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In rural areas such as those that I am familiar with in rural Snowdonia and the Llyn peninsula, but I am sure that this is equally true in Cornwall, the Lake District and other parts of these islands, there are people living in villages in rented accommodation. If they have to move out of their accommodation-these are often three-bedroom houses, as has previously been mentioned-there are just no other rented houses available anywhere near the communities. We may be talking about them having to move 20 or 30 miles away to find somewhere. People might think that at one time there were two-bedroom council houses in some of these villages. However, they were a minority that were quickly sold off; and rapidly, with the cycle of the years, became second homes in the private sector for people who went on holiday to those areas. Rent in the private sector is prohibitive because of the rent that can be secured in the holiday season. As a result, often only winter lets are available for six months outside the holiday period. In those circumstances in such areas, it is not reasonable to apply this law in a blanket fashion to vulnerable people who may find themselves with one bedroom more than they need.
The amendment would not go all the way to meeting all the concerns that many of us raised during earlier stages of the Bill, but at least it would start to ameliorate them. Some step has to be taken. We cannot allow this to go on to the statute book with the effect that it will have on rural areas, disabled people and children. What the position of disabled children in rural areas will be, goodness only knows.
Baroness Howe of Idlicote: My Lords, I shall be even briefer in supporting my noble friend Lord Best. My noble friend Lord Wigley has pointed out the vulnerable groups that will suffer from this provision. My noble friend Lord Best has made an effort to concentrate on the groups that will suffer most. Therefore, I very much hope that these groups will be excepted by the Minister. Given the regional differences in the price of housing and all the other problems, without this sort of amelioration it is too worrying to think of the consequences of wanting to claim this sum of money from the people least able to pay it.
Lord German: My Lords, before I raise a number of issues that the Minister considered on Report, I shall just say a word about some of the conversation that there has been on behavioural change in this debate. If we pause for a moment to think of the 1.8 million people on the waiting list for social housing and the number of empty rooms, and put the two together, there is something dysfunctional about our housing sector. We have people living in overcrowded conditions who are waiting for social housing. Around 700,000 of those people fall into the vulnerable categories.
Wherever I go, the answer is always to build more homes, which is obviously part of the solution. However, for as long as there is that dysfunction and a shortage of funding and land to build more housing on-and a resistance to building more housing in some rural areas-people will continue to extend that waiting list. It is important that we do not miss the opportunity to change that dysfunction in some way. That is part of the issue that is being addressed. However, there are difficulties over the transition and how it will affect people. It is not something that is done lightly; nor is it easy to do.
There are questions that I should like to pose to the Minister. In answer to me on 14 December, at col. 1302 of Hansard, on the additional £30 million that would be used for DHPs to make up for the difficulties faced by two specific groups, he said that it would, "assist around 40,000 cases". Is that simply a division of the amount of money available by the numbers that are predicted, or is it a fundamental assessment of those who live in adapted accommodation or are foster carers? I know that many noble Lords have made significant contributions to the debate on foster carers, both in Committee and on Report. It is of great concern because it has a very wide impact. Therefore, is the amount of money that is being made available sufficient to cope not only with the existing flow of foster carers but with the additional numbers that we need in this country to satisfy a very broad demand?
The second issue that arises from the Minister's statement on Report relates to the other group that will be assisted by the discretionary housing payments-disabled people who have significantly adapted accommodation. I recall that in Committee we talked about several examples of people who had had very expensive changes made to their accommodation at public expense. That public expense would be duplicated if they had to move to other accommodation. Will the Minister explain to the House what "significantly adapted accommodation" is? Is the definition to do with whether it would not be cash-worthwhile, or does it go beyond that and relate to the nature of the adaptation that has been made?
One issue relates to equipment. Some equipment for disability is very cumbersome, large and bulky and would not warrant being moved. It would probably have been built into accommodation. For example, does this apply to a home where a disabled person requires ground-floor accommodation and where the expense of building a ground-floor extension to a property means that there is an empty bedroom upstairs? Will we still require that sort of change?
This whole transition, which must be effected through regulations, will undoubtedly be the source of some detailed conversations about these matters. Therefore, will the Minister give us some indication of whether the DHP that will be applied will be sufficient to tackle the two specific groups in all circumstances; and what he expects to be able to afford to do in the transitional arrangements that he may bring forward in regulations?
Lord McKenzie of Luton: My Lords, the Government have moved in a number of ways on the issues that have been returned from the other place. Along the way, they have also accepted a number of other changes that were pressed on them by your Lordships' House. However, the Bill remains unchanged in some of its most unacceptable provisions, not least of which are those relating to underoccupancy. That is why we support the amendment in lieu, which was moved with such precision and expertise by the noble Lord, Lord Best. As we have heard, the amendment is less ambitious than that previously accepted on Report, reflecting our obligation to take account of the financial strictures of the Government. However, the amendment is not cost-free and cannot be if it is to provide protection for hundreds of thousands of households that, on average, could see their income fall by £14 a week.
It is clear that, under the guise of addressing underoccupation, the Government seek to make further savings on housing benefit on top of the multiplicity of restrictions-the CPI uprating, the 30 per cent percentile, the rent and size caps and the shared-room rate-that are already in play. Savings from some of these are being made in parallel with the benefit cap. The Government's stated aims for the underoccupation rules are to encourage greater mobility within the social rented sector; to make better use of the available social housing stock; to improve work incentives; and to curtail housing benefit expenditure. The amendment in lieu addresses each of these issues. It is clear that, should a suitable offer of accommodation be forthcoming, there is an expectation that an underoccupying tenant should take it up, whether or not they have only one spare bedroom or fall into any of the exemption categories listed. If they did not, the housing benefit reduction would ensue. What is suitable would have to be defined in regulations and would have to reflect the circumstances of the household, including its need for adapted property, transport links, access to support services and appropriate schooling.
However, there is no merit at all in an economic incentive to move to smaller properties when there are no smaller properties to which people can move. Therefore, the amendment provides that, with no suitable alternative offer, the underoccupation deductions-the room tax, in the terms of the noble Lord, Lord Best-would apply unless there was no more than one spare bedroom and one or more of the other exemption criteria applied. As for improving work incentives, this can surely have no application for those who have no work requirement placed upon them, for example because of a severe disability. These are people who the Government themselves recognise cannot work and should not be expected to work, so what is the purpose of an economic work incentive for them?
We know that disabled people face extra costs in their daily lives and that it is harder for them to take the hit of reduced housing benefit. Indeed, the Government have already recognised this in the benefit cap by exempting certain categories of individuals from loss of housing benefit or universal credit. These are the self same categories listed in paragraph (b) in the amendment, mainly those on DLA or PIP. War widows or war widowers are similarly included in the exemption to parallel the arrangements in the benefit cap-no more, no less. The noble Lord, Lord Best, referred to the sources of funding on offer to deal with foster caring. It is hoped that the Minister will be able to dispel any suggestion that the new money to which he referred is just being cynically recycled. The Government's other solution is for people to take in paying lodgers. Perhaps the Minister can say what assessment has been made of this possibility.
We agree that underoccupation in the social housing sector should be addressed and clearly the lack of social housing and the need to build more is part of that, but it is clear that the Government do not see these provisions as a route to doing so. Their assumption is that most people will not move and will take the hit and that is how the Government will get their savings. These amendments would stop them getting those savings from the most disadvantaged in our country. We support them.
Lord Freud: My Lords, the amendment in lieu of the noble Lord, Lord Best, seeks to exempt certain categories where the tenant underoccupies by one bedroom and no suitable alternative accommodation is available, those not required to seek work, carers, disabled people, war widows and foster carers. Our estimate of the cost of this amendment is slightly lower than that of the noble Lord. He suggested that it was £150 million. We estimate that it would cost up to around £100 million in 2013-14. We have already announced an increase of £30 million in the discretionary housing payments aimed at some of these categories-those living in adapted properties and foster carers. Others in vulnerable situations can also apply to the fund where they have difficulty meeting the shortfall.
I say to my noble friend Lord Kirkwood that that £30 million is an ongoing rate. The amount will be kept under review to see whether it is meeting the level of demand in different areas. We set the amount at £30 million based on the numbers likely to be affected by the measures. We think that the £30 million could help about 40,000 cases based on the average reduction of £14 a week. That figure is based on the group of 35,000 potentially affected claimants who are wheelchair users and live in accommodation that has been adapted to suit their needs, although, of course, not all of these would need to apply for a discretionary housing payment. We estimate that around 5,000 foster carers, including those in between assignments, could be affected by the measure.
My noble friend Lord German referred to the type of housing that would be affected by the measure. We decided to tackle this matter through discretionary housing payments, as introducing exemptions and classification is very difficult in practice. Therefore, we are leaving it to local authorities to make some very
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In summary, we believe it is right and fair to proceed with the measure as it is in the Bill. We will apply a percentage reduction of 14 per cent for those underoccupying by one bedroom and 25 per cent for those underoccupying by two or more bedrooms. That comes in in April 2013. The noble Lord, Lord McKenzie, asked me to disavow any cynical recycling. I am in a position to do that, as we announced a range of these reductions of between 10 and 15 per cent for one room and 20 to 25 per cent for two rooms. When I fixed the rates in December, I was able to do that within the bands that we had set.
Lord Freud: My Lords, we have to look at these things in the round, as we did with the Bill. The reality is that we had a range and we set the provision at an affordable level within that range. Noble Lords may argue that saving money is a cynical thing to do but, as I say, we had a range and we set the provision within the range. We have found the money to ameliorate the measure through the discretionary housing payments process.
My noble friend Lord Newton made an important point about changing circumstances. We have rules within housing benefit to protect people when their circumstances change. Among those changes are going into hospital, being on remand and the death of a member of a household which would result in a reduction in housing benefit. Those same rules will apply in the social rented sector and provide protection for such claimants. For example, housing benefit currently provides 12 months' protection from rent restrictions where there is bereavement, so there are ways of dealing with such circumstances.
