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What we have in this Bill is a system that is simple and easy to operate, which is something that no one can say of the current situation. The important thing about these new arrangements is that financially, even at the minimum wage, the withdrawal taper is reduced

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so that a single person is always better off in work, and a couple with two children only loses out, on my calculations, by working between 17 and 18 hours a week. Working for 16 or 19 hours is okay, but 17 or 18 hours is not-or at least that is what the White Paper says. So to all intents and purposes, as my noble friend Lord Freud almost said, the benefit trap disappears. Not only that, but it is intended that the introduction of universal credit will not mean a reduction in a recipient's current benefit. To me, as my noble friend Lord Freud knows, the trick has always been to achieve a single out-of-work benefit coupled with the adoption of a permanent disability benefit. That is why I am not troubled by the proposal to limit contributory employment and support allowance to one year as opposed to the current two years. After one year, it should be possible to assess whether the incapacity is permanent for, say, the next three or five years before a new assessment is made. I was struck by something said by the noble Baroness, Lady Hollis. She spoke, as I understood her, as if the withdrawal of contributory ESA would mean that there would no longer be any state financial support. That, of course, is quite wrong.

I accept though, that there are debates to be had and questions to be answered on when the reassessment should start. Should it, for example, be after nine months with no change of benefits until the 12 months is up; or should it be after the full 12 months, in which case what happens to the benefits until the assessment is made? For myself, I prefer the former, but like so much in this Bill, I await developments once we see the statutory instruments that flow from it. In this connection, I am grateful to my noble friend for saying that we will be able to see as much information as is available, well before our consideration is completed.

A certain amount has been said about working mothers. Of course, this is a subject that we are returning to after dealing with it previously in the Bill and statutory instrument, which I am sure the noble Lord, Lord McKenzie of Luton, will remember well. The key for working mothers, of course, is affordable childcare. The noble Baronesses, Lady Meacher and Lady Hollis, I and others asked-or quizzed, I should say-the then Minister as to whether this would be available. He said words to the effect of, "Don't bother your little heads about it, all will be well". I ask my noble friend Lord Freud whether that statement has borne fruit, and the situation is such as the noble Lord, Lord McKenzie of Luton, predicated.

This debate has shown that the House is in favour of a universal benefit. The noble Baroness, Lady Hollis, put it well and most of us have followed her. That is fine, but the noble Baroness uttered a very loud "but". This reminded me of a phrase I uttered in a pantomime in my amateur dramatics days: "But me no buts". I know enough of my noble friend Lord Freud to know that he will examine all our buts, to which he knows we will all require answers if he is to secure his Bill. I look forward to receiving them in the remaining stages.

I make one plea to the Minister, for him to abide by an acronym that I invented last night. The beauty of universal credit is in its simplicity. I urge him therefore to abide by KISISS, which stands for Keep it Simple in Social Security.

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8.48 pm

Baroness King of Bow: My Lords, we all believe in welfare reform, making work pay and simplifying the benefits system; and I am sure none of us envies the Minister his job. However, these reforms cut benefits to the point where they undermine the principles of the welfare state and remove the final safety net from some of the most vulnerable people in Britain. I confess I am shocked by the Bill's consequences as it currently stands. I also have another confession: I am one of those Labour politicians who knows there are genuinely enlightened Conservative politicians. That is something I simply would not have believed as a child. Lib Dems, of course, have often espoused the same progressive social policies that I believe in. In fact, I remember many occasions when Lib Dem MPs stood alongside me and other Labour Back-Benchers between 1997 and 2005 to challenge our Labour Government's record on housing-in particular they lambasted Ministers for not doing enough to support private tenants, especially those on housing benefit.

What are we to make of those same Lib Dems now backing Tory plans to drive a coach and horses through the housing safety net? This Bill will, in effect, drive the poor out of inner London; it will leave thousands facing eviction and homelessness. Do not take it from me: research done by the University of Cambridge for Shelter found that cuts to LHA will lead to 134,000 households either being evicted or forced to move. Or take it from Conservative Mayor Boris Johnson, who was moved to describe these cuts as "Kosovo-style social cleansing". I thought that was taking it a bit far, but DCLG seemed to back up some of his concerns. Its modelling calculated a likely 20,000 extra homelessness acceptances as a result of the total benefit cap-and that comes on top of the 20,000 additional acceptances already anticipated as a result of the other changes to housing benefit. DCLG helpfully summarised the situation, saying that,

So there we go. Not only is it going to cause untold human suffering by forcing people out of their homes, but it is going to cost us money. It just does not add up.

This dose of truth obviously did not go down too well at the DWP. The Minister even took the trouble to write to my own local newspaper, the East London Advertiser. I am sure he was writing to local newspapers up and down the country, but none the less the East London Advertiser got news, fresh from the horse's mouth, that:

"Scare stories that housing benefit changes will force thousands of London families from their homes are nonsense and are causing unnecessary distress".

And yet his own department's impact assessment tells a different story. It is a story of unnecessary distress, and it will ruin lives. In Tower Hamlets, the DWP impact assessment shows 1,900 households affected by the move from the median to the thirtieth percentile of local rents. In English, that means those households lose on average £20 to £30 a week.

The impact assessment also shows that 970 families were affected by the caps already introduced in April. Those households lose, on average, £20 to £30 a week,

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depending on property size. I know the Minister has suggested that these families will be able to negotiate a lower rent with their landlord. If he genuinely believes this, I implore him to give us some evidence. If he feels that this may not be the case, that landlords will not will not just throw up their hands and say, 'Oh, okay, I'll lower your rent', I say in all sincerity that maybe he will give those tenants some rights to challenge their landlords, because otherwise he is literally casting them adrift. He might also wish to let them know whether, if they cannot make up that shortfall, they should use their jobseeker's allowance or child benefit to cover these shortfalls.

The week before the Minister's letter appeared in the East London Advertiser, in the Answer to a Written Question I tabled on the numbers affected by his reform to the shared room rate of local housing allowance, he stated that,

adding that:

"The average loss per loser is estimated at £109 per week".-[Official Report, 29/6/11; col. WA 440.]

Can the Minister tell me how someone on jobseeker's allowance of £65 per week can find an extra £109 per week to pay their rent? With all respect, I truly believe the Minister is not inhabiting the real world. That is the most respectful way I can put that issue. I suspect the Minister may fall back on the usual claim that these single people should all move into shared housing, or that his £20 million discretionary housing payment fund will help them bridge the gap, but neither claim bears scrutiny and if I had more time I would explain why. Should the Minister wish to let me describe the reasons why I do not feel they stack up, I would be delighted.

The Minister has made a small concession to help a few hundred vulnerable, homeless Londoners living in hostels. That is very important, and I welcome it, but again what about everybody else? In Tower Hamlets, the pressure on the discretionary housing payment budget is already so intense that the initial length of awards has already been cut from 10 months to just four months, and that is before a lot of the other cuts have impacted. Whatever its theoretical advantages, the universal cap of £26,000 introduced by Chapter 1 of this Bill will undoubtedly make a bad situation far worse. I recognise that this cap is superficially attractive in its simplicity, and I am attracted to it myself. It is the level of the cap that I disagree with, and as my noble friend Lady Sherlock stated concisely, fairness has been sacrificed for simplicity. It just is not fair that parents will be left with the stark choice of paying their rent or feeding their kids. It also is not fair that Clause 68 increases the local housing allowance in line with CPI inflation, meaning that in real terms the costs of private rented housing will not be covered. That puts claimants on the rack and tightens the screw year on year.

However, there is something in this Bill that I object to even more strongly: the unforgivable scrapping of the discretionary social fund and its replacement with a system of hand-me-down or in-kind charity. As someone who helped many constituents make those

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applications, I understand the benefits and weaknesses of those schemes but let us be clear that the benefits far outweigh the weaknesses. The reforms which Yvette Cooper suggested last March were adequate to address those problems. Instead, the Bill pushes the poorest further into debt.

The argument should not and cannot be reduced to deficit reduction. I accept the need for deficit reduction. What I reject with some outrage is that the Bill seeks to reduce our national debt by increasing the personal debt of the very poorest. If you are going to take money from people's pockets, take it from people like us in this Chamber. Do not take it from people who have not got the money to buy a bed, a fridge, a cooker or a cot because if you do, you either force these people to live in conditions that shame this country-like those of the family I visited, where the baby sleeps in the bath-or force them into the hands of loan sharks and an inescapable debt trap. The Government have dumped the responsibility for this on local authorities without any guarantee of funding or any requirement to continue the current eligibility criteria.

