Motion to Regret
That this House regrets that the Government have not, in advance of the entry into force of the Benefit Cap (Housing Benefit and Universal Credit) (Amendment) Regulations 2016 (SI 2016/909), made additional support available to those individuals affected by the benefit cap to find work.
Relevant document: 9th Report from the Secondary Legislation Scrutiny Committee
My Lords, I am delighted to take the House to the much more straightforward issue of social security secondary legislation. The House has been hard at work all afternoon, so I do not want to detain it any longer than I can help, but I hope that this will be an interesting break from the important topics of children and social work that we were considering earlier.
It is my pleasure to move the regret Motion which stands in my name and would amend the Benefit Cap (Housing Benefit and Universal Credit) (Amendment) Regulations to provide that additional support be made available to individuals affected by the benefit cap to find work. I want to acknowledge how hard business managers have worked to find an appropriate time slot for this short but important debate. It was important to have a discussion about the implications of the new measures at roughly the same time as the change was made—which, as colleagues know, happened yesterday. I am grateful for the effort made to make the debate relevant in terms of its timing.
I am grateful too—as I always am, and as the House always should be—for the work that has been done by the Secondary Legislation Scrutiny Committee. I find what it does invaluable; it helps me to understand and interpret legislation that is sometimes complicated even for somebody like me who has done work in a field such as social security. Its report captured my attention and led to this debate.
I acknowledge that there are two important additional exemptions in the regulations. I pay tribute to the noble Baroness, Lady Pitkeathley, and her colleagues on the opposition side and to the Minister for achieving them. If they had not been in these regulations, I would have been tempted to try to annul them altogether. It was obviously a clever trick on the part of the Minister to put in a couple of exemptions so that we could not attack the regulations more fundamentally.
Anyway, that is by way of preamble. We are considering a fourfold increase to 88,000 in the number of households that the cap will now cover. The two significant differences are that it is set at a lower level and it is tiered. Both differences will change the incidence and the effect but not the fact that it will be out-of-work households of a working age that carry the weight of the changes. I cannot miss the opportunity to observe in passing that over the period since 2010 working-age families have carried more of the can than maybe they should. In retrospect we might look back on that and wonder why we did not spread the load more widely. We have had debates about that in the past.
I hope that in the new regime we are now under with the change of Government in the summer, there will be better consideration of these matters and the incidence of cuts falling on working-age families in the future. Certainly, some reassuring things were said by the Prime Minister in her early incarnation. The new Secretary of State is a man with whom I am certainly very happy to do business. He is a sensible man and I have known him a long while. I look forward to working with him in the social security field in future.
I will not labour the objection because the noble Lord, Lord Freud, has heard me on this ad nauseam. I am of the school of thought that benefits should be assessed by way of establishing need; that need should lead to the entitlement. This second raft of supporting mechanisms in our social protection policy is that there is an annual uprating, an undertaking that adjusts rates. We have a perfect system there for adjusting—reducing, increasing, or anything we like—that is well understood and has been in place since the Second World War effectively. It hurts me that we start having vanity projects unleashed by uncontrolled Chancellors of the Exchequer who know nothing about what the Department for Work and Pensions really wants to do, visiting cuts in an unexpected way. For example, these cuts will have the arbitrary outcome of particularly affecting large families, which is no surprise, in high-rent areas, which is not a surprise either. Indeed, the only way in our benefit system that you can get anywhere near £20,000 or £23,000 by way of benefits is by being in one or both of those categories. There is no other way. Jobseeker’s allowance pays £73 a week, not £23,000 a year. The general public find that difficult to understand but we in this House know better. The arbitrary nature of a policy such as the cap being introduced is dangerous and it hurts people.
Turning to the Motion, I worked as hard as I could to see if I could go with the grain of what the Government are trying to do. I agree that of the three objectives in this policy, getting more people into work is something that we all favour, but the so-called work incentives deployed in this measure are threatening to most people. They will continue to be threatening unless these people can be assured—as can we as policymakers—that they are being given a fair shot at getting into employment. Now, phase 1 of the cap substantially had its incidence in London. There is a labour market in London that is as vibrant as any in the United Kingdom. The tiered effect of phase 2 of the cap will produce difficulties all across the United Kingdom in varying labour market conditions. People will find it very much harder in phase 2 to respond to the exhortation that work incentives are being increased. It is very difficult for people to do that without substantial support and that is absent at the moment, so far as I am concerned. This Motion merely says, if I can put it this way, that it is not safe to introduce this yet—not until we get better provision made and help people into work.
There are three other things I will briefly canvass. Obviously, one of the other objectives in this is trying to persuade the Government—I hope the Minister will reflect on this—that it is madness to put this benefit cap into universal credit. None of the figures we are talking about this evening draws any experience from universal credit yet because it is too early in its rollout. However, putting the clauses of the benefit cap into universal credit will make it even harder to get people to understand what universal credit is trying to do. I do not think that it is too late to do that, although these regulations go through the motions of it. I just hope that the ministerial team will reflect carefully on opportunities in future under the new Government to try to strip out benefit capping from universal credit when it is properly introduced.
