Welfare Reform and Work Bill Committee

Written evidence submitted by Barnardo’s (WRW 36)

1. About Barnardo’s

Barnardo’s supports more than 240,000 children, young people, parents and carers through over 960 services across the UK. This experience directly informs our policy positions.

2. Introduction

This briefing outlines Barnardo’s response to relevant clauses of the Welfare Reform and Work Bill. Our key concern is that measures in the Bill are likely to increase child poverty now and in the future, and could mean that families already struggling on low incomes become even poorer. We believe that the near repeal of the Child Poverty Act 2010, which passed with cross-party support, will send the message that the UK Government no longer considers ending child poverty to be an important goal. The Government cannot ignore the impact of growing up in a family struggling on a very low income. Whilst income is not the only measure that affects a child’s "life chances", it does have an impact on health and life expectancy, academic outcomes, and future success in the work place. It is vital that the Government continues to report on an income measure, and considers the needs of children living in poverty whose parents are in work, as well as those in workless households. Finally, whilst the new "apprenticeship target" has the potential to transform young people’s lives, the Government must take action to ensure apprenticeships are accessible to those who need them most – including young people who have been in the care system.

3. Summary of key points

- Clause 2: 20,000 of the three million new apprenticeships should be ring-fenced for care leavers;

- Clause 4: the Government should continue to report on an income-based measure of child poverty;

- Clauses 7 and 8: the household benefit cap should not include benefits for children, and it should be reviewed annually;

- Clause 9: safeguards should be introduced to mitigate the potential impact of the benefits freeze on vulnerable families (should inflation rise);

- Clauses 11 and 12: tax credits and the child element of Universal Credit should not be limited to the first two children;

- Clause 15: conditionality for parents with young children claiming out of work benefits should not be implemented until a number of safeguards are in place to prevent hardship.

4. Clause 2 Apprenticeships reporting obligation

We welcome the Government’s commitment to create three million apprenticeships by March 2020. Apprenticeships have the potential to transform the lives of vulnerable young people, through a combination of college and work-based learning. However, the policy in its current form is unlikely to benefit young people facing the greatest challenges, including those who have been in the care system. The young people we support tell us they struggle to access apprenticeships, often due to the entry requirements, which often include five A*-C grades at GCSE. Care leavers’ school education is often disrupted due to multiple placements, which, combined with the impact of traumatic early experiences, means they are much less likely to achieve academically at the same rate as their peers. One of the consequences of this is that 34 percent of all care leavers are not in education, employment or training (NEET) at age 19 compared with 15.5 percent of 18 year olds in the general population. [1]

Proposed amendment: We are calling on the Government to amend the Bill to specify additional information that must be included in the Secretary of State’s progress report towards meeting the apprenticeship target. This information should include uptake of apprenticeships by young people who have been in the care system.

We also support amendments that would specify that information about the uptake of apprenticeships broken down by region, gender, age, ethnicity, disability, sector, qualification and level would be included in the Secretary of States report. This would encourage the Government and employers to ensure apprenticeships are accessed by vulnerable groups.

Proposed amendment: We are calling on the Government to amend the Bill to change the definition of the "apprenticeship target" to: specify that 20,000 apprenticeships will be reserved for young people who have been in the care system; these special apprenticeships will come with appropriate support to assist young people who have been in care with any barriers to accessing the workplace; and employers will receive a larger reimbursement to cover the additional costs.

5. Clause 4 Workless households and educational attainment and Clause 6 Other amendments to Child Poverty Act 2010

Barnardo’s believes the Government must continue to report to Parliament on progress against an income measure of child poverty. The Government’s proposal to replace the current measures, including the relative income measure with a) educational attainment and b) worklessness, would mean many children in low income households would not be treated as living in poverty. The latest figures show that 3.7 million children are living in poverty in the UK (after housing costs) [2] , whilst there are up 1.5 million children living in workless families in England. [3] The likely consequence is that UK Government policy solutions would not in future cover the 2.2 million children living in income poverty but where one or more adult works.