I will discard the last page because I understand that I have reached the time limit. I am sorry to get exercised about this but it is like watching a slow-motion legislative car crash. I have not even had time to touch on a plethora of desperately worrying issues: the unfair repeat assessments for the long-term sick and disabled; the impact on foster carers and kinship carers; or the use of a private company, Unum insurance, which was found guilty in America of harassing and defrauding social security claimants.

Putting all that to one side, my final point is directly to the Minister. I am sure that he did not come into politics to disadvantage Britain's poorest kids, force people out of their homes, reduce the childcare support for hard-pushed parents or strike genuine fear and despair into the hearts of disabled people up and down the country-but that is what this Bill currently allows for and it is the legacy which the Minister risks. If safeguards are not forthcoming, social historians may look back on the history of the welfare state and pinpoint this Bill as the tipping point in the slide towards a feral state. I sincerely and genuinely hope that the Minister will take account of the grave concern in this Chamber and make significant changes to the Bill.

8.58 pm

Baroness Murphy: My Lords, having worked so happily with the noble Baroness, Lady King of Bow, in east London I am sorry to tell her that I disagree with almost all the points that she has just made. I support the provisions of the Bill. The Government are promoting the necessary cultural change in the benefits system which the vast majority of people in this country want to see. We need a shift in the expectations of what the state will do for us, and a radical shift in attitudes to choices enabled by the state which generate unintentional moral hazard. However, one thing that we seem not to have talked about sufficiently is the fluidity of dependency in populations and how quickly behaviours change as opportunities and threats change. I am talking not about changes in people's levels of disability but about population changes and how they respond to situations.

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The vast majority of people in receipt of benefits are merely making ends meet in ways that make legitimate sense to them. They have no alternative but to depend on the benefits to which they are entitled. However, there are huge numbers of people who do not consciously think about alternatives, because they do not have to and at present have too little support to do so. In my professional life as a psychiatrist I have witnessed many people with mild and more serious mental health problems who had to give up work during a very bad period, but who should have been assisted and coerced-in the best sense of the word; there is such a thing as good coercion-back into the workplace for the sake of their future health; and whose life has been blighted for many years after a brief episode of illness by a system which allowed them to remain unwell and workless, and indeed insisted that they should, in order to qualify for help. I have also seen in my own family how a modest chronic disability can unconsciously perpetuate dependence. Of course, the vast majority of people in receipt of benefits do not consciously make these choices, but some unconsciously make choices that are in no one's best interests-if I can pray in aid another Freud.

I have a slightly different approach to the conditionality issues. The major problem with implementing conditionality-which can be so helpful for people to move them on to a different state, and remind them of the threat of this thing which will move them on to a different place-is how it is implemented in the DWP outposts in jobcentres and so on, by staff. Putting in the universal credit system-which we all want to see; it is very noble and sensible-and implementing it fairly will be a challenge. My noble friend Lady Meacher has articulated very well the difficulties with training, particularly in relation to some mental health problems, autism and some mild degrees of learning disability, where people are trying to access work and so on. Those problems are so serious that it is not just the culture of the dependent population that needs assistance to change; it is the dependence of the officers-of those who apply the system-that needs to change. If some of the assessment doctors continue to be reported as being unlistening, dismissive, unsympathetic and poorly trained, the Bill will not work.

I turn to the specifics in changes in disability provisions. I have, of course, read the multiple briefings from organisations working with people with various types of disability and I am surprised that more of them do not welcome the shift from disability living allowance to the more personalised personal independence payment, which is better focused on people's individual circumstances and does not assume that disability is a fixed, unchanging matter. I have to say that I do not think that the disability support organisations have necessarily been very helpful in assisting people through the realities of how this will work. Enormous anxiety has been generated about the assessment and its efficacy, the interpretation of regulations and how sensitive the assessment tools and descriptors can be made. Of course, it is going to be difficult to get it completely right and we look forward to hearing how Professor Harrington's second report, which is now apparently available, will change matters again.

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There are quite marked differences in the proportions of different populations within the United Kingdom on DLA, which needs some thought. We have heard about the increasing level of the use of disability living allowance. For example, in Scotland there are, I think, something like 6 per cent more people on DLA. It is said that this is because of a different population level of disability in Scotland, due to cardiovascular and cerebrovascular disease, but the age range of disabilities simply does not add up. The reality is that there is different interpretation of the rules north of the border. In many other parts of the country there are variations which do not take account of the fact that we need better assessment and recurrent assessment. I do not think it is right that people should be assessed once and left where they are. You lose all opportunities to continue to implement effective support if you do not assess people on a regular basis. Therefore, I completely disagree with the notion that people should not have to go through an assessment, because it gives them an opportunity to get the help that they need.

The housing benefit system has received much attention so I shall keep my remarks on it brief. I have looked at the analysis of the situation in London carried out by Shelter and the University of Cambridge Centre for Housing and Planning Research. I think that 100,000 households in London that are on housing benefit may theoretically be obliged to move to lower rental areas. However, the analysis does not take sufficient account of the possibility of the rental sector changing its rents. In fact, the map that has been drawn up shows that only three boroughs are affected-one is the City of London, which is a very tiny place where very few people live, and the others are Kensington and Chelsea and Westminster. I suggest that many noble Lords in this House cannot afford to live in Kensington and Chelsea or Westminster.

I see that the noble Baroness, Lady Turner of Camden, is in her place. In fact, it has been demonstrated that Camden is one of those areas where the people we are discussing will still be able to afford to live. There is ample opportunity to assist people through a transitional phase. However, I hope that the Minister will say how that might be done. Much has been made of the polarisation of rich and poor neighbourhoods but that has been going on in London since the early 18th century. A mixed neighbourhood does not comprise exceedingly wealthy pockets being situated next door to profoundly impoverished pockets; that does not seem to me a mixed community. After all, these social goods of a mixed community are not available to working people on low wages who are paying taxes and trying to live in London but who do not receive benefits. I find it difficult to understand why the noble Baroness thinks that that social good should be made available to those who are dependent on benefit.

We need the cultural shift that I have mentioned. Many changes need to be made to the Bill but its basics are profoundly right and I support it.

9.07 pm

Lord Sheikh: My Lords, this Bill is one of the boldest attempts to repair and restructure a welfare system that has essentially failed taxpayers and jobseekers.

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Welfare reform is an important plank of this Government's programme. The current system has resulted in welfare provision that is not always distributed to the recipients who are most in need. It is also a system that favours reluctance among some people to work rather than to seek employment. That system is simply not sustainable.

The centrepiece of this Bill is the universal credit award. It has been reported that the universal credit has the potential to lift more than 350,000 children and 500,000 adults out of poverty. In streamlining the current system, the universal credit will provide clarity and accountability as opposed to the multifaceted approach. A simplified system will make a valuable contribution towards the fight against benefit fraud. It has been estimated that this type of fraud costs the taxpayer £1.5 billion per year.

I welcome the clearly defined boundaries within Part 1 of the Bill, as it details the sanctions that will be put in place if claimants fail to comply with the requirements of the universal credit award. I support the Government's efforts to tackle the current situation surrounding housing benefit, which has seen claims rise by £10 billion over the past 10 years. A move towards an annual uprating in line with the consumer prices index will contribute towards greater stability in rents. It has been estimated that the change will generate savings of approximately £300 million a year. The current system unintentionally allows a number of registered social landlords to encourage welfare dependency among clients for their own financial gain.

It can be argued that the most significant aspect of the universal credit is its potential to encourage unemployed people to find work while ensuring that they are not left out of pocket by doing so. Much debate has focused on the conditionality to be introduced with universal credit, requiring claimants to look for work with appropriate sanctions. As an employer and chairman of companies, I feel that we need to encourage people to work. People should work principally for two reasons: first, to earn a living and, secondly, to obtain job satisfaction. I shall therefore concentrate on matters relating to work.

Our welfare system should align incentives to ensure that those who demonstrate a willingness to work are not less well off than those who resist opportunities to earn. It is a tragedy that nearly 5 million people of working age in the United Kingdom are on out-of-work benefits, with almost 1.5 million having received them for more than 10 years.

We have one of the largest workless populations in Europe, and just under 2 million children living in households with nobody working. The current system penalises people for looking for work. The majority of people on benefits do not wish to be recipients for the remainder of their lives, but we need to consider carefully the process of transition so that they are not penalised in the interim period.

The most effective mechanism for relieving poverty is work. Work is good for people's mental health, their physical health and their general well-being. These benefits have been demonstrated repeatedly. Dependency is not liberating; it constrains people and prevents

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them achieving their ambitions. People have become trapped in our welfare system and they need to be freed.

