue to explore that particular issue with her and whether it is possible to bring forward something at Third Reading.
In relation to disabled children, the Government are committed to making sure that disability benefits work for these families, so we will continue to support families with disabled children through the disability elements of child tax credit and the equivalent in universal credit. I must point out to the right reverend Prelate the Bishop of Portsmouth that the figure is not reduced in universal credit: the absolute figure reads across from the tax credit system into the universal credit system. That will be payable for all disabled children, even when they are a third or subsequent child, so support for families with disabled children will still be reflected in universal credit and tax credits following the introduction of Clauses 11 and 12. There is of course other support for disabled children within the DLA system to recognise the extra costs which, as noble Lords have pointed out, parents with disabled children need to carry. In addition, we are exempting disability benefits such as personal independence payment and disability living allowance from the uprating freeze.
Could I ask for some clarity on what the Minister has just said? It sounded to me as though there was concern about the length of time that might be involved and so on and so forth, but his tone of voice sounded as though there might be willingness to at least explore the possibility. I am just teasing out whether he meant that he really was not willing to consider this, or whether there may be a possibility of exploring it further, particularly around domestic violence.
We have a regulatory process where these exemptions will be gone through in detail. I can make a commitment today where I can do so, but I assure noble Lords, including the right reverend Prelate, that the machinery of government is not in a place which allows me to say anything more about anything else at this stage. However, the process of setting out regulations will take place some months from now, and we will be exploring in great detail how they work. If the right reverend Prelate is asking me whether there are going to be more opportunities to put pressure on the Government, I would imagine that there will be.
In which case, given that helpful and tactful response by the Minister, will he help us even further by agreeing to publish draft proposed regulations before the formal procedure of “take it or leave it” in both Houses, thus allowing various participants to discuss those proposed draft regulations with the Minister before they are formally submitted?
In practice, I think that what I have said produces that outcome. I have said that we will consult very widely with stakeholders to get this right, because these are very sensitive issues. The rape exemption is very difficult. Getting kinship caring and adoption right is not straightforward. In practice, there will be consultation, but I do not want to overformalise that process. I have committed to a much more open process than you might see in some other regulations that we issue.
The next complicated case is the formation of new households through re-partnering of single parents, which we have looked at very closely and which produces a number of difficulties. First, it would be perceived as unfair by those families with three or more children who stay together and receive a maximum amount of child element or child tax credit in respect of two children, whereas other families who have formed more recently could receive more. Secondly, there is a risk that families may try to manipulate the benefit system by breaking up and re-forming, or even claiming to have broken up and subsequently re-formed in order to increase the amount. Thirdly, there would be a practical issue in assigning children in newly formed families to a particular parent. We have not done that before. Your Lordships will hear me muttering the word “carbunclising”. That is not to mention the intrusive nature of that process.
Finally, I looked at the numbers involved. The reality is that, whether we like it or not, the bulk of children stay with the mother. The number of fathers with children joining mothers with children is not many. Once the measure is fully rolled out, we expect that only 7% of single men will have children, so it is not that substantial a problem. The noble Baroness, Lady Manzoor, talked about half a million. That is just not the reality. I reiterate what I said in Committee about the way it is introduced in 2017 for child tax credit and universal credit. Any household which has claimed within the past six months will also be protected. For those reasons, I urge the noble Baronesses and the right reverend Prelate not to press their amendments.
Before the Minister sits down, given the fact that, as a nation, increasingly our children are growing up without a father in the family—according to the OECD, in the 2030s, we will overtake the United States in the proportion of children growing up without a father in the family—will he think again about his last statement? It may be a small proportion of fathers who bring children into these mixed families, but surely we want to encourage those larger families, especially, to have a father. The benefits that that father brings to those two children, or whatever, from the mother’s family is important. Will the Minister keep that in mind?
We have looked at this very sympathetically, but in practice we found it too difficult. We have heard from this Chamber about the kinship and adoption issues, and those are the ones that we want to get absolutely right.
My Lords, I am grateful to the dozen or so Members of your Lordships’ House who have contributed in the course of these exchanges as we have considered these amendments. I am sure that we have all been touched and moved by the strength of feeling and clarity of argument that have been brought. I am particularly grateful for the Minister’s response a few minutes ago. In my opening remarks, I spoke of the candour and courtesy he showed when a number of us met him last week, and we have been grateful for that again.
We heard very clearly the indication from the Minister of the importance of consideration of the regulations that will be brought forward relating to these measures, and I am grateful for his sensitivity about that. I assure him that we on these Benches and, no doubt, others, too, will certainly engage in the way that he suggested. We are also grateful for some clarification about the reporting model he has in mind to be used where a third child is born as a result of rape. Again, I know that many people will wish to engage in further consideration about that.
I think it is fair to say that we are delighted by the position he has outlined about kinship carers and adoptive parents and are very grateful indeed for that on behalf of the children themselves and of wider society.
On areas where the Minister was not able to satisfy us as much as we might have hoped, I draw his particular attention to circumstances in which children and a parent flee domestic violence. I said at the beginning that violence is never justified in circumstances such as that. I hope that the Minister will understand how difficult it is for me and others to accept what sounds at the moment like a policy which gives a financial incentive to risk staying in a situation where children might be in danger of abuse or in physical danger. It is a very serious matter and I hope that there may be some flexibility in the conversation to which he has pointed.
With grateful thanks to the Minister and to those who have contributed in this conversation and this debate, and welcoming the advances that have been made and the indications of some further changes in the future, I beg leave to withdraw the amendment.
My Lords, I have been sitting here listening in amazement as the Minister has been shelling out goodies right, left and centre. It is a quite unfamiliar experience. I just hope that his bag is not now empty; I hope that he has not completely run out of goodies to dole out.
Amendment 41 would leave out Clause 13. It is tabled in my name and those of the noble Baronesses, Lady Meacher and Lady Manzoor, and the noble Lord, Lord McKenzie of Luton. I shall speak also to Amendment 44, which would leave out Clause 14, which is tabled in my name and those of the noble Baronesses, Lady Sherlock, Lady Meacher and Lady Manzoor.
Clause 13 would abolish the work-related activity group component of employment and support allowance —which I shall call ESA from now on—for new claimants from April 2017. Clause 14 abolishes the equivalent component in the new universal credit, which will replace ESA and a number of other benefits. If Clauses 13 and 14 were to remain in the Bill, the effect would be to reduce income for those in the work-related activity group, which from now on I shall start calling “the WRAG”. It would reduce income for those in the WRAG from £102.15 to £73.10 a week—the same level as jobseeker’s allowance—which would be a reduction of £29.05 a week. Existing claimants would be protected but would be affected if they moved into work and then returned to claiming ESA in the WRAG. Furthermore, as the noble Lord, Lord Patel, showed in Committee, anyone initially placed in the support group, but who subsequently moved into the WRAG, would drop from £109 to £73.10, a reduction of £35.90 a week.
My Lords, your Lordships will recall that, as the noble Lord, Lord Low, said, we had a very full debate, in which I participated, in Committee, so I shall simply summarise the contrary argument to that of the noble Lord. As I did then, I very much welcome the report that he and other noble Lords contributed to because it has many recommendations, some of which are in themselves very important for the delivery of future policy, and I hope that the document will be used in the future.
The essence of the argument is that the effect of Amendments 41 and 44 would be substantially to leave things as they are. However, things are not satisfactory as they are. Contrary to what the noble Lord, Lord Low, said, it is not just about saving money, although needs must. We have to have regard to the necessity to reduce the overall welfare budget but, in truth, this is fundamentally about the benefit of those who have an albeit limited capability for work actually finding work.
The status quo is that we have a substantial number of people in the work-related activity group, 61% of whom want to work, but each month only 1% are moving off benefits. That is not good enough—it is what we need to move from, and we have to do all the things that are calculated to assist in that. Some of it I know we can agree on. The improvement in the availability of access to work, the extension of work choices, the development of the health and work scheme through to 2017, and the Government’s commitment of £100 million to support that programme are all very important. They are designed to help in the delivery of the objective that we share of halving the disability employment gap, which we also discussed fully on Monday.
My Lords, I have added my name to Amendments 41 and 44. I have listened very carefully to what the noble Lord, Lord Lansley, has said and will try to give some answer to the question that I think he is putting forward, which I fundamentally disagree with.
I thank the noble Lord, Lord Low, the noble Baroness, Lady Meacher, and others for the very good report they undertook. I read it with great interest. I also thank the noble Lord, Lord Low, for making a very comprehensive statement regarding these two amendments.
I do not want to spend too much time on this because we have, as the noble Lord, Lord Low, said, already discussed it for over two hours in Committee. However, I want to say a number of things. I was very disappointed to see the BBC news over the weekend state that government sources had said that people who were concerned about the cuts to ESA and the WRAG were “scaremongering”. This really is not the case. The facts speak for themselves. As I said, we had an extensive debate in Committee, which highlighted the research that has been done and the impact that these cuts would have. I do not want to repeat that research, but it is there. This is not scaremongering.
We on these Benches are opposed to the ESA and WRAG cuts, which will affect people when they are at their most vulnerable—when they are sick. These are people who have been independently assessed by government-appointed assessors—not by their own GPs who they have perhaps had a lifetime relationship with, but by independent assessors—as having limited capacity for work or as being able to return to some form of work in the future. As has already been outlined, over 50% of people in this group have mental health problems and it includes people with disabilities, people with progressive diseases, such as MS and Parkinson’s, and people who may be undergoing cancer treatments.
It is interesting to note that the Government have enshrined in law that there is to be parity between acute services and mental health services in the Department of Health, which is laudable. However, another department—the DWP—is penalising people with mental health problems on ESA and WRAG by cutting their benefit as though this will improve their health and will make them better sooner. That is not true, and there is no research which demonstrates it. The Department of Health and the DWP should at least try to have a dialogue to complement respective government policies. If there was more joined-up thinking between departments the taxpayer could save significant sums of money. There is no evidence that cutting £30 a week from the benefit to that of a jobseeker’s allowance will improve these claimants’ ability and fitness to work. Indeed, it may have the opposite effect.
On the point made by the noble Lord, Lord Lansley, it is unthinkable that we should put it in the Bill that these benefits should be cut from ESA and WRAG without reviews and without putting into place some of the things that noble Lords have suggested. We and the Government could do those reviews first and then implement a policy. To implement a policy that will have such dire effects first, and then consider that, whatever falls out of it, something will happen, is not right or fair. The Government have to undertake research, think about the policy, consider its impact and then implement it in a fair and considered way.
The Government should strengthen the support that is given to ESA and WRAG claimants by ensuring that specialist advice and support is available to these people. Work coaches should also be given the appropriate training to understand and meet the needs of these claimants.
I look at this issue through the prism of work. The Government must also tackle the thorny issue of employer discrimination—which, although against the law, still exists, sadly, in places—and identify exactly what kind of support they will give to employers to enable them to employ more people with disabilities.
Clauses 13 and 14 should be removed from the Bill. They have no place in a caring and compassionate society.
My Lords, I support the proposal to leave out Clauses 13 and 14. I was disappointed in the comments of the noble Lord, Lord Lansley. Of course, we all want people to be able to return to work, and employment is incredibly helpful if people are well enough to take it on. On the idea that, somehow, if we are not in favour of cutting these benefits we are content that people should remain out of work for an indefinite period unnecessarily, the crucial point is: can these people return to work, is it reasonable, and will these cuts facilitate that return to work or drive people further from the labour market? That is issue and we have all the evidence we need to raise serious questions about it.
I want to avoid repeating the arguments so ably put by my noble friend Lord Low but to endorse the view that these clauses will not achieve the Government’s objective of increasing the numbers of sick and disabled people moving into and remaining in jobs. It is remaining in a job which is absolutely crucial, because there is no point in getting a job for two weeks and then finding that you are so ill you have to drop out. Then, you will spend months trying to restore the benefits you have been receiving. In fact, it is a very dangerous thing for most people on benefits to take a job, which is one of the big issues the Government need to tackle. Until people feel freer to move in and out of work, we will not achieve the results we want. I know that that is the aim of universal credit and I applaud the objective. The reduction of £30 a week in the incomes of these vulnerable groups will undoubtedly cause the most incredible misery and hardship for a lot of already very vulnerable people.