The noble Baroness, Lady Hollis, referred to couples who have health problems. I re-emphasise the point that they would not be pensioners by definition as they are excluded from this measure, so we are talking about couples of working age. Clearly, if there is real difficulty in that regard and separate bedrooms are required, where discretionary housing payments would be considered, and where the couple required an overnight carer, whether non-resident or otherwise, the size criteria would be increased to provide additional room. However, we should consider what happens to people who are renting in the private sector. These situations are already faced by more than 1 million people-I think it is 1.3 million people-renting in the private housing sector.
This is part of a package of reforms to keep the housing benefit bill under control. I have never tried to disguise that in any way. This is a way of trying to control the housing benefit bill that is moving up
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We realise, obviously, that we need to support tenants, their advisers and housing providers in preparing properly for what is a very substantial change happening in April 2013. Work is well under way to support social housing providers, local authorities and other government departments. An important point raised by my noble friend Lord Kirkwood is the impression that it is all happening on one day. It might be happening on one day, but in practice there is a year before it culminates in which we are aiming to get a very smooth implementation process. We are working closely with the stock team, which is part of the Chartered Institute of Housing, funded by the GLC. We are putting a tool-kit out for local authorities, which involves working on who will be affected; advice on data sharing; allocations policy; tackling worklessness; taking in lodgers; letting spare rooms; reducing arrears; national home-swap schemes; affordable rents; and alternative housing options. We are working on all those areas.
A behavioural response is required right across the piece on something like this. We are looking to help claimants. Those who can must look for a job. Those who are in work can increase earnings by getting more hours. We have discussed taking in a lodger, moving to a smaller property or moving into the private rented sector. Landlords need to have responses. They need to give permission to accept lodgers, identify those affected, communicate changes, train staff, review their allocation policies, look at where the discretionary housing payments need to be made, and so on. There is a range of things on a substantial scale that need to happen, just as the Government have to do a huge amount of work to ensure that they do happen.
We are not expecting the 670,000 people who are affected to move. As I have tried to describe, there are a number of ways in which claimants can make up any shortfall and stay where they are. So I ask the noble Lord to withdraw his amendment.
Lord Best: My Lords, I am extremely grateful to people from all parts of the House who have joined in this debate. My thanks go to the noble Baroness, Lady Hollis, who has been tireless in supporting this amendment and so many others during the course of this Bill; to the noble Lord, Lord Newton, who has been a hero in bringing common sense and good judgment to this Bill at all kinds of stages; to the right reverend Prelate the Bishop of Ripon and Leeds for his support; and to the noble Lord, Lord German, who raised a number of important points. Perhaps I could respond to his point that 1 million bedrooms-I am not sure whether he actually quoted this number-are underoccupied in the social housing sector, and that it would be good if we could get those used. In this country there are, I think, 6.8 million empty bedrooms in houses where there is already one spare room. We have lots and lots of spare rooms, but they are in the owner-occupied sector, and nobody is suggesting that we levy a bedroom
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I am also grateful to the noble Lord, Lord McKenzie of Luton, for his contribution and indeed to the noble Lord, Lord Wigley. I single out the noble Lord, Lord McKenzie of Luton, because he has brought the expertise of a previous Minister on this key issue to all of our debates and has been more than helpful to me in my formulation of the amendments that we have before us today.
I was greatly encouraged when the Minister said that the cost of this has come down from the earlier amendment, which found favour with your Lordships and did not do so badly in the other place. The cost has come down from some £300 million to about £100 million. I think the Minister said up to £100 million. This, I agree, is serious money, but it is set against the savings in housing benefit that the Minister mentioned again that he is seeking to achieve of over £2 billion. The £100 million is for particularly vulnerable and low-income households. I was not convinced by the argument from our earlier debates in Committee for the increase in the amount that will be charged each week. It will rise from £13 per week to £14 per week, which happens to be the amount required to find a further £30 million of discretionary housing payments. That, I fear, has meant that we are robbing Peter to pay Paul. We are charging another 50 quid to everybody else to pay for the ways in which we can exempt certain people, people in houses that have been expensively adapted, and indeed those who regularly have foster children in the home. That is excellent, but it is being paid for by pushing up the total bedroom tax for everybody else to £728 a year. That is three-and-a-half times the winter fuel payment, for example. That is a serious amount for people on the lowest incomes to find.
I do understand the pressures on the Minister to help the Government achieve deficit reduction, but I see it as incumbent on us in this House to take a stand, even a modest one, to draw a line where deficit reduction is at the expense of many thousands of the very poorest households. We have to say: so far, and no further. Applying the bedroom tax to these vulnerable groups, set out in this amendment, where there is no opportunity for those on very low incomes to avoid the tax, is going too far. I wish to test the opinion of the House.
15A:Because Lords Amendments Nos. 15 and 23 would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.
23A: Because Lords Amendments Nos. 15 and 23 would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.
Lord Freud: There have been considerable extensive debates in both Houses on the ESA provisions for young people. I recognise that noble Lords have pursued their concerns about this measure constructively.
Our proposed changes to the condition relating to entitlement to ESA on grounds of limited capability during youth are part of our principled approach to reform. We want to modernise and simplify the current welfare system, focus support, avoid duplication of provision and redefine the contract between the state and individuals, in advance of the introduction of universal credit.
I understand the point made by noble Lords on more than one occasion: that the social security system has provided a non-contributory, non-means tested incapacity or invalidity benefit for many years. However, we are trying to simplify and rationalise the support provided by the system which has been recognised as complex and difficult to understand. That is the reason for the introduction of universal credit.
We do not believe that it is right, for example, that where a claimant has qualified for contributory ESA under the youth provisions and, some years later, they inherit a substantial sum, they should be able to continue to receive unlimited contributory ESA without having paid any contributions.
We estimate that about 90 per cent of those who presently receive ESA on youth grounds will be eligible for income-related ESA. So just 10 per cent will not qualify and that is because they have other means available to them-either a partner in full time work or, more likely in practice, capital of more than £16,000.
I know that there was confusion in the other place on this point, which I need to clear up, about when young people were entitled to its benefit. Once a young person has left education and child benefit is no longer payable, the young person is free to claim income-related ESA in their own right and their parents' income and capital will not affect the young person's benefit entitlement, because they are no longer regarded as dependent on their parents.
Another important point is that eligibility to income-related ESA also provides automatic entitlement to passported benefits such as free NHS prescriptions. As many noble Lords will be aware, many stakeholders have called for this change, which means that the present process of separate applications will no longer be required. As noble Lords will be aware, I have asked the Social Security Advisory Committee to provide advice about how passported benefits will be provided in future. We are working with other government departments and the devolved Administrations to prepare our response to the advisory committee's report. That response will be published alongside the final report by the end of April.
In this, we are targeting the support that the Government can provide to where it is needed most. We simply do not think that someone who has independent capital or income should benefit from indefinite entitlement to contributory ESA. We have, however, as part of the process, listened to concerns and made amendments to the Bill that allow claimants to re-qualify for a further award of contributory ESA after their ESA has ceased as a result of time-limiting
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One of the hidden aspects that we are trying to deal with here is benefit tourism. We are trying to make sure that our benefits are paid only to people who have a legitimate link to the UK and who meet the same conditions of entitlement as those who normally live in this country. We have a strong view that the Government of the United Kingdom are responsible for determining entitlement to UK benefits. There are a number of ongoing cases where the Government are doing all they can to defend this fundamental right, which allows us to decide who should be eligible. I know that there is widespread support for this view across the House and in the country. The Stewart case is just one example of the challenges that we are facing in defending this position, and I shall touch on that in a second.
We do not think it is right to distort our social security system to fit European rulings. We are defending this position in the courts, both domestically and in Luxembourg and Strasbourg. In Strasbourg, my right honourable friend the Minister for Employment has been discussing with his European counterparts whether we can find a more pragmatic and sensible approach to European regulation.
Perhaps I may touch again on the Stewart judgment, given by the European Court of Justice in July. The effect of this judgment is that someone living abroad could qualify for benefit without having to satisfy the past presence test. In other words, they could get benefit where they could demonstrate a genuine and sufficient link to the United Kingdom. In relation to Ms Stewart herself, the Court determined that she could arguably demonstrate a link with the UK because she was in receipt of another UK benefit, she was dependent on her parents, who were UK pensioners, and she had spent a significant part of her life in the UK. We want people to qualify only where they have lived in the UK recently prior to the claim, but we also have to satisfy our EU obligations by taking account of the Court's judgment with regard to where we can still operate such a past presence test. We strongly disagree with the European Court of Justice's ruling.
The effect of the judgment is that under EU law we cannot have a blanket past presence test of this kind for benefit claimants. As a result, the ESA youth provision is potentially more widely available than intended. As we are bound by EU law, there is nothing we can do by way of domestic legislation, even primary, to change its effect, short of abolition.
As usual when we introduce policy changes, we will be reviewing the changes to make sure that they work as intended and do not have unintended effects. Although I recognise noble Lords' concerns, I believe that abolition of the ESA youth provision for new claims remains the best option to close the door to people from overseas while also simplifying and modernising the support to be provided in the future. I beg to move.
(3C) The review under subsection (3B) shall commence twelve months after subsection (3A) has come into force; and a report of the review shall be laid before both Houses of Parliament within three months of the review commencing.""
Baroness Lister of Burtersett: My Lords, I admit that this is not the amendment that I had wanted to move but I have been prevented from moving that one by the-and I hope that this is not unparliamentary language-sneaky amendment that the Government passed on the evening of 11 January, which ran contrary to the earlier decision made by your Lordships' House to protect the ESA youth provision. This amendment simply calls for a report on the impact of its abolition so that the young people affected are not left completely in the lurch.
