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Benefit Cap: Review

Volume 815: debated on Wednesday 3 November 2021


Asked by

To ask Her Majesty’s Government when they propose to conduct the next statutory review of the benefit cap.

There is a statutory duty to review the benefit cap levels once in each Parliament, unless an early election is called. As such, the review will happen at the appropriate time, yet to be determined by the Secretary of State, which must currently be by December 2024.

My Lords, it is exactly five years since the cap on how much benefit can be received was reduced to its current level. Given that the numbers affected remain well above pandemic levels, and the mounting evidence of the cap’s contribution to deep child poverty, food insecurity, homelessness, mental health problems and difficulties faced by domestic abuse survivors, will the Government undertake now to do the review required by law—as the Minister said—and address in it the evidence of hardship and the growing calls for the cap to be abolished, including from the noble Lord, Lord Freud, yesterday in this House, who called it an “excrescence”?

I am afraid I cannot commit to the Secretary of State reviewing the benefit cap now. I note the points the noble Baroness has made and continues to make, but for the Government the benefit cap provides a strong work incentive, and we think the national cap of earnings at £24,000 and £28,000 in London is a fair system at the moment. However, I will take her points back to the department.

My Lords, the Government state that, where possible, it is in the best interests of children to be in a working household. What support is available for those impacted by the cap, in particular for people who want to become less reliant on benefits in their search for work? What support can be given to help with home rental costs?

I know there is much angst about the benefit cap, but let me tell noble Lords what we are doing to support people impacted. We have a range of employment support available with work coaches. The real desire is for people to be less reliant on benefits. Our work coaches have the flexible support fund, which is doing a lot of good to overcome the barriers that stop people going to work. Claimants can recover up to 85% of their eligible childcare costs. Local authorities provide budgeting advice and, in terms of rental cost support, the local housing allowance —where we have maintained the amount.

My Lords, the number of households that have had their income limited by the benefit cap soared more than 137% during the pandemic. Those are the Government’s figures. Those numbers are still going up. Almost all the capped households include children: 400,000 of them are in families in which both parents are in work. The Government’s policy is dragging families deeper and deeper into poverty. Will the Minister tell the House what assessment the Government have made of the cap’s impact on driving children into deep poverty?

We understand there are around 190,000 households in both universal credit and housing benefit that were capped in May 2021—about 2.8%. There are some exemptions to the cap, as the noble Baroness well knows, and some grace periods. I will need to go back to the department to ask the question about the impact. I cannot answer it now, and rather than give a wrong answer, let me write to the noble Baroness.

My Lords, evidence to the House of Lords Economic Affairs Committee states that the benefit cap is putting abused women

“in situations where they may have no choice but to return to the abuser or take out payday loans.”

Is it not time that the Government took action to address the injustices of the benefit cap and its effect on hardship and poverty?

As I said, the benefit cap will be reviewed at a time to be determined by the Secretary of State, but we have a range of measures designed to support people who flee abusive and violent households, as it is quite unacceptable that they should have to do this. We have provisions in housing benefit and universal credit, and I can assure the House that, where necessary, we arrange split payments for people in order for them to be able to maintain an independent life.

My Lords, in his recent book, the noble Lord, Lord Freud, said:

“The benefit cap made little sense in a system designed to provide each family what it needed.”

Quite, so why do it? Yesterday, the noble Lord, Lord Freud, told the House why. He said that George Osborne’s chief of staff had said to him:

“I knew it didn’t make much in the way of savings, but when we tested the policy, it polled off the charts.”—[Official Report, 2/11/2021; col. 1128.]

The cap has caused huge hardship and driven kids into poverty, but it was not because it was right, but because it polled off the charts, helped by rhetoric demonising the poor and those who could not work. Labour would scrap it to lift people out of poverty; will the Government now do the right thing?

I am well aware of the observations passed by my noble friend Lord Freud. As I have said, the benefit cap will be reviewed by the Secretary of State. I am very sorry, but I am not able to give a commitment to scrap it.

My Lords, will the Minister tell us what proportion of those subject to the benefit cap are realistically incapable of moving into work? Perhaps they are sole carers of very young or disabled children, or dependent adults, or they might be recovering from addictions. With such cases in mind, will the Minister update us on progress in developing universal support?

My Lords, I will deal with the latter point first. The Government are fundamentally against universal support or universal basic income: it is the wrong approach for the people of the UK. It would mean that there was no incentive to work; it would not target those in greatest need, and it would fail to take into account the significant additional costs faced by many individuals. As for the people mentioned by my noble friend, it would be easy to write them off, but our absolute commitment is to say that the best route out of poverty—the best route for these people—is, where they can, to get work.

I was passed today just one story about a single father from Scotland who lives remotely, 25 miles from his nearest Jobcentre Plus, for whom finding work was almost impossible. However, his work coach found him a Kickstart job: they absolutely threw the kitchen sink at the flexible support fund and got him advance costs to enable him to travel. He is now working on the Kickstart scheme, which is proving to be very good for him.

My Lords, the Minister rightly says that getting people into work is the best way out of poverty, but the noble Lord, Lord Farmer, asked about those who cannot work. Will the Government undertake to look into the statistics for those people who cannot work and look again at the benefit cap for them? I also note that December 2024, by which time the Minister says there has to be a review, may well be after the next general election, which may mean that the Secretary of State will never bother engaging in a statutory review.

The Secretary of State is required by law to do a review, so I do not see how she is going to get out of it—but perhaps the noble Baroness knows more than me. I know that the Secretary of State is a robust lady and is on the money, and she cares more about unemployed people than some people give her credit for—so let me just park that with you. It is important to know. I am exhausted now.

I have already agreed to go back to the department on the point that the noble Baroness, Lady Lister, made about impact and so on, and I will do so. I thank the noble Baroness for the reminder.

My Lords, given that some families have particular difficulties, are there any circumstances in which the benefit cap does not operate?

I can tell my noble friend that when people have caring responsibilities, or someone has a severe disability or health condition, they will not have their benefits capped. Universal credit households are exempt from the cap if household earnings are at least £617 a month, and housing benefit claimants entitled to working tax credits are also exempt from the benefit cap.

Will the Minister understand the concern—indeed, revulsion—across many sections of this House at this punitive policy? The Minister refers to people finding work where they can. The truth is that large numbers hit by the cap cannot obtain work. Will the Minister understand that this policy recreates less eligibility and the worst aspects of the Poor Law?

As I have said to the noble Baronesses, Lady Lister and Lady Smith of Newnham, and as I shall say to the noble Lord, Lord Davies of Brixton, I have agreed to go back and come back to noble Lords on this issue. The question is virtually the same, and I shall give an answer.