Motion to Consider
My Lords, the regulations were laid before the House on 12 January. They provide the details of a new benefit, bereavement support payment, which was first introduced as part of the Pensions Act 2014. Bereavement support payment will replace bereavement allowance, widowed parent’s allowance and the bereavement payment for those who lose a spouse or civil partner on or after 6 April 2017. These regulations set out the amounts to be paid, the duration of payments, payments for those who are prisoners, and the territories in which a person must reside in order to receive the new benefit. I am satisfied that this instrument is compatible with the European Convention on Human Rights.
Losing a spouse or civil partner is a tragic occurrence, and bereavement benefits provide vital financial support during this deeply distressing time in a person’s life. Previous reforms have tended to be limited and in response to specific pressures. No one had really considered how this support fits in with wider changes to the benefit system and, indeed, to the social landscape as a whole. Consequently, the current benefits are out of date, difficult to administer and hard to understand. Reform is essential to simplify and modernise the current system. The history of bereavement benefits is rooted in the Widows, Orphans and Old Age Contributory Pensions Act 1925, at a time when most women were wholly dependent on their husband’s income. If a woman was widowed, her sole source of income would disappear completely, so it was considered necessary at that time to provide a replacement for that income in order for her to survive. Thankfully, that situation is no longer the case, women as well as men are active participants in today’s workforce, and many households are now made up of, and benefit from, dual careers and dual incomes. For those where the loss of a spouse equates to the loss of the sole breadwinner, income-related benefits are available to make sure that nobody is left without sufficient money to live on.
Compared to the current bereavement benefits, bereavement support payment is designed to be significantly simpler with a uniform payment structure and a single contribution condition. The aim is to provide targeted financial support at the time when it is needed most without affecting access to additional forms of support available through other parts of the welfare system. The reform of bereavement benefits has been welcomed by both the Social Security Advisory Committee and the Work and Pensions Select Committee, the latter of which heralded many of the changes as long overdue. In addition to scrutiny by those two bodies, bereavement support payment was also the subject of a public consultation exercise launched in 2011. Responses to this consultation played a major part in the design of bereavement support payment, including the decision to structure the payments as a series of instalments as opposed to a single lump sum and also the decision that bereavement support payment will not be subject to income tax.
The evidence from our public consultation exercise found that the financial impact of spousal bereavement is particularly acute in the early months. Bereavement support payment will therefore provide a significant cash boost for people at this time where they need it the most, with a lump sum followed by 18 monthly instalments. In recognition that those with children may need a greater level of support, a higher rate will be paid to those who are pregnant or who have dependent children at the time they are bereaved. The duration of payments is not intended to equate to the period of an individual’s grief, nor is it intended to provide ongoing income replacement; rather, the fundamental design principle of the new benefit is that, as a short-term payment, it is designed to address the additional costs of bereavement rather than contribute towards everyday living costs. Because they are clearly distinct from income replacement benefits, we will disregard payments of bereavement support payment from universal credit and legacy benefits, as well as discounting them from the calculations which count towards the benefit cap. This will clearly benefit the least well-off as they will, for the first time, be able to receive payments of bereavement benefit in full, alongside any other entitlements. For example, an unemployed widow with one child who is entitled to bereavement support payment could receive £7,350 in the first year. In addition, they could receive the standard allowance and the child element of universal credit, which is more than £7,130 a year. On top of this, they may also be able to access other support such as help with childcare and housing costs.
Let me be clear that this reform is not about saving money but is aimed at providing targeted financial support at the time when it is needed most. In fact, we will be spending £45 million more over the first two years after implementation than if we had carried on with the current system. Analysis shows that, overall, over half of the new recipients will be better off after the reforms.
Looking at the welfare system as a whole, the best way to provide meaningful support to those who have been bereaved is through a shorter-term payment of bereavement benefit combined with a longer-term income replacement benefit such as universal credit. As I have already said, losing a spouse or civil partner is a tragic occurrence, the effects of which are likely to be felt for many years after the event and we need to keep in mind that the support we provide should be more than just help towards the initial costs. We also have a responsibility to help the bereaved to adjust to their changed situation.