The Government’s argument for shifting the focus away from an income measure is that increasing poor families’ incomes does not translate into equivalent improvements in children’s outcomes. The idea is that by reporting on educational attainment and worklessness, policy solutions will focus on these factors, leading to sustainable improvements in outcomes. Tackling educational attainment and worklessness is of course welcome. However, this ignores that fact that income poverty has a negative impact on children, whether or not their parents are in work. It also assumes that transition into work lifts families out of poverty, when evidence shows that, for about a third of people, entering employment does not lead to escaping poverty. [4] Furthermore, proposed changes, including those contained in this Bill, will mean that many people transitioning into work in the future will receive less support from benefits and tax credits. This would make it less likely that moving into work would result in moving out of poverty.

For example, Barnardo’s has calculated that the proposed cuts to tax credits would mean that from April 2016, a lone parent working full time on the minimum wage for 37 hours a week with two young children would lose £1,200 a year, even after accounting for the increase in the minimum wage .

Changes proposed in the Bill would therefore result in a crucial gap in the way child poverty is reported on. By eliminating any income measure in the Government’s reporting duties there is a real risk that income-based child poverty will not be seen as an issue that needs addressing.

The current measure (60% of the median household income, based on annual data) is internationally recognised. However, it is not perfect. For instance, in a year of recession, where median incomes fall, a year on year measure would be likely to show a reduction in relative poverty.

We propose that by calculating the median income over a longer term, for example using pooled datasets of four years, it would moderate the effect of shorter term economic fluctuations. The result would be to produce a headline measure of income poverty on a rolling basis, showing the number of children in families below the rolling average poverty line. In addition to this headline measure, we should also look at the distribution of families and children along the whole income spectrum below the rolling average median income. For example, including the number of people at 30, 40 and 50 percent of the median income would allow for a more nuanced understanding to inform policy debate.

Proposed amendment: We are calling on the Government to reinstate reporting obligations on an income level of child poverty. We propose the use of a four year rolling average poverty measure.

6. Clause 7 Benefit cap

According to the Government’s impact assessment, an additional 224,000 children would be affected by the reduced cap in 2016/17, rising to 333,000 in 2017/18. [5] The Government argues that families can avoid this financial penalty by making the "choice" to move into work. Whilst we understand the rationale for incentivising employment, the idea that all parents receiving out of work benefits could "choose" to work if they wanted to ignores the complex reality of the challenges facing many of the vulnerable families we support.

The Government is right to say that it benefits children to live in a household where one or more parents work. However, children do not benefit from living in income poverty, and we oppose punitive measures which risk leaving children without the basics. We support amendments which would remove child benefit, child tax credit, guardian’s allowance and maternity allowance from the benefit cap.

7. Clause 8 Review of the benefit cap

The Bill gives the Secretary of State the power to increase or decrease the cap without parliamentary scrutiny, or consideration of the impact on vulnerable families and children living in income poverty.

We support amendments which would require the Secretary of State to review the cap every year and to take into account an annual report by the Social Security Advisory Committee on the level of the benefit cap when undertaking his review. The SSAC’s report would include an assessment of the impact on the benefit cap on the Discretionary Housing Payments Funds administered by local authorities.

8. Clause 9 Freeze of certain social security benefits for four tax years

Freezing key benefits could (depending on inflation) have a significant negative impact on vulnerable families, and risk increasing child (income) poverty. We are opposed to the freeze on this basis.

We support amendments that would subject the four year freeze to an annual review by the Secretary of State, which takes into account inflation and the national economic situation. If the freeze is enacted, these vital safeguards must be in place to mitigate the risk of harm to vulnerable families.

9. Clause 11 Changes to child tax credit

This clause limits support for families with more than two children (with some very limited exceptions), so that child tax credit is only available for the first and second child. We know that children in larger families are already 1.4 times more likely to be living in poverty than families with one or two children. We therefore oppose this measure, on the basis that it is likely to have a significant negative impact on vulnerable families.