This Government have shown their commitment to helping individuals find long-term employment through the work programme. Approximately 2 million children are living in households where those of working age are unemployed. Unemployment and a heavy reliance on benefits have devastating effects on our economy and our wider society. These adverse effects often include high levels of personal debt, anti-social behaviour and solvent abuse. The current system fosters a dangerous culture of dependency and lethargy.

The Department for Work and Pensions has estimated that the reforms proposed by the Bill could reduce by 300,000 the number of households where those of working age are unemployed. It is also thought that the changes could improve the net incomes of 700,000 of the country's lowest paid workers, as they will be able to keep a greater portion of their earnings. The Bill encourages social mobility while tackling the causes and effects of poverty and unemployment.

I turn to the new sanctions regime in the Bill. I welcome the fact that all those claiming benefits will have to sign a claimant contract, including a pledge to turn up for appointments and interviews and take up reasonable offers of work. By introducing more appropriate financial sanctions, the new regime will provide the necessary spur to the minority of claimants who fail to comply.

The provisions in the Bill encourage social mobility while tackling the causes and effects of poverty and unemployment. These elements suggest that there will be wider gains to the British economy. The Bill raises questions not of political allegiances, but of fairness. I welcome the Bill and the Government's resolve to get this right.

9.15 pm

Lord Knight of Weymouth: My Lords, I start by paying tribute to the ambition of the Minister and his Bill. I know that the Minister is motivated by the very best of intentions in trying to tackle a system that is complex and needs continual reform. Certainly, the principles of the Bill are difficult to argue with, although it feels as if they have been ranked. He listed the three principles. I would rank them in the order of affordability, because he has to answer to the Treasury, followed by dealing with dependency, which is important. I am afraid that fairness appears to come third.

My worry for him and for the reform is that, to coin a phrase, it is too far too fast. As a department, as well as focusing on welfare reform, the Minister should focus on employment and work. The clue is in the title. We have an unemployment problem and if we really want to bring down the benefit bill, tackling unemployment is something that we need to take seriously. He should look, for example, at what the noble Lord, Lord Hall, has published in terms of the evaluation of the Future Jobs Fund in London with the Culture Quarter Programme, which had a 73 per cent success rate in getting people into permanent employment or full-time training. I substantially agree with the noble Lord, Lord Sheikh, and with the excellent

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maiden speech of the noble Lord, Lord Feldman of Elstree-I pay tribute to him-who said that work works. I think that the noble Lord, Lord Bilimoria, said the same. The Minister also needs to concentrate on the work programme. A lot of other things must be done alongside this important reform.

When we were in Government, we were committed to a single working age benefit. That should be the staging post for a more prudent and pragmatic way of going forward-tackling all those things that I described and then trying to simplify the benefit system before then taking something that is assessed on the basis of households and merging it with a taxation system that is based on personal assessment, which complicates things unduly. I will come to that.

I hope that the universal credit works. The noble Lord, Lord Skelmersdale, paid tribute to its simplicity. In many ways, the Minister is trying to design a swan-something that looks beautiful in its simplicity, but we all know underneath will be working frantically in a complicated way to move forward. Other noble Lords have spoken about those who will potentially lose out as a result of this reform if what looks like an ugly duckling grows up to be a duck rather than a swan. I hope it becomes a swan.

Rather than repeat some of the points that have been made-I thank all those who have corresponded with me principally by e-mail-I want to focus on the risks that need to be addressed in the context of delivery. There are two. The first relates to merging household and personal assessment, which particularly relates to IT. The Government have produced some excellent briefing and I thank them for that. I remember that in his first emergency Budget the Chancellor announced huge savings by cutting consultancies and big IT projects. I genuinely hope that, with this enormous IT project, on which this whole set of reforms is dependent, he is employing some good consultants. I hope that he is ignoring Francis Maude and getting some good capacity in. Much as I believe that in Joe Harley, the CIO at DWP, he has a really good guy who can help the Minister to oversee this from the department's point of view, he will need all the help he can get to make this work.

The briefing that the department has given me talks about agile development for the IT system. Certainly, I do not have a problem with developing the IT and business solutions together so that you can get the IT designed as you go along. Then you can do the things that you know will happen right from the outset rather than waiting for the whole thing to be designed, producing a specification and having a long delay. I certainly agree with digital by default, although it has to answer some questions around inclusion and ensuring that there are still people who can deal face-to-face with those who have complex needs and those who are struggling to do things digitally.

Other questions remain. The system that is being developed in respect of benefits has to bolt in with HMRC's real-time information system which, I gather, is on track to be up and running for October 2012. We all know that Governments have had some problems with IT in the past-the NHS is the best possible example. However, the tax credits system is another

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one. It is a great system, at the root of this reform, to make work pay, but we have problems with it. In the end, as an MP, I knew more about the problems than I knew about the successes, even though there were many great things that we got out of tax credits.

Once you bolt together HMRC and DWP, you create vulnerabilities in terms of risk. Then you add into that the other system that is being developed which is for self-employed people so that they can self-declare income. That will be the fallback IT system if the HMRC system does not work. We can ask questions about whether self-declaration of employment in real time will work and whether it will deal with possible fraud and error, but the integration of those three IT systems against a very tight timetable needs close scrutiny. I hope that the Minister will look at the report from the Public Accounts Committee in the other place, which was published today. I hope that he is learning lessons from the NHS IT programme and from the problems that we had with that and with tax credits. I hope that, ultimately, he will produce and publish for us to scrutinise an analysis of the risks that are attached to the IT programme. The Permanent Secretary in his evidence to the Public Accounts Committee had a bit of a Rumsfeld moment when he talked about the unknown unknowns in respect of risk when you are doing something in a way that Whitehall has not done before. If that risk register can be published, if the project milestones and the target dates attached to those milestones can be published and there is a report to Parliament on the progress, I am sure that this House will be very grateful to the Minister for giving us some confidence about how this crucial part of the process goes.

I shall quickly touch on one other subject, which is the centralisation of housing benefit as part of these reforms. Yes, I worry about those staff working in local authority offices who are doing benefit assessment, but I understand that there may be a significant saving that has already been scored with the Treasury through centralisation. My worry is that individuals will have crucial documents to prove their identity and their income, which they will have to send off to a DWP processing centre with the potential for those to be lost. We know from casework and from our interaction with the real world that that happens. I worry that there will be a duplication of some of the information that local councils will have to gather in respect of council tax benefit, which is now being localised, thanks to Eric Pickles. I worry about the complex cases of some individuals, where a default to online with support from telephony might not be sufficient to understand their needs. I also worry about some loss of local expertise.

I ask the Minister to consider whether individuals could go to council offices with their key documents, as we do when we take our documents to the post office to submit an application for a passport, to get them checked for their council tax benefit applications. That information can be collected electronically and put into the wonderful IT system which I think I have already said I hope will be a success. You would have a halfway house between some sensitivity around local processing and a central system. When the individuals in local council offices who are doing the interviews

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spot someone who has complex issues attached to their case, they could set up an appointment there and then with someone locally from the DWP, or perhaps from Jobcentre Plus, who can come and do a one-to-one interview to make sure that we get it right first time. We all know that in difficult cases, if we get it right first time it makes things a hell of a lot easier than trying to fix it after we have got it wrong.

With those comments, I will sit down. I wish the Minister well in his reforms and wish the House well in amending the Bill and the reforms so that, to some extent, we slow it down to get it right.

9.25 pm

Baroness Finlay of Llandaff: My Lords, there have been many admirable speeches tonight. They must have given the Minister much food for thought. As a patron of Foodbank Cymru, I fear that we will see a rise in the number of people who beat a path to our door because they are in financial crisis and cannot even put food on the table.

In the short time allocated, I will address the situation of people who become suddenly and catastrophically ill, and what happens to them and their families. Before I do that, I will say that the clear aim of the Bill is to get more people into work. This principle was underpinned by the very elegant speech of the noble Lord, Lord Feldman, whom we all welcome. The Bill refers to assessment in considering a person's physical or mental condition. Of course, these are so often integrally linked, which is why the findings of Sir Donald Acheson's independent inquiry into inequalities in health are so relevant. He states:

"Some of the excess morbidity and mortality associated with unemployment may be a result of people in poorer health being more likely to become unemployed, rather than vice versa ... It does ... illustrate the double disadvantage that people with chronic sickness or disability may face: their ill-health puts them at greater risk of unemployment, and the experience of unemployment in turn may damage their health still further".