For those who are not in work, or maybe gave up working to care for a terminally ill spouse, part of the process of adjustment is making plans to return to the workforce. It is well known that prolonged periods away from the labour market can have a negative effect on a person’s financial, emotional and psychological well-being. Growing up in a workless household is also known to have a detrimental impact on children—impacting everything from socialisation to educational attainment. This responsibility needs to be balanced with the need for the surviving parent to be able to spend time with their children to help them process their grief.
In keeping with the current bereavement benefits, bereavement support payment has no work-related requirement attached to it. Currently, claimants on legacy benefits who are bereaved will only be exempted from the work search requirements for a maximum of eight weeks. However, under universal credit, claimants who are bereaved will be exempted from work search requirements for six months, which is a generous improvement on the current system, and after this period has passed we will take a flexible approach to conditionality, allowing it to be tailored to the individual.
Bereavement support payment should not be seen as only the latest in a list of reforms of bereavement benefit. It is a new approach to helping those who have been bereaved. First and foremost it is about providing fast, direct financial help in the initial crucial months following the loss of a spouse. Secondly, it is about helping widows and widowers to rejoin the labour market, providing them with the right level of support to make this a reality. This is a new approach with the interests of the bereaved, the families and the children at heart. It is with this in mind that I commend the regulations to the House. I beg to move.
I thank the Minister for his succinct and helpful introduction. I realise that we have already had extensive debates during the passage of the pensions Bill and I do not wish to impede the progress that we are making with these regulations. Therefore I hope the Minister will not mind if I briefly raise a number of concerns, which I know are shared by my colleagues on the Bench of Bishops, in the hope that Her Majesty’s Government might keep these under review.
I have three concerns. The first is around the length of time for which bereavement support payments will be made, particularly to widowed parents with dependent children. At Second Reading of the pensions Bill, my right reverend friend the Bishop of Derby suggested that three years of additional financial support should be a minimum standard when helping bereaved families to adjust to life without a father or a mother, and I endorse his comments. If the Government are serious about this payment being about bereavement support, they must recognise that the effects of bereavement go way beyond 18 months. I realise that it is difficult to decide on what is the right length of time but I want to push the issue a little. Universal credit, with its system of conditionality, is unlikely to be appropriate for a young family still coming to terms with its grief.
My second concern is about the Government’s refusal to uprate basic support payments in line with inflation, which will see the value of the payments eroded after time, particularly given the likely rises in inflation over the coming years. Benefit support payments must be added to the list of benefits subject to annual review and be uprated in line with inflation. I hope that the Minister will encourage Her Majesty’s Government to commit to that in the forthcoming Budget.
Thirdly and finally, I have a concern about the failure to extend eligibility for bereavement support payments to cohabiting couples, particularly those with children. One might be surprised that I am making this point. As a Bishop, I of course support marriage and want to encourage everyone to consider it good for society and individuals. One would know the line that I would come out with. However, a situation that leaves one in five parents ineligible for bereavement support if their partner dies is inadequate. I recognise that determining a qualifying partnership outside marriage or civil partnership is complex but these challenges are not insurmountable, particularly when one thinks about the welfare of children, who are almost always those who take the hit and suffer most.
Benefit systems already accommodate the claims of cohabiting couples, and the Armed Forces Pension Scheme successfully uses a definition of “eligible partner” to determine who can receive a pension. I hope that Her Majesty’s Government will give serious thought to this situation and see what can be done to extend support, at least to cohabiting partners with dependent children. That is my key point. Failure to do so could leave an estimated 2,000 families a year facing the future, having lost a parent, without the financial assistance of bereavement support.
My Lords, I am glad to follow the right reverend Prelate’s caring remarks, and my intervention will be brief. I thank the Minister for his thoughtful outline of the impact of these complicated regulations about serious matters. I note that Article 19 of the order to follow—the Social Security Benefits Up-rating Order 2017—refers to bereavement benefits. Can the Minister give us an estimate of the numbers of those claiming such payments in the past year? On the basis of that insight, can he estimate the number of future claimants under the new regulations?