Noble Lords will recall that we are concerned here with the abolition of a provision which has been an accepted and uncontested part of social security legislation since 1975. It enables young people who have been disabled from birth or childhood to access contributory employment and support allowance without having paid the necessary contributions on the grounds that they cannot be expected to have paid them.
I shall not go over all the arguments that have already been made but I want to pick up one point that the Minister made-that young people who do not qualify for income-related ESA have independent means. I find it strange that the Government, who have such concern about so-called welfare dependency on the state, do not seem to understand that in the 21st century an adult who has to depend totally economically on another finds that demeaning. It is not right.
The abolition of the youth ESA provision was originally justified on the grounds of administrative simplification, as the noble Lord has said. That argument did not stand up well to scrutiny, so the Government shifted their ground and argued that its abolition was necessary to protect against the effects of a European Court of Justice decision in the case of Stewart, as the Minister has explained. This decision is dated 21 July 2011. The Grand Committee discussed the youth condition on 8 November-three and a half months later-yet the Minister did not mention it. If the implications of the decision were so significant, surely someone in the DWP would have noticed them during those three and a half months. The first that noble Lords heard of it was in January. Interestingly, in January the department was also rebuked by the UK Statistics Authority for rushing out figures on benefit
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More importantly, I have received advice from Dr Charlotte O'Brien, a law lecturer at the University of York. She is an expert in this area and I am very grateful to her. She disputes the department's interpretation of the implications of the Stewart case. In her view, the Government's "claim that 'we could end up paying this benefit, on a long-term unconditional basis, to more people who have never lived in the United Kingdom but who can simply demonstrate a link to it'; and the suggestion that the ruling makes ESA in youth much more widely available are not supported by either the rules on social security co-ordination or by the wording of the judgment". I shall not wear the patience of your Lordships' House by going into detail. I just wish to say that it is unlikely that in many such cases the UK will be the "competent state"-a necessary condition of entitlement. However, where it is, it is still open to the UK Government to apply a "real link test", which would not be deemed to be arbitrary in the way that the residence test was in Stewart. When I put it to Dr O'Brien that it would appear that the Stewart judgment had been seized on as a pretext, she agreed, adding, "I think it is a very flimsy pretext".
If, however, the department's interpretation were correct, it might also raise questions about entitlement to DLA/PIP and attendance allowance. Can the Minister please give the House a firm assurance that there will be no attempt in future to abolish those payments using the same pretext?
Finally, I come to the question of money. The impact assessment for this measure did not include financial savings in its list of policy objectives, yet Ministers have subsequently used these savings as an argument to justify it. What savings are we talking about? The amendment overturned by the House of Commons would have cost a mere £17 million by 2015-16. That is a cumulative cost. It would be really helpful if the Minister could stick to annual costings, or are they so minimal as to be unquantifiable on an annual basis? Surely it is an abuse of financial privilege to slap it on an amendment, the cost of which falls easily within the normal margin of error.
I do not blame the Minister, but in both Houses Ministers have tried to justify the abolition of youth ESA as part of what they have called the Government's "principled approach to reform". I believe that this mean-minded little measure and the justifications put forward for it, together with the application of financial privilege and the manner in which the Government moved their own amendment on Report, are totally unprincipled. I beg to move.
Baroness Hayter of Kentish Town: My Lords, as we have heard, without our amendment, the Bill will deny thousands of disabled people aged under 20 the right
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Clause 52 abolishes the right of people under 20 with work-limiting conditions to be treated as if they had met the NI contributions. I wonder whether our colleagues in the Commons really meant to reject our amendment in the knowledge that it affects young people, some with profound disabilities from childhood, and those with the greatest disadvantage in the labour market. The Bill removes their access to an independent income and reduces their chance of achieving independence. As my noble friend Lady Lister said, it was not to save money-at least that was not listed as a policy intent in the Government's paper. Therefore, it can only be about changing behaviour, but how do these youngsters change their disability? Most of them would love to work but it is the behaviour of others, particularly understanding employers, which will be the biggest determinant of whether they can find work.
As my noble friend Lady Lister said, these changes are, for the country, tiny-£17 million cumulative-but the impact on young disabled people will be huge. On average, 70 per cent will lose about £25 a week, but 10 per cent of those 15,000 youngsters will lose entitlement altogether, because they have either savings or income from another family member. The Minister spoke earlier about inheritance. I do not know people who go around inheriting lots of money; maybe he does. The idea that because some people may inherit, everyone should be denied access to benefit, I find very strange.
The impact assessment also does not look at the effect on other family members. The introduction of a means test will undoubtedly decrease the incentive for anyone living with a young disabled person either to work or to build up savings. Indeed, these young disabled people will actually have a huge negative dowry to bring into any relationship, because the earnings of the person whom they would love to move in with will immediately kick in against the means-tested benefits of these young disabled people.
We do not know-we cannot work it out from the income assessment-exactly which people will be affected. However, the figures for those under 16 claiming DLA show that 41 per cent of them do so in relation to a learning disability. It is reasonable to assume that a large proportion of the people affected will also be in this group. As my noble friend has said, this is not the amendment she wanted to table. While we must accept that the Commons has given its decision on this provision that removes the right from these people, we ask the
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The Minister has said that he will review all such policies and impacts of the Bill. We hope as we begin the ending, if you like, of this period of the Bill that the Government can say yes to this very small amendment, which only writes in that such a review should take place.
Lord Freud: My Lords, the short answer is that we will monitor it. However, I do not accept the amendment and I will explain exactly why. It does not work in the way that is intended. It is designed for us to have a full formal review. As noble Lords will recognise, we do have reviews and we treat them very seriously. If you look at the example of the Harrington review of the WCA, you see that they can be of immense value in the development of policy.
The way this one would work is that we would have a review one year after the measure came into force. The amendment would require that that report-a big formal report-is laid before the Houses of Parliament within three months, an incredibly rapid timescale as I am sure that the noble Baroness will recognise. We will monitor this and use evidence from a large number of sources on the experiences and outcomes of those affected. We will use DWP administrative datasets to monitor the trends in both the caseloads and in the level and distribution of benefit entitlements.
I want to put into context the huge paraphernalia that this amendment would require in practice. We are looking at the region of 15,000 claims to ESA youth every year. We expect 10 per cent of those not to qualify for ESA-not to be in the system. That is 1,500 people. It is not appropriate to have on the Bill a major Houses of Parliament review when the numbers are so small. The timing is not right. One does not look at a policy like this only once; one needs to keep it under review and look at it over a number of years, not do it in an inflexible way. I am trying to say that I buy the point that we need to watch it, but I do not think this amendment works. We can evaluate detailed specialist research. Broad surveys will be useless. It is too small and we will not pick up anyone if we do it on the FRS. It will be five people if we do it like that. We will have to review it very differently and then use it to inform how we guide our future policy direction and, potentially, operational improvements.
I do not wish to row about benefit tourism. The reason that it came through late, to be blunt, is that my blood was chilled towards the end of last year when I started working through some of this stuff. That is why I missed it in November. I had not really absorbed the implications. I do not think I would call it a panic-
Lord Lester of Herne Hill: I was troubled when the noble Baroness, Lady Lister, alleged that the use of EU law was a pretext-I think she said pretext-which means it was a kind of sham. May I take it that the analysis given about the decision of the European Court of Justice was based on legal advice and that
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Lord Freud: No, my Lords. The department has an international wing that monitors this matter very closely and is on top of it. It has lawyers and also takes advice from lawyers-although formally I am not allowed to say that we ever consult lawyers internally for advice. I think that is the position. All I can say is that there are many ramifications to this. I am not playing games. I am quite worried about the implications for our whole benefits system.
Baroness Hollis of Heigham: In my experience in the department, over eight years and with a dozen Bills, the legal advice was usually gold-plated. When I scratched it, I realised that we were going over the top. Most outcomes that were predicted on such things as pensions did not occur. I urge the Minister to adopt an appropriate degree of scepticism toward the legal advice that comes his way.
Lord Freud: My Lords, I am always delighted to take the advice of someone who occupied my room in the department for so many years-although I think that there is a progression and that ignoring it early on does not mean that it will not come back. I will not go into this in too much detail. I am sure that the noble Baroness did not mean to say that I was making it up, because I was not.
Baroness Lister of Burtersett: Before the noble Lord moves off the point, will he give us the assurance I asked for that, whether or not this is a pretext this time, the argument will not be used to bring forward proposals to abolish attendance allowance, DLA or PIP on the grounds that it is the only way to deal with such cases?
Lord Freud: My Lords, that is an enormous question. In this context, I am in no position to give the undertaking. We will have to look very carefully at how we frame our benefits if we do not want them all to be very freely and widely used. That is all I am saying. How we will frame them in the years ahead I do not know. I have not started to think about it. Clearly, we are going through a huge exercise to introduce PIP and it is very unlikely that anything will reverse it for many years. I cannot answer the question because it is too big. However, these are real concerns.
I will go back to a narrower point. We want to modernise and simplify the welfare system. We want to avoid duplication of provision, and to redefine the basis of the contract between the individual and the state. We need to do that in advance of universal credit coming in. We want to place claimants on the same basis as everyone else. All those who do not qualify for contributory benefits will qualify for income-related benefits. The effect in practice will be a streamlined system for these youngsters to receive passported benefits.
Baroness Lister of Burtersett: My Lords, I am grateful, first, to my noble friend Lady Hayter of Kentish Town for her very helpful and supportive speech. I also thank the Minister. Of course he is right that the amendment in its current form is not appropriate. As I said, it is not the amendment that I wanted to table. However, it has done what I hoped it would do. It has elicited from the Minister a commitment to monitoring. That is very welcome.