My noble friends Lord Patel and Lady Morgan of Drefelin highlighted the problem for young people who suddenly find themselves ill with life-threatening disease. They referred to the mismatch for 16 to 18 year- olds that must be addressed. I am sure that amendments will be tabled to that effect.

I understand that those with cancer, HIV and MS will be eligible for PIPs from the time of diagnosis; that is when the clock will start ticking. However, what about those with other neurological diseases, those with massive injuries such as head injuries, the loss of a limb or any sudden, catastrophic disease, or those who are seriously ill with conditions that are difficult to pin down at the time of diagnosis but which fluctuate and make progress rapidly? Huge expense is often incurred at the moment that people lose their health, particularly with a diagnosis such as cancer, which demands punishing chemotherapy, often very rapidly, or where there has been a road accident and massive injury has occurred. The costs of heating, transport, food and childcare suddenly rise in an uncontrollable way. Waiting three months for the DLA is already hard enough. Why make it much harder by creating a six-month qualifying period? Many have argued tonight

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for the year to be redefined as a three-month qualifying period followed by a nine-month prospective test period. It would cost the same. I hope that the Minister will take away the consistent message that has emerged in the debate.

The mobility component of the DLA is critical to keeping people well. Those in residential care are not being double funded. The joint report of 27 charities, Don't Limit Mobility, makes that clear. For some who live in residential homes and the young, severely disabled people in supported residence, taking away the mobility allowance is like locking the door and throwing away the key. One person said:

"Without it, I would be severely depressed like I used to be ... My independence is my most prized possession".

One case that we must consider is that of the young single parent who suddenly becomes ill and whose ex-spouse does not provide child maintenance. In Wales, 68,500 parents-half of all single-parent families-need the Child Support Agency to obtain child maintenance. According to the Bill, such parents will now have to pay a registration fee and a levy on each payment, suddenly making their situation even worse, while they will have to wait six months to be eligible for PIP if they become suddenly ill. If that young parent needs an electric wheelchair to carry on coping with his or her family, they will not be able to get one without the mobility component. The noble Lord, Lord Kirkwood, spoke of hopelessness. Indeed, that is a real danger, as so many people are terrified of how they will be able to live, fearing becoming imprisoned by their condition. They fear the assessment process, rather than believing that a personal independence payment will help them to keep living.

Carers of the seriously ill are not mentioned in the initial impact assessment. Can the Minister tell us how many of the current 500,000 recipients are likely to lose carers' allowance and how many of those will be women, given that 73 per cent of those claiming carers' allowance are women? Can he also explain how the three levels of DLA transferred over to the two levels of standard and enhanced in PIP will act as a gateway to carers' allowance in the future?

The tripwire of all this change will be how the assessments are done. Many feel that ATOS is not fit for purpose-harsh words, I know, but 40 per cent of its rejection decisions go to appeal and 70 per cent are overturned. Many find the assessments humiliating and degrading, and medical statements are often ignored. Some die before lengthy appeals are heard. I hope that the new assessment processes will be better. Sometimes, one thinks that they could not get much worse. Even the pilots are revealingly complex, showing that a subtle nuancing is required to meet individuals' needs.

Concluding on a positive note, I am glad that the Government have continued with the DS1500 principle. The terminally ill cannot wait for assessments and their changing conditions mean that a single snapshot assessment is not appropriate. But as the Royal College of Physicians told the Select Committee of the noble and learned Lord, Lord Mackay, prognosis is a probabilistic art. Sometimes those with fluctuating conditions appear to be dying, imminently, but do not die at the time anticipated-al-Megrahi is a clear

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public example of this. Can the Minister reassure us that under the new system those in receipt of the benefit will not find it stopped if they happen to be alive at six months and will not be expected to repay it if they live longer? Also, should they go into an unexpected remission and cease claiming, will they be eligible again when they face dying? The intention behind this Bill is to make our welfare system affordable but it will be the traps that we have to address.

9.33 pm

Baroness Gardner of Parkes: There is nothing left to say on this Bill. Everyone has made the most marvellous, wide-ranging statements. A theme that is coming through clearly-that people should be encouraged to work, do their best, have an aspiration and stand on their own feet wherever possible-is in theory a wonderful idea. We all know that that is true. The difficulty is when it comes to applying these things. I have always declared that I have a daughter with a physical disability and another family member with learning difficulties. My daughter tells me that every form that you have to fill in now is 35 pages long. As a dentist, I remember that people had to fill in 25 pages if they wanted help with their set of false teeth. At the end of the 25 pages, you were told how many prison visits that you could have. It was a sort of one-form-covers-everything-many pages that were totally irrelevant to a lot of people. They had no idea how to fill it in. They always brought it in and you had to do it for them.

In those days, another issue was whether the payment came straight to the dentist or went to the patient. When it went to the patient, you often did not see it. I can understand the suggestion now that housing benefit might go straight to the landlord. That is a terrible situation, particularly for those on housing benefit with private landlords who are in some cases crooked and demanding a great deal of extra money in cash from them, as well as their housing benefit. Landlords are getting eviction orders against them all. When you go into an estate agent, as I did with someone who has just had a notice that they have to move out and that the bailiffs will be coming shortly, the estate agent makes very clear that, even if the rent is within the £250 a week, no private landlord wants to have anything to do with housing benefit cases. That is terrible, and something must be done about it. It worries me that if the money is going to be paid directly to the landlord, the tenant cannot in any way pretend that they are not a housing benefit case because the landlord will see that when the money comes. It is very difficult. I think it might be wise to bring in flexibility about whether the money goes directly to the tenant or to the landlord. It is a major problem. I have had this from local councils as well. They have told me that they have done research and found that in central London landlords do not want to know you, so I am very worried for people who will be hard hit by housing benefit changes.

Returning to the principle of the Bill, my noble friend Lady Stedman-Scott made an excellent speech. She has worked at finding jobs for people who have often been out of work for a long time. I think that is wonderful. My noble friend Lord Sheikh said how good it is for people to work. That is true. There are advantages in having a job not only physically but in

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the morale-building effect it has on you because you feel you are making a contribution to society and to your own life.

A point made by other noble Lords is so true: we should hasten slowly. The noble Baroness, Lady King, made this point. If we try to do everything in five seconds, we are not going to succeed. It is so complicated that it will take a tremendous amount of work to sort it out. The noble Baroness, Lady Finlay, made the point that we are going to need a degree of flexibility. There are going to be cases that come suddenly out of the blue, and someone will have to look after those people. We cannot rely on charities to do it because they are finding it harder and harder to cope. It is a problem.

On mobility and the new personal independence payment, it is terribly important that people should be encouraged to be independent, but there has to be recognition of things we have mentioned, such as heating costs. I have raised them in Questions in your Lordships' House over many years, and the Answer is always that it is all taken into account in the money you get. Whether we are paying our own bills or someone else is helping us with them, heating costs are alarming if they are jumping at 18 per cent, 20 per cent or more. It is really quite concerning because a lot of people, particularly people who are a bit immobile, can easily die of hypothermia.

Years ago when I was on the local council here in Westminster, we introduced the free bus pass. Now I know that Ken very cleverly called it the Freedom Pass and everyone thinks he started it, but we had it going at least 10 years before that but were not smart enough to get the credit for it. Our main reason for doing it and for everyone getting it free, because at one time we talked about charging people for it, was that it was going to cost so much to assess people that it was cheaper just to give them the pass. We also thought it was better than any social service to keep people mobile and able to move around. I still hold the view today that if you can keep people able to go and do their own shopping, it is much better than having to give them a carer to help them do it, but where the carer is the only answer, we have to do that.

I am always very impressed when the Minister answers any questions on these issues. He has very clear thinking and understanding, but he has a huge job on his hands to satisfy the world and the people in this House. The job ahead will have to be done very thoroughly. As my noble friend Lady Stedman-Scott said earlier, her father, the furrier, said you want to cut only once, not twice.

9.39 pm

Baroness Lister of Burtersett:My Lords, as a member of the night shift, I will inevitably cover issues already eloquently discussed by other noble Lords, but I shall do so by focusing on some of the Bill's gender implications and drawing on the work of the Women's Budget Group, of which I am a member.

First, simplification is one of the main aims of the Bill and has long been the holy grail of social security reform. The Bill bears out an earlier warning from the Social Security Advisory Committee that there is a

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limit to the simplification that is possible with means-tested benefits. The closer we study it, the more we see how new complexities spring up, hydra-like. While the Minister may be a self-styled revolutionary, in the words of my noble friend Lady Sherlock, I fear that he is no Heracles. Where universal credit represents a welcome breakthrough is in the integration of in-work and out-of-work support, thereby potentially reducing the insecurities associated with the transition into and out of paid work. That is very important. That is about the only positive thing I am going to say, I am afraid.