My Lords, I thank the Minister for his explanation of these draft regulations and all noble Lords who have spoken today.
As we have heard, these regulations enact the provisions of the Pensions Act 2014—which, as the right reverend Prelate pointed out, we debated at some length. They introduce a new single payment to replace bereavement payment, bereavement allowance and widowed parent’s allowance for those whose spouse or civil partner dies on or after 6 April 2017. The Government’s case is that this will modernise the current provision and increase simplicity for those who are bereaved and seeking support. I am grateful to the Minister for confirming that the Government’s main aim is not to save money. However, I am pleased to reassure him that they are, accidentally, about to save quite a bit of it. I confess that my antennae always start twitching whenever I hear Ministers promise that a social security reform is mainly just about making things simpler. The first question is always to look at who stands to gain as a result of the new simplicity—the claimant or the Treasury. On this occasion, after two years of an introductory period the answer is, I am sorry to say, the Treasury. The Explanatory Memorandum tells us that after two years of reform, steady-state savings are expected to be about £100 million a year. In other words, these reforms take £100 million a year from bereaved families and give it to the Exchequer.
The Explanatory Memorandum offers two other objectives for the reforms: for the system to be fair and to promote self-dependency. I suspect that if the Government had tested public opinion on the matter of fairness, being kind to widows might come high up the list. Has the Minister reflected again on the issue of promoting self-dependency? People who get married or civilly partnered and have children were not intending to be self-dependent. They formed a family which had been ruptured, presumably by the death of their spouse or partner. That was precisely the sort of situation for which the welfare state was designed to step in. We on these Benches registered our concerns about the impact of these reforms during the passage of the Bill. Indeed, concern was expressed across the House. I still remember the powerful speech given by the right reverend Prelate the Bishop of Derby when we discussed these matters; his interventions were very much taken to heart by many in the House. We sought to amend the Bill to mitigate some of the effects but, sadly, we were unsuccessful —so here we are.
On matters of detail, concern was expressed by the Social Security Advisory Committee and the Work and Pensions Select Committee about a number of areas, and I am pleased to see that the Government have responded to one criticism raised by both committees by extending the period that the bereavement support payment can be accessed from 12 to 19 months. Unfortunately, that is less generous than it sounds because the Government have simply redistributed the amount of money that they originally proposed over a longer period, so people get the same amount but for a longer time.
There are notional gainers, such as younger widows, although figures in the original impact assessment seemed to me to suggest that, perhaps unsurprisingly, and fortunately, there are very few of those, with the vast bulk of the current caseload in the over-55 bracket. Despite the time extension, the Childhood Bereavement Network, which I thank for the very comprehensive briefing that it sent to all interested noble Lords, suggests that 91% of parents will still be supported for a shorter time than under the current system and that the DWP’s own figures admit that 75% of claimants with children will get less money. Can the Minister confirm that those figures are correct and, if not, give the Committee the department’s own estimates instead?
Those with young children will be disproportionately affected, as the parents can currently claim for longer. The current widowed parent’s allowance is paid until the youngest child leaves full-time education. As the briefing from the Childhood Bereavement Network briefing pointed out, a six year-old child losing her father in 2016 would be supported until she leaves school. A six year-old losing her father in 2018 will be supported for just a year and a half. I suspect that her mother might be willing to deal with a bit of complexity for the sake of another decade of additional support to feed and clothe her daughter. The Childhood Bereavement Network says that those with younger children could be up to £31,000 worse off in total than they would have been without these reforms. Can the Minister confirm that this is correct?
The right reverend Prelate the Bishop of St Albans raised the question of cohabiting couples, and I am sure that the House was glad to hear concern for those cohabiting couples and their children, notwithstanding his support for the institution of marriage. In their consultation response, the Government said:
“The Government position on this issue is unchanged: there are still no plans to extend eligibility for bereavement benefits to those who are not married or in a civil partnership”.