I want to avoid duplicating the comments of other speakers and rather to draw the Minister’s attention to the four key points made by the Royal College of Psychiatrists about Clauses 13 and 14 and the cuts. First, as others have mentioned, more than 50% of people affected by this cut will be suffering from mental and behavioural disorders. These people find it particularly hard to get into work and, indeed, to maintain a job for reasons that have nothing to do with their benefits but more to do with fears about employers, health problems, travel problems and so on. Secondly, a survey by the Disability Rights Coalition found that almost seven in 10 disabled people say that the cuts to ESA will cause their health to suffer. To judge by my experience of some 25 years in mental health services, mentally ill people’s health will suffer most severely—if I dare say that in front of colleagues who know about other disabilities far better than I do. When faced with severe financial hardship, people with psychiatric and psychological problems will find it extremely difficult to function at all. Common sense tells us that someone with an anxiety disorder or depression will find rising debts and the prospect of eviction from their home impossible to cope with. Are these people really going to be able to search for jobs effectively? Of course not.
The third point made by the Royal College of Psychiatrists reinforces this. It points out that there is no evidence that cutting the amount of benefit someone with mental health problems receives will make it more likely for them to find work. This point has been made in respect of disabled people in general, but given the sizeable number of ESA/WRAG clients with mental health problems, the view of the psychiatrists should not be ignored. Finally, and most important from the point of view of the Government, these cuts could lead to an increase in demand for NHS mental health services. According to a Rethink Mental Illness survey, 78% of respondents said they will need more support from their GP, community services or in-patient mental health services if their benefits are cut. I do not believe that these services have the capacity to deal with an influx of demand from these groups.
Macmillan Cancer Support has made the point that success in finding a job and moving off ESA is related to the quality of back-to-work support offered, the availability of jobs, and the health of the individual rather than impoverishment. Surely these realities should drive the Government’s policy. Macmillan argues that its own research proves the correlation between financial deprivation and poorer health outcomes. In the case of cancer patients, too early a return to work can be dangerous and may drive people into the support group. That is detrimental to them and, of course, to the taxpayer.
The third group I want to mention briefly is the 8,000 ESA/WRAG claimants with progressive and incurable conditions including Parkinson’s, multiple sclerosis and motor neurone disease, as already mentioned by the noble Baroness, Lady Manzoor. Does the Minister believe that anyone currently unfit for work due to Parkinson’s or motor neurone disease will become fit for work in the near future—or ever? These illnesses are relentlessly, tragically and depressingly progressive. Does not the Minister regard it as quite immoral—I do not often use that word but I feel I need to in this context—to treat such clients in the same way as young, fit people looking for work? I would be grateful for his views on this point.
In conclusion, I find Clauses 13 and 14 immoral in certain respects, as well as counterproductive even in achieving the Government’s own objectives of cutting the costs of sick and disabled people to the taxpayer through driving them back into work.
My Lords, in responding to the noble Lord, Lord Lansley, I do not want to go over the debate we had last time, although I pointed out then that in the survey to which he referred, the policy implication it was drawing out more was the need to improve in-work benefits. Since that debate, it has been drawn to my attention that the loss of the limited capability for work element of universal credit will cut the benefits received by disabled people in work. I cannot believe that this is the intended consequence.
This matter was brought to my attention by Sue Royston. I will simply read out what she sent me, as otherwise I could get it wrong—welfare rights can get a bit complicated. She wrote:
“Under Universal Credit, the main additional financial support for disabled people in work to cover their extra costs in work is the limited capability for work element. Any person requiring additional support because of a health condition/impairment will therefore have to take the work capability assessment … and be placed in the limited capability for work group (WRAG group) even if they are working more than 16 hours a week. Anyone on Universal Credit who qualifies for the limited capability for work element currently receives an extra £30 in their Universal Credit regardless of the hours they work.
The limited capability for work element and for some disabled people additional support through the disabled person’s work allowance is meant to replace the additional support disabled people in work of 16 hours or more receive in the current system through the disabled workers element of working tax credit …
Removing the limited capability for work element in Universal Credit will … reduce substantially the additional support a disabled person in work can receive to help with their additional costs … 116,000 disabled people currently receive the disabled workers element in tax credits”.
I cannot believe that this is an intended consequence.
I support the amendment but I hope that, if it is unsuccessful, the Minister will look at this matter. It completely flies in the face of what is said to be one of the purposes of these provisions. Perhaps we need to come back to this on Third Reading because we did not look at it properly in Committee. Only the experts in welfare rights pick up something like this and draw it to our attention. It is a very important point that rather undermines the argument that this is all about improving work incentives, which the noble Lord, Lord Low, had already pretty well destroyed as an argument.
Finally, I do not think that I have ever said that paid work is a cul-de-sac. I have said that the danger is that it becomes a cul-de-sac and that depends on what happens to people who are in paid work. If I said it, I certainly did not mean it. It is the danger that we cannot assume that paid work is a route out of poverty. It certainly will not be a route out of poverty for disabled people if we cut their income by £30 a week.
My Lords, as I said in Committee, if this reduction in benefits for the disabled is about incentivising work rather than simply cutting costs from the benefit budget, I support the Government’s intention. However, the way in which they are going about the task to cut ESA WRAG and its universal credit counterparts is misguided. Clearly, other noble Lords agree with that. For that reason, I am inclined to support the removal of Clauses 13 and 14.
A number of noble Lords have spoken about this stubborn disability employment gap—this sad indictment on a society that has perhaps for too long been willing to ignore the aspirations of the disabled to engage fully in society through work. Reference has already been made to the Government’s impact assessment, which found that 61% of those in the work-related activity group want the opportunity to earn a living. It is quite right that the Government have committed to halving the disability employment gap. The problem is that this is a complex issue. Some have a physical disability, others a mental disability. As the noble Baronesses, Lady Manzoor and Lady Meacher, said, people with chronic illnesses are also lumped into this group.
I declare an interest, in that my sister works for the motor neurone disease charity, which has met with me about this. It is deeply worried about this. This is a disease the progression of which is so rapid that many people would be way beyond any possibility of doing any work even before they get any sort of assessment. It is vital for people with this devastating diagnosis—many are young with children—to have all the support that they need immediately.
However, if this cut continues under the Government’s strategy, I fear that it will be a poor strategy. Indeed, I fully concur with the review into these clauses, published by the noble Lord, Lord Low, which found that,
“the Government’s impact assessment of the removal of the ESA WRAG component is lacking in depth and quality”.
It may be that the case for a cut in benefits will act as an incentive to encourage the fully able to find employment, but I have still to see the evidence that that will apply for the disabled. By removing nearly £1,500 from the future budgets of those who join ESA WRAG or those receiving universal credit limited capability for work, it seems that all the Government are likely to succeed in doing is push more disabled people into poverty, and, as others have said, probably destroy what little confidence and hope that they have as they want to get back into work. Those in this group are not in the same position as fully able JSA claimants and should not be treated as such; many are likely to remain in the WRAG for an extended period and their benefits situation must reflect this reality.
Like many noble Lords, I have met people who are disabled who are longing to get back to work. I do not believe that the basic problem is one of incentivising them. It really is a different problem—one of perception. I remember when I was an archdeacon many years ago and we made some major steps when legislation first came through to get ramps for every one of our churches. We looked at these problems and thought, “How on earth are we ever going to do it?”. Actually, there was a massive change of attitude, partly because we insisted that some of the people who argued against it got in wheelchairs and got themselves into churches. They discovered just how difficult it was. I have to confess that I had a change of perception; I had not got my mind around it.
I believe that we have an even bigger leap to take now. The vast majority of disabled people will need customised, individual help. That is part of the issue and the problem. What is needed is not so much carrot-and-stick incentives, but a wider strategy that helps disabled people to overcome the many challenges that they face in entering, or re-entering and staying in, the workplace. We need programmes and interventions designed to help these groups into employment, not arbitrary cuts to the living standards of some of the most vulnerable people in our society.
My Lords, I also support the amendments in the name of my noble friend Lord Low and other noble Lords. I will concentrate on an aspect that I do not think has been fully recognised in the Chamber today.
It is important to remember that the cuts to ESA proposed in the Bill are happening not in isolation, but in a certain context. I respectfully disagree with the noble Lord, Lord Lansley, who said that we cannot let things remain the same. They are not remaining the same; I am afraid that they are getting worse. For example, I have spoken in the Chamber regularly about the desperate situation in social care, where disabled people are having their support drastically cut. This leaves them no alternative but to fund the shortfall personally or to go without and face the consequences. There are other areas of disabled people’s lives where the extra expense of living with a disability is rising year on year and month on month. My own annual bill comes to just over £12,000, which is checked and verified by my social services department—£12,000 a year. Please do not imagine that DLA or PIP covers this; it simply does not.
We know from the spending review last November that the Government plan to bring forward a new White Paper which is expected to announce further changes and reforms to ESA and benefits to disabled people, as well as to the WCA. Disabled people are fearful that the assault on their personal finances does not end with today’s proposals, and I think that they are right to be anxious. Today, the Minister will ask the House to decide whether to follow my noble friend Lord Low’s amendment on financial support for disabled people who have been assessed as unfit for work. In a few weeks’ time, the Minister will again announce plans to reform the whole system further in the White Paper. Today we are being asked to make decisions on proposals that will soon be impacted by further government changes. This is not joined-up government. It is not the joined-up approach that we have been promised by this Administration.
Frankly, disabled people are worn down by the relentless changes and cuts to their support arrangements and are right to be afraid of what is to come. Their personal finances are not in a good state. I speak for all of us, including some others here today—we should be afraid on their behalf and should support my noble friend Lord Low’s amendment today.
My Lords, I ask for a little clarification. I was somewhat astonished by my noble friend Lady Meacher referring to patients with multiple sclerosis, motor neurone disease, Parkinson’s, and diseases that can in fact be terminal. I understand that there is a distinction between the point at which people are diagnosed and the point at which they might be assessed as being able to work, but these are progressive diseases and the danger is that these people could very quickly become not able to work and indeed very ill. It is on this point that I would welcome some clarification.
My Lords, I rise to speak to Amendment 44 in this group but I also have some comments that relate to Amendment 41. Like many in previous sections of this debate, I have been looking at disabled people getting into work, not what will happen, under Clause 14, to disabled people who are in work. There are some shocking and severe implications for this. The noble Baroness, Lady Lister, was absolutely right that 116,000 disabled people who currently receive the disabled worker element in working tax credit will lose £60 a week. I cannot believe that it would be the intention of the Government to affect disabled people in work in this way. However, if Clause 14 stays in the Bill, that will happen.
In numerous debates, we have talked about universal credit being more simple; quite frankly it is not. I apologise for the somewhat technical nature of what I am going to say, but this is going to affect hundreds of thousands of disabled people. We have been told that a similar amount of additional financial support for disabled people in work would be available in universal credit and would be accessed through the work capability assessment even if the person was working full-time. Any disabled person who is working and requires additional financial support because of the extra costs, which have already been mentioned, would have to take the WCA. If they still qualified as having a limited capability for work, they would receive the £30 element in their universal credit, regardless of the hours that they worked. They would also receive the disabled person’s work allowance. For single people in rented accommodation it is worth a further £30 a week. Together, the limited capability for work element and the work allowance would replace the additional support offered in the current system through the extra element in working tax credit. Removing the limited capability for work element will therefore reduce by about £30 a week, or £1,500 a year, the additional support available to many disabled people in work once universal credit has rolled out. Only those who are working but qualify for the support group will receive an additional element.
My Lords, cutting the benefit of those who are fit for work but unemployed might act as an incentive but it will really not work for those who are found not fit for work. It is likely to have the opposite effect, pushing some in the WRAG further from employment. One fact that has not come out is that it will surely increase enormously the number of work capability assessment appeals—it will probably overload the system.
Muscular Dystrophy UK has found that the extra £30 a week is invaluable to fund those disabled people in the WRAG who, for example, need to get to interviews or to volunteering work, perhaps with a support worker, or to work experience for which Access to Work is not available. Often, suitable work, volunteering or work experience is some way away from where the disabled person lives, so the cost of transport has to be taken into consideration. As for their DLA or PIP taking up the slack, that is not, unlike ESA, an income replacement. It pays for the extra costs of being disabled, and is all too often spent on topping up a disabled person’s direct payment. Another expense common to many disabled people is the need for extra heating because of their condition. Putting an extra sweater on simply is not the answer.
I am sure the Minister will tell us that this is all about trade-offs, and that for all those people made poorer by this cut, there are other things that mitigate their situation, such as increases in the personal tax allowance and the national living wage, and better support in finding a job. But none of these things will help those disabled people who are nowhere near paying tax now, and who want to volunteer or try work experience in order to build up their CV.
Turning to Clause 14 and the impact on universal credit, we have heard extensively from the noble Baronesses, Lady Grey-Thompson and Lady Lister, about how this particular cut is not well enough understood. It is also not well enough understood that universal credit has taken a huge hit from the Treasury since its inception several years ago. We ought to hear more about that and I think we will when we come on to the work allowances, which reflect this, in the next amendment.