Means-testing will be extended as a result of the arbitrary time-limiting of employment and support allowance for those in the work-related activity group. A disabled woman who has written to me-one of many-voicing her fears about the Bill's overall impact on sick and disabled people, asks, "What do we do then?". The Government's answer is: claim income-related ESA. However, 34 per cent of men and 46 per cent of women affected will not be eligible. Where they have to depend on a working partner instead, their financial autonomy will be eroded. This matters to people. Indeed, Professor Roy Sainsbury told the Public Bill Committee in the other place that in research with claimants,

Women's financial autonomy is also likely to be eroded as a result of measures that reduce incentives for some second earners, as my noble friend Lady Hollis of Heigham has already talked about. A new separate earnings disregard for second earners would go some way towards addressing this and I would welcome the Minister's views on that possibility.

We should also note Carers UK's concerns about the loss of a bespoke disregard for carers. Furthermore, we still do not know what is proposed for childcare costs, which is one of many gaping holes in the Bill that must be filled before Committee. The attempt to fit a childcare quart into a funding pint pot will aggravate the work disincentive for second earners and lone parents, as we have already heard. The disincentives faced by many second earners will encourage what we academics call a male breadwinner model. This sits uneasily with the Government's very welcome goal of encouraging shared parenting. It is also very short-sighted from a dynamic perspective. If a woman is in paid work while living with a partner, she is better equipped to remain in the labour market should that relationship break down.

Research demonstrates the extent to which women remain the main managers of poverty. This means that women are likely to bear much of the burden of measures such as the abolition of part of the Social Fund and the introduction of a benefits cap. I am concerned about both, but will focus for now on the cap. I have been struck by the number of noble Lords from across the House who have raised very serious concerns about this cap. I hope that the Minister is getting the message. The 50,000 or so households that stand to be affected will receive less than Parliament has decided is necessary to meet their basic needs, as the noble Lord, Lord Kirkwood, has eloquently explained.

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The Secretary of State has justified the cap in the name of fairness, claiming that it is about those who we believe should be able to go to work but are not doing so. However, it will apply to some groups that are not even expected to work.

In the other place the Minister claimed that the cap is about ensuring that there is a level playing field for everyone, but this is not a level playing field. The benefits and tax credits received by working families are being ignored. If they were all taken into account, official figures show hardly anybody would be affected by the cap. As a number of noble Lords have said, it is particularly unfair that child benefit is not added to the comparator earnings but is treated as income for the purposes of the cap. Could the Minister please explain to the House how this can possibly be justified?

The Minister also assured the committee in the other place that the cap is not about creating hardship, but hardship will be created, as the Centre for Social Justice has pointed out. Hardship could also result from the proposal to pay benefit monthly rather than fortnightly on the grounds that this is in line with the demands of modern life, and we have to prepare people for paid work. However, over a fifth of workers-and a higher proportion of low-paid workers-are still paid weekly or fortnightly, according to the department's own figures. While the earlier switch from weekly to fortnightly payments may have caused few difficulties, the leap from fortnightly to monthly is much greater.

Nearly two in five families with children-the lowest income fifth-already run out of money regularly. So this is not a problem for a small minority to be solved as proposed by appropriate budgeting support and more frequent payments in exceptional circumstances. Again, it is women, as the managers of poverty, who will bear the main brunt. I hope that the Minister will be open to persuasion on an administrative matter that has significant consequences.

Another payment issue of great concern to many organisations is that the whole of the universal credit will be paid to one partner with, in particular, no routine provision for payments for children to be paid to the main carer, usually still the mother. Not only will this in many cases represent a further erosion of women's financial autonomy, but also research that I and others have carried out shows that income is not always shared fairly within families and that money labelled for children and paid to the main carer is more likely to be spent on the children. As Fran Bennett of Oxford University warns, payment into a joint account-a so-called "nudge", as the Minister has said-is not necessarily the answer, because research shows that joint accounts do not guarantee both partners equal access.

We see here an inconsistent approach to public and private dependency which could undermine some of the Government's own objectives. A driving motivation behind the Bill, as we heard from a number of noble Lords, is to address what in my view is a damagingly inflated problem of public welfare dependency without any regard for the consequences of private economic dependency within the family. This could create a new

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couple penalty as the fear of a loss of financial autonomy and security could discourage women from committing to a new relationship.

In conclusion, while I was focused on the Bill's potentially damaging impact on women, this also has implications for children, given the link between women's and children's poverty. I hope that in this House we will be able to deliver the concessions necessary to protect women, children and disabled people and achieve the fairness that the Minister assures us this legislation is supposed to be about, but at present signally fails to deliver.

9.48 pm

Lord Best: My Lords, my set-piece speech was going to cover a number of housing issues. To my slight surprise, housing has featured in an awful lot of your Lordships' contributions and my speech is virtually redundant. Even at this late hour, however, I might be able to add one or two new points, because a couple of new reports have come out in the past 48 hours, specifically to help our debate today, dealing with housing benefit reforms, the restrictions and the cuts. Having a total benefit cap which impacts on housing is probably the seventh, or just possibly the eighth, restriction on housing benefit. With this underlying intention of the Government of saving some £2 billion per annum from the housing benefit bill, the question has always been: will that burden of an extra £2 billion fall on the tenants or on the landlords? The hope has been that the landlords will reduce rents to the new levels and that it will not be the tenants, who are, after all, some of the poorest people in this country, who will suffer from the benefit reductions.

The report that came out yesterday from the British Property Federation and the Chartered Institute of Housing looks at whether benefit reductions will lead to landlords reducing rents. The report takes it on a historic basis as well as a contemporary one. I am afraid that, although we must await the much more extensive research project which the Minister has put very properly in hand-I have congratulated him on doing so-it does not appear that benefit reductions will lead landlords to reduce rents. Therefore, the burden and the pain of cuts will fall upon very poor households and may impact on homelessness.

The second ingredient I was going to explore concerns the payment direct of housing benefit to social housing landlords or the local housing allowance to private landlords and the new measure which involves the benefit being paid instead to the tenant. The tenant would handle the money and would have to pass it on to the landlord in due course. A National Housing Federation report that came out today has done an opinion poll of tenants to see how they feel about the independence that this would give them and the preparation for work that this might help with. However, the outcome of this opinion poll is that 93 per cent of tenants felt strongly that their rent should go to their landlord. Perhaps they think that they do not want the temptation of using that rent for something else or simply want the convenience that the rest of us have with mortgage payments being made by direct debit to the building society and thus not giving us the temptation of handling that money.

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We have to reckon that some people have difficulties of their own and that their budgeting could be very complicated. Some will have debts and sometimes people who are after them to repay those debts will be a lot nastier than social landlords. Today's opinion poll confirms that paying rent to the landlord is a sensible option. Picking up on something said by the noble Baroness, Lady Gardner of Parkes, is it so likely that landlords will accept tenants at all unless the rent is paid directly to that landlord?

The third ingredient on which I was going to speak at more length is the penalty if one is found to have a spare room somewhere in one's property in social housing if you are under pensionable age. It is expected that 670,000 households will be discovered to have a spare room and will be required therefore to downsize to something smaller or to face the cost of a reduction in their benefit, averaging between £8 and £11 a week. It will be taken from the other benefits that they receive and will be calculated without regard to any housing costs. Those averages are, of course, averages and in some areas the cost per week would be very much higher.

This seems to be a cruel reduction in people's entitlements when one bears in mind that it may be physically impossible for some people to move to a smaller home. Of the people affected, 180,000 are in two-bedroom accommodation and would be required to move to a single-bedroom place. But, last year, there were only 68,000 vacancies in social housing in one-bedroom accommodation. Even if we allocated all the one-bedroom accommodation to people who were downsizing, which we cannot do because we have a lot of other people in priority need, it would take several years before people could move down from their two-bedroom property to a one-bedroom property. In the mean time, to penalise them seems very unfair. I am afraid that I do not have a new report out to tell noble Lords about that third ingredient.

I hope that the Minister will take account of the fact that so many of your Lordships today have hit upon housing and housing benefit reforms as a really important aspect of this Bill. Indeed, we will put amendments before him, which we hope he will consider favourably.

9.55 pm

Lord Kennedy of Southwark: My Lords, as noble Lords on these Benches have said, the Opposition support many of the broad principles in the Welfare Reform Bill. On the face of it, these Benches could agree with many of the opening remarks of the noble Lord, Lord Freud. Universal credit is a welcome simplification of the benefits system. We all want measures to support people getting back into work, we support sanctions for people who persist in refusing to look for work, and we can support careful, considered reform of disability living allowance. All these reforms can build on the actions the Labour Government took to make work pay.