No reason was offered as to why the Government had rejected this proposal. Given that the right reverend Prelate had given his blessing and feels that the institution of marriage will be safe should the Government venture into this territory, can the Minister take the opportunity to tell the Committee why the Government chose not to extend provision in this way?
Lastly, I would like to ask a couple of questions about universal credit—first, on the interaction of universal credit with bereavement support. I think that I heard the Minister say—and I apologise as I did not quite follow the argument, which is entirely my fault—that BSP will be disregarded in full when calculating entitlement to universal credit. Can he confirm that in his reply? I apologise for making him revisit the matter.
Secondly, paragraph 7.13 of the Explanatory Memorandum says:
“Payments will be subject to a disregard within the calculation of income-based benefits; Payments will also not be counted as benefit income when calculating the maximum amount of other benefits a person can be paid”.
I think that that means that BSP will not count towards the benefit cap, but could he just confirm that? I apologise if he did so and I missed it.
There is then the question raised by the right reverend Prelate about those who need to claim universal credit as well as BSP and will be subject to conditionality. I understand that those conditionality requirements, as the Minister said, will be suspended for six months following the death of a partner or child, but during the passage of the Bill we had a lot of discussion about this point—the position of parents with children who are dealing with the consequences, not just for themselves but for their children, of losing a partner or parent. The consequences were emotional for the children and for the parent having to deal with their own and the child’s emotions, but also practical in a range of ways. During the passage of the Bill, the noble Lord, Lord Freud, agreed to conduct a review of the position of parents whose children had suffered distress in bereavement, in response to points made in the Chamber by the noble Baroness, Lady Finlay. Parents whose children’s distress and bereavement disrupts their normal childcare responsibilities are, I understand, able to request a one-month suspension of work-related requirements. If I have read this correctly, you can request another one month every six months for up two years. So that would be potentially four one-month periods but only one every six months. I believe from my reading of the regulations that that was enacted in Regulation 8 of the Universal Credit and Miscellaneous Amendments (No. 2) Regulations 2014. Can the Minister confirm that that is the only specific provision available for parents in this circumstance? If it is, can he tell the Committee—or agree to write if not—how many claimants have used, or are expected to use, this facility?
On backdating, paragraph 7.17 of the Explanatory Memorandum states:
“Given the vulnerability of this claimant group there will be a period from the date of death in which the claimant can make a claim without losing any money. If a claim is received more than 3 months after the date of death payments can be backdated for three months before the date of claim. This time limit is extended to 12 months for the initial higher payment to help ensure that people do not miss out on this payment”.
I am glad that the Government are acknowledging that people are vulnerable after a death and that they may not always quickly manage to turn their attention to making a claim for bereavement support payment. However, given that the Government have accepted that, what is the rationale for limiting that flexibility only to the lump sum? Why not allow people the same flexibility in relation to the monthly payments?
I endorse the point made by the right reverend Prelate about whether or not it is the Government’s intention to update the value of this payment in line with other benefits. It would seem that it is not. I hope that we have misread that and that the Government can tell us now whether it is their intention or that we can expect a change of policy on that matter very soon.
I thank my noble friend and the right reverend Prelate for their contributions and I look forward to the Minister’s reply.
My Lords, I thank the noble Baroness, Lady Sherlock, the noble Lord, Lord Jones, and the right reverend Prelate the Bishop of St Albans for their contributions. I hope to deal with their concerns in the course of my speech.
On the first point raised by the right reverend Prelate about the length of time—this was also alluded to by the noble Baroness, Lady Sherlock—as noble Lords will remember, the original idea was that it should be for 12 months. This was extended as a result of the consultation, the comments from SSAC and the Select Committee to 18 months. One of the reasons for this is that it was considered that 12 months was not the optimum period, particularly in the light of its ending more or less on the anniversary of the death. Eighteen months fits in slightly better with that. The same could be said about three years because it also would fall on an anniversary. However, I do not use that to argue against a period that might be longer or shorter. We came to the view that 18 months rather than three years was about right and that thereafter, if necessary, income-related benefits would be more appropriate. The idea is to provide support at the time of bereavement and in the months afterwards, but there has to be a cut off at some point.