The Minister has acknowledged that monitoring cannot be simply statistical. I hope that it will pay particular attention to the nine out of 10 people who will qualify for income-related ESA. We will want to know how much money they will get relative to what they would have received under a contributory scheme. As my noble friend said, the income assessment suggested that there would be an average loss of £25 per week for some young and vulnerable people. That is a lot of money for them. We will want to know about the situation of the one in 10 who will not qualify. Will it be because of the great inheritance they have received? Or will it be the case, as I suspect, that their parents have scrimped and saved to ensure that when they die, their son or daughter has a financial cushion-as a result of which they could lose all entitlement to benefits. I cannot believe that the House would want that.
I hope that the monitoring will look at that and will include research to find out how young people feel when they have a partner and no entitlement and so come to depend economically on their partner, on whom they may already depend for physical assistance. Their dependence will become total. I hope that the Minister will discuss with researchers and others-perhaps including Members of this House and the other place-the appropriate monitoring that will take place. I very much welcome what he said about monitoring, and the fact that he will report to the House and to the other place. The time period of three months is too short and we do not want just a one-off report. I hope that there will be a mechanism for enabling us, on a regular basis, to hear what is happening to this group of young people. As my noble friend said, they are very vulnerable.
One thing I found worrying in the Minister's reply was that he was not able to give the assurance that I asked for about the other benefits. I thought that I was asking for a simple thing. It makes me worry about whether there is a plan-I will put on the record that the noble Lord is shaking his head to indicate that there is no such plan-to abolish these benefits. However, I would have felt much happier if we had had a clear assurance that it simply would not happen and that the Government's interpretation of EU law would not be used in that way.
It is not with a heavy heart that I withdraw the amendment because I completely accept, as the Minister said, that it is not terribly good. However, it is with a heavy heart that I feel that we in this House and the other place have let down young disabled people who look to Parliament to preserve their independent income. I feel disappointed that we have not been able to protect that group of people. Having said that, I beg leave to withdraw the Motion.
"(2A) The period for which a person is entitled to a contributory allowance by virtue of the third condition set out in Part 1 of Schedule 1 (youth) shall not exceed a prescribed number of days which must be at least 730."
Lord Freud: My Lords, there has been extensive debate in both Houses on ESA provisions. Many points were made and we made a number of changes as a result, which I know that noble Lords acknowledge. Amendments 17 and 19 would increase the time limit for claimants receiving contributory ESA in the work-related activity group from the proposed 365 days to a minimum of 730 days. This would have to be prescribed in regulations. I fully recognise the concerns expressed by noble Lords who supported the amendments, in particular their concern for claimants suffering from cancer. We will debate the cancer point again in a while. On time limiting, I stress again that it will affect only contributory ESA claimants in the WRAG who would normally expect to be able to return to work with appropriate support. Time limiting will not apply at all to claimants who are placed in the support group. They will continue to receive unlimited support for as long as they need it.
We will come on to this in detail later, but I should briefly add that around two-thirds of those with a primary diagnosis of cancer who complete their WCA are placed in the support group and would therefore be unaffected by our time-limiting proposals. Additionally, claimants with the lowest incomes will be in receipt of income-related ESA and would therefore also be unaffected by this measure.
We have had a number of debates about whether the time limit is arbitrary. I do not accept that it is. A number of countries apply a similar limit to that provided by this Bill. The Government need to strike a reasonable balance between the needs of sick and
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There is, of course, a strong fiscal case for this change. We estimate that this amendment would reduce the total savings by around £1.6 billion by 2016-17. We have discussed this again and again, but this is a very substantial figure, and this is one of a number of very difficult decisions the Government have had to make in order to stabilise the financial position. I beg to move.
As an amendment to Motion E, leave out from "17A" to the end and insert "and do not agree with the Commons in their Amendment 19A but do propose Amendments 17B, 17C, 17D and 19B as amendments in lieu of Amendments 17 and 19A"
Lord McKenzie of Luton:My Lords, Amendments 17B, 17C, 17D and 19B relate to the time limit for the contributory employment and support allowance, and recommend that this can be increased by secondary legislation in the future.
The time-limiting of contributory ESA to just 365 days for those in the work-related activity group is one of the most indefensible provisions in the Bill. It is all about saving money and will bring what my right honourable friend Stephen Timms referred to in the other place as,
I remind noble Lords that the number affected will rise by 2015-16 to something like 700,000, 40 per cent of whom will not be entitled to income-related ESA. It will hit some 100,000 claimants in a matter of a few weeks when they see their ESA disappear literally overnight, with losses in income of up to £90 a week and over half of those affected in the lowest three income deciles. The very manner in which this is being introduced, including the assessment period and time already on the clock, demonstrates that this is not about fairness but about money.
The arguments against this one-year limitation have been well rehearsed and I do not propose to develop them in detail again this evening. They were subject to a powerful amendment moved by the noble Lord, Lord Patel, on Report. The restriction has no credible evidence base, it undermines the contributory principle, it creates another couple penalty, and it simply fails to take proper account of the time that many will need to overcome their illness or disability so as to be able to access employment. The policy potentially overrides the WRAG conditionality, and the noble Lord, Lord Patel, is rightly pursuing the situation for cancer sufferers. We look forward to supporting him in his endeavours shortly.
Noble Lords sent a strong message to the House of Commons seeking a minimum of two years for the restriction, and for the restriction to be embodied in secondary legislation so that an evidence base could be brought to bear. That message fell on stony ground and the Government have brought the shutters down on our original amendment by claiming financial privilege. Of course, they did this with the full support of the Lib Dems, despite their party policy to oppose arbitrary time limits, but this is a reality that we have to face, if not forget.
In proposing this amendment in lieu, we do not abandon our determination to see this policy based on evidence; nor do we accept the 365-day arbitrary limit. Securing that an upward revision of this limit can be achieved by secondary legislation at least keeps the cause alive. The Minister has claimed international precedents-as he did a moment ago-as part of the evidence base for this policy. Perhaps we can ask the DWP to publish that research so we can share the benefit of it.
Lord Freud: My Lords, Amendments 17B, 17C, 17D and 19B, tabled by the noble Lord, Lord McKenzie, mean that although a time limit of 365 days will still be applied to contributory ESA claimants in the WRAG, including those claiming under the youth provision, there would also be an order-making power that would allow the number of days to be increased in the future.
I thank the noble Lord, Lord McKenzie, for his amendment as this has given me the opportunity to consider again an order-making power for time-limiting. We have discussed at length our rationale for setting the time limit at 365 days. We have listened carefully to noble Lords' concerns about this time limit. We have always said that, for clarity, we believe it is right to
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However, this amendment achieves an excellent balance of the two. A time limit of 365 days is still specified in the Bill, but with the added flexibility to increase the number of days by order. We welcome this amendment and I commend the noble Lord, Lord McKenzie, for tabling it.
To sum up, we have listened to the concerns raised by noble Lords and have made amendments to ensure that disabled people whose condition deteriorates are able to re-qualify for contributory ESA if they would be placed in the support group. This demonstrates our continued commitment to supporting those with the most severe health conditions or disabilities.
The noble Lord, Lord McKenzie, has tabled very well considered amendments, so I urge noble Lords to accept them. However, I need to make clear that accepting these amendments in no way changes the Government's policy on the time-limiting of contributory ESA. The limit will remain 365 days. These amendments simply mean that a future Government-of any hue-would be able to change the limit by order, as well as by further legislation.
Lord McKenzie of Luton: My Lords, I am very grateful to the Minister for his acceptance of those amendments. He helped to draft them so he should accept them! I hear what he says about the Government sticking to their 365-day limit, but we will continue to work on him and his colleagues and hope to change their minds before we have a next Government.
Lord Freud: Thank you very much. I was about to launch into the wrong thing. This is about the ESA provisions for people with cancer, which has been a very sensitive issue. We have listened very carefully to those concerns and made a number of changes to clarify our policy intent to ensure that vulnerable people, such as those with deteriorating conditions, are protected.
The intended purpose of Amendment 18 means that no time limit would be applied to contributory ESA claimants who are receiving treatment for cancer, or have a diagnosis of cancer, for as long as they have limited capability for work as a result. This is clearly a sensitive topic, and we have said all along that we want to do the best for individuals suffering from cancer.
I have to repeat something I said a few minutes ago: that most individuals with cancer are placed in the support group at the outset of their treatment. This recognises the serious effects that cancer treatment can have on individuals.
We have been working closely with Macmillan to improve how the WCA assesses individuals who are being treated for cancer, and we are now consulting on our proposals. While it is important that we do not pre-empt the consultation, I can assure noble Lords that our abiding aim is to ensure that individuals undergoing or recovering from cancer treatment are not subject to unnecessary assessment. A process is in place to ensure that appropriate evidence is gathered to allow those who are unable to work due to the effects of their treatment to access the support group. In this way I believe that we can ensure that people with cancer are treated sensitively and receive the support that they need. I beg to move.
"( ) In calculating for the purpose of subsection (1) or (2A) the length of the period for which a person is entitled to a contributory allowance, days in a period during which a person is receiving treatment for cancer or suffering from the effects of treatments for cancer are not to be counted."
Lord Patel: My Lords, before I start, I would like to record my most sincere gratitude to the Minister for the courteous way in which he has engaged with me on many occasions to discuss all my amendments, but particularly this one. I found that our meeting was courteous, and he showed a clear understanding of the issues, so I thank him for that.
I was, of course, disappointed that the other House decided to overturn my amendment, particularly one that I thought was fairly modest, as Amendment 18 simply sought to protect cancer patients from the impact of time-limiting employment and support allowance. If the impact of the time-limiting proposal
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During the previous debate I indicated very briefly what it is like for patients to be on chemotherapy for prolonged periods of time, sometimes for as long as two years. I could not do enough justice to the description of how a patient feels, so I would rather use the actual words of a patient.
I think she is right. The vast majority of people with cancer who are out of work because of their condition want to work. For cancer patients, getting back to work is a crucial step forward in getting their lives back after cancer, but people with cancer often experience debilitating physical and psychological effects from the disease and its treatment. As I have described, these can be quite severe. For the majority of people with cancer who need ESA, 12 months is simply not long enough to return to work.