However, the Bill is a lost opportunity for real progress. I sincerely hope that the noble Lord, Lord Freud, is in listening mode. These Benches have major concerns about how the reforms have been proposed

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and the negative effect they will have on the living standards of millions of families and children. The Bill is not clearly thought through and in reality is an attack on family budgets which will have billions of pounds taken away under a smokescreen of reform. I hope the noble Lord, Lord Freud can explain why the Government have chosen to bring forward legislation which is so light on detail. Would it not have been better to wait and detail the proposals more clearly? We all want to get people quickly back into work, but to achieve that you need some jobs for them to get into. Failure to provide realistic opportunities for employment throughout the UK will mean that unemployment levels will rise and the welfare bill will be difficult to rein in.

Noble Lords will recall that we have been here before. It is very simple. If we can get people back into work, that will reduce welfare costs, but the Bill does not help in that regard either. The number of people chasing each vacancy can vary greatly, but even in areas that have more jobs on offer, you can be looking at one person chasing every five or six vacancies. So I worry that the Bill just does not take into account the reality of the situation people can find themselves in but instead takes a blinkered view.

There are a number of other issues. As the noble Lord, Lord Best, said, direct payment to claimants is not always in the interest of the benefit recipient. There is much to be said for payment to providers on behalf of the claimants. We have to recognise that people sometimes struggle to keep a grip of their household budget. Rising prices and the change in benefit rates from RPI to CPI all add to pressures on families. With direct payments of benefits into bank accounts, have the Government considered the problem of banks levying charges when account holders are overdrawn and recovering them as soon as funds from the DWP appear in the account? Charges taken direct from the claimant's account will mean people will have even less money with which to meet their obligations. How will that help a family which is struggling to make ends meet?

As my noble friend Lord Knight of Weymouth said, proposals to remove local authorities from administering the housing benefit elements of universal credit need detailed scrutiny by your Lordships' House. At present, the proposals run the risk of not saving money but actually costing more and increasing hardship and worry. At present, local authorities have achieved a high level of performance, which has reduced errors and speeded up claims. Should the Government not be allowing more localisation and less centralisation? The Institute of Revenues, Rating and Valuation, in evidence to the Department for Work and Pensions, urged the Government to listen, take a realistic approach and use local authorities in this regard. They have a track record of delivering and have the necessary skills and expertise. Can the noble Lord, Lord Freud, tell the House how a reformed administration of the system, overseen directly by the Department for Work and Pensions, will improve on the situation at present? How does the noble Lord envisage that measures to mitigate risks in the change will be implemented? What will be the process for the DWP to start a new

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claim? Will all new claimants be expected to send all their documents to the DWP? What if documents go missing? How will the new system mitigate against fraud? Does the Minister not understand the problem that over or underpayment will cause to claimants, as people seek to budget effectively?

Often housing benefit services are combined with council tax benefit and other benefits as part of a general benefit service. Can the noble Lord, Lord Freud, confirm that these local authority contracts will be allowed to run their course and local authorities will not be placed in the invidious position of having to seek to end these contracts early with all the resultant expense that that will entail. At this stage, I fail to see how not allowing local authorities to retain responsibility for administering the housing benefit element of universal credit is not a good thing. The system is administered well. If we move away from that expertise, the Government must put in place protections for people so that they are not disadvantaged and the situation made worse by this change.

In conclusion, I ask the noble Lord, Lord Freud, where the Government took soundings from before they brought these proposals to Parliament. Did they look at how systems are operated abroad? If they did, which systems did they look at? Much could be done with this Bill if the Government are prepared to listen and to work with noble Lords. There could be much merit in these proposals, but the devil is in the detail and the consequences for individuals and families on the lowest incomes appear to be grave indeed.

10 pm

Lord McKenzie of Luton: My Lords, this has been a powerful, knowledgeable and passionate debate, as it should be, given the issues at hand. I congratulate the noble Lord, Lord Feldman of Elstree, on a very impressive maiden speech, and I look forward in the future to more of his contributions, and indeed to his stories. I had expected to hear about the iron triangle, but not from the noble Lord, Lord Boswell. I had not expected to hear a treatise on the family sizes of the Pakistani and Bangladeshi communities, and hope that I do not again.

I thank the noble Lord, Lord Freud, for the manner in which he introduced the Bill, for the extensive surrounding briefings and for the accessibility of the Bill team. I thank him again for his promise of further information, and it would be good to have a schedule of what is upcoming, particularly in relation to the Committee timetable. We acknowledge that the Minister is a pioneer and a true believer in the universal credit, and someone who is always evidence-led in his approach to policy. But his difficulty is that what is before us is a proposed credit that is not universal, and a universe in which there are too many black holes. I see the noble Lord not so much as a Che Guevara but perhaps as a Captain Kirk boldly going forth with a few warp factors involved. Of course, the universal credit provisions sit alongside measures that are known and which are deeply concerning. These arise in the context of the £18 billion of cuts to benefits before the universal credit sees the light of day, so assurances that there will be no losers, frankly, ring a little hollow.

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We have had the timely and devastating report from the IFS which concludes that the Government's economic strategy will give rise to greater inequality and rising child poverty, putting into reverse progress made in the years of the last Government. Indeed, if unchanged, the Bill will help to deliver this outcome for the Government. It is an outcome that, apart from those right at the very top of the income scale, will see the poorest 30 per cent hit the hardest. As my noble friend Lady Hayter reminded us in a fantastic speech from the Front Bench, the rhetoric of parts of Government-I exonerate the noble Lord from this-is increasingly in danger of stigmatising benefit recipients with a benchmarking always made against "hardworking families who pay their taxes". I am bound to say we heard a little of that from the noble Baroness, Lady Stowell, implying that in order to receive benefits, you must be feckless, workshy and happy to live off the state, no matter that your circumstances may have changed because of a family bereavement, ill health, the worsening of a disability, the closure of a workplace or being forced to move because of housing benefit changes-or, as the right reverend Prelate the Bishop of Leicester said, because of simply making a mistake.

We are in support of a welfare system that recognises the benefits of work, supports people into work or closer to the labour market, and with an obligation on people to engage with the system and sanctions for those who refuse to look for work. These principles underpinned our approach to welfare reform when in government, with advice, of course, from the noble Lord, Lord Freud, in his former life. We know that the vast majority of claimants want to work, but they face job shortages and barriers to employment, so the Government have their part to play in promoting growth and job creation.

Of course, these barriers are not only lack of jobs but lack of skills, and sometimes employer attitudes to employing people with disabilities. A benefits system that provides in- and out-of-work support, and that has a single taper rate, a simple system of disregard and a single payment has the ingredients that could forge a political consensus, as my noble friend Lady Hollis said. However, having these components does not of itself justify the claim by the Secretary of State that there will be no losers and that work will always pay. It depends on the detail. There is a limit to simplicity, because the system must respond to the complexity of the lives of claimants, as we heard from my noble friends Lady Lister and Lady Sherlock; and of course, as my noble friend Lord Whitty said, simplification costs money.

We know that we have a taper rate of 65 per cent rather than 55 per cent, as the noble Lord, Lord German, would wish, because it was imposed by the Treasury; and that nearly 2 million workers will have a worse marginal effective tax rate as a consequence. We know that the savings cap will take thousands out of universal credit altogether, which is why we will seek to remove it during the passage of this Bill. Many noble Lords have commented on the lack of clarity about childcare-what we tragically do not see is a recognition of childcare as an investment to help

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parents access employment, reduce reliance on benefits and enable career development. We will continue to press for answers in Committee.

We also have no answers on how passporting to other benefits would work, although the passport in from PIP in respect of carers' allowance is, as I understand it, work in progress. As my noble friend Lady Donaghy said, there is a lack of detail around self-employment, other than the unreal notion that someone starting a business will earn at the minimum wage from day one. We know that the Government have more work to do on payment issues, especially for joint claims, to take account of unequal distributions of finance in some households and to ensure that money allocated for children actually reaches them.

We have the outstanding issue of how direct payments to RSLs in respect of housing support can be made. It is only when these matters, and many others, are resolved that we can make our judgment on the universal credit. Although there are benefits in having a single payment source, it places even greater emphasis on the delivery systems being robust, because it is all or nothing. We have heard concerns expressed by the noble Lords, Lord Kirkwood and Lord Bilimoria; and my noble friend Lord Knight, in a very incisive contribution, effectively made the case for Parliament having reassurance before this finally proceeds.