The noble Baroness accused us of bad faith when we extended the period from 12 to 18 months and said that the global amount would be a slightly smaller figure. If we extended to three years the same would apply—it would be a smaller figure—and it is better to get it in 18 monthly instalments than over a period of three years. Others may disagree, but judgments have to be made on this issue and we feel that 18 months is about right.
The right reverend Prelate also objected to the fact that there was no automatic top-up in line with inflation. The noble Baroness, Lady Sherlock, also wished to address the point. She will know that bereavement benefits of all sorts have been uprated in the annual Social Security Benefits Up-rating Order 2017, which we will get to later on. She will also know that the basic component of bereavement allowance and widowed parent’s allowance have to be uprated annually, at least in line with price inflation. There has been no requirement to uprate the bereavement payment, which has been frozen since 2001.
Bereavement support payment is a grant paid in instalments, rather than as an income replacement benefit, so it is treated in a similar way to the current bereavement payment. That is what is behind our views on that matter. It will be reviewed annually on a discretionary basis but without expectation that the payment should automatically be increased annually. Again, I imagine that we will want to come on to that later on, when we debate the general uprating order.
The third point touched on by both the right reverend Prelate and the noble Baroness was about extending the payment to cohabitees, as opposed to just those who are married and in civil partnerships. I do not actually know the result of the civil partnerships case that was in the Court of Appeal today.
I am grateful to the right reverend Prelate for saying that it has been rejected. By that, I take him to mean that it is still not possible for those of the opposite sex to have a civil partnership. Civil partnerships will therefore apply to those of the same sex, and marriages to those of the same sex and those of the opposite sex. We took the view that it was better and simpler to confine it to those groups, rather than to extend it to cohabitees. Cohabitees, as we have always known, have the ability to take steps to rectify their position and become married or, in certain cases, to become civil partners. To add the complexities, which I accept already face cohabitees regarding, for example, income-related benefits, such as UC, to a payment of this sort would not be appropriate. It can be dealt with by people themselves if they wish to regularise their position, which is always important to know.
I can remember some of the debates on various Private Members’ Bills, particularly one which I think was promoted by the noble Lord, Lord Lester of Herne Hill. He said that there was gross ignorance about this matter and that people thought being a common-law wife or husband gave them the same rights. I think that by now, most people should know that it does not give them the same rights; their rights are distinctly different if they are cohabitees. As I said, it would add excessive complications to a benefit of this sort, and I do not see the reason for extending it.
The noble Lord, Lord Jones, asked about the numbers of those who are likely to be affected. In the past, it has been something of the order of 40,000 a year and we have no reason to believe that it will be any different. I can add to that one other figure, which will be of interest to him and the Committee: of those 40,000, some 8,000 also have dependent children. That figure might or might not surprise the noble Lord. I was slightly surprised, since we are talking about claimants of working age, that it should be as low as that. But that is the figure, and I have no reason to believe that it will change.
Finally, I can confirm to the noble Baroness, Lady Sherlock, that bereavement support payment will be disregarded for universal credit and for income-related benefits. I think I made that clear in my speech. If even Homer nods, perhaps even the noble Baroness occasionally nods.
She was nodding in a different way but anyway, I can confirm that it will be disregarded, as it will be for the benefit cap.
Finally, the noble Baroness talked about the time for claiming the benefit and the fact that the monthly payments must be claimed within three months but that in terms of the basic amount, they had a full year. The simple answer is that for monthly payments it is appropriate to have a cut off that is shorter than for the lump sum. I do not believe—this is the important thing—that there is much ignorance, once people are bereaved, about benefits of this sort. Certainly the evidence we have and the evidence we have had in the past, which implies a very high take up of this benefit, seems to suggest that most people get to know about it very quickly. It is one of those things that, for example, I am sure undertakers know about and will advise on, as will others.
I hope that, with the assurance that I may find that there are one or two points I have not answered, the Committee will accept the regulations.