Currently, disabled people working more than 16 hours a week are entitled to the disabled workers element of working tax credit. It is currently payable to those who have a disability or condition that makes it more difficult for them to find and sustain employment and can be claimed, not by taking the work capability assessment, but by being passported from DLA/PIP. Under the changes in the Bill, anyone who requires additional support because of a health condition will have to take the WCA, even if they are working more than 16 hours a week. It really does not make sense. If they are found to have limited capability for work, after 2017 any new claimant will not receive this additional support. No wonder it is commonly agreed that disabled people, many of whom are living in poverty, are yet again being hit hard by the Government.
My Lords, since Committee I have spoken to a number of people with learning disabilities about their aspirations for work. I want to remind noble Lords that the proportion of people with learning disabilities in paid employment has remained stubbornly low, at around 7% of people known to social services. Most people that I have spoken to—and I think most people with learning disabilities—want to work. They do not want to be assessed to be in the support group. They really want help to find work. But the truth is that the vast majority of people with learning disabilities have never worked: back-to-work support is not what they need. Nor do they need a massive cut to their income, which will further marginalise and isolate them. Will the Minister specify exactly what evidence-based support is being planned for this group and how and where it will be delivered? It seems that personalised support in looking for suitable jobs and making written applications—recognising the low literacy levels among people with learning disabilities—and ongoing support to ensure they succeed in work in the longer term, might help a number of people to increase their chances. But will the Minister also acknowledge that people with learning disabilities will be particularly badly affected by a drop in income, given the difficulties they often have with financial management and making the most of a limited income? This group of people is going to be so adversely affected by this change that I feel the need to emphasise again and again that this policy has not been thought through for this group particularly and will affect it really badly.
My Lords, we have added our names to Amendments 41 and 44. Yet again, we have heard compelling arguments why Clauses 13 and 14 should be removed from the Bill.
I should say, compelling arguments bar one—I say to the noble Lord, Lord Lansley, that if we pass these amendments today it is not tantamount to leaving things as they are. The task from now on in is to do something the Government have genuinely started to do: to look at and tackle the barriers that disabled people face when they are trying to get into work. Surely that should continue and accelerate if the closing of the disability employment gap is to be achieved. I think the noble Lord said it was axiomatic that the bigger the gap between income in work and income out of work, the bigger the incentive. If the noble Lord thinks about it, if you took that argument to its logical conclusion, you would not have any benefits at all, and that cannot be right.
The noble Lord, Lord Low, took us through some of the detail of the report: the hardship that these changes would cause; that somehow recouping the benefit by a few hours’ work simply is not practical for people who have been assessed as not fit for work; and the need to tackle the barriers to work, which was a strong strand of that report. The noble Baroness, Lady Manzoor, made a very strong point when she said that we are doing this the wrong way round: we are cutting the benefit without addressing the issues that need to be addressed to help people into work.
The noble Baroness, Lady Meacher, reminded us that 50% of people with a mental health condition are in the WRAG. She raised the issue of people with progressive conditions—how on earth can we expect such individuals to access work? My noble friend Lady Lister, and the noble Baronesses, Lady Grey-Thompson and Lady Thomas, focused on the impact of Clause 14 and some of the extremely disagreeable consequences that could flow for people in work under universal credit. As has been said, that simply cannot be what the Government intended.
The right reverend Prelate the Bishop of St Albans reminded us that the disability employment gap is a stubborn one and we need to address it not in a generic way but in an individual, focused way. The noble Baroness, Lady Campbell, gave us just a glimpse of what the cuts to ESA will mean for people, pointing out that the extra expenses for disabled people are rising and are not effectively covered by DLA and PIP. The noble Baroness, Lady Hollins, focused on those people whom it has been particularly difficult to help into work—those with learning disabilities. These are fundamental parts of the analysis that underpins why these amendments are so important and why we should not allow these provisions to stay in the Bill.
Of course, the arguments have come not only from noble Lords today and in Committee but from a range of organisations that work day in, day out, with the very disabled people whom these clauses will hurt. Since Committee we have had more time to absorb the report, Halving the Gap, produced by the noble Lord, Lord Low, together with the noble Baronesses, Lady Meacher and Lady Grey-Thompson, which reviewed the Government’s proposals. The report could not have been clearer in concluding that,
“there is no relevant evidence setting out a convincing case that the ESA WRAG payment acts as a financial disincentive to claimants moving towards work, or that reducing the payment would incentivise people to seek work”.
Indeed, as we have heard, there are concerns that reducing the WRAG component would have the opposite effect and push people further away from the labour market. This is why we support Amendments 41 and 44. Frankly, we do not take lightly the prospect of removing whole sections of proposed legislation, but it would be no more significant than the effect these clauses will have on hundreds and thousands of disabled people.
My Lords, these amendments seek to remove Clauses 13 and 14 in order to prevent the proposed changes to the ESA work-related activity component and the universal credit limited capability for work element. Clause 13 amends existing legislation to remove this additional payment for new claims to ESA and aligns the amount of benefit paid to claimants with limited capability for work with that paid to jobseeker’s allowance claimants. I think I need to clarify that although some Peers have mentioned a loss of £60, the work-related activity component is just under £30 a week. Clause 14 is designed to introduce a similar outcome for UC claimants. The measure will save £640 million over the long term but in 2017-18, it will save £55 million while we will invest £60 million into additional practical support.
This change does not affect the support group component, the UC equivalent or the premiums which form part of income-related ESA. Existing claimants in the support group will be entitled to the work-related activity component if they are reassessed into the WRAG. We aim to protect existing ESA claimants who temporarily leave the benefit to try out work and then return to ESA, an issue which the noble Baroness, Lady Meacher, was concerned about.
ESA was set up by a previous Government to support people with health conditions and disabilities into work but it has unfortunately failed the very people who it was designed to help. Despite spending £2.7 billion this year on the WRAG, currently only 1% of people in this group actually move off the benefit every month. As a Government, we want to ensure that we spend money responsibly in a way that improves individuals’ life chances and helps them to achieve their ambitions, rather than paying for a lifetime wasted on benefits.
Currently, those in the WRAG are given additional cash payments but very little employment support. As the Prime Minister recently stated, this fixation on welfare treats the symptoms and not the causes of poverty. Over time, it traps people in dependency. That is why we are proposing to recycle some of the money currently spent on cash payments, which are not achieving the desired effect of helping people to move closer to the labour market, into practical support that will make a genuine difference to people in these groups.
The additional practical support is part of a real-terms increase that was announced at the Autumn Statement. How the £60 million to £100 million of support originally set out in the Budget will be spent is going to be influenced not only by Whitehall but by a task force of representatives from disability charities, disabled people’s user-led organisations, employers, think tanks, provider representatives and local authorities. I thank the noble Lord, Lord Low, and the noble Baronesses, Lady Grey-Thompson and Lady Meacher, for their work during Committee in this area.
The new work and health programme will provide specialist support for the very long-term unemployed. We are committed to supporting everyone who is able to work to do so. The forthcoming White Paper is aimed at ensuring that we offer the best possible support to those with health conditions or disabilities, a point raised by the noble Baroness, Lady Campbell, and the right reverend Prelate the Bishop of St Albans.
There have been ongoing discussions with the noble Baroness, Lady Hollins, about learning difficulties. Mencap’s website points out that despite the fact that research shows that 65% of people with a learning difficulty want to work, and the fact that with the right support they make highly-valued employees, only one in 10 people with a learning disability known to social services is currently in paid work. The Autumn Statement announced a real-terms increase in funding of almost 15% for those with health conditions and disabilities.
In Committee, some noble Lords raised concerns that we are expecting claimants who have been found “not fit for work” to be able to work. Although this was discussed then, it is important to stress once again that claimants in the work-related activity group have been found to have “limited capability for work”, which is very different to being unfit for any work. That is an important distinction, as this misconception helps drive people further away from the labour market and perpetuates the benefit trap.
As for returning to work and improved mental health, this Government are committed to ensuring that people with mental health conditions receive effective support to return to and remain in work. The noble Baroness, Lady Meacher, was concerned about this issue. We are investing £43 million over the next three years in trialling ways to provide specialist support for people with common mental health conditions. I have trawled the international evidence, and I know that we are going to build up a very substantial body of knowledge in this key area.
The noble Baroness, Lady Meacher, also raised the issue of deteriorating conditions. People with Parkinson’s who are currently getting the work-related activity component will not lose it, and will continue to receive ESA at the same rate, but any claimant who reports a deterioration in their condition can request a WCA to assess whether they may be eligible for the support group. As all Peers in the Chamber will acknowledge, some of these conditions can take a very long time indeed to develop, and there are times when people in the early period of those conditions are able to work, and indeed really want to.
Another area discussed at length in Committee was the evidence to support the Government’s view that the work-related activity component, in some cases, acts as a financial incentive to remain on benefit. I went through that evidence in some detail then but will summarise the points now. The findings of the OECD report, which we have touched on today, covered the whole population. Although the report does not specifically focus on the disabled population, it does not indicate the incentives would not apply there. We have the paper by Barr et al in 2010, which found that,
“eight out of 11 studies reported that benefit levels had a significant negative association with employment”.
It also noted that, “The most robust study”—by Hesselius and Persson—
“demonstrated a small but significant negative association”.
I have already mentioned the Norwegian study of the impact of financial incentives.
It is important to also recognise that the changes to ESA and universal credit work together and cannot be taken forward in isolation. Universal credit will replace income-related employment and support allowance once fully rolled out. We want to ensure that we build on what is working in universal credit to help those with health conditions and disabilities move into work. We have invested a lot in universal credit to make sure that we keep people connected to the labour market from the outset of their claim. Unlike under ESA, UC claimants with a health condition or disability are offered labour market support, where it is appropriate to do so, at the very start of their claim. This helps them to remain closer to the labour market, even if they are not immediately able to return to work.
The noble Baroness, Lady Lister, said that about 116,000 people in the whole country benefit from the disability element of tax credits. The smallness of that number illustrates how the current system is not working. That is why universal credit gets rid of the hours rules that stop people entering the labour market. It makes every hour—every fluctuating hour—pay and gives people the work coach support they need to find and then retain work. I have to say that some of figures from the noble Baroness, Lady Grey-Thompson, do not accurately reflect the situation. The point is that universal credit will make smaller, regular hours pay. Rather than dealing with a lot of very complicated sums, I will write to her and set out our response.
The findings from Universal Credit at Work show that universal credit is making a real difference in getting people closer to the labour market. It is easier to understand. People are earning more, they say they have better incentives to work and, indeed, they are working more. Universal credit is a step towards modernising the welfare system into one that improves individuals’ life chances, but we intend to go a lot further than that. We will publish a White Paper in the new year that will set out reforms to improve support for people with health conditions and disabilities, including exploring the role of employers, to further reduce the disability employment gap—which we are committed to doing —and promote integration across health and employment.
As for the impact of another budget, I should point out to the noble Lord, Lord Low, what we spend on disability benefit: it went up by £2 billion in real terms over the last Parliament. We spend £50 billion every year on benefits to support people with disabilities or health conditions, which is rather more than we spend on defence and police combined—6% of government spending.
Clauses 13 and 14, together with the additional practical support announced in the Budget, provide the right support and incentives to help people with limited capability for work move closer to the labour market and, when ready, into work. I therefore urge the noble Lord to withdraw his amendment.
My Lords, I thank the Minister for his very full and careful reply. I knew that it was too much to hope that his generous spending spree would continue into this group of amendments, so we will deal with the case that has been made on its merits. I also thank all those noble Lords who have spoken. The amendment has attracted support from right across the House: I made it 10 speeches in all and 9:1 in favour of the amendment.
My Lords, Amendment 44A is in my name and the name of the noble Baroness, Lady Manzoor, who tabled a similar amendment in Committee. We return to the issue because we were not satisfied with the response in Committee to what we believe is a strong case for explicitly writing into the claimant commitment a provision to ensure that regard is had to the best interests of any child cared for by the claimant, in line with Article 3.1 of the UN Convention on the Rights of the Child. Thus the aim of the amendment is to ensure that the well-being of any child is taken into account when a job coach agrees a claimant commitment, which records a claimant’s responsibilities and the agreed actions that they will take to seek and find work. This is something that the Office of the Children’s Commissioner has pressed for as well.
The other reason for returning to the issue is to ask what has happened to a similar provision that was inserted into the Welfare Reform Act 2009, as Section 31, during its passage through your Lordships’ House. I am sure that my noble friend Lord McKenzie will talk about this as well, because he was responsible for adding that section in response to a series of amendments from the noble Lord, Lord Northbourne, which had the support of the Conservative Opposition, whose spokesperson was the noble Lord, Lord Skelmersdale. The noble Lord, Lord Skelmersdale, made a very telling point:
“A work action plan would not be worth its salt if it harmed a participant’s children in some way, through unsuitable hours or a lack of suitable childcare. I suspect that the Minister will resist these amendments by saying that of course we would expect any back-to-work plan to take into account the needs of children. If that is so, he should not be afraid to accept these amendments, or ones very similar to them, as a confirmation of that”.—[Official Report, 11/6/09; col. GC 167-8.]