On the Government’s claims of success, I do not know if the Minister saw the IFS observation note published on Sunday, but there is some evidence of movement. However, the Government are vastly over-claiming the success of this policy. The IFS says that in 2015-16, phase 1 of the benefit cap saved directly some £65 million. In 2016-17, it expects it to directly save another £100 million on top of that. Yet that has been covered off by people claiming discretionary housing payments, in 2015-16 for £26,000 and in 2016-17 for the £20,000 cap. I am sorry—I did not make that very clear. The savings of £65 million and £100 million are, the IFS estimates, some 1% of the £12,000 million to be saved over five years, so it is not a huge amount of money.
The point I was garbling there is that the £65 million saving must be offset by £25 million in DHP awards in 2015-16. We now know that in phase 1, 40% of people subjected to the cap made successful applications for discretionary housing payments. It comes to the point where you really need to ask yourself whether the savings made, when measured against the discretionary housing payments paid at the moment, are worth the effort. The National Audit Office and Comptroller and Auditor-General, when they get round to it in due time once this whole policy area settles down, will start asking themselves that question: whether the totality of the spend to try to handle some of the transitional arrangements and mitigate some of the effects does not make the policy less than worth doing because it so affects the money actually saved.
I noticed a Motion that went through the House just after the summer where £585 million went to Northern Ireland for mitigating effects. That is for a community of 1.8 million people. When you look at the amount of discretionary money and some of the block grant Scotland is using—principally at the moment to mitigate the bedroom tax changes, but no doubt the Scottish Government will think about using their own money to mitigate some of the cuts under this policy too—the totality of public spend begins to be questionable. I am not sure that it can be claimed that this is a clear success in terms of making a significant saving to the public purse.
My next point, briefly, is that the evaluation is weak. I know that the Minister is very hot—and rightly so—on the research dished up for his consideration. I ask him to look at that again. There are dynamic effects, which I understand are difficult to measure. He has said that many times before. The Ipsos MORI survey was done with 490 people who had been subjected to phase 1 of the cap. Those 490 self-selected respondents do not seem to me to be a core collective statistical analysis of the experience across the whole cohort of those subjected to the cap. For example, I do not think that there has been any attempt at all to follow up offload destinations. There are people who just left and stopped claiming benefit. They have disappeared and we need to look at that very carefully indeed.
Finally, I turn to the kind of thing that the Motion would ask the Government to do. The chances are that we do not know for certain what people will do and how they will respond. However, it is clear that there are people able to claim exemptions by applying for working tax credits. Any claim that is open is an exemption. There have been a lot of successful disability applications which produced exemptions. I think that there are a lot of households with overcrowding but we have not been able to quantify that. We need multiagency support for all affected to try to make this a safer policy for getting people into work. We need Jobcentre Plus involvement to provide bespoke schemes for the households involved. We need to attract more employer involvement in trying to get people into work. We need to work much harder on the situation of these new families being sent letters and then left to wonder what is going on. We need much, much more robust support to make sure that they have a chance. As the impact assessment for the Bill said:
“People who do the right thing and move into work are not affected by the cap—creating a clear incentive to move into employment”.
That is something the Government want to do. This Motion seeks help for additional support to help those people do just that. I beg to move.
My Lords, I thank the noble Lord, Lord Kirkwood of Kirkhope, who is in practice my noble friend on these issues, for praying against the benefit cap regulations. The first-year review of the cap unsurprisingly found that caring responsibilities, especially for young children, represented one of the main barriers facing capped families looking for work. According to the equality analysis, 16% of existing capped households—more than 3,000—contain a child aged under one. Of these, more than 2,000 are headed by a lone parent and the great majority of those are women. Yet even under the current punitive regime this group is not expected to seek work when their youngest child is so young, so what is the justification for including them in the cap? Surely, on the logic of the High Court judgment that led to the welcome exclusion of carers in these regulations, as we have heard, those caring for infants should also be excluded. The equality analysis indicates that the number of households containing a child aged under one is now of course likely to increase. Can the Minister give an estimate of how great this increase is likely to be?
The new cap will affect a much wider group of families over a wider geographical area. In my own region of the east Midlands, the number of households affected is expected to increase from 800 to 5,000—a rise from 4% to 11% of those affected nationally. In order to avoid the risk of the arbitrary effects to which the noble Lord, Lord Kirkwood, referred, the IFS suggests:
“It would be sensible for the government to set out a clear vision of which families it thinks receive excessive amounts of benefits and why”.
I look forward to the Minister enlightening us.
It still beats me how, as the Government claim, it can be in the best interests of these children for them to be driven further into poverty in the name of some theoretical future life chances, especially when the earlier IFS evaluation showed that only a tiny fraction of those affected had moved into paid work. Its more recent analysis suggests that it is not likely to be that different now. Moreover, there is evidence to indicate that cutting benefits can be counterproductive because impoverishment reduces job-seeking capacities. If all one’s energy has to go into getting by, that does not leave much over for presenting oneself as a suitable job applicant to employers.
As I cited during the passage of the Bill, according to last year’s Supreme Court judgment the department is misinterpreting the best interests requirement when it argues on the basis of the theoretical best interests of the generality of children rather than the actual best interests of children whose parents’ income is driven below what Parliament has deemed necessary to meet their needs. I very much concur with what the noble Lord, Lord Kirkwood, said about the basic principle of this cap, which I am opposed to.