We hope there is consensus that cancer patients awaiting and undergoing cancer treatment should be in the support group. The Minister already referred to this, and I am grateful for that. I understand that following my discussions with the Minister and others, the Government are in discussions with Macmillan about how this process can be reviewed. Progress is being made, and I appreciate that very much. However, the primary concerns about the impact of time limiting on cancer patients have been that those who still experience the long-term effects of treatment will lose their benefit before they are ready to return to work. I hope the Minister will say something about that.
I am glad, however, that the Government are seeking to ensure that these people are given more time in the support group, where they will not be impacted by the time limit. If we are to protect cancer patients who are suffering from the debilitating side-effects of their treatment through the work capability assessment, it is crucial that the views of healthcare professionals-the oncologists, the GPs and the specialist nurses-are taken on board, and their evidence ought to suffice.
I hope that the Minister will refer to that. Patients often deteriorate after treatment is completed, hence my amendment, which says that those suffering from the effects of treatment should not be included. A system would be based on the presumption-and that word is important-that the cancer patient leaving the treatment phase would remain in the support group of the benefit if they needed it. Evidence from a healthcare professional would consist of confirmation that the cancer patient continues to experience side effects that limit a claimant's capability to work, and therefore should be placed in the support group. I agree that this assessment could be reviewed after a suitable period-even after six months-to see how the claimant's situation has changed.
Baroness Morgan of Drefelin: My Lords, I support the Motion of the noble Lord, Lord Patel, and in so doing I remind the House of my interest as chief executive of Breast Cancer Campaign. In particular I congratulate the noble Lord, Lord Patel, on pursuing his amendment and on articulating so clearly the concerns of cancer patients. I also congratulate Macmillan on the work that it has been doing very determinedly to raise these important issues on behalf of cancer patients, and I thank the Minister for listening and for being very careful in his response, as I am sure he will be.
I do not want to repeat the arguments that have already been made in this House on Report, but I would like to be very clear that I believe this House has made its intention very clear-with an alternative amendment-on the need to provide cancer patients with the security of having treatment without the pressure of potentially losing their benefit added to it, an issue that I suggested here today and that I would like to hear from the Minister on.
I would specifically welcome hearing from the Minister about the position of cancer patients who, by April 2012, will have been in the work-related activity group for 12 months. Will he clarify for us, in the light of his new thinking, whether this group of patients will no longer be eligible to receive contributory ESA? I know that the Government are consulting, and I understand that the Minister will not want to pre-empt the outcome of that consultation, but it would be very helpful for those who have received notice that their benefit will come to an end after 12 months to know, as cancer patients, what their position might be.
Lord Avebury: My Lords, perhaps I may intervene briefly and question the noble Lord, Lord Patel, about the breadth of his amendment. He spoke about those people who are receiving treatment for cancer and described vividly the ordeals that they go through when receiving chemotherapy. Of course, we all have knowledge of that kind of treatment, not from personal experience but from our relatives and friends who have been through those procedures. But not every cancer patient has to be given chemotherapy or radiotherapy. Some cancers can be treated with medication. I was speaking particularly about myeloproliferative disorders, which can be treated in the early stages with medication.
The wording of the amendment as regards "receiving treatment" is too broad and should be confined, for example, to those receiving chemotherapy or radiotherapy. In that way, the provision would be limited to those people who are so physically affected by the treatment that they are receiving that they would be incapable of working or unlikely to be capable of working until that treatment ceases.
Lord Patel: My Lords, it is true that some cancer patients may not need any treatment after surgery. But many others need therapy and my amendment refers particularly to those who cannot work because of their treatment or their suffering from the effects of the treatment. My key point is that those people want to work. As Jenni Russell said in her article, they are not skiving. They want to work. If the amendment is defective in that area, the purpose is not.
Lord McKenzie of Luton: My Lords, when our amendments were considered in the other place, the Minister, Chris Grayling, emphasised that the scope of the support group had been increased for cancer patients and that the consultation, following work with Macmillan Cancer Support and Professor Harrington, carried a presumption that someone with cancer will be in the support group. In an exchange with my right honourable friend Stephen Timms, the Minister also confirmed that it was planned to have a simple system that enables a medical professional to indicate whether someone has sufficiently recovered to make a return to work. That obviously is to be welcomed. It clearly goes with the grain of the amendment in lieu in the name of the noble Lord, Lord Patel, which has our support. He has set out the arguments clearly and the support of noble Lords would bring relief to up to 7,000 people who have or have had cancer.
We recognise that the Minister cannot pre-empt a consultation, but we hope that the Government can accept the thrust of what the noble Lord, Lord Patel, proposes. If he cannot, we hope that the noble Lord will test the opinion of the House. Bringing relief to some 7,000 cancer sufferers is a worthy endeavour. Of course, it does not of itself provide help to the hundreds of thousands who are adversely affected by the arbitrary time limit in contributory ESA but that should not prevent us bringing some relief to this group where that is possible.
Lord Freud: My Lords, I need to start by paying tribute to the noble Lord, Lord Patel, who has done some astonishing work in this area in bringing the issues vividly to life. We certainly have learnt and have appreciated some of the things that he has said. I hope that I will be able to give him and the House some reassurance about the progress we have made on this.
As noble Lords will know, we are committed to improving the WCA so that it accurately identifies the individuals who should be in the support group where there is no time limiting and no questions. That is why we asked Professor Harrington and Macmillan Cancer Support to look at the way in which individuals being treated for cancer are assessed. That is why we have proposed changes and those changes are what we are consulting on now.
The intention of our proposals is to introduce a presumption that most people being treated for cancer should be in the support group unless the evidence indicates that, exceptionally, the debilitating effects of treatment are likely to be more limited. We would expect this to increase the number of individuals going into the support group and to reduce the number of people called to attend a face-to-face assessment. We have been working closely with Macmillan Cancer Support as part of the consultation and to understand if, following the consultation, there are further areas where improvements need to be made.
I can report to noble Lords that our discussions with Macmillan Cancer Support have been constructive. As a result we have reached agreement in the following three areas, which I hope will deal with some of the searching questions raised by the noble Lord, Lord Patel. First, we have agreed that following the consultation we will work with Macmillan Cancer Support to develop the detailed guidance that underpins the regulations. Our aim is that the guidance should clearly specify the evidence required from a healthcare professional that would confirm presumption and allow immediate access to the support group without a face-to-face assessment. In our initial discussions we have agreed with Macmillan Cancer Support that evidence would be accepted from an oncologist, a GP or a specialist cancer nurse.
Secondly, we have agreed to review the guidance and process for people who are in the work-related activity group but whose condition deteriorates or relapses during the course of treatment so that they can access the support group quickly and smoothly. We would expect this to speed the process and reduce the need for face-to-face assessments. Thirdly, we have agreed with Macmillan Cancer Support to review the guidance for people who are in the recovery period following cancer treatment. That will ensure that individuals can remain in the support group for as long as appropriate during their recovery. Combining those three proposals will greatly improve the way we assess and support individuals suffering from cancer and reflect the particular challenges they face as a result of both the condition and the treatment.
As a result, we would expect that the majority of cancer patients are likely to be placed in the support group for the first six months while they undergo treatment. Following this, many are likely to have a further period in the support group while they recover from the residual effects of treatment. It could easily be up to a year therefore for many people with cancer before the clock starts running in relation to time-limiting. I know that the chief executive of Macmillan Cancer Support has welcomed these proposals and we look forward to working with his organisation following
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Finally, in response to the noble Baroness, Lady Morgan, on the WRAG, we are looking at this in the round and it would be unwise to pre-empt the consultation. But, clearly, we would want to be in a position where those in the WRAG are genuinely able to do work-related activity. As I have said, we now presume that most people will end up in the support group for an extended period. On the basis of what I have said, I hope that the noble Lord, Lord Patel, will feel able to withdraw his amendment.
Lord Patel: My Lords, I thank the Minister for his very positive response. Like the noble Baroness, Lady Morgan, I pay tribute to the work Macmillan Cancer Support has done for cancer patients. To summarise, the Minister has been clear in accepting that the WCA assessment will be improved, that there will be a presumption that cancer patients in treatment will be in the support group, that discussions with Macmillan will continue following the consultation, and that guidance will be developed based on evidence from healthcare professionals to allow cancer patients either to remain in the WRAG or to go into the support group. He has also agreed to review guidance for patients in the WRAG so that if they deteriorate they can access the support group and to review guidance on the period of recovery following treatment. I have to say that it must be quite unusual to be content with the outcome on amendments on two successive days before two different Ministers. I thank the Minister very much for his summation. Cancer patients will be relieved. I am happy to withdraw the Motion.
Lord Freud: My Lords, by now the House will be well aware of the Government's reasons for introducing the benefit cap. It is about incentivising work and promoting fairness. Since we last debated the Bill, I have had a number of meetings with noble Lords and right reverend Prelates where concerns have been raised about the tone of the debate, and especially some of
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At the same time, I think we all agree that people who can work should be expected to do so and that the benefits system should encourage, not detract from, individual responsibility. There has to be a balance between the responsibility of the state and the taxpayer and the responsibility of the individual. Members of your Lordships' House know that the current benefits system does not have the balance right. All too often individual responsibility is undermined and, effectively, people are trapped on benefits. That is what we mean when we talk about welfare dependency-I know that "welfare" is not liked all around the House; we have had that discussion. This, above all, is what we are trying to achieve with the introduction of universal credit.