Separating council tax benefit and housing benefit creates the worst of all worlds: a credit that is not universal, and the need to unpick local authority systems currently coping well with both-many of which, as my noble friend has just said, have been jointly outsourced. Local authorities are having to cope with this at the same time as the challenges of huge cuts in resources, increased homelessness and while picking up the pieces of the discretionary Social Fund-the latter without ring-fenced resources. Can the Minister tell me what assessment has been made of the capacity of local government to respond to these challenges, including that of devising new rebate systems with 10 per cent less money? How will this fragmentation help individuals access specific advice? The calculation of housing costs within the universal credit is delegated to regulations, but we know that this facilitates the uprating of housing allowance by CPI, separating actual rent levels from the housing support available.

The Bill covers just some of the changes to housing benefit that this Government have introduced. Our debate today has illustrated the extent to which noble Lords are appalled by the so-called under-occupancy provisions relating to social housing, ignoring the needs of foster carers, irrespective of where there is available smaller accommodation with equivalent security of tenure, regardless of whether people can afford to move and ignoring the expense to follow from replicating adaptations when disabled people are forced to move. These are illogical, wretched provisions that must be exposed and opposed. Even Mr Pickles has recognised that this will increase homelessness and cost money.

Many noble Lords have also commented on the benefit cap, an arbitrary measure which lacks an evidence base or indeed a clearly stated aim. We must use Committee to clearly challenge the basis for the figures and the perversity of including housing support in the

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calculation. There can be no more damning critique of this proposal than that of the Children's Society, which says that 200,000 children would be affected by the proposal, and more than 80,000 children made homeless. I simply cannot believe that the Minister himself will find this acceptable, or the Treasury that it is cost effective.

We have heard from many noble Lords in this debate the fears that the policy in this Bill will have a massive impact on the lives of disabled children and adults, people with long-term conditions and their carers. These concerns have been highlighted by reforms to DLA set in the context of a reduction target of 20 per cent in expenditure mentioned by the noble Lord, Lord Rix. We are not unsupportive of reform to DLA, provided it is undertaken fairly, but what is important-and we have heard this from many noble Lords-is that there is a full opportunity in Committee and otherwise to scrutinise the proposed assessment criteria, the process and the structure of the benefits. As the noble Baroness, Lady Campbell, said, the lack of coproduction in this is to be regretted.

Many noble Lords again expressed particular concerns about the assessment process. The noble Baronesses, Lady Meacher, Lady Campbell and Lady Grey-Thompson, the noble Lord, Lord Wigley, and my noble friends Lord Touhig and Lady Healy raised questions about how the assessment would work in issues relating to people with mental health, fluctuating conditions, autism and Parkinson's disease. I am bound to say I had a sense of déjà vu in all this. When we were discussing the work capability assessment we had a team of excellent officials from the department and extensive work with stakeholder groups testing the process, but we know what history tells us about what happened to the WCA and the extent to which it has taken time to put it together. We do not want a replication of that. We will also want to know how it works before it has been applied to existing DLA recipients.

The noble Baroness, Lady Hollins, my noble friends Lady Hollis and Lady Morgan and others gave us graphic descriptions of the effect of proposing a one-year time limit on contributory ESA-a limit which is to be imposed retrospectively. As we did in the other place, we will seek to get this extended to two years. We will further seek support for the qualifying period for PIP to be three months, as is currently the case for DLA. It is time for an end to the lingering confusion of DLA mobility for those in residential homes, and to ensure that it is protected.

Under the universal credit, the gateway to extra support for adults with a disability will be through the ESA. What this means is that there is no extra help within universal credit for those found fit for work regardless of their level of disability. The demise of the severe disability premium means less help for disabled people if they live on their own without a carer, and parents of all but the most severely disabled children will have their means-tested extra support cut in half. Moreover, the higher proportion of childcare costs of disabled children in less well-off families will be lost. Whatever the final proposals on childcare, does the Minister accept that these families are currently

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likely to miss out? We will seek to amend the Bill to ensure that any new disability addition to the universal credit for disabled children is no lower than that they currently receive in the child tax credit system.

Several noble Lords raised the issue of child maintenance: the noble Baroness, Lady Finlay, the noble Lord, Lord Boswell, the noble and learned Lord, Lord Mackay of Clashfern, and my noble friend Lady Sherlock. The legislative basis on which charging could proceed in fact is set down in the Child Maintenance and Other Payments Act 2008, but we will not allow our legislation to be prayed in aid for charging PWCs for routine access to the statutory system on a basis which will inevitably deter parents with care from using a lifeline to maintenance. We will also challenge the veto which non-resident parents have been given over a right to prevent PWCs accessing the statutory system. Of course, we support the encouraging of parents to reach their own arrangements but not for the gateway to act as a barrier to that system. Perhaps the Minister can tell us about the research which underpins the approach that the Government have adopted and the extent of the support services which can be brought to bear.

This is a great upheaval of the benefit system and it is being accompanied by a legal aid Bill which puts welfare benefits and employment out of scope, while limiting housing advice-quite unbelievable. The Bill presents us with many challenges. If it proceeds through your Lordships' House unamended, some of the most vulnerable people in our society will face serious hardship. Their day-to-day existence and their aspirations for the future will be diminished. Our task is to confront the Government with the consequences of what they propose, pursue the detail of the glaring gaps in the universal credit, scrutinise what detail is available on the PIP and the draft regulations and amend the Bill where we can-and to continue to argue the case for a fair, progressive, compassionate and sustainable welfare benefits system.

10.16 pm

Lord Freud: My Lords, I thank everybody who has spoken today. There have been some truly excellent contributions. I need to congratulate my noble friend Lord Feldman on his remarkable maiden speech, which I think we all enjoyed. We look forward to many more equivalent contributions.

The Bill deals with some really important matters and I am extremely pleased that the debate has been both informed and committed. I may not have enjoyed some of the things I heard but it has certainly been extraordinarily well considered. I think I can claim that we share a consensus on the need for reform and that there has been a great deal of general support for the principles underpinning the Bill. We all believe that the welfare system should be fair; we all agree that it should be affordable; and we all share the aspiration of a welfare system that incentivises people to work, releases people from the net of benefit dependency and ensures that work pays. There has been a little debate about the order of priority from the noble Lord, Lord Knight, among others, but I think that we can all agree with those main principles.

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The discussion is about how we get from here to there and I know that the detail of that will be heavily scrutinised in Committee, which is absolutely right. I also expect that our debates in Committee will be just as informed as they have been today, and I assure noble Lords right around the House that I will be listening with extraordinary care to the informed views of its Members. I have had a large number of specific questions relating to particular clauses and scenarios. There is no way that I can deal with them all in the time that I have today but clearly we will have ample opportunity to go into great depth in all those areas, so to the extent that I do not deal with an issue now I know that we will come back to it.

Perhaps I may remind the House of the commitment that I made in my opening remarks. Over the next few weeks I shall publish a great deal of detailed information which was previously provided in Committee in another place. It will include notes on every regulation-making power in the Bill, full policy briefing notes and, where possible, illustrative draft regulations which will go into considerably more detail than has previously been published. In addition, as we approach each section of debate in Committee I will ensure that officials from the Department for Work and Pensions are available to host briefing meetings for noble Lords. These sessions will be a further opportunity to go over the detail of each clause before it is debated in Committee. I hope that both these sessions and the additional information that will be published will be of use to the House and will go a reasonable way to answering many of the questions and specific points raised today. Clearly, we will pick up the outstanding issues in Committee.

Let me try now to summarise in my closing remarks some of the identifiable themes that emerged this evening. The most disturbing thing that I heard today was the concerns of many noble Lords about the anxiety of disabled people. The noble Baronesses, Lady Murphy and Lady Gale, talked about how people were terrified, or petrified, and that worries me more than anything I heard. We are committed to supporting disabled people to exercise choice and control and to lead independent lives. There has been a growing consensus that the disability living allowance has not been delivering and, as I said in my opening remarks-actually, I think that I said it yesterday-it is inconsistent and confusing and does not reflect, in particular, the needs of people with non-physical impairments, such as mental health conditions. Our intention is that the personal independence payment will focus support on those individuals who experience the greatest barriers to remaining independent and leading full, active and independent lives. The intention of the reforms is to ensure that the benefit is sustainable for the longer term, with a more objective assessment of individual need, and that it will be responsive to changes in people's conditions.