Both the UN Committee on Economic, Social and Cultural Rights and the UN Committee on the Rights of the Child have recently expressed deep concern about the impact of the reductions in the cap. This is also referred to in the report just published by the Committee on the Rights of Persons with Disabilities. The fears of these UN committees are likely to be borne out given the recent warnings of, for example, the Chartered Institute of Housing. It is quite clear from the revised impact assessment that children are still disproportionately affected. In his Statement on the recent UNCRC concluding observations, the Minister for Vulnerable Children and Families called on government colleagues to reflect on the committee’s recommendations,
“for example, by reflecting the voice of the child fully in the design and implementation of policy”.—[Official Report, Commons, 17/10/16; col. 23WS.]
There is no evidence of the voice of the child here.
Despite being pressed a number of times during the passage of the Bill, there is also still no mention in the revised impact assessment of the application of the famous family test. The best that we got during the Bill was a letter from the Minister, which turned up in my junk email folder, assuring us:
“The Government has fully considered the family test criteria as an integral part of the policy development process”.
This is not how the DWP advises other government departments to present the outcome of the application of the family test. It simply is not good enough. Perhaps the Minister prefers not to spell out the impact on families of a policy that the impact assessment shows will disproportionately hit children and lone mothers.
Returning specifically to the impact on children’s rights, I draw attention here to the Equality and Human Rights Commission’s note on priority issues for implementing the concluding observations of the UNCRC. It would,
“highlight, for an urgent response, the recommendation of the UN CRC for the UK to ‘[c]onduct a comprehensive assessment of the cumulative impact of the full range of social security and tax credit reforms introduced between 2010 and 2016 on children’, and to revise the reforms where necessary to ensure the best interests of the child are”—
I stress are—“a primary consideration”. I would welcome the Minister’s response.
My Lords, on the face of it withdrawing help from very poor people, which is the effect of lowering the overall benefit cap, seems extremely harsh. It has two justifications, as I understand it, in addition to the obvious aim of saving money and reducing the national deficit. First, it is hoped that it will fiercely encourage those affected to seek out a job, since that would exempt them from the constraints of the cap. Secondly, the effect of the cap reducing support in housing benefit could be to persuade landlords to reduce rents. It seems that neither of these hoped-for outcomes will be very successful.
On the jobs front, the previous imposition of a benefits cap seems to have pushed less than a quarter of those affected into a job, leaving the great majority to take the hit in a straightforward reduction of their standard of living. The noble Lord, Lord Kirkwood, and the noble Baroness, Lady Lister, have spelled out the obstacles to the new measure getting people into work.
On the housing side, could the lowering of the cap achieve savings to the Government without hardship to those whose benefit is cut by coercing private landlords to trim their rents? Landlords who concentrate on tenants who need housing benefit would, it is argued, have to settle for a lower rent if tenants cannot pay, otherwise they would be faced with an empty property.
Of course I understand that the Department for Work and Pensions, propelled by the pressure of the Treasury, wants to reduce the housing benefit bill which, frustratingly, keeps rising as rents rise, but such is the scarcity of inexpensive homes to rent in London, and increasingly throughout the country, that private landlords do not cut rents when housing benefit tenants are given less to spend on rent. Instead, landlords simply stop letting their properties to people in receipt of housing benefit. More than three-quarters of private landlords will not consider housing anyone in receipt of HB, and those who are already letting to such tenants are increasingly unlikely to renew assured shorthold tenancies when they conclude after six months or a year.
The new cap is estimated by the Chartered Institute of Housing to hit 116,000 families containing 319,000 children. It comes on top of the local housing allowance caps and freezes, which are biting already. Although the impact of the new measure is greatest in London, despite the higher level of the cap there, all areas are affected. IFS figures show that families with three children face the most severe cuts. Half of them are facing a gap between their housing benefit and their rent of more than £100 per week. No private landlord is going to reduce rents by anything approaching that level.
So, in housing terms, the most likely impact of the new measure is the gradual elimination of privately rented accommodation for households which, for a host of reasons, are not in employment. Although tenants may try to make up the shortfall between their housing benefit and their rent by drawing on loans, help from friends and using up resources provided for food, heating et cetera, this is untenable for a sustained period. Debts and arrears are highly likely, and private landlords can see this coming. It is safer and more profitable to let to tenants who need no HB support.
What follows is likely to be an increase in homelessness. Housing associations and councils cannot take in all those rejected by the private rented sector. I know the Minister has done sterling work in extracting funding from the Treasury for discretionary housing payments to offset the impact of earlier benefit cuts. His efforts have reduced the deficit-cutting savings for the Government, but they are not a stable way to fend off homelessness in the face of continuing benefit cuts.
I will soon have the honour of piloting the Homelessness Reduction Bill through your Lordships’ House if and when it completes its stages in the other place. It will be a really helpful measure to prevent homelessness and provide more relief for those who face homelessness, and I am delighted that the Government are supporting it. However, this legislation, if it completes its stages in the other place and meets with approval in your Lordships’ House, cannot swiftly turn the tide and conjure up more rented homes within the reach of those who receive housing benefit. Market forces dictate that, if housing benefit does not cover the rent, private landlords will simply not let to these households.
I agree with the noble Lord, Lord Kirkwood of Kirkhope, that additional support to help those hit by the latest cap get a job is definitely needed before inflicting upon them a very significant cut in their income. Locating and assisting those affected in the private rented sector may not be easy, but several thousand council and housing association tenants are also affected. Councils which focus on these tenants are to be commended. Housing associations trying to help tenants with skills training need to be informed by their local councils of which tenants will be affected by the new benefit cap. They can then target support with financial advice and training on those people. The National Housing Federation points out that not all councils are sharing these data with their local housing associations. Support from the Minister in making sure this data-sharing happens would be very valuable.