But the benefit cap is also a key element of our reforms. We firmly believe that it is a serious flaw in the current system to pay some claimants more money when they are out of work than they could reasonably expect to earn from working full time. It is clear that the vast majority of the public believe that too. The core principle of the benefit cap is that people should not receive more on benefits than the average weekly wage for working households. That is why we have said that for families and lone parents, the cap should be set at £500 a week, £26,000 a year, equivalent to gross earnings of £35,000 a year. We estimate that this is the amount that is equivalent to the average wage for working households. The original amendment to exclude child benefit and the new amendments tabled by the noble Lord, Lord McKenzie, effectively say that £26,000 a year is not enough. At this point, I should say that I shall confine my remarks to what is in the original amendment because I am curious to learn what the new amendment really does say. By setting a clear limit through the cap, we will shift people's expectations and change behaviour. In future, people will know what they can expect from the benefits system and take decisions accordingly.
Much of the concern in our debates has been about people who have already taken decisions that they could not easily reverse, or have decisions forced upon them by circumstances beyond their control. From the outset we have been clear about the need for appropriate exemptions and transitional measures, and we recognise the importance of getting these measures right. We have taken time in our deliberations. We have listened carefully to the debates here and in the other place, and we have met individuals and organisations representing vulnerable groups to discuss their concerns. We have used departmental data to improve our understanding of the potential impacts on households and their characteristics, and those are the figures that we have set out in the revised impact assessment.
On 1 February, during the Commons' consideration of the Lords' amendment, the Minister for Employment announced details of our proposals for a package of transitional measures and support that we believe will provide the necessary safeguards for households. We have always accepted that there are certain groups for whom it would not be appropriate to apply the cap. We had already said that we would exempt households which are in receipt of disability living allowance, personal independence payment, attendance allowance or constant attendance allowance, as well as households entitled to working tax credit and war widows and widowers. We have now announced that we will also exempt the small number of households with someone who is in receipt of the support component of employment support allowance, but not in receipt of DLA. In practice, in many cases this is probably more an issue of timing. This will ensure that the cap affects only people who, taking account of their health and any disability, can reasonably be expected to do work or work-related activity.
We do not want to penalise those who are in work and are doing the right thing, and therefore we will be putting in place a nine-month grace period for those who have been in work for the previous 12 months and lose their job through no fault of their own. This will allow people time to find alternative employment or consider alternative options to avoid the cap. The grace period will also help people who have to stop work for a while because they have suffered a bereavement or have taken on kinship carer responsibilities. In the latter case, it will help the kinship carer who has to take time off work to help children settle into their new home.
I know that the noble Lord, Lord McKenzie, has a specific concern about whether the grace period will apply to people who lose their job before the introduction of the cap, and in conversation he put that question to me very directly. Indeed, I think we can give credit to this House, because as a direct result we are refining these proposals. We have looked into this and we agree that it would be unfair if the cap applied immediately to those who have only been out of work for a month. In practice, therefore, we will look at the whole period, so the nine-month cap will look backwards in that way. In the case of somebody who finishes work this month, the cap would not apply until November, a full nine months later. I am sorry, let me get the dates right because I seem to be in a different year. If someone loses their job in February 2013, the cap would not apply until November 2013.
An essential part of our plan is to use scans of our databases to identify cases early, give people information and help them work through the options available to them. We have details of the cases that are already in payment. Regular scans will identify new cases as they arise, enabling us to let people know when the cap will apply to them. Once identified, all cases will be closely controlled and progress monitored. From April this year, we will provide support from Jobcentre Plus and the work programme to households who might be affected by the cap. We have more than a year to work intensively with those households so that they understand the implications of the cap and are given help to move into work and so avoid the cap wherever possible.
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We will ensure that there is transitional support to help manage families into more appropriate accommodation. This will include additional money to enable local authorities to make discretionary housing payments to help hard cases. This mirrors the steps that we took last year to provide safeguards following the introduction of the housing benefit cap. We will ensure that resources are provided to the areas where they are most needed and are available to help families deal in the short term with a variety of challenges they might face. We are talking about up to £80 million in 2013-14 and a further £50 million in 2014-15. That is just within this SR; it does not mean that we might not look yonder. There is no presumption that it is a cliff edge.
We believe that these transitional arrangements, taken as a whole, will strike the correct balance between providing people with the help they need to move into work and ensuring that hard cases get the most support while they adapt to the introduction of the cap. Finally, we have said that we will lay before the House a report on this policy's impact after a year of its operation, which will allow a review of how successfully we have met these objectives.
Given all these assurances, I hope that your Lordships will agree that the Government have listened to the concerns expressed in this House and elsewhere about the impact of the benefit cap. I hope, too, that your Lordships will agree that targeted exemptions and support are a much better way of ensuring that the cap operates fairly than structural changes that would alter its whole nature. I beg to move.
I accept absolutely the Minister's assurance that he would have no part in seeking to demonise people on benefits. I have never thought that of him and I think that we would all accept that to be the position.
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The amendment encompasses the concept of a period of grace of nine months before the cap bites for somebody who has become unemployed and it enables the detail to be set by regulation, which will enable the Government to specify their announced requirement of 12 prior months of work for the grace period to run.
When debating this exemption in the other place on 1 February, the Minister, Chris Grayling, also announced further exemptions in the ESA support group which the noble Lord, Lord Freud, confirmed a moment ago. These exemptions add to the existing list, which includes those in receipt of DLA, PIP, attendance allowance and, as we have heard, a war pension for surviving dependants when that is in payment. Further, we know that non-cash benefits such as free school meals, council tax benefit in its localised form and the childcare element of universal credit are to be ignored in what is included in the total benefits for the purposes of the comparison with average earnings-perhaps the Minister will confirm that to be the case.
Moreover, again as we have just heard, there is the announcement of more money, £160 million in total, for the first two years to top up discretionary housing payments to help those facing particular challenges. Whether this will be enough remains to be seen. So far as it goes, it is all well and good, although having lectured us on there being no money, perhaps the Minister can tell us where this funding has come from. Is it new money, or has something else been cut and, if so, what?
The cap will still hit tens of thousands of families hard, but the issue of who is in and who is out, and what is in the calculation, is at least a little porous under what the Government now propose. When announcing the period of grace, the Minister in the other place stated that it was always his intention to introduce this measure. One can only conclude that he went to some effort to disguise it. It did not appear in the impact assessment, including the updated document of 23 January. Indeed, on the basis of a response to an amendment tabled on Report by the noble Lord, Lord Best, pressed also by my noble friend Lady Drake, it seemed to be far from certain that a period of grace would be accepted. The Minister said then:
"What I can say today, as I said in Grand Committee, is that we are well aware of the issues, we are confident that we have the powers we need to ease transitions and we will consider the case for a grace period along with the other options that might be available".-[Official Report, 23/1/12; col. 892.]
One reason for highlighting this issue in this way is to get on the record how the grace period is to operate. It is understood that if somebody becomes unemployed
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Moreover, can the Minister confirm that the period of grace will operate when somebody has their hours reduced so that they fall below the threshold for the number of hours necessary to be considered in work and thus falling within the scope of the cap? Can he also confirm that, for so long as the prior-employment requirement is met, an individual may benefit from the period of grace more than once? What is the position where a couple claims universal credit? Will just one of the joint claimants have to satisfy the conditions for the period of grace to operate? What assumptions underpin the estimate that the period of grace will reduce savings by £30 million? I should make it clear that we support and have argued for a period of grace, and the amendment seeks clarification as to how it will work in practice. We are pleased that it will help to ameliorate the misery that the cap will bring and we want the period of grace to be meaningful and not just a gesture to get the Lib Dems on board.
I turn to Motion G2. We support a benefit cap but do not consider the manner in which it is to be introduced by the Government to be sensible. As we did in the other place, we take the opportunity to set down our view of how a cap could operate. Our amendments approach the benefit cap in a different way. It is different because of the difficulty in particular in seeking to create a one-size-fits-all cap which could lead to at least 20,000 families becoming homeless, wiping out any of the £270 million savings that the Government have said their benefit will produce. Indeed, it would lead to the very consequences which the Government have had to recognise in providing the additional £160 million of funding announced on 1 February-which we have just discussed. They are the sort of consequences which the Government have recognised in a series of exclusions for individuals and exemptions for certain types of benefit from the calculation.
The concept of a cap might be superficially very straightforward and, indeed, attractive: no household should get more in total benefits than the average net-of-tax-and-national-insurance earnings of those in work. A nice round sum of £500 a week for some might seem generous given that, for many, it is more than a family has to live on.
We risk creating the impression that everyone on benefits is getting £26,000 a year; and, by dealing in generalities, we risk ignoring the differing circumstances that families face. Although only 1 per cent of benefit claimants may be caught by the cap, this still amounts to some 67,000 families. The sum of £500 a week might get you a one-bedroom apartment in London, but in Rotherham in Yorkshire it would get a six-bedroom, detached family house. Given that the largest single benefit received by those set to be affected by the cap is housing benefit, one cap, set nationally, cannot be fair. This is particularly-but not exclusively-a London
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Moreover, if a benefit cap is to become part of the benefits landscape, there is a case for appointing an independent body to advise on what the appropriate levels for the cap should be. The benefit cap is-or has certainly become-an emotive issue, but it would be bad policy if the structure of the benefit system were driven by public sentiment rather than evidence and analysis. A requirement for an independent body to have regard to safeguarding against homelessness should not be contentions. It is what the Government have just done in pumping £160 million into the system and would help avoid local authorities racking up millions of pounds of costs at a time of austerity. However, it does not mean that somebody should never move, nor does it give anyone licence to occupy the extravagant, upmarket properties so beloved of the media. Neither should this approach negate the Government's belief that part of the rationale for a cap is to change attitudes. Having regard to child poverty targets is not just about income transfers, it is about a range of building blocks, including accessing the workplace, for those who can.
We seek to support a cap that better reflects reality than that promulgated by the Government. We are of course dealing with some of the most vulnerable families in our country and we owe it to them to construct policies that are not driven by short-term political expediency. I beg to move.