I am tempted to leave it there and say, “I rest my case, my Lords”. However, there is a bit more to be said, and before turning to today’s amendment, I want to ask the Minister why Section 31 has not yet been brought into force seven years later. When Emily Thornberry MP asked a Question about this recently in the other place, the Employment Minister responded:
“There are no current plans to bring into force Section 31 of the Welfare Reform Act 2009”.
Why not? The case for it is all the stronger today, as conditionality has been ratcheted up with its gradual extension to parents with ever younger children, so that under this Bill parents of children aged three will be expected to move into paid work.
When we debated a similar amendment in Committee, the noble Baroness replied pretty much on the line anticipated by the noble Lord, Lord Skelmersdale, back in 2009. She painted a rather idealised picture of the kind of conversation that work coaches have with claimants, not recognised by organisations such as Gingerbread working in the field. I should say here that I am grateful to Gingerbread for its help with this amendment. She suggested that the aim of the amendment was,
“achievable through existing legislation and it would be unduly burdensome to set out this level of detail in primary legislation”.—[Official Report, 9/12/15; col. 1664.]
However, this is not about some technical detail; it is about a basic principle enshrined in the UN Convention on the Rights of the Child, to which the Government have signed up. In what way is it burdensome? The implication is that it would be burdensome for job coaches always to ensure that regard is had for a child’s well-being. To repeat what the noble Lord, Lord Skelmersdale, said, a claimant commitment,
“would not be worth its salt if it harmed a participant’s children in some way”,
for instance, through unsuitable hours or unaffordable or inaccessible childcare. I know that Ministers think that parental paid work is intrinsically in the best interests of children, but, as I said in Committee, the evidence from academic work is actually more nuanced than that. The evidence also shows that the existing guidance for parents of young children is too often not followed.
The noble Baroness, Lady Meacher, spoke in support of what became Section 31 during the 2009 debate. She was also part of a 2015 inquiry into women on jobseeker’s allowance, the launch of which I attended. That found evidence of divergence from the guidance in the claimant commitment that parents were asked to sign. This included a survey of lone parents that found that nearly a third of them stated that their commitment was written entirely by their adviser without any input from them and did not take account of their need also to care for their child. It is a common theme on Gingerbread’s helpline each month that parents of young children have been given inappropriate instruction that did not take account of the well-being of their children.
I will give just three examples from within the past six months. A parent with a two year-old child was wrongly told by her adviser that she needed to look for paid work. She is currently not required to do that until her child is five. A mother of a five year-old child had to sign a claimant commitment to say that she had to look for full-time work. She should have been able to look for work during school hours only. A caller with a 20 month-old child was wrongly told by her adviser at the jobcentre that she had to look for work or do courses, or her benefit would stop. These are just examples of what we described in Committee as the “parallel universe” occupied by claimants and their advisers on the ground, so different from the one described by Ministers.
The noble Baroness the Minister also said:
“It would also not be fair only to prescribe that claimant commitments must contain information relating to the well-being of children”.—[Official Report, 9/12/15; col. 1664.]
Could she expand on that, please? In what way would it not be fair to ensure that regard is had to the well-being of children in drawing up a claimant commitment? The intention is not that the commitment has to contain information about any child’s well-being; we are not looking for a survey of how children are doing, or the kind of survey that my noble friend Lord McKenzie was talking about the other day in relation to well-being. It just needs to show that regard has been had to it in a way that was clearly not the case in the examples cited.
Once more I refer back to the question posed by the noble Lord, Lord Skelmersdale, when he was speaking for the Conservative Opposition: why, if a child’s well-being is being taken into account by work coaches during the drafting of agreements, would the Minister be afraid to have this written into legislation? I urge the department to bring Section 31 of the Welfare Reform Act 2009 into force without further delay and to accept this amendment, or bring forward a similar amendment, at Third Reading. I beg to move.
My Lords, I support the noble Baroness, Lady Lister, on this amendment. Once again, we had a very good debate in Committee, and, in her usual fashion, the noble Baroness has laid out a very comprehensive argument with which I concur absolutely. I can therefore add very little to that argument except to press the Minister again to say why the well-being of children is not being factored in when it already has been. For noble Lords who were not in the Chamber earlier, I will read what the amendment says. This is all is says—which is why I have difficulty in understanding why it cannot be in the Bill. The amendment states:
“In preparing a claimant commitment for a claimant, the Secretary of State shall have regard (so far as is practicable) to its impact on the wellbeing of any child who may be affected by it”.
What is so wrong with that?
My Lords, I will briefly support this amendment. Before doing so, however, I have not had an opportunity to thank the noble Lord, the Minister’s colleague, for the assurance and commitment that adoptive parents, kinship carers and others will be kept out of the two-parent limit. I was very grateful to hear that from him.
The amendment, which I support, brings to mind two questions. If a child has had, for instance, pneumonia, and subsequently gets ill on a regular basis, what mechanism is in place to allow for the fact that the child has been and continues to be unwell on a periodic basis, which will allow the parent to give the child the care they need to recover fully from this issue?
The other question—perhaps I am stretching a little—is with regard to dealing with mental health. There has been a great deal of concern about perinatal mental health, and clearly this is an opportunity to spot perinatal mental ill health, including post-natal depression, and to do something about it. I may have missed other debates during the course of the Bill—perhaps the Minister can refer me to them or just drop me a line—but I know that information about the health of welfare claimants cannot be shared with the health service directly. Are the Government thinking of doing what they do in police stations, which is to station a mental health professional in the jobcentre itself so that they can help spot any issues of this kind and ensure that the parent and child get the support they need to deal with that?
My Lords, I will contribute briefly to this debate in support of the amendment. The issue here is that we are in a very different benefits culture from the one we had maybe until 2010—I am not sure when exactly. The point is that the claimant commitment is the basis for sanctioning. If a parent fails to comply with a claimant commitment, that is when they will be sanctioned. If the claimant commitment is completely unrealistic and the parent cannot comply with it—for example, if it requires the parent to travel 90 minutes each way and they manage to have childcare for only five or six hours a day, or whatever it is—it will be physically impossible for them to satisfy that claimant commitment.
We know, certainly from the Fawcett Society inquiry I was involved with, that there is quite a need for training for these staff. That of course goes back for as long as I have ever been involved with welfare matters, which is probably some 40 years. Staff are very poorly paid, they tend to be rather inadequately trained and there is always a rapid turnover of staff, so you always have new staff who are trying to learn the rules, and so on. So this claimant commitment takes on a far greater significance in this day and age than it would have done 30 or 40 years ago.
That is why I ask the Government to take this very seriously. They need to accept that they have low-paid staff, a rapid turnover, poor training, and therefore that sanctions happen utterly inappropriately. The claimant commitments are wildly unrealistic in the experience of the inquiry I was involved with, which is very dangerous for the children. The parent goes along on a Friday to pick up their benefit and is told, “Oh, sorry”—or probably not even “sorry”—“your benefit has been stopped”. Is there any supper for the children? No, sorry, no food in the house—and so on. It is very serious for children affected by sanctions following the claimant commitment. That is why, although this sounds like a fairly innocuous amendment, believe me, it is very important.
My Lords, I agree wholeheartedly with this amendment. It would be difficult to do otherwise because, as my noble friend reminded us, I moved a parallel amendment to what became the Welfare Reform Act 2009 when we were in government. When one looks back at legislation one has been responsible for there is always a moment of trepidation, but we are on safe ground in this case. Those were the days when the noble Lords, Lord Skelmersdale and Lord Northbourne, were heavily involved in our debates. Having said that—and I underline the importance that the noble Baroness, Lady Meacher, has placed on this amendment—it is slightly disconcerting to understand that one’s labours at the Dispatch Box all those years ago have lain dormant and fallow, so I press the Minister to say why it has not been introduced.
My Lords, this amendment, tabled by the noble Baronesses, Lady Lister and Lady Manzoor, seeks to set into primary legislation a requirement for the Secretary of State, when preparing a claimant commitment, to have regard to the impact on any child affected by it. I fully support the principle that requirements should be adjusted according to individuals’ personal circumstances, including the well-being of any children for whom the claimant is responsible. However, this amendment proposes to unnecessarily prescribe the contents of the claimant commitment in the Welfare Reform Act 2012. During discussions with individuals, work coaches already take into account all the personal circumstances relevant to both claimant and child when agreeing work-related activities. We continually review the operation of the claimant commitment and will act on anything we find that can be improved. Claimants can request a review of their claimant commitment if they have concerns.
On the question asked by the noble Baroness, Lady Lister, about Section 31 of the 2009 Act, it applies to JSA and ESA, not universal credit. As part of the claimant commitment, parents can input into the contents of the commitment within universal credit.
We are very clear about the importance of our responsibilities with regard to the well-being of children. Regulations 98 and 99 cover the circumstances in which all or some requirements should be suspended for a temporary period, which includes circumstances in which a parent has to spend time caring for a child in distress or if they are in the kind of situation which the noble Earl, Lord Listowel, talked about. The number of hours a claimant is expected to spend carrying out work-related activity is also tailored so as to be compatible with the claimant’s individual childcare responsibilities.
These reasonable requirements, including any limiting or lifting and the reasons for this, are recorded within the claimant commitment. The amendment does not specify that it applies to the responsible care of a child; it refers to “any child”, which would make it extremely difficult to determine which children are being referred to other than those within the claimant’s responsibility. This would make it difficult for jobcentres to effectively administer.
The key principle of the claimant commitment is that we treat people as individuals and tailor their requirements accordingly. We have chosen not to prescribe in legislation what a claimant commitment should take account of in order that we can reflect all the possible circumstances people can present with. It would be too prescriptive to single out one element—the well-being of a child—and legislate that claimant commitments must contain this information. It would not be practical to prescribe everything a claimant commitment should contain—we want to take account of a broad range of circumstances.
We know that developing a skilled workforce is key to realising the flexibilities that we have built into the legislative framework of universal credit. We want to empower our work coaches to use this broad discretion to make sound decisions that are right for the individual in front of them. As the noble Baroness said, I talked at length about the work under way to invest in learning and development of our front-line staff, including the work coach delivery model and accreditation. I did that because I wanted to stress the importance we place on making sure that work coaches are trained and that they use their discretion to the benefit of the families they work with. I emphasised that element because I wanted to stress to noble Lords that we take that very seriously.
Existing legislation already enables us to take account of the well-being of children when setting a claimant commitment; it is something that work coaches routinely do. Therefore we do not believe that it is necessary to set out this level of detail in primary legislation. I hope that on that basis the noble Baroness will withdraw the amendment.
My Lords, I am grateful to all noble Lords who have spoken. The noble Baroness, Lady Manzoor, asked what there is to object to. It is a good question. The noble Earl, Lord Listowel, gave a very good example of what happens when a child is unwell. But the noble Baroness, Lady Meacher, in a sense finished off the argument by talking about the implications of the well-being of the child not being taken into account in a culture where many people are sanctioned—and, as the evidence from her inquiry showed, sometimes sanctioned for the wrong reasons.
I am again disappointed by the Minister’s response. It seemed simply to repeat the arguments that were made in Committee and did not really engage with the counter-arguments that I put. She said that Section 31 applies to JSA ESA. Yes, many lone parents are still claiming those benefits and will be for some time. As we know, universal credit is being rolled out slowly and the more complicated cases will move on to it more slowly, so why is it not being introduced in the mean time? I find it very sad that the good work of my noble friend Lord McKenzie is gathering dust. In fact, it was the good work done by the noble Lord, Lord Northbourne, that started it all, because it was his amendments that triggered this section, but nothing has happened. Therefore, I am afraid that the fact that it is JSA ESA is irrelevant.
This is not just one other detail; the best interests of the child is a fundamental principle that policy-making and legislation is supposed to have regard to in this country, or in any country that has signed up to the UN convention. So I am disappointed. Again, we have evidence of a sort of parallel universe where all the wonderful conversations are being had. It is excellent that the training is happening and I welcome that. However, as I understand it, when lone parents had bespoke advisers who understood the issues, rather than generic job coaches, they tended to be treated much better than they are now.
The helplines of organisations such as Gingerbread are constantly showing that the best interests of the child are not being taken into account. When this Bill is out of the way, I wonder whether the noble Lord or the noble Baroness would be willing to meet those organisations to talk about why there is this difference in perception, and perhaps we could have another look at Section 31.