However, more fundamentally, I argue that Ministers should consider whether the likely unintended consequences of greater homelessness for those outside the jobs market whose landlords do not reduce rent levels do not necessitate a pause in these cumulative housing benefit cuts. The Government are in earnest in seeking to address the massive problem of undersupply of the homes we need but, until housing production catches up with demand to a greater extent than today, it simply will not work to deprive tenants of the means to pay for a roof over their heads.
I support this Motion of Regret and express considerable regret at a policy that goes well beyond incentivising work. It will not only have painful consequences for the tenants affected but thwart wider housing policies for easing homelessness.
My Lords, we have heard a number of impressive figures and statistics this evening. It seems to me that the principle underlying all this is that you can save money with one hand but you will pay it out with another. According to End Child Poverty statistics released this month, we have 3.5 million children living in poverty in the United Kingdom in the 21st century. In some regions, up to 47% of children are living in poverty. In my own diocese, in the Bradford local authority area, 32.7% of children are living in poverty after housing costs. The national average is 29%. In Leeds Central, it is 41.8%. If children are living in housing and food poverty—as we know they are from food banks and all the other stuff we see on the ground in our cities, towns and rural areas—then we will end up paying out through the National Health Service and in other ways for the consequences of what children do not have at present.
Could the Government see their way to reducing the impact of this change on children by excluding children’s benefits from the cap, so that families always receive a basic income to spend on their children’s needs? Secondly, could the Government reverse the reductions to in-work allowances under universal credit in order to incentivise moving into work through the provision of better in-work financial support, recognising that much of the poverty we see around us involves those who are in work? I support the Motion to Regret.
My Lords, I thank my noble friend Lord Kirkwood of Kirkhope for moving this regret Motion. He has raised a very specific issue about the need for additional support to be made available to help those affected by the cap to find work. But, as we have heard, the issue is broader than this. The Government need to get to the heart of the problem, which previous speakers have identified, which is that they have not been building enough new homes, and as a consequence prices have been rising steeply, whether for owner occupation or for rent.
Crucially, the Government’s emphasis on subsidising owner occupation has left the social rented sector seriously short of funding and therefore of supply. Those who cannot afford to buy are increasingly forced into the private rented sector, with its high rents in most parts of the country. We heard from the noble Lord, Lord Best, about the implications for the private rented sector and the likelihood that the availability of homes in the private rented sector will decline for those who are on housing benefit.
Building more homes will help to hold down rents, which in return can reduce the Government’s revenue costs in terms of housing benefit. I understand that there is to be a White Paper on housing supply shortly. That is welcome, but can the Minister confirm whether the purpose of that White Paper is to address the lack of social rented accommodation? Might it also address the absurdity of calling a home “affordable” when for many people such homes are nothing of the kind?
Meanwhile, the impact on homelessness of lowering the cap could be severe. The Government are already committed, as we have heard, to supporting the Homelessness Reduction Bill, but their support for the Bill seems to sit oddly with this cap, which will actually increase homelessness. We have heard a whole set of disturbing figures, from the right reverend Prelate the Bishop of Leeds and others. I understand that Shelter has estimated that there will be more than 120,000 children in temporary accommodation at Christmas. I find that disturbing. Also disturbing is the fact that since the original cap was introduced, around 70% of those affected have not found work. So doubling the number subject to the cap and worsening it for those already subject to it means that many more people who are already poor are going to be made poorer.
When the Prime Minister took office, she declared that his was a Government for all the people. But this is a dubious claim when poor people are being made poorer. The Government must show that they are prepared to invest further in helping people back into work, at decent rates of pay, thus overcoming the barriers so many can face daily in their attempts to do so. If the Government do not do that, they are simply widening social and financial inequalities in our country, which is unacceptable.
My Lords, I support this Motion to Regret, over three issues in particular. First, the noble Baroness, Lady Lister, referred to the 17% of mothers who have a child under the age of one. I would add pregnant mothers to that. Can they not be exempted, or can that at least be looked at? The Maternal Mental Health Alliance report published last year highlighted to all of us the terrible bane of post-natal and pre-natal depression and the risk that if a mother’s mental health deteriorates, her relationship with her young infant is damaged. This costs society huge amounts in the long term.
My second concern is about more children being taken into care. We were reminded earlier by the noble Baroness, Lady Lister, that most children coming into care come from poverty. Has the Minister examined this policy to look at whether it increases the risk of children being taken into care?
Thirdly, the noble Lord, Lord Shipley, alluded to the fact that we face having 120,000 children in Britain in temporary accommodation this Christmas. There has been an 18% rise in the past year in the use of bed and breakfast accommodation for such families. I followed a woman’s journey through temporary accommodation last year. First, she was in a domestic refuge and then in a very small single room with her 16 year-old daughter and one year-old child. She was distressed by that, but most distressed by the uncertainty of where she would go next. She was evicted from there to another, even smaller room and then there was the fear that she might be moved away from London, as far afield as Manchester, where she would know no one; she was in despair about this situation. Finally there was resolution. She has, at least for now, a larger and quite comfortable place for the next six months, for which she is so grateful. But one cannot overestimate the impact on the mental health of families and children of being put into homeless temporary accommodation.