The Lord Bishop of Ripon and Leeds: My Lords, I have listened very hard to the Minister as he has sought to explain the rejection of your Lordships' amendment on children and the benefit cap. I remain regretful at the loss of the principle of child benefit for all and especially for those in most need. It is sometimes said that, although in this House we have a good many experts in fields such as health, education and the Armed Forces, we lack experts on poverty, because so few of us are actually in a position now of poverty. Maybe some of us can throw our minds back to times when we were not as comfortably off as we are now and remember the importance of child benefit in our own lives. My own experience was certainly that it was a lifeline in bringing up our own children. I have seen this repeated time and again in my ministry-both for those in employment and for those who have the misfortune to be unemployed. The almost total take-up of child benefit demonstrates for me the value of a benefit that is available for all and can carry no possible stigma for those in need of help.
I also remain puzzled at the failure to understand that children are expensive. Bringing them up costs money. Whatever the rights and wrongs of the particular
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All of that said, I am very grateful to the Government in general, and to the Minister in particular, for listening so carefully to the concerns of this House on the effect that the cap is likely to have on those in most need. I am grateful for the transitional arrangements that the Minister for Employment has announced. The nine-month period of grace, costing some £30 million, for those who lose their jobs is extremely welcome and should reduce the numbers of households capped by some 10,000. I am not quite sure whether Motion G1 is another example of sweetness and light between the two Front Benches, but they seem to be saying exactly the same thing on this matter and so I rather take it that the Minister is likely to accept Motion G1.
Then there is the additional discretionary housing payment for local authorities of up to £80 million for 2013-14 and £50 million for 2014-15. That is also extremely welcome, as is the assurance that claimants made homeless by the cap will not be considered intentionally homeless. I am grateful for the way in which in Motion G2 we have at last in today's debate tackled the question of homelessness. We have not actually talked about this before, but it is one of the key elements in deciding how a welfare system should work. Already in Yorkshire-no doubt in Rotherham as well as in Leeds-there is an increasing amount of homelessness on the streets. That can only get greater as a result of increased unemployment and we need to be very careful in this Bill that we are not increasing the amount of homelessness.
I look forward to more detail on the ring-fencing of the £80 million, including on how that support is going to be delivered and whether families will be able to apply directly for that support. I hope that this provision will enable there to be real support for those in most need. I am very grateful for the Government's expression of support and the financial commitment to the poor that it involves. However, I have to say that it still seems odd that the Government were so opposed to your Lordships' amendment on financial grounds, when the cost of their provision is apparently almost identical in 2013-14, at £110 million rather than £113 million, or whatever the figure was that we were using in relation to our earlier amendment.
I remain concerned about kin carers. I have not yet heard a satisfactory explanation of how we avoid the burden that the cap puts on those who take other people's children into their homes. This happens time and again in our society, for a whole host of reasons, such as the death or illness of a parent, or the parents' inability to bring up children. Carers are often grandparents. Kin carers preserve family life for children in distress and save the state a considerable amount of money-maybe some £119 million a year, according to a Children's Society estimate that has been given to
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Finally, but importantly, I am very grateful for the Minister's assertion of the importance and value of the benefit system and for his rejection of any demonising of those who are on benefit. This debate about the cap on benefits has produced, in some sections of the press and maybe of society more generally, an apparent assumption that those on benefit are deliberately sponging off the state. In a few often-quoted cases, that is no doubt true, but already those who are unable to work because of disability are reporting that they are being regarded as work-shy, when they would desperately love to work if they were able. It is crucial that we affirm the importance of the benefit system in providing support for those unable to work. The numbers who cannot find work are rising and there will always be those who are not capable of paid work because of illness or disability. It is crucial that we do nothing to exacerbate suspicion between those in work-often low-paid and struggling-and those who cannot find jobs.
I hope that the Minister in his response will be able to renew the conviction that benefits for those in need are crucial in a civilised society to provide for those who have fallen into hardship as a result of illness or disability or simply not being able to find a job, which is tragically not uncommon in some of our cities now. Many of those on benefit contribute to our society-as kin carers, for example, or in encouragement of those who are disabled, or in voluntary work, which helps to create a good society. Benefits are not a drain on society but a contribution to the common good. I hope that the Minister will be able to affirm this.
I am very grateful for the substantial government response to the earlier amendment, not least for that promise of an evaluation of the cap after a year of its operation. I look forward to that report in 2014, to a serious examination of any unintended consequences and to the continued work by the Government to do all that they can to protect children from damage at a time of financial stringency. I am happy to support Motion G1.
Lord Kirkwood of Kirkhope: My Lords, I would like to intervene briefly in this debate. I think that a household benefit cap is a wholly reprehensible policy device. I am absolutely and implacably opposed to it. However, I know when I am licked and I think that the Government have come a huge way in easing the path of the 67,000 families, although I still have fear and concerns for them. My purpose in intervening is to ask my noble friend to assist me by reassuring me that, with the extra spending envelope, he now has the capability-working closely with local authorities and Jobcentre Plus-to track the destinations of these families over the next few years. Colleagues who have been following debates on social security internationally know that, in America, the changes made in 1996 by President Clinton meant that people fell off the lists in droves and no one could find out where they went. The social security system then spent years trying to pick them up.
The fact is that 67,000 is 1 per cent of the case load; it is not a big number of people. I am reasonably assured now that, with the finances available to local authorities and Jobcentre Plus, it should be possible to get a report. When we get this important report-and I, too, agree that that is an important concession-the House will be able to be confident that none of these families has disappeared. I do not want any of these families to be "disappeared". I hope that my noble friend can give me that assurance.
I do not want this benefit cap to be anything like an accepted part of the landscape in future. I think that it is a sticking plaster and that an entitlement override is wholly wrong. However, I have enough confidence in my noble friend to know that if we get universal credit up and established and running well, and if he switches his attention-as I hope he will-to housing benefit in the context of a proper housing policy, and I would support him in doing that, we can trade our way out of needing a benefit cap. That is the way forward. I accept, however, that in the short term we are stuck with this. I hate it and will be pursuing it in regulations as aggressively as I can. However, as I said at the beginning, I know when I am licked and I hope that the Government will get on and do this properly.
I hope that the noble Lord, Lord McKenzie, will not press this idea of having an independent body on the benefit cap. I want nothing to do with independent bodies or anything else of any kind that has to do with the household benefit cap. Therefore, if he presses his amendment, he will find me-unusually, perhaps, in this case-in the opposite Lobby.
Baroness Butler-Sloss: My Lords, I would like briefly to take up a point made by the right reverend Prelate the Bishop of Ripon and Leeds in relation to kinship carers. I spoke previously on this and I remember that the Minister was sympathetic. I would be very glad to get some reassurance as to where his sympathy lies and how he proposes to endorse it.
Lord Newton of Braintree: My Lords, I am intervening only briefly, partly because I do not want to attack the right reverend Prelate, who seemed to be in a much less militant mood than he was on the previous occasion. I will, therefore, not repeat the remarks that I made then, when I made the point that what he was asking for was an increase in the benefit cap. I refrained from saying at that time-and the House ought to bear this in mind when thinking about all of this-that child benefit for the first child is now worth about £1,000 a year tax-free. For every other child it is a bit less than that. Bearing in mind that it is tax-free and that we are talking about a benefit cap of £26,000 net, which is said to equate to £36,000 gross, if you put child benefit on top you are looking at a position in which you would have to be a higher-rate taxpayer in order to hit the benefit cap, in terms of what you would have to earn. People ought to bear that in mind.
My main point is to express some reservations about the amendments tabled by the noble Lord, Lord McKenzie. What do we mean by "local area"? He really needs to answer that. My noble friend Lord Fowler and I-and I have already referred to some of our travails over housing benefit in 1986 to 1988-looked
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Baroness Drake: My Lords, I support Motion G1. I am conscious that I have entered the debate several times on the matter of the grace period before the weight of penalties comes into play and the benefit cap bites for those who lose their job through redundancy or some enforced reason. I apologise today if I sound a little repetitive, but it is something about which I feel most strongly. A modern welfare system, while addressing benefit dependency, must also support those hard-working families with a clear work ethic in managing today's flexible labour market. It must not fail to support responsible hard-working people and their families managing today's economic realities. There is a danger that this dimension has lost some focus in the current debate on the Bill.
The Bill writes the welfare rules for those in work and for those who have no record of benefit dependency. There are millions of people in this country on modest and low incomes who are hard-working, take the hard knocks that life hands out to them and fight to stay on course, so I welcomed the comments from the Minister, Chris Grayling, in the House of Commons on the 1st of this month that the Government would put in place a period of grace of nine months for those who have been in work for the previous 12 months and have lost their job through no fault of their own. The Government's recognition of the case for a period of grace is most welcome, but I remain anxious.
We know that the Government want to see increased flexibility in the labour market, including, if I may speculate, revisions to employment laws on redundancy consultation and no-fault dismissal for SMEs for up to two years-we await their proposals on these matters. This desire, taken together with the realities of today's labour market and the intensity of competition, makes a powerful case for inserting into the Bill the provision that regulations will provide for a period of grace in the circumstances where someone faces forced job loss. The provision of a period of grace for a fair period should be hardwired into the welfare system-an integral part of the definition of fairness-and not too easily reserved to the Secretary of State's discretion, which is why I feel that the amendment is correct.
Ever one who is keen to build on progress to see if there is any more progress to be made, I would like to clarify a matter with the Minister. Experience since 2007 has revealed that some employers have been more creative in responding to downturns than by using the traditional laying off of workers and redundancies. We have seen reductions in working hours and we have seen unpaid sabbaticals-that is, extended periods of non-payment and no work, where, through agreement and to avoid compulsory redundancy and to assist the company, the employment contract has stayed in place but the flow of wages has been suspended or reduced.