I shall be very happy to meet them.
I very much appreciate that. On that basis, I beg leave to withdraw the amendment.
My Lords, I have tabled this new clause because I think it is fundamentally important. Noble Lords will recollect that Members of all parties and none were pleased when the Chancellor dropped his plans to cut tax credits. That happened only because of the pressure put upon him by this House.
I have put down this amendment because the universal credit changes are identical to the tax credit changes, so the arguments are almost identical. Although the universal credit changes come in later and will affect the flow, not the stock, of claimants, they will have exactly the same effect as the tax credit cuts. This impact has been confirmed both in the Red Book and by the Institute for Fiscal Studies, which says that the tax credit cuts will, in the long run, make no difference, as the cuts to universal credit will affect the very same people. On average, low-income working people will lose £1,000—again echoing the tax credit cuts.
My Lords, I will add just a word to my noble friend’s excellent speech. I want to do three things: look at the context, share some new analytical evidence that I have just had access to and, finally, talk about the relationship between Amendments 45 and 46A.
For me, this is a significant moment for universal credit. I am determined to do everything in my power to bring universal credit to a successful, sustainable position if it is the last thing I do before I go to the great Parliament in the sky. This is an important moment. What we are arguing about is part of the strategic balance in the architecture of the system. I believe that the Chancellor, who is fully focused on the public finances, as perhaps Chancellors have to be, is completely blind to family budgets. That is evident in the way that he has been seeking some of the necessary public savings. I know that the Minister is completely innocent in terms of any of these changes. My spies are everywhere, and they actually give him quite high marks. One only had to read the newspapers over the late autumn, sensitively and between the lines, to know that we could have been facing rates of change to the reduction in the benefit of not just 65% but 75%. I believe that to be true and believe that the Minister was responsible for stopping that happening. I am deeply grateful for that. If that had happened, I would have given up any further attempt to make this policy work at all.
We are talking about work allowances and how they fit into the system. We have to get this sorted out once and for all, because although people have been told this before, I believe that in the 2016 fiscal year we will see a massive scaling up of universal credit, not just across all the job centres but in terms of the categories and numbers of claimants that will be admitted. I am anxious that that should happen. However, I make the point that there are a lot of problems waiting on the other side of that, which we know about and have been working on. We have to get the architecture right before the scale-up starts, and work allowances are an essential ingredient.
My noble friend’s amendment actually works with the grain of government policy much better than the Chancellor’s proposal does. The universal credit, making work pay and work incentive momentum will be significantly reduced if these work allowances are reduced in the way that is being suggested.
We are able now to start to look at some of the impacts on universal credit recipients as the rollout moves on. I will very briefly sketch through some analysis I have seen from Policy in Practice, a group of people whose judgment I trust. It has done some forecasting of the effects of the impact of universal credit on recipients. The analysis makes three points. First, with no mitigation plan in place for people currently on universal credit, all households in work and on universal credit in April 2016 can expect to be worse off as a result of reduced work allowances. It estimates that 96,000 households in work will be worse off by April 2016. I see the wrinkling of a ministerial nose already. I know that this is the Minister’s territory and I am sure that he will want to look at some of these figures, but that is what I am told and I am reading it as accurately as I can.
The second worrying point raised by the Policy in Practice analysis, and with an indirect relationship to the work allowances changes, is the finding that taking into account the national living wage and higher personal allowance—that is, the government package—35% of universal credit recipients will be worse off in 2020 without transitional protection. If that is anything like true, we should be worried.
Even more interestingly, and perhaps more worryingly, the third conclusion of the analysis is that households that are worse off under universal credit would need to work additional hours in order to not be worse off from these changes. Policy in Practice’s current best estimate puts the combined figure at an additional 10 million hours each week across the United Kingdom that would need to be found and worked before people could protect their income in the long run. Worse than that, it then goes on to say that, at the same time, cuts to work allowances will limit the dynamic effect of universal credit by up to 2.5 million hours each week, and that is on top of the OBR estimate that the national living wage will reduce the weekly hours available by a further 1.8 million hours each week.
If you combine these factors, we are looking at the possibility of making it more difficult for households to make up their shortfall by working additional hours. I am sure that that will all be tested in due course when the figures are made available. However, that is the scale of the challenge that we may be facing as a result of some of these work allowance changes. I am certainly concerned that this is a significant change that we need to think about very carefully.
My Lords, I support the amendment of my noble friend Lady Manzoor. One day before I entered this House the Government were defeated on tax credits. The Government were very upset but conceded the issue. Except that they did not—they found another way to cut support for hard-working people on low incomes. It was a more obscure way and they hoped that we would not notice it and that their attempts to bully this House might make us kow-tow.
As my noble friends Lady Manzoor and Lord Kirkwood have set out, these changes to UC have similar impacts on the same people as the tax credit changes. The Liberal Democrats strongly supported universal credit in government because we believed that it would increase work incentives. I am sure that the Secretary of State will be as dismayed as we are that his UC policy is being so consistently undermined by the Chancellor. I am sorry that we are not there any more to help resist that but we shall do so in this Chamber. If we opposed the tax credit changes, it is beyond me why we would not oppose these changes.
The Government have no mandate for the changes—quite the contrary. The Conservative manifesto says that the aim of welfare reform should be to reward hard work and protect the vulnerable. The changes in regulations do the opposite. Not only do they have no mandate, their manifesto requires that they should oppose such changes.
It would be great if Peers on the Benches opposite were to support us—although that may be rather hopeful—but, if they are not willing to do so, they should not trouble themselves to make protestations to the public that they are on the side of the working poor. I await with interest to hear the position of the Official Opposition. I hope that Labour Peers will support us and that, if they were planning not to, they will reconsider. What is the point of all the controversy and antagonism that took place over the tax credits votes if, only three months later, we allow measures that impact on the same people in a similar way to go through? If Labour does not support us through the same opposition that it showed in the House of Commons, as my noble friend Lord Kirkwood pointed out, there will not be any point in it weeping tears of regret when the impact of these measures comes to be felt by the public. It will not be able to wash away its failure to stand with us tonight and to stand up for working people.
My Lords, Amendment 46A, in my name and that of my noble friend Lady Hollis, would require the Government to produce and lay before Parliament a report assessing the impact on work incentives of the Universal Credit (Work Allowance) Amendment Regulations 2015, which passed through Parliament last year. In particular it would require the Government to analyse data on income and hours worked by household type, and the impact of the regulations on the levels of awards of in-work support payable to claimants who have moved, or will move before 2018, from tax credits to universal credit as a result of changed circumstances.
I shall address the matter of substance first and then move on to the politics of the matter. I raised these matters in Committee to get the Minister to tell the House what would happen to people who were moving across from tax credits to universal credit. The answers were deeply worrying. It is now clear that two big and distinct problems are emerging in relation to universal credit. First, the incentives to enter and progress in work have been severely damaged by a succession of changes made by the Government. As the director of the Resolution Foundation observed, universal credit was set to be £2.3 billion more expensive than the six benefits it replaced. Indeed, versions of the policy early in the last Parliament were even more expensive than that. No wonder the Treasury was nervous about a fast rollout—not, I suspect, the chief concern facing it at the moment. But after repeated chipping away, it seems that universal credit will now actually save the Treasury money—more than £2 billion a year once it is fully in place. Of course, if it saves the Treasury money, it costs claimants money, so universal credit is no longer going to do the job it was meant to.
The final straw was the reduction in the work allowances that went through Parliament last autumn. After weeks of pressure from all quarters and being asked to think again by this House through the Motion of my noble friend Lady Hollis, the Chancellor announced that he was scrapping the equivalent planned cuts to tax credits. I unreservedly welcomed that change. However, the Government decided to press ahead with comparable changes to universal credit. These various changes have done serious damage to work incentives, and, furthermore, the way that universal credit is now structured means that there is a significant problem with lack of work incentives for second earners and the position of self-employed people is a major problem.
Then we have the second problem: transitional protection. Iain Duncan Smith declared on “The Andrew Marr Show” in the wake of the tax credits change that no one would lose a penny from universal credit cuts. That is by no means clearly so. We know that if you take two working families with children in identical circumstances, but one on tax credits and the other on UC, the one on UC could be almost £3,000 a year worse off. How can nobody be a penny worse off? It depends on the transitional arrangements. Evidence given to Members of another place by the department suggests that there are two ways that people could end up moving from tax credits to UC. The first is “managed migration”, as the jargon has it. These are people who are moved over en bloc by the department, but that will not happen until 2018. They will get transitional protection.
The second way is by what is slightly oddly called “natural migration”. This happens when someone who is getting tax credits has a change in circumstances and is forced by the department to move across to universal credit. We now know that this can happen through all kinds of changes, some of which were alluded to by the noble Baroness, Lady Manzoor: if someone loses their job; has a baby or adopts a child; if a lone parents gets remarried or repartnered; if a couple splits up; if someone becomes a carer or ceases to be a carer; or even, slightly oddly, if a lone parent’s child reaches the age of five.
As I understand it, in all of those circumstances and indeed in more, a tax credit recipient will be forced on to universal credit and overnight could see their entitlement fall by up to £3,000 a year. Can the Minister confirm that that is the case? Further, can he tell the House whether any transitional protection will be forthcoming for the group of people in the category called “natural migration”? How many people does his department anticipate will be in that position during the first year of the new work allowance regime? We have a problem of transition and a problem of seriously damaged work incentives. Above all, there is an unacceptable lack of clarity about the impact on low-income working families.
I should probably have declared an interest as I was an adviser to Gordon Brown as Chancellor of the Exchequer when tax credits were invented. He hired me away from the single-parent charity where I was toiling to support him in trying to work out what to do about the fact that we had the second-highest child poverty rate in the developed world. Child poverty had trebled under the previous Tory Government. We also had significant problems around lone parents not working. I worked with Gordon Brown to work out how the Government should tackle what was then a very low rate of single-parent employment. Tax credits made a massive difference. They helped to lift millions of British children out of poverty and led to the most dramatic rise I know of in the proportion of single parents in work. To see this Government damage work incentives that were so hard won breaks my heart.
I fully accept that the noble Baroness, Lady Manzoor, truly cares about the plight of working families, but I do not think that those families are helped by leading them to believe that this House can do things for them that it cannot do. It is clear to me, and I am sure it is really clear to Liberal Democrat Peers—I understand that we have to go with the politics of the age—that there is a distinction between opposing something and feeling that this House should vote it down. I oppose this entire Bill, but I did not vote against it at Second Reading because as a revising Chamber it is not our place to do so. As I say, we are a revising Chamber, and, if that is the case, we should do our job properly.
Rather than using primary legislation retrospectively to repeal regulations which have only recently passed through both Houses of Parliament, and are not even regulations flowing from this Bill, let us focus instead on taking appropriate action to hold the Executive to account. Let us not let the Government off the hook by playing politics with this issue. Let us not pretend that we all take the same view on tactics, but that does not mean we have different views on substance.
I understand that during the tax credits debate, the noble Baroness, Lady Manzoor, wanted to run a fatal Motion against all the conventions of the House. We did not back that; we backed my noble friend Lady Hollis in running a delay Motion which had exactly the right result but in an appropriate constitutional manner. That is the position we are in today. The Chancellor’s cuts are going to do significant damage to working families in Britain. Those people and this House have a right to know what that damage is. That is what we are pushing for today and that is what we on these Benches will be voting for.
My Lords, all of us in the House supported universal credit and we all recognised the absolutely key role played by the noble Lord, Lord Freud, in seeking to deliver it. Why have those of us who worked on tax credits—my noble friend in the Treasury and myself as the Minister taking the tax credits Bills through this House—none the less gone on to support universal credit? It was because tax credits did make work pay, they transformed lives, and we were and indeed are proud of them.
But, first, without real-time information, we could not keep pace with the changes of circumstance. Half of all lone parents experienced more than a dozen changes of circumstance every year, and the computers never caught up. We had to have end-of-year adjustments and we had the sadness of trying to recover overpayments from people who could ill afford to make them. Secondly, as has been said, we absolutely needed to simplify the benefits system so that people would know what they were entitled to. Finally, tax credits were rightly built on a work model, and work was defined as 16 hours a week. However, we know that for many lone parents a job for fewer than 16 hours a week, a mini job, is the pathway into work. Instead of the cliff-edge of 16 hours, we supported the principle that the noble Lord enunciated in universal credit of a ladder up from mini jobs right on into full-time work. Over some 17 long Committee days, we supported the noble Lord on universal credit.