I recognise that the Minister may be limited in how far he can help the House today, but I hope he will take very much to heart the concerns that have been raised. I share my noble friend Lord Best’s gratitude to the Government for supporting the current homelessness legislation, the Homelessness Reduction Bill. I look forward to the White Paper on housing supply, and to the Minister’s response.
My Lords, I support my noble friend Lord Kirkwood of Kirkhope and thank him for raising this important topic. As we have heard, the original rationale for the benefit cap was that it would give people an incentive to seek work, yet evidence shows that only 30% of those who have been hit by the cap left the benefit cap as a result of finding work.
A lot of the support that the Government claim will help people into work clearly is not there. For example, they made great play of how the troubled families programme would provide the answer, but evidence from the National Institute of Economic and Social Research recently showed that there is no evidence it has had the impact that the Government intended.
Prior to being reduced, the benefit cap at its current level mostly affected large families in areas with high rents, as my noble friend said. The new lower thresholds mean that some single-person households are likely to be hit by the cap for the first time, and there is considerable concern from Crisis and others that by affecting a far greater number of households the cap will have a more significant impact on homelessness. As the noble Lord, Lord Best, illustrated, private landlords are likely to stop taking families who are currently in receipt of benefits.
Analysis by Crisis examining the cap in relation to London housing allowance rates shows that the new cap will affect single jobseekers in most parts of inner London. Existing single claimants in the work-related activity group for employment and support allowance are likely to be affected in areas of inner and outer London, as well as in high-rent areas such as Guildford and Oxford. This is because they will still be eligible for the work-related activity component, which is due to be removed for future claimants but will still be subject to the cap.
The Government have acknowledged that these reduced benefit thresholds are lower than average earnings, arguing that the policy will encourage more claimants into work. However, to date the benefit cap has not performed well enough in encouraging people into work to justify that. According to the Government’s own evaluation, just one in 10 of people affected by the cap in February 2014 had found enough work to become unaffected by the cap by the summer of the same year. The vast majority, 78%, were still capped, including a significant majority with barriers to employment, including poor health and/or skills gaps. All the figures that I am quoting today come from the DWP’s own statistics.
Households that are capped have responded by cutting back on household essentials, including skipping meals, while a significant proportion—45% in summer 2014—were in rent arrears. As we heard from the noble Lord, Lord Best, people in rent arrears are unlikely to be allowed to continue their accommodation with private landlords. Many find that they cannot move house to reduce their housing costs because they are already living in the cheapest available accommodation in their area.
In recent months the Government have set out a clear agenda on homelessness prevention, which is to be welcomed. As we have heard, this includes a new funding programme and support for the Homelessness Reduction Bill, the Private Member’s Bill that is about to go into Committee in the other place. The lowering of the benefit cap risks undermining this important agenda by putting newly capped households at risk of homelessness.
We heard from my noble friend Lord Shipley about the effect that a lack of housebuilding is having on homelessness. The Bill includes a new duty on other public bodies to make referrals to local authority homelessness teams if they are working with people who are homeless or at risk of homelessness. There are already some examples of good practice from local authorities in response to the existing benefit cap in joining up employment support and housing teams to help capped households into work. This should result in their coming off the cap. It is to be hoped that the new duty to refer in the Homelessness Reduction Bill will promote even more collaborative working between different local authority departments to prevent capped households reaching crisis point.
We heard from the noble Baroness, Lady Lister, and the right reverend Prelate the Bishop of Leeds of the terrible plight of children: 800 families affected rising to 5,000. That is a terrible increase in the number of children who will be affected. Where is the family test in this policy, or the voice of the child?
Last weekend, I looked after my granddaughter, who is two. The thought of her being in temporary accommodation this Christmas is chilling. We cannot let this happen to any child. In the current economic climate post Brexit, we anticipate increased food prices in the supermarket. This will impact on both those in work at the lower end of the income scale and those hit by the benefit cap, where the effects will bite most severely. This will result in large queues at food banks. It will also affect those who donate to food banks, as they find that they have less spare money in their pockets.
If the Government continue to pursue this blanket policy without dramatically increasing support to enable those affected to find employment, it will be cruel and will demonstrate that their policy is all about public relations, not supporting a decent welfare system that is fair to both claimants and the taxpayer. I fully support my noble friend Lord Kirkwood and look forward to the Minister’s response.
My Lords, this has been an interesting debate, and I am grateful to the noble Lord, Lord Kirkwood, for his introduction to it and to all noble Lords who have contributed.
First, the good news. I am certainly glad to welcome the good bit of the regulations. As one of a number of concessions won by hard work in this House across the Benches, the regulations exempt from the benefit cap people claiming guardian’s allowance, carer’s allowance and the carer’s element of universal credit.
I have a couple of practical questions for the Minister before I move on. I understand that, because the regulations took effect yesterday, anyone in receipt of one of those benefits will be automatically exempted from the cap. That means that any such person who is already capped will have it automatically lifted, and their next payment will reflect that fact. Similarly, anyone whose case is flagged up as otherwise being caught by the new lower cap but who is in receipt of, or entitled to, one of those benefits will automatically be exempt. Can the Minister confirm that that automatic exemption is the case, and that the claimant will not have to do anything to ensure that they are exempted when they should be? Will he also confirm that his department has communicated with those claimants to let them know what is happening, so that they will understand the change in their circumstances?