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I repeat that hard-working families have paid their dues but will need support in managing their way through a difficult labour market. A period of grace is of itself fundamentally fair. After all, for hard-working people who have lost their job and are desperately seeking another one, which most of them do, what change of behaviour can the immediate application of the cap be designed to achieve? Rather, it would have the perverse effect of undermining their efforts to get back early into the labour market because they were rushing around trying to find affordable accommodation, move their children into new schools or whatever. While I welcome, in the statements from the Minister today and from Chris Grayling, that they have accepted the argument for a grace period, in my view that argument is so compelling that it should not be a matter of discretion but should be enshrined in the Bill. Could that period of grace be applied in a way that fits in with trends in the modern labour market?
I would like to make a final comment. I had not intended to do so but have been prompted to by the comments of the right reverend Prelate the Archbishop-sorry, the Bishop of Ripon and Leeds; I accidentally promoted him there-on kinship carers, a matter on which I myself have tabled several amendments. The Minister has given us his promise that he recognises the contribution of kinship carers, who keep 200,000-plus children out of care, and that he is on the case. I trust him on that; I trust him to honour his promise. I hope that he can reassure the right reverend Prelate that he will hold to his promise, even if today we cannot get the details of how he will do so.
Lord Empey: My Lords, I have some remarks on Motion G2. I recall vividly that in the Autumn Statement there were indications that regional pay was to be examined and the Chancellor had asked regional bodies throughout the United Kingdom to report to him by next July on the issues of regional pay. From a regional perspective, I have to say to the noble Lord, Lord McKenzie, that I have great reservations about his proposals. While a cap is by definition a blunt instrument, and there always has been a specific London issue in pay for as long as I can remember anyway, if we go down the route of establishing a body to run around the regions-as the noble Lord, Lord Newton, has pointed out with his usual typical incisiveness, the variation is not only between regions but within regions and within cities, streets and districts-then I fear that we open the Pandora's box not only of regional pay but of regional benefit, and sooner or later some people are going to say regional taxes. I fear that the
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If you want to encourage people to move to where they are more likely to get work, that tends to be in densely populated areas-that is just the reality of life. This measure, however, portends a reality where you could discourage people from going somewhere that they are more likely to find work. I fear that if we go down the road of the amendment, we could open up a range of issues in the regions relating to pay, benefits, taxes and the whole relationship that exists there.
When I heard the noble Lord's colleague announce this policy in the other place some time ago, I was greatly surprised. Many of his colleagues spoke to me after I had made the point about regional pay and said, "Yes, we can see this is coming". However, this would actually accelerate the process, so I hope that the noble Lord might not move his amendment and might instead reconsider the policy as it might apply to the regions.
Lord Freud: My Lords, in my opening remarks I described the measures that the Government are putting in place to ensure that the cap operates fairly. I explained that the exemption of people in the ESA support group ensures that the cap affects only people who, taking account of their health and any disability, can reasonably be expected to do work or work-related activity. I explained that the nine-month grace period will ensure that those who have been in work for 12 months or more will have time to find alternative employment or consider alternative options before the cap applies.
I was asked which payments would be ignored. The noble Lord, Lord McKenzie, went through what I said in Committee and I do not think there is any reason to change any of that. We have to work out the exact nature of the work exemption but, in principle, I see no reason why the grace period should not apply when hours are reduced.
An important point was raised by my noble friend Lord Kirkwood about monitoring people. We will monitor these cases very closely and keep track of their destinations. We already know who they are and will engage proactively with them from now on.
The right reverend Prelate the Bishop of Ripon and Leeds and the noble and learned Baroness, Lady Butler-Sloss, raised a question about kinship carers. In practice, the grace period is particularly helpful for kinship
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The right reverend Prelate raised the question of what a benefits system is for. We are constructing the universal credit to make a modern benefits system that does what we need it to do. He can take that as read.
Amazingly, I think I might have answered all the questions. The right reverend Prelate mentioned sweetness and light in relation to Motion G1. Fundamentally, I think that there is sweetness and light. I hope so, in that we are providing a grace period through regulations. We have all the powers that we need to do it, so in practice this amendment is unnecessary. It is sweetness and light in that sense and I hope the Motion will be withdrawn.
To be absolutely honest, there is less sweetness and light over Motion G2. I am resisting having some political knockabout on this. I know that it is not proper in this Chamber; let us leave that to another place. However, I find it very hard to think about having regional limits set by a new quango. My noble friend Lord Newton and the noble Lord, Lord Empey, have made the point that this could be very confusing and complex. If the noble Lord were sitting on my side of the Table at some future point, I would give him some advice: "You don't want to do this". Looking at it with a slightly stricter hat on, if we were to vote the Motion through it would mess up and delay the application of the cap. We are talking there about real money. We simply could not make the saving of £200 million a year because it would be such a complicated thing to introduce. Therefore, I hope that Motion G2 will be withdrawn. My mouth will be open if it is not.
There is an important principle in this debate. It is not fair that families on benefits receive more than the average working family. It is not fair to taxpayers. Indeed, it is not fair to benefit recipients who are trapped in a cycle of welfare dependency. Therefore, I urge the noble Lord not to press either Motion G1 or Motion G2.
Lord McKenzie of Luton: My Lords, I thank the Minister for his detailed responses, as ever. It is all sweetness and light as far as Motion G1 is concerned. It was tabled to get the very detailed answers that we got from the Minister and I thank him for that. I thank all other noble Lords who have participated in this debate. It is always good to hear from the right reverend Prelate the Bishop of Ripon and Leeds, who brings us back to issues of homelessness and vulnerable people. It is all too easy for us to forget about them in this environment.
The noble Lord, Lord Kirkwood, expressed his view that he was less than pleased with the benefit cap. I am well aware that he is not alone in that view. Interestingly, he referred to the cap as a sticking plaster. There is an interesting issue over whether the Government see it as a continuing part of the benefit system. We took it that they did, which is why we made some of our proposals, but maybe it is just a short-term measure.
I thank my noble friend Lady Drake for her support. The noble Lord, Lord Newton, asked about how local we would get in all this. Fundamentally, Motion G2 tries to highlight that rent is the big issue in all this. There are big disparities, particularly the London phenomenon, and rent will never be equalised across the country. I see and understand the potential risks in that, to which the noble Lord, Lord Empey, and others, including the Minister, referred. However, the intent is to focus on rents and that huge disparity. In the instance that I cited, the disparity is so big that how you make one cap fit all on an ongoing basis, without having to pile in more money every year to deal with the effects, is a real issue. The Government will have to face that in the months to come.
However, I should make clear that it is not my intention to press the amendments in Motion G1. On Motion G2, I am bound to say that my colleagues in the other place were denied the opportunity to vote on this. Therefore, I intend to test the opinion of the House.
"( ) Regulations may provide for the benefit cap to be applied to the welfare benefits to which a single person or a couple is entitled according to the local area in which they are ordinarily resident."
"(7) Before making the first regulations under subsection (5), the Secretary of State shall refer the matters specified in subsection (8) to the Independent Body on the Benefit Cap for their consideration.
(9) Where matters are referred to the Independent Body on the Benefit Cap under subsection (7), the Body shall, after considering those matters, make a report to the Secretary of State which shall contain the Body's recommendations about each of those matters.
(11) If the Independent Body on the Benefit Cap fail to make their report under subsection (9) within a time to be specified in regulations (which shall be no less than 9 months) any power of the Secretary of State to make regulations under this section shall be exercisable as if subsection (6) had not been enacted."
"(2A) Nothing in regulations under subsection (1) shall impose a liability on a parent with care for the payment of fees to the Commission where that parent has taken reasonable steps to establish whether it is possible or appropriate to make a maintenance agreement (within the meaning of section 9 of the Child Support Act 1991), and where, having taken such reasonable steps, it is either not possible or not appropriate for the parent with care to do so.""
Perhaps I may start from a rather different position from the one I took in the debate when we last looked at this issue. I shall quote the right honourable Frank Field, who is an acknowledged expert in this area. Even though he sits on a different side, he makes a point that is absolutely smack-on. He said:
"Is not the really big change that we are discussing the fact that when the CSA was first established, the maintenance moneys went to the Treasury to offset what taxpayers were putting up because, generally speaking, fathers were not prepared to do so, whereas now that money remains with the family? Is it not reasonable, in such circumstances, if people are going to get a top-up to their benefit that they should contribute to the cost of gaining that extra money? On the timing, should we not charge people once they are getting the money, not before?".-[Official Report, Commons, 1/2/12; col. 910.]
That quote highlights the central point to the debate. We need to look at the proposed charges in the context of all the other financial support that the Government provide for lone parents. Child maintenance is only one aspect of that support.
I have made some rough calculations to give noble Lords a sense of the relative orders of magnitude involved. In the 12 months to December 2011, the CSA collected or arranged maintenance of more than £1 billion. However, by far the largest amount of money going from the Government to support lone parents is through the benefits and tax credits systems. The benefits system provides well over £5 billion of support to lone parents, and the Government provide more than £10 billion of further support through tax credits. Thereby, the total support going to lone parents-a few lone parents are bereaved but the bulk, 95 per cent, are not-in either direct state funding or with funds from state mechanisms is well over £16 billion.
Let us now look at the other end of the telescope. What are we asking the parent with care to pay for collecting that extra money? By the end of the next spending review we will collect each year between £50 million and £100 million in collection charges from parents with care. Those figures are based on the 7 per cent to 12 per cent range of collection charges set out in the Green Paper.
Let us take the figure of £75 million and compare it to the £16 billion of support that is being provided to
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Lord McKenzie of Luton: To clarify the figures, is the £16 billion to which the noble Lord refers payable just to parents with care who are using the statutory CSA system, or to lone parents generally?
Lord Freud: This is paid over to lone parents as a group. That is what we are paying over to lone parents. Some of them have been bereaved, but the bulk of them have not. All of them could look to get support from the non-resident parent, whether or not they had lived with them at one stage. That is the figure I am trying to explain. All of them could look to get some maintenance.
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