The architecture of universal credit remains, but to repeat the image of the noble Baroness, Lady Manzoor, the key driver of making work pay is being shrivelled by the cuts, slice after slice. My heart goes out to the Minister because he must hate it. But, of course, he cannot possibly comment. Instead of universal credit being more supportive than tax credits, which is where we came from in helping people into work, as my noble friend Lady Sherlock has said, increasingly the opposite is now true.
Yes, last autumn we protected existing families on tax credits—not new claimants—from cuts to their existing income, given the commitments made on all sides during the general election. The Chancellor accepted that as people move from tax credits to UC as part of the migration timeline, they should not be worse off simply by virtue of that administrative change. It was the right thing to do and I believe that everyone in the House, including of course the noble Baroness, Lady Meacher, who was so key to this, was delighted by the move.
However, as my noble friend has said, such transitional protection may not cover situations where there has been a recognised, formal change of circumstance which, as it stands, could bring existing tax credits families immediately into UC over and beyond the migration timeframe, and at that point they will experience cuts in UC. I want the Minister to help us by clarifying the situation. What will take a person who is on tax credits now, who is not part of the planned timeline, into UC and thus experiencing immediate cuts? The reason it is uncertain is that at the moment, certain changes with tax credits must rightly be formally reported to HMRC. As my noble friend set out, that must be done when a lone parent becomes part of a couple or the couple breaks up, when there is another child or a child leaves school, and when hours of work or income change, or childcare costs change—for example, during the summer holidays. And, of course, tax credits rates are now and should continue to be properly adjusted to reflect those natural changes in circumstance. However, will such changes of circumstance, which would bring about a change in tax credits, now instead be a trigger on to UC, at which point families will find themselves caught by the UC cuts, or will they remain outside it? Or does this apply only when the tax credit claims have completely ended, so that no tax credits are in payment? For example, if a lone parent has repartnered and her partner’s income floats them off tax credits altogether and then, say, a year on, sadly, he moves out and she needs to make a fresh new claim, will that fresh claim be under tax credit rules or the more oppressive universal credit rules?
If the oppressive universal credit rules apply, will there none the less be a linking rule—as in the past with a well-established principle for disability benefits—so that within six months, or certainly a year, a new claim is regarded as a resumption of the old claim? In other words, the lone parent remains de facto on tax credits with the protection that that carries when, by the natural time migration, she moves over to UC. I apologise to your Lordships for being quite nerdish about this, but it is essential that the Minister clarify the position for us, which I am sure he will.
Finally, we supported UC over tax credits above all to incentivise people into work. My noble friend has spelt out the additional resource that the Minister was able to achieve to incentivise people into work, especially those more marginal to the labour market, by allowing them to keep more of what they earnt. We all thought that that was the right thing to do. Several years back, the Minister was absolutely right, while criticising tax credits because of the multiplicity of interlocking benefits, when he said that there was a high rate of benefit withdrawal—that is, the taper—which meant that some working people kept only pennies in the pound for every hour that they worked. Therefore, they did not.
However, although the universal credit regulations do not change the taper, in many cases they essentially halve the work allowance which can be earnt before the taper kicks in for many, and they withdraw it in its entirety for some. Therefore, cuts will affect people who come on to universal credit after April 2016. The cut in the standard work allowance for a lone parent working mother, from more than £8,000 to £4,764, means that she will lose half. Effectively, she will lose £2,628 a year by being on universal credit, which she would not if the work allowance had not been halved. Couple families with one partner with limited capacity to work because of disability will lose around £3,000. Single people will lose it altogether. Hence, this amendment.
I am concerned, as are my noble friend and others on our Benches, about the impact of these proposed cuts within universal credit, as we all are about work incentives. We need evidence. The Minister respects evidence. If it is not there it needs to be collected. If it is, I am sure the Minister would want us to address any problems that may arise. My fear is that universal credit, instead of encouraging people into work, will begin to disincentivise them. But I do not know, which is why, as my noble friend has argued, we need that report to determine how, where and with what severity those cuts will fall, and on whom. In particular, how will they affect the key significance of universal credit: to improve work incentives and, as we all wish, to make work pay?
Without improving work incentives, universal credit has lost its moral argument and becomes instead, I fear, a mere administrative tidying up of the current benefit system, with the added risk that we are already beginning to see of repeated cuts. There would be much upheaval for no gain for many claimants, and real, if potential, losses for many more. I hope that I am wrong but we need to know. Such a report would tell us and, if my noble friend chooses to put this to a vote, I hope this House will support her.
Before I start, I acknowledge my appreciation for what Peers are saying. This is not an attack on universal credit. They are some of its greatest fans and it is in that context that they speak. I absolutely get that and I appreciate it. It has reminded me that I owe regular updates about progress of universal credit and has jogged me to get going on that as soon as this Bill is over.
The amendment in the name of the noble Baroness, Lady Manzoor, seeks to repeal the work allowance regulations. I am going to sound like the noble Baroness, Lady Sherlock. This measure has been debated and voted on twice in the other place, and both times these regulations have been retained. Therefore, this House should think carefully about using a Bill such as this to introduce opposition to a financial measure that has seen that kind of support in another place.
On the amendment, let me remind noble Lords of the context of those changes. The previous welfare system was not working. Spending went up from £6 billion in 1998 to £28 billion in 2010, when we reached the stage where nine in 10 families with children were eligible for tax credits. Some families could earn £60,000 a year and still receive benefits. Yet, at the same time, the number of people in in-work poverty increased by about 20%. It also did not do enough to support people to get into work, stay in work, and progress in work. People were left with unfulfilled potential and did not have an incentive to progress. Even if we forget the money, it undermined opportunity and aspiration due to the distortions and complexities of the system.
The Government have stated their intention to move from a low-wage, high-tax, high-welfare society to a high-wage, low-tax, low-welfare economy and have set out a package of measures. Let me remind noble Lords that the national living wage is set to reach over £9 an hour by 2020 and the personal tax allowance is set to rise to £11,000 in 2016-17, taking 570,000 more people out of income tax. I remember some debates about increasing support for childcare, and we have moved it up to a rate of 85% of eligible costs. We have doubled the early years’ provision, which is free for the working parents of three to four year-olds. When one looks at the whole of childcare, we now spend £5 billion in total across all the schemes, including UC, tax credits and the early years’ provisions, which is more than any previous Administration. Since 2010, there has been an increase of £1 billion.
To respond to the noble Baroness, Lady Manzoor, the measure is different from the tax credit cuts. Universal credit provides an incentive to making work pay and helps to move people off a life on benefits. They get personalised support through a dedicated work coach which helps them through the barriers. It is a different structure. It is not the same thing as the reduction in tax credits. Clearly, we have two elements; namely, the work allowance and the taper rate. We have already got evidence that it works and gets people into work much more effectively than jobseeker’s allowance. Apart from the savings we will achieve on taxpayers’ money, it will generate—partly by focusing the money more efficiently on the people who need it most—gross economic benefits of £7 billion every year once it is fully in.
My Lords, I thank the Minister for his response, which was very considered. I also thank my noble friends Lord Kirkwood of Kirkhope and Lord Oates for supporting me on this amendment. I understand clearly the argument that the Front Bench has put forward and I get the argument because, like the Minister and the noble Baroness, Lady Sherlock, I am very interested in evidence-based decision-making. As a relative newcomer to this House, I sometimes think that we put the cart before the horse, as we saw earlier on when the noble Lord, Lord Lansley, spoke in relation to another amendment—let us do something and then see what the effects are afterwards. But we are talking about real people with real lives, not just figures to be moved around in the budget. These cuts will have an impact on those people’s lives.
I said earlier at Second Reading, a long time ago it seems, that we on these Benches are looking at the Welfare Reform and Work Bill through the prism of work; that is what is really important to us. It is about getting more and more people off benefits and into long-term, sustainable, well-paid work—that is the purpose of this. I do not feel that, as it currently stands, this will be achieved. I have articulated not my figures, but figures from respected bodies, which have indicated what the impact of this cut to universal credit work allowance will be.
I say, again, to all noble Lords on all sides of the House, this amendment is different. It is not like the amendment on tax credits, where there was an issue about constitutional matters—though I took wide advice before I put down my fatal amendment and noble Lords will know that I did not speak in the debate that the noble Lord, Lord Strathclyde had; I have immense respect for him—this is something that will affect people’s lives. As I said, 2.6 million individuals are going to be affected. We cannot have this inconsistency in our approach. I passionately believe in consistency and I passionately believe in equality and fairness and this will not allow that to happen. We will see two sets of people who are in very similar or indeed identical circumstances being paid different rates of benefit. That cannot be right. I really do not want to be seen as a rebel in this House, as somebody has called me; that is certainly not my intention. But, for me, this is the principle of the matter and it is on that basis that I beg leave to test the opinion of the House.
My Lords, I thank the Minister for his commitment to evaluation, but I regret that it is not enough. I therefore wish to test the opinion of the House.
Report (2nd Day)
Relevant documents: 13th and 19th Reports from the Delegated Powers Committee
Clause 11: Changes to child tax credit
35: Clause 11, page 13, line 12, at end insert “, or
(c) an exception applies under section 10(4A) of the Welfare Reform Act 2012, as inserted by section 12 of the Welfare Reform and Work Act 2016”
Two single-parent families each with two children will potentially receive benefit for all four children. Should the parents make a commitment to form one family or marry, they will be eligible for benefits for only two of the children. The policy driving this Bill is intended to change behaviour. I fear that, perversely, the result of these provisions at present is to discourage the formation of committed relationships and families which are good for children. The amendment I propose gives substance to the words we speak about wanting what is good for children.
These amendments seek to build on the two welcome exemptions already in the Bill. They do not challenge the Government’s policy, which intends parents to take responsible decisions. They recognise that unforeseen tragic or life-changing circumstances arise which cannot be predicted or planned. They further encourage, not only by word but by policy and action, the sort of societies and communities we surely want to be, where stable relationships and families are encouraged, where generous parenting by kinship carers and foster and adoptive parents is valued, where disabled children are not a source of regret, where domestic abuse and violence is never tolerated and where the wounds of untimely death are not deepened by financial anxiety. I beg to move.
The noble Baroness, Lady Howarth, asked about the family test. I can give the assurance that we are committed to improving family stability, with government spending for family, parenting and relationship support standing currently at £6.5 million.
I am not able to give as much pleasure or satisfaction to Peers on other issues. To exempt bereaved parents and those fleeing domestic violence would raise a number of practical questions. For how long would the exemption be in place? Would it be permanent or just for a period of time? If it is the former, it places claimants in a very favourable position to other claimants even when they have managed to get their lives back on track. If it is temporary, there will be a temporary increase in benefit for existing claimants which will fall away again. This raises, again, questions on how long it should apply. Such exemptions would treat parents in these situations more favourably than other lone parents, which again would introduce unfairness in the system. We are modernising bereavement benefits, and those with dependent children will receive nearly £10,000 over the course of a year.
In response to the question from the right reverend Prelate the Bishop of Portsmouth, one of the things about universal credit is that it responds quickly to changes.
Amendment 35 withdrawn.
Amendments 36 to 38 not moved.
Amendment 39 had been withdrawn from the Marshalled List.
Amendment 40 not moved.
Clause 13: Employment and support allowance: work-related activity component
41: Clause 13, leave out Clause 13
We debated the impact of these cuts that the Government are proposing in depth and at great length in Committee for more than two hours. In addition, with the noble Baronesses, Lady Meacher and Lady Grey-Thompson, I carried out a review of the potential impact of the cuts, which was made widely available to noble Lords at the time of the Committee. We were supported in our review by a number of disability charities: Leonard Cheshire Disability, Mind, the Multiple Sclerosis Society, the National Autistic Society, RNIB, the Royal Mencap Society and Scope. As a vice-president of RNIB, I declare my interest here, but, as someone who did not personally write a word of the review, I can perhaps say what an excellent report it was and commend it to noble Lords for their attention.
Of course, I extend huge thanks to the charities concerned, led by Rob Holland of Mencap, who managed to complete the review in six weeks flat from start to finish—an astonishing feat. Some 30 organisations responded to our call for evidence, as well as 200 disabled people who gave us often very personal and moving accounts of their lives and aspirations and the hardships that they faced. I am also very grateful to the Minister for finding time to discuss the review with us before Committee at very short notice.
We have also had the benefit of briefings for this debate from the Equality and Human Rights Commission and the Disability Benefits Consortium. The DBC’s briefing actually contains a good summary of our review, so noble Lords have not run short of information to support this debate. In these circumstances, I do not propose to detain the House too long by going through the arguments in detail, but will simply do my best to summarise them as briefly as I can. I hope it will not be necessary to press these amendments to a vote, but if it is, I propose to treat them as consequential in the interest of saving the House’s time, as they relate to the same principle. I hope that the Minister would be agreeable to that approach.
Essentially I want to make five points. The first relates to the hardship that these changes would cause to substantial numbers of disabled people. A drop of £1,500 a year in their benefit income from £5,300 to £3,800 would be catastrophic for many disabled people. It would exacerbate poverty among the disabled; a third of working-age disabled adults live in poverty already, compared with only a fifth of those who are not disabled. The Government’s proposals would push many further towards, or actually into, poverty. The EHRC expressed concern that the proposals would cause unnecessary hardship and anxiety to people who have been independently assessed as unfit for work and that the measures were likely to have a disproportionately adverse impact on disabled people.
ESA is the main benefit for people who are unable to work because of illness or disability. In November 2014, nearly half of the 490,000 ESA claimants placed in the WRAG were suffering from mental and behavioural conditions; a further 529,000 ESA claimants were in the assessment phase. The number of ESA claimants in the WRAG is expected to increase to 537,000 by 2019-20. Considerable numbers of disabled people will be adversely affected by these changes if they go through.
For all these reasons, the cut to ESA and the limited capability for work component of universal credit are the aspects of the Bill which are most feared by disabled people and the organisations which represent them. A 38 Degrees petition against the cuts was started about a week ago and at the last count had already attracted nearly 100,000 signatures. Some 36 disability organisations have written an open letter to Iain Duncan Smith calling for the cut to be halted.
The mitigation set out in the Government’s impact assessment is that someone moving into work could, by working around four or five hours a week at the national living wage, recoup the notional loss of the work-related activity component of limited capability for work element or universal credit. However, as the EHRC points out, this is not an option for those unable to work because of disability. As Parkinson’s UK says,
“This is not a realistic possibility for anyone with a progressive condition who has already been acknowledged as too unwell to work”.
Secondly, the Government say that the ESA WRAG premium acts as a disincentive for people to look for work. Our review found no evidence to support this assertion. The 2005 study on which the Government rely deals only with general unemployment, not unemployment among disabled people, which is very different, as evidenced by the so-called disability employment gap and its persistence. Only half of disabled people are currently employed, compared with nearly 80% of non-disabled adults. This has proved intractable over many years to the point where it is almost a structural feature of the labour force. When challenged on the OECD study, officials managed to come up with an article in the Journal of Epidemiology and Community Health from 2010, which said that,
“there was some evidence indicating that benefit level was negatively associated with employment”.
We had some discussion of this with the Minister in Committee but I think even he would agree that the only conclusion to be drawn is that the evidence is rather weak. The authors comment:
“Policy and researchers need to address the lack of a robust empirical basis for assessing the employment impact of”,
recent welfare reforms.
Thirdly, the claim that disabled people are more likely to get a job if their benefit is cut just does not stand up. In fact, our review found that the precise opposite is the case. The barrier to employment for disabled people is not any financial disincentive created by the ESA premium. What stops disabled people getting jobs are things such as employer attitudes, their health condition, illness or impairment, difficulty with transport, and lack of qualifications, experience, confidence and job opportunities.
Fourthly, the Government aim to halve the disability employment gap, which is very welcome, but our review found that the proposed cut would hinder people’s ability to look for work. They would struggle to pay for well-being activities that help recovery and enable them to feel more confident about considering paid work. The thought of such a drastic reduction in income makes people more worried and stressed—would your Lordships not feel the same?—and this impacts on their mental health and has an impact on work-related activity, such as travelling to appointments, volunteering or obtaining smart clothes for interviews. One thing that particularly struck me was people’s ability to maintain internet and phone connections, which are so important for identifying job opportunities and submitting applications. It would also be harder to attend training courses and work-focused interviews if people were already struggling to meet their basic needs.
Fifthly, it was clear from those who gave evidence to our review that they encountered a wide variety of barriers to work that could not simply be removed by providing generic support. The overwhelming message was that personalised support tailored to the individual’s particular needs is the key.
Our review contained 11 recommendations, chief of which were to reverse the cut of the ESA WRAG component and the equivalent payment under universal credit, and to conduct a thorough impact assessment of the proposed changes to ESA WRAG, plus a raft of other measures to promote the employment of disabled people. This cut is estimated to save £640 million a year by 2020-21 but, as we have seen, this is at the cost of considerable further hardship for disabled people who are already poor and, by definition, unable to work. Furthermore, no assessment has been made of the additional costs to the NHS and social care services as a result of these changes, as well as other DWP benefits. Clauses 13 and 14 are all about making savings for the Treasury and have nothing to do with the interests of disabled people. They should be resisted. I beg to move.
Beyond that, there is also the question of whether, under those circumstances, we should leave the position as it is with regard to the relationship between out-of-work benefit income and in-work income. The findings of the 2005 study looking at employment generally are, on the face of it, pretty straightforward to understand and evidentially attested: the bigger the gap between income in work and income through benefit, the greater the likelihood of people seeking and finding work. It is, effectively, a kind of economic law of gravity. That being the case, we are dealing here with people who have a limited capability for work. We should not elide the assessment that they are not able to work—if they were not able to work at all they should be in the ESA group and not the WRAG. We all agree that there should be a robust form of assessment, and there is a debate to be had about that, but abolishing the WRAG does not preclude, and in fact might advantage, the process of ensuring that the assessment of the criteria for people being in the ESA group is properly pursued.
So where does that leave us? We should be assisting people into work and the Government need to improve on that. At the same time, we need to make sure that both the support and the incentive structure are fully aligned and not working against each other. That requires change, and change is what undoubtedly Clauses 13 and 14 will bring. It is devoutly to be wished for that we achieve this because the fundamental point, to me, is that we should be looking for people who have a capability for work, albeit limited, to actually be in work. It makes an enormous difference.
It is precisely because so many of those people in the WRAG have mental and behavioural difficulties and problems they have to overcome that the sooner they can be in work, the greater the support for them to be in work or, if they fall out of work, to return to work as quickly as possible—again we discussed this on Monday—through the rollout and access to the IAPT, the greater the benefit that we will give them. The biggest benefit we can give them is to enable them to be in work. Contrary to what I recall the noble Baroness, Lady Lister, saying, work is not a cul-de-sac; work is a route. It is a valid route out of poverty, a route to dignity and a route for people to be no longer dependent on benefits—and they do not want to be dependent on benefits. Frankly, we have to use the opportunity in Clauses 13 and 14 to change the current situation and make that happen. Taking those clauses out would, I am afraid, simply leave us in the unsatisfactory position that we have been in for too long.
For disabled parents who are in work, the position is even more serious. There are 43,000 households with at least one disabled parent who is receiving the disabled worker’s element of working tax credit. Under universal credit, disabled parents do not get any advantage from the work allowance for disabled people because they get a work allowance as parents, and, unlike in the current system, you can have only one or the other. This means that, if this measure goes through, a disabled parent who is working and qualifies as having limited capability for work will, under universal credit—the flagship element of government policy—have no extra support in work compared with a non-disabled parent in otherwise the same circumstances. What will this mean for a disabled parent? Single disabled parents working 16 hours or more, living in rented accommodation and making a new claim for universal credit in 2017, will receive about £70 a week, or £3,500 a year, less than they would receive now on tax credits, despite the rise in the minimum wage.
Disabled single parents with a mortgage who make a new claim are likely to have an even lower disposable income under universal credit compared with under tax credits, amounting to about £100 a week, or £5,000 a year, less. Couples making a new claim where the disabled parent is working more than 16 hours are also likely to be entitled to less under universal credit in 2017 than they are under tax credits now, even though some households in similar circumstances, but where no one is disabled, may be better off under universal credit. Couples with two children and both parents working more than 16 hours a week, but with one parent needing additional help for the first time because they have become disabled, could receive about £3,000 a year less on universal credit in 2017 than under the current system.
I have had numerous examples from the public, charities and from 38 Degrees about how this measure will affect people. I checked two minutes ago and so far 98,477 people have signed the 38 Degrees petition. Therefore, some 98,500 people do not believe that this cut is fair.
There has been a lot of discussion on the evidence around cutting ESA and encouraging people into work. The Government’s evidence to support the proposed cut is now being drawn from an OECD report entitled, Sickness, Disability and Work: Breaking the Barriers. A Synthesis of Findings Across OECD Countries. However, the previous report on getting disabled people into work, which has often been cited in this Chamber, did not look specifically at the situation of sick and disabled people and the unique circumstances around that. My noble friend Lord Low covered many of the issues. However, at this stage, it is very important to note that the OECD report that was used so many times to justify this cut looked at 13 countries but the advice of a number of expert organisations in the UK has been refuted. The advice of the Equality and Human Rights Commission, which looked at specific proposals in this context, has been turned down, and inconvenient findings and caveats in the OECD report appear to have been disregarded. We have to question how valid and reliable this report is in the context of what we are trying to do in the UK.
For hundreds of thousands of disabled people, keeping Clause 14 in the Bill will be devastating. It means that far from there being an incentive for disabled people to get into work, find work and contribute to society in the future, those with deteriorating conditions will be less likely to stay in work.
I ask the Minister just one question: is it really the intention of the Bill to make it so hard for hundreds of thousands of disabled people to get into work? Frankly, I cannot see where the incentive is: far from there being an incentive, I see a huge disincentive.
The positive benefits of work—good work—on individuals and families is not in question but the fundamental issue is that people in the WRAG have been assessed as not fit for work. Yes, they should be expected to move closer to the job market where they can, but this requires that they be supported in a way which recognises the individual barriers they face and the help they need. This was another clear message from the report of the noble Lord, Lord Low. I thought that even the Government had accepted that current support programmes are inadequate if progress on halving the disability employment gap is to be achieved.
It seems to us that there is something inherently cruel in seeking to push disabled people into work by reducing their financial support without addressing the fundamental reasons why they are out of work in the first place, and why accessing the labour market can be so challenging for them. The reason for extra support being given in the first place is that we recognise that they are likely to be unemployed for a longer period than those receiving JSA. We should also recognise that for many disabled people, the current strains of daily living involve extra costs—they are not all in receipt of DLA or PIP—and that the fear of losing the WRAC is creating stress and anxiety among many. The case has been overwhelmingly well made today and we will support these amendments in the Lobby, if that is where the noble Lord, Lord Low, takes us.
I want to deal with the points that have been made as quickly as I can—I cannot deal with them all—under four headings. The first two concern the intervention of the noble Lord, Lord Lansley, which was a thoughtful and serious contribution and deserves to be taken seriously. I agree that there are lots of things that should be done to help disabled people into work; the only point is that cutting benefits is not one of them.
The Minister talked about the impact of benefit support on people in the WRAG. Obviously, it varies. People in the WRAG are not a homogeneous group; they are on a journey towards work. People are put in the WRAG because they are assessed as possibly being able to work at some point. Obviously, some will, but many remain on the journey. We should not hobble them in making that journey by cutting their benefit, with all the deleterious consequences for seeking work that I mentioned in moving the amendment.
My noble friend Lord Berkeley, who is sitting behind me, extended the point about the heterogeneous nature of those in the WRAG. The noble Lord pointed out that some, particularly those with progressive conditions, will become less able to make the journey into work. We need to be very mindful of the consequences of cutting benefit for them.
I can make my second point more briefly. It concerns the OECD report of 2005, to which the noble Lord, Lord Lansley, referred and on which the Minister relied. I have to repeat the point I made in moving the amendment: it is not to the point at all. It is not about disability. It does not deal with disability employment or unemployment; it is concerned with the general employment and unemployment of non-disabled people, so it is not to the case.
The noble Baroness, Lady Meacher, referred to the fact that it was counterproductive even in the Government’s terms to cut the ESA premium. I remind noble Lords of the point that emerged from our review: the finding that Clauses 13 and 14, far from helping, will actually undermine the Government’s ability to get disabled people into work and halve the disability employment gap. No one could be more excited than I am about the possibility of getting people into employment and halving the employment gap, but it is very disappointing to see the Government going in precisely the opposite direction to what is needed to fulfil their objective.
Finally, it defies logic and common sense, surely, to say that you will help disabled people to get into work by cutting the money that they have to engage in work-related activities. The right reverend Prelate the Bishop of St Albans got it in one when he said that the problem is one not of incentivising people, but of mobilising the job opportunities and giving disabled people the support they need to get into them.
With those points, I am left feeling that the case for the amendment is even stronger than when I moved it, and that it has not really been answered by the Minister, or anyone who has spoken against it. That being the case, I beg to test the opinion of the House.
27 January 2016
Division on Amendment 41
Amendment 41 agreed.View Details
Amendments 42 and 43 not moved.
Clause 14: Universal credit: limited capability for work element
44: Clause 14, leave out Clause 14
Amendment 44 agreed.
Clause 15: Universal credit: work-related requirements
44A: Clause 15, page 14, line 30, at end insert—
“( ) in section 14 (claimant commitment) after subsection (5) insert—“(6) In preparing a claimant commitment for a claimant, the Secretary of State shall have regard (so far as is practicable) to its impact on the wellbeing of any child who may be affected by it.””
Amendment 44A withdrawn.
45: After Clause 15, insert the following new Clause—
“Universal Credit (Work Allowance)
The Universal Credit (Work Allowance) Amendment Regulations 2015 are repealed.”
These changes are immensely troubling for a number of reasons. First, these cuts, as with tax credits, will hit low-income working people. They undermine the principal reason for creating universal credit—to ensure that work always pays. This has been a principle that the Chancellor has never really supported. During the coalition, Nick Clegg, among others, worked very hard to block attempts by the Chancellor to change the withdrawal rate in universal credit, yet the changes to which this amendment relates show that the Chancellor has now got his way. That should be deeply concerning for everyone who supports the aims of universal credit.
The second reason is that the changes will mean that, for the first time, universal credit will bring about an additional cut in people’s benefits. It will not be, as was originally envisaged, a mechanism to make low-income working people better off. According to the IFS, these changes will mean that, in total, 2.6 million working families will lose an average of £1,600 a year, compared with only 1.9 million gaining an average of £1,400. That is a long way from the proposals set out in the original plans for universal credit.
The third reason is the way these cuts will impact on families. As I said, the universal credit cuts will affect the flow of new claimants, not the stock of existing claimants or those migrated on to universal credit. However, the cuts will affect those who, having been migrated on to universal credit, see a change in their circumstances, and this is where, from our perspective, one of the nastiest points of the policy arises.
As I said in Committee, a change of circumstance can mean a change in the household make-up, including a new partner. That means that a single parent who finds a new partner and decides to become a two-parent family will lose a notional entitlement of around £1,000 in their benefit. We hear a lot from members of this Government about the benefits of two-parent families, but this change to universal credit amounts to a disincentive to that. What is more, regardless of the merits of two-parent families, the change acts as a disincentive to someone finding a new partner. Essentially, it amounts to what can only be described as a penalty on love—a “love tax”. How can we countenance a benefits system that provides such perverse incentives? Surely we cannot.
Turning from the impact of the cuts to the nature of the amendment, I am aware that some will say that it bears a relation to the vote that I instigated in this House to reject the mirroring statutory instrument on tax credits. While I and my noble friends on these Benches still believe that that was the right thing to do, as I said at the time, I did not discount the views of those who did not want to use the power of this House to decline to approve a statutory instrument on that occasion.
However, this amendment is not a Motion to decline or approve; it is an amendment to a Bill. It is perfectly right and reasonable for this House to consider an amendment to change or repeal regulations in the same way that we would consider any other amendment. Should this House agree to the amendment, as I hope it will, it would not kill off the regulations but would simply ask the Commons to consider its position, as is the role of this House. We would be doing our job in scrutinising. To be clear, this amendment is not a constitutional issue. For me and my colleagues on these Benches, it is purely one of principle—on the impact of the cuts to universal credit.
It is possible that we may also hear from the Minister about the cost of such a change. It is true that the amendment would have a high price tag, and it may be that the Commons would consider it financially privileged. However, if the Chancellor wisely accepted the principle of the arguments made in this House about tax credits, surely the principle of the argument against the same cuts but for the longer term must also stand—there would be no logic otherwise. If making work pay is a point of principle then the savings from this cut are surely not the issue. Universal credit was intended to enable those who wanted to get off benefits and into work to do so without losing out.
In a week when it has been revealed that large corporations have been allowed certain freedoms, it runs rather contrary that the Government want to interfere with the private lives and finances of hard-working people on low incomes.
Finally, I want to address the Labour Party and its Amendment 46A. I am deeply disappointed in that amendment. I have the utmost respect for the Labour Party’s Front Bench, but Amendment 46A is barely a shrivelled fig leaf. It asks for a review of the impact of these cuts. We know the impact: the Budget scores the savings, the IFS confirms the impact, and the NGOs and others have identified how it will affect people. Either you agree with this cut going ahead or you do not. Seeking a review to determine what we already know adds nothing and simply wastes valuable resources.
As I have said, reasonable objections to voting down a statutory instrument, which may have been the reason for Labour’s reticence to support our amendment previously, do not apply today given that this is simply an amendment to the Bill. I am therefore at a loss to understand why there would be objections to our amendment—unless the Labour Party simply supports the Government’s cut to universal credit. I ask everyone in the House to support this amendment in the Lobbies tonight and challenge the Government’s clear error of judgment over universal credit. The Chancellor got it right when he overturned the previous decision, and we can do the same again today. Not doing so must surely be seen as a derogation of our duty to all those who will be affected by these cuts. I beg to move.
We will be looking across the House for support— my noble friend adverted to this—but my spies in the Labour Party tell me that it might be setting its face against this amendment should my noble friend wish to test the opinion of the House. I find that surprising, if it is true, because I made a point of following the excellent speech made by Emily Thornberry on 19 November 2015 in the House of Commons First Delegated Legislation Committee. Ms Thornberry is obviously a rising star because she is now shadow Secretary of State for Defence. In her excellent speech she confessed that she cannot put IKEA BILLY bookcases together, which might be slightly worrying in someone who might be running the defences of the country. However, I have sympathy with her because I could not either.
Ms Thornberry made an important speech. She was trying to resist exactly the same regulations that are the subject of my noble friend’s amendment. She started by saying that the Opposition do not support the regulations. These are the same regulations and that was on 19 November. She made a truly excellent speech—I could not have made a better one myself—in which she rehearsed the history and talked about the 2009 CSJ version of dynamic benefits, which was the forerunner to universal credit. She described it as the “Old Testament” of universal credit. I am not sure about that; I will need to ask my minister at the weekend. She went on to look at the 2010 version of the White Paper. She supported that and a more generous disregard because she thought it would make work pay. She said that these regulations would turn the “disregard making work pay” argument on its head. She complained effectively, as we have here, as I have myself, about the lack of adequate impact assessment. She referred to the consequences, with special reference to single parents, and we heard something about that in the earlier stages of the Bill. She cited extensively and effectively from a range of expert organisations in support of her case that these regulations were not sensible. She ended with a sentence which says it all:
“These cuts will not be passed unchallenged. The Opposition will be voting against them today”.—[Official Report, Commons, First Delegated Legislation Committee, 19/11/15; col. 6.]
My question to the Labour Front Bench is this: if that was its position on 19 November, what is its position today? Having given consideration to these two amendments together, I believe that Amendment 45 is more strategically significant and important than Amendment 46A.
I speak only for myself but if the Labour Party is not going to support my noble friend if she presses Amendment 45, that would be deeply disappointing. It is not for me to tell the Labour Party how to vote but its Front Bench can be asked about what has changed since 19 November and whether it changes the approach that the Labour group will be taking on work allowances in UC in future. That, for me, is the significant question contained in these amendments.
Constructive opposition is not the exclusive prerogative of any opposition party on its own. Some procedural give and take would add value to collective opposition and would make the constructive opposition that we try to deploy in this House more effective. It is on that basis that, of the two amendments Amendment 45 is by far the most significant. I will be delighted if my noble friend presses it to a Division and I will follow her happily into the Lobbies.
I remind noble Lords that if Amendment 45 were to go through it would mean, once universal credit is fully rolled out, significant costs of the order of £3 billion a year having to be found from elsewhere. The debate we had in the House around this was that tax credits were coming in abruptly in April when the countervailing factors had not come in—the living wage, tax allowances and childcare. A large number of noble Lords talked about that mismatch. The Chancellor’s response was to delay: he took away the tax credits cuts and smoothed the transition in two ways. First, he moved it to the timing of universal credit, where we had these large changes happening and large moves across in 2018, 2019 and 2020, when some of these changes come through. Of course, there is also transitional relief for people moving straight across. I will come to some of the issues raised by the noble Baroness, Lady Hollis, on that.
There will not be tax losers. I say to the noble Lord, Lord Kirkwood, who I know is the greatest fan and has a spy network that should be dismantled, that his figures showing that 96,000 people would be worse off in April 2016 are not accurate in the context of these universal credit changes. The vast majority of the current universal credit caseload will not lose. It affects only people in work, most of whom are single or childless couples with no limited capability for work.
We will have additional support for those directly impacted. They have fewer barriers limiting their ability to respond positively to increase their hours and earnings. We will provide additional work coach support and increase the amount available through flexible support to help people progress in work and increase their earnings.
Concerns about natural migration have been raised in the media and, indeed, inside the House, in particular just now by the noble Baroness, Lady Hollis. Significant changes of circumstance have always caused changes in entitlements in the benefit system. The impact of moving to universal credit needs to be assessed on a case-by-case basis and depends on a large number of factors. The changes that would cause a new claim are the same as in the current system. As the noble Baroness, Lady Hollis, asked a large number of specific questions, I will write to her spelling out the answers. However, universal credit continues to have its core architecture and incentives: the single taper rate remains set at 65% and claimants no longer need to move between different systems just because their hours and earnings change. It continues to provide real support.
Amendment 46A would introduce a requirement for the Government to produce a report assessing the impact of these regulations on work incentives. As I said earlier, the work allowances are just one element of a system designed to produce incentives to move people into work and then progress in work. It is one element of a wider package of measures introduced in the summer Budget designed to move us from the low-pay, high-welfare, high-tax economy to the opposite.
When someone moves to universal credit as a result of a change of circumstances, they will not experience the impact of the work allowances in isolation. They will see all the impacts of the universal credit design, which is already helping people move into work faster. They will have better support from their work coach, clear incentives to increase their hours and more generous support for childcare. It is worth reiterating the point that those claimants who are moved by the DWP from tax credits to universal credit will be transitionally protected.
While it may be technically possible to evaluate the impacts on different claimant groups in the way Amendment 46A sets out, it is not practically possible. It is extremely difficult to single out the effect of any one measure when many other things have been changed at the same time. To do so would be resource and time intensive—and, bluntly, ludicrously expensive—but the department is committed to evaluating the impacts of introducing universal credit as a whole and I am happy to repeat that commitment. I think many noble Lords know how intensely I require the department to get this kind of evidence.
We published plans for evaluating universal credit in 2012. We have already started publishing evaluation reports. Indeed, they show very positive impacts. In 2015, we published the latest results from our analysis of UC impact on employment and earnings, which showed that universal credit claimants are eight percentage points more likely to have been employed in the first nine months than their JSA equivalents. If noble Lords do not like percentage points, that is the equivalent of it being 13% more likely: for every 100 JSA claimants who found work in that period, 113 UC claimants did the same. This is very dramatic for the early introduction of a new benefit where one does not quite know what one is doing. We expect it to go on. We will be able to monitor in the same way in the years to come.
Are we seeing the disincentive that the noble Baroness, Lady Hollis, is so concerned about? I am so concerned. We will see it. If you see some deterioration there and understand it, it is valuable information. As noble Lords know, I introduced a measure to allow us to do some really sophisticated econometric assessments: what is the dynamic effect, for instance, of tapers, of work allowances, of second work allowances and all the things we are interested in? We can test all that for the first time. That is the context in which this amendment is coming in. We will publish further research and update our formal evaluation on labour market outcomes later this year, and we will go on doing that in future years. That will cover a widening group of claimant types.
As your Lordships know, we need to learn from all the evidence that we get to find out the best operational delivery and the best future policy development. This is what we have dubbed the “test and learn” approach, which I am proud to say has been adopted almost as government policy. That is how we are going to do things.
I ask noble Lords to accept that this is the right way to do these assessments. One will see from that all the information that it is possible to find. One does not need something that, frankly, I cannot ask people to do, because it is just not practical. It is not realistic to do what has been asked for in Amendment 46A. It is for that reason, and not because I am against information, that I ask the noble Baronesses not to press that amendment.
27 January 2016
Division on Amendment 45
Amendment 45 disagreed.View Details
Amendment 46 had been retabled as Amendment 82A.
46A: After Clause 15, insert the following new Clause—
“Universal Credit (Work Allowance) (No. 2)
(1) Within one year of the coming into effect of the Universal Credit (Work Allowance) Amendment Regulations 2015, the Secretary of State shall publish, and lay before each House of Parliament, a report assessing the impact of those Regulations on work incentives.
(2) The report prepared under subsection (1) must contain data analysis of—
(a) income and hours worked, by household type, and(b) the impact of the regulations on the levels of awards of in-work support payable to claimants who have moved from tax credits to universal credit as a result of a change of circumstances, or claimants who will move from tax credits to universal credit as a result of a change of circumstances before 2018.”
27 January 2016
Division on Amendment 46A
Amendment 46A disagreed.View Details