On to the bad news. I will not rehearse the arguments made eloquently by many noble Lords about the impact on housing and homelessness—points made very well by the noble Lords, Lord Best and Lord Shipley—and on children, a point made by my noble friend Lady Lister and the right reverend Prelate the Bishop of Leeds. His predecessor the Bishop of Ripon and Leeds and I made an attempt right at the beginning to exempt child benefit from the cap. Sadly, we were unsuccessful, but I am glad to see the right reverend Prelate keeping up a fine tradition of speaking up for the children of Leeds; I hope that one day, he will not have to. If his sermons are as commendable, pointed and brief as his speeches here, may people flock to his cathedral in time to come.
As has been pointed out, the cap will change significantly. We heard about the large number of people who have been brought into it, but there is also the size of the losses. Households already capped could lose another £3,000 a year in London, or £6,000 elsewhere. The Government estimate that newly capped households will lose an average of £2,000 a year. The profile will change dramatically. No longer can Ministers pretend that the problem is people living in Mayfair or having 17 children; the problem will now be right across the country, a point made by the noble Lord, Lord Kirkwood. That was never really the issue, but in future, just 22% of affected households will be in London, whereas the figure had been 42%.
For me, the telling point is that in the north-east, where I live, the number of households affected will jump from 600 to 4,000. There are not that many very expensive properties in the north-east—certainly not that benefits pay for. This is now being spread right across the country. Nor can the Minister complain that it is just about large families. Under the new cap, a single mum with two young children sharing a room will be capped if she is living, not in Mayfair, but in 19% of areas in the country, including Basingstoke or Reading. If those two children are in different rooms, we are talking about a third of the areas in England. This is becoming really significant.
What is it about? Is it about saving money? Points were made by a number of noble Lords. I have been through the impact assessment again, and it is now clear that the savings from these regulations will be £540 million in total over five years. Over that period the Government will spend £870 million in discretionary housing payments. Clearly, not all of that will go on the benefit cap. It also has to cover the impact of the bedroom tax, LHA cuts and the general misery caused by the Government’s social security policy. In the current year, more than a quarter of DHP money went on the benefit cap victims, and we know that the number will go up significantly—more than threefold. Can the Minister tell us how much the Government expect to save from these regulations after deducting an appropriate proportion of the costs of discretionary housing payment money?
We have heard that the options for somebody who is capped are to accept the cut, move somewhere cheaper or get a job for at least 16 hours a week. Let me run through those very briefly. These are cash cuts and they come in overnight. If a family faces an annual benefit cut of £6,000 a year, can the Minister say whether that means it is possible that someone’s housing benefit could be cut by £115 a week from one housing benefit payment to the next? If that is the case, how could anyone absorb that kind of cut?
Another option is to move somewhere cheaper. But where can they move to? The cap spreads right across the country, so what will happen? There are no cheaper places to move to, and the only reason for the handful of places that are cheaper is that they are the kind of areas where there are no jobs and there is no transport to get there even if there were jobs. What is the point of sending people to live there?
The third option is to get a job. The Secretary of State for Work and Pensions, Damian Green, has said that the benefit cap is a real success. Based on the fact that the IFS found only 5% of people in the past who had got a job, the Minister may have to work on defining his terms. Let us look at what happens now. The Government think that if they cut it far enough, eventually people will get a job, but let us see who is being affected. I am particularly concerned about the effect on parents with young children. The benefit cap has already particularly affected single parents with very young kids. Most of those capped have a child aged nought to four. DWP statistics show that 11% of households affected by the current cap are single parents with a child under one. I want to look at that a bit more.
Let us imagine a single mother with young twins who are six months old, living in Basingstoke on basic out-of-work benefits. Let us call her Susan. Susan will be hit by this new cap. If she cannot find a cheaper flat—and she will not, because the housing benefit limits have been pushed down so far that she is already at rock bottom—the only way to escape the cap is to work 16 hours a week. The Government have been getting tougher and tougher on conditionality on single parents, but even they do not require parents of babies to work If you have children of that age you would not be required by the DWP to work.
Even if Susan wanted to leave the babies and go out to work, she would have to find a suitable job. She is not eligible for any of the job search programmes because she is not required to work. I understand that government guidelines to local authorities on the implementation of the benefit cap is that someone who is already capped and will be hit again by the lower cap will be entitled to 40 minutes in total with a work coach to help them to find a job. Can the Minister tell me if that is correct? What help will be provided to a single parent being capped for the first time?
Secondly, where will Susan get childcare from to be able to go out to work? A survey just out from the Family and Childcare Trust found a huge problem of insufficient childcare in many local authority areas. Fewer than half of local authorities in Great Britain reported having sufficient childcare for nought to two year-olds. The Minister will probably talk about the Government’s free childcare offer, but let us remember that that is only for three and four year-olds. It is only 15 hours a week which is not enough to enable parents to get the kids to a nursery, get to a job for 16 hours and back again. The much-vaunted extension of that will not come until next April whereas the cap is already in place. Evidence shows that there is not enough childcare provision now, never mind when it is extended.