As the Government’s impact assessment makes clear, this policy will disproportionately affect black and ethnic minority (BME) families. [6] These groups are more likely to live in poverty, and more likely to have larger families (sometimes for cultural or religious reasons), and this combination means they are more likely to be reliant on tax credits. All BME groups are more likely to live in poverty compared with White groups, with Pakistani and Bangladeshi households most likely to be living in poverty (at 40% and 35% respectively). Barnardo’s analysis also shows that non-white people are more than twice as likely to live in the 20 percent most deprived areas in the UK.

This measure would also have a detrimental impact on women who leave their partners as a result of domestic violence. A mother with more than two children who is forced to leave her partner should not be limited to claiming tax credits for just the two children. Parents cannot be expected to make decisions based on the possibility they could in the future become a victim of domestic abuse.

Limiting support for families already struggling on low incomes will be detrimental to children’s life chances. Families have more than two children for a variety of reasons, including religious and cultural factors. Reducing support will mean vulnerable children miss out.

Proposed amendment: We are calling on the Government to remove this measure from the Bill.

If the Government does not remove this Clause from the Bill, we would be supportive of amendments that would exempt certain families from this restriction of child tax credit. Currently, the Government is committed to an exemption for rape. Along with many others, we are extremely concerned about how this would work in practice, and would oppose any requirement that women demonstrate they have been raped. Furthermore, this exemption must extend to domestic violence and abusive relationships. Vulnerable women and their children must not be punished. Other categories must also be protected, including where a child is adopted of fostered, or where people are kinship carers, families must continue to receive support.

10. Clause 12 Changes to child element of universal credit

As with child tax credit (above), this measure could have significant negative consequences for larger families, who are already more likely to be living in poverty. For these reasons we are opposed to this clause.

Furthermore, this could deter parents from moving into work, on the basis that if they are already claiming out of work benefits they would not be hit by the reduction in support, whilst if they enter employment but subsequently lose their job, they will no longer be entitled to the "child element" of Universal Credit for more than the first two children.

Proposed amendment: We are calling on the Government to remove this measure from the Bill.

11. Clause 15 Universal credit: limited capability for work element

We welcomed the Government’s recent announcement that working parents of three and four year olds in England would be entitled to 30 hours’ free child care. This could, subject to how it is implemented, enable many parents to return to work and progress with their careers.

This clause would increase conditionality on parents of three and four year olds so that they will have to undertake work-related activities. Whilst in principle, this makes sense in the context of increased free child care in England, we have concerns about the implementation of the policy.

Proposed amendment: We are calling on the Government to ensure that the increased conditionality on parents with three and four year old children does not have an adverse effect on vulnerable families. The Government must ensure that the new requirements on parents come into force only after:

o the Childcare Bill 2015 has been implemented in full and parents of three and four year olds can access appropriate childcare;

o the Secretary of State sets out what childcare will be available to parents who are looking for work;

o the Secretary of State has published an assessment of the impact of the new requirements on parents outside England, in the context of childcare entitlement in the devolved nations;

o the Secretary of State taken steps to ensure vulnerable responsible carers receive support to meet conditionality requirements where needed. This should include a full review of how Job Centre Plus supports vulnerable parents looking for work;

o the Secretary of State has undertaken a full review of the sanctions regime;

o the Secretary of State has issued guidance on the use of sanctions in respect of families with young children.

September 2015

[1] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/266484/Care_Leaver_Strategy.pdf

[2] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/437246/households-below-average-income-1994-95-to-2013-14.pdf

[3] http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-375768

[4] Analysis by the Office of National Statistic (ONS) of the EU-SILC longitudinal poverty data shows that between 2007 and 2012.

[5] http://www.parliament.uk/documents/impact-assessments/IA15-006.pdf

[6] http://www.parliament.uk/documents/impact-assessments/IA15-006E.pdf

[6] Ethnic minority households may be more likely to be impacted by these changes. This is because they are, on average, more likely to be in receipt of these benefits, and on average have larger families.


Prepared 18th September 2015