In answer to the question that was raised by a number of noble Lords, including the noble Baroness, Lady Finlay, and the noble Lord, Lord McKenzie, about the relationship with the carer's allowance, I can reassure the House that the personal independence payment's daily living component will be part of the gateway for receipt of carer's allowance, but only when we have completed the modelling and testing of the

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assessment criteria will we be able to update the impact of the new PIP assessment on carer's allowance recipients and the rate of daily living allowance to be actually used. We published the initial draft of those assessment criteria in May. These were developed in collaboration with a group of independent specialists in health, social care and disability and we drew on a wide range of relevant expertise. The aim of the criteria was to look at the ability of individuals to carry out a range of everyday activities. I think that there are currently 11 separate criteria and, for example, the introduction of communication will ensure that we take the effect of impairment of hearing, speech and language comprehension into account much better.

My noble friend Lady Thomas asked what account the assessment criteria will take of the successful use of aids and appliances. We recognise that aids do not remove an individual's disability and that there may be ongoing costs. We know that it is vital to get these assessment criteria right. Over the summer we heard the views of disabled people and organisations. We met with around 60 organisations and received about 170 other written responses. We tested the draft criteria by reviewing them with 1,000 people who are on DLA to see how they worked. The findings and the testing will be used to produce a second draft of the assessment criteria and the regulations later in the autumn in time for us to use them when we consider the relevant clauses in Committee.

The noble Baroness, Lady Meacher, asked who will make the final decision on the assessment. I can confirm that that will be the DWP decision-maker and not the medical assessor. I can also confirm that all claimants, particularly those with mental health conditions, can be accompanied at the face-to-face assessment. As I have said in the past, the default position is a face-to-face assessment but I am conscious that in some circumstances that is counterproductive. A number of Peers are worried about autism and how that will be handled.

Several noble Lords have commented on the extension of the qualifying period of PIP to six months. While there has been reasonable support for the principle of an overall qualifying period of 12 months, there is concern that a longer qualifying period will adversely affect certain groups of disabled people, particularly people who have had strokes and those with a recent diagnosis of cancer. My honourable friend the Minister for Disabled People and officials have engaged with disability groups during the summer and the Government are continuing to look closely at the issues they have raised in regard to this change.

The other issue that is of great concern to noble Lords is the time limiting of ESA for those in a WRAG, particularly for cancer patients. The noble Lord, Lord Patel, with his direct experience of this issue, made a moving speech on it. The contributory ESA was always intended to be a benefit which provided temporary support for those in work-related activity. With the right support it is reasonable to expect people in this group to return to work; that is what this definition aims to do. In our view a time limit of one year strikes the right balance between the need to restrict access to contributory benefits for those under pension age while allowing those with longer term

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illnesses to adjust to their health condition. It is, of course, double the length of time for which the contributory JSA applies. I must emphasise that severely ill or disabled people in the support group, which includes many people with cancer, are fully protected and will continue to receive contributory ESA indefinitely. Income-related ESA will also be available for those with little or no alternative resources. My department has been working with Macmillan Cancer Support and others to ensure that we support people who are diagnosed with cancer in the most sensitive, fair and appropriate way.

A number of noble Lords raised deliverability and IT-I am thinking in particular of my noble friends Lord German, Lord Kirkwood and Lord Brooke, and the noble Lord, Lord Knight. I am aiming as soon as I can to give a much more extensive demonstration of the IT, because what is happening is very interesting-it will not be in the Chamber because a lot of graphics are involved. Our aim is to process and implement the majority of claims automatically. By pulling the benefits and credits together, we break the factor of so many different organisations delivering them. It will not require large-scale IT, and it is absolutely not an IT development on the scale of that the NHS, which was cited by a number of noble Lords. We are already under way on the design and development. The agile process means that, rather than delivering the system in one go and then testing it, we are constantly testing how it works. The scale of the IT is similar to that for the ESA, which was successfully delivered by the previous Government on time and on budget in October 2008. We will not rely on last-minute testing. It is a fascinating area, and I commit to doing something quite elaborate on it.

Another area that received considerable attention today was the benefit cap. Powerful contributions were made by the noble Baronesses, Lady King and Lady Lister, and my noble friend Lord Kirkwood, who is amazingly still in his place tonight despite his bad back. Let me be clear: the cap is being introduced for a number of reasons. It will address some of the problems of welfare dependency, add to the incentives to move into work and promote fairness between those people who are out of work and rely on the benefits system and taxpayers in work who pay for it. There is an important principle here: people should not expect a life on benefits getting more money from the state than people in similar circumstances could earn in work. This is the legacy of a system where people are not always better off when they get a job, which is one of the fundamental problems that we are trying to fix with the universal credit. The introduction of a benefit cap will mean that households on out-of-work benefits will have to make the same decisions as families in work with regard to the lives they lead and the areas they can live in. People will have to take responsibility for their decisions in the light of what they can afford. We have said that we will consider ways of easing the transition for families on existing benefits and are looking at exactly what might be needed. In doing so, we shall be mindful of the points that have been made on this issue today and throughout the passage of the Bill to date.

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Housing has provoked much more interest around the House than is normally the case, possibly to the slight surprise of specialists such as the noble Lord, Lord Best, who is one of the gurus on the topic. Over the past 10 years, housing benefit expenditure has roughly doubled in cash terms. The Government are convinced that it is absolutely necessary to take steps to manage this expenditure. We have already introduced legislation to ensure that people who make new claims for housing benefit in the private rented sector are prevented from claiming excessive rates of local housing allowance. The Welfare Reform Bill introduces further measures to control expenditure and to ensure that housing benefit is fair and affordable.

Noble Lords have spoken about the changes that we are making to housing benefit in the social rented sector. In England alone, around 5 million people are on the social housing waiting list and over a quarter of a million households are in overcrowded conditions within the social rented sector. Yet at the same time, something approaching nearly 1 million extra bedrooms are being paid for by housing benefit. That is simply a luxury that we can no longer afford.

It is not fair to the taxpayer and not fair to those in housing need. The demand is such that we must do all that we can to make better use of our limited social housing stock. We need to do more to tackle the high rate of under-occupation, encourage more people to move as well as help those who want to move but have so far been unable to do so. If people continue to live in a property larger than they need, we will expect them to make a reasonable contribution to its cost through a reduction in housing benefit.

On the connection between the CPI and the LHA uprates, I must point out that we are committed to that measure for two years; 2013-14 and 2014-15. If it then becomes apparent that local housing allowance rates and rents are out of step, they can be reconsidered.

Many noble Lords including my noble friends Lady Stedman-Scott and Lord Ahmad, the noble Baroness, Lady Hollis, and the right reverend Prelate the Bishop of Leicester, raised concerns about childcare and how it fitted with the universal credit. It is a critical issue and we are taking the time to ensure that we get it right. The impact assessment showed that an average family with children is more likely to have a higher entitlement under universal credit, and the combination of higher disregards and a single taper will make work pay. If childcare costs are taken into account, some families may face a higher effective marginal deduction rate, but that is the same as happens in the existing system. It is not because of the universal credit. But I absolutely accept the point that noble Lords have made right around the House that we need to get this right and make sure that the way that we structure and fit in childcare is absolutely optimised.

The impact of this Welfare Reform Bill will be greater than the sum of its parts. The introduction of the universal credit will mean around 2.7 million households will have a higher benefit entitlement. For more than 1 million households, that will amount to more than £25 per week. We anticipate that introducing a simplified welfare system will lead to greater take-up of benefits, potentially lifting 600,000 adults and

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350,000 children out of poverty. The combined effects of welfare reform could mean up to 300,000 fewer workless households. That is at the core. The reason for this is as the noble Baroness, Lady Hollis, said so eloquently: we are de-risking being out of work compared with being in work.

A point that I think noble Lords still have not really accepted-or perhaps not on the other Benches-is that when the pure universal credit comes in, in its entirety, it will put more than £4 billion each year into the pockets of the poorest people in this country. I know that there are other cuts which noble Lords do not like, but on the universal credit, we have had to invest a lot of money each year and the Treasury has supported that to make the system work.

The welfare reform and the contents of this Bill are about much more than money. The reform is aimed at

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changing the state of our nation. Taken together, these measures will radically alter the mindset of dependency. They will create work incentives to drive positive behaviour. They will deliver a welfare system that is fair, flexible and firm. In essence, it will bring real, lasting change by directly affecting attitudes and behaviour. This Bill is a real opportunity to make a difference to the lives of some of the poorest, the neediest and the most vulnerable people in our society. It is an important and necessary piece of legislation. I commend the Bill to the House and ask for it to be given a Second Reading.

Bill read a second time.

House adjourned at 10.42 pm.

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