Parents like Susan, with children under three, have no entitlement to free childcare at all. They could claim help within tax credits or universal credit, but the limit of how much you can get is so small now, as it has not been raised for so long, that it falls way short of actual childcare costs. The Family and Childcare Trust says,
“there are 11 local authorities where the average cost of part-time childcare exceeds”,
the working tax support cap completely,
“leaving the poorest working parents having to pay an average of”,
£81 a week out of their own pocket. Where is Susan going to get that kind of money? Care for babies is especially expensive. Even if she could find somewhere suitable and a suitable job, she may not even be able to afford the deposit on the first month’s nursery fees, which are usually required upfront. Can the Minister at least assure the House that any parent of young children, who has to take a job because they are capped, can claim the full costs of the deposit for childcare from the flexible support fund his department operates? I ask that because Gingerbread has been getting reports that job centres do not want to use this fund, which is meant to remove barriers to work for childcare, even though childcare is a really obvious barrier. Can he reassure us on that point?
However, let us remember that these are parents whom the DWP does not normally require to work. The only reason that that mum is having to go to work—despite the fact she has only two kids, does not live in an expensive area and her only income is basic benefits and tax credits—is because her rent, as the noble Lord, Lord Best, has said, is at a level where she cannot reasonably pay it without help from benefits. There are Susans all over the country.
As the IFS has pointed out:
“It is possible for the benefit cap to quickly affect many more out-of-work families in an area, once its level falls below the sum of the HB cap in that area for the family type in question and the other (nationally-set) benefit entitlements”.
Once it happens, all those families are going to be chasing the handful of cheaper accommodation and none of them will be able to cope. What do the Government think will happen? Where are these families going to live? The point made by the noble Lord, Lord Best, is that this is driven primarily by a housing crisis. Is not the problem that the Government have failed to invest in housing and are therefore simply trying effectively to shift the problem on to the poor, who are the victims of the rent rise which they have not been able to address?
I am sure the Minister does not want to see parents of young children plunged into crisis. He knows that discretionary housing payments cannot be relied upon because they are discretionary and councils have too many demands on them for help. At the very least, will the Minister pledge to look at how his department can protect parents of young children from the impact of the reduction in the cap? I very much back my noble friend Lady Lister who is pressing the Government to address the question of the family test. Perhaps in doing that, the Minister could also guarantee to report back to Parliament on the impact of this change on families with young children. That is the very least we can expect.
My Lords, this Government believe that those out of work should not receive more in benefits than many working families are able to earn. We introduced a benefit cap to encourage people to find work and that is exactly what has happened. The new benefit cap levels continue to provide a clear incentive to work, helping to reduce long-term welfare dependency and ensuring fairness for working households.
Since the original benefit cap was introduced in April 2013, 23,500 capped households have found work. Evaluation has found—this is in response to the query of the noble Baroness, Lady Bakewell—that capped households are 41% more likely to go into work than similar uncapped households, and that 38% of those capped said they were doing more to find work. A number of noble Lords have argued that the benefit cap is flawed, but it was a manifesto commitment and was extensively debated in this House and in another House.
One aspect that I would like to point out to noble Lords is that there has been a culture change around the importance of going to work. Whatever particular policy has been driving that is difficult to assess, but the figures are astonishingly dramatic. The number of children in workless households now stands at 1.35 million. That is the lowest ever since these statistics started to be collected in 1996. It compares well with the figure at the height of the boom: it is more than 400,000 lower. It was 1.79 million in 2008. It is much lower—almost 1 million lower than it was in 1997.
So there has been a dramatic change in attitudes. We see it in various statistics, including the number of people in social housing now going back to work, which they never did. So there is a structural change. I do not pin it directly on this policy. But I do say that there seems to have been a real change, and that is one of the aspects of it.
The Motion of the noble Lord, Lord Kirkwood, expresses concern that we have not,
“made additional support available to those individuals affected by the benefit cap to find work”.
Actually, there is quite a lot of evidence that the success that the cap has had in helping people into work is partly a reflection of the strong support offer we have in place in both jobcentres and local authorities, which we continue to improve. We have contacted claimants potentially affected by the cap well in advance, giving them an idea what the impact might be on their household income and offering them support to adjust their circumstances. We have also ensured that jobcentres and local authorities are equipped and funded to provide that support.
I shall set out the measures we have put in place. From May, an online benefit cap calculator has been available to show claimants the potential impact on their income. The department issued notifications to claimants identified as potentially affected by this change in May and early June this year, to give them time to look for work or make other changes to prepare for the cap. We sent a further communication in September. Universal credit and JSA claimants in full conditionality will have discussed the impacts of benefit capping with their work coach. Where claimants have not responded, DWP and many local authorities have made further efforts to contact them. Local authorities have information on which of their residents are most likely to be impacted and have contacted many of them, often as part of ongoing contact between local authorities and some of their harder-to- help residents.
All claimants responding to notifications or contact can receive a variety of support measures. From their local authority they can receive budgeting support, including advice on the impact of the cap as well as on household budgeting, and support with housing costs. This includes advice on how to manage or reduce housing costs, potentially including the option of moving, as well as consideration of discretionary housing payments in appropriate cases. From Jobcentre Plus they can receive advice on gaining employment, including employment provision and specialist training via the Flexible Support Fund and advice and some funding for childcare—which I assure the noble Baroness the Flexible Support Fund can offer. And with universal credit, of course, the figure is now standing at 85% of the costs.
We have set aside extra funding to cover the additional support that jobcentres and local authorities are providing. In this financial year, jobcentres have received £4.8 million in respect of this support, a further £5 million to cover specialist training from the Flexible Support Fund, and £1.4 million to support additional co-location of jobcentre and local authority staff in support of this initiative. Local authorities received £14.7 million New Burdens funding in July 2016.
To ensure that local authorities are able to protect the most vulnerable and support households adjusting to reforms, the Government have committed, as the noble Baroness, Lady Sherlock, pointed out, to provide £870 million in total for discretionary housing payments over the next five years. The DHP funding linked to the benefit cap increased by £15 million in 2016-17—up from £25 million to £40 million. For 2017-18, overall DHP funding is increasing by a further £35 million to help those affected by all welfare reforms. I do not have broken-down figures for the different components and we have not yet provided them to local authorities.
Discretionary housing payments are used to ease the transition for households moving into work or adjusting to the cap and, as the name suggests, are at the discretion of the local authority, although a comprehensive guidance manual has been produced. The noble Lord, Lord Kirkwood, made a point about matching the payments against savings. Discretionary housing payments are usually transitional and they help move people from one circumstance to the next.
On the family test, the noble Baroness, Lady Lister, acknowledged that the question was asked and answered during the passage of the Bill. As I have said, it is not in the interests of children to grow up in workless families and there is a lot of evidence on that. In response to the noble Lord, Lord Best, on the homelessness issue, the evaluation of the current cap showed very little, if any, impact on homelessness as a direct result. The households we are discussing are actually receiving more in benefits than many working people are able to earn. In response to the noble Lord, Lord Shipley, we do expect that landlords will continue to let a full range of properties to people on benefits, providing that the accommodation is affordable to that household. We are also working closely with DCLG on this.
The noble Lord, Lord Best, made a point about data sharing. This is absolutely critical. It is the key to joining up support services and is one of the factors that we are researching very actively in our universal support programme. The noble Baroness, Lady Lister, was concerned about including women with young children. We found that lone parents affected by the cap were 51% more likely to go into work than similar, uncapped lone parents. The noble Baroness, Lady Sherlock, made a point about double-capped cases. There could be a very small proportion of households affected by the lower cap who have already been affected before. As the noble Baroness said, we have put in place an additional 40-minute work coach intervention, on top of all the other support offers, to further help the claimant avoid capping. This additional support reflects the Government’s view that the preferred outcome for these claimants is employment rather than moving.
The noble Baroness also asked a question about carer’s allowance. The new exemptions apply from 7 November. We run scans every month of all the relevant IT systems and use the information to calculate the overall amount of benefit in payment. Claimants in receipt of a benefit which will exempt them from the cap, including carer’s allowance, the carer’s element of universal credit and guardian’s allowance are excluded at source and are therefore not capped. They are excluded at source so they do not have an issue. There is no point in telling someone that nothing is going to happen to them.
If you introduce this, there will be a change for somebody who is already capped; or they may have previously been told and made a decision not to make an application because they knew of the impact of the cap. I presume the Government have communicated at some point. It was a serious point.
I am sorry. I did not mean not to be serious. My best understanding of this is that where someone has been capped and will no longer be capped then we will inform them of the change. If that is not the case, I will write to the noble Baroness; if it is, I will not. However, I am pretty sure that it is the case.
To pick up on the concern expressed by the noble Lord, Lord Kirkwood, regarding the point made by the Secondary Legislation Scrutiny Committee, the committee wrote to my colleague the Minister for Welfare Delivery to express concern about the equality analysis. I imagine that the noble Lord saw that letter. Ministers fully considered the equality analysis at the same time as the regulations were made but there was simply a delay in publishing it. Perhaps noble Lords can cast their minds back to the peculiar period in our history following the June referendum, when the machinery of government perhaps was not working quite as smooth as it usually—or always—is.
On evaluation and the Ipsos MORI survey that the noble Lord talked about, the numbers came about because it was a longitudinal survey to understand what was happening; a lot of different levels of analysis went on, which looked at different outcomes, some of which were done on a quantitative basis, others on a qualitative basis; that was a qualitative one. We are committed to go on evaluating it and now we are developing the plans to understand behaviours and attitudes. The quarterly benefit cap statistics will continue to be produced, and the May 2017 release will be the first to show the impact of the lower levels.
I hope I have reassured the House that the Government have put in place measures that provide significant additional support to claimants affected by this policy to help them adjust, and wherever possible to move into work.
My Lords, I am grateful to the Minister and to all colleagues who have contributed to this debate. I think it has been worth while. My difficulty with the Minister’s response—which I will study, as I always do; I have the box set of the Freud responses over 10 years—is that I was looking for “additional”, but I did not get that. It is also too passive. A lot of good work is laid in front of some of these people who are confronting quite catastrophic changes in their financial circumstances. I would have expected a benefit team to have been geared up to deal with that specifically, certainly for six months or so, and that is absent. That is inadequate, because people will suffer as a result of it not being there.
I trust that the Minister has taken the message that although we had important debates about this in 2010 and 2015-16, this is a clear and present danger if it is not got right, and it will continue to be considered in that vein by the department. However, because of the absence of the activity that I was looking for and the additional measures which were not produced, I fear I must test the opinion of the House.
House adjourned at 9.